604 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 26 

[Docket ID OCC–2018–0011] 

RIN 1557–AE22 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 212 and 238 

[Docket No. R–1641] 

RIN 7100–AF31 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 348 

RIN 3064–AE57 

Thresholds Increase for the Major 

Assets Prohibition of the Depository 

Institution Management Interlocks Act 

Rules 

AGENCY: Office of the Comptroller of the 

Currency (OCC); Board of Governors of 

the Federal Reserve System (Board); and 

Federal Deposit Insurance Corporation 

(FDIC). 

ACTION: Notice of proposed rulemaking 

and request for public comment. 

SUMMARY: The OCC, the Board, and the 

FDIC (collectively, the agencies) are 

inviting comment on a proposed rule 

that would increase the major assets 

prohibition thresholds for management 

interlocks in the agencies’ rules 

implementing the Depository Institution 

Management Interlocks Act (DIMIA). 

The DIMIA major assets prohibition 

prohibits a management official of a 

depository organization with total assets 

exceeding $2.5 billion (or any affiliate of 

such an organization) from serving at 

the same time as a management official 

of an unaffiliated depository 

organization with total assets exceeding 

$1.5 billion (or any affiliate of such an 

organization). DIMIA provides that the 

agencies may adjust, by regulation, the 

major assets prohibition thresholds in 

order to allow for inflation or market 

changes. The agencies propose to raise 

the major assets prohibition thresholds 

to $10 billion to account for changes in 

the United States banking market since 

the current thresholds were established 

in 1996. The agencies also propose three 

alternative approaches for increasing the 

thresholds based on market changes or 

inflation. Increasing the major assets 

prohibition thresholds would relieve 

certain depository organizations below 

the adjusted thresholds from having to 

ask the agencies for an exemption from 

the major assets prohibition. The 

agencies do not expect the proposal to 

materially increase anticompetitive risk. 

DATES: Comments must be received on 

or before April 1, 2019. 

ADDRESSES: Comments should be 

directed to: 

OCC: Because paper mail in the 

Washington, DC area and at the OCC is 

subject to delay, commenters are 

encouraged to submit comments 

through the Federal eRulemaking Portal 

or email, if possible. Please use the title 

‘‘Thresholds Increase for the Major 

Assets Prohibition of the Depository 

Institution Management Interlocks Act 

Rules’’ to facilitate the organization and 

distribution of the comments. You may 

submit comments by any of the 

following methods: 

Federal eRulemaking Portal— 

‘‘Regulations.gov’’: Go to 

www.regulations.gov. Enter ‘‘Docket ID 

OCC–201X–0011’’ in the Search box and 

click ‘‘Search.’’ Click on ‘‘Comment 

Now’’ to submit public comments. 

• Click on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov, 

including instructions for submitting 

public comments. 

• Email: regs.comments@

occ.treas.gov. 

• Mail: Legislative and Regulatory 

Activities Division, Office of the 

Comptroller of the Currency, 400 7th 

Street SW, Suite 3E–218, Washington, 

DC 20219. 

• Hand Delivery/Courier: 400 7th 

Street SW, Suite 3E–218, Washington, 

DC 20219. 

• Fax: (571) 465–4326. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

ID OCC–201X–0011’’ in your comment. 

In general, OCC will enter all comments 

received into the docket and publish the 

comments on the Regulations.gov 

website without change, including any 

business or personal information that 

you provide such as name and address 

information, email addresses, or phone 

numbers. Comments received, including 

attachments and other supporting 

materials, are part of the public record 

and subject to public disclosure. Do not 

include any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

You may review comments and other 

related materials that pertain to this 

rulemaking action by any of the 

following methods: 

• Viewing Comments Electronically: 

Go to www.regulations.gov. Enter 

‘‘Docket ID OCC–201X–0011’’ in the 

Search box and click ‘‘Search.’’ Click on 

‘‘Open Docket Folder’’ on the right side 

of the screen. Comments and supporting 

materials can be viewed and filtered by 

clicking on ‘‘View all documents and 

comments in this docket’’ and then 

using the filtering tools on the left side 

of the screen. 

• Click on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov. 

The docket may be viewed after the 

close of the comment period in the same 

manner as during the comment period. 

• Viewing Comments Personally: You 

may personally inspect comments at the 

OCC, 400 7th Street SW, Washington, 

DC 20219. For security reasons, the OCC 

requires that visitors make an 

appointment to inspect comments. You 

may do so by calling (202) 649–6700 or, 

for persons who are deaf or hearingimpaired, TTY, (202) 649–5597. Upon 

arrival, visitors will be required to 

present valid government-issued photo 

identification and submit to security 

screening in order to inspect comments. 

Board: When submitting comments, 

please consider submitting your 

comments by email or fax because paper 

mail in the Washington, DC area and at 

the Board may be subject to delay. You 

may submit comments, identified by 

Docket No. R–1641 and RIN 7100–AF31, 

by any of the following methods: 

• Agency Website: http://

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Email: regs.comments@

federalreserve.gov. Include docket 

number in the subject line of the 

message. 

• FAX: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Ann E. Misback, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue NW, Washington, 

DC 20551. 

All public comments will be made 

available on the Board’s website at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm as 

submitted, unless modified for technical 

reasons or to remove personally 

identifiable information at the 

commenter’s request. Otherwise, 

comments will not be edited to remove 

any identifying or contact information. 

Public comments also may be viewed 

electronically or in paper in Room 3515, 

1801 K Street NW (between 18th and 

19th Streets NW), between 9:00 a.m. and 

5:00 p.m. on weekdays. 

FDIC: You may submit comments, 

identified by RIN 3064–AE57, by any of 

the following methods: 


khammond on DSKBBV9HB2PROD with PROPOSALS
Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules 605 

1 12 U.S.C. 3201 et seq. 2 In the agencies’ rules, ‘‘management official’’ is 

defined to include directors; advisory or honorary 

directors of a depository institution with total assets 

of $100 million or more; ‘‘senior executive officers,’’ 

as that term is defined in the agencies’ rules 

regarding notice of addition or change of directors 

and senior executive officers; branch managers; 

trustees of depository organizations under the 

control of trustees; and any persons who have a 

representative or nominee as defined in the 

agencies’ rules on management interlocks, serving 

in any of the capacities described above. 12 CFR 

26.2(j)(1) (OCC); 12 CFR 212.2(j)(1) and 238.92(j)(1) 

(Board); and 12 CFR 348.2(k)(1) (FDIC). 

3 In the agencies’ rules, the term ‘‘depository 

organization’’ means a depository institution or a 

depository holding company. ‘‘Depository 

institution’’ means a commercial bank (including a 

private bank), a savings bank, a trust company, a 

savings and loan association, a building and loan 

association, a homestead association, a cooperative 

bank, an industrial bank, or a credit union, 

chartered under the laws of the United States and 

having a principal office located in the United 

States. Additionally, a United States office of a 

foreign commercial bank, including a branch or 

agency, is a depository institution. ‘‘Depository 

holding company’’ means a bank holding company 

or a savings and loan holding company (as more 

fully defined in section 202 of the Interlocks Act (12 

U.S.C. 3201)) having its principal office located in 

the United States. 12 CFR 26.2 (OCC); 12 CFR 212.2 

and 238.92 (Board); and 12 CFR 348.2 (FDIC). 

4 12 CFR 26.1(b) (OCC); 12 CFR 212.1(b) and 

238.91(b) (Board); and 12 CFR 348.1(b) (FDIC). 

5 In the agencies’ rules, ‘‘community’’ means a 

city, town, or village, and contiguous and adjacent 

cities, towns, or villages. 12 CFR 26.2(c) (OCC); 12 

CFR 212.2(c) and 238.92(c) (Board); and 12 CFR 

348.2(c) (FDIC). 

• Agency Website: https://

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

Follow instructions for submitting 

comments on the Agency website. 

• Email: Comments@fdic.gov. Include 

the RIN 3064–AE57 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 Delivery: 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. 

Instructions: All comments received 

must include the agency name and RIN 

3064–AE57 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 (877) 275–3342 or 

(703) 562–2200. 

FOR FURTHER INFORMATION CONTACT:

OCC: Daniel Perez, Attorney, 

Christopher Rafferty, Attorney, Chief 

Counsel’s Office, (202) 649–5490; or for 

persons who are deaf or hearingimpaired, TTY, (202) 649–5597; Office 

of the Comptroller of the Currency, 400 

7th Street SW, Washington, DC 20219. 

Board: Michelle Kidd, Senior 

Counsel, (202) 736–5554; Claudia Von 

Pervieux, Senior Counsel, (202) 452– 

2552; or Andrew Hartlage, Counsel, 

(202) 452–6483, of the Legal Division; 

Katie Cox, Manager, (202) 452–2721; or 

Melissa Clark, Senior Supervisory 

Financial Analyst, (202) 452–2277, of 

the Division of Supervision and 

Regulation, Board of Governors of the 

Federal Reserve System, 20th Street and 

Constitution Avenue NW, Washington, 

DC 20551. For the hearing impaired 

only, Telecommunication Device for the 

Deaf, (202) 263–4869, Board of 

Governors of the Federal Reserve 

System, 20th Street and Constitution 

Avenue NW, Washington, DC 20551. 

FDIC: Karen J. Currie, Senior 

Examination Specialist, Division of Risk 

Management Supervision, (202) 898– 

3981; Mark Mellon, Counsel, Legal 

Division, (202) 898–3884; Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

A. Summary of Proposed Rule and Policy 

Objectives 

B. Background 

II. Description of Proposed Rule 

A. Proposal To Increase Asset Thresholds 

to $10 Billion 

B. Expected Impact 

C. Future Adjustments to the Thresholds 

III. Alternative Approaches To Adjust the 

Asset Thresholds 

A. Thresholds Adjustment Based on 

Percentage of the Number of Banking 

Organizations Covered by Prohibition 

B. Thresholds Adjustment Based on Asset 

Growth 

C. Thresholds Adjustment Increased Based 

on Inflation 

IV. FDIC Technical Amendments 

V. Request for Comment 

VI. Regulatory Analysis 

I. Introduction 

A. Summary of Proposed Rule and 

Policy Objectives 

The Office of the Comptroller of the 

Currency (OCC), the Board of Governors 

of the Federal Reserve System (Board), 

and the Federal Deposit Insurance 

Corporation (FDIC) (collectively, the 

agencies) are inviting comment on a 

notice of proposed rulemaking 

(proposed rule or proposal) that would 

increase the major assets prohibition 

thresholds for management interlocks in 

the agencies’ rules implementing the 

Depository Institution Management 

Interlocks Act (DIMIA).1 The proposed 

increase in the thresholds would 

account for changes in the United States 

banking market since Congress 

established the current thresholds in 

1996. Under the major assets 

prohibition of the current rules, a 

management official 2 of a depository 

organization 3 (or any affiliate of such 

organization) with total assets exceeding 

$2.5 billion may not serve as a 

management official of an unaffiliated 

depository organization (or any affiliate 

of such organization) with total assets 

exceeding $1.5 billion without seeking 

an exemption. The proposed rule would 

increase both thresholds to $10 billion. 

In addition, the agencies are 

proposing three alternative approaches 

for increasing the asset thresholds, 

described below. 

By increasing the major assets 

prohibition thresholds, the proposed 

rule and proposed alternative 

approaches would reduce the number of 

depository organizations subject to the 

major assets prohibition and reduce 

burden by relieving depository 

organizations below the increased 

thresholds from having to ask the 

agencies for an exemption from the 

major assets prohibition. The agencies 

anticipate that raising the thresholds 

will facilitate small depository 

organizations in finding qualified 

directors by eliminating the need to file 

a request for an exemption from the 

major assets prohibition. 

B. Background 

DIMIA—implemented through the 

agencies’ rules at 12 CFR parts 26, 212, 

238 subpart J, and 348—fosters 

competition by prohibiting a 

management official from serving at the 

same time as a management official of 

an unaffiliated depository organization 

in situations where the management 

interlock may have an anticompetitive 

effect.4 DIMIA and the agencies’ rules 

achieve this purpose through three 

restrictions. 

The first, the community prohibition, 

prohibits a management official of a 

depository organization from serving at 

the same time as a management official 

of an unaffiliated depository 

organization if the involved depository 

organizations (or a depository 

institution affiliate thereof) have offices 

in the same community.5 The second, 

the relevant metropolitan statistical area 

(RMSA) prohibition, prohibits a 

management official of a depository 

organization from serving at the same 

time as a management official of an 

unaffiliated depository organization if 

the involved depository organizations 

(or a depository institution affiliate 

thereof) have offices in the same 


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606 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules 

6 In the agencies’ rules, ‘‘RMSA’’ means an MSA, 

a primary MSA, or a consolidated MSA that is not 

comprised of designated Primary MSAs to the 

extent that these terms are defined and applied by 

the Office of Management and Budget. 12 CFR 

26.2(m) (OCC); 12 CFR 212.2(m) and 238.92(m) 

(Board); and 12 CFR 348.2(c) (FDIC). 

7 12 U.S.C. 3207. 

8 12 CFR 26.6(a) (OCC); 12 CFR 212.6(a) and 

238.96(a) (Board); and 12 CFR 348.6(a) (FDIC). The 

agencies have published an interagency 

interpretation that explains which agency is the 

appropriate agency for purposes of filing a request 

for a general exemption under the agencies’ rules. 

See Permissible Interlocks—Regulatory Exceptions; 

Agency Approval, 1 Fed. Res. Reg. Serv. (Bd. of 

Governors of the Fed. Reserve Sys.) § 3–831 (Nov. 

18, 1992), 2006 WL 3928616. 

9See Economic Growth and Regulatory 

Paperwork Reduction Act of 1996, Pub. L. 104–208, 

Title II, 110 Stat. 3009–9, § 2210(a). 

10The Economic Growth and Regulatory 

Paperwork Reduction Act—S. 650: Hearings Before 

the Subcomm. on Fin. Insts. and Regulatory Relief 

of the S. Comm. on Banking, Hous., & Urban 

Affairs, 104 Cong. 90 (1995) (statement of Eugene 

A. Ludwig, Comptroller of the Currency). 

11 12 U.S.C. 3203. 

12Federal Financial Institutions Examination 

Council, Joint Report to Congress: Economic 

Growth and Regulatory Paperwork Reduction Act, 

82 FR 15900, 15903 (Mar. 30, 2017), https://

www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_JointReport_to_Congress.pdf. 

13Legislative history indicates that Congress 

intended for the major assets prohibition to apply 

to ‘‘larger’’ organizations. See H.R. Rep. No. 95– 

1383, at 5 (1978); S. Rep. No. 95–323, at 13 (1977). 

14Economic Growth, Regulatory Relief, and 

Consumer Protection Act, Public Law 115–174, 

§ 201, 203, 132 Stat. 1296, 1306, 1309 (2018) 

(enacting a ‘‘Community Bank Leverage Ratio’’ 

capital simplification framework that is generally 

available to depository institutions and depository 

institution holding companies with $10 billion or 

less in total consolidated assets and exempting 

generally from the prohibitions of section 13 of the 

Bank Holding Company Act of 1956, also known as 

the ‘‘Volcker Rule,’’ certain entities with $10 billion 

or less in total consolidated assets). 

15Public Law 111–203, § 1025 & 1026, 124 Stat. 

1376, 1990–95 (2010). 

16Bd. of Governors of the Fed. Reserve Sys., 

Commercial Bank Examination Manual (rev. Jan. 

2018), https://www.federalreserve.gov/publications/ 

files/cbem.pdf. 

17See 12 CFR 327.8(e) and (f). For the purposes 

of the FDIC’s assessment regulations, a ‘‘small 

institution’’ generally is an insured depository 

institution with less than $10 billion in total assets. 

Generally, a ‘‘large institution’’ is an insured 

depository institution with more than $10 billion in 

total assets or that is treated as a large institution 

for assessment purposes under section 327.16(f). 

18Comptroller’s Handbook, ‘‘OCC Community 

Bank Supervision’’ (June 2018), https://

www.occ.gov/publications/publications-by-type/ 

comptrollers-handbook/community-banksupervision/pub-ch-community-banksupervision.pdf. 

RMSA 6 and each depository 

organization has total assets of $50 

million or more. The third, the major 

assets prohibition, prohibits a 

management official of a depository 

organization with total assets exceeding 

$2.5 billion (or any affiliate of such an 

organization) from serving at the same 

time as a management official of an 

unaffiliated depository organization 

with total assets exceeding $1.5 billion 

(or any affiliate of such an organization), 

regardless of the location of the two 

depository organizations. While the first 

two prohibitions capture the risk of 

anticompetitive effects from 

management interlocks between 

depository organizations that operate 

within overlapping geographical areas, 

the major assets prohibition addresses 

management interlocks between 

depository organizations that are large 

enough that a management interlock 

may present anticompetitive concerns 

despite the fact that the involved 

organizations may not have offices in 

the same community or RMSA. 

DIMIA allows the agencies to 

prescribe regulations that permit 

otherwise prohibited interlocks under 

certain circumstances.7 Pursuant to the 

general exemption provision of the 

agencies’ regulations, the appropriate 

agency may exempt a prohibited 

interlock in response to an application 

by a depository organization if the 

appropriate agency finds that the 

interlock would not result in a 

monopoly or substantial lessening of 

competition and would not present 

safety and soundness concerns.8

The $1.5 billion and $2.5 billion 

thresholds for the DIMIA major assets 

prohibition were enacted through 

amendments to DIMIA in the Economic 

Growth and Regulatory Paperwork 

Reduction Act of 1996 (EGRPRA).9

During hearings for EGRPRA, it was 

noted that the increase of the asset 

thresholds to $1.5 billion and $2.5 

billion was made because the previous 

asset threshold numbers did not 

‘‘realistically reflect the size of large 

institutions in today’s market.’’ 10

DIMIA, as amended, provides that the 

agencies may adjust the thresholds as 

necessary ‘‘to allow for inflation or 

market changes.’’ 11 The current major 

assets thresholds have not been adjusted 

since 1996, do not reflect the growth 

and consolidation among U.S. 

depository organizations that has 

occurred in the intervening years, and 

do not realistically reflect the size of 

large institutions in today’s market. For 

instance, total assets at depository 

organizations have grown nearly 250 

percent between the fourth quarter of 

1996 and the fourth quarter of 2017. 

Moreover, in a March 2017 report to 

Congress mandated by EGRPRA, the 

agencies committed to reducing 

regulatory burden by adjusting the 

major assets thresholds in the agencies’ 

DIMIA regulations.12

II. Description of Proposed Rule 

A. Proposal To Increase Asset 

Thresholds to $10 Billion 

The agencies are proposing to raise 

the major assets prohibition thresholds 

from $1.5 billion and $2.5 billion to $10 

billion each. As proposed, the major 

assets prohibition would restrict 

management interlocks between 

unaffiliated depository organizations 

with total assets exceeding $10 billion 

(or any affiliates of such organizations). 

The proposed threshold increase, and 

applying the major assets prohibition to 

larger depository organizations rather 

than small institutions (i.e., community 

banks), is consistent with the purpose of 

DIMIA.13 A $10 billion major assets 

prohibition threshold would prohibit 

interlocks between larger depository 

organizations, which could present a 

risk of anticompetitive conduct at the 

national banking market level, while 

exempting smaller or communitybanking-organization-sized depository 

organizations, which do not present the 

same competitive risks at the national 

banking market level. 

In addition, the proposal is consistent 

with the current thresholds that 

Congress and the agencies have used to 

distinguish between small institutions 

and larger institutions. For example, 

section 201 and 203 of the Economic 

Growth, Regulatory Relief, and 

Consumer Protection Act provide 

certain procedural burden relief for 

institutions with less than $10 billion in 

total consolidated assets.14

Additionally, the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act uses a $10 billion threshold to 

distinguish between large banks subject 

to supervision by the Bureau of 

Consumer Financial Protection and 

small banks subject to prudential 

regulator supervision.15 A $10 billion 

threshold also is consistent with the 

asset threshold used by the Board to 

distinguish between community 

banking organizations and larger 

banking organizations for supervisory 

and regulatory purposes,16 the asset 

threshold used by the FDIC to 

distinguish between ‘‘small’’ and 

‘‘large’’ institutions for purposes of its 

assessment regulations,17 and the asset 

threshold used by the OCC to 

distinguish community banks from 

midsize and large banks.18

Further, having a single, consistent 

asset threshold would simplify the 

agencies’ DIMIA regulations and enable 

depository organizations to identify 

more easily whether they may be subject 

to the major assets prohibition. 


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Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules 607 

19The analysis in this preamble reflecting 

changes in the number of depository organizations 

exempted does not incorporate credit unions 

because this proposed rule does not apply to credit 

unions. Data used in this analysis were drawn from 

the December 31, 1996, and December 31, 2017, 

Consolidated Reports of Condition and Income (Call 

Reports), Consolidated Financial Statements for 

Holding Companies, Parent Company Only 

Financial Statements for Large Holding Companies, 

Parent Company Only Financial Statements for 

Small Holding Companies, and Reports of Assets 

and Liabilities of U.S. Branches and Agencies of 

Foreign Banks. 20See 12 U.S.C. 3203. 

21The agencies’ analysis, and resulting 

percentages and thresholds, for this approach relies 

on ‘‘banking organizations’’ instead of ‘‘depository 

organizations’’ to avoid double-counting the assets 

of depository institutions held by depository 

holding companies that reported consolidated 

holding company assets. As used here, the term 

‘‘banking organization’’ includes all depository 

holding companies, as defined by the agencies’ 

DIMIA regulations, that reported consolidated 

assets greater than zero and all depository 

institutions, as defined by the agencies’ DIMIA 

regulations, with reported assets greater than zero 

that are not consolidated under a holding company. 

B. Expected Impact 

The proposed rule would increase the 

number of depository organizations that 

would no longer be subject to the major 

assets prohibition and therefore reduce 

the number of institutions that need to 

seek an exemption from the major assets 

prohibition from the appropriate 

agency. 

As of December 31, 2017, 1,021 

depository organizations had total assets 

of more than $1.5 billion and were 

subject to the major assets prohibition.19

In addition, 698 depository 

organizations with total assets of more 

than the $2.5 billion threshold were 

subject to restrictions on management 

interlocks with unaffiliated depository 

organizations with total assets 

exceeding the $1.5 billion threshold. If 

the agencies raise the $1.5 billion asset 

threshold to $10 billion, they would 

exempt 764 depository organizations 

from the major assets prohibition as of 

December 31, 2017. Of these 764 

depository organizations, 224 are FDICsupervised depository institutions, 113 

are OCC-supervised depository 

institutions, 91 are Board-supervised 

depository institutions, and 336 are 

Board-supervised depository holding 

companies. As of December 31, 2017, 

257 depository organizations reported 

total assets greater than $10 billion and 

would remain subject to the major assets 

prohibition. 

Increasing the thresholds of the major 

assets prohibition would allow smaller 

depository organizations to form 

management interlocks with other 

smaller depository organizations and 

would relieve the depository 

organization seeking to add a 

management official from the associated 

burden of seeking a general exemption 

from the appropriate agency with 

respect to such a management interlock 

(unless the interlock would be 

prohibited by the community or RMSA 

prohibitions). The agencies believe that 

with fewer depository organizations 

subject to the major assets prohibition 

thresholds, the proposed rule would 

expand the pool of available 

management officials for smaller 

depository organizations no longer 

covered by the major assets prohibition. 

The agencies do not expect the 

proposal to materially increase 

anticompetitive risk. The increase to the 

major assets prohibition thresholds is 

insufficient to materially increase the 

risk of anticompetitive interlocks 

between depository organizations at the 

national banking market level, and the 

proposal does not affect DIMIA 

prohibitions against interlocks within 

overlapping geographical areas. 

C. Future Adjustments to the Thresholds 

Following adjustment of the 

thresholds by this proposed rule, if 

adopted, the agencies would make 

further adjustments to the thresholds to 

account for inflation through direct final 

rule without notice and comment 

pursuant to 12 CFR 26.3(c), 212.3(c), 

238.93(c), and 348.3(c). If the agencies 

determine that further adjustments to 

the thresholds are warranted for reasons 

other than inflation, the agencies then 

would propose another adjustment 

through a subsequent notice of proposed 

rulemaking with the opportunity to 

comment. 

III. Alternative Approaches To Adjust 

the Asset Thresholds 

As described above, in order to 

account for market changes since the 

agencies’ DIMIA regulations were last 

updated, the agencies propose to 

increase the major assets prohibition 

thresholds to $10 billion. The agencies 

also invite comment on three alternative 

approaches discussed below. Consistent 

with the agencies’ authority under 

DIMIA, two of the alternative 

approaches, like the proposed approach, 

are based on market changes, and the 

third alternative approach is based on 

inflation.20 Because the proposal and 

the alternative approaches all would 

raise the major assets prohibition 

thresholds, the agencies expect that the 

impact for each proposal would be 

similar (i.e., each approach would result 

in a greater number of depository 

organizations exempted from the major 

assets prohibition), varying only in the 

degree of the impact (i.e., the number of 

depository organizations exempted). 

A. Thresholds Adjustment Based on 

Percentage of the Number of Banking 

Organizations Covered by Prohibition 

Under the first alternative approach, 

the agencies would adjust the major 

assets prohibition thresholds so that 

approximately the same percentage of 

the total number of banking 

organizations 21 that were covered by 

the thresholds as of the fourth quarter of 

1996—the year in which the $1.5 billion 

and $2.5 billion major assets prohibition 

thresholds were established by statute— 

would be covered as of fourth quarter 

2017. By adjusting the major assets 

prohibition thresholds so that they 

cover the same percentage of the total 

number of banking organizations as was 

covered in 1996, this alternative 

approach accounts for changes in the 

U.S. banking market and seeks to 

maintain the prohibition’s initial scope 

and impact—which was limited to only 

relatively large depository 

organizations—as well as the 

protections it provides against 

anticompetitive risk. This approach 

would increase the current thresholds of 

$1.5 billion and $2.5 billion to $7.9 

billion and $11.8 billion, respectively. 

As of the fourth quarter of 1996, the 

major assets prohibition thresholds 

covered the top 1.9 percent and 1.3 

percent of banking organizations by 

asset size. By the fourth quarter of 2017, 

the percentage of banking organizations 

covered by the thresholds had increased 

to 6.83 percent and 4.44 percent. 

Adjusting the major assets prohibition 

thresholds to account for this market 

change would result in adjusted asset 

thresholds of $7.9 billion and $11.8 

billion. 

Raising the current $1.5 billion 

threshold to $7.9 billion would result in 

an additional 702 depository 

organizations being exempted from the 

major assets prohibition. Of these 702 

depository organizations, 207 are FDICsupervised depository institutions, 102 

are OCC-supervised depository 

institutions, 82 are Board-supervised 

depository institutions, and 311 are 

Board-supervised depository holding 

companies. As of December 31, 2017, 78 

depository organizations reported total 

assets greater than $7.9 billion but less 

than $11.8 billion. Finally, 241 

depository organizations reported total 

assets greater than $11.8 billion and 

would remain subject to the major assets 

prohibition. 


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608 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules 

B. Thresholds Adjustment Based on 

Asset Growth 

Under this second alternative 

approach, the agencies would propose 

to adjust the major assets prohibition 

thresholds to reflect the rate of asset 

growth for depository organizations over 

the period between the fourth quarter of 

1996 and the fourth quarter of 2017. 

This approach seeks to replicate the 

major assets prohibition’s coverage of 

the 1996 banking market by using total 

asset growth as a measure of market 

change. Total assets at depository 

organizations have grown by $15.6 

trillion between the fourth quarter of 

1996 and the fourth quarter of 2017. 

This growth represents an increase of 

three and one-half times the amount of 

total assets in the fourth quarter of 1996. 

Under this approach, the current major 

assets prohibition thresholds would be 

multiplied by the aforementioned rate of 

asset growth (3.5) to account for market 

changes for depository organizations. As 

a result, the current assets thresholds 

would be raised from $1.5 billion and 

$2.5 billion to $5.3 billion and $8.8 

billion, respectively. 

Raising the $1.5 billion asset 

threshold to $5.3 billion would result in 

an additional 616 depository 

organizations being exempted from the 

major assets prohibition. Of these 616 

depository organizations, 182 are FDICsupervised depository institutions, 89 

are OCC-supervised depository 

institutions, 74 are Board-supervised 

depository institutions, and 271 are 

Board-supervised depository holding 

companies. As of December 31, 2017, 

109 depository organizations reported 

total assets greater than $5.3 billion, but 

less than $8.8 billion. Finally, 296 

depository organizations reported total 

assets greater than $8.8 billion and 

would remain subject to the major assets 

prohibition. 

C. Thresholds Adjustment Increased 

Based on Inflation 

Under the third alternative approach, 

the agencies would adjust the major 

assets prohibition thresholds based on 

the year-to-year change in the average of 

the Consumer Price Index for Urban 

Wage Earners and Clerical Workers 

(CPI–W). Adjusting the asset thresholds 

based on inflation from the fourth 

quarter of 1996 to the fourth quarter of 

2017 would increase the major assets 

prohibition thresholds from $1.5 billion 

and $2.5 billion to $2.3 billion and $3.9 

billion, respectively. Although the 

agencies’ current rules allow an 

adjustment for inflation based on the 

CPI–W to be published as a final rule 

without notice and comment, the 

agencies believe it is appropriate to seek 

comment on an inflation-based 

approach given the length of time that 

has passed without change to the 

thresholds and given the extent to 

which the banking market has changed 

during that time. 

Raising the $1.5 billion asset 

threshold to $2.3 billion would exempt 

an additional 288 depository 

organizations from the major assets 

prohibition. Of these 288 depository 

organizations, 83 are FDIC-supervised 

depository institutions, 45 are OCCsupervised depository institutions, 36 

are Board-supervised depository 

institutions, and 124 are Boardsupervised depository holding 

companies. As of December 31, 2017, 

219 depository organizations reported 

total assets greater than $2.3 billion but 

less than $3.9 billion. Finally, 514 

depository organizations reported total 

assets greater than $3.9 billion and 

would remain subject to the major assets 

prohibition. 

IV. FDIC Technical Amendments 

In addition to the proposed 

adjustment of the thresholds for the 

major assets prohibition, the FDIC 

intends to make two purely technical 

corrections to FDIC regulations, both 

pertaining to DIMIA implementation, by 

means of a separate final rule without 

notice and comment. The first 

correction pertains to 12 CFR 303.249 

and would remove an erroneous 

statement. The second pertains to 12 

CFR 348.4(i) and would correct a 

citation. Both technical corrections will 

be explained in further detail in the 

FDIC final rule. 

V. Request for Comment 

The agencies invite comment on all 

aspects of this proposal, including the 

specific questions enumerated below. 

Question 1: Are depository 

organizations the appropriate unit for 

measuring market change for purposes 

of the agencies’ proposal? In addition, 

are banking organizations the 

appropriate unit for measuring market 

change for purposes of the agencies’ 

alternative approach based on the 

percentage of the number of banking 

organizations covered by the 

prohibition? For all of the proposed 

approaches, would another unit of 

measurement be more appropriate? If 

so, what unit of measurement and why? 

Question 2: Is the proposed $10 

billion asset threshold appropriate to 

carry out the purposes of the major 

assets prohibition? Would one of the 

other alternative approaches proposed 

to adjust the thresholds be more 

appropriate to meet the purposes of the 

major assets prohibition? Would some 

other dollar amount, or some 

combination of asset thresholds or 

factors, be more appropriate? If so, what 

threshold, factor, or combination thereof 

would be appropriate, and why? 

Question 3: Is the measurement 

period of the fourth quarter of 1996 

through the fourth quarter of 2017, as 

used in the agencies’ alternative 

approaches, appropriate for purposes of 

measuring market change? Should the 

agencies shorten or extend this 

measurement period? If so, why? 

Question 4: Are there any other 

approaches to adjusting the major 

assets prohibition thresholds that would 

be more appropriate than the 

approaches proposed by the agencies? If 

so, what approach would be more 

appropriate and why? 

VI. Regulatory Analysis 

A. Paperwork Reduction Act of 1995 

Certain provisions of the proposed 

rule contain ‘‘collection of information’’ 

requirements within the meaning of the 

Paperwork Reduction Act (PRA) of 1995 

(44 U.S.C. 3501–3521). In accordance 

with the requirements of the PRA, the 

agencies 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 OMB 

control number for the OCC is 1557– 

0014; the Board’s is 7100–0134; and the 

FDIC’s is 3064–0118. These information 

collections will be extended for three 

years, with revision. The information 

collection requirements contained in 

this proposed rulemaking have been 

submitted by the OCC and FDIC to OMB 

for review and approval under section 

3507(d) of the PRA (44 U.S.C. 3507(d)) 

and section 1320.11 of the OMB’s 

implementing regulations (5 CFR 1320). 

The Board reviewed the proposed rule 

under the authority delegated to the 

Board by OMB. 

Comments are invited on: 

a. Whether the collections of 

information are necessary for the proper 

performance of the agencies’ functions, 

including whether the information has 

practical utility; 

b. The accuracy or the estimate of the 

burden of the information collections, 

including the validity of the 

methodology and assumptions used; 

c. Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

d. Ways to minimize the burden of the 

information collections on respondents, 

including through the use of automated 

collection techniques or other forms of 

information technology; and 


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Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules 609 

22See 12 CFR 26.3 (OCC); 12 CFR 212.3 and 238.3 

(Board); 12 CFR 348.3 (FDIC). 

23See 12 CFR 26.6 (OCC); 12 CFR 212.6 and 238.6 

(Board); 12 CFR 348.6 (FDIC). 

24 13 CFR 121.201. 

25The OCC bases its estimate of the number of 

small entities on the SBA’s size thresholds for 

commercial banks and savings institutions, and 

trust companies, which are $550 million and $38.5 

million, respectively. Consistent with the General 

Principles of Affiliation 13 CFR 121.103(a), the OCC 

counts the assets of affiliated financial institutions 

when determining if it should classify an OCCsupervised institution as a small entity. The OCC 

uses December 31, 2017, to determine size because 

a ‘‘financial institution’s assets are determined by 

averaging the assets reported on its four quarterly 

financial statements for the preceding year.’’ See 

footnote 8 of the U.S. Small Business 

Administration’s Table of Size Standards. 

26 5 U.S.C. 603. 

e. Estimates of capital or startup costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 

All comments will become a matter of 

public record. Comments on aspects of 

this notice that may affect reporting, 

recordkeeping, or disclosure 

requirements and burden estimates 

should be sent to the addresses listed in 

the ADDRESSES section of this document. 

A copy of the comments may also be 

submitted to the OMB desk officer by 

mail to U.S. Office of Management and 

Budget, 725 17th Street NW, #10235, 

Washington, DC 20503; facsimile to 

(202) 395–6974; or email to oira_

submission@omb.eop.gov, Attention, 

Federal Banking Agency Desk Officer. 

Proposed Information Collection 

Title of Information Collection: 

Management Official Interlocks. 

Frequency: Annual, event driven. 

Affected Public: Businesses or other 

for-profit. 

Respondents 

OCC: National banks, Federal savings 

associations, and U.S. offices of foreign 

commercial banks, including Federal 

branches and agencies. 

Board: State member banks (SMBs), 

bank holding companies (BHCs), 

savings and loan holding companies 

(SLHCs), and their affiliates; and U.S. 

offices of foreign commercial banks, 

including state-licensed branches and 

agencies. 

FDIC: State nonmember banks, state 

savings associations, and certain 

subsidiaries of those entities; and U.S. 

offices of foreign commercial banks, 

including insured branches and 

agencies. 

Current Actions: The proposed rule 

would revise section ll.3, 

‘‘Prohibitions,’’ of the agencies’ DIMIA 

rules 22 by increasing the major asset 

prohibition thresholds from $2.5 billion 

and $1.5 billion to $10 billion each. 

Section ll.6, ‘‘General Exemption,’’ 23

contains a process for applying for an 

exemption from the prohibitions in 

section ll.3. With the increase in the 

major assets prohibition thresholds in 

section ll.3, it is likely that fewer 

applications will be filed under section 

ll.6. Therefore, the agencies have 

reduced their respondent counts for 

section ll.6 accordingly. Also, in 

order to be consistent across the 

agencies, the agencies are applying a 

conforming methodology for calculating 

the burden estimates for the reporting 

and recordkeeping requirements. 

PRA Burden Estimates 

OCC 

OMB control number: 1557–0014. 

Estimated number of respondents: 2. 

Estimated average hours per response: 

Reporting Sections 26.4(h)(1)(i) and 

26.6(b)—4. 

Recordkeeping Section 26.5(b)—3. 

Estimated annual burden hours: 14. 

Board 

OMB control number: 7100–NEW 

(The current management official 

interlocks reporting and recordkeeping 

requirements are housed under OMB 

control number 7100–0134 and will be 

separated out in a new OMB control 

number). 

Estimated number of respondents: 4. 

Estimated average hours per response: 

Reporting Sections 212.4(h)(1)(i) and 

212.6(b)—4. 

Recordkeeping Section 212.5(b)—3. 

Estimated annual burden hours: 28. 

FDIC 

OMB control number: 3064–0118. 

Estimated number of respondents: 6. 

Estimated average hours per response: 

Reporting Sections 348.4(h)(1)(i) and 

348.6(b)—4. 

Recordkeeping Section 348.5(b)—3. 

Estimated annual burden hours: 42. 

B. Regulatory Flexibility Act 

In general, the Regulatory Flexibility 

Act (RFA) (5 U.S.C. 601 et seq.) requires 

that in connection with a rulemaking, 

an agency prepare and make available 

for public comment a regulatory 

flexibility analysis that describes the 

impact of the rule on small entities. The 

SBA has defined ‘‘small entities’’ to 

include certain organizations with total 

assets less than or equal to $550 

million.24 Under 5 U.S.C. 605(b), this 

analysis is not required if an 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 brief 

explanatory statement in the Federal 

Register along with its rule. 

OCC: The OCC currently supervises 

approximately 886 small entities.25

Because the major assets prohibition of 

DIMIA prevents a management official 

of a depository organization with total 

assets exceeding $2.5 billion (depository 

organization threshold) or any affiliate 

of such organization from serving as a 

management official of an unaffiliated 

depository organization with total assets 

exceeding $1.5 billion (unaffiliated 

organization threshold) it is unlikely to 

affect any OCC-supervised small 

institutions. Therefore, the OCC certifies 

that the proposed rule would not have 

a significant economic impact on a 

substantial number of OCC-supervised 

small entities. 

Board: The Board is providing an 

initial regulatory flexibility analysis 

with respect to this proposed rule. The 

Regulatory Flexibility Act, 5 U.S.C. 601 

et seq. (RFA), requires an agency to 

consider whether the rules it proposes 

will have a significant economic impact 

on a substantial number of small 

entities. In connection with a proposed 

rule, the RFA requires an agency to 

prepare an Initial Regulatory Flexibility 

Analysis describing the impact of the 

rule on small entities or to certify that 

the proposed rule would not have a 

significant economic impact on a 

substantial number of small entities. An 

initial regulatory flexibility analysis 

must contain (1) a description of the 

reasons why action by the agency is 

being considered; (2) a succinct 

statement of the objectives of, and legal 

basis for, the proposed rule; (3) a 

description of, and, where feasible, an 

estimate of the number of small entities 

to which the proposed rule will apply; 

(4) a description of the projected 

reporting, recordkeeping, and other 

compliance requirements of the 

proposed rule, including an estimate of 

the classes of small entities that will be 

subject to the requirement and the type 

of professional skills necessary for 

preparation of the report or record; (5) 

an identification, to the extent 

practicable, of all relevant Federal rules 

which may duplicate, overlap with, or 

conflict with the proposed rule; and (6) 

a description of any significant 

alternatives to the proposed rule which 

accomplish its stated objectives.26

The Board has considered the 

potential impact of the proposed rule on 

small entities in accordance with the 

RFA. Based on its analysis and for the 

reasons stated below, the Board believes 

that this proposed rule will not have a 

significant economic impact on a 


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27 12 CFR 212.2 and 231.92. 28 12 U.S.C. 3207(2). 

29 5 U.S.C. 601 et seq. 

30The 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.’’ 13 CFR 

121.201 n.8 (2018). ‘‘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 . . . .’’ 13 CFR 121.103(a)(6) (2018). 

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. 

31FDIC-supervised institutions are set forth in 12 

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

32Call Report, December 31, 2017. 

substantial number of small entities. 

Nevertheless, the Board is publishing 

and inviting comment on this initial 

regulatory flexibility analysis. A final 

regulatory flexibility analysis will be 

conducted after comments received 

during the public comment period have 

been considered. 

1. Reasons for the Proposal 

As discussed in the Supplementary 

Information, the proposed rule would 

adjust the major assets prohibition 

thresholds for management interlocks in 

the Board’s rules implementing DIMIA. 

Under the current major assets 

prohibition, a management official of a 

depository organization with total assets 

exceeding $2.5 billion (or any affiliate of 

such an organization) from serving at 

the same time as a management official 

of an unaffiliated depository 

organization with total assets exceeding 

$1.5 billion (or any affiliate of such an 

organization), regardless of the location 

of the two depository organizations. For 

these purposes, the term ‘‘depository 

organization’’ means a depository 

institution or a depository holding 

company. ‘‘Depository institution’’ 

means a commercial bank (including a 

private bank), a savings bank, a trust 

company, a savings and loan 

association, a building and loan 

association, a homestead association, a 

cooperative bank, an industrial bank, or 

a credit union, chartered under the laws 

of the United States and having a 

principal office located in the United 

States. Additionally, a United States 

office, including a branch or agency, of 

a foreign commercial bank is a 

depository institution. ‘‘Depository 

holding company’’ means a bank 

holding company or a savings and loan 

holding company (as more fully defined 

in section 202 of DIMIA) having its 

principal office located in the United 

States.27 The primary benefit of the 

proposed rule would be to exclude from 

the major assets prohibition 

management interlocks involving 

depository organizations with total 

assets in excess of the current asset 

thresholds but below the proposed asset 

thresholds. Raising the thresholds will 

help to facilitate small banks in finding 

qualified directors by eliminating the 

need to file a request for an exemption 

from the major assets prohibition. 

2. Statement of Objectives and Legal 

Basis 

As discussed above, the Board’s 

objective in proposing this rule would 

be to reduce the number of depository 

organizations subject to the major assets 

prohibition. The Board has authority 

under DIMIA to prescribe regulations to 

carry out DIMIA with respect to state 

banks that are members of the Federal 

Reserve System, bank holding 

companies, and savings and loan 

holding companies.28

3. Description of Small Entities To 

Which the Regulation Applies 

The Board’s proposal would apply to 

state member banks, bank holding 

companies, and savings and loan 

holding companies having their 

principal offices in the United States. 

Under regulations issued by the Small 

Business Administration, a small entity 

includes a depository institution, bank 

holding company, or savings and loan 

holding company with total assets of 

$550 million or less and trust 

companies with total assets of $38.5 

million or less. As of June 30, 2018, 

there were approximately 3,053 small 

bank holding companies, 184 small 

savings and loan holding companies, 

and 541 small state member banks. The 

proposed rule would increase the total 

asset level at which depository 

organizations and their affiliates become 

subject to the major assets prohibition 

from $1.5 billion and $2.5 billion to $10 

billion and $10 billion, respectively. 

4. Projected Reporting, Recordkeeping, 

and Other Compliance Requirements 

To the extent that a small entity is 

subject to the major assets prohibition 

by virtue of its affiliation with a banking 

organization that has total assets 

exceeding $10 billion, the proposed rule 

would not impose any additional 

requirements on those small entities 

because they were already subject to the 

major assets prohibition. The proposed 

changes to the major assets prohibition 

would not impose any new reporting, 

recordkeeping, and other compliance 

requirements. Accordingly, the Board 

believes that the proposed rule will not 

have a significant economic impact on 

small banking organizations supervised 

by the Board. 

5. Identification of Duplicative, 

Overlapping, or Conflicting Federal 

Regulations 

The Board is aware of no other 

Federal rules that duplicate, overlap, or 

conflict with the proposed changes to 

the major assets prohibition thresholds. 

6. Discussion of Significant Alternatives 

The Board believes that the proposed 

rule will not have a significant 

economic impact on small entities 

supervised by the Board and therefore 

believes that there are no significant 

alternatives to the proposed rule that 

would reduce the economic impact on 

small entities supervised by the Board. 

The Board welcomes comment on all 

aspects of its analysis. In particular, the 

Board requests that commenters 

describe the nature of any impact on 

small entities and provide empirical 

data to illustrate and support the extent 

of the impact. 

FDIC: The Regulatory Flexibility Act 

(RFA) generally requires that, in 

connection with a proposed rule, an 

agency prepare and make available for 

public comment an initial regulatory 

flexibility analysis describing the 

impact of the rulemaking on small 

entities.29 A regulatory flexibility 

analysis is not required, however, if the 

agency certifies that the rule will 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 less than or equal to $550 

million.30 The FDIC supervises 3,643 

depository institutions,31 of which 

2,840 are defined as small banking 

entities by the terms of the RFA.32

The proposed rule will only affect 

institutions with total consolidated 

assets between the current thresholds of 

$1.5 billion and $2.5 billion and the 

proposed threshold of $10 billion. 

Therefore, the proposed rule will likely 

affect zero small entities. 

Accordingly, the FDIC believes that 

the proposed rule will not have a 

significant impact on a substantial 

number of small entities. For the 

reasons described above and pursuant to 

5 U.S.C. 605(b), the FDIC certifies that 

the proposed rule will not have a 

significant economic impact on a 

substantial number of small entities. 

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? 


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C. OCC Unfunded Mandates Reform Act 

of 1995 Determination 

The OCC analyzed the proposed rule 

under the factors set forth in the 

Unfunded Mandates Reform Act of 1995 

(UMRA) (2 U.S.C. 1532). Under this 

analysis, the OCC considered whether 

the proposed rule includes a Federal 

mandate that may result in the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year (adjusted for inflation). 

The proposed rule does not impose new 

mandates. Therefore, the OCC 

concludes that the proposed rule will 

not result in an expenditure of $100 

million or more annually by state, local, 

and tribal governments or by the private 

sector. 

D. Riegle Community Development and 

Regulatory Improvement Act 

The Riegle Community Development 

and Regulatory Improvement Act of 

1994 requires that each Federal banking 

agency, in determining the effective date 

and administrative compliance 

requirements for 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. In addition, 

new regulations that impose additional 

reporting, disclosures, or other new 

requirements on insured depository 

institutions 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. 

The proposed rule would reduce 

burden and imposes no additional 

reporting, disclosure, or other 

requirements on IDIs, including small 

depository institutions, nor on the 

customers of depository institutions. 

Nonetheless, in connection with 

determining an effective date for the 

proposed rule, the agencies invite 

comment on any administrative burdens 

that the proposed rule would place on 

depository institutions, including small 

depository institutions, and customers 

of depository institutions. 

E. Plain Language 

Section 722 of the Gramm-LeachBliley Act requires the Federal banking 

agencies to use plain language in all 

proposed and final rules published after 

January 1, 2000. The agencies have 

sought to present the proposed rule in 

a simple and straightforward manner, 

and invite comment on the use of plain 

language. For example: 

• Have the agencies organized the 

material to inform your needs? If not, 

how could the agencies present the 

proposed rule more clearly? 

• Are the requirements in the 

proposed rule clearly stated? If not, how 

could the proposed rule be more clearly 

stated? 

• Does the proposed rule 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 rule 

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 

agencies incorporate to make the 

proposed rule easier to understand? 

List of Subjects 

12 CFR Part 26 

Antitrust, Banks, banking, Holding 

companies, Management official 

interlocks, National banks. 

12 CFR Part 212 

Antitrust, Banks, banking, Holding 

companies, Management official 

interlocks. 

12 CFR Part 238 

Administrative practice and 

procedure, Banks, banking, Holding 

companies, Reporting and 

recordkeeping requirements, Securities. 

12 CFR Part 348 

Antitrust, Banks, banking, Holding 

companies. 

Authority and Issuance 

For the reasons stated in the 

preamble, the OCC proposes to amend 

12 CFR part 26, the Board proposes to 

amend 12 CFR parts 212 and 238, and 

the FDIC proposes to amend 12 CFR 

part 348 as follows: 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

PART 26—MANAGEMENT OFFICIAL 

INTERLOCKS 

■ 1. The authority citation for part 26 

continues to read as follows: 

Authority: 12 U.S.C. 1, 93a, 1462a, 1463, 

1464, 3201–3208, 5412(b)(2)(B). 

■ 2. Section 26.3 is amended by revising 

the first sentence of paragraph (c) to 

read as follows: 

§ 26.3 Prohibitions. 

* * * * * 

(c) Major assets. A management 

official of a depository organization 

with total assets exceeding $10 billion 

(or any affiliate of such an organization) 

may not serve at the same time as a 

management official of an unaffiliated 

depository organization with total assets 

exceeding $10 billion (or any affiliate of 

such an organization), regardless of the 

location of the two depository 

organizations. * * * 

* * * * * 

FEDERAL RESERVE SYSTEM 

PART 212—MANAGEMENT OFFICIAL 

INTERLOCKS (REGULATION L) 

■ 3. The authority citation for part 212 

continues to read as follows: 

Authority: 12 U.S.C. 3201–3208; 15 U.S.C. 

19. 

■ 4. Section 212.3 is amended by 

revising the first sentence of paragraph 

(c) to read as follows: 

§ 212.3 Prohibitions. 

* * * * * 

(c) Major assets. A management 

official of a depository organization 

with total assets exceeding $10 billion 

(or any affiliate of such an organization) 

may not serve at the same time as a 

management official of an unaffiliated 

depository organization with total assets 

exceeding $10 billion (or any affiliate of 

such an organization), regardless of the 

location of the two depository 

organizations. * * * 

PART 238—SAVINGS AND LOAN 

HOLDING COMPANIES (REGULATION 

LL) 

■ 5. The authority citation for part 238 

is revised to read as follows: 

Authority: 5 U.S.C. 552, 559; 12 U.S.C. 

1462, 1462a, 1463, 1464, 1467, 1467a, 1468, 

1813, 1817, 1829e, 1831i, 1972, 3201–3208; 

15 U.S.C. 78 l. 

■ 6. Section 238.93 is amended by 

revising the first sentence of paragraph 

(c) to read as follows: 

§ 238.93 Prohibitions. 

* * * * * 

(c) Major assets. A management 

official of a depository organization 

with total assets exceeding $10 billion 

(or any affiliate of such an organization) 

may not serve at the same time as a 

management official of an unaffiliated 

depository organization with total assets 

exceeding $10 billion (or any affiliate of 

such an organization), regardless of the 


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612 Federal Register / Vol. 84, No. 21 / Thursday, January 31, 2019 / Proposed Rules 

location of the two depository 

organizations. * * * 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

PART 348—MANAGEMENT OFFICIAL 

INTERLOCKS 

■ 7. The authority citation for part 348 

continues to read as follows: 

Authority: 12 U.S.C. 3207, 12 U.S.C. 

1823(k). 

■ 8. Section 348.3 is amended by 

revising the first sentence of paragraph 

(c) to read as follows: 

§ 348.3 Prohibitions. 

(c) Major assets. A management 

official of a depository organization 

with total assets exceeding $10 billion 

(or any affiliate of such an organization) 

may not serve at the same time as a 

management official of an unaffiliated 

depository organization with total assets 

exceeding $10 billion (or any affiliate of 

such an organization), regardless of the 

location of the two depository 

organizations. * * * 

* * * * * 

Dated: December 18, 2018. 

William A. Rowe, 

Chief Risk Officer. 

By order of the Board of Governors of the 

Federal Reserve System, December 14, 2018. 

Ann E. Misback, 

Secretary of the Board. 

Dated at Washington, DC, this 18th day of 

December 2018. 

By order of the Board of Directors. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 2018–28038 Filed 1–30–19; 8:45 am] 

BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P 

NATIONAL MEDIATION BOARD 

29 CFR Parts 1203 and 1206 

[Docket No. C–7198] 

RIN 3140–AA01 

Decertification of Representatives 

AGENCY: National Mediation Board. 

ACTION: Proposed rule with requests for 

comments. 

SUMMARY: The National Mediation 

Board (NMB or Board) is proposing to 

amend its regulations to provide a 

straightforward procedure for the 

decertification of representatives. The 

Board believes this change is necessary 

to fulfill the statutory mission of the 

Railway Labor Act, protecting 

employees’ right to select their 

representative. This change will ensure 

that each employee has a say in their 

representative and eliminate 

unnecessary hurdles for employees who 

no longer wish to be represented. 

DATES: Submit comments on or before 

April 1, 2019. A public hearing will be 

held at 10 a.m. in Washington, DC at a 

date and location to be announced later. 

ADDRESSES: You may submit comments, 

identified by Docket No. C–7198, by any 

of the following methods: 

—Federal eRulemaking Portal: http://

regulations.gov. Follow the 

instructions for submitting comments. 

—Agency Website: http://www.nmb.gov. 

Follow the instructions for submitting 

comments. 

—Email: legal@nmb.gov. Include Docket 

No. C–7198 in the subject line of the 

message. 

—Fax: (202) 692–5085. 

—Mail and Hand Delivery: National 

Mediation Board, 1301 K Street NW, 

Ste. 250E, Washington, DC 20005. 

Instructions: All submissions received 

must include the agency name and 

docket number. All comments received 

will be posted without change to http:// 

www.nmb.gov, including any personal 

information provided. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http://

www.nmb.gov. 

FOR FURTHER INFORMATION CONTACT: 

Mary Johnson, General Counsel, 

National Mediation Board, (202) 692– 

5040, legal@nmb.gov. 

SUPPLEMENTARY INFORMATION: The 

Railway Labor Act (RLA), 45 U.S.C. 151 

et seq. establishes the NMB whose 

functions, among others, are to 

administer certain provisions of the 

RLA with respect to investigating 

disputes as to the representative of a 

craft or class. In accordance with its 

authority under 45 U.S.C. 152, Ninth, 

the Board has considered changes to its 

rules to better facilitate the statutory 

mission to investigate representation 

disputes ‘‘among a carrier’s employees 

as to who are the representatives of such 

employees.’’ 

Currently, while employees have the 

ability to decertify a representative 

under the RLA, the process to decertify 

is unnecessarily complex and 

convoluted. By failing to have in place 

a straight-forward process for 

decertification of a representative, the 

Board is maintaining an unjustifiable 

hurdle for employees who no longer 

wish to be represented and failing to 

fulfill the statutory purpose of ‘‘freedom 

of association among employees.’’ 45 

U.S.C. 151a(2). 

Unlike the National Labor Relations 

Act, the RLA has no statutory provision 

for decertification of a bargaining 

representative. The Supreme Court, 

however, has held that, under Section 2, 

Fourth, 45 U.S.C. 152, Fourth, 

employees of the craft or class ‘‘have the 

right to determine who shall be the 

representative of the group or, indeed, 

whether they shall have any 

representation at all.’’ Bhd. of Railway 

and Steamship Clerks v. Assoc. for the 

Benefit of Non-Contract Employees, 380 

US 650, 670 (1965)(ABNE). In ABNE, 

the Court further noted that the 

legislative history of the RLA supports 

the view that employees have the option 

of rejecting collective representation. Id. 

at 669. citing Hearings on H.R. 7650, 

House Committee on Interstate and 

Foreign Commerce, 73d Cong., 2d Sess., 

34–35. In International Brotherhood of 

Teamsters v. Bhd. of Railway, Airline 

and Steamship Clerks, the United States 

Court of Appeals for the District of 

Columbia (D.C. Circuit), stated that ‘‘it 

is inconceivable that the right to reject 

collective representation vanishes 

entirely if the employees of a unit once 

choose collective representation. On its 

face that is a most unlikely rule, 

especially taking into account the 

inevitability of substantial turnover of 

personnel within the unit.’’ 402 F.2d 

196, 202 (1968), See also Russell v. 

National Mediation Board, 714 F.2d 

1332 (1983). 

Under its current procedures, the 

NMB allows indirect rather than direct 

decertification. The Board does not 

allow an employee or a group of 

employees of a craft or class to apply for 

an election to vote for their current 

representative or for no union. 

Employees who wish to become 

unrepresented must follow a more 

convoluted path to an election because 

of the Board’s requirement of the ‘‘straw 

man.’’ This straw man requirement 

means that if a craft or class of 

employees want to decertify, they must 

find a person willing to put their name 

up, i.e. ‘‘John Smith,’’ and then explain 

to at least fifty percent of the workforce 

that John Smith does not want to 

represent them, but if they want to 

decertify they have to sign the card 

authorizing him to represent them. 

Thus, in order to become unrepresented, 

employees are required to first sign an 

authorization card to have a strawman 

step in to represent them. In the 

resulting election, the ballot options 

will include the names of the current 

representative; John Smith, the 

strawman applicant; ‘‘no union;’’ and an 

option to write in the name of another 


khammond on DSKBBV9HB2PROD with PROPOSALS