Community Reinvestment Act Joint Final Rule
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This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
Rules and Regulations
Federal Register
61035
Vol. 75, No. 191
Monday, October 4, 2010
1 12 U.S.C. 2903.
2 See 12 CFR parts 25 (OCC), 228 (Board), 345
(FDIC), and 563e (OTS).
3 74 FR 31209 (Jun. 30, 2009).
4 ‘‘Consumer loan’’ is defined in the CRA
regulations as a loan to one or more individuals for
household, family, or other personal expenditures.
Consumer loans include the following categories of
loans: motor vehicle loans, credit card loans, home
equity loans, other secured consumer loans, and
other unsecured consumer loans. 12 CFR 25.12(j),
228.12(j), 345.12(j), and 563e.12(j).
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 25
[Docket ID OCC–2010–0014]
RIN 1557–AD24
FEDERAL RESERVE SYSTEM
12 CFR Part 228
[Docket No. R–1360]
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 345
RIN 3064–AD45
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 563e
[Docket ID OTS–2010–0023]
RIN 1550–AC35
Community Reinvestment Act
Regulations
AGENCIES: Office of the Comptroller of
the Currency, Treasury (OCC); Board of
Governors of the Federal Reserve
System (Board); Federal Deposit
Insurance Corporation (FDIC); Office of
Thrift Supervision, Treasury (OTS).
ACTION: Joint final rule.
SUMMARY: The OCC, Board, FDIC, and
OTS (collectively, ‘‘the Agencies’’) are
issuing this joint final rule, which
revises our rules implementing the
Community Reinvestment Act (CRA)
of
the Currency, Treasury (OCC); Board of
Governors of the Federal Reserve
System (Board); Federal Deposit
Insurance Corporation (FDIC); Office of
Thrift Supervision, Treasury (OTS).
ACTION: Joint final rule.
SUMMARY: The OCC, Board, FDIC, and
OTS (collectively, ‘‘the Agencies’’) are
issuing this joint final rule, which
revises our rules implementing the
Community Reinvestment Act (CRA).
The rule implements the statutory
requirement that the Agencies consider
low-cost education loans provided by
the financial institution to low-income
borrowers as a factor when assessing an
institution’s record of meeting
community credit needs. The final rule
also incorporates the statutory provision
that allows the Agencies to consider
capital investment, loan participation,
and other ventures undertaken by
nonminority-owned and nonwomen-
owned financial institutions in
cooperation with minority- and women-
owned financial institutions and low-
income credit unions as a factor when
assessing an institution’s CRA record.
DATES: Effective Date: November 3,
2010.
FOR FURTHER INFORMATION CONTACT:
OCC: Margaret Hesse, Special
Counsel, Community and Consumer
Law Division, (202) 874–5750; or
Gregory Nagel, National Bank Examiner,
Compliance Policy, (202) 874–4428,
Office of the Comptroller of the
Currency, 250 E Street, SW.,
Washington, DC 20219.
Board: Rebecca Lassman, Supervisory
Consumer Financial Services Analyst,
(202) 452–2080; or Brent Lattin, Senior
Attorney, (202) 452–3667, Division of
Consumer and Community Affairs,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551.
FDIC: Janet R. Gordon, Senior Policy
Analyst, Division of Supervision and
Consumer Protection, Compliance
Policy Branch, (202) 898–3850; or Susan
van den Toorn, Counsel, Legal Division,
ent Lattin, Senior
Attorney, (202) 452–3667, Division of
Consumer and Community Affairs,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551.
FDIC: Janet R. Gordon, Senior Policy
Analyst, Division of Supervision and
Consumer Protection, Compliance
Policy Branch, (202) 898–3850; or Susan
van den Toorn, Counsel, Legal Division,
(202) 898–8707, Federal Deposit
Insurance Corporation, 550 17th Street,
NW., Washington, DC 20429.
OTS: Stephanie M. Caputo, Senior
Compliance Program Analyst,
Compliance and Consumer Protection,
(202) 906–6549; or Richard Bennett,
Senior Compliance Counsel,
Regulations and Legislation Division,
(202) 906–7409, Office of Thrift
Supervision, 1700 G Street, NW.,
Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
Background
The Community Reinvestment Act
(CRA) requires the federal banking and
thrift regulatory agencies to assess the
record of each insured depository
institution (hereinafter, ‘‘institution’’) in
meeting the credit needs of its entire
community, including low- and
moderate-income neighborhoods,
consistent with the safe and sound
operation of the institution, and to take
that record into account when the
agency evaluates an application by the
institution for a deposit facility.1 The
Agencies have promulgated
substantially similar regulations to
implement the requirements of the
CRA.2
Notice of Proposed Rulemaking
On June 30, 2009, the Agencies
published a joint notice of proposed
rulemaking that would incorporate two
statutory requirements into the CRA
regulations.3 The first revision would
implement section 1031 of the Higher
Education Opportunity Act, Public Law
110–315, 122 Stat. 3078 (August 14,
2008) (the ‘‘HEOA’’), which amended the
CRA. This provision requires the
Agencies to consider low-cost education
loans provided by the institution to low-
income borrowers as a factor when
evaluating an institution’s record of
meeting community credit needs. 12
U.S.C
sion would
implement section 1031 of the Higher
Education Opportunity Act, Public Law
110–315, 122 Stat. 3078 (August 14,
2008) (the ‘‘HEOA’’), which amended the
CRA. This provision requires the
Agencies to consider low-cost education
loans provided by the institution to low-
income borrowers as a factor when
evaluating an institution’s record of
meeting community credit needs. 12
U.S.C. 2903(d). The second revision
would incorporate 12 U.S.C. 2903(b),
which allows the Agencies to consider
and take into account nonminority- and
nonwomen-owned financial
institutions’ activities in connection
with minority- and women-owned
financial institutions and low-income
credit unions.
Twenty-four different commenters
provided their views to the Agencies on
the proposed revisions. The commenters
represented financial institutions,
financial institution trade organizations,
community or consumer organizations,
and others.
Low-Cost Education Loans to Low-
Income Borrowers
Background and General Comments
Under existing CRA regulations,
education loans are evaluated as
consumer loans.4 An institution’s
consumer lending must be evaluated if
consumer lending makes up a
substantial majority of an institution’s
business. Institutions that do not meet
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er existing CRA regulations,
education loans are evaluated as
consumer loans.4 An institution’s
consumer lending must be evaluated if
consumer lending makes up a
substantial majority of an institution’s
business. Institutions that do not meet
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5 See 12 CFR 25.22(a)(1) and 25.42(c); 12 CFR
228.22(a)(1) and 228.42(c); 12 CFR 345.12(a)(1) and
345.42(c); and 12 CFR 563e.22(a)(1) and 563e.42(c).
6 See, e.g., 12 CFR 25.22 and 25.26; 228.22 and
228.26, 345.22 and 345.26, and 563e.22 and 563.26.
7 12 U.S.C. 2903(d).
8 H.R. Rep. No. 110–500 at 297 (2007). See also
Private Student Lending: Hearing before the Senate
Comm. on Banking, Housing, and Urban Affairs,
110th Cong. (2007) (comment by Sen. Dodd: ‘‘It
strikes me that we should be promoting, of course,
incentives for lenders to provide the neediest
students with good loans, loans, in my mind, that
are similar in rate and fee structure to those under
the federal loan program.’’) (transcript available
through CQ Congressional Transcripts,
Congressional Hearings, Jun. 6, 2007).
9 74 FR at 31214.
10 12 U.S.C. 2903(d) (as added by section 1031 of
the HEOA).
11 Section 140(a)(7) of the Truth in Lending Act,
as added by section 1011 of the HEOA.
12 Section 140(a)(6)(A) of the Truth in Lending
Act, as added by section 1011 of the HEOA.
this criterion may choose to have
consumer loans evaluated when the
institution’s CRA record is being
examined
ings, Jun. 6, 2007).
9 74 FR at 31214.
10 12 U.S.C. 2903(d) (as added by section 1031 of
the HEOA).
11 Section 140(a)(7) of the Truth in Lending Act,
as added by section 1011 of the HEOA.
12 Section 140(a)(6)(A) of the Truth in Lending
Act, as added by section 1011 of the HEOA.
this criterion may choose to have
consumer loans evaluated when the
institution’s CRA record is being
examined. Institutions must collect and
maintain data about consumer loans if
they choose to have those loans
evaluated.5 Like other consumer loans,
institutions’ education loans are
generally evaluated by total number and
amount; borrower characteristics (i.e.,
distribution among borrowers of
different income levels); geographic
distribution (i.e., distribution among
borrowers in geographies with different
income levels and whether the loans are
made to borrowers in the institution’s
assessment areas); and, for large retail
institutions, whether the education loan
program is innovative or flexible in
addressing the credit needs of low- or
moderate-income individuals or
geographies.6 This revised rule does not
change the eligibility of education loans
to be treated as consumer loans. Rather,
the revised rule amends the general
performance rules in 12 CFR 25.21,
228.21, 345.21, and 563e.21 to
implement the requirements of section
1031 of the HEOA. If an institution’s
education loans do not qualify for CRA
consideration under section 1031 of the
HEOA and this implementing rule, the
institution continues to be able to
receive consideration under existing
standards applicable to consumer loans
e amends the general
performance rules in 12 CFR 25.21,
228.21, 345.21, and 563e.21 to
implement the requirements of section
1031 of the HEOA. If an institution’s
education loans do not qualify for CRA
consideration under section 1031 of the
HEOA and this implementing rule, the
institution continues to be able to
receive consideration under existing
standards applicable to consumer loans.
Section 1031 of the HEOA revised the
CRA to require the Agencies to consider
low-cost education loans provided by
the institution to low-income borrowers
as a factor when evaluating an
institution’s record of meeting
community credit needs.7 The
legislative history indicates that the
provision was intended to provide
incentives for lenders to provide low-
cost education loans to low-income
borrowers.8
Consistent with the supplemental
information accompanying the proposed
rule, under the final rule as
implemented by the Agencies,
institutions will receive favorable
qualitative consideration for originating
‘‘low-cost education loans to low-
income borrowers’’ as a factor in the
institutions’ overall CRA rating. Such
loans would be considered responsive
to the credit needs of the institutions’
communities.9
The Proposal
The Agencies proposed to consider
low-cost education loans provided by
the institution to borrowers in its
assessment area(s) who have an
individual income that is less than 50
percent of the area median income.
Further, the Agencies proposed to
define ‘‘low-cost education loans’’ to
mean (1) education loans originated by
an institution through a U.S.
Department of Education loan program;
or (2) any private education loan as
defined in the Truth in Lending Act,
including loans under a state or local
education loan program, originated by
an institution for a student at an
‘‘institution of higher education,’’ with
interest rates and fees no greater than
those of comparable education loans
offered through loan programs of the
U.S. Department of Education
cation loan program;
or (2) any private education loan as
defined in the Truth in Lending Act,
including loans under a state or local
education loan program, originated by
an institution for a student at an
‘‘institution of higher education,’’ with
interest rates and fees no greater than
those of comparable education loans
offered through loan programs of the
U.S. Department of Education.
Under the first prong of the proposed
definition, any loans that institutions
make through a Department of
Education loan program, such as the
Federal Family Education Loan (FFEL)
Program, would be considered ‘‘low-cost
education loans.’’
Under the second prong of the
proposed definition, ‘‘private education
loans’’ that institutions make would be
considered ‘‘low-cost education loans,’’
provided that the interest rates and fees
are no greater than those of comparable
education loans offered through loan
programs of the U.S. Department of
Education.
The Agencies also proposed a
conforming amendment to Appendix A
of the regulations to include
consideration of a financial institution’s
low-cost education loans to low-income
borrowers as a factor when assigning a
rating to the institution.
The Agencies asked for comment on
a number of areas related to the
proposed definition.
General Comment About Education
Lending by Financial Institutions
Several commenters noted that
education lending, particularly private
education lending, is a specialized type
of lending engaged in by only a few
financial institutions. These
commenters requested that the Agencies
expressly state that the final rule does
not require institutions to make low-cost
education loans, or, for that matter,
education loans generally. The Agencies
agree that the intent of the revision is to
encourage, but not to require, financial
institutions to make low-cost education
loans to low-income borrowers and
provide an incentive to do so
e
commenters requested that the Agencies
expressly state that the final rule does
not require institutions to make low-cost
education loans, or, for that matter,
education loans generally. The Agencies
agree that the intent of the revision is to
encourage, but not to require, financial
institutions to make low-cost education
loans to low-income borrowers and
provide an incentive to do so.
Scope of ‘‘Education Loans’’
Education Loans—The Proposal
The HEOA amendment to the CRA
specifies that the Agencies must
consider low-cost ‘‘education loans’’ to
low-income borrowers.10 The Agencies
proposed to define education loans as
including loans originated by financial
institutions through a program of the
U.S. Department of Education. The
Agencies also proposed to define
education loans to include low-cost
private education loans, including loans
under State or local education loan
programs.
As discussed in the preamble to the
proposed rule, in defining private
education loans, the Agencies proposed
to adopt the terms ‘‘private education
loan,’’ ‘‘private educational lender,’’ and
‘‘postsecondary educational expenses,’’
each of which is defined in the HEOA
in the context of the Truth in Lending
Act (TILA). Section 1011 of the HEOA
added section 140 of TILA to provide
the following definition:
[T]he term ‘‘private education loan’’—
(A) Means a loan provided by a private
educational lender that—
terms ‘‘private education
loan,’’ ‘‘private educational lender,’’ and
‘‘postsecondary educational expenses,’’
each of which is defined in the HEOA
in the context of the Truth in Lending
Act (TILA). Section 1011 of the HEOA
added section 140 of TILA to provide
the following definition:
[T]he term ‘‘private education loan’’—
(A) Means a loan provided by a private
educational lender that—
(i) Is not made, insured, or guaranteed
under title IV of the Higher Education Act of
1965 (20 U.S.C. 1070 et seq.); and
(ii) Is issued expressly for postsecondary
educational expenses to a borrower,
regardless of whether the loan is provided
through the educational institution that the
subject student attends or directly to the
borrower from the private educational lender;
and
(B) Does not include an extension of credit
under an open end consumer credit plan, a
reverse mortgage transaction, a residential
mortgage transaction, or any other loan that
is secured by real property or a dwelling.11
In turn, the HEOA defines a ‘‘private
educational lender’’ to include, among
others, any financial institution that
solicits, makes, or extends private
education loans.12
The HEOA defines ‘‘postsecondary
educational expenses’’ to mean any of
the expenses that are included as part of
the cost of attendance of a student, as
defined under section 472 of the Higher
Education Act of 1965 (20 U.S.C.
1087ll). That definition includes tuition
and fees, books, supplies, miscellaneous
personal expenses, room and board, and
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part of
the cost of attendance of a student, as
defined under section 472 of the Higher
Education Act of 1965 (20 U.S.C.
1087ll). That definition includes tuition
and fees, books, supplies, miscellaneous
personal expenses, room and board, and
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13 See 20 U.S.C. 1087ll (definition of ‘‘cost of
attendance’’).
14 Health Care and Education Reconciliation Act
of 2010, Public Law 111–152 (2010).
15 The Agencies note, however, that many such
institutions are covered under the definition of
‘‘institution of higher education’’ discussed below,
and loans to their students could qualify for CRA
consideration under this provision if other
applicable criteria are met.
16 H.R. Rep. No. 110–500 at 203, 297 (2007)
(emphasis added).
17 If the Agencies were to restrict the definition
of ‘‘institution of higher education’’ to only those
institutions defined in section 101 of the HEA,
loans to cover educational expenses at for-profit
institutions of higher education, some post-
secondary vocational institutions that provide
training to prepare students for employment in a
recognized occupation, and some U.S. Department
of Education-approved institutions located outside
the United States would not qualify for
consideration.
18 The Agencies note that the U.S. Department of
Education provides a database of post-secondary
educational institutions and programs that are, or
were, accredited by an accrediting agency or state
approval agency recognized by the Secretary of
Education as a ‘‘reliable authority as to the quality
of postsecondary education’’ within the meaning of
the HEA at http://ope.ed.gov/accreditation
18 The Agencies note that the U.S. Department of
Education provides a database of post-secondary
educational institutions and programs that are, or
were, accredited by an accrediting agency or state
approval agency recognized by the Secretary of
Education as a ‘‘reliable authority as to the quality
of postsecondary education’’ within the meaning of
the HEA at http://ope.ed.gov/accreditation. The
Department of Education recommends that the
database be used as one source of qualitative
information and that additional sources of
qualitative information be consulted.
an allowance for any loan fee,
origination fee, or insurance premium
charged to a student or parent for a loan
incurred to cover the cost of the
student’s attendance.13
Although section 1031 of the HEOA is
not expressly limited to loans for higher
education, the Agencies proposed to
include this limitation in the definition
of low-cost private education loans.
Thus, the Agencies proposed that the
private education loan definition would
encompass loans made for expenses
incurred at any ‘‘institution of higher
education’’ as that term is generally
defined in sections 101 and 102 of the
Higher Education Act of 1965 (HEA), 20
U.S.C. 1001 and 1002. Such institutions
generally include accredited public or
nonprofit colleges and vocational
schools, accredited private colleges and
vocational schools, and certain foreign
institutions offering postsecondary
education that are comparable to
institutions of higher education in the
United States based on standards
approved by the U.S. Department of
Education. The Agencies did not
propose to cover unaccredited colleges,
universities, or vocational schools
because they lacked sufficient
information regarding these institutions,
but solicited comment on this issue
titutions offering postsecondary
education that are comparable to
institutions of higher education in the
United States based on standards
approved by the U.S. Department of
Education. The Agencies did not
propose to cover unaccredited colleges,
universities, or vocational schools
because they lacked sufficient
information regarding these institutions,
but solicited comment on this issue.
Based on these definitions and
considerations, under the proposed rule,
financial institutions would receive
CRA consideration for making private
(non-Federal) closed-end education
loans, not secured by real property or a
dwelling, for post-secondary
educational expenses at an institution of
higher education. They would also
receive consideration for making
education loans through a program of
the U.S. Department of Education.
Comments and Final Rule
As discussed above, the Agencies
proposed to define education loans as
including loans originated by financial
institutions through a program of the
U.S. Department of Education, such as
the Federal Family Education Loan
(FFEL) Program. As of July 1, 2010, no
new loans may be made or insured
under the FFEL program, and no new
funds may be appropriated or expended
to make or insure such loans.14 Thus,
the final rule does not include in the
definition of education loans any
reference to the FFEL program.
The proposed definition of ‘‘private
education loan’’ included only loans
made for post-secondary (beyond high
school) educational expenses, not for
primary or elementary education. The
Agencies sought comment on whether
coverage should be limited in this
manner. Most commenters who
addressed the issue, including financial
institutions, trade associations, and
community groups, supported the
Agencies’ proposal to limit the
definition of private education loans to
loans made for post-secondary
education expenses
nal expenses, not for
primary or elementary education. The
Agencies sought comment on whether
coverage should be limited in this
manner. Most commenters who
addressed the issue, including financial
institutions, trade associations, and
community groups, supported the
Agencies’ proposal to limit the
definition of private education loans to
loans made for post-secondary
education expenses. These commenters
agreed that the amendment to the CRA
statute should be viewed in light of the
HEOA’s overall purpose of promoting
post-secondary education affordability.
One trade association supported the
proposal, but encouraged the Agencies
to consider expanding the scope at a
later time to include vocational and
career training.15 One financial
institution suggested that coverage
should be as broad as possible and
should include all types of education,
including primary and secondary
education.
The final rule covers only loans made
for higher education expenses, not for
primary or secondary education
expenses. As the preamble to the
proposed rule explained, the statutory
requirement to consider education loans
under the CRA was adopted as a part of
the HEOA, which specifically addresses
higher education reform. The purpose of
H.R. 4137, which introduced the
incentive of CRA consideration for low-
cost education loans was ‘‘to make
college more affordable and accessible;’’
to ‘‘expand college access and support
for low-income and minority students;’’
and to provide incentives for lenders to
provide ‘‘low-cost private student loans
to low-income borrowers.’’ 16
Higher Education Institutions—The
Proposal
In defining the types of higher
education institutions covered, the
Agencies proposed to include
‘‘institutions of higher education’’ as
defined in sections 101 and 102 of the
HEA, 20 U.S.C. 1001–1002
w-income and minority students;’’
and to provide incentives for lenders to
provide ‘‘low-cost private student loans
to low-income borrowers.’’ 16
Higher Education Institutions—The
Proposal
In defining the types of higher
education institutions covered, the
Agencies proposed to include
‘‘institutions of higher education’’ as
defined in sections 101 and 102 of the
HEA, 20 U.S.C. 1001–1002. The
Agencies requested comment on
whether the scope of the definition
should be narrowed to encompass only
loans made for education expenses at an
‘‘institution of higher education’’ as that
term is defined for general purposes in
section 101 of the HEA, 20 U.S.C. 1001,
which is limited generally to accredited
public and nonprofit colleges,
universities, and employment training
schools in the United States.17 The
Agencies also requested comment on
whether, alternatively, the scope of the
educational institutions covered should
be expanded to include unaccredited
institutions that would not meet the
definition of ‘‘institution of higher
education’’ under the HEA but would be
covered by the definition of ‘‘covered
educational institution’’ under TILA
section 140(a)(1).
Comments and Final Rule
Commenters generally opposed using
the narrower definition of ‘‘institution of
higher education’’ found in section 101
of the HEA because it would exclude
some institutions providing vocational
and career training. The Agencies agree
that, consistent with the HEOA’s
purpose, eligible schools should include
the broad range of accredited
institutions under the definition of
‘‘institution of higher education,’’
including accredited vocational
institutions that provide educational
programs that prepare students for
gainful employment in a recognized
profession.
Community group commenters
opposed expanding coverage to include
unaccredited institutions, citing a
concern about providing CRA credit for
student loans to finance inadequate,
unaccredited training programs
tution of higher education,’’
including accredited vocational
institutions that provide educational
programs that prepare students for
gainful employment in a recognized
profession.
Community group commenters
opposed expanding coverage to include
unaccredited institutions, citing a
concern about providing CRA credit for
student loans to finance inadequate,
unaccredited training programs.
Financial institution and trade group
commenters were split. Those who
supported the proposal expressed
similar concerns that degrees from
unaccredited institutions may not be
acceptable for certain positions such as
federal or state civil service positions or
other employment. One commenter did,
however, request that the Agencies
publish a list of accredited programs.18
By contrast, commenters who supported
expanding coverage to include
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19 H.R. 3221, 111th Cong., 1st Sess. (2009).
20 Title II, Health Care and Education
Reconciliation Act of 2010, Public Law 111–152
(2010).
unaccredited institutions encouraged
the Agencies to provide maximum
flexibility to financial institutions to
provide a wide range of education loans.
The Agencies are adopting the scope
of higher education institutions as
proposed. As noted above, the Agencies
believe that the broader definition of
‘‘institution of higher education,’’
including accredited vocational
institutions, provides flexibility to
financial institutions, while limiting the
definition to accredited institutions will
help ensure that such programs benefit
students. The Agencies will consider, as
a factor, low-cost education loans to
low-income borrowers to attend
institutions of higher education, as
defined in sections 101 and 102 of the
HEA, 20 U.S.C
uding accredited vocational
institutions, provides flexibility to
financial institutions, while limiting the
definition to accredited institutions will
help ensure that such programs benefit
students. The Agencies will consider, as
a factor, low-cost education loans to
low-income borrowers to attend
institutions of higher education, as
defined in sections 101 and 102 of the
HEA, 20 U.S.C. 1001–1002, when
evaluating a financial institution under
the CRA.
Private Education Loans—The Proposal
As discussed above, the Agencies
proposed to consider low-cost private
education loans made to low-income
borrowers, as well as loans provided to
low-income borrowers by a financial
institution under a Federal education
program. The Agencies requested
comment on whether private education
loans not made, insured, or guaranteed
under a Federal, state, or local
education program should be
considered for CRA purposes.
Comments and Final Rule
Although one commenter stated that
private education loans should not be
considered because a private loan to a
student may not guarantee that the
funds are used for education, many
commenters strongly believed that
private loans should be considered. In
fact, several commenters noted that if
then pending legislation in Congress
were passed, private lenders would no
longer be involved in Department of
Education loan programs.19
These commenters noted that many
students and families are unable to
cover the full cost of an education
relying only on government programs
and may need to pursue other types of
funding to complete their education.
Consequently, these commenters
encouraged the Agencies to allow CRA
consideration for non-governmental
low-cost private education loans. The
Agencies note that the HEOA’s purpose
was, in significant part, to provide an
incentive to financial institutions to
provide low-cost private education
loans to low-income borrowers not
currently served by education loan
programs
e their education.
Consequently, these commenters
encouraged the Agencies to allow CRA
consideration for non-governmental
low-cost private education loans. The
Agencies note that the HEOA’s purpose
was, in significant part, to provide an
incentive to financial institutions to
provide low-cost private education
loans to low-income borrowers not
currently served by education loan
programs.
The Agencies also considered
whether CRA consideration is necessary
for loans made by financial institutions
under the Federal education programs.
Federal program education loans
generally subjected an institution to
little or no risk and, therefore, already
provided an incentive to lenders.
However, because as of July 1, 2010,
financial institutions may no longer
originate education loans under the
Federal program,20 the final rule does
not provide for CRA consideration of
such loans under § 1031 of HEOA.
However, if an institution has made
education loans under the Federal
program, it would be able to receive
consideration for those loans under
existing standards applicable to
consumer loans.
State or Local Government-Sponsored
Education Loans—The Proposal
The Agencies proposed to treat
education loans offered to low-income
borrowers under state or local
government education programs the
same as all other private education
loans, consistent with the definition of
‘‘private education loans’’ in section
140(a)(7) of the Truth in Lending Act,
which includes education loans made
by financial institutions under local and
state education loan programs. The
Agencies asked whether all education
loans offered to low-income borrowers
under state or local education programs,
regardless of whether the fees and rates
are greater than those under comparable
Department of Education programs,
should be eligible for CRA
consideration.
Comments and Final Rule
Only three commenters addressed this
question
local and
state education loan programs. The
Agencies asked whether all education
loans offered to low-income borrowers
under state or local education programs,
regardless of whether the fees and rates
are greater than those under comparable
Department of Education programs,
should be eligible for CRA
consideration.
Comments and Final Rule
Only three commenters addressed this
question. One commenter advised that
the Agencies should use consistent
measures among all private education
loan programs, without favoring state
and local programs. A second
commenter believed that rates and fees
on loans made by an institution under
state or local education programs would
not have to be exactly the same, but
should be reasonably comparable to
rates and fees on loans made under the
Department of Education programs. The
third commenter believed that all
education loans offered to low-income
borrowers and families under state or
local programs, regardless of whether
the rates and fees are comparable to
those under Department of Education
programs, should be eligible for CRA
consideration.
After a review of the comments, the
Agencies have adopted the language in
the provision regarding state or local
education programs as proposed. The
Agencies are not aware of any state or
local education loan programs that are
targeted or available to low-income
students in which costs are limited in a
manner similar to the Federal direct
loan program, and for which an
alternative definition of ‘‘low-cost’’
might be appropriate.
Types of Loans—The Proposal
The proposed definition of a private
education loan was limited to closed-
end loans not secured by real property
or a dwelling originated by a financial
institution.
Comments and Final Rule
Community group commenters
supported limiting coverage in this
manner noting a concern about using a
home as collateral for an education loan
ost’’
might be appropriate.
Types of Loans—The Proposal
The proposed definition of a private
education loan was limited to closed-
end loans not secured by real property
or a dwelling originated by a financial
institution.
Comments and Final Rule
Community group commenters
supported limiting coverage in this
manner noting a concern about using a
home as collateral for an education loan.
One financial institution commenter
also supported the proposed limitation,
noting that there may be operational
difficulties determining whether a
dwelling-secured loan was used for
educational expenses. By contrast, other
financial institution and trade group
commenters encouraged the Agencies to
broaden the scope of the private
education loan definition to include
open-end or dwelling-secured credit,
noting that consumers use these types of
credit to fund educational expenses.
These commenters requested that the
Agencies provide flexibility to financial
institutions by including such types of
credit.
The definition of education loan in
the final rule incorporates the TILA
definition of that term, which excludes
open-end credit and credit secured by
real property or a dwelling. As
discussed more fully below, the HEOA
amended both the CRA to provide an
incentive for financial institutions to
make low-cost education loans and
TILA to provide for new disclosures and
additional consumer protections for
private education loans. The Agencies
believe that in order for financial
institutions to receive consideration
under the CRA for an education loan, it
is appropriate that such loans also be
covered by the new disclosures and
other substantive restrictions added to
TILA by the HEOA. Therefore the
Agencies are adopting the definition of
private education loan as used in
section 140(a)(7) of TILA.
Some community group commenters
suggested that the Agencies place
further conditions on the types of loans
that could be eligible for CRA
consideration
riate that such loans also be
covered by the new disclosures and
other substantive restrictions added to
TILA by the HEOA. Therefore the
Agencies are adopting the definition of
private education loan as used in
section 140(a)(7) of TILA.
Some community group commenters
suggested that the Agencies place
further conditions on the types of loans
that could be eligible for CRA
consideration. For example,
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21 Section 128(e) of the Truth in Lending Act, as
added by section 1021 of the HEOA.
22 Section 140(e) of the Truth in Lending Act, as
added by section 1011 of the HEOA.
commenters suggested that the Agencies
provide consideration only for loans
that meet a standard of affordability and
provide certain consumer protections
such as income-based repayment plans,
fixed interest rates, and no prepayment
penalties.
The final rule does not impose
additional restrictions on education
loans for purposes of CRA consideration
because the Agencies have limited the
types of loans eligible for CRA
consideration to those covered under
the new TILA protections in the HEOA.
For example, the HEOA requires that
consumers receive disclosures regarding
private education loans that explain the
terms and costs of those loans on or
with an application, after the consumer
is approved for the loan, and before
funds are disbursed. The disclosures
also provide consumers with
information about federal student loan
alternatives where applicable.
Consumers are provided 30 days after a
private education loan is approved in
which to accept the offer and the lender
is prohibited, with few exceptions, from
making changes to the rate or terms of
the loan during that time
proved for the loan, and before
funds are disbursed. The disclosures
also provide consumers with
information about federal student loan
alternatives where applicable.
Consumers are provided 30 days after a
private education loan is approved in
which to accept the offer and the lender
is prohibited, with few exceptions, from
making changes to the rate or terms of
the loan during that time. Consumers
are also provided with three days in
which to cancel a loan after receiving
the final TILA disclosure.21 In addition,
the HEOA places restrictions on private
education loan terms and on private
educational lenders. For example, the
HEOA specifically prohibits
prepayment penalties for private
education loans. The HEOA also
amended TILA to prohibit practices
such as revenue sharing and co-
branding between private educational
lenders and educational institutions.22
The Agencies also requested comment
on whether to limit consideration to
loans originated by the financial
institution, as proposed, or to consider
loans purchased by the institution.
Community group commenters opposed
providing consideration for purchased
loans, stating a concern that purchasing
loans does not significantly expand the
capacity of financial institutions to offer
additional loans. By contrast, financial
institution commenters supported
allowing consideration for purchased
loans, consistent with other types of
CRA-eligible loans.
The final rule limits consideration to
low-cost education loans originated by
the financial institution, and not to
purchased loans. As discussed above,
the Agencies believe that the intent of
the HEOA amendment to the CRA was
to provide an incentive to financial
institutions to originate loans to low-
income borrowers currently not reached
by most private loan programs
A-eligible loans.
The final rule limits consideration to
low-cost education loans originated by
the financial institution, and not to
purchased loans. As discussed above,
the Agencies believe that the intent of
the HEOA amendment to the CRA was
to provide an incentive to financial
institutions to originate loans to low-
income borrowers currently not reached
by most private loan programs. The
Agencies believe that providing
consideration only for loans originated
by the financial institution provides an
incentive to financial institutions to
develop education loan programs that
are tailored to the specific need targeted
by the statutory amendment.
‘‘Low-Cost Education Loans’’
The Proposal
The Agencies proposed to define
‘‘low-cost education loans’’ as education
loans that are originated by financial
institutions through a program of the
U.S. Department of Education; or any
private education loans, including loans
under state or local education loan
programs, originated by financial
institutions with interest rates and fees
no greater than those of comparable
education loan programs offered by the
U.S. Department of Education.
The proposal would have looked to
guaranteed education loans provided by
financial institutions through the U.S.
Department of Education’s Federal
Family Education Loan Program (FFEL
loans) as being the comparable
education loan program.
Comments and Final Rule
The Agencies asked whether the
proposed definition of the term ‘‘low-
cost education loans’’ is appropriate
and, if not, how the Agencies should
define ‘‘low-cost education loans.’’
Commenters representing community
organizations generally agreed with the
proposed definition that private
education loans receiving CRA
consideration should have interest rates
and fees no greater than comparable
loans offered through the Department of
Education
e term ‘‘low-
cost education loans’’ is appropriate
and, if not, how the Agencies should
define ‘‘low-cost education loans.’’
Commenters representing community
organizations generally agreed with the
proposed definition that private
education loans receiving CRA
consideration should have interest rates
and fees no greater than comparable
loans offered through the Department of
Education. In fact, the same commenters
stated that, to maintain consistency with
the purpose of the HEOA to make
college affordable, the lowest rates and
fees should be used.
Although commenters representing
financial institutions and their trade
organizations generally agreed that
loans made by financial institutions
under Department of Education
programs should be considered low-
cost, they raised concerns about
requiring the rates and fees on private
education loans to be comparable to the
rates and fees applicable to Department
of Education loans. In particular, they
noted the substantial differences
between loans made by financial
institutions under Department of
Education programs and private
education loans in terms of risks, costs,
and pricing. For example, commenters
noted that FFEL education loans have a
97 percent guarantee against default and
that a lender’s yield is not tied to the
fixed interest rate paid by the borrower,
but rather is based on a separate formula
set in statute. By contrast, private
education loans generally have a
variable rate determined by an index,
such as Prime or one- or three-month
LIBOR, and a margin, which typically
varies depending on a borrower’s
creditworthiness. In addition, the lender
assumes all of the risk of default on a
private education loan.
Several of the commenters
representing financial institutions or
their trade groups suggested that the
Agencies should develop a formula,
based on an index and a margin, to
define low-cost, variable rate private
education loans
argin, which typically
varies depending on a borrower’s
creditworthiness. In addition, the lender
assumes all of the risk of default on a
private education loan.
Several of the commenters
representing financial institutions or
their trade groups suggested that the
Agencies should develop a formula,
based on an index and a margin, to
define low-cost, variable rate private
education loans. Commenters suggested
one-month or three-month LIBOR or
Prime as possible rates to use as an
index. Margin suggestions varied from
three to eight percent. Commenters also
suggested that upfront fees of up to four
percent would be appropriate.
The Agencies also asked how to
determine whether a private education
loan is comparable to a Department of
Education loan and whether the lowest
or highest rate and fees available under
the comparable Department of
Education program should be used to
determine whether a private education
loan is low cost. Although few
commenters addressed these questions,
the views of the commenters that did
respond were mixed. Commenters
suggested both that it is necessary to use
the lowest rates and fees, as well as that
the higher rate should serve as the
maximum permissible rate for private
loans. Industry commenters reasserted
that it is not appropriate to evaluate
whether a private education loan is
‘‘low-cost’’ based on rates and fees
applicable to federal education loans.
The Agencies have considered these
comments carefully. The Agencies
considered various options with regard
to a definition of a ‘‘low-cost’’ private
education loan that could address these
concerns. For example, the Agencies
considered whether a low-cost private
education loan should be defined with
a rate that is 100 to 300 basis points over
a Federal loan rate
federal education loans.
The Agencies have considered these
comments carefully. The Agencies
considered various options with regard
to a definition of a ‘‘low-cost’’ private
education loan that could address these
concerns. For example, the Agencies
considered whether a low-cost private
education loan should be defined with
a rate that is 100 to 300 basis points over
a Federal loan rate. However, we did not
receive comments that identified a
standard benchmark, margin, or number
of basis points to be used as an
alternative formula for ‘‘low cost.’’
After consideration of the comments
and recent changes in the law described
above, the Agencies have revised the
rule to refer solely to the Federal direct
loan program of the U.S. Department of
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23 See 20 U.S.C. 1087e.
24 See http://studentaid.ed.gov/
PORTALSWebApp/students/english/
studentloans.jsp; http://studentaid.ed.gov/
PORTALSWebApp/students/english/
parentloans.jsp.
25 20 U.S.C. 1087e(b)(6). See also U.S. Department
of Education, ‘‘FFEL and Direct Loan Interest Rates
Effective July 1, 2009,’’ available at http://
studentaid.ed.gov/PORTALSWebApp/students/
english/FFEL_DL_InterestRates.jsp.
26 This is consistent with guidance issued by the
Agencies in the Interagency Questions and Answers
Regarding Community Reinvestment, 75 FR 11642,
11671 (Mar. 11, 2010) (Q&A § __.42(c)(1)(iv)–4).
Education as the benchmark for ‘‘low
cost’’ education loans.
To determine whether education
loans have rates and terms that are no
greater than the rates and terms on loans
made under the Federal direct loan
program, education loans will be
compared with comparable direct loans
ons and Answers
Regarding Community Reinvestment, 75 FR 11642,
11671 (Mar. 11, 2010) (Q&A § __.42(c)(1)(iv)–4).
Education as the benchmark for ‘‘low
cost’’ education loans.
To determine whether education
loans have rates and terms that are no
greater than the rates and terms on loans
made under the Federal direct loan
program, education loans will be
compared with comparable direct loans.
For example, fixed-rate loans will be
compared to fixed-rate Federal loans,
variable-rate loans will be compared to
variable-rate Federal loans, loans to
students will be compared to Federal
loans to students, and loans to parents
will be compared to Federal loans to
parents. The Agencies note that most
education loans originated by financial
institutions have a variable rate.
The direct loan program formally
called the William D. Ford Federal
Direct Loan Program is the program
against which the rates and fees of
private education loans must be
compared.23 The rates and fees that
have been allowed under the FFEL
program, which the preamble of the
proposal explained was a ‘‘comparable
U.S. Department of Education program,’’
are statutorily specified and are very
similar to the rates and fees charged to
borrowers under the William D. Ford
Direct Loan Program, which are also
statutorily prescribed. The fixed rates
under the Federal direct loan program
that the agencies will use as benchmarks
are the rates for unsubsidized direct
Stafford loans for students and direct
PLUS loans for parents.24
Although variable-rate loans are no
longer available under the Department
of Education programs, the Department
of Education publishes rates annually
for those variable-rate education loans
that remain outstanding. The rate is
based on 91-day Treasury bills plus a
statutory percentage margin.25
Origination fees are allowed for
Federal direct loans. Financial
institutions may use the fee percentages
for Federal loans to students and
parents, as appropriate, as benchmarks
on programs, the Department
of Education publishes rates annually
for those variable-rate education loans
that remain outstanding. The rate is
based on 91-day Treasury bills plus a
statutory percentage margin.25
Origination fees are allowed for
Federal direct loans. Financial
institutions may use the fee percentages
for Federal loans to students and
parents, as appropriate, as benchmarks.
Although the Agencies are adopting a
definition of ‘‘low-cost education loan’’
that is generally similar to the proposal,
if the Agencies find that the rules as
adopted have not acted as an incentive
to financial institutions’ providing low-
cost education loans to low-income
borrowers, the Agencies may reconsider
these provisions.
‘‘Low-Income Borrower’’
The Proposal
Under the proposed regulation, the
term ‘‘low-income’’ had the same
meaning as that term is defined in the
existing CRA rule: An individual
income less than 50 percent of area
median income. In the preamble to the
proposed regulation, the Agencies
clarified that, if an institution considers
the income of more than one person in
connection with an education loan, the
gross annual incomes of all primary
obligors on the loan, including co-
borrowers and co-signers, would be
combined to determine whether the
borrowers are ‘‘low-income.’’ 26 The
Agencies further noted that various
education programs offered by the U.S.
Department of Education are targeted to
individuals who have financial needs
and the criteria for the programs vary.
The Agencies requested comment on
whether low-income should be defined
differently than the term is already
defined in the CRA regulation. The
Agencies also sought comment on how
they should treat the income of a
student’s family or other expected
family contributions to ensure that the
CRA consideration provided is
consistent with HEOA’s focus on low-
income borrowers
he programs vary.
The Agencies requested comment on
whether low-income should be defined
differently than the term is already
defined in the CRA regulation. The
Agencies also sought comment on how
they should treat the income of a
student’s family or other expected
family contributions to ensure that the
CRA consideration provided is
consistent with HEOA’s focus on low-
income borrowers.
Final Rule and Comments
Several commenters, including
community groups and several financial
institutions or trade associations
generally supported using the 50
percent benchmark as proposed. Several
financial institutions and trade
associations advocated that the final
rule be expanded to cover both low-
income and moderate-income borrowers
as defined by the existing CRA rule. A
state association of lenders commented
that the Agencies should simply base
the income assessment on loans
originated through the U.S. Department
of Education by defining low-cost
education loans as need-based federal
student loans. This commenter and
several financial institutions further
explained that institutions that make
U.S. Department of Education loans do
not have access to financial and income
information on students and their
families because the student borrowers
are qualified by the school; thus, it
would be hard to determine for CRA
purposes whether the borrowers are
low-income. Some of these commenters
recommended that low-income
borrowers be defined as any borrower
eligible for a loan through a program of
the U.S. Department of Education or, for
a borrower through a private loan
program, with qualifying income that is
less than 50 percent of area median
income. Another financial institution
recommended that government loans
that are needs-based, such as subsidized
Stafford loans, automatically qualify as
loans to low-income borrowers
s any borrower
eligible for a loan through a program of
the U.S. Department of Education or, for
a borrower through a private loan
program, with qualifying income that is
less than 50 percent of area median
income. Another financial institution
recommended that government loans
that are needs-based, such as subsidized
Stafford loans, automatically qualify as
loans to low-income borrowers. One
trade association suggested that, as an
alternative to the proposed definition of
low-income (less than 50 percent of the
area median income), the Agencies
could look only at the household
income of the primary obligor on the
loan and if the primary obligor is a
dependent in a low-income household,
the primary obligor would be
considered a low-income borrower no
matter what additional guarantors or co-
signors are obligated on the loan.
Similarly, the commenter noted, if the
student is a financially emancipated
adult, then his/her individual income
would determine his/her income status.
Alternatively, the commenter suggests
that if all those obligated on the credit
are taken into account, then the final
rule needs to clarify how the Agencies
will calculate whether the low-income
standard is met.
Several commenters addressed how to
treat the income of a student’s family or
other expected family contributions to
ensure that the CRA consideration is
consistent with HEOA’s focus on low-
income borrowers. As noted above, a
trade association suggested the final
regulation should look at the household
income of the primary obligor. That
commenter recommended that
household income be considered in lieu
of considering income of a co-signer, to
avoid any situation where obtaining a
co-signer, who might strengthen the
loan application and improve the safety
and soundness of the loan, might be
discouraged for CRA-related loans
ion suggested the final
regulation should look at the household
income of the primary obligor. That
commenter recommended that
household income be considered in lieu
of considering income of a co-signer, to
avoid any situation where obtaining a
co-signer, who might strengthen the
loan application and improve the safety
and soundness of the loan, might be
discouraged for CRA-related loans.
A nonprofit organization commented
that, in cases where a student is the
borrower but is claimed as a dependent,
the household income of the taxpayer
claiming the student should be used to
determine whether the loan qualifies for
CRA consideration. A trade association
also suggested that if a student has
applied for financial aid and has been
identified as eligible, that should qualify
the student as ‘‘low-income’’ for
purposes of the test. A financial
institution commented that, in addition
to consideration of income, the CRA
evaluation of education lending should
also consider how many individuals are
enrolled in or will be enrolled in an
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27 H. Rep. No. 110–500 at 366 (2007) (emphasis
added). The CRA also generally encourages
financial institutions to help meet the credit needs
of the local communities in which they are
chartered. 12 U.S.C. 2901(b).
institution of higher education and
whether such individuals had unmet
financial needs that could be addressed
by a private education loan. Another
financial institution commented that the
differences between the U.S
hasis
added). The CRA also generally encourages
financial institutions to help meet the credit needs
of the local communities in which they are
chartered. 12 U.S.C. 2901(b).
institution of higher education and
whether such individuals had unmet
financial needs that could be addressed
by a private education loan. Another
financial institution commented that the
differences between the U.S.
Department of Education loan
qualification standards, which are
generally based on need, and the private
education loan qualification standards,
which are generally based on credit
score and income, should preclude
treating Federal program loans and
private education loans the same for
purposes of the ‘‘low-income’’ analysis.
The Agencies considered these
commenters’ concerns about the
possibility that a student borrower may
be considered to be ‘‘low-income’’ under
the CRA standard, even though the
student’s family may be able to provide
additional financial support. The
Agencies considered, for example,
adopting a test to determine whether a
student borrower is an ‘‘independent’’
student and, if not, requiring the use of
family income to determine whether the
loan was to a ‘‘low-income’’ borrower.
The Agencies are adopting the
definition of ‘‘low-income’’ as
proposed—based on an individual
income that is less than 50 percent of
the area median income. As noted
above, some financial institutions may
not require family income information
in connection with education loans
(except when family members co-sign or
guaranty the loan). Requiring collection
of data on family income would likely
have imposed new burdens and
procedural requirements on both
borrowers and financial institutions
at is less than 50 percent of
the area median income. As noted
above, some financial institutions may
not require family income information
in connection with education loans
(except when family members co-sign or
guaranty the loan). Requiring collection
of data on family income would likely
have imposed new burdens and
procedural requirements on both
borrowers and financial institutions.
‘‘Other Education Loan Issues’’
Quantitative Consideration
As proposed by the Agencies,
institutions would receive favorable
qualitative consideration for originating
‘‘low-cost education loans to low-
income borrowers’’ as a factor in the
institutions’ overall CRA rating,
independent of the consideration for
consumer loans under the current
lending test. Such loans would be
considered responsive to the credit
needs of the institutions’ communities.
Under the CRA regulations, an
institution’s consumer lending must be
evaluated if consumer lending makes up
a substantial majority of an institution’s
business. Institutions that do not meet
this criterion may choose to have
education loans evaluated as consumer
loans under the lending test applicable
to the institution. If an institution opts
to have education loans evaluated, the
loans would be evaluated quantitatively,
based on the data the institution
provides. The Agencies requested
comment on whether the final
regulation should also allow an
institution to receive separate
quantitative consideration for the
number and amount of low-cost
education loans to low-income
borrowers as part of its CRA evaluation
under the performance test applicable to
that institution, without regard to other
consumer loans
ed on the data the institution
provides. The Agencies requested
comment on whether the final
regulation should also allow an
institution to receive separate
quantitative consideration for the
number and amount of low-cost
education loans to low-income
borrowers as part of its CRA evaluation
under the performance test applicable to
that institution, without regard to other
consumer loans.
Comments and Final Rule
One financial institution agreed that
institutions should receive favorable
qualitative consideration for originating
low-cost loans to low-income borrowers
and recommended that, consistent with
the treatment of other consumer loans,
education loans not be reviewed as part
of the quantitative CRA evaluation
unless such loans represent a
substantial majority of the financial
institution’s business or at the
institution’s option if it has collected
and maintained data. Other financial
institutions and a trade association
strongly supported providing
institutions the option to receive
favorable quantitative consideration as
consumer loans under the lending test
of the current CRA rules. These
commenters further stated that if the
low-cost education loans were to
become a separate subcategory of
consumer lending, financial institutions
would have to generate the necessary
data, to the extent they do not already
exist and that it would be difficult to
evaluate the data in the absence of data
from other institutions. They further
stated that if this were the approach
taken, it may be a disincentive to
participate. Finally, one financial
institution commented that the
legislation regarding the low-cost
education loans clearly anticipates that
the agencies would consider student
lending on its own merits, apart from
other consumer loan categories and
suggested that consideration could be
accomplished by revising the consumer
loan reporting categories to include a
separate category for student loans
Finally, one financial
institution commented that the
legislation regarding the low-cost
education loans clearly anticipates that
the agencies would consider student
lending on its own merits, apart from
other consumer loan categories and
suggested that consideration could be
accomplished by revising the consumer
loan reporting categories to include a
separate category for student loans.
After consideration of the comments,
the Agencies have adopted the
provision as proposed to make clear that
all types and sizes of institutions will be
eligible to receive qualitative
consideration for originating ‘‘low-cost
education loans to low-income
borrowers’’ as a factor in the institutions’
overall CRA rating, without regard to
the performance test under which an
institution is evaluated. As noted above,
institutions may obtain CRA
consideration of education loans as
consumer loans under existing
standards applicable to consumer loans.
Application to All Institutions
The Agencies also asked whether
institutions and other interested parties
understood that the new provision on
low-cost education loans to low-income
borrowers is applicable to all
institutions, without regard to
institution size, as a result of the
provisions’ placement in 12 CFR 25.21,
228.21, 345.21 and 563e.21. No
commenters responded directly to the
question. However, several commenters
suggested that the Agencies should treat
low-cost education loans to low-income
borrowers differently than initially
proposed.
Several commenters representing
small financial institutions suggested
that the provision should not apply to
small financial institutions because few
small institutions make education loans.
As discussed above, financial
institutions that do not make education
loans will not be required to start
making such loans.
Another commenter believed that
evaluation of education lending should
not apply to wholesale or limited
purpose institutions
tutions suggested
that the provision should not apply to
small financial institutions because few
small institutions make education loans.
As discussed above, financial
institutions that do not make education
loans will not be required to start
making such loans.
Another commenter believed that
evaluation of education lending should
not apply to wholesale or limited
purpose institutions. The Agencies
agree that wholesale institutions will
not engage directly in education lending
because, by definition, wholesale
institutions do not engage in retail
lending. Limited purpose institutions,
on the other hand, could engage in
education lending as their narrow
product line.
One commenter suggested that low-
cost education loans to low-income
borrowers should be considered as
community development loans. The
primary reason for this suggestion was
based on the more expansive
consideration of loans that are
considered under the community
development test—not only in an
institution’s assessment area(s), as
proposed, but also in the broader
statewide or regional area that includes
its assessment area(s). The Agencies
decline to adopt this change as
suggested. The Agencies note that the
legislative history of the Act indicates
that the Agencies are to consider ‘‘low-
cost education loans provided by a
financial institution to low-income
borrowers in assessing and taking into
account the record of a financial
institution in meeting the credit needs
of its local community.’’ 27 The proposed
rule restricted favorable consideration
for low-cost education loans to low-
income borrowers to the institution’s
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taking into
account the record of a financial
institution in meeting the credit needs
of its local community.’’ 27 The proposed
rule restricted favorable consideration
for low-cost education loans to low-
income borrowers to the institution’s
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61042
Federal Register / Vol. 75, No. 191 / Monday, October 4, 2010 / Rules and Regulations
28 See 12 CFR 25.22(b)(3), 228.22(b)(3),
345.22(b)(3), and 563e.22(b)(3).
29 See Interagency Questions and Answers
Regarding Community Reinvestment, 75 FR at
11656–57 (Q&A § __.22(b)(2) & (3)–4).
30 12 CFR 25.12(o)(1), 228.12(o)(1), 345.12(o)(1),
and 563e.12(o)(1).
31 12 U.S.C. 2903(b).
32 74 CFR at 31213.
33 Id.
34 74 FR 498, 507 (Jan. 6, 2009) (Q&A § __.12(g)–
4).
35 74 FR at 500.
36 74 FR at 507 (Q&A § l.12(g)–4); 75 FR at 11645
(same).
assessment area(s). After careful
consideration of the comments received,
the Agencies have decided to apply the
same rule that applies to the
consideration of loans made to low- and
moderate-income borrowers.28 Thus, the
final rule provides that the Agencies
will consider low-cost education loans
originated by a financial institution to
low-income borrowers ‘‘particularly in
its assessment area(s).’’ Similar to the
analysis for loans to low- and moderate-
income individuals generally, the
Agencies will consider first whether a
financial institution has adequately
addressed the low-cost education loan
needs of low-income borrowers in its
assessment area(s) and, if so, will also
consider such loans outside of its
assessment area(s).29 The Agencies
believe that the final rule may provide
greater flexibility and additional
incentives for financial institutions to
provide low-cost education loan
programs for low-income borrowers
itution has adequately
addressed the low-cost education loan
needs of low-income borrowers in its
assessment area(s) and, if so, will also
consider such loans outside of its
assessment area(s).29 The Agencies
believe that the final rule may provide
greater flexibility and additional
incentives for financial institutions to
provide low-cost education loan
programs for low-income borrowers.
Finally, one commenter emphasized
that the provision addressing
consideration of low-cost education
loans to low-income borrowers should
not affect CRA strategic plans that are
already in effect or future plans. The
Agencies do not intend this provision to
affect CRA strategic plans.
Other Comments on the Proposed
Education Loan Provision
Several commenters suggested that
unnecessarily detailed technical
requirements should be kept to a
minimum in the final rule. The
Agencies agree and have attempted to
do so.
One commenter suggested that
financial institutions should be able to
receive CRA consideration for loans to
students who reside in their assessment
area(s) and also for loans to students
who attend schools in the institutions’
assessment area(s). The Agencies
decline to adopt this suggestion. As
with other consumer lending, a
financial institution would look to the
‘‘loan location’’ to determine whether
the loan meets the geographical
requirements for loan consideration. ‘‘A
consumer loan is located in the
geography where the borrower resides
* * *. ’’30 Therefore, the lender should
rely on the address on the education
loan application or otherwise provided
by the borrower or school to determine
the loan location
ncial institution would look to the
‘‘loan location’’ to determine whether
the loan meets the geographical
requirements for loan consideration. ‘‘A
consumer loan is located in the
geography where the borrower resides
* * *. ’’30 Therefore, the lender should
rely on the address on the education
loan application or otherwise provided
by the borrower or school to determine
the loan location.
Activities Undertaken in Cooperation
with Minority- and Women-Owned
Financial Institutions and Low-Income
Credit Unions
The Proposal
Section 804(b) of the Community
Reinvestment Act (CRA) provides that
the Agencies may consider as a factor
capital investment, loan participation,
and other ventures undertaken by the
institution in cooperation with
minority- and women-owned financial
institutions and low-income credit
unions in assessing the CRA record of
nonminority- and nonwomen-owned
financial institutions. These activities,
however, must help meet the credit
needs of the local communities in
which such institutions and credit
unions are chartered.31 The Agencies
proposed to incorporate this statutory
language into their regulations and to
clarify that such activities need not also
benefit the assessment area or the
broader statewide or regional area that
includes the assessment area of the
nonminority- and nonwomen-owned
institution. The preamble of the
proposed rule indicated that activities
undertaken to assist minority- and
women-owned financial institutions
and low-income credit unions would be
considered as part of the overall
assessment of the nonminority- and
nonwomen-owned institution’s CRA
performance.32
The preamble further explained that
the proposed revision to the rule would
reinforce to examiners, financial
institutions, and the public that the
Agencies may consider and take into
account nonminority- and nonwomen-
owned financial institutions’ activities
in connection with minority- and
women-owned financial institutions
and low-income credit unions.33 The
on’s CRA
performance.32
The preamble further explained that
the proposed revision to the rule would
reinforce to examiners, financial
institutions, and the public that the
Agencies may consider and take into
account nonminority- and nonwomen-
owned financial institutions’ activities
in connection with minority- and
women-owned financial institutions
and low-income credit unions.33 The
Agencies noted that their 2009 revisions
to the ‘‘Interagency Questions and
Answers Regarding Community
Reinvestment’’ clarified this point 34 and
indicated the proposal was intended to
codify this clarification in the rule.
The Agencies proposed to add the
new provision addressing favorable
CRA consideration for activities in
cooperation with minority- and women-
owned financial institutions and low-
income credit unions to 12 CFR 25.21,
228.21, 345.21, and 563e.21. These
sections apply to all types and sizes of
institutions, without regard to the
performance test under which an
institution is evaluated. Accordingly,
the preamble indicated that the
proposed provision would also be
applicable to all financial institutions.
The Agencies also proposed a
conforming amendment to Appendix A
of the regulations to include
consideration of a financial institution’s
activities in cooperation with minority-
and women-owned financial
institutions as a factor when assigning a
rating to the institution.
Comments and Final Rule
Several consumer and community
groups commented on the geographic
scope of the proposal. They urged the
Agencies to narrow the geographic
scope by providing favorable CRA
consideration to investments outside the
majority-owned institution’s assessment
area only if the majority-owned
institution met the needs of its
assessment area
ng a
rating to the institution.
Comments and Final Rule
Several consumer and community
groups commented on the geographic
scope of the proposal. They urged the
Agencies to narrow the geographic
scope by providing favorable CRA
consideration to investments outside the
majority-owned institution’s assessment
area only if the majority-owned
institution met the needs of its
assessment area. One community
organization urged the Agencies to
narrow the geographic scope even
further by providing favorable CRA
consideration only to loan
participations and other ventures
undertaken in cooperation with
minority- and women-owned financial
institutions and low-income credit
unions outside the majority-owned
institution’s assessment area only if the
majority-owned institution met the
needs of its assessment area.
As the Agencies explained in the
preamble to their 2009 Interagency
Questions and Answers Regarding
Community Reinvestment, the Agencies
do not currently interpret section 804(b)
of the CRA to impose such limitations.35
However, as indicated in the question
and answer guidance, the impact of
such activities on majority-owned
institution’s CRA rating is determined
in conjunction with its overall
performance in its assessment area(s).36
The Agencies note that activities outside
of the majority-owned institution’s
assessment area will not compensate for
poor lending performance within its
assessment area and intend to add this
clarification to the Interagency
Questions and Answers Regarding
Community Reinvestment.
One financial institution trade
association urged the Agencies to treat
all capital investments, loan
participations, and other ventures
undertaken by a majority-owned
institution in cooperation with
minority- and women-owned financial
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ment.
One financial institution trade
association urged the Agencies to treat
all capital investments, loan
participations, and other ventures
undertaken by a majority-owned
institution in cooperation with
minority- and women-owned financial
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37 75 FR at 11652 (Q&A § l.12(t)–4).
38 75 FR at 11648 (Q&A § l.12(h)–1).
39 12 CFR 25.21(f); 228.21(f); 345.21(f); and
563e.21(f).
institutions and low-income credit
unions as community development
activities. The statute does not specify
how the Agencies must evaluate these
activities, some of which may not
qualify as community development
activities under the existing rules.
Therefore, the Agencies have not
adopted this suggestion.
However, the Agencies note that
nothing in today’s final rule affects the
ability of any institution to receive
community development consideration
for activities undertaken in cooperation
with minority- and women-owned
financial institutions, low-income credit
unions, and other financial
intermediaries in those limited
circumstances where such activities
meet all of the rule’s requirements for
community development consideration.
These requirements include having a
primary purpose of community
development (as defined in 12 CFR
25.12(g), 228.12(g), 345.12(g), or
563e.12(g), as applicable) and meeting
the applicable geographic restrictions
for community development activities
ermediaries in those limited
circumstances where such activities
meet all of the rule’s requirements for
community development consideration.
These requirements include having a
primary purpose of community
development (as defined in 12 CFR
25.12(g), 228.12(g), 345.12(g), or
563e.12(g), as applicable) and meeting
the applicable geographic restrictions
for community development activities.
The Agencies’ Interagency Questions
and Answers Regarding Community
Reinvestment provide as an example of
‘‘qualified investments,’’ investments,
grants, deposits, or shares in or to
financial intermediaries, including
minority- and women-owned financial
institutions, that primarily lend or
facilitate lending in low- and moderate-
income areas or to low- and moderate-
income individuals in order to promote
community development.37 Similarly,
the Interagency Questions and Answers
provide as an example of ‘‘community
development loans,’’ loans to financial
intermediaries, including minority- and
women-owned financial institutions,
which primarily lend or facilitate
lending to promote community
development.38 The Agencies are not
changing the availability of community
development consideration for these
activities. Today’s final rule allows
capital investments, loan participations,
and other ventures undertaken by a
majority-owned institution in
cooperation with minority- and women-
owned financial institutions and low-
income credit unions to be considered
as a factor when assigning a rating; it
applies to a broader range of activities
than may qualify for community
development consideration.
Several consumer and community
organizations urged the Agencies to
conduct an analysis of the impact of the
2009 guidance on minority- and
women-owned institutions (Q&A
§ l.12(g)–4) before codifying the
question and answer into the CRA rule
onsidered
as a factor when assigning a rating; it
applies to a broader range of activities
than may qualify for community
development consideration.
Several consumer and community
organizations urged the Agencies to
conduct an analysis of the impact of the
2009 guidance on minority- and
women-owned institutions (Q&A
§ l.12(g)–4) before codifying the
question and answer into the CRA rule.
They urged the Agencies to evaluate the
types of investments, loans, and services
that have been leveraged to see whether
they have disproportionately benefited
predominantly white middle- and
upper-income communities. They also
urged the Agencies to ascertain whether
bank financing of low-income credit
unions and minority- and women-
owned financial institutions has also
benefited minorities and communities
of color. The Agencies note that they are
generally incorporating into the CRA
regulations the statutory provision
adopted by Congress.
The Agencies are adopting 12 CFR
l.21(f) and revising Appendix A as
proposed.
Effective Date
This joint final rule becomes effective
30 days after the date of publication in
the Federal Register.
Interagency Guidance
The Agencies intend to issue for
comment interagency CRA guidance
addressing primarily the new provision
addressing low-cost education loans
made to low-income borrowers in the
near future. The guidance, in the form
of new interagency questions and
answers, will include relevant
explanatory discussion in the
supplementary information
accompanying this final rule. As noted
above, the Agencies will also revise
existing guidance to reflect the
regulatory provisions 39 on activities in
cooperation with minority- and women-
owned financial institutions and low-
income credit unions and to indicate
that such activities outside of the
majority-owned institution’s assessment
area(s) will not compensate for poor
lending performance within its
assessment area(s)
d
above, the Agencies will also revise
existing guidance to reflect the
regulatory provisions 39 on activities in
cooperation with minority- and women-
owned financial institutions and low-
income credit unions and to indicate
that such activities outside of the
majority-owned institution’s assessment
area(s) will not compensate for poor
lending performance within its
assessment area(s).
Regulatory Analysis
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. Ch.
3506; 5 CFR 1320 Appendix A.1) (PRA),
each agency reviewed its final rule and
determined that there are no new
collections of information contained
therein. However, the amendments may
have a negligible affect on burden
estimates for existing information
collections, including recordkeeping
requirements for consumer loans. The
Agencies did not receive any comments
on the PRA section of the proposed rule.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
requires an agency that is issuing a final
rule to provide a final regulatory
flexibility analysis or to certify that the
rule will not have a significant
economic impact on a substantial
number of small entities.
Under regulations issued by the Small
Business Administration, a small entity
includes a bank holding company,
commercial bank, or savings association
with assets of $175 million or less
(collectively, small banking
organizations). Under this joint final
rule, the Agencies would consider, as a
factor, when assessing an institution’s
CRA record that the institution made
low-cost education loans to low-income
borrowers or engaged in activities in
cooperation with minority- or women-
owned financial institutions or low-
income credit unions. The Agencies
believe that this joint final rule will not
have a significant economic impact on
a substantial number of small entities
because the final rule does not require
a financial institution to engage in these
activities
ducation loans to low-income
borrowers or engaged in activities in
cooperation with minority- or women-
owned financial institutions or low-
income credit unions. The Agencies
believe that this joint final rule will not
have a significant economic impact on
a substantial number of small entities
because the final rule does not require
a financial institution to engage in these
activities. In addition, the Agencies did
not receive any comments that the
proposal would have a significant
impact on small banking organizations.
Accordingly, each of the Agencies
certifies that this rule will not have a
significant economic impact on a
substantial number of small entities.
OCC and OTS Executive Order 12866
Determinations
Pursuant to Executive Order 12866,
OMB’s Office of Information and
Regulatory Affairs (OIRA) has
designated the final rule to be
significant.
OCC and OTS Unfunded Mandates
Reform Act of 1995 Determination
Section 202 of the Unfunded
Mandates Reform Act of 1995
(Unfunded Mandates Act) (2 U.S.C.
1532) requires that covered agencies
prepare a budgetary impact statement
before promulgating a rule that includes
any Federal mandate that may result in
the expenditure by State, local, and
tribal governments, in the aggregate, or
by the private sector, of $100 million or
more in any one year. If a budgetary
impact statement is required, section
205 of the Unfunded Mandates Act also
requires covered agencies to identify
and consider a reasonable number of
regulatory alternatives before
promulgating a rule. The OCC and the
OTS have determined that this joint
final rule will not result in expenditures
by State, local, and tribal governments,
or by the private sector, of $100 million
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le number of
regulatory alternatives before
promulgating a rule. The OCC and the
OTS have determined that this joint
final rule will not result in expenditures
by State, local, and tribal governments,
or by the private sector, of $100 million
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61044
Federal Register / Vol. 75, No. 191 / Monday, October 4, 2010 / Rules and Regulations
or more in any one year. Accordingly,
neither agency has prepared a budgetary
impact statement or specifically
addressed the regulatory alternatives
considered.
The Treasury and General Government
Appropriations Act, 1999—Assessment
of Impact of Federal Regulation on
Families
The FDIC has determined that this
joint final rule will not affect family
well-being within the meaning of
section 654 of the Treasury and General
Government Appropriations Act,
enacted as part of the Omnibus
Consolidated and Emergency
Supplemental Appropriations Act of
1999, Public Law 105–277 (5 U.S.C. 601
note).
OCC and OTS Executive Order 13132
Determination
The OCC and the OTS have each
determined that its portion of this joint
final rule does not have any Federalism
implications, as required by Executive
Order 13132.
Administrative Procedure Act; Riegle
Community Development and
Regulatory Improvement Act of 1994
This joint final rule becomes effective
30 days after the date of publication in
the Federal Register.
Section 302 of the Riegle Community
Development and Regulatory
Improvement Act of 1994 (CDRIA),
Public Law 103–325, authorizes a
banking agency to issue a rule that
contains additional reporting,
disclosure, or other requirements to be
effective before the first day of the
calendar quarter that begins on or after
the date on which the regulations are
published in final form if the agency
finds good cause for an earlier effective
date. 12 U.S.C. 4802(b)(1)
ement Act of 1994 (CDRIA),
Public Law 103–325, authorizes a
banking agency to issue a rule that
contains additional reporting,
disclosure, or other requirements to be
effective before the first day of the
calendar quarter that begins on or after
the date on which the regulations are
published in final form if the agency
finds good cause for an earlier effective
date. 12 U.S.C. 4802(b)(1). Section 302
of CDRIA does not apply because this
final rule imposes no additional
requirements. Rather, it reduces burden
by expanding the ways institutions may
receive CRA consideration.
List of Subjects
12 CFR Part 25
Community development, Credit,
Investments, National banks, Reporting
and recordkeeping requirements.
12 CFR Part 228
Banks, banking, Community
development, Credit, Investments,
Reporting and recordkeeping
requirements.
12 CFR Part 345
Banks, banking, Community
development, Credit, Investments,
Reporting and recordkeeping
requirements.
12 CFR Part 563e
Community development, Credit,
Investments, Reporting and
recordkeeping requirements, Savings
associations.
Department of the Treasury
Office of the Comptroller of the
Currency
12 CFR Chapter I
Authority and Issuance
■For the reasons discussed in the joint
preamble, the Office of the Comptroller
of the Currency amends part 25 of
chapter I of title 12 of the Code of
Federal Regulations as follows:
PART 25—COMMUNITY
REINVESTMENT ACT AND
INTERSTATE DEPOSIT PRODUCTION
REGULATIONS
■1. The authority citation for part 25 is
revised to read as follows:
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36,
93a, 161, 215, 215a, 481, 1814, 1816, 1828(c),
1835a, 2901 through 2908, and 3101 through
3111.
■2. In § 25.21, add new paragraphs (e)
and (f) to read as follows:
§ 25.21
Performance tests, standards, and
ratings, in general.
*
*
*
*
*
E DEPOSIT PRODUCTION
REGULATIONS
■1. The authority citation for part 25 is
revised to read as follows:
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36,
93a, 161, 215, 215a, 481, 1814, 1816, 1828(c),
1835a, 2901 through 2908, and 3101 through
3111.
■2. In § 25.21, add new paragraphs (e)
and (f) to read as follows:
§ 25.21
Performance tests, standards, and
ratings, in general.
*
*
*
*
*
(e) Low-cost education loans provided
to low-income borrowers. In assessing
and taking into account the record of a
bank under this part, the OCC considers,
as a factor, low-cost education loans
originated by the bank to borrowers,
particularly in its assessment area(s),
who have an individual income that is
less than 50 percent of the area median
income. For purposes of this paragraph,
‘‘low-cost education loans’’ means any
education loan, as defined in section
140(a)(7) of the Truth in Lending Act
(15 U.S.C. 1650(a)(7)) (including a loan
under a state or local education loan
program), originated by the bank for a
student at an ‘‘institution of higher
education,’’ as that term is generally
defined in sections 101 and 102 of the
Higher Education Act of 1965 (20 U.S.C.
1001 and 1002) and the implementing
regulations published by the U.S.
Department of Education, with interest
rates and fees no greater than those of
comparable education loans offered
directly by the U.S. Department of
Education. Such rates and fees are
specified in section 455 of the Higher
Education Act of 1965 (20 U.S.C.
1087e).
and 102 of the
Higher Education Act of 1965 (20 U.S.C.
1001 and 1002) and the implementing
regulations published by the U.S.
Department of Education, with interest
rates and fees no greater than those of
comparable education loans offered
directly by the U.S. Department of
Education. Such rates and fees are
specified in section 455 of the Higher
Education Act of 1965 (20 U.S.C.
1087e).
(f) Activities in cooperation with
minority- or women-owned financial
institutions and low-income credit
unions. In assessing and taking into
account the record of a nonminority-
owned and nonwomen-owned bank
under this part, the OCC considers as a
factor capital investment, loan
participation, and other ventures
undertaken by the bank in cooperation
with minority- and women-owned
financial institutions and low-income
credit unions. Such activities must help
meet the credit needs of local
communities in which the minority-
and women-owned financial
institutions and low-income credit
unions are chartered. To be considered,
such activities need not also benefit the
bank’s assessment area(s) or the broader
statewide or regional area that includes
the bank’s assessment area(s).
■3. In Appendix A to Part 25,
paragraph (a)(1) is revised to read as
follows:
Appendix A to Part 25—Ratings
(a) * * *
(1) In assigning a rating, the OCC evaluates
a bank’s performance under the applicable
performance criteria in this part, in
accordance with §§ 25.21 and 25.28. This
includes consideration of low-cost education
loans provided to low-income borrowers and
activities in cooperation with minority- or
women-owned financial institutions and
low-income credit unions, as well as
adjustments on the basis of evidence of
discriminatory or other illegal credit
practices
the applicable
performance criteria in this part, in
accordance with §§ 25.21 and 25.28. This
includes consideration of low-cost education
loans provided to low-income borrowers and
activities in cooperation with minority- or
women-owned financial institutions and
low-income credit unions, as well as
adjustments on the basis of evidence of
discriminatory or other illegal credit
practices.
*
*
*
*
*
Federal Reserve System
12 CFR Chapter II
Authority and Issuance
■For the reasons set forth in the joint
preamble, the Board of Governors of the
Federal Reserve System amends part
228 of chapter II of title 12 of the Code
of Federal Regulations as follows:
PART 228—COMMUNITY
REINVESTMENT (REGULATION BB)
■1. The authority citation for part 228
is revised as proposed to read as
follows:
Authority: 12 U.S.C. 321, 325, 1828(c),
1842, 1843, 1844, and 2901 through 2908.
■2. In § 228.21, add new paragraphs (e)
and (f) to read as follows:
§ 228.21
Performance tests, standards,
and ratings, in general.
*
*
*
*
*
(e) Low-cost education loans provided
to low-income borrowers. In assessing
and taking into account the record of a
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Federal Register / Vol. 75, No. 191 / Monday, October 4, 2010 / Rules and Regulations
bank under this part, the Board
considers, as a factor, low-cost
education loans originated by the bank
to borrowers, particularly in its
assessment area(s), who have an
individual income that is less than 50
percent of the area median income. For
purposes of this paragraph, ‘‘low-cost
education loans’’ means any education
loan, as defined in section 140(a)(7) of
the Truth in Lending Act (15 U.S.C
this part, the Board
considers, as a factor, low-cost
education loans originated by the bank
to borrowers, particularly in its
assessment area(s), who have an
individual income that is less than 50
percent of the area median income. For
purposes of this paragraph, ‘‘low-cost
education loans’’ means any education
loan, as defined in section 140(a)(7) of
the Truth in Lending Act (15 U.S.C.
1650(a)(7)) (including a loan under a
state or local education loan program),
originated by the bank for a student at
an ‘‘institution of higher education,’’ as
that term is generally defined in
sections 101 and 102 of the Higher
Education Act of 1965 (20 U.S.C. 1001
and 1002) and the implementing
regulations published by the U.S.
Department of Education, with interest
rates and fees no greater than those of
comparable education loans offered
directly by the U.S. Department of
Education. Such rates and fees are
specified in section 455 of the Higher
Education Act of 1965 (20 U.S.C.
1087e).
(f) Activities in cooperation with
minority- or women-owned financial
institutions and low-income credit
unions. In assessing and taking into
account the record of a nonminority-
owned and nonwomen-owned bank
under this part, the Board considers as
a factor capital investment, loan
participation, and other ventures
undertaken by the bank in cooperation
with minority- and women-owned
financial institutions and low-income
credit unions. Such activities must help
meet the credit needs of local
communities in which the minority-
and women-owned financial
institutions and low-income credit
unions are chartered. To be considered,
such activities need not also benefit the
bank’s assessment area(s) or the broader
statewide or regional area that includes
the bank’s assessment area(s).
■3. In Appendix A to Part 228,
paragraph (a)(1) is revised to read as
follows:
Appendix A to Part 228—Ratings
in which the minority-
and women-owned financial
institutions and low-income credit
unions are chartered. To be considered,
such activities need not also benefit the
bank’s assessment area(s) or the broader
statewide or regional area that includes
the bank’s assessment area(s).
■3. In Appendix A to Part 228,
paragraph (a)(1) is revised to read as
follows:
Appendix A to Part 228—Ratings
(a) * * *
(1) In assigning a rating, the Board
evaluates a bank’s performance under the
applicable performance criteria in this part,
in accordance with §§ 228.21 and 228.28.
This includes consideration of low-cost
education loans provided to low-income
borrowers and activities in cooperation with
minority- or women-owned financial
institutions and low-income credit unions, as
well as adjustments on the basis of evidence
of discriminatory or other illegal credit
practices.
*
*
*
*
*
Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
■For the reasons set forth in the joint
preamble, the Board of Directors of the
Federal Deposit Insurance Corporation
amends part 345 of chapter III of title 12
of the Code of Federal Regulations as
follows:
PART 345—COMMUNITY
REINVESTMENT
■1. The authority citation for part 345
is revised to read as follows:
Authority: 12 U.S.C. 1814–1817, 1819–
1820, 1828, 1831u and 2901–2908, 3103–
3104, and 3108(a).
■2. In § 345.21, add new paragraphs (e)
and (f) to read as follows:
§ 345.21
Performance tests, standards,
and ratings, in general.
*
*
*
*
*
e Code of Federal Regulations as
follows:
PART 345—COMMUNITY
REINVESTMENT
■1. The authority citation for part 345
is revised to read as follows:
Authority: 12 U.S.C. 1814–1817, 1819–
1820, 1828, 1831u and 2901–2908, 3103–
3104, and 3108(a).
■2. In § 345.21, add new paragraphs (e)
and (f) to read as follows:
§ 345.21
Performance tests, standards,
and ratings, in general.
*
*
*
*
*
(e) Low-cost education loans provided
to low-income borrowers. In assessing
and taking into account the record of a
bank under this part, the FDIC
considers, as a factor, low-cost
education loans originated by the bank
to borrowers, particularly in its
assessment area(s), who have an
individual income that is less than 50
percent of the area median income. For
purposes of this paragraph, ‘‘low-cost
education loans’’ means any education
loan, as defined in section 140(a)(7) of
the Truth in Lending Act (15 U.S.C.
1650(a)(7)) (including a loan under a
state or local education loan program),
originated by the bank for a student at
an ‘‘institution of higher education,’’ as
that term is generally defined in
sections 101 and 102 of the Higher
Education Act of 1965 (20 U.S.C. 1001
and 1002) and the implementing
regulations published by the U.S.
Department of Education, with interest
rates and fees no greater than those of
comparable education loans offered
directly by the U.S. Department of
Education. Such rates and fees are
specified in section 455 of the Higher
Education Act of 1965 (20 U.S.C.
1087e).
and 102 of the Higher
Education Act of 1965 (20 U.S.C. 1001
and 1002) and the implementing
regulations published by the U.S.
Department of Education, with interest
rates and fees no greater than those of
comparable education loans offered
directly by the U.S. Department of
Education. Such rates and fees are
specified in section 455 of the Higher
Education Act of 1965 (20 U.S.C.
1087e).
(f) Activities in cooperation with
minority- or women-owned financial
institutions and low-income credit
unions. In assessing and taking into
account the record of a nonminority-
owned and nonwomen-owned bank
under this part, the FDIC considers as a
factor capital investment, loan
participation, and other ventures
undertaken by the bank in cooperation
with minority- and women-owned
financial institutions and low-income
credit unions. Such activities must help
meet the credit needs of local
communities in which the minority-
and women-owned financial
institutions and low-income credit
unions are chartered. To be considered,
such activities need not also benefit the
bank’s assessment area(s) or the broader
statewide or regional area that includes
the bank’s assessment area(s).
■3. In Appendix A to Part 345,
paragraph (a)(1) is revised to read as
follows:
Appendix A to Part 345—Ratings
(a) * * *
(1) In assigning a rating, the FDIC evaluates
a bank’s performance under the applicable
performance criteria in this part, in
accordance with §§ 345.21 and 345.28. This
includes consideration of low-cost education
loans provided to low-income borrowers and
activities in cooperation with minority- or
women-owned financial institutions and
low-income credit unions, as well as
adjustments on the basis of evidence of
discriminatory or other illegal credit
practices
e applicable
performance criteria in this part, in
accordance with §§ 345.21 and 345.28. This
includes consideration of low-cost education
loans provided to low-income borrowers and
activities in cooperation with minority- or
women-owned financial institutions and
low-income credit unions, as well as
adjustments on the basis of evidence of
discriminatory or other illegal credit
practices.
*
*
*
*
*
Department of the Treasury
Office of Thrift Supervision
12 CFR Chapter V
■For the reasons set forth in the joint
preamble, the Office of Thrift
Supervision amends part 563e of
chapter V of title 12 of the Code of
Federal Regulations as follows:
PART 563e—COMMUNITY
REINVESTMENT
■1. The authority citation for part 563e
is revised to read as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 1814, 1816, 1828(c), and 2901 through
2908.
■2. In § 563e.21, add new paragraphs
(e) and (f) to read as follows:
§ 563e.21
Performance tests, standards,
and ratings, in general.
*
*
*
*
*
(e) Low-cost education loans provided
to low-income borrowers. In assessing
and taking into account the record of a
savings association under this part, the
OTS considers, as a factor, low-cost
education loans originated by the
savings association to borrowers,
particularly in its assessment area(s),
who have an individual income that is
less than 50 percent of the area median
income. For purposes of this paragraph,
‘‘low-cost education loans’’ means any
education loan, as defined in section
140(a)(7) of the Truth in Lending Act
(15 U.S.C. 1650(a)(7)) (including a loan
under a state or local education loan
program), originated by the savings
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s paragraph,
‘‘low-cost education loans’’ means any
education loan, as defined in section
140(a)(7) of the Truth in Lending Act
(15 U.S.C. 1650(a)(7)) (including a loan
under a state or local education loan
program), originated by the savings
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61046
Federal Register / Vol. 75, No. 191 / Monday, October 4, 2010 / Rules and Regulations
association for a student at an
‘‘institution of higher education,’’ as that
term is generally defined in sections 101
and 102 of the Higher Education Act of
1965 (20 U.S.C. 1001 and 1002) and the
implementing regulations published by
the U.S. Department of Education, with
interest rates and fees no greater than
those of comparable education loans
offered directly by the U.S. Department
of Education. Such rates and fees are
specified in section 455 of the Higher
Education Act of 1965 (20 U.S.C.
1087e).
(f) Activities in cooperation with
minority- or women-owned financial
institutions and low-income credit
unions. In assessing and taking into
account the record of a nonminority-
owned and nonwomen-owned savings
association under this part, the OTS
considers as a factor capital investment,
loan participation, and other ventures
undertaken by the savings association in
cooperation with minority- and women-
owned financial institutions and low-
income credit unions. Such activities
must help meet the credit needs of local
communities in which the minority-
and women-owned financial
institutions and low-income credit
unions are chartered. To be considered,
such activities need not also benefit the
savings association’s assessment area(s)
or the broader statewide or regional area
that includes the savings association’s
assessment area(s).
■3. In Appendix A to Part 563e,
paragraph (a)(1) is revised to read as
follows:
Appendix A to Part 563e—Ratings
-owned financial
institutions and low-income credit
unions are chartered. To be considered,
such activities need not also benefit the
savings association’s assessment area(s)
or the broader statewide or regional area
that includes the savings association’s
assessment area(s).
■3. In Appendix A to Part 563e,
paragraph (a)(1) is revised to read as
follows:
Appendix A to Part 563e—Ratings
(a) * * *
(1) In assigning a rating, the OTS evaluates
a savings association’s performance under
the applicable performance criteria in this
part, in accordance with §§ 563e.21 and
563e.28. This includes consideration of low-
cost education loans provided to low-income
borrowers and activities in cooperation with
minority- or women-owned financial
institutions and low-income credit unions, as
well as adjustments on the basis of evidence
of discriminatory or other illegal credit
practices.
*
*
*
*
*
Dated: June 29, 2010.
John C. Dugan,
Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, September 2, 2010.
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, this 27th day of
September, 2010.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
Dated: September 24, 2010.
By the Office of Thrift Supervision.
John E. Bowman,
Acting Director.
[FR Doc. 2010–24737 Filed 10–1–10; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P;
6720–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2010–0342; Directorate
Identifier 2002–NE–08–AD; Amendment 39–
16458; AD 2010–20–23]
RIN 2120–AA64
Airworthiness Directives; Bombardier-
Rotax GmbH Type 912 F, 912 S, and
914 F Series Reciprocating Engines
AGENCY: Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule
F TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2010–0342; Directorate
Identifier 2002–NE–08–AD; Amendment 39–
16458; AD 2010–20–23]
RIN 2120–AA64
Airworthiness Directives; Bombardier-
Rotax GmbH Type 912 F, 912 S, and
914 F Series Reciprocating Engines
AGENCY: Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule.
SUMMARY: The FAA is superseding an
existing airworthiness directive (AD) for
certain serial numbers (S/Ns) of
Bombardier-Rotax GmbH type 912 F and
914 F series reciprocating engines. That
AD currently requires initial and
repetitive visual inspections of the
engine crankcase for cracks. This AD
requires those same inspections, adds
the 912 S series to the affected
population, adds a test procedure to
determine the engine suitability for a
special flight permit, and changes
applicability from engine S/N to
crankcase S/N. This AD results from an
increase in the affected crankcase
population. We are issuing this AD to
prevent oil loss caused by cracks in the
engine crankcase, which could lead to
in-flight failure of the engine and forced
landing.
DATES: This AD becomes effective
November 8, 2010.
ADDRESSES: You can get the service
information identified in this AD from
BRP-Rotax GmbH & Co. KG, Welser
Strasse 32, A–4623 Gunskirchen,
Austria.
The Docket Operations office is
located at Docket Management Facility,
U.S. Department of Transportation, 1200
New Jersey Avenue, SE., West Building
Ground Floor, Room W12–140,
Washington, DC 20590–0001.
FOR FURTHER INFORMATION CONTACT:
Alan Strom, Aerospace Engineer, Engine
Certification Office, FAA, Engine &
Propeller Directorate, 12 New England
Executive Park, Burlington, MA 01803;
e-mail: alan.strom@faa.gov; telephone
ted at Docket Management Facility,
U.S. Department of Transportation, 1200
New Jersey Avenue, SE., West Building
Ground Floor, Room W12–140,
Washington, DC 20590–0001.
FOR FURTHER INFORMATION CONTACT:
Alan Strom, Aerospace Engineer, Engine
Certification Office, FAA, Engine &
Propeller Directorate, 12 New England
Executive Park, Burlington, MA 01803;
e-mail: alan.strom@faa.gov; telephone
(781) 238–7143; fax (781) 238–7199.
SUPPLEMENTARY INFORMATION: The FAA
proposed to amend 14 CFR part 39 by
superseding AD 2002–16–26,
Amendment 39–12865 (67 FR 53296,
August 15, 2002), with a proposed AD.
The proposed AD applies to
Bombardier-Rotax GmbH type 912 F,
912 S, and 914 F series reciprocating
engines with certain serial-numbered
crankcases. We published the proposed
AD in the Federal Register on April 7,
2010 (75 FR 17632). That action
proposed to require initial visual
inspection for cracks in the engine
crankcase of engines with certain serial-
numbered crankcases, within 50 hours
time-in-service (TIS) after the effective
date of that AD, and repetitive visual
inspections at each 100-hour, annual, or
progressive inspection, or within 110
hours TIS since last inspection,
whichever occurs first. If any cracks are
found, the engine must be removed from
service.
Examining the AD Docket
You may examine the AD docket on
the Internet at http://
www.regulations.gov; or in person at the
Docket Operations office between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays. The AD docket
contains this AD, the regulatory
evaluation, any comments received, and
other information. The street address for
the Docket Operations office (telephone
Examining the AD Docket
You may examine the AD docket on
the Internet at http://
www.regulations.gov; or in person at the
Docket Operations office between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays. The AD docket
contains this AD, the regulatory
evaluation, any comments received, and
other information. The street address for
the Docket Operations office (telephone
(800) 647–5527) is provided in the
ADDRESSES section. Comments will be
available in the AD docket shortly after
receipt.
Comments
We provided the public the
opportunity to participate in the
development of this AD. We have
considered the comment received.
One commenter asks us to change
paragraph (g)(4) from ‘‘If the engine
crankcase is cracked, replace the engine
before further flight’’ to ‘‘If the engine
crankcase is cracked, replace, repair, or
overhaul the engine before further
flight’’. The commenter states that this
would allow the option of replacing the
crankcase as a repair or overhaul as well
as an outright engine replacement.
We partially agree. An owner or
operator might interpret paragraph (g)(4)
to mean they can’t repair the engine. We
have changed paragraph (g)(4) to state
‘‘If the engine crankcase is cracked,
remove the engine from service before
further flight.’’
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.