This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

67149 

Vol. 83, No. 248 

Friday, December 28, 2018 

1 12 U.S.C. 5365(i). 

2 77 FR 62417 (October 15, 2012). The Board and 

the Office of the Comptroller of the Currency 

contemporaneously issued comparable regulations. 

See 77 FR 62380 (October 12, 2012) (Board); 77 FR 

61238 (October 9, 2012) (OCC). 

3Public Law 115–174, 132 Stat. 1296–1368 

(2018). 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 325 

RIN 3064–AE84 

Company-Run Stress Testing 

Requirements for FDIC-Supervised 

State Nonmember Banks and State 

Savings Associations 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Notice of proposed rulemaking 

with request for public comment. 

SUMMARY: The Federal Deposit 

Insurance Corporation (FDIC) is 

requesting comment on a proposed rule 

(proposed rule or NPR) that would 

revise the FDIC’s requirements for stress 

testing by FDIC-supervised institutions, 

consistent with changes made by 

Section 401 of the Economic Growth, 

Regulatory Relief, and Consumer 

Protection Act (EGRRCPA). Specifically, 

the proposed rule would amend the 

FDIC’s existing stress testing regulations 

to change the minimum threshold for 

applicability from $10 billion to $250 

billion, revise the frequency of required 

stress tests by FDIC-supervised 

institutions, and reduce the number of 

required stress testing scenarios from 

three to two. The NPR also proposes to 

make certain conforming and technical 

changes, including changes that were 

previously proposed in an April 2018 

notice of proposed rulemaking that was 

superseded, in part, by the enactment of 

EGRRCPA. 

DATES: Comments on the notice of 

proposed rulemaking must be received 

by February 19, 2019. 

ADDRESSES: Interested parties are 

encouraged to submit written 

comments. Commenters are encouraged 

to use the title ‘‘Company-Run Stress 

Testing Requirements for FDICsupervised State Nonmember Banks and 

State Savings Associations’’ to facilitate 

the organization and distribution of 

comments among the Agencies. You 

may submit comments, identified by 

RIN number, by any of the following 

methods: 

• Agency website: https://

www.FDIC.gov/regulations/laws/ 

federal/. Follow instructions for 

submitting comments on the Agency 

website. 

• Email: Comments@FDIC.gov. 

Include RIN 3064–AE84 on the subject 

line of the message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivered/Courier: Comments 

may be hand-delivered to the guard 

station at the rear of the 550 17th Street 

Building (located on F Street) on 

business days between 7:00 a.m. and 

5:00 p.m. 

• Public Inspection: All comments 

received must include the agency name 

and RIN 3064–AE84 for this rulemaking. 

All comments received will be posted 

without change to https://www.fdic.gov/ 

regulations/laws/federal/, including any 

personal information provided. Paper 

copies of public comments may be 

ordered from the FDIC Public 

Information Center, 3501 North Fairfax 

Drive, Room E–1002, Arlington, VA 

22226 by telephone at 1 (877) 275–3342 

or 1 (703) 562–2200. 

FOR FURTHER INFORMATION CONTACT: 

Ryan Sheller, Section Chief, (202) 412– 

4861, RSheller@FDIC.gov, Large Bank 

Supervision, Division of Risk 

Management Supervision; Annmarie 

Boyd, Counsel, (202) 898–3714, aboyd@

FDIC.gov; or Benjamin Klein, Counsel, 

(202) 898–7027, bklein@FDIC.gov; Legal 

Division, Federal Deposit Insurance 

Corporation, 550 17th Street NW, 

Washington, DC, 20429. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Prior to the enactment of EGRRCPA, 

section 165(i)(2) of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act 1 (Dodd-Frank Act) required a 

financial company, including an 

insured depository institution, with 

total consolidated assets of more than 

$10 billion and regulated by a primary 

Federal regulatory agency to conduct 

annual stress tests and submit a report 

to the Board of Governors of the Federal 

Reserve System (Board) and to its 

primary federal regulatory agency. 

Section 165(i)(2)(C) required each 

primary Federal regulator to issue 

consistent and comparable regulations 

to: (1) Implement the stress testing 

requirements, including establishing 

methodologies for conducting stress 

tests that provided for at least three 

different sets of conditions, including 

baseline, adverse, and severely adverse; 

(2) establish the form and content of the 

required reports, and (3) require 

companies to publish a summary of the 

stress test results. 

In October 2012, the FDIC published 

in the Federal Register its rule 

implementing the Dodd-Frank Act stress 

testing requirement.2 The FDIC 

regulation at 12 CFR part 325 

implements the company-run stress test 

requirements of section 165(i)(2) of the 

Dodd-Frank Act with respect to state 

nonmember banks and state savings 

associations with more than $10 billion 

in assets (covered banks). Although 12 

CFR part 325 applies to all covered 

banks that exceed $10 billion in assets, 

the regulation differentiates between 

‘‘$10 billion to $50 billion covered 

banks’’ and ‘‘over $50 billion covered 

banks.’’ 

EGRRCPA, enacted on May 24, 2018,3

amended certain aspects of the 

company-run stress-testing 

requirements in section 165(i)(2) of the 

Dodd-Frank Act. Specifically, section 

401 of EGRRCPA raises the minimum 

asset threshold for the company-run 

stress testing requirement from $10 

billion to $250 billion; replaces the 

requirement for banks to conduct stress 

tests ‘‘annually’’ with the requirement to 

conduct stress tests ‘‘periodically;’’ and 

no longer requires the ‘‘adverse’’ stress 

testing scenario, thus reducing the 

number of required stress testing 

scenarios from three to two. The 

EGRRCPA amendments to the section 

165(i)(2) stress testing requirements are 

effective eighteen months after 

enactment. 

Prior to the enactment of EGRRCPA, 

on April 2, 2018, the FDIC issued a 

notice of proposed rulemaking that also 

proposed certain revisions to the FDIC 


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4 83 FR 13880 (April 2, 2018). 

stress testing regulations (April NPR).4

Certain changes proposed in the April 

NPR, particularly those establishing a 

stress testing transition process for 

‘‘over $50 billion covered banks’’ are no 

longer relevant as a result of EGRRCPA’s 

increase in the stress testing asset 

threshold to $250 billion. However, 

other revisions originally proposed in 

the April NPR remain necessary to 

ensure the FDIC’s stress testing 

regulations remain consistent with those 

of the Board and the Office of the 

Comptroller of the Currency (OCC). 

II. Description of the Proposed Rule 

A. Covered Banks 

As described above, section 401 of 

EGRRCPA amended section 165 of the 

Dodd-Frank Act by raising the 

minimum asset threshold for banks 

required to conduct stress tests from $10 

billion to $250 billion. The proposed 

rule would implement this change by 

eliminating the two existing 

subcategories of ‘‘covered bank’’—‘‘$10 

to $50 billion covered bank’’ and ‘‘over 

$50 billion covered bank’’—and revising 

the term ‘‘covered bank’’ to mean a State 

nonmember bank or State savings 

association with average total 

consolidated assets that are greater than 

$250 billion. In addition, the proposal 

would make certain technical and 

conforming changes to 12 CFR part 325 

in order to consolidate requirements, 

such as those related to reporting and 

publication, that are currently 

referenced separately with respect to 

$10 billion to $50 billion covered banks 

and over $50 billion covered banks. 

B. Frequency of Stress Testing 

Section 401 of EGRRCPA also 

changed the requirement under section 

165 of the Dodd-Frank Act to conduct 

stress tests from ‘‘annual’’ to ‘‘periodic.’’ 

Consistent with proposals by the Board 

and the OCC, the NPR proposes that, in 

general, an FDIC-supervised institution 

that is a covered bank as of December 

31, 2019, would be required to conduct, 

report, and publish a stress test once 

every two years, beginning on January 1, 

2020, and continuing every evennumbered year thereafter (i.e., 2022, 

2024, 2026, etc.). The proposed rule 

would also add a new defined term, 

‘‘reporting year,’’ to the definitions at 12 

CFR 325.2. A covered bank’s reporting 

year would be the year in which a 

covered bank must conduct, report, and 

publish its stress test. As noted above, 

the ‘‘reporting year’’ for most covered 

banks would generally be every evennumbered year. However, under the 

NPR, covered banks that are subsidiaries 

of global systemically important bank 

holding companies or bank holding 

companies that have $700 billion or 

more in total assets or crossjurisdictional activity of $75 billion or 

more would be required to conduct, 

report, and publish stress test results on 

the same schedule as their bank holding 

companies, which would be annually 

under rules proposed by the Board. 

Subsequent to these changes, some 

covered banks would have a biennial 

reporting year (biennial stress testing 

covered banks) while others would have 

an annual reporting year (annual stress 

testing covered banks). In either case, 

under the NPR, the dates and deadlines 

in the FDIC’s stress testing rule would 

apply for each reporting year for a 

covered bank. For example, a biennial 

stress testing covered bank preparing its 

2022 stress test would rely on financial 

data available as of December 31, 2021; 

use stress test scenarios that would be 

provided by the FDIC no later than 

February 15, 2022; provide its report of 

the stress test to the FDIC by April 5, 

2022; and publish a summary of the 

results of its stress test in the period 

starting June 15 and ending July 15 of 

2022. 

Based on the FDIC’s experience 

overseeing and reviewing the results of 

company-run stress testing, the FDIC 

believes that a biennial stress testing 

cycle would be appropriate for most 

covered banks. For covered banks that 

would stress test on a biennial cycle, the 

FDIC nonetheless expects this level of 

frequency to provide the FDIC and the 

covered bank with information that is 

sufficient to satisfy the purposes of 

stress testing. In addition, the FDIC 

would continue to review the covered 

bank’s stress testing processes and 

procedures. Under the proposed rule, all 

covered banks that would conduct stress 

tests on a biennial basis would be 

required to conduct stress tests in the 

same reporting year (i.e., the reporting 

years for biennial stress testing covered 

banks would be synchronized). By 

requiring these covered banks to 

conduct their stress tests in the same 

reporting year, the proposal would 

continue to allow the FDIC to make 

comparisons across banks for 

supervisory purposes and assess 

macroeconomic trends and risks to the 

banking industry. 

As discussed above, under the 

proposed rule, only certain covered 

banks would be required to conduct 

annual stress tests. This subset would be 

limited to covered banks that are 

consolidated under holding companies 

that are required to conduct stress tests 

more frequently than once every other 

year. This requirement reflects the 

FDIC’s expectation that covered banks 

that would be required to stress test on 

an annual basis would be subsidiaries of 

the largest and most systemically 

important banking organizations, (i.e., 

subsidiaries of global systemically 

important bank holding companies or 

bank holding companies that have $700 

billion or more in total assets or crossjurisdictional activity of $75 billion). 

This treatment aligns with the agencies’ 

long-standing policy of applying similar 

standards to holding companies and 

their subsidiary banks. 

C. Removal of ‘‘Adverse’’ Scenario 

As enacted by the Dodd-Frank Act, 

section 165(i)(2)(C) required the FDIC to 

establish methodologies for conducting 

stress tests and further required the 

inclusion of at least three different 

stress-testing scenarios: ‘‘baseline,’’ 

‘‘adverse,’’ and ‘‘severely adverse.’’ 

EGRRCPA amended section 165(i) to no 

longer require the FDIC to include an 

‘‘adverse’’ stress-testing scenario and to 

reduce the minimum number of 

required stress test scenarios from three 

to two. Given that the ‘‘adverse’’ stresstesting scenario has provided limited 

incremental information to the FDIC 

and market participants beyond what 

the ‘‘baseline’’ and ‘‘severely adverse’’ 

stress testing scenarios provide, the NPR 

proposes to remove the ‘‘adverse’’ 

scenario in the FDIC’s stress testing rule 

and to maintain the requirement to 

conduct stress tests under the 

‘‘baseline’’ and ‘‘severely adverse’’ stress 

testing scenarios. The NPR would also 

amend the definition of ‘‘severely 

adverse scenario’’ so that the term is 

defined relative to the ‘‘baseline 

scenario,’’ rather than relative to the 

‘‘adverse scenario.’’ 

D. Transition Process for Covered Banks 

Currently, 12 CFR 325.3 provides for 

a transition period between when a 

bank becomes a covered bank and when 

the bank must report its first stress test. 

The NPR proposes to revise the 

transition period in 12 CFR 325.3 to 

conform to the other changes in this 

proposal. Accordingly, proposed 

paragraph (a)(2) would generally require 

a state nonmember bank or state savings 

association that becomes a covered bank 

after December 31, 2019, to conduct its 

first stress test under this part in the first 

reporting year that begins more than 

three calendar quarters after the date the 

state nonmember bank or state savings 

association becomes a covered bank. For 

example, if a covered bank that 

conducts stress tests on a biennial basis 

becomes a covered bank on March 31 of 

a non-reporting year (e.g., 2023), the 


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5 12 CFR 325.1(c). 

6 12 CFR 325.4(c). 

7 82 FR 9308 (Feb 3, 2017). 

8 83 FR 7951 (Feb. 23, 2018). 

9 79 FR 69365 (Nov. 21, 2014). 

10 83 FR 17737 (Apr. 24, 2018). Additional 

technical amendments to part 325 were recently 

proposed in a notice of proposed rulemaking to 

implement the current expected credit losses 

methodology for allowances. 83 FR 22312 (May 14, 

2018). 

11See Interagency Statement Clarifying the Role 

of Supervisory Guidance, Financial Institution 

Letter 49–2018 (Sep. 11, 2018). 12 12 U.S.C. 4802. 

bank would report its first stress test in 

the subsequent calendar year (i.e., 

2024), which is its first reporting year. 

If the same bank becomes a covered 

bank on April 1 of a non-reporting year 

(e.g., 2023), it would skip the 

subsequent reporting calendar year and 

the following, non-reporting calendar 

year, and would report its first stress 

test in the next reporting year (i.e., 

2026). As with other aspects of the 

stress test rule, the rule reserves to the 

FDIC the authority to change the 

transition period for a particular 

covered bank, as appropriate in light of 

the nature and level of the activities, 

complexity, risks, operations, and 

regulatory capital of the covered bank, 

in addition to any other relevant 

factors.5

The NPR would not establish a 

transition period for covered banks that 

move from a biennial stress testing 

requirement to an annual stress testing 

requirement. Accordingly, a covered 

bank that becomes subject to annual 

stress testing would be required to begin 

stress testing annually as of the next 

reporting year. The FDIC expects that 

covered banks would anticipate and 

make arrangements for this 

development. To the extent that 

particular circumstances warrant the 

extension of a transition period, the 

FDIC would do so based on its 

reservation of authority and supervisory 

discretion. 

E. Review by Board of Directors 

Currently, 12 CFR 325.5(a)(2) requires 

a covered bank’s board of directors, or 

a committee thereof, to approve and 

review the policies and procedures of 

the stress testing processes as frequently 

as economic conditions or the bank’s 

condition may warrant, but no less than 

annually. The NPR would revise the 

frequency of this requirement from 

‘‘annual’’ to ‘‘once every reporting year’’ 

in order to make review by the board of 

directors consistent with the covered 

bank’s stress testing cycle. 

F. Reservation of Authority 

12 CFR 325.1(c) currently includes a 

reservation of authority, pursuant to 

which the FDIC may revise the 

frequency and methodology of the stress 

testing requirement as appropriate for a 

particular covered bank. The NPR 

proposes to amend the reservation of 

authority by clarifying the FDIC’s 

authority to exempt a covered bank from 

the requirement to conduct a stress test 

in a particular reporting year. 

G. New Range of As-of Dates for Trading 

Scenario Component 

Under 12 CFR 325.4(c), the FDIC may 

require a covered bank with significant 

trading activities to include trading and 

counterparty components in its adverse 

and severely adverse scenarios. The 

trading data to be used in this 

component is as of a date between 

January 1 and March 1 of a calendar 

year.6 On February 3, 2017 the Board 

published a final rule that extended this 

range to run from October 1 of the 

calendar year preceding the year of the 

stress test to March 1 of the calendar 

year of the stress test.7 On February 23, 

2018, the OCC published a final rule 

making the same change to its stress 

testing regulation.8 The proposed rule 

would make the same change to the 

FDIC’s stress testing regulation (as was 

originally proposed in the April NPR). 

Extending the as-of date range would 

ensure consistency with the Board and 

OCC rules and increase the FDIC’s 

flexibility to choose an appropriate asof date. 

H. Other Changes 

As originally proposed in the April 

NPR, the proposed rule would also 

remove certain obsolete transitional 

language in 12 CFR 325.3 that was 

included to facilitate a 2014 shift in the 

dates of the annual stress testing cycle.9

That transition is now complete and the 

regulatory transition language is no 

longer necessary. 

Additionally, in order to update and 

standardize the language used in part 

325, references to ‘‘this subpart’’ would 

be changed to ‘‘this part’’ following the 

redesignation of the FDIC’s stress test 

rule from subpart C of 12 CFR part 325 

to occupy all of part 325.10 Finally, the 

proposed rule would eliminate the 

reference to supervisory guidance in 12 

CFR 325.5(b)(1).11

III. Request for Comment 

The FDIC invites comment on all 

aspects of this proposed rule, including 

the following questions: 

1. The proposal would require a 

covered bank that is consolidated under 

a holding company that is required to 

conduct a stress test at least once every 

calendar year to treat every calendar 

year as a reporting year, unless 

otherwise determined by the FDIC. Is 

this the appropriate frequency for this 

group of banks? What are the advantages 

and disadvantages of requiring a 

covered bank to conduct a stress test at 

the same frequency as, or at a different 

frequency than, its holding company? 

2. As an alternative to the requirement 

that a covered bank be required to stress 

test annually based on the stress testing 

requirements of its holding company, 

should the FDIC establish separate 

criteria to capture certain large banks 

(e.g., banks above a specified asset 

threshold), regardless of whether they 

are consolidated under a holding 

company? 

3. All other covered banks that are not 

required to stress test annually would be 

required to stress test biennially. Is this 

the appropriate frequency for this 

category of banks? Should the FDIC 

further subdivide covered banks into 

additional categories that would be 

subject to different frequency 

requirements? 

4. Is the length of the transition period 

for new covered banks appropriate? 

Should the proposal establish a 

transition period for covered banks that 

are already required to stress test and 

that move from a biennial stress testing 

requirement to an annual stress testing 

requirement? 

IV. Regulatory Analysis 

A. Riegle Community Development and 

Regulatory Improvement Act of 1994 

The RCDRIA requires that the FDIC, 

in determining the effective date and 

administrative compliance requirements 

of new regulations that impose 

additional reporting, disclosure, or other 

requirements on insured depository 

institutions (IDIs), consider, consistent 

with principles of safety and soundness 

and the public interest, any 

administrative burdens that such 

regulations would place on depository 

institutions, including small depository 

institutions, and customers of 

depository institutions, as well as the 

benefits of such regulations.12 In 

addition, in order to provide an 

adequate transition period, new 

regulations that impose additional 

reporting, disclosures, or other new 

requirements on IDIs generally must 

take effect on the first day of a calendar 

quarter that begins on or after the date 

on which the regulations are published 

in final form. 


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13 5 U.S.C. 601 et seq. 

14The SBA defines a small banking organization 

as having $550 million or less in assets, where ‘‘a 

financial institution’s assets are determined by 

averaging the assets reported on its four quarterly 

financial statements for the preceding year.’’ See 13 

CFR 121.201 (as amended, effective December 2, 

2014). ‘‘SBA counts the receipts, employees, or 

other measure of size of the concern whose size is 

at issue and all of its domestic and foreign 

affiliates.’’ See 13 CFR 121.103. Following these 

regulations, the FDIC uses a covered entity’s 

affiliated and acquired assets, averaged over the 

preceding four quarters, to determine whether the 

covered entity is ‘‘small’’ for the purposes of RFA. 

15FDIC-supervised institutions are set forth in 12 

U.S.C. 1813(q)(2). 

16FDIC Call Report, September 30, 2018. 

The proposed rule imposes no 

additional reporting, disclosure, or other 

requirements on IDIs, including small 

depository institutions, nor on the 

customers of depository institutions. 

The proposed rule would reduce the 

frequency of company-run stress tests 

for a subset of banks, raise the threshold 

for covered banks from $10 billion to 

$250 billion, and reduce the number of 

required stress test scenarios from three 

to two for all covered banks. The 

requirement to conduct, report, and 

publish a company-run stress testing is 

a previously existing requirement 

imposed by section 165(i) of the DoddFrank Act. Nonetheless, in connection 

with determining an effective date for 

the proposed rule, the FDIC invites 

comment on any administrative burdens 

that the proposed rule would place on 

depository institutions, including small 

depository institutions, and customers 

of depository institutions. 

B. The Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601 et seq., generally requires 

an agency, in connection with a 

proposed rule, to prepare and make 

available for public comment an initial 

regulatory flexibility analysis that 

describes the impact of a proposed rule 

on small entities.13 However, a 

regulatory flexibility analysis is not 

required if the agency certifies that the 

rule would not have a significant 

economic impact on a substantial 

number of small entities. The Small 

Business Administration (SBA) has 

defined ‘‘small entities’’ to include 

banking organizations with total assets 

of less than or equal to $550 million that 

are independently owned and operated 

or owned by a holding company with 

less than $550 million in total assets.14

For the reasons described below and 

under section 605(b) of the RFA, the 

FDIC certifies that this proposed rule 

would not have a significant economic 

impact on a substantial number of small 

entities. 

The FDIC has considered the potential 

impact of the proposed rule on small 

entities in accordance with the RFA. 

The FDIC supervises 3,533 depository 

institutions,15 of which, 2,726 are 

defined as small banking entities by the 

terms of the RFA.16 As discussed in the 

Background Section, 12 CFR part 325 

implements company-run stress test 

requirements for all state nonmember 

banks and state savings associations 

with more than $10 billion in assets 

(covered banks). The proposed rule 

would raise the threshold for covered 

banks required to conduct company-run 

stress testing from $10 billion to $250 

billion. No FDIC-supervised institutions 

with total consolidated assets of $550 

million or less are or would, as a result 

of the proposed rule, be subject to 12 

CFR part 325. Therefore, the proposed 

rule would not affect any small, FDICsupervised institutions. 

The FDIC invites comments on all 

aspects of the supporting information 

provided in this RFA section. In 

particular, would this rule have any 

significant effects on small entities that 

the FDIC has not identified? 

C. The Paperwork Reduction Act 

The FDIC has determined that this 

proposed rule involves a collection of 

information pursuant to the provisions 

of the Paperwork Reduction Act of 1995 

(the PRA) (44 U.S.C. 3501 et seq.). 

A Federal agency may not conduct or 

sponsor, and an organization is not 

required to respond to, this information 

collection unless the information 

collection displays a currently valid 

Office of Management and Budget 

(OMB) control number. The FDIC has 

obtained an OMB control number for 

this information collection (3064–0189) 

and will make a submission to OMB in 

connection with the proposed rule. 

Revised Information Collection Title: 

Stress Test Reporting Templates and 

Documentation for Covered Banks with 

Total Consolidated Assets of $250 

Billion or More. 

OMB Number: 3064–0189. 

Form Number: FDIC DFAST 14A 

Summary; FDIC DFAST 14A Scenario. 

Affected Public: Insured state 

nonmember banks. 

Burden Estimate: 

SUMMARY OF ANNUAL BURDEN

Information collection description Type of burden Obligation to 

respond 

Estimated 

number of 

respondents 

Estimated 

frequency of 

responses 

Estimated time 

per response 

(hours) 

Estimated 

annual burden 

(hours) 

Methodologies and Practices ......... Recordkeeping .. Mandatory ......... 1* Annually 640 640 

Stress Test Reporting .................... Reporting ........... Mandatory ......... 1* Annually 240 240 

Publications .................................... Disclosure .......... Mandatory ......... 1* Annually 160 160 

Estimated Total Annual Burden............................. ............................ ........................ ........................ ........................ 1,040 

* Note: FDIC estimates that none of the existing FDIC-supervised institutions are currently subject to the recordkeeping, reporting or disclosure 

requirements in the proposed rule. However, FDIC is reporting one respondent as a placeholder to preserve the burden estimate in case an institution becomes subject to these requirements in the future. 

Comments are invited on: 

1. Whether the information 

collections are necessary for the proper 

performance of the Agencies’ functions, 

including whether the information has 

practical utility; 

2. The accuracy of the Agencies’ 

estimates of the burden of the 

information collections, including the 

validity of the methodology and 

assumptions used; 

3. Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

4. Ways to minimize the burden of 

information collections on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology; and 

5. Estimates of capital or start-up costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 


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D. Plain Language 

Section 722 of the Gramm-LeachBliley Act requires the FDIC to use plain 

language in all proposed and final rules 

published after January 1, 2000. The 

FDIC invites comment on how to make 

this proposed rule easier to understand. 

For example: 

• Has the FDIC organized the material 

to inform your needs? If not, how could 

it present the proposed rule more 

clearly? 

• Are the requirements in the 

proposed rule clearly stated? If not, how 

could the proposal be more clearly 

stated? 

• Does the proposed regulation 

contain technical language or jargon that 

is not clear? If so, which language 

requires clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the proposed 

regulation easier to understand? If so, 

what changes would achieve that? 

• Is this section format adequate? If 

not, which of the sections should be 

changed and how? 

• What other changes can the FDIC 

incorporate to make the proposed 

regulation easier to understand? 

List of Subjects in 12 CFR Part 325 

Administrative practice and 

procedure, Banks, banking, Reporting 

and recordkeeping requirements, State 

savings associations, Stress tests. 

Authority and Issuance 

For the reasons stated in the 

preamble, the FDIC proposes to amend 

12 CFR part 325 as follows: 

PART 325—STRESS TESTING 

■ 1. The authority citation for part 325 

continues to read as follows: 

Authority: 12 U.S.C. 5365(i)(2), 12 U.S.C. 

5412(b)(2)(C), 12 U.S.C. 1818, 12 U.S.C. 

1819(a)(Tenth), 12 U.S.C. 1831o, and 12 

U.S.C. 1831p–1. 

■ 2. The heading for part 325 is revised 

to read as set forth above. 

■ 3. In part 325, revise all references to 

‘‘subpart’’ to read ‘‘part’’. 

■ 4. Amend § 325.1 by: 

■ a. Revising paragraph (b); and 

■ b. Redesignating current paragraphs 

(c)(4), (5), and (6) as (c)(5), (6), and (7), 

and adding new paragraph (c)(4). 

The revisions read as follows: 

§ 325.1 Authority, purpose, and 

reservation of authority. 

* * * * * 

(b) Purpose. This part implements 12 

U.S.C. 5365(i)(2), which requires the 

Corporation (in coordination with the 

Board of Governors of the Federal 

Reserve System (Board) and the Federal 

Insurance Office) to issue regulations 

that require each covered bank to 

conduct periodic stress tests, and 

establishes a definition of stress test, 

methodologies for conducting stress 

tests, and reporting and disclosure 

requirements. 

(c) * * * 

* * * * * 

(4) The Corporation may also exempt 

a covered bank from the requirement to 

conduct a stress test in a particular 

reporting year. 

* * * * * 

■ 4. Amend § 325.2 by: 

■ a. Removing paragraph (a) and 

redesignating current paragraphs (b) 

through (h) as paragraphs (a) through 

(g); 

■ b. Revising the definitions of ‘‘covered 

bank’’ in paragraph (c), 

■ c. Adding the definition of ‘‘reporting 

year’’ as paragraph (h); 

■ d. Revising the definitions of 

‘‘scenarios’’ in paragraph (i), 

■ e. Revising the definitions of ‘‘severely 

adverse scenario’’ in paragraph (j), and 

■ f. Revising the definitions of ‘‘stress 

testing cycle’’ in paragraph (m). 

The revisions and additions read as 

follows: 

§ 325.2 Definitions. 

For purposes of this part— 

* * * * * 

(c) Covered bank means any state 

nonmember bank or state savings 

association with average total 

consolidated assets calculated as 

required under this part that are greater 

than $250 billion. 

* * * * * 

(h) Reporting year means the calendar 

year in which a covered institution must 

conduct, report, and publish its stress 

test, as required under 12 CFR 325.4(d). 

(i) Scenarios are those sets of 

conditions that affect the U.S. economy 

or the financial condition of a covered 

bank that the Corporation determines 

are appropriate for use in the companyrun stress tests, including, but not 

limited to, baseline and severely adverse 

scenarios. 

(j) Severely adverse scenario means a 

set of conditions that affect the U.S. 

economy or the financial condition of a 

covered bank and that overall are 

significantly more severe than those 

associated with the baseline scenario 

and may include trading or other 

additional components. 

* * * * * 

(m) Stress test cycle means the period 

beginning January 1 of a reporting year 

and ending on December 31 of that 

reporting year. 

■ 5. Revise § 325.3 to read as follows: 

§ 325.3 Applicability. 

(a) Covered banks subject to stress 

testing. (1) A state nonmember bank or 

state savings association that is a 

covered bank as of December 31, 2019, 

is subject to the requirements of this 

subpart for the 2020 reporting year. 

(2) A state nonmember bank or state 

savings association that becomes a 

covered bank after December 31, 2019, 

shall conduct its first stress test under 

this part in the first reporting year that 

begins more than three calendar 

quarters after the date the state 

nonmember bank or state savings 

association becomes a covered bank, 

unless otherwise determined by the 

Corporation in writing. 

(b) Ceasing to be a covered bank. A 

covered bank shall remain subject to the 

stress test requirements of this part 

unless and until total consolidated 

assets of the covered bank falls to $250 

billion or less for each of four 

consecutive quarters as reported on the 

covered bank’s most recent Call Reports. 

The calculation will be effective on the 

as-of date of the fourth consecutive Call 

Report. 

(c) Covered bank subsidiaries of a 

bank holding company or savings and 

loan holding company subject to 

periodic stress test requirements. (1) 

Notwithstanding the requirements 

applicable to covered banks under this 

section, a covered bank that is a 

consolidated subsidiary of a bank 

holding company or savings and loan 

holding company that is required to 

conduct a periodic company-run stress 

test under applicable regulations of the 

Board of Governors of the Federal 

Reserve System may elect to conduct its 

stress test and report to the FDIC on the 

same timeline as its parent bank holding 

company or savings and loan holding 

company. 

(2) A covered bank that elects to 

conduct its stress test under paragraph 

(c)(1) of this section will remain subject 

to the same timeline requirements of its 

parent company until otherwise 

approved by the FDIC. 

■ 6. Revise § 325.4 to read as follows: 

§ 325.4 Periodic stress tests required. 

Each covered bank must conduct the 

periodic stress test under this part 

subject to the following requirements: 

(a) Financial data—A covered bank 

must use financial data as of December 

31 of the calendar year prior to the 

reporting year. 

(b) Scenarios provided by the 

Corporation. In conducting the stress 

test under this part, each covered bank 

must use the scenarios provided by the 


amozie on DSK3GDR082PROD with PROPOSALS1
67154 Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Proposed Rules 

Corporation. The scenarios provided by 

the Corporation will reflect a minimum 

of two sets of economic and financial 

conditions, including baseline and 

severely adverse scenarios. The 

Corporation will provide a description 

of the scenarios required to be used by 

each covered bank no later than 

February 15 of the reporting year. 

(c) Significant trading activities. The 

Corporation may require a covered bank 

with significant trading activities, as 

determined by the Corporation, to 

include trading and counterparty 

components in its severely adverse 

scenarios. The trading and counterparty 

position data used in this component 

will be as of a date between October 1 

of the year preceding the reporting year 

and March 1 of the reporting year, and 

the Corporation will communicate a 

description of the component to the 

covered bank no later than March 1 of 

the reporting year. 

(d) Frequency. A covered bank that is 

consolidated under a holding company 

that is required, pursuant to applicable 

regulations of the Board of Governors of 

the Federal Reserve System, to conduct 

a stress test at least once every calendar 

year must treat every calendar year as a 

reporting year, unless otherwise 

determined by the Corporation. All 

other covered banks must treat every 

even-numbered calendar year beginning 

January 1, 2020 (i.e., 2022, 2024, 2026, 

etc.), as a reporting year, unless 

otherwise determined by the 

Corporation. 

■ 7. Amend § 325.5 by revising 

paragraph (b) to read as follows: 

§ 325.5 Methodologies and practices. 

* * * * * 

(b) Controls and oversight of stress 

testing processes. (1) The senior 

management of a covered bank must 

establish and maintain a system of 

controls, oversight, and documentation, 

including policies and procedures, that 

are designed to ensure that its stress test 

processes satisfy the requirements in 

this part. These policies and procedures 

must, at a minimum, describe the 

covered bank’s stress test practices and 

methodologies, and processes for 

validating and updating the covered 

bank’s stress test practices and 

methodologies consistent with 

applicable laws and regulations. 

(2) The board of directors, or a 

committee thereof, of a covered bank 

must approve and review the policies 

and procedures of the stress testing 

processes as frequently as economic 

conditions or the condition of the 

covered bank may warrant, but no less 

than once every reporting year. The 

board of directors and senior 

management of the covered bank must 

receive a summary of the results of the 

stress test. 

(3) The board of directors and senior 

management of each covered bank must 

consider the results of the stress tests in 

the normal course of business, including 

but not limited to, the covered bank’s 

capital planning, assessment of capital 

adequacy, and risk management 

practices. 

■ 8. Revise § 325.6 to read as follows: 

§ 325.6 Required reports of stress test 

results to the FDIC and the Board of 

Governors of the Federal Reserve System. 

(a) Report required for periodic stress 

test results. A covered bank must report 

to the FDIC and to the Board of 

Governors of the Federal Reserve 

System, on or before April 5 of the 

reporting year, the results of the stress 

test in the manner and form specified by 

the FDIC. 

(b) Content of reports. (1) The reports 

required under paragraph (a) of this 

section must include under the baseline 

scenario, severely adverse scenario, and 

any other scenario required by the 

Corporation under this part, a 

description of the types of risks being 

included in the stress test, a summary 

description of the methodologies used 

in the stress test, and, for each quarter 

of the planning horizon, estimates of 

aggregate losses, pre-provision net 

revenue, provision for loan and lease 

losses, net income, and pro forma 

capital ratios (including regulatory and 

any other capital ratios specified by the 

FDIC). In addition, the report must 

include an explanation of the most 

significant causes for the changes in 

regulatory capital ratios and any other 

information required by the 

Corporation. 

(2) The description of aggregate losses 

and net income must include the 

cumulative losses and cumulative net 

income over the planning horizon, and 

the description of each regulatory 

capital ratio must include the beginning 

value, ending value, and minimum 

value of each ratio over the planning 

horizon. 

(c) Confidential treatment of 

information submitted. The 

confidentiality of information submitted 

to the Corporation under this part and 

related materials will be determined in 

accordance with applicable law 

including any available exemptions 

under the Freedom of Information Act 

(5 U.S.C. 552(b)) and the FDIC’s Rules 

and Regulations regarding the 

Disclosure of Information (12 CFR part 

309). 

■ 9. Revise § 325.7 to read as follows: 

§ 325.7 Publication of stress test results. 

(a) Publication date—(1) A covered 

bank must publish a summary of the 

results of its stress tests in the period 

starting June 15 and ending July 15 of 

the reporting year, provided: 

(A) Unless the Corporation 

determines otherwise, if the covered 

bank is a consolidated subsidiary of a 

bank holding company or savings and 

loan holding company subject to 

supervisory stress tests conducted by 

the Board of Governors of the Federal 

Reserve System under 12 CFR part 252, 

then, within the June 15 to July 15 

period, such covered bank may not 

publish the required summary of its 

periodic stress test earlier than the date 

that the Board of Governors of the 

Federal Reserve System publishes the 

supervisory stress test results of the 

covered bank’s parent holding company. 

(B) If the Board of Governors of the 

Federal Reserve System publishes the 

supervisory stress test results of the 

covered bank’s parent holding company 

prior to June 15, then such covered bank 

may publish its stress test results prior 

to June 15, but no later than July 15, 

through actual publication by the 

covered bank or through publication by 

the parent holding company under 

paragraph (b) of this section. 

(b) Publication method. The summary 

required under this section may be 

published on the covered bank’s website 

or in any other forum that is reasonably 

accessible to the public. A covered bank 

that is a consolidated subsidiary of a 

bank holding company or savings and 

loan holding company that is required 

to conduct a company-run stress test 

under applicable regulations of the 

Board of Governors of the Federal 

Reserve System will be deemed to have 

satisfied the public disclosure 

requirements under this subpart if it 

publishes a summary of its stress test 

results with its parent bank holding 

company’s or savings and loan holding 

company’s summary of stress test 

results. Subsidiary covered banks 

electing to satisfy their public disclosure 

requirement in this manner must 

include a summary of changes in 

regulatory capital ratios of such covered 

bank over the planning horizon, and an 

explanation of the most significant 

causes for the changes in regulatory 

capital ratios. 

(c) Information to be disclosed in the 

summary. A covered bank must disclose 

the following information regarding the 

severely adverse scenario if it is not a 

consolidated subsidiary of a parent bank 

holding company or savings and loan 

holding company that has elected to 


amozie on DSK3GDR082PROD with PROPOSALS1
Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Proposed Rules 67155 

make its disclosure under 12 CFR 

325.3(d): 

* * * * * 

Dated at Washington, DC, on December 18, 

2018. 

By order of the Board of Directors. 

Federal Deposit Insurance Corporation. 

Valerie Best, 

Assistant Executive Secretary. 

[FR Doc. 2018–27824 Filed 12–27–18; 8:45 am] 

BILLING CODE 6714–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2018–1010; Product 

Identifier 2018–NM–148–AD] 

RIN 2120–AA64 

Airworthiness Directives; Dassault 

Aviation Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to remove 

Airworthiness Directive (AD) 2012–02– 

18, which applies to all Dassault 

Aviation Model MYSTERE–FALCON 50 

airplanes. AD 2012–02–18 requires 

revising the maintenance program to 

include revised airworthiness 

limitations. AD 2012–02–18 is no longer 

necessary because we have since issued 

AD 2017–09–03 to address the unsafe 

condition. Accordingly, we propose to 

remove AD 2012–02–18. 

DATES: We must receive comments on 

this proposed AD by February 11, 2019. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

Examining the AD Docket 

You may examine the AD docket on 

the internet at http://

www.regulations.gov by searching for 

and locating Docket No. FAA–2018– 

1010; or in person at Docket Operations 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

The AD docket contains this proposed 

AD, the regulatory evaluation, any 

comments received, and other 

information. The street address for 

Docket Operations (phone: 800–647– 

5527) is in the ADDRESSES section. 

Comments will be available in the AD 

docket shortly after receipt. 

FOR FURTHER INFORMATION CONTACT: Tom 

Rodriguez, Aerospace Engineer, 

International Section, Transport 

Standards Branch, FAA, 2200 South 

216th St., Des Moines, WA 98198; 

telephone and fax 206–231–3226. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposal. Send your comments to 

an address listed under the ADDRESSES

section. Include ‘‘Docket No. FAA– 

2018–1010; Product Identifier 2018– 

NM–148–AD’’ at the beginning of your 

comments. We specifically invite 

comments on the overall regulatory, 

economic, environmental, and energy 

aspects of this proposed AD. We will 

consider all comments received by the 

closing date and may amend this 

proposed AD because of those 

comments. 

We will post all comments we 

receive, without change, to http://

www.regulations.gov, including any 

personal information you provide. We 

will also post a report summarizing each 

substantive verbal contact we receive 

about this proposed AD. 

Discussion 

We issued AD 2012–02–18, 

Amendment 39–16941 (77 FR 12175, 

February 29, 2012) (‘‘AD 2012–02–18’’), 

for all Dassault Aviation Model 

MYSTERE–FALCON 50 airplanes. AD 

2012–02–18 requires revising the 

maintenance program to include revised 

airworthiness limitations. AD 2012–02– 

18 was prompted by reports of cracking 

of the flap tracks. We issued AD 2012– 

02–18 to address cracking of the flap 

tracks, which could lead to flap 

asymmetry and loss of control of the 

airplane. 

Actions Since AD 2012–02–18 Was 

Issued 

Since we issued AD 2012–02–18, we 

have issued AD 2017–09–03, 

Amendment 39–18865 (82 FR 21467, 

May 9, 2017) (‘‘AD 2017–09–03’’), 

which addresses the unsafe condition. 

AD 2017–09–03 requires revising the 

maintenance or inspection program, as 

applicable, to incorporate new and more 

restrictive maintenance requirements 

and airworthiness limitations, which 

include an eddy current inspection of 

flap tracks 2 and 5 to address cracking. 

FAA’s Conclusions 

Upon further consideration, we have 

determined that AD 2012–02–18 is no 

longer necessary. Accordingly, this 

proposed AD would remove AD 2012– 

02–18. Removal of AD 2012–02–18 

would not preclude the FAA from 

issuing another related action or commit 

the FAA to any course of action in the 

future. 

Costs of Compliance 

This proposed AD would add no cost. 

This proposed AD would remove AD 

2012–02–18 from 14 CFR part 39; 

therefore, operators would no longer be 

required to show compliance with that 

AD. 

Authority for this Rulemaking 

Title 49 of the United States Code 

specifies the FAA’s authority to issue 

rules on aviation safety. Subtitle I, 

Section 106, describes the authority of 

the FAA Administrator. Subtitle VII, 

Aviation Programs, describes in more 

detail the scope of the Agency’s 

authority. 

We are issuing this rulemaking under 

the authority described in Subtitle VII, 

Part A, Subpart III, Section 44701, 

‘‘General requirements.’’ Under that 

section, Congress charges the FAA with 

promoting safe flight of civil aircraft in 

air commerce by prescribing regulations 

for practices, methods, and procedures 

the Administrator finds necessary for 

safety in air commerce. This regulation 

is within the scope of that authority. 

This proposed AD is issued in 

accordance with authority delegated by 

the Executive Director, Aircraft 

Certification Service, as authorized by 

FAA Order 8000.51C. In accordance 

with that order, issuance of ADs is 

normally a function of the Compliance 

and Airworthiness Division, but during 

this transition period, the Executive 

Director has delegated the authority to 

issue ADs applicable to transport 

category airplanes and associated 

appliances to the Director of the System 

Oversight Division. 

Regulatory Findings 

We have determined that this 

proposed AD would not have federalism 

implications under Executive Order 

13132. This proposed AD would not 

have a substantial direct effect on the 

States, on the relationship between the 

national Government and the States, or 

on the distribution of power and 


amozie on DSK3GDR082PROD with PROPOSALS1