Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 1653 

of proposed rulemaking for test 

procedures and energy conservations 

standards. That notification also 

solicited nominations for membership 

to the working group. (83 FR 15514) 

This notification announces the next 

round of meetings for this working 

group. 

DOE will host a public meeting and 

webinar on Thursday, February 21, 2019 

from 9:00 a.m. to 5:00 p.m. and on 

Friday, February 22, 2019 from 9:00 

a.m. to 1:00 p.m. in Washington, DC. 

The purpose of these meetings will be 

to negotiate in an attempt to reach 

consensus on proposed Federal test 

procedures and energy conservation 

standards for VRF multi-split systems. 

Public Participation 

Attendance at the Public Meeting 

The time, date, and location of the 

public meeting are listed in the DATES

and ADDRESSES sections of this 

document. If you plan to attend the 

public meeting, please notify the 

ASRAC staff at asrac@ee.doe.gov. 

Due to the REAL ID Act implemented 

by the Department of Homeland 

Security (DHS), there have been recent 

changes regarding ID requirements for 

individuals wishing to enter Federal 

buildings from specific States and U.S. 

territories. DHS maintains an updated 

website identifying the State and 

territory driver’s licenses that currently 

are acceptable for entry into DOE 

facilities at https://www.dhs.gov/real-idenforcement-brief. A driver’s license 

from a State or territory identified as not 

compliant by DHS will not be accepted 

for building entry, and one of the 

alternate forms of ID listed below will 

be required. Acceptable alternate forms 

of Photo-ID include U.S. Passport or 

Passport Card; an Enhanced Driver’s 

License or Enhanced ID-Card issued by 

States and territories as identified on the 

DHS website (Enhanced licenses issued 

by these States and territories are clearly 

marked Enhanced or Enhanced Driver’s 

License); a military ID or other Federal 

government-issued Photo-ID card. 

In addition, you can attend the public 

meeting via webinar. Webinar 

registration information, participant 

instructions, and information about the 

capabilities available to webinar 

participants will be published on DOE’s 

website: https://energy.gov/eere/ 

buildings/appliance-standards-andrulemaking-federal-advisory-committee. 

Participants are responsible for ensuring 

their systems are compatible with the 

webinar software. 

Procedure for Submitting Prepared 

General Statements for Distribution 

Any person who has plans to present 

a prepared general statement may 

request that copies of his or her 

statement be made available at the 

public meeting. Such persons may 

submit requests, along with an advance 

electronic copy of their statement in 

PDF (preferred), Microsoft Word or 

Excel, WordPerfect, or text (ASCII) file 

format, to the appropriate address 

shown in the FOR FURTHER INFORMATION

CONTACT section of this notification. The 

request and advance copy of statements 

must be received at least one week 

before the public meeting and may be 

emailed, hand-delivered, or sent by 

postal mail. DOE prefers to receive 

requests and advance copies via email. 

Please include a telephone number to 

enable DOE staff to make a follow-up 

contact, if needed. 

Conduct of the Public Meeting 

ASRAC’s Designated Federal Officer 

will preside at the public meeting and 

may also use a professional facilitator to 

aid discussion. The meeting will not be 

a judicial or evidentiary-type public 

hearing, but DOE will conduct it in 

accordance with section 336 of EPCA 

(42 U.S.C. 6306). A court reporter will 

be present to record the proceedings and 

prepare a transcript. A transcript of the 

public meeting will be included on 

DOE’s website: https://energy.gov/eere/ 

buildings/appliance-standards-andrulemaking-federal-advisory-committee. 

In addition, any person may buy a copy 

of the transcript from the transcribing 

reporter. Public comment and 

statements will be allowed prior to the 

close of the meeting. 

Docket 

The docket is available for review at 

https://www.regulations.gov/ 

docket?D=EERE-2018-BT-STD-0003, 

including Federal Register notices, 

public meeting attendee lists and 

transcripts, comments, and other 

supporting documents/materials. All 

documents in the docket are listed in 

the https://regulations.gov index. 

However, not all documents listed in 

the index may be publically available, 

such as information that is exempt from 

public disclosure. 

Signed in Washington, DC, on January 18, 

2019. 

Steven Chalk, 

Acting Deputy Assistant Secretary for Energy 

Efficiency and Renewable Energy. 

[FR Doc. 2019–00885 Filed 2–4–19; 8:45 am] 

BILLING CODE 6450–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Parts 365 and 390 

RIN 3064–AE22 

Removal of Transferred OTS 

Regulations Regarding Lending and 

Investment; and Conforming 

Amendments to Other Regulation 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: In order to streamline FDIC 

regulations and reduce regulatory 

burden, the FDIC proposes to rescind 

and remove from the Code of Federal 

Regulations rules entitled ‘‘Lending and 

Investment’’ (part 390, subpart P) that 

were transferred to the FDIC from the 

Office of Thrift Supervision (OTS) on 

July 21, 2011, in connection with the 

implementation of Title III of the DoddFrank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act); amend 

certain sections of existing FDIC 

regulations governing real estate lending 

standards to make it clear that such 

rules apply to all insured depository 

institutions for which the FDIC is the 

appropriate Federal banking agency; 

and amend part 365 by rescinding in its 

entirety the subpart concerning 

registration requirements for residential 

mortgage loan originators because 

supervision and rulemaking authority in 

this area was transferred to the Bureau 

of Consumer Financial Protection 

(Bureau) by the Dodd-Frank Act. 

DATES: Comments must be received on 

or before April 8, 2019. 

ADDRESSES: You may submit comments 

by any of the following methods: 

• FDIC Website: http://www.fdic.gov/ 

regulations/laws/federal/ Follow 

instructions for submitting comments 

on the agency website. 

• FDIC Email: Comments@fdic.gov. 

Include RIN 3064–AE22 on the subject 

line of the message. 

• FDIC Mail: Robert E. Feldman, 

Executive Secretary, Attention: 

Comments, Federal Deposit Insurance 

Corporation, 550 17th Street NW, 

Washington, DC 20429. 

• Hand Delivery to FDIC: 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 a.m. and 5 p.m. 

Please include your name, affiliation, 

address, email address, and telephone 

number(s) in your comment. All 

statements received, including 

attachments and other supporting 

materials, are part of the public record 

1654 Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 

1Public Law 111–203, 124 Stat. 1376 (2010). 

2Codified at 12 U.S.C. 5411. 

3Codified at 12 U.S.C. 5414(b). 

4Codified at 12 U.S.C. 5414(c). 

5 76 FR 39246 (July 6, 2011). 

6Codified at 12 U.S.C. 5412(b)(2)(B)(i)(II). 

7 12 U.S.C. 1811 et seq. 

8Codified at 12 U.S.C. 5412(c)(1). 

9 12 U.S.C. 1813(q). 

10 76 FR 47652 (Aug. 5, 2011). 

11See 76 FR at 47653. 

and are subject to public disclosure. 

You should submit only information 

that you wish to make publicly 

available. 

Please note: All comments received will be 

posted generally without change to http://

www.fdic.gov/regulations/laws/federal/, 

including any personal information 

provided. 

FOR FURTHER INFORMATION CONTACT: 

Karen J. Currie, Senior Examination 

Specialist, (202) 898–3981, email 

address kcurrie@fdic.gov, Division of 

Risk Management Supervision; 

Cassandra Duhaney, Senior Policy 

Analyst, (202) 898–6804, Division of 

Depositor and Consumer Protection; 

Rodney D. Ray, Counsel, Legal Division, 

(202) 898–3556 or Linda Hubble Ku, 

Counsel, Legal Division, (202) 898– 

6634. 

SUPPLEMENTARY INFORMATION: 

I. Policy Objectives 

The policy objectives of the proposed 

rule are twofold. The first is to simplify 

the FDIC’s regulations by removing 

unnecessary regulations, or realigning 

existing regulations in order to improve 

the public’s understanding and to 

improve the ease of reference. The 

second is to promote parity between 

State savings associations and State 

nonmember banks by making both 

classes of institutions subject to the 

same requirements regarding real estate 

lending standards. Thus, as further 

detailed in this SUPPLEMENTARY

INFORMATION Section, the FDIC proposes 

to rescind and remove from the CFR 

rules entitled ‘‘Lending and Investment’’ 

(part 390, subpart P) that were 

transferred to the FDIC from OTS in 

connection with the implementation of 

Title III the Dodd-Frank Act. The FDIC 

takes the view that other existing 

regulations that concern permissible 

activities, safety and soundness 

standards, and real estate lending 

standards replicate the current 

requirements in part 390, subpart P. In 

addition, the proposal would amend 

certain sections of part 365 of the FDIC’s 

existing regulations on real estate 

lending standards to make it clear that 

part 365, subpart A, applies to all 

insured depository institutions for 

which the FDIC is the appropriate 

Federal banking agency. Not only would 

this approach simplify the FDIC’s 

regulations by removing unnecessary 

provisions, but it would have the added 

benefit of creating parity between state 

savings associations and state 

nonmenber banks by ensuring that both 

classes of institutions are subject to the 

same requirements regarding safety and 

soundness and real estate lending 

standards. Finally, the FDIC proposes to 

amend part 365 by rescinding in its 

entirety subpart B concerning 

registration requirements for residential 

mortgage loan originators because 

supervision and rulemaking authority in 

this area was transferred to the Bureau 

by the Dodd-Frank Act and the Bureau 

has issued its own regulation, 

Regulation G. 

II. Background 

A. The Dodd-Frank Act 

The Dodd-Frank Act, signed into law 

on July 21, 2010, provided for a 

substantial reorganization of the 

regulation of State and Federal savings 

associations and their holding 

companies.1 Beginning July 21, 2011, 

the transfer date established by section 

311 of the Dodd-Frank Act,2 the powers, 

duties, and functions formerly 

performed by the OTS were divided 

among the FDIC, as to State savings 

associations, the Office of the 

Comptroller of the Currency (OCC), as to 

Federal savings associations, and the 

Board of Governors of the Federal 

Reserve System (FRB), as to savings and 

loan holding companies. Section 316(b) 

of the Dodd-Frank Act 3 provides the 

manner of treatment for all orders, 

resolutions, determinations, regulations, 

and other advisory materials that have 

been issued, made, prescribed, or 

allowed to become effective by the OTS. 

The section provides that if such 

materials were in effect on the day 

before the transfer date, they continue in 

effect and are enforceable by or against 

the appropriate successor agency until 

they are modified, terminated, set aside, 

or superseded in accordance with 

applicable law by such successor 

agency, by any court of competent 

jurisdiction, or by operation of law. 

Pursuant to section 316(c) of the 

Dodd-Frank Act,4 on June 14, 2011, the 

FDIC’s Board of Directors approved a 

‘‘List of OTS Regulations to be Enforced 

by the OCC and the FDIC Pursuant to 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act.’’ This list was 

published by the FDIC and the OCC as 

a Joint Notice in the Federal Register on 

July 6, 2011.5

Although section 312(b)(2)(B)(i)(II) of 

the Dodd-Frank Act,6 granted the OCC 

rulemaking authority relating to both 

State and Federal savings associations, 

nothing in the Dodd-Frank Act affected 

the FDIC’s existing authority to issue 

regulations under the Federal Deposit 

Insurance Act (FDI Act) 7 and other laws 

as the ‘‘appropriate Federal banking 

agency’’ or under similar statutory 

terminology. Section 312(c)(1) of the 

Dodd-Frank Act 8 revised the definition 

of ‘‘appropriate Federal banking 

agency’’ contained in section 3(q) of the 

FDI Act,9 to add State savings 

associations to the list of entities for 

which the FDIC is designated as the 

‘‘appropriate Federal banking agency.’’ 

As a result, when the FDIC acts as the 

designated ‘‘appropriate Federal 

banking agency’’ (or under similar 

terminology) for State savings 

associations, as it does here, the FDIC is 

authorized to issue, modify, and rescind 

regulations involving such associations, 

as well as for State nonmember banks 

and insured branches of foreign banks. 

As noted above, on June 14, 2011, 

operating pursuant to this authority, the 

FDIC’s Board of Directors (Board) issued 

a list of regulations of the former OTS 

that the FDIC would enforce with 

respect to State savings associations. 

Also on June 14, 2011, the FDIC’s Board 

reissued and redesignated certain 

regulations transferred from the former 

OTS. These transferred OTS regulations 

were published as new FDIC regulations 

in the Federal Register on August 5, 

2011.10 When the FDIC republished the 

transferred OTS regulations as new 

FDIC regulations, it specifically noted 

that its staff would evaluate the 

transferred OTS rules and might later 

recommend incorporating the 

transferred OTS regulations into other 

FDIC regulations, amending them, or 

rescinding them, as appropriate.11

B. Transferred OTS Regulations 

(Transferred to the FDIC’s Part 390, 

Subpart P) 

A subset of the regulations transferred 

to the FDIC from the OTS concern 

lending and investment provisions 

applicable to State savings associations. 

The OTS regulations, formerly found at 

12 CFR part 560, sections 560.1, 560.3, 

560.100, 560.101, 560.120, 560.121, 

560.130, 560.160, 560.170, and 560.172, 

were transferred to the FDIC with only 

nomenclature changes and now 

comprise part 390, subpart P. Each 

provision of part 390, subpart P is 

discussed in Part III of this 

SUPPLEMENTARY INFORMATION section, 

below. 

The FDIC has conducted a careful 

review and comparison of part 390, 

Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 1655 

12The Secure and Fair Mortgage Licensing Act of 

2008 (S.A.F.E. Act) was enacted as part of the 

Housing and Economic Recovery Act of 2008, 

Public Law 110–289, 122 Stat. 2654, sections 1501– 

17 (codified at 12 U.S.C. 5101–16) as amended by 

Title X of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act) (Pub. L. 

111–203, 124 Stat. 1376). The S.A.F.E. Act requires 

residential mortgage loan originators employed by 

depository institutions, subsidiaries that are owned 

and controlled by a depository institution and 

regulated by a federal banking agency, and 

institutions regulated by the Farm Credit 

Administration to register with the Nationwide 

Mortgage Licensing System and Registry, obtain a 

unique identifier, and maintain such registration. 

13See 81 FR 25323 (April 28, 2016). 

14 12 U.S.C. 1831e. 

15See 12 U.S.C. 1461 et seq. 

16 12 CFR 362.9(a). 

17 12 CFR 362.9(c). 

18 61 FR 50951, 50958 (Sept. 30, 1996). 

19 12 CFR 560.120. 

20 61 FR at 50958. 

21See 76 FR 48950 (Aug. 9, 2011). 

22 12 CFR 390.267 (a). A footnote lists examples 

of laws or rules of practice applicable to letters of 

credit and other independent undertakings. 

23 12 CFR 362.9(a). 

subpart P and other FDIC regulations 

concerning permissible activities for 

State savings associations (12 CFR part 

362, subpart C (part 362, subpart C)), 

activities implicating safety and 

soundness (12 CFR part 364 (part 364 

and its appendix A)), and activities 

implicating real estate lending standards 

(part 365, subpart A and its appendix 

A). As discussed in Part III of this 

SUPPLEMENTARY INFORMATION section, the 

FDIC proposes to rescind part 390, 

subpart P because the FDIC considers 

the provisions contained in part 390, 

subpart P to be unnecessary because of 

the applicability of other FDIC 

regulations. 

C. Part 365, Subpart A, Real Estate 

Lending Standards 

The FDIC proposes to further 

effectuate the transfer of supervisory 

authority for State savings associations 

from the former OTS to the FDIC by 

amending certain parts of part 365 of the 

FDIC’s regulations to clarify that part 

365, subpart A applies to all insured 

depository institutions, including State 

savings associations, for which the FDIC 

is the appropriate Federal banking 

agency. As discussed in Part IV of this 

SUPPLEMENTARY INFORMATION section, the 

FDIC proposes to amend part 365, 

subpart A in order to make part 365, 

subpart A applicable to all insured 

depository institutions, including State 

savings associations, for which the FDIC 

is the appropriate Federal banking 

agency. 

D. Part 365, Subpart B, Registration of 

Residential Mortgage Loan Originators 

Simultaneously, the FDIC proposes to 

take the opportunity to rescind, in its 

entirety, subpart B of part 365, which 

relates to registration requirements for 

residential mortgage loan originators, 

due to the Bureau’s issuance of its 12

regulation, Regulation G, pursuant to 

the Bureau’s authority under the DoddFrank Act.13 As discussed in Part V of 

this SUPPLEMENTARY INFORMATION

section, the FDIC considers the 

provisions contained in part 365, 

subpart B to be unnecessary, redundant, 

or otherwise duplicative of the Bureau 

regulation governing this area. 

III. Comparison of FDIC Regulations 

With the Transferred OTS Regulations 

To Be Rescinded 

A. Permissible Activities for State 

Savings Associations 

1. FDIC’s 12 CFR Part 362, Subpart C— 

Activities of Insured State Savings 

Associations 

Part 362 of the FDIC’s regulations 

governs the activities and investments 

in which insured State banks and 

insured State savings associations may 

engage as principals. Subpart C of part 

362 implements section 28 of the FDI 

Act.14 Subpart C specifically addresses 

insured State savings associations and 

restricts their activities and investments 

to those permissible for a Federal 

savings association under any statute, 

including the Home Owners’ Loan 

Act 15 (HOLA), and to those recognized 

as permissible for a Federal savings 

association by the OCC (or former OTS) 

or in bulletins, orders, or written 

interpretations of either the OCC or 

former OTS.16 The FDIC has indicated 

that it will allow State savings 

associations and their service 

corporations to ‘‘undertake only safe 

and sound activities and investments 

that do not present significant risks to 

the Deposit Insurance Fund and that are 

consistent with the purposes of Federal 

deposit insurance and other applicable 

law.’’ 17

2. Former OTS Part 560, Sections 

560.120 and 560.121 (Transferred to the 

FDIC as Sections 390.267 and 390.268) 

a. Section 390.267—Letters of Credit 

and Other Independent Undertakings To 

Pay Against Documents 

As part of a regulatory reorganization 

and modernization initiative, section 

560.120 was promulgated by the OTS in 

1996. At that time, the OTS 

incorporated the substance of former 

section 545.48 (authorizing Federal 

savings associations to issue letters of 

credit) into new section 560.120 that 

applied to both Federal and State 

savings associations.18 Section 560.120 

was designed to provide uniform 

authority, standards and restrictions for 

all savings associations to consider 

before issuing a letter of credit or 

entering into another independent 

undertaking that had been recognized in 

law or approved by the OTS.19 The 

former OTS rule largely mirrored the 

approach taken by the OCC for national 

banks, which incorporated market 

standards and international conventions 

applicable to letters of credit.20

Section 560.120 was transferred to the 

FDIC and redesignated as section 

390.267 to cover letters of credit and 

other independent undertakings to pay 

against documents issued by or entered 

into by State savings associations, and it 

was also transferred to the OCC and 

redesignated as section 160.120 to cover 

Federal savings associations that issue 

letters of credit and enter into other 

independent undertakings.21

Sections 390.267 and 160.120 provide 

that subject to safety and soundness 

considerations, ‘‘a [State/Federal] 

savings association may issue and 

commit to issue letters of credit within 

the scope of applicable laws or rules of 

practice recognized by law. It may also 

issue other independent undertakings 

within the scope of such laws or rules 

of practice recognized by law, that have 

been approved by the [FDIC/OCC] 

(approved undertaking).’’ 22

As noted above in Part III.A.1 of this 

SUPPLEMENTARY INFORMATION section, 

part 362, subpart C of the FDIC’s 

regulations prohibits insured State 

savings associations and their service 

corporations from engaging in activities 

and investments of a type that are not 

permissible for a Federal savings 

association and their service 

corporations. 

Under subpart C of part 362, the 

phrase ‘‘activities and investments of a 

type that are not permissible for a 

Federal savings association’’ generally 

means any activity not authorized 

expressly by HOLA and activities not 

recognized as permissible by OCC 

regulation or other written supervisory 

directive from the OCC or from the OTS 

to the extent not modified, terminated, 

set aside, or superseded by the OCC.23

Federal savings associations are 

permitted to issue letters of credit and 

may issue other independent 

undertakings pursuant to 12 CFR 

160.50, as transferred by the OCC from 

the OTS, subject to standards and 

restrictions found in 12 CFR 160.120, 

discussed above. 

Because 12 CFR 362.9 allows State 

savings associations to exercise the 

power permitted to Federal savings 

associations by 12 CFR 160.50 and must 

1656 Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 

24 12 U.S.C. 1464(c)(1)(P); see 12 U.S.C. 1469. 

25 12 U.S.C. 1831p–1. Section 132 of the Federal 

Deposit Insurance Corporation Improvement Act of 

1991, Public Law 102–242, 105 Stat. 2236 (codified 

at 12 U.S.C. 1831p–1) added section 39 to the FDI 

Act. Section 39 was later amended by section 956 

of the Housing and Community Development Act 

of 1992, Public Law 102–550, 106 Stat. 3672 and 

section 318 of the Riegle Community Development 

and Regulatory Improvement Act of 1994 (CDRI 

Act), Public Law 103–325, 108 Stat. 2160. 

26 12 U.S.C. 1831p–1(a). 

27 12 U.S.C. 1831p–1(b). 

28 12 U.S.C. 1831p–1(c). 

29 60 FR 35674 (Jul. 10, 1995). 

30 61 FR 43948 (Aug. 27, 1996). 

31See 60 FR at 35686; 61 FR at 43952. The FDIC 

transferred part 570 of the OTS’s regulations to part 

391, subpart B, of the Code of Federal Regulations. 

Subsequently, the FDIC rescinded part 391, subpart 

B and made conforming amendments to 12 CFR 

part 364 to reflect its applicability to all entities for 

which the FDIC is the applicable Federal banking 

agency. See 80 FR 65903 (Oct. 28, 2015). 

32Appendix B was added in accordance with 

section 501 of the Gramm-Leach-Bliley Financial 

Modernization Act of 1999, Public Law 106–102, 

113 Stat. 1338, codified at 15 U.S.C. 6801, which 

statute required the Agencies to establish 

appropriate information security standards in order 

to protect nonpublic personal information. 

33 12 U.S.C. 1831n. 

34 12 U.S.C. 1817 (a)(3); 12 U.S.C. 1464(v). 

35 12 CFR part 364 app. A, sec. II.C. 

36 Id. sec. II.G. 

37 Id. 

follow State law, the standards and 

restrictions applicable to Federal 

savings associations that issue letters of 

credit and engage in other independent 

undertakings set forth in 12 CFR 

160.120, and considerations of safety 

and soundness, the FDIC considers 

section 390.267 to be unnecessary and 

proposes that it be rescinded. 

b. Section 390.268—Investment in State 

Housing Corporations 

Section 390.268 of part 390, subpart 

P, formerly designated as OTS section 

560.121, applies to all savings 

associations and addresses investments 

in or loans to State housing 

corporations. 

Under subpart C of part 362, State 

savings associations generally are 

permitted to invest in State housing 

corporations because Federal savings 

associations are expressly authorized to 

invest in State housing corporations 

pursuant to section 5(c)(1)(P) of 

HOLA.24 Because such investments are 

expressly permissible for Federal 

savings associations to make under 

HOLA, State savings associations may 

rely on part 362 in making such 

investments consistent with State law 

and in a safe and sound manner. As 

such, the FDIC considers section 

390.268 to be unnecessary and proposes 

that it be rescinded. 

B. Activities Implicating Safety and 

Soundness 

1. FDIC’s 12 CFR Part 364—Standards 

for Safety and Soundness 

The FDIC’s standards for safety and 

soundness were promulgated in the 

mid-1990s jointly by the FDIC, along 

with the FRB, the OCC, and the OTS 

(collectively, ‘‘the Agencies’’) pursuant 

to section 39 of the FDI Act.25 Section 

39(a) of the FDI Act 26 required the 

Agencies to prescribe standards for 

safety and soundness relating to the 

following: (A) Internal controls and 

information systems; (B) internal audit 

systems; (C) loan documentation; (D) 

credit underwriting; (E) interest rate 

exposure; (F) asset growth; (G) asset 

quality; (H) earnings; and (I) 

compensation and benefits, as well as 

such other operational and managerial 

standards as appropriate. Section 39(b) 

of the FDI Act required the Agencies to 

prescribe standards for insured 

depository institutions related to asset 

quality, earnings, and stock valuation.27

Further, section 39(c) of the FDI Act 

required the Agencies to develop 

standards related to preventing unsafe 

and unsound practices related to 

compensation arrangements.28

In 1995, the Agencies published part 

364 as a final rule with an appendix that 

implements Section 39(a) of the FDI Act 

regarding standards for safety and 

soundness (appendix A).29 Later, part 

364, appendix A was amended to reflect 

subsections 39(b) and (c) of the FDI 

Act.30 The OTS’s part 570, as amended, 

implemented section 39 of the FDI Act 

for all savings associations.31

The FDIC’s part 364, appendix A 

(regarding safety and soundness) and 

appendix B (regarding information 

security) implement section 39 of the 

FDI Act.32 Section 364.101 of part 364 

provides that appendix A and appendix 

B apply to all insured State nonmember 

banks, State-licensed insured branches 

of foreign banks, and State savings 

associations. 

Generally, part 364, appendix A 

addresses operational and managerial 

standards, compensation standards, and 

standards related to asset quality, 

earnings, and stock valuation and also 

provides that an institution should have 

internal controls and information 

systems that are appropriate to the size 

of the institution and the nature, scope, 

and risk of its activities and that provide 

for: (1) An organizational structure that 

establishes clear lines of authority and 

responsibility for monitoring adherence 

to established policies; (2) effective risk 

assessment; (3) timely and accurate 

financial, operational, and regulatory 

reports; (4) adequate procedures to 

safeguard and manage assets; and (5) 

compliance with applicable laws and 

regulations. 

With respect to timely and accurate 

financial, operational and regulatory 

reports, FDIC-supervised institutions are 

required to prepare such reports in 

accordance with generally accepted 

accounting principles 33 (GAAP) and are 

also required to file quarterly Reports of 

Condition.34

Appendix A of part 364 also 

addresses loan documentation, 

requiring institutions to establish and 

maintain loan documentation practices 

that: (1) Enable the institution to make 

informed lending decisions and to 

assess risk, as necessary, on an ongoing 

basis; (2) identify the purpose of a loan 

and the source of repayment, and assess 

the ability of the borrower to repay the 

indebtedness in a timely manner; (3) 

ensure that any claim against a borrow 

is legally enforceable; (4) demonstrate 

appropriate administration monitoring 

of a loan; and (5) take account the size 

and complexity of the loan.35

Appendix A of part 364 sets standards 

for asset quality and provides that an 

insured depository institution ‘‘establish 

and maintain a system that is 

commensurate with the institution’s 

size and the nature and scope of its 

operations to identify problem assets 

and prevent deterioration of those 

assets’’ 36 by: (1) Conducting periodic 

asset quality reviews to identify 

problem assets; (2) estimating the 

inherent losses in those assets and 

establish reserves that are sufficient to 

absorb estimated losses; (3) comparing 

problem asset totals to capital; (4) taking 

appropriate corrective action to resolve 

problem assets; (5) considering the size 

and potential risks of material asset 

concentrations; and (6) providing 

periodic asset reports with adequate 

information for management and the 

board of directors to assess the level of 

asset risk.37

Taken together, part 364 and 

appendix A constitute the FDIC’s longstanding expectations for all prudently 

managed insured depository 

institutions, but leave specific methods 

of achieving these objectives to each 

institution. Specifically, they provide a 

framework for sound corporate 

governance and the supervision of 

operations designed to prompt an 

institution to identify emerging 

problems and correct deficiencies before 

capital becomes impaired. The FDIC 

uses these standards in its supervisory 

examination process in order to assess 

an institution’s risk profile and assign 

an appropriate rating during the 

supervisory examination process, with 

Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 1657 

38 12 U.S.C. 1831p–1(e). 

39See 12 U.S.C. 1831p–1(e); 12 CFR 308.300, et 

seq. 

40 12 CFR 390.262. 

41See 54 FR 49411, 49560 (Nov. 30, 1989). 

42See 61 FR 60173, 60176 (Nov. 27, 1996); OTS 

Interpretative Letter, Loan Procurement Fees (Dec. 

14, 1994), available at http://www.occ.gov/static/ 

ots/legal-opinions/ots-lo-12-14-1994a.pdf. Former 

section 560.130 was previously listed as section 

563.40(a), see 61 FR at 60176, and the 1994 OTS 

interpretive letter references this earlier section 

number. 

43 61 FR at 60176. 

44 12 CFR 390.262. 

45The OCC prohibition on loan procurement fees 

is located at 12 CFR 160.130. See 76 FR 48950, 

49043 (Aug. 9, 2011). 

46 12 U.S.C. 1818. 

47 12 CFR 560.160. 

48See 54 FR at 49415. 

49See 61 FR 50951, 50982 (Sept. 30, 1996). 

50 Id. at 50963. 

51 12 CFR 364, app. A, sec. II.G. 

material deficiencies documented in the 

Report of Examination. Pursuant to 

section 39(e) of the FDI Act,38 an FDICsupervised institution’s failure to meet 

the standards may cause the FDIC to 

require the institution to submit a safety 

and soundness compliance plan and if 

the institution does not comply with its 

plan, the FDIC will issue an order to 

correct safety and soundness 

deficiencies.39

2. Former OTS Safety and Soundness— 

Part 390, Subpart P, Sections 390.260, 

390.262, 390.269, 390.270, 390.271, and 

390.272 

a. Section 390.260—General 

Former OTS section 560.1, as 

modified by the FDIC in transferred 

section 390.260, provided the general 

authority and scope for safety-andsoundness-based lending and 

investment for State savings 

associations. It is substantively similar 

to 12 CFR 364.101. Because the two 

regulations are substantively similar and 

section 364.101 already applies to State 

savings associations, the FDIC considers 

it duplicative to retain section 390.260. 

Accordingly, the FDIC proposes that 

section 390.260 be rescinded. 

b. Section 390.262—Definitions 

Former section 560.3 provided a set of 

definitions to several commonly used 

terms related to lending, such as 

‘‘consumer loans,’’ home loans,’’ ‘‘real 

estate loans,’’ and ‘‘credit card,’’ and it 

is not expressly duplicative of or 

substantively similar to any 

corresponding FDIC regulation. 

However, as transferred and 

redesignated by the FDIC, the 

definitions contained in section 390.262 

are only relevant to the provisions of 

part 390, subpart P. Specifically, section 

390.262 provides a list of definitions 

‘‘[f]or purposes of this subpart.’’ 40

Because the FDIC has concluded that 

the substantive provisions of part 390, 

subpart P are unnecessary, redundant, 

or otherwise duplicative of other FDIC 

regulations, it follows that the 

definitions contained in section 390.262 

that are only relevant to subpart P are 

also unnecessary. Accordingly, the FDIC 

considers section 390.262 to be 

unnecessary and proposes that it be 

rescinded. 

c. Section 390.269—Prohibition on Loan 

Procurement Fees 

Former section 560.130 addressed 

loan procurement fees, and is not 

expressly duplicative of or substantively 

similar to any corresponding FDIC 

regulation. This section was originally 

transferred to the OTS from the Bank 

Board in 1989 41 and has been the 

subject of a regulatory clarification and 

an OTS interpretative letter.42

Specifically, the provision had applied 

to affiliated persons of savings 

associations but, in response to requests 

for clarification and public comment, 

the OTS revised it to apply only to 

natural persons.43 As transferred to the 

FDIC, section 390.269 provides, 

If you are a director, officer, or other 

natural person having the power to direct the 

management or policies of a State savings 

association, you must not receive, directly or 

indirectly, any commission, fee, or other 

compensation in connection with the 

procurement of any loan made by the State 

savings association or a subsidiary of the 

State savings association.44

Although the OTS maintained this 

provision in its regulations since 1989, 

of the other Federal banking agencies, 

only the OCC has a corresponding 

provision in its regulations, as the OCC 

also transferred former section 560.130 

from the OTS.45 Rather than identify 

and prohibit particular types of 

compensation or fees on a case-by-case 

basis, the FDIC’s approach has been to 

act against compensation practices that 

are unsafe or unsound, or represent a 

breach of an officer’s or director’s duty 

not to place his or her own interests 

ahead of those of the institution; and 

where necessary, the FDIC can take 

action under section 8 of the FDI Act.46

Because the FDIC can act against 

compensation practices that are 

demonstrably unsafe or unsound or a 

breach of fiduciary duty, the FDIC 

considers section 390.269 to be 

unnecessary and proposes that it be 

rescinded. 

d. Section 390.270—Asset Classification 

Former OTS section 560.160, entitled 

‘‘Asset Classification,’’ required savings 

associations to classify their assets on a 

regular basis in accordance with the 

OTS’s Thrift Activities Handbook.47 The 

regulation originally was transferred to 

the OTS from the Bank Board in 1989 

and it contained specific accounting 

classification metrics.48 It was revised 

over time in response to initiatives to 

modernize and streamline Federal 

banking regulations.49 Commenters had 

suggested that the OTS remove the 

classification metrics from the 

regulation and move them to the Thrift 

Activities Handbook.50 In response to 

these comments, the OTS simplified 

former section 560.160 but retained 

portions of the regulation to ensure that 

a savings association’s board of directors 

would be responsible for monitoring its 

classification system. 

Transferred to the FDIC as section 

390.270, the current regulation requires, 

among other things, State savings 

associations to classify assets on a 

regular basis in a manner consistent 

with the classification system used by 

the FDIC and to establish adequate 

valuation allowances or charge-offs, as 

appropriate, consistent with GAAP and 

the practices of the Federal banking 

agencies. The FDIC’s implementation of 

part 364, appendix A provides the 

FDIC’s minimum standards for 

establishing and maintaining ‘‘a system 

that is commensurate with the 

institution’s size and the nature and 

scope of its operations to identify 

problem assets and prevent 

deterioration of those assets.’’ 51

State savings associations are already 

expected to maintain an appropriate 

level of allowance for loan and lease 

losses in accordance with GAAP. 

Because safety and soundness 

principles require all insured depository 

institutions for which the FDIC is the 

appropriate Federal banking agency— 

including State savings associations—to 

provide timely and accurate financial, 

operational, and regulatory reports in 

accordance with GAAP, the FDIC 

considers section 390.270 to be 

unnecessary and proposes that it be 

rescinded. 

e. Section 390.271—Records for Lending 

Transactions 

As transferred to the FDIC, section 

390.271 requires State savings 

associations to establish and maintain 

loan documentation practices that 

mirror all of the requirements of part 

364, appendix A. Because the lending 

documentation practices and 

requirements contained in section 

390.271 are contained in part 364, 

appendix A, as discussed above, the 

1658 Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 

52See 54 FR at 49587. 

53 12 CFR 563.172 (1994). 

54See 12 CFR 390.272; cf 12 CFR 560.172. 

55 12 CFR 364, app. A., sec. II.G. 

56See FIL–62–2008. 

57See Public Law 102–242, 105 Stat. 2236 

(codified at 12 U.S.C. 1828(o)). 

58See 57 FR 62890, 62900 (Dec. 31, 1992). 

59See section 312(c) of the Dodd-Frank Act, 

codified at 12 U.S.C. 1813(q). 

60 12 U.S.C. 1813(q). 

61 12 U.S.C. 5106. 

62See section 1100 of the Dodd-Frank Act. 

63 12 CFR 1007.101(c). 

FDIC considers section 390.271 to be 

unnecessary and proposes that it be 

rescinded. 

f. Section 390.272—Re-Evaluation of 

Real Estate Owned 

Former OTS section 560.172 also was 

part of the transfer to OTS and 

recodification of Bank Board regulations 

in 1989.52 It originally addressed reevaluation of assets and, among other 

things, required a savings association to 

appraise each parcel of real estate 

owned at the earlier of in-substance 

foreclosure or at the time of the savings 

association’s acquisition, and at such 

times thereafter as dictated by prudent 

management policy or as required by 

the OTS’ regional director.53 The 

provision did not apply to real estate 

owned by the institution that was sold 

and reacquired less than 12 months 

subsequent to the most recent appraisal. 

The form of the regulation transferred to 

the FDIC as section 390.272 remains 

substantively the same as the most 

recent version adopted by the former 

OTS.54

As transferred to the FDIC, section 

390.272 is not duplicative of any other 

existing FDIC regulation. However, as 

discussed in part III.B.1. of this 

SUPPLEMENTARY INFORMATION section, 

above, the FDIC relies on part 364, 

appendix A to convey its expectation 

that FDIC-supervised institutions 

should ‘‘establish and maintain a system 

that is commensurate with the 

institution’s size and the nature and 

scope of its operations to identify 

problem assets and prevent 

deterioration of those assets’’ 55 and, as 

State-chartered institutions, to follow 

State law with respect to the initial and 

subsequent valuations of other real 

estate (ORE).56 The FDIC expects all 

supervised institutions to adhere to part 

364 with regard to maintaining a system 

to identify and manage problem assets 

(including ORE) and to provide for 

timely and accurate financial, 

operational, and regulatory reports 

according to GAAP and the Call Report 

Instructions as it pertains to the 

appropriate carrying value of ORE. 

Further, State law generally provides for 

when an appraisal is necessary for Statechartered institutions (including savings 

associations). Therefore, the FDIC 

considers section 390.272 to be 

unnecessary and proposes that it be 

rescinded. 

Accordingly, as explained in the 

analysis above, the FDIC proposes to 

remove sections 390.260, 390.262, 

390.269, 390.270, 390.271 and 390.272 

of part 390, subpart P because these 

sections are unnecessary, redundant of, 

or otherwise duplicative of the safety 

and soundness standards delineated in 

part 364 and its appendix A. 

C. Activities Implicating Real Estate 

Lending Provisions 

1. The FDIC’s Part 365—Real Estate 

Lending Standards 

Section 304 of the Federal Deposit 

Insurance Corporation Improvement Act 

of 1991 (FDICIA) required the Agencies 

to adopt uniform regulations prescribing 

standards for extensions of credit that 

are secured by liens on interests in real 

estate or made for the purpose of 

financing the construction of a building 

or other improvements to real estate.57

The Agencies published their joint rule 

and appendices for real estate lending 

on the last day of 1992, and the rules 

became effective on March 19, 1993.58

The FDIC’s regulation is found at part 

365, subpart A, which includes an 

appendix A regarding real estate 

lending. 

2. Sections 390.264, 390.265, Including 

Appendix to 390.265—Real Estate 

Lending 

Former OTS sections 560.100 and 

560.101 (including the appendix) 

implemented real estate lending 

provisions, as required by FDICIA. 

Former sections 560.100 and 560.101 

were transferred to the FDIC as sections 

390.264 and 390.265 (including the 

appendix to part 365, subpart A). These 

regulations are nearly identical to 12 

CFR 365.1 and 365.2 (including 

appendix A to part 365, subpart A). 

However, in order to include State 

savings associations within the scope of 

part 365 and its appendix A, it is 

necessary for the FDIC to make the 

technical amendment as discussed in 

section IV of this SUPPLEMENTARY

INFORMATION section, below. 

Because the FDIC considers sections 

390.264 and 390.265 (including the 

appendix to section 390.265) to be 

duplicative of part 365, subpart A, as 

proposed to be amended herein, the 

FDIC proposes to rescind and remove 

them from the Code of Federal 

Regulations. 

IV. Proposed Amendment to Part 365, 

Subpart A 

As discussed in part III.C of this 

SUPPLEMENTARY INFORMATION, the FDIC’s 

part 365 subpart A addresses real estate 

lending standards for insured State 

nonmember banks (including Statelicensed insured branches of foreign 

banks). The Dodd-Frank Act added State 

savings associations to the list of entities 

for which the FDIC is designated as the 

appropriate Federal banking agency.59

To clarify that part 365 applies to all 

institutions for which the FDIC is the 

appropriate Federal banking agency, the 

FDIC proposes to amend sections 365.1 

and 365.2 of part 365 to replace the 

phrases ‘‘insured state nonmember 

banks (including state-licensed insured 

branches of foreign banks)’’ and ‘‘state 

nonmember bank’’ throughout subpart 

A with the phrase ‘‘FDIC-supervised 

institution.’’ Under the proposal, section 

365.1 would be revised to add the 

definition of the term ‘‘FDIC-supervised 

institution’’ to mean any insured 

depository institution for which the 

FDIC is the appropriate Federal banking 

agency pursuant to section 3(q) of the 

FDI Act.60

V. Rescinding Part 365, Subpart B 

The FDIC issued part 365, subpart B 

to implement the Federal registration 

requirements for mortgage loan 

originators required by the S.A.F.E. Act. 

As relevant here, the S.A.F.E. Act 

required the Agencies, the Farm Credit 

Administration, and National Credit 

Union Administration (the ‘‘S.A.F.E. 

Act Agencies’’) to develop and maintain 

a system for registering mortgage loan 

originators employed by institutions 

regulated by the agencies.61

However, the Dodd-Frank Act 

amended the S.A.F.E. Act, transferring 

that authority from the S.A.F.E. Act 

Agencies to the Bureau.62 On December 

19, 2011, the Bureau published an 

interim final rule incorporating the 

S.A.F.E. Act into its Regulation G. On 

April 28, 2016, the Bureau finalized the 

interim final rule, which is substantially 

duplicative to the FDIC’s S.A.F.E. Act 

regulation at part 365, subpart B. The 

Bureau’s regulation addresses Federal 

registration requirements for mortgage 

loan originators and applies to all FDICsupervised institutions.63 As such, the 

FDIC proposes to rescind part 365, 

Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 1659 

64 44 U.S.C. 3501–3521. 

subpart B because it is outdated and no 

longer necessary. 

VI. Summary 

If the proposal is finalized, 12 CFR 

part 390, subpart P would be removed 

because it is largely unnecessary, 

redundant, or duplicative of existing 

FDIC regulations; the requirements of 

part 365, subpart A expressly would 

apply to all FDIC-supervised insured 

depository institutions; and part 365 

subpart B would be removed because it 

is outdated and no longer necessary due 

to the transfer of S.A.F.E. Act 

rulemaking power to the Bureau. These 

three initiatives will serve to streamline 

the FDIC’s regulations and reduce the 

regulatory burden on FDIC-supervised 

institutions. 

VII. Expected Effects 

As explained in detail in Section III 

of this SUPPLEMENTARY INFORMATION

section, certain OTS regulations 

transferred to the FDIC by the DoddFrank Act relating to lending and 

investment are either unnecessary or 

effectively duplicate existing FDIC 

regulations. This proposal would 

eliminate those transferred OTS 

regulations. The proposal also would 

clarify that the standards in part 365 

apply to State savings associations 

because the FDIC is the ‘‘appropriate 

Federal banking agency’’ pursuant to the 

FDI Act. 

As of June 30, 2018, the FDIC 

supervises 3,575 depository institutions, 

of which 41 (1.1%) are State savings 

associations. The proposed rule 

primarily would affect regulations that 

govern State savings associations. 

As explained previously, the 

proposed rule would remove sections 

390.260, 390.261, 390.262, 390.263, 

390.264, 390.265, 390.266, 390.267, 

390.268, 390.269, 390.270, 390.271, and 

390.272 of part 390, subpart P because 

these sections are unnecessary, 

redundant of, or otherwise duplicative 

of other FDIC regulations regarding 

safety and soundness. Because these 

regulations are redundant to existing 

regulations, rescinding them will not 

have any substantive effects on FDICsupervised institutions. 

Thus, for example, as explained 

previously, part 364 covers State savings 

associations in section 364.101 and its 

appendix A. Because the lending 

documentation practices and standards 

in part 364, appendix A are 

substantively similar to existing 

regulations for State savings 

associations found in section 390.271, 

rescission of section 390.271 would not 

have any substantive effects on FDICsupervised institutions. The same 

would be true for the other sections of 

part 390, subpart P. 

The proposed rule would amend part 

365, subpart A so that it would 

expressly apply to State savings 

associations. Because the real estate 

lending requirements in sections 365.1 

and 365.2 and appendix A to part 365, 

subpart A are substantively identical to 

currently applicable regulations for 

State savings associations found in 

390.264 and 390.265 (including the 

appendix to 390.265), amending part 

365, subpart A to include State savings 

associations would not have any 

substantive effects on FDIC-supervised 

institutions. 

Finally, as previously explained, the 

proposed rule would rescind part 365, 

subpart B because the authority to 

implement Federal registration 

requirements for mortgage loan 

originators has been transferred by 

statute to the Bureau. Because 

rulemaking authority for the S.A.F.E. 

Act was transferred to the Bureau in 

December 2011, the removal of the 

FDIC’s S.A.F.E. Act regulations would 

not have any substantive effects on 

FDIC-supervised institutions. 

The FDIC invites comments on all 

aspects of this analysis. In particular, 

would the proposed rule have any costs 

or benefits to covered entities that the 

FDIC has not identified? 

VIII. Alternatives 

The FDIC has considered alternatives 

to the proposed rule but believes that 

the proposed amendments represent the 

most appropriate option for covered 

institutions. As discussed previously, 

the Dodd-Frank Act transferred certain 

powers, duties, and functions formerly 

performed by the OTS to the FDIC. The 

FDIC’s Board reissued and redesignated 

certain transferred regulations from the 

OTS, but noted that it would evaluate 

them and might later incorporate them 

into other FDIC regulations, amend 

them, or rescind them, as appropriate. 

The FDIC has evaluated the existing 

regulations relating to lending and 

investment of covered entities, 

including part 365 and part 390, subpart 

P. The FDIC considered the status quo 

alternative of retaining the current 

regulations but did not choose to do so 

because it would be needlessly complex 

for substantively similar regulations 

regarding lending and investment 

activities of State nonmember banks and 

State savings associations to be located 

in different locations within the Code of 

Federal Regulations. The FDIC believes 

it would be procedurally complex for 

FDIC-supervised institutions to 

continue to refer to these separate sets 

of regulations. Therefore, the FDIC is 

proposing to amend and streamline the 

FDIC’s regulations. 

IX. Request for Comments 

The FDIC invites comments on all 

aspects of this proposed rulemaking. In 

particular, the FDIC requests comments 

on the following questions: 

1. Are the provisions of 12 CFR parts 

362, 364, and 365 sufficient to provide 

consistent and effective requirements 

related to permissible lending and 

investment activities for all insured 

depository institutions for which the 

FDIC is the appropriate Federal banking 

agency? Please provide examples, data, 

or otherwise substantiate your answer. 

2. What negative impacts, if any, can 

you foresee in the FDIC’s proposal to 

rescind part 390, subpart P and part 

365, subpart B and remove them from 

the Code of Federal Regulations? 

3. As to the OTS’s former rule 

prohibiting loan procurement fees, the 

FDIC noted above that no other Federal 

banking agency has a similar rule. Do 

you believe that a separate rule is 

necessary for safety and soundness 

reasons? Please provide examples, data, 

or otherwise substantiate your answer. 

4. Please provide any other comments 

you have on the proposal. 

X. Regulatory Analysis and Procedure 

A. The Paperwork Reduction Act 

In accordance with the requirements 

of the Paperwork Reduction Act of 1995 

(PRA),64 the FDIC may not conduct or 

sponsor, and the respondent is not 

required to respond to, an information 

collection unless it displays a currently 

valid Office of Management and Budget 

(OMB) control number. 

The proposed rule would rescind and 

remove from FDIC regulations part 390, 

subpart P. With regard to part 365, 

subpart A, the proposed rule would 

amend sections 365.1 and 365.2 to 

clarify that State savings associations, as 

well as State nonmember banks and 

foreign banks having insured branches 

are all subject to part 365. It would also 

rescind and remove from the FDIC’s 

regulations part 365, subpart B. The 

proposed rule will not create any new 

or revise any existing collections of 

information under the PRA. Therefore, 

no information collection request will 

be submitted to the OMB for review. 

B. The Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

requires that, in connection with a 

notice of proposed rulemaking, an 

agency prepare and make available for 

public comment an initial regulatory 

flexibility analysis that describes the 

1660 Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 

65 5 U.S.C. 601, et seq. 

66The 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 

FDIC-supervised institution is ‘‘small’’ for the 

purposes of RFA. 

67FDIC Call Report, March 31st, 2018. 

68Public Law 106–102, 113 Stat. 1338, 1471 

(codified at 12 U.S.C. 4809). 69Public Law 104–208, 110 Stat. 3009 (1996). 

impact of the proposed rule on small 

entities.65 However, a regulatory 

flexibility analysis is not required if the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities, 

and publishes its certification and a 

short explanatory statement in the 

Federal Register together with the rule. 

The Small Business Administration 

(SBA) has defined ‘‘small entities’’ to 

include banking organizations with total 

assets of less than or equal to $550 

million.66 For the reasons provided 

below, the FDIC certifies that the 

proposed rule, if adopted in final form, 

would not have a significant economic 

impact on a substantial number of small 

banking organizations. Accordingly, a 

regulatory flexibility analysis is not 

required. 

As of June 30, 2018, the FDIC 

supervised 3,575 insured financial 

institutions, of which 2,804 are 

considered small banking organizations 

for the purposes of RFA. The proposed 

rule primarily affects regulations that 

govern State savings associations. There 

are 38 State savings associations 

considered to be small banking 

organizations for the purposes of the 

RFA.67

As explained previously, the 

proposed rule would remove sections 

390.260, 390.261, 390.262, 390.263, 

390.264, 390.265, 390.266, 390.267, 

390.268, 390.269, 390.270, 390.271, and 

390.272 of part 390, subpart P because 

these sections are unnecessary, 

redundant of, or otherwise duplicative 

of other FDIC regulations for safety and 

soundness standards. Because these 

regulations are redundant to existing 

regulations, rescinding them would not 

have any substantive effects on small 

FDIC-supervised institutions. 

As explained previously, part 364 

covers State savings associations in 

section 364.101 and in appendix A. 

Because the lending documentation 

practices and standards in part 364, 

appendix A are substantively similar to 

existing regulations for State savings 

associations found in section 390.271 

rescinding section 390.271 and the rest 

of part 390, subpart P would not have 

any substantive effects on small FDICsupervised institutions. 

As stated previously, the proposed 

rule would amend part 365, subpart A 

so that it would expressly apply to State 

savings associations. Because the real 

estate lending requirements in sections 

365.1 and 365.2 and part 364, appendix 

A are substantively identical to 

currently applicable regulations for 

State savings associations found in 

390.264 and 390.265 (including the 

appendix to section 390.265), amending 

part 365, subpart A so that it would 

apply to all FDIC-supervised 

institutions would not have any 

substantive effects on small FDICsupervised institutions. 

As explained previously, the 

proposed rule would rescind part 365, 

subpart B because the authority to 

implement Federal registration 

requirements for mortgage loan 

originators has been transferred by 

statute to the Bureau. Because 

rulemaking authority for the S.A.F.E. 

Act was transferred to the Bureau in 

December 30, 2011, the removal of the 

FDIC’s S.A.F.E. Act regulations would 

not have any substantive effects on 

small FDIC-supervised covered 

institutions. 

Based on the information above, the 

FDIC certifies that the proposed rule 

would not have a significant economic 

impact on a substantial number of small 

entities. 

5. 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. Plain Language 

Section 722 of the Gramm-LeachBliley Act 68 requires each Federal 

banking agency to use plain language in 

all of its proposed and final rules 

published after January 1, 2000. As a 

federal banking agency subject to the 

provisions of this section, the FDIC has 

sought to present the proposed rule to 

rescind part 390, subpart P and amend 

part 365 in a simple and straightforward 

manner. 

6. The FDIC invites comments on 

whether the proposal is clearly stated 

and effectively organized, and how the 

FDIC might make the proposal easier to 

understand. 

D. The Economic Growth and 

Regulatory Paperwork Reduction Act 

Under section 2222 of the Economic 

Growth and Regulatory Paperwork 

Reduction Act of 1996 (EGRPRA), the 

FDIC is required to review all of its 

regulations, at least once every 10 years, 

in order to identify any outdated or 

otherwise unnecessary regulations 

imposed on insured institutions.69 The 

FDIC, along with the other federal 

banking agencies, submitted a Joint 

Report to Congress on March 21, 2017, 

(EGRPRA Report) discussing how the 

review was conducted, what has been 

done to date to address regulatory 

burden, and further measures that will 

be taken to address issues that were 

identified. As noted in the EGRPRA 

Report, the FDIC is continuing to 

streamline and clarify its regulations 

through the OTS rule integration 

process. By removing outdated or 

unnecessary regulations, such as part 

390, subpart P and part 365, subpart B, 

and amending part 365, subpart A, this 

rule complements other actions the 

FDIC has taken, separately and with the 

other federal banking agencies, to 

further the EGRPRA mandate. 

List of Subjects 

12 CFR Part 365 

Banks, banking, Credit, Mortgages, 

Savings associations. 

12 CFR Part 390 

Administrative practice and 

procedure, Advertising, Aged, Civil 

rights, Conflict of interests, Credit, 

Crime, Equal employment opportunity, 

Fair housing, Government employees, 

Individuals with disabilities, Reporting 

and recordkeeping requirements, 

Savings associations. 

Authority and Issuance 

For the reasons stated in the 

preamble, the Board of Directors of the 

Federal Deposit Insurance Corporation 

proposes to amend title 12 of the Code 

of Federal Regulations as follows: 

PART 365—REAL ESTATE LENDING 

STANDARDS 

Subpart A—Real Estate Lending 

Standards [Amended] 

■ 1. Revise the authority citation for part 

365 to read as follows: 

Authority: 12 U.S.C. 1828(o), 5412. 

■ 2. Revise § 365.1 to read as follows: 

§ 365.1 Purpose and scope. 

This subpart, issued pursuant to 

section 304 of the Federal Deposit 

Federal Register / Vol. 84, No. 24 / Tuesday, February 5, 2019 / Proposed Rules 1661 

1 17 U.S.C. 1401(f)(5)(A)(i)(I)–(II). 

2H.R. Rep. No. 115–651, at 16 (2018); see S. Rep. 

No. 115–339, at 18 (2018). 

Insurance Corporation Improvement Act 

of 1991, 12 U.S.C. 1828(o), prescribes 

standards for real estate lending to be 

used by FDIC-supervised institutions in 

adopting internal real estate lending 

policies. For purposes of this subpart, 

the term ‘‘FDIC-supervised institution’’ 

means any insured depository 

institution for which the Federal 

Deposit Insurance Corporation is the 

appropriate Federal banking agency 

pursuant to section 3(q) of the Federal 

Deposit Insurance Act, 12 U.S.C. 

1813(q). 

■ 3. Amend § 365.2 by revising 

paragraphs (a), (b)(1)(iii), (2)(iii) and 

(iv), and (c) to read as follows: 

§ 365.2 Real estate lending standards. 

(a) Each FDIC-supervised institution 

shall adopt and maintain written 

policies that establish appropriate limits 

and standards for extensions of credit 

that are secured by liens on or interests 

in real estate, or that are made for the 

purpose of financing permanent 

improvements to real estate. 

(b)(1) * * * 

(iii) Be reviewed and approved by the 

FDIC-supervised institution’s board of 

directors at least annually. 

(2) * * * 

(iii) Loan administration procedures 

for the FDIC-supervised institution’s 

real estate portfolio; and 

(iv) Documentation, approval, and 

reporting requirements to monitor 

compliance with the FDIC-supervised 

institution’s real estate lending policies. 

(c) Each FDIC-supervised institution 

must monitor conditions in the real 

estate market in its lending area to 

ensure that its real estate lending 

policies continue to be appropriate for 

current market conditions. 

* * * * * 

Subpart B—[Removed and Reserved] 

■ 4. Remove and reserve subpart B, 

consisting of §§ 365.101, 365.102, 

365.103, 365.104, 365.105, and 

appendix A to subpart B. 

PART 390—REGULATIONS 

TRANSFERRED FROM THE OFFICE OF 

THRIFT SUPERVISION 

■ 5. The authority citation for part 390 

continues to read as follows: 

Authority: 12 U.S.C. 1819. 

Subpart P—[Removed and Reserved] 

■ 6. Remove and reserve Subpart P, 

consisting of §§ 390.260, 390.261, 

390.262, 390.263, 390.264, 390.265, 

390.266, 390.267, 390.268, 390.269, 

390.270, 390.271, 390.272. 

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. 2018–28084 Filed 2–4–19; 8:45 am] 

BILLING CODE 6714–01–P 

LIBRARY OF CONGRESS 

Copyright Office 

37 CFR Part 201 

[Docket No. 2018–8] 

Noncommercial Use of Pre-1972 Sound 

Recordings That Are Not Being 

Commercially Exploited 

AGENCY: U.S. Copyright Office, Library 

of Congress. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The U.S. Copyright Office 

(‘‘Copyright Office’’ or ‘‘Office’’) is 

issuing a notice of proposed rulemaking 

regarding the Classics Protection and 

Access Act, title II of the recently 

enacted Orrin G. Hatch-Bob Goodlatte 

Music Modernization Act. In connection 

with the establishment of federal 

remedies for unauthorized uses of 

sound recordings fixed before February 

15, 1972 (‘‘Pre-1972 Sound 

Recordings’’), Congress also established 

an exception for certain noncommercial 

uses of Pre-1972 Sound Recordings that 

are not being commercially exploited. 

To qualify for this exemption, a user 

must file a notice of noncommercial use 

after conducting a good faith, reasonable 

search to determine whether the Pre1972 Sound Recording is being 

commercially exploited, and the rights 

owner of the sound recording must not 

object to the use within 90 days. After 

soliciting public comments through a 

notice of inquiry, the Office is proposing 

regulations identifying the specific steps 

that a user should take to demonstrate 

she has made a good faith, reasonable 

search. The proposed rule also details 

the filing requirements for the user to 

submit a notice of noncommercial use 

and for a rights owner to submit a notice 

objecting to such use. 

DATES: Written comments must be 

received no later than 11:59 p.m. 

Eastern Time on March 7, 2019. Meeting 

requests must be received no later than 

11:59 p.m. Eastern Time on March 18, 

2019, and all meetings must take place 

no later than Friday, March 22, 2019. 

The Office will not consider requests to 

hold meetings after that date. So that the 

Copyright Office is able to meet the 

statutory deadlines set forth in the 

Music Modernization Act, no further 

extensions of time will be granted in 

this rulemaking. 

ADDRESSES: For reasons of government 

efficiency, the Copyright Office is using 

the regulations.gov system for the 

submission and posting of public 

comments in this proceeding. All 

comments are therefore to be submitted 

electronically through regulations.gov. 

Specific instructions for submitting 

comments are available on the 

Copyright Office’s website at https://

www.copyright.gov/rulemaking/ 

pre1972-soundrecordingsnoncommercial/. If electronic 

submission of comments is not feasible 

due to lack of access to a computer and/ 

or the internet, please contact the Office 

using the contact information below for 

special instructions. 

FOR FURTHER INFORMATION CONTACT: 

Regan A. Smith, General Counsel and 

Associate Register of Copyrights, by 

email at regans@copyright.gov or Anna 

Chauvet, Assistant General Counsel, by 

email at achau@copyright.gov. Each can 

be contacted by telephone by calling 

(202) 707–8350. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On October 11, 2018, the president 

signed into law the Orrin G. Hatch-Bob 

Goodlatte Music Modernization Act, 

H.R. 1551 (‘‘MMA’’). Title II of the 

MMA, the Classics Protection and 

Access Act, created chapter 14 of the 

copyright law, title 17, United States 

Code, which, among other things, 

extends remedies for copyright 

infringement to owners of sound 

recordings fixed before February 15, 

1972 (‘‘Pre-1972 Sound Recordings’’). 

Under the provision, rights owners may 

be eligible to recover statutory damages 

and/or attorneys’ fees for the 

unauthorized use of their Pre-1972 

Sound Recordings if certain 

requirements are met. To be eligible for 

these remedies, rights owners must 

typically file schedules listing their Pre1972 Sound Recordings (‘‘Pre-1972 

Schedules’’) with the U.S. Copyright 

Office, which are indexed into the 

Office’s public records.1 The filing 

requirement is ‘‘designed to operate in 

place of a formal registration 

requirement that normally applies to 

claims involving statutory damages.’’ 2

The MMA also creates a new 

mechanism for members of the public to 

obtain authorization to make 

noncommercial uses of Pre-1972 Sound