79278 Federal Register / Vol. 75, No. 243 / Monday, December 20, 2010 / Rules and Regulations 

1 12 U.S.C. 2903. 

2See 12 CFR parts 25, 228, 345, and 563e. 

E–2 CNMI Investor is eligible for 

employment in the CNMI only; 

* * * * * 

Janet Napolitano, 

Secretary. 

[FR Doc. 2010–31652 Filed 12–17–10; 8:45 am] 

BILLING CODE 9111–97–P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 25 

[Docket ID OCC–2010–0021] 

RIN 1557–AD34 

FEDERAL RESERVE SYSTEM 

12 CFR Part 228 

[Docket No. R–1387] 

RIN 7100–AD50 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 345 

RIN 3064–AD60 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Part 563e 

[Docket ID OTS–2010–0031] 

RIN 1550–AC42 

Community Reinvestment Act 

Regulations 

AGENCIES: Office of the Comptroller of 

the Currency, Treasury (OCC); Board of 

Governors of the Federal Reserve 

System (Board); Federal Deposit 

Insurance Corporation (FDIC); Office of 

Thrift Supervision, Treasury (OTS). 

ACTION: Joint final rule. 

SUMMARY: The OCC, the Board, the 

FDIC, and the OTS (collectively, ‘‘the 

agencies’’) are adopting revisions to our 

rules implementing the Community 

Reinvestment Act (CRA). The agencies 

are revising the term ‘‘community 

development’’ to include loans, 

investments, and services by financial 

institutions that support, enable, or 

facilitate projects or activities that meet 

the ‘‘eligible uses’’ criteria described in 

Section 2301(c) of the Housing and 

Economic Recovery Act of 2008 (HERA), 

as amended, and are conducted in 

designated target areas identified in 

plans approved by the United States 

Department of Housing and Urban 

Development (HUD) under the 

Neighborhood Stabilization Program 

(NSP). The final rule provides favorable 

CRA consideration of such activities 

that, pursuant to the requirements of the 

program, benefit low-, moderate-, and 

middle-income individuals and 

geographies in NSP target areas 

designated as ‘‘areas of greatest need.’’ 

Covered activities are considered both 

within an institution’s assessment 

area(s) and outside of its assessment 

area(s), as long as the institution has 

adequately addressed the community 

development needs of its assessment 

area(s). Favorable consideration under 

the revised rule will be available until 

no later than two years after the last date 

appropriated funds for the program are 

required to be spent by the grantees. The 

agencies will provide reasonable 

advance notice to institutions in the 

Federal Register regarding termination 

of the rule once a date certain has been 

identified. 

DATES: Effective Date: This joint final 

rule is effective January 19, 2011. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Michael S. Bylsma, Director, or 

Margaret Hesse, Special Counsel, 

Community and Consumer Law 

Division, (202) 874–5750; or Greg Nagel 

or Brian Borkowicz, National Bank 

Examiners, Compliance Policy, (202) 

874–4428; Office of the Comptroller of 

the Currency, 250 E Street, SW., 

Washington, DC 20219. 

Board: Paul J. Robin, Manager, 

Reserve Bank Oversight and Policy, 

(202) 452–3140; or Jamie Z. Goodson, 

Attorney, (202) 452–3667; Division of 

Consumer and Community Affairs, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

FDIC: Janet Gordon, Senior Policy 

Analyst, Division of Supervision and 

Consumer Protection, (202) 898–3850 or 

Richard Schwartz, Counsel, Legal 

Division, (202) 898–7424; Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

OTS: Stephanie M. Caputo, Senior 

Compliance Program Analyst, 

Compliance and Consumer Protection, 

(202) 906–6549; or Richard Bennett, 

Senior Compliance Counsel, 

Regulations and Legislation Division, 

(202) 906–7409; Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552. 

SUPPLEMENTARY INFORMATION: 

Background 

The Community Reinvestment Act 

(CRA) requires the Federal banking and 

thrift regulatory agencies to assess the 

record of each insured depository 

institution in helping to meet the credit 

needs of its entire community, 

including low- and moderate-income 

neighborhoods, consistent with the safe 

and sound operation of the institution, 

and to take that record into account 

when the agency evaluates an 

application by the institution for a 

deposit facility.1 The agencies have 

promulgated substantially similar 

regulations to implement the 

requirements of the CRA.2

There is a pressing need to provide 

housing-related assistance to stabilize 

communities affected by high levels of 

foreclosures. High levels of foreclosures 

have devastated communities and are 

projected to continue into 2012 and 

beyond with damaging spillover effects 

for low- and moderate-income census 

tracts, as well as middle-income census 

tracts, affected by high levels of loan 

delinquencies and foreclosures. Among 

the many consequences of high levels of 

foreclosures are growing inventories of 

vacant foreclosed properties and 

institution ‘‘other real estate owned’’ 

(OREO) properties, depreciating home 

values, declining property tax bases, 

and destabilization of communities 

directly affected by high levels of 

foreclosures and of adjacent and 

surrounding neighborhoods. 

Neighborhood Stabilization Program 

(NSP) 

Congress recognized the need to 

provide emergency assistance to address 

these problems with the establishment 

of the Neighborhood Stabilization 

Program (NSP) through Division B, Title 

III, of the Housing and Economic 

Recovery Act of 2008 (HERA), Public 

Law 110–289 (2008). Under HERA, 

emergency funds (‘‘NSP1’’) totaling 

nearly $4 billion for the redevelopment 

of abandoned and foreclosed properties 

were distributed to States and localities 

with the greatest need for such funds 

according to a formula based on the 

number and percentage of home 

foreclosures, the number and percentage 

of homes financed by a subprime 

mortgage-related loan, and the number 

and percentage of homes in default or 

delinquency in each State or unit of 

general local government. Under NSP1, 

each of the 50 States and Puerto Rico 

received a minimum award of $19.6 

million and 254 local areas received 


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3See ‘‘Neighborhood Stabilization Grants,’’ http:// 

www.hud.gov/offices/cpd/communitydevelopment/ 

programs/neighborhoodspg/nsp1.cfm. 

4See ‘‘Neighborhood Stabilization Program 2,’’ 

http://www.hud.gov/offices/cpd/ 

communitydevelopment/programs/ 

neighborhoodspg/arrafactsheet.cfm. 

5 74 FR 21377 (May 7, 2009); 73 FR 58330 (Oct. 

6, 2008). 

6HUD published formula allocations and 

program requirements for NSP3 grants on October 

19, 2010. See 75 FR 64322 (Oct. 19, 2010). 

7NSP2 and NSP3 funds for redevelopment of 

demolished or vacant properties may be used only 

for housing. 

8Section 1497 of the Dodd-Frank Act amended 

Section 2301(f)(3)(A) of HERA. Prior to this 

amendment, applicable to NSP1 and NSP2, not less 

than 25 percent of funds had to be used ‘‘for the 

purchase and redevelopment of abandoned or 

foreclosed homes and residential properties that 

will be used’’ to house individuals and families 

whose incomes do not exceed 50 percent of area 

median income. 

9 75 FR 36016 (Jun. 24, 2010). 

10 70 FR 44256 (Aug. 2, 2005), and 71 FR 18614 

(Apr. 12, 2006). 

11See HUD, NSP Frequently Asked Questions, 

http://www.hud.gov/offices/cpd/ 

communitydevelopment/programs/ 

neighborhoodspg/pdf/ 

nsp_faq_formula_allocation.pdf. 

grants totaling $1.86 billion ranging 

from $2.0 million to $62.2 million.3

Using similar criteria, the American 

Recovery and Reinvestment Act of 2009 

(ARRA), Public Law 111–5 (2009), 

provided supplementary NSP funding 

(‘‘NSP2’’) to be awarded as grants, 

through a competitive bidding process, 

to State and local governments, as well 

as to non-profit organizations and 

consortia of non-profit entities. On 

January 14, 2010, HUD awarded a 

combined total of nearly $2 billion in 

NSP2 grants.4 To receive NSP funding, 

each grantee was required to submit an 

action plan or application, including 

any amendments thereto, to HUD 

according to specific alternative 

requirements set out by HUD in 2008 

and 2009.5

The Dodd-Frank Wall Street Reform 

and Consumer Protection Act (the 

Dodd-Frank Act), Public Law 111–203, 

enacted July 21, 2010, provided $1 

billion in additional NSP funding to be 

allocated by a funding formula to be 

established by HUD within 30 days after 

enactment. Under the Dodd-Frank Act, 

HUD’s funding formula will continue to 

consider the same criteria regarding 

foreclosure rates, subprime mortgages, 

and home mortgage defaults and 

delinquencies and each State will 

receive not less than 0.5 percent of the 

new funds. Each State or local 

government grantee must establish 

procedures to create preferences for the 

development of affordable rental 

housing for properties assisted with the 

funds made available under the DoddFrank Act.6 On September 8, 2010, HUD 

announced the allocation of $970 

million in NSP3 funding to 283 grantees 

nationwide and has issued guidance to 

grantees on the preparation and 

submission of action plans. 

Section 2301(c) of HERA, as amended, 

establishes five activities that are 

‘‘eligible uses’’ of NSP funds (for 

purposes of this rule, designated as 

‘‘NSP-eligible activities’’). NSP-eligible 

activities are projects or activities that 

use the NSP funds to: (1) Establish 

financing mechanisms for purchase and 

redevelopment of foreclosed upon 

homes and residential properties, 

including such mechanisms as softseconds, loan loss reserves, and shared 

equity loans for low- and moderateincome homebuyers; (2) purchase and 

rehabilitate homes and residential 

properties that have been abandoned or 

foreclosed upon, in order to sell, rent, or 

redevelop such homes and properties; 

(3) establish and operate land banks for 

homes and residential properties that 

have been foreclosed upon; (4) demolish 

blighted structures; and (5) redevelop 

demolished or vacant properties.7 In 

addition, Section 2301(f)(3)(A) of HERA, 

as amended, provides that all NSP funds 

must be used with respect to 

individuals and families whose income 

does not exceed 120 percent of the area 

median income, and not less than 25 

percent of funds must be used to house 

individuals and families whose incomes 

do not exceed 50 percent of area median 

income.8

HUD approves NSP action plans and 

applications, including amendments 

thereto (hereinafter referred to as ‘‘NSP 

plans’’ or ‘‘plans’’), for all NSP grantees. 

These public documents must designate 

‘‘areas of greatest need’’ for targeting 

NSP-eligible activities, consistent with 

statutory criteria. The vast majority of 

NSP-targeted areas are listed on a map 

database located on HUD’s Web site at: 

http://www.hud.gov/nspmaps. 

However, there may be a few NSPtargeted geographies in HUD-approved 

State NSP1 plans that are not identified 

in the HUD census tract database. 

Information about these targeted areas 

may be found in the individual plans. 

NSP3 targeting data will periodically be 

added to these maps in a timely manner 

following approval of grantee action 

plans. 

HUD has allocated NSP funds in a 

way that assists communities with the 

greatest need to address the adverse 

consequences of elevated foreclosure 

levels, consistent with Congressional 

intent. Allowing institutions to receive 

CRA consideration for NSP-eligible 

activities in NSP-targeted areas creates 

an opportunity to leverage government 

funding targeted to areas with high 

foreclosure or vacancy rates. 

Proposed Rule 

The definition of ‘‘community 

development’’ is a key definition in the 

agencies’ CRA regulations. Financial 

institutions receive positive 

consideration in their CRA 

examinations for community 

development loans, qualified 

investments, and community 

development services which have a 

primary purpose of ‘‘community 

development.’’ 

The agencies proposed to revise the 

interagency CRA regulations by adding 

to the definition of ‘‘community 

development’’ loans, investments, and 

services that support, enable, or 

facilitate NSP-eligible activities in 

designated target areas identified in 

plans approved by HUD under the 

NSP.9 For example, under the proposed 

revised definition of ‘‘community 

development,’’ a financial institution 

would receive favorable CRA 

consideration for a donation of OREO 

properties to non-profit housing 

organizations in eligible middle-income, 

as well as low- and moderate-income, 

geographies. In addition, under the 

proposal, institutions would receive 

favorable CRA consideration if they 

provided financing for the purchase and 

rehabilitation of foreclosed, abandoned, 

or vacant properties in targeted areas. 

Other examples of activities that would 

receive favorable CRA consideration 

under the proposal are loans, 

investments, and services that support 

the redevelopment of demolished or 

vacant properties in such areas, 

consistent with eligible uses for NSP 

funds. 

Although the CRA rules expressly 

encourage activities that benefit low- or 

moderate-income individuals or 

geographies, the agencies have created 

limited exceptions to address certain 

adverse circumstances that may affect 

middle-income individuals and 

geographies.10 The agencies believe that 

the purposes of CRA can be served by 

providing CRA incentives to institutions 

to engage in community development 

loans, investments and services that 

meet the narrowly tailored requirements 

of the NSP. First, HUD has stated that 

its funding of these programs was 

designed to satisfy Congressional intent 

that the funds have maximum impact 

and be targeted to States and local 

communities with the greatest needs.11

In addition, while, by its statutory 

terms, the NSP may benefit middleincome individuals, grantees must use 

at least 25 percent of their funds to 


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79280 Federal Register / Vol. 75, No. 243 / Monday, December 20, 2010 / Rules and Regulations 

12The Board also received over 650 other 

comments that stated that banks should not receive 

an ‘‘outstanding’’ rating if they contributed to 

economic decline and should assist their 

communities, should not be allowed to pick the 

geographic area or affiliates considered, and should 

get a ‘‘failing’’ rating if they discriminate against 

African-American and Latino communities. 

house low-income individuals and 

families. 

Under the current CRA rules, an 

institution is evaluated primarily on 

how well it helps meet the credit and 

community development needs of its 

CRA assessment area(s). However, the 

agencies note that many foreclosed 

residential properties owned by an 

institution may be located in areas that 

are outside of the institution’s CRA 

assessment area(s). Restricting CRA 

consideration of NSP-eligible activities 

to an institution’s assessment area(s) 

may not fully help to promote 

Congress’s objectives for the NSP. 

Therefore, the proposed rule provided 

that an institution that has adequately 

addressed the community development 

needs of its assessment area(s) may 

receive favorable consideration for NSPeligible activities under this provision 

that are outside of its assessment area(s). 

There is precedent for allowing 

greater flexibility concerning the CRA 

focus on assessment area(s) in certain 

temporary and exigent circumstances. 

For example, in 2006, the agencies 

issued a supervisory policy statement 

providing that an institution would 

receive favorable CRA consideration for 

engaging in activities that helped 

revitalize or stabilize areas affected by 

Hurricanes Katrina and Rita, even if 

such areas were not in the institution’s 

assessment area(s), provided the 

institution had adequately met the CRArelated needs of its assessment area(s). 

Finally, the agencies stated their 

intention that the proposed rule be 

generally tied to the duration of the 

NSP. As described more fully below, the 

NSP does not have a ‘‘sunset’’ date. 

Therefore, a specific termination date 

for the regulatory provision was not 

proposed. Instead, the proposed rule 

provided that NSP-eligible activities 

would receive favorable consideration 

under the new rule if conducted no later 

than two years after the last date 

appropriated funds for the program are 

required to be spent by the grantees. The 

proposal indicated that the agencies will 

provide reasonable advance notice to 

institutions in the Federal Register 

regarding termination of the rule once a 

date certain has been identified. 

The proposed rule would have 

imposed no new requirements on 

institutions. It simply would have 

expanded the categories of activities 

that qualify for CRA consideration as 

‘‘community development.’’ No 

institution would be required to provide 

loans, investments, or services pursuant 

to the proposed expanded definition. In 

addition, any community development 

loans that may be made by large 

institutions under the proposed new 

provision would be covered under 

existing loan reporting requirements. As 

such, no new reporting requirements 

and negligible, if any, administrative 

costs would result from the proposed 

rule if adopted. The agencies 

anticipated that the proposal, if 

finalized, would provide an incentive 

for institutions to engage in activities 

that stabilize foreclosure affected 

communities approved for NSP projects. 

Thus, the proposed rule would create an 

opportunity to leverage government 

funded projects with complementary 

private financing in areas targeted for 

assistance with minimal, if any, 

regulatory burden or costs. 

Review of Comments on the Proposed 

Rule and Agencies’ Final Rule 

Together, the agencies received 34 

comments addressing the proposed 

revision that would expand the 

definition of ‘‘community 

development.’’ 12 The commenters 

represented a variety of industry, 

consumer, community development, 

and governmental entities. The 

commenters generally supported 

expanding the definition of ‘‘community 

development’’ to encourage housingrelated assistance to stabilize 

communities affected by high levels of 

foreclosures and delinquencies. 

In addition to a request for comments 

generally, the agencies asked for and 

received comment on five specific 

issues in connection with the proposal. 

Activities Eligible for CRA 

Consideration: Virtually all of the 

commenters supported the intent of the 

proposed rule to permit CRA 

consideration, as a component of the 

regulatory ‘‘community development’’ 

definition, of loans, investments, and 

services that support activities that are 

NSP-eligible and are conducted in NSPtargeted areas. In particular, the 

agencies requested comment on whether 

favorable CRA consideration should be 

limited to support of those activities 

specified in a HUD-approved NSP plan 

for the relevant area or support of 

specific activities that have been funded 

by the NSP. The commenters that 

specifically addressed the question 

opposed limiting CRA consideration to 

such activities. For example, a 

community development organization 

stated that so limiting covered activities 

would unduly burden banks and 

examiners by requiring them to verify 

that an activity was covered by a plan. 

A few industry and government 

commenters suggested that the agencies 

adopt a broader rule that provides 

express CRA consideration for activities 

that are not NSP-eligible and/or are 

outside of geographies covered in NSPtargeted areas. Several other 

commenters stated that the agencies 

should provide consideration for 

activities that are NSP-eligible, but are 

not specifically covered in the 

underlying NSP plans. By contrast, six 

community development organizations 

that target low- and moderate-income 

communities stated that donations of 

OREO in poor condition can carry 

associated costs and liability for a 

receiving organization. These 

organizations recommended providing 

favorable CRA consideration for such 

donations only if they are consistent 

with local and/or regional government 

or nonprofit plans and the donor 

institutions fund associated costs, such 

as demolition and environmental 

remediation costs. The agencies will 

consider the credit given to donations of 

OREO as part of their general regulatory 

review of CRA regulations. 

The agencies have considered the 

comments on the scope of the 

‘‘community development’’ definition 

and are adopting the revision to the 

definition as proposed, with only minor 

changes to statutory references. This 

revision to the definition of ‘‘community 

development’’ is narrowly tailored to 

encourage financial institutions to 

support stabilization efforts in targeted 

areas identified by the Federal 

government as having greater need for 

assistance as a result of the foreclosure 

crisis. Commenters opposed limiting 

favorable CRA consideration to those 

NSP-eligible activities expressly 

described in NSP plans or to those 

funded by NSP programs, as discussed 

above. The agencies note that the final 

rule allows institutions to receive CRA 

consideration for supporting, enabling, 

or facilitating NSP-eligible activities in 

the geographic areas targeted in NSP 

program plans. 

As noted above, the agencies believe 

that allowing institutions to receive 

CRA consideration for supporting, 

enabling, or facilitating NSP-eligible 

activities in NSP-targeted areas will 

help to leverage scarce government 

funding to those designated areas with 

the greatest need for such activities. 

Finalization of this rule will provide an 

immediate incentive for institutions to 

undertake activities that will support 

the stabilization of areas targeted for 

NSP-initiatives. 


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13 12 CFR 25.12(g)(4), 228.12(g)(4), 345.12(g)(4), 

and 563e.12(g)(4). 

14 Interagency Questions and Answers Regarding 

Community Reinvestment (Questions and 

Answers), 75 FR 11642, 11647, 11650–51, 11654– 

55 (Mar. 11, 2010) (Q&As §ll.12(g)(4)(i)–1, 

§ll.12(i)–3, and §ll.22(a)–1). 

15Questions and Answers, 75 FR at 11652–53 

(Q&A §ll.12(t)–5). 

16Questions and Answers, 75 FR at 11650–51, 

11657 (Q&As §ll.12(i)–1, §ll.12(i)–3, and 

§ll.22(b)(5)–1). 

17Under the agencies’ current CRA regulations, 

‘‘community development’’ includes activities 

related to affordable multifamily housing, and a 

‘‘community development loan’’ includes 

construction and permanent financing of 

multifamily rental property serving low- and 

moderate-income persons. 12 CFR 25.12(g)(1), 

228.12(g)(1), 345.12(g)(1), and 563e.12(g)(1); 

Questions and Answers, 75 FR at 11648 (Q&A 

§ll.12(h)–1). Further, a ‘‘home mortgage loan’’ 

includes a multifamily dwelling loan, and a 

‘‘qualified investment’’ includes an investment, 

grant, deposit, or share in organizations engaged in 

rehabilitating or constructing affordable multifamily 

rental housing. Questions and Answers, 75 FR at 

11651–52 (Q&As §ll.12(l)–1 and §ll.12(t)–4). 

18Questions and Answers, 75 FR at 11652 (Q&A 

§ll.12(t)–4). 

19See 75 FR 35686 (Jun. 23, 2010). 

20 In the proposed rule text, the agencies referred 

to Section 2301(c)(3) of the HERA with regard to 

that provision’s NSP ‘‘eligible uses’’ definition. 

Section 2301(c)(3) was changed to 2301(c)(4) in the 

Helping Families Save Their Homes Act of 2009, 

Public Law 111–22, § 105(a) (2009). Rather than 

change the reference in the regulatory text, and risk 

having to change that reference in the future, the 

agencies are using the term ‘‘eligible uses’’ and 

referring to Section 2301(c) generally. 

21 70 FR 44256 (Aug. 2, 2005) and 71 FR 18614 

(Apr. 12, 2006). 

In addition, the agencies note that, 

under the current CRA rules and 

interagency guidance, CRA 

consideration is already available for 

some neighborhood stabilization 

activities. First, revitalization and 

stabilization activities in low- and 

moderate-income geographies or in 

distressed or underserved 

nonmetropolitan middle-income 

geographies receive positive 

consideration under the existing CRA 

rules, regardless of whether these areas 

are targeted areas under the NSP.13

Similarly, foreclosure prevention 

programs may also receive positive CRA 

consideration, for example, if they are 

part of a loan program that is designed 

to provide sustainable relief to 

homeowners facing foreclosure on their 

primary residences or if they help to 

revitalize or stabilize low- or moderateincome geographies.14 In addition, 

below-market sales and donations of 

OREO properties to nonprofit 

organizations, consistent with safe and 

sound banking operations, also may 

receive positive consideration under the 

existing CRA rules. The CRA rules 

provide favorable consideration for 

grants, which would include an in-kind 

donation of property. If these grants 

have a primary purpose of community 

development, such as to provide 

affordable housing to low- and 

moderate-income individuals, they also 

would already receive positive CRA 

consideration as a qualified 

investment.15 Further, favorable CRA 

consideration is given for technical 

assistance about financial services to 

community-based groups, local or Tribal 

government agencies, or intermediaries 

that help to meet the credit needs of 

low- and moderate-income individuals 

or small businesses and farms.16

Favorable CRA consideration also is 

available for certain activities involving 

multifamily housing.17 In addition, 

economic development activities not 

directly related to housing may qualify 

for favorable CRA consideration. For 

example, ‘‘qualified investments’’ for 

which favorable CRA consideration may 

be given include investments, grants, 

deposits, or shares in or to organizations 

supporting activities essential to the 

capacity of low- and moderate-income 

individuals or geographies to utilize 

credit or to sustain economic 

development.18

Finally, the agencies note that they 

have begun a regulatory review of the 

CRA rules generally, and as part of that 

regulatory review, the agencies will 

carefully consider any comments 

received through this rulemaking that 

may recommend further changes to the 

definition of ‘‘community 

development.’’19

Reference to Statutes Appropriating 

Funds to NSP: In the proposal, the 

regulatory text specifically referred to 

the two statutes that authorized funds 

under NSP1 and NSP2, the HERA and 

the American Recovery and 

Reinvestment Act of 2009, respectively. 

As stated above, since the agencies 

issued their proposal, Congress 

provided an additional $1 billion to the 

NSP under the Dodd-Frank Act. Based 

on this additional authorization and the 

fact that the rule’s reference to the NSP 

now covers any of that program’s 

iterations (thus far NSP1, NSP2, and 

NSP3), the agencies need to amend the 

final regulatory language to account for 

these funds. Rather than add a reference 

to the Dodd-Frank Act, and thereafter 

amend the rule whenever a statute 

provides additional funds, the agencies 

have revised § __.12(g)(5)(i) to refer 

solely to HERA.20

Sunset: The duration of the agencies’ 

proposed rule was generally linked to 

the duration of the NSP. Under NSP1, 

grantees must expend NSP funds within 

four years of the date the grant is 

awarded. Under NSP2, grantees have 

three years from that date to fully spend 

the grant, and HUD was required to 

obligate all funds appropriated for NSP2 

in February 2010. The funds 

appropriated in the Dodd-Frank Act also 

must be fully expended by grantees 

within three years after they receive 

their grants, and HUD is required to 

obligate all funds appropriated by the 

Dodd-Frank Act by July 2011. Since the 

NSP does not have a termination date, 

Congress could appropriate additional 

funds for the program in future years. 

Therefore, a specific termination date 

for the regulatory provision was not 

proposed. Instead, the proposed rule 

provided that NSP-eligible activities 

would receive favorable consideration 

under the new rule if conducted no later 

than two years after the last date 

appropriated funds for the program are 

required to be spent by the grantees. 

Most commenters supported the 

proposal to allow CRA consideration of 

qualifying loans, investments, and 

services that are provided no later than 

two years after the last date 

appropriated funds for the program are 

required to be spent by grantees. A few 

commenters stated that there should be 

no ‘‘sunset’’ date. These commenters 

asserted that need for NSP-eligible 

activities will remain even after Federal 

funding is no longer available; 

continuing CRA consideration would 

encourage financial institutions to help 

to meet those needs. 

The agencies carefully considered 

these comments and are adopting the 

revision as proposed. The agencies 

believe that two years after the last date 

appropriated funds for the program are 

required to be spent by grantees 

generally allows sufficient time for 

institutions to engage in meaningful 

community development activities in 

NSP-targeted areas. As indicated in the 

proposal, the agencies will provide 

reasonable advance notice to 

institutions in the Federal Register 

regarding termination of the rule once a 

certain date has been identified. 

Benefit to Low-, Moderate-, and 

Middle-Income Communities: As noted 

above, the CRA rules expressly 

encourage activities that benefit low- or 

moderate-income individuals or 

geographies. Nevertheless, to address 

certain adverse circumstances, the 

agencies have created limited 

exceptions to permit favorable 

consideration of activities that benefit 

middle-income individuals and 

geographies in addition to low- and 

moderate-income individuals and 

geographies.21

Most commenters supported the 

expansion to permit CRA consideration 

of activities that may benefit middleVerDate Mar<15>2010 19:04 Dec 17, 2010 Jkt 223001 PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 E:\FR\FM\20DER1.SGM 20DER1

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22See 5 U.S.C. 603(a). 

23See 5 U.S.C. 605(b). 

income individuals and communities, 

consistent with the NSP program. 

Although a few of these commenters 

emphasized that the focus of CRA 

should continue to be on low- and 

moderate-income households and 

neighborhoods, the commenters 

supported the proposal to redefine 

‘‘community development’’ to align with 

NSP-eligible activities in designated 

areas identified in plans approved by 

HUD. 

After careful review of these 

comments and as proposed, the agencies 

are including activities that benefit 

middle-income individuals and 

geographies among the activities for 

which the agencies may provide 

favorable CRA consideration under the 

final rule. 

Recognition of NSP–Eligible Activities 

Outside of Assessment Area(s): Under 

the current CRA rules, an institution is 

evaluated primarily on how it helps 

meet the credit and community 

development needs of its CRA 

assessment area(s). However, many 

foreclosed properties owned by an 

institution may be located in areas that 

are outside of the institution’s CRA 

assessment area(s). As noted in the 

proposal, restricting CRA consideration 

of NSP-eligible activities to an 

institution’s assessment area(s) may not 

fully help to promote Congress’s 

objectives for the NSP. Therefore, the 

proposed rule provided that an 

institution that has adequately 

addressed the community development 

needs of its assessment area(s) may 

receive favorable consideration for NSPeligible activities under this provision 

that are outside of its assessment area(s). 

The agencies also specifically asked for 

comment on this aspect of the proposal. 

The commenters that addressed this 

issue unanimously supported allowing 

CRA consideration for NSP projects 

outside of an institution’s assessment 

area(s), provided the institution has met 

the community development needs 

within its assessment area(s). Several 

commenters suggested that the agencies 

should issue additional guidance on, for 

example, how financial institutions may 

demonstrate that they have adequately 

met the needs in their assessment 

area(s) and how outside-the-assessment 

area activities will be allocated toward 

an institution’s State-wide and overall 

CRA ratings. One financial institution 

trade association suggested that 

community banks receive favorable CRA 

consideration for NSP-eligible activities 

in the banks’ assessment areas whether 

or not the area is in an NSP-targeted 

area. 

The agencies carefully considered 

these comments and are adopting the 

rule as proposed. The final rule, like the 

proposal, allows institutions to receive 

favorable consideration for activities 

that benefit low-, moderate-, and 

middle-income individuals and 

geographies in the institution’s 

assessment area(s) or areas outside the 

bank’s assessment area(s) provided the 

institution has adequately addressed the 

community development needs of its 

assessment area(s). To the extent 

additional guidance may be needed on 

this provision, the agencies will 

consider it in connection with a future 

revision of the Interagency Questions 

and Answers Regarding Community 

Reinvestment or examination 

procedures. 

Potential Costs and Benefits: Only 

five commenters directly responded to 

the agencies’ request for comment on 

the potential costs and benefits of the 

proposed rule, if adopted. Most of these 

commenters predicted there would be 

only negligible costs associated with the 

proposed revision, typically in the form 

of additional administrative costs, 

including capturing loan data, and 

training. These commenters generally 

thought that the rule would result in 

some benefit to communities affected by 

the foreclosure crisis. A trade 

association of community banks and a 

financial institution stated that they 

anticipate additional administrative 

costs for loan documentation and 

reporting and for staff training if the 

proposed rule is adopted but did not 

estimate those costs. 

Effect on an Institution’s Decisions 

about Community Development 

Activities: The agencies also asked for 

specific comment about whether and 

the extent to which the proposed rule, 

if adopted, would affect an institution’s 

decisions about the amount, type, and 

location of community development 

loans, investments, and services it will 

provide. Four of the five commenters 

that addressed this request for comment 

believed that the rule would affect 

positively an institution’s decisions 

about the types and amount of 

community development activities it 

will provide. The other commenter 

stated that the rule would provide an 

incentive for institutions to engage in 

NSP-eligible activities, but might not 

substantially alter institutions’ general 

CRA decision-making. 

Effective Date 

The final rule becomes effective 30 

days after publication in the Federal 

Register. That effective date is 

consistent with section 553 of the 

Administrative Procedure Act, which 

provides that a substantive rule may not 

be made effective until 30 days after 

publication in the Federal Register, 

with specified exceptions. 5 U.S.C. 

553(d). Section 302 of the Riegle 

Community Development and 

Regulatory Improvement Act of 1994 

(CDRI) provides that regulations 

prescribed by a Federal banking agency 

that contain additional reporting, 

disclosure, or other new requirements 

on insured depository institutions shall 

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, with certain exceptions. 

12 U.S.C. 4802(b). Section 302 of the 

CDFR does not apply to this final rule 

because the final rule does not prescribe 

additional reporting, disclosures, or 

other new requirements on insured 

depository institutions. As discussed in 

detail above in the SUPPLEMENTARY

INFORMATION, the final rule instead 

expands the types of activities for which 

such institutions may receive favorable 

CRA consideration. 

Regulatory Analysis 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. Ch. 

3506; 5 CFR part 1320 Appendix A.1), 

each agency reviewed its final rule and 

determined that there are no collections 

of information. The final rule would 

expand the types of activities that 

qualify for CRA consideration, if an 

institution chooses to engage in them, 

but it would not impose any new 

requirements, including paperwork 

requirements. The overall cost of this 

final rule is expected to be negligible, at 

most. The amendments could have a 

negligible effect on burden estimates for 

existing information collections, 

including recordkeeping requirements 

for community development loans. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires agencies that are 

issuing a final rule to prepare and make 

available for public comment a 

regulatory flexibility analysis that 

describes the impact of the final rule on 

small entities.22 The RFA provides that 

agencies are not required to prepare and 

publish a regulatory flexibility act 

analysis if the agencies certify that the 

final rule will not, if promulgated, have 

a significant economic impact on a 

substantial number of small entities.23

The Small Business Administration 

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

banking purposes as a bank or savings 

association with $175 million or less in 


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24A financial institution’s assets are determined 

by averaging the assets reported on its four 

immediately preceding full quarterly financial 

statements. 

assets.24 13 CFR 121.201. Each agency 

has reviewed the impact of this final 

rule on the small entities subject to its 

regulation and supervision and 

addresses the RFA requirements, as 

appropriate, below. 

OCC: The OCC has reviewed the final 

amendments to Part 25. The final rule 

would expand the definition of the term 

‘‘community development,’’ which is 

applied in the CRA regulations’ 

performance tests. However, the final 

rule does not impose new requirements 

on small entities because the CRA 

performance test for small entities (as 

defined above) does not require 

community development activities. 

Rather, the final rule reduces burden by 

expanding the types of community 

development activities for which 

institutions may receive CRA 

consideration. Only 605 national banks 

are small entities based on the SBA’s 

general principles of affiliation (13 CFR 

121.103(a)) and the size threshold for 

commercial banks and trust companies. 

The OCC reviewed national banks with 

assets of less than $175 million that are 

evaluated under the lending, 

investment, and service tests, which are 

normally applicable to large banks, the 

community development test, which is 

applicable to wholesale and limited 

purpose banks, and the community 

development performance factor 

applicable to intermediate small banks. 

As of June 30, 2010, only 13 of the 605 

national banks that are small entities 

would be evaluated on their community 

development activities under these 

examination types. The rest would be 

evaluated under the small bank 

examination procedures, which do not 

require consideration of community 

development activities. The OCC has 

determined and therefore certifies, 

pursuant to section 605(b) of the RFA, 

that the final rule will not have a 

significant economic impact on a 

substantial number of small entities. 

OTS: The OTS has reviewed the final 

amendments to Part 563e. The final rule 

would expand the definition of the term 

‘‘community development,’’ which is 

applied in the CRA regulations’ 

performance tests. However, the final 

rule does not impose new requirements 

on small entities because the CRA 

performance test for small entities (as 

defined above) does not require 

community development activities. 

Rather, the final rule reduces burden by 

expanding the types of community 

development activities for which 

institutions may receive CRA 

consideration. The Small Business 

Administration (SBA) has defined 

‘‘small entities’’ for banking purposes as 

a savings association with $175 million 

or less in assets. See 13 CFR 121.201. As 

of September 23, 2010, only 361 OTSregulated thrifts are small entities with 

assets of $175 million or less. However, 

also as of that date, only three of those 

small savings associations are wholesale 

or limited purpose savings associations 

whose community development 

activities would be evaluated as an 

automatic part of the CRA examination 

process. Another three are special 

purpose savings associations not subject 

to CRA. The OTS has determined and 

therefore certifies, pursuant to section 

605(b) of the RFA, that the final rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 

FDIC: The FDIC has reviewed the 

proposed amendments to part 345. The 

proposal does not impose new 

requirements on small entities because 

the CRA performance test for small 

entities (as defined above) does not 

require community development 

activities. Rather, the proposed rule 

reduces burden by expanding the types 

of community development activities 

for which institutions may receive CRA 

consideration. As of June 30, 2010, FDIC 

regulated entities under the SBA’s size 

criteria, with assets of less than $175 

million, totaled 2840. However, also as 

of that date, only 5 of those banks that 

are small entities would be required to 

engage in community development 

activities under the examination types 

that include such consideration. The 

FDIC has determined and therefore 

certifies, pursuant to section 605(b) of 

the RFA, that the final rule will not have 

a significant economic impact on a 

substantial number of small entities. 

Board: The Regulatory Flexibility Act 

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

agency to perform an initial and final 

regulatory flexibility analysis on the 

impact a rule is expected to have on 

small entities. The Small Business 

Administration has defined ‘‘small 

entities’’ for banking purposes as a 

banking organization with $175 million 

or less in assets. See 13 CFR 121.201. 

The Board received no comments 

directly addressing the initial regulatory 

flexibility analysis. The Board has 

prepared the following final regulatory 

flexibility analysis pursuant to section 

604 of the RFA. 

1. Statement of the need for, and 

objectives of, the final rule. As 

explained above in the supplementary 

information, the Board believes that it is 

desirable to expand eligibility for 

favorable CRA consideration to NSPeligible activities and areas, in order to 

provide financial institutions incentives 

to leverage NSP funding by providing 

loans, investments, and services in areas 

with high foreclosure or vacancy rates. 

The final rule expands the definition of 

the term ‘‘community development,’’ 

which is applied in the CRA 

regulations’ performance tests. 

However, it does not impose new 

requirements on small entities because 

the CRA performance test for small 

entities does not require community 

development activities. Rather, the final 

rule expands the types of community 

development activities for which 

institutions may receive CRA 

consideration. 

2. Summary of the significant issues 

raised by public comment in response to 

the Board’s initial analysis, the Board’s 

assessment of such issues, and a 

statement of any changes made as a 

result of such comments. The Board 

published an initial regulatory 

flexibility analysis in connection with 

the proposed rule and requested 

comment on the effect of the proposed 

rule on small entities. See 75 FR 36016, 

36020 (Jun. 24, 2010). The Board 

received no comments specifically 

addressing the Board’s initial regulatory 

flexibility analysis. A financial 

institution trade association and a bank 

stated that institutions that seek CRA 

consideration for covered activities 

under a final rule would incur 

administrative costs, such as costs for 

documentation of activities and 

training. Those commenters did not 

estimate those costs or indicate that they 

especially affect small entities. The 

Board made no changes to the proposed 

rule based on public comment regarding 

costs associated with the final rule, 

because entities are not required to seek 

CRA consideration for covered activities 

under the final rule. Rather, entities may 

continue to seek CRA consideration for 

activities included in the definition of 

‘‘community development’’ prior to the 

expansion of that definition by this final 

rule. 

3. Small entities affected by the final 

rule. As of June 2010, the Board 

supervised 392 banking organizations 

that meet the definition of small 

entities, all of which are subject to the 

final rule. 

4. Recordkeeping, reporting, and 

compliance requirements. The final rule 

does not impose any new recordkeeping 

or reporting requirements, as the final 

rule does not require supervised 

banking organizations to engage in 

community development activities. 

Institutions that elect to seek credit for 

community development activities 


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under the expanded ‘‘community 

development’’ definition under the final 

rule will need to maintain 

documentation regarding those 

activities. 

5. Significant alternatives to the final 

revisions. Given that the final rule does 

not require institutions to fund NSPeligible activities and reduces burdens 

and restrictions on CRA funding in 

general, the Board does not believe any 

other alternatives would accomplish the 

stated objectives while minimizing 

burden of the final rule. The legal basis 

of the final rule is in CRA Section 806, 

12 U.S.C. 2905. The final rule expands 

the definition of the term ‘‘community 

development,’’ which is applied in the 

CRA regulations’ performance tests. 

However, it does not impose new 

requirements on small entities because 

the CRA performance test for small 

entities does not require community 

development activities. Rather, the final 

rule expands the types of community 

development activities for which 

institutions may receive CRA 

consideration. 

OTS Executive Order 12866 

Consideration 

Pursuant to Executive Order 12866, 

OMB’s Office of Information and 

Regulatory Affairs (OIRA) designated 

the proposed rule to be significant but 

did not determine whether the proposal 

would have an annual effect on the 

economy of $100 million or more. OTS 

solicited comment on the costs and 

benefits of the proposed rule, if adopted. 

As summarized elsewhere in the 

SUPPLEMENTARY INFORMATION, five 

commenters directly addressed the 

issue. In general, these commenters 

predicted there would be only negligible 

costs associated with the proposed 

revision, typically in the form of 

additional administrative costs, 

including capturing loan data and 

training. A trade association of 

community banks and a financial 

institution stated that they anticipate 

additional administrative costs for loan 

documentation and reporting and for 

staff training if the proposed rule is 

adopted but did not estimate those 

costs. Another financial institution 

indicated that since no new reporting 

requirements would be imposed, it did 

not foresee any incremental costs 

beyond the cost of doing business. 

Similarly, a trade association for home 

builders indicated the costs would be 

negligible since the rule would not 

place any new requirements on 

financial institutions. A State banking 

department said there appears to be few, 

if any, costs. 

Even the potential negligible costs 

would only apply to those savings 

associations that choose to seek CRA 

consideration for engaging in NSPeligible activities under the new 

provision promulgated in today’s final 

rule. As discussed elsewhere in the 

SUPPLEMENTARY INFORMATION, including 

the Regulatory Flexibility Act Analysis, 

many savings associations are not 

evaluated for community development 

activities. Small savings associations 

(currently defined as those with under 

$274 million in assets, 12 CFR 

563e.12(u)(1)) are only evaluated for 

community development under the 

small institution test ‘‘as appropriate,’’ in 

other words, when it is necessary to 

determine if they meet or exceed the 

standards for a satisfactory rating or at 

their request. 12 CFR part 563e; 

Questions and Answers, 75 FR at 11662 

(Q&A §ll.26(b)–2). Currently, 471 of 

the 741 savings associations are small. 

Further, as discussed elsewhere in the 

SUPPLEMENTARY INFORMATION, even 

without the new provision in today’s 

final rule, CRA consideration has 

already been available for some 

neighborhood stabilization activities 

under the pre-existing CRA rules and 

interagency guidance. Revitalization 

and stabilization activities in low- and 

moderate-income geographies or in 

distressed or underserved 

nonmetropolitan middle-income 

geographies receive positive 

consideration under the existing CRA 

rules, regardless of whether these areas 

are targeted areas under the NSP. 

Foreclosure prevention programs may 

also receive positive CRA consideration, 

for example, if they are part of a loan 

program that is designed to provide 

sustainable relief to homeowners facing 

foreclosure on their primary residences 

or if they help to revitalize or stabilize 

low- or moderate-income geographies. 

Below-market sales and donations of 

OREO properties to nonprofit 

organizations, consistent with safe and 

sound banking operations, also may 

receive positive consideration under the 

existing CRA rules. The CRA rules 

provide favorable consideration for 

grants, which would include an in-kind 

donation of property; if these grants 

have a primary purpose of community 

development, such as to provide 

affordable housing to low- and 

moderate-income individuals, they also 

would already receive positive CRA 

consideration as a qualified investment. 

Favorable CRA consideration is given 

for technical assistance about financial 

services to community-based groups, 

local or Tribal government agencies, or 

intermediaries that help to meet the 

credit needs of low- and moderateincome individuals or small businesses 

and farms. Favorable CRA consideration 

is available for certain activities 

involving multifamily housing. 

Economic development activities not 

directly related to housing may qualify 

for favorable CRA consideration. 

These commenters generally thought 

that the rule would result in some 

benefit to communities affected by the 

foreclosure crisis. Four of the five 

commenters that addressed the issue 

believed that the rule would affect 

positively an institution’s decisions 

about the types and amount of 

community development activities it 

will provide. These comments were 

from a trade association for State 

banking supervisors, a State banking 

department, a trade association for 

home builders, and a financial 

institution. The other commenter, 

another financial institution, indicated 

that the rule would provide an incentive 

for institutions to engage in NSP-eligible 

activities, but might not substantially 

alter institutions’ general CRA decisionmaking. 

As discussed elsewhere in the 

SUPPLEMENTARY INFORMATION, the 

duration of the final rule is generally 

linked to the duration of the NSP. Under 

NSP1, grantees must expend NSP funds 

within four years of the date the grant 

is awarded. Under NSP2, grantees have 

three years from that date to fully spend 

the grant, and HUD was required to 

obligate all funds appropriated for NSP2 

in February 2010. The funds 

appropriated in the Dodd-Frank Act also 

must be fully expended by grantees 

within three years after they receive 

their grants, and HUD is required to 

obligate all funds appropriated by the 

Dodd-Frank Act by July 2011. The final 

rule provides that NSP-eligible activities 

will receive favorable consideration 

under the new rule if conducted no later 

than two years after the last date 

appropriated funds for the program are 

required to be spent by the grantees. 

After that date, the rule will cease to 

apply. 

In light of the foregoing, OIRA has 

designated the final rule to be 

significant but not to have an annual 

effect on the economy of $100 million 

or more. 

OCC and OTS Unfunded Mandates 

Reform Act of 1995 Determination 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 

(Unfunded Mandates Act) (2 U.S.C. 

1532) requires that covered agencies 

prepare a budgetary impact statement 

before promulgating a rule that includes 

any Federal mandate that may result in 


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the expenditure by State, local, and 

Tribal governments, in the aggregate, or 

by the private sector, of $100 million or 

more in any one year. If a budgetary 

impact statement is required, section 

205 of the Unfunded Mandates Act also 

requires covered agencies to identify 

and consider a reasonable number of 

regulatory alternatives before 

promulgating a rule. The OCC and the 

OTS have determined that this final rule 

will not result in expenditures by State, 

local, and Tribal governments, or by the 

private sector, of $100 million or more 

in any one year. Accordingly, neither 

agency has prepared a budgetary impact 

statement or specifically addressed the 

regulatory alternatives considered. 

The Treasury and General Government 

Appropriations Act, 1999—Assessment 

of Impact of Federal Regulation on 

Families 

The FDIC has determined that this 

final rule will not affect family wellbeing within the meaning of section 654 

of the Treasury and General 

Government Appropriations Act, 

enacted as part of the Omnibus 

Consolidated and Emergency 

Supplemental Appropriations Act of 

1999, Public Law 105–277 (5 U.S.C. 601 

note). 

List of Subjects 

12 CFR Part 25 

Community development, Credit, 

Investments, National banks, Reporting 

and recordkeeping requirements. 

12 CFR Part 228 

Banks, Banking, Community 

development, Credit, Investments, 

Reporting and recordkeeping 

requirements. 

12 CFR Part 345 

Banks, Banking, Community 

development, Credit, Investments, 

Reporting and recordkeeping 

requirements. 

12 CFR Part 563e 

Community development, Credit, 

Investments, Reporting and 

recordkeeping requirements, Savings 

associations. 

Department of the Treasury 

Office of the Comptroller of the 

Currency 

12 CFR Chapter I 

Authority and Issuance 

For the reasons discussed in the joint 

preamble, the Office of the Comptroller 

of the Currency amends part 25 of 

chapter I of title 12 of the Code of 

Federal Regulations as follows: 

PART 25—COMMUNITY 

REINVESTMENT ACT AND 

INTERSTATE DEPOSIT PRODUCTION 

REGULATIONS 

■ 1. The authority citation for part 25 

continues to read as follows: 

Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 

93a, 161, 215, 215a, 481, 1814, 1816, 1828(c), 

1835a, 2901 through 2907, and 3101 through 

3111. 

■ 2. In § 25.12: 

■ a. Republish the introductory text of 

paragraph (g); 

■ b. Remove the word ‘‘or’’ at the end of 

paragraph (g)(3); 

■ c. Remove the period at the end of 

paragraph (g)(4)(iii)(B) and add ‘‘; or’’ in 

its place; and 

■ d. Add a new paragraph (g)(5). 

The republication and addition read as 

follows: 

§ 25.12 Definitions. 

* * * * * 

(g) Community development means: 

* * * * * 

(5) Loans, investments, and services 

that— 

(i) Support, enable or facilitate 

projects or activities that meet the 

‘‘eligible uses’’ criteria described in 

Section 2301(c) of the Housing and 

Economic Recovery Act of 2008 (HERA), 

Public Law 110–289, 122 Stat. 2654, as 

amended, and are conducted in 

designated target areas identified in 

plans approved by the United States 

Department of Housing and Urban 

Development in accordance with the 

Neighborhood Stabilization Program 

(NSP); 

(ii) Are provided no later than two 

years after the last date funds 

appropriated for the NSP are required to 

be spent by grantees; and 

(iii) Benefit low-, moderate-, and 

middle-income individuals and 

geographies in the bank’s assessment 

area(s) or areas outside the bank’s 

assessment area(s) provided the bank 

has adequately addressed the 

community development needs of its 

assessment area(s). 

* * * * * 

Federal Reserve System 

12 CFR Chapter II 

Authority and Issuance 

■ For the reasons set forth in the joint 

preamble, the Board of Governors of the 

Federal Reserve System amends part 

228 of chapter II of title 12 of the Code 

of Federal Regulations as follows: 

PART 228—COMMUNITY 

REINVESTMENT (REGULATION BB) 

■ 1. The authority citation for part 228 

continues to read as follows: 

Authority: 12 U.S.C. 321, 325, 1828(c), 

1842, 1843, 1844, and 2901 et seq. 

■ 2. In § 228.12: 

■ a. Republish the introductory text of 

paragraph (g); 

■ b. Remove the word ‘‘or’’ at the end of 

paragraph (g)(3); 

■ c. Remove the period at the end of 

paragraph (g)(4)(iii)(B) and add ‘‘; or’’ in 

its place; and 

■ d. Add a new paragraph (g)(5). 

The republication and addition read as 

follows: 

§ 228.12 Definitions. 

* * * * * 

(g) Community development means: 

* * * * * 

(5) Loans, investments, and services 

that— 

(i) Support, enable or facilitate 

projects or activities that meet the 

‘‘eligible uses’’ criteria described in 

Section 2301(c) of the Housing and 

Economic Recovery Act of 2008 (HERA), 

Public Law 110–289, 122 Stat. 2654, as 

amended, and are conducted in 

designated target areas identified in 

plans approved by the United States 

Department of Housing and Urban 

Development in accordance with the 

Neighborhood Stabilization Program 

(NSP); 

(ii) Are provided no later than two 

years after the last date funds 

appropriated for the NSP are required to 

be spent by grantees; and 

(iii) Benefit low-, moderate-, and 

middle-income individuals and 

geographies in the bank’s assessment 

area(s) or areas outside the bank’s 

assessment area(s) provided the bank 

has adequately addressed the 

community development needs of its 

assessment area(s). 

* * * * * 

Federal Deposit Insurance Corporation 

12 CFR Chapter III 

Authority and Issuance 

■ For the reasons set forth in the joint 

preamble, the Board of Directors of the 

Federal Deposit Insurance Corporation 

amends part 345 of chapter III of title 12 

of the Code of Federal Regulations as 

follows: 

PART 345—COMMUNITY 

REINVESTMENT 

■ 1. The authority citation for part 345 

continues to read as follows: 


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79286 Federal Register / Vol. 75, No. 243 / Monday, December 20, 2010 / Rules and Regulations 

1Public Law 111–203, sec. 334(a), 124 Stat. 1376, 

1539 (to be codified at 12 U.S.C. 1817(b)(3)(B)). 

2Public Law 111–203, sec. 334(d), 124 Stat. 1376, 

1539 (to be codified at 12 U.S.C. 1817(nt)). 

3Public Law 111–203, sec. 334(e), 124 Stat. 1376, 

1539 (to be codified at 12 U.S.C. 1817(nt)). 

4Public Law 111–203, sec. 332(d), 124 Stat. 1376, 

1539 (to be codified at 12 U.S.C. 1817(e)). 

Authority: 12 U.S.C. 1814–1817, 1819– 

1920, 1828, 1831u and 2901–2907, 3103– 

3104, and 3108(a). 

■ 2. In § 345.12: 

■ a. Republish the introductory text of 

paragraph (g); 

■ b. Remove the word ‘‘or’’ at the end of 

paragraph (g)(3); 

■ c. Remove the period at the end of 

paragraph (g)(4)(iii)(B) and add ‘‘; or’’ in 

its place; and 

■ d. Add a new paragraph (g)(5). 

The republication and addition read as 

follows: 

§ 345.12 Definitions. 

* * * * * 

(g) Community development means: 

* * * * * 

(5) Loans, investments, and services 

that— 

(i) Support, enable or facilitate 

projects or activities that meet the 

‘‘eligible uses’’ criteria described in 

Section 2301(c) of the Housing and 

Economic Recovery Act of 2008 (HERA), 

Public Law 110–289, 122 Stat. 2654, as 

amended, and are conducted in 

designated target areas identified in 

plans approved by the United States 

Department of Housing and Urban 

Development in accordance with the 

Neighborhood Stabilization Program 

(NSP); 

(ii) Are provided no later than two 

years after the last date funds 

appropriated for the NSP are required to 

be spent by grantees; and 

(iii) Benefit low-, moderate-, and 

middle-income individuals and 

geographies in the bank’s assessment 

area(s) or areas outside the bank’s 

assessment area(s) provided the bank 

has adequately addressed the 

community development needs of its 

assessment area(s). 

* * * * * 

Department of the Treasury 

Office of Thrift Supervision 

12 CFR Chapter V 

■ For the reasons set forth in the joint 

preamble, the Office of Thrift 

Supervision amends part 563e of 

chapter V of title 12 of the Code of 

Federal Regulations as follows: 

PART 563e—COMMUNITY 

REINVESTMENT 

■ 1. The authority citation for part 563e 

continues to read as follows: 

Authority: 12 U.S.C. 1462a, 1463, 1464, 

1467a, 1814, 1816, 1828(c), and 2901 through 

2907. 

■ 2. In § 563e.12: 

■ a. Republish the introductory text of 

paragraph (g); 

■ b. Remove the word ‘‘or’’ at the end of 

paragraph (g)(3); 

■ c. Remove the period at the end of 

paragraph (g)(4)(iii)(B) and add ‘‘; or’’ in 

its place; and 

■ d. Add a new paragraph (g)(5). 

The republication and addition read as 

follows: 

§ 563e.12 Definitions. 

* * * * * 

(g) Community development means: 

* * * * * 

(5) Loans, investments, and services 

that— 

(i) Support, enable or facilitate 

projects or activities that meet the 

‘‘eligible uses’’ criteria described in 

Section 2301(c) of the Housing and 

Economic Recovery Act of 2008 (HERA), 

Public Law 110–289, 122 Stat. 2654, as 

amended, and are conducted in 

designated target areas identified in 

plans approved by the United States 

Department of Housing and Urban 

Development in accordance with the 

Neighborhood Stabilization Program 

(NSP); 

(ii) Are provided no later than two 

years after the last date funds 

appropriated for the NSP are required to 

be spent by grantees; and 

(iii) Benefit low-, moderate-, and 

middle-income individuals and 

geographies in the savings association’s 

assessment area(s) or areas outside the 

savings association’s assessment area(s) 

provided the savings association has 

adequately addressed the community 

development needs of its assessment 

area(s). 

* * * * * 

Dated: December 8, 2010. 

John Walsh, 

Acting Comptroller of the Currency. 

By order of the Board of Governors of the 

Federal Reserve System, December 13, 2010. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

Dated at Washington, DC, this 14th day of 

December 2010. 

Federal Deposit Insurance Corporation. 

Valerie J. Best, 

Assistant Executive Secretary. 

Dated: December 9, 2010. 

By the Office of Thrift Supervision. 

John E. Bowman, 

Acting Director. 

[FR Doc. 2010–31818 Filed 12–17–10; 8:45 am] 

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

6720–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 327 

RIN 3064–AD69 

Designated Reserve Ratio 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: To implement a 

comprehensive, long-range management 

plan for the Deposit Insurance Fund 

(DIF or fund), the FDIC is amending its 

regulations to set the designated reserve 

ratio (DRR) at 2 percent. 

DATED: Effective Date: January 1, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Munsell St. Clair, Chief, Banking and 

Regulatory Policy Section, (202) 898– 

8967, Christopher Bellotto, Counsel, 

(202) 898–3801, 550 17th Street, NW., 

Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Governing Statutes 

The Dodd-Frank Wall Street Reform 

and Consumer Protection Act (DoddFrank), which was enacted on July 21, 

2010, gave the FDIC much greater 

discretion to manage the DIF, including 

where to set the DRR. Among other 

things, Dodd-Frank: (1) Raises the 

minimum DRR, which the FDIC is 

required to set each year, to 1.35 percent 

(from the former minimum of 1.15 

percent) and removes the upper limit on 

the DRR (which was formerly capped at 

1.5 percent) and consequently on the 

size of the fund; 1 (2) requires that the 

fund reserve ratio reach 1.35 percent by 

September 30, 2020 (rather than 1.15 

percent by the end of 2016, as formerly 

required); 2 (3) requires that, in setting 

assessments, the FDIC ‘‘offset the effect 

of [requiring that the reserve ratio reach 

1.35 percent by September 30, 2020 

rather than 1.15 percent by the end of 

2016] on insured depository institutions 

with total consolidated assets of less 

than $10,000,000,000’’; 3 (4) eliminates 

the requirement that the FDIC provide 

dividends from the fund when the 

reserve ratio is between 1.35 percent 

and 1.5 percent; 4 and (5) continues the 

FDIC’s authority to declare dividends 

when the reserve ratio at the end of a 


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