Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Notices 48089

Commission clarifies in the Order on

Reconsideration that nondominant

interexchange carriers should retain the

documents supporting the rates, terms,

and conditions of the carriers’ interstate,

domestic, interexchange offerings.

Nondominant interexchange carriers are

required to retain the foregoing records

for a period of at least two years and six

months following the date the carrier

ceases to provide services on such rates,

terms and conditions, in order to afford

the Commission sufficient time to notify

a carrier of the filing of a complaint,

which generally must be filed within

two years from the time the cause of

action accrues (in the event a complaint

is filed against a carrier, the carrier will

be required to retain documents relating

to the complaint until the complaint is

resolved). See 47 CFR Section 42.11.

Nondominant interexchange carriers are

required to maintain the foregoing

records in a manner that allows them to

produce such records within ten

business days of receipt of a

Commission request, and to file with the

Commission, and update as necessary,

the name, address, and telephone

number of the individual, or

individuals, designated by the carrier to

respond to Commission inquiries and

requests for documents. The availability

of such records will enable the

Commission to meet its statutory duty of

ensuring that such carriers’ rates, terms,

and conditions for service are just,

reasonable, and not unreasonably

discriminatory, and that these carriers

comply with the geographic rate

averaging and rate integration

requirements of the 1996 Act. In

addition, maintenance of such records

will enable the Commission to

investigate and resolve complaints. (519

respondents × 2 hours per response =

1038 annual burden hours).

d. Certification Requirement: In the

Second Report and Order, the

Commission adopted its proposal to

require nondominant interexchange

carriers to file certifications with the

Commission stating that they are in

compliance with their statutory

geographic rate averaging obligations

under Section 254(g) of the

Communications Act, as amended.

These providers must also file

certifications with the Commission

stating that they are in compliance with

their statutory rate integration

obligations under Section 254(g). See 47

CFR 64.1900. This requirement is

reaffirmed in the Order on

Reconsideration. (519 respondents × .05

hours per response = 259.5 annual

burden hours).

The information collected under the

tariff cancellation requirement must be

disclosed to the Commission, and will

be used to implement the Commission’s

detariffing policy. The information

collected under the recordkeeping and

other requirements will be used by the

Commission to ensure that affected

interexchange carriers fulfill their

obligations under the Communications

Act, as amended.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97–24212 Filed 9–11–97; 8:45 am]

BILLING CODE 6712–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

Notice of Agency Meeting

Pursuant to the provisions of the

‘‘Government in the Sunshine Act’’ (5

U.S.C. 552b), notice is hereby given that

the Federal Deposit Insurance

Corporation’s Board of Directors will

meet in open session at 10:00 a.m. on

Tuesday, September 16, 1997, to

consider the following matters:

Summary Agenda

No substantive discussion of the

following items is anticipated. These

matters will be resolved with a single

vote unless a member of the Board of

Directors requests that an item be

moved to the discussion agenda.

Disposition of minutes of previous

Board of Directors’ meetings.

Report of actions taken pursuant to

authority delegated by the Board of

Directors.

Discussion Agenda

Memorandum re: Revised Strategic

Plan.

Memorandum and resolution re:

Proposal to Revise the Risk-Based

Capital Treatment of Recourse and

Direct Credit Substitutes.

Memorandum and resolution re: Part

325 Proposal to Revise the Regulatory

Capital Treatment of Net Unrealized

Gains on Equity Securities.

Memorandum and resolution re: Part

325 Final Rule Implementing Section

208 of the CDRI Act—Capital

Requirement for Small Business

Loans Transferred With Recourse.

The meeting will be held in the Board

Room on the sixth floor of the FDIC

Building located at 550—17th Street,

N.W., Washington, D.C.

The FDIC will provide attendees with

auxiliary aids (e.g., sign language

interpretation) required for this meeting.

Those attendees needing such assistance

should call (202) 416–2449 (Voice);

(202) 416–2004 (TTY), to make

necessary arrangements.

Requests for further information

concerning the meeting may be directed

to Mr. Robert E. Feldman, Executive

Secretary of the Corporation, at (202)

898–6757.

Dated: September 9, 1997.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 97–24323 Filed 9–9–97; 5:01 pm]

BILLING CODE 6714–01–M

FEDERAL FINANCIAL INSTITUTIONS

EXAMINATION COUNCIL

Uniform Retail Credit Classification

Policy

AGENCY: Federal Financial Institutions

Examination Council.

ACTION: Notice and request for comment.

SUMMARY: The Board of Governors of the

Federal Reserve System (FRB), the

Federal Deposit Insurance Corporation

(FDIC), the Office of the Comptroller of

the Currency (OCC), and the Office of

Thrift Supervision (OTS) (collectively

referred to as the agencies), under the

auspices of the Federal Financial

Institutions Examination Council

(FFIEC), are requesting comment on

changes to the 1980 Uniform Policy for

Classification of Consumer Instalment

Credit Based on Delinquency Status

(1980 policy). The 1980 policy is used

by the agencies for classifying retail

credit loans of financial institutions on

a uniform basis.

The FFIEC is currently reviewing the

1980 policy to determine where

revisions may be necessary to more

accurately reflect the changing nature of

risk in today’s retail credit environment.

The preliminary results of this review

indicate that revisions should include: a

charge-off policy for open-end and

closed-end credit; a classification policy

for loans affected by bankruptcy,

fraudulent activity, and/or death of a

borrower; a prudent re-aging policy for

past due accounts; and a classification

policy for delinquent residential

mortgage and home equity loans.

Before developing a revised policy

statement for public comment, the

FFIEC is first soliciting comments on:

areas in the existing policy statement

that may need to be revised; specific

recommendations for changing the

policy statement; data that would help

quantify the financial or business

impact on financial institutions if the

existing policy was revised; and an

estimate of the time frames necessary for
48090 Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Notices

an institution to successfully implement

the revisions. After reviewing the input

received, the FFIEC will issue a revised

policy statement for public comment

that establishes clear guidance for the

industry; is based on an informed and

reasonable analysis of all available data;

and satisfies the principles of sound and

effective supervision.

DATES: Comments must be received by

November 12, 1997.

ADDRESSES: Comments should be sent to

Joe M. Cleaver, Executive Secretary,

Federal Financial Institutions

Examination Council, 2100

Pennsylvania Avenue NW, Suite 200,

Washington, DC 20037 or by facsimile

transmission to (202) 634–6556.

FOR FURTHER INFORMATION CONTACT:

FRB: William Coen, Supervisory

Financial Analyst, (202) 452–5219,

Division of Banking Supervision and

Regulation, Board of Governors of the

Federal Reserve System. For the hearing

impaired only, Telecommunication

Device for the Deaf (TDD), Dorothea

Thompson, (202) 452–3544, Board of

Governors of the Federal Reserve

System, 20th and C Streets NW,

Washington, DC 20551.

FDIC: James Leitner, Examination

Specialist, (202) 898–6790, Division of

Supervision. For legal issues, Michael

Phillips, Counsel, (202) 898–3581,

Supervision and Legislation Branch,

Federal Deposit Insurance Corporation,

550 17th Street NW, Washington, DC

20429.

OCC: Cathy Young, National Bank

Examiner, Credit Risk Division, (202)

874–4474; Ron Shimabukuro, Senior

Attorney, Legislative and Regulatory

Activities Division, Office of the

Comptroller of the Currency (202) 874–

5090, 250 E Street SW, Washington, DC

20219.

OTS: William J. Magrini, Senior

Project Manager, (202) 906–5744,

Supervision Policy; Vern McKinley,

Attorney, (202) 906–6241, Regulations

and Legislation Division, Chief

Counsel’s Office, Office of Thrift

Supervision, 1700 G Street NW,

Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

Background Information

On June 30, 1980, the FRB, FDIC, and

OCC adopted the FFIEC uniform policy

for classification of open-end and

closed-end credit. The OTS adopted the

policy in 1987. The policy was issued

to establish uniform guidelines for the

classification of instalment credit based

on delinquency status. While the 1980

policy recognized the statistical validity

of measuring losses predicated on past

due status, the 1980 policy also

permitted exceptions to the

classification policy in situations where

significant amounts were involved or

when a loan was well secured and in

the process of collection.

A fundamental objective of the 1980

policy is the timely recognition of losses

as required by generally accepted

accounting principles (GAAP). While

the 1980 policy provides general

guidance for a large segment of the retail

credit portfolio, it does not provide

supervisory guidance on loan chargeoffs related to consumer bankruptcy,

fraudulent activities, and accounts of

decedents. Furthermore, no guidance is

provided on the classification of

delinquent residential mortgages and

home equity loans. In light of the

questionable asset quality of many of

these accounts and the inconsistent way

in which financial institutions report

and charge-off these accounts, the FFIEC

believes that additional supervisory

guidance is necessary.

Request for Comments in the Following

Areas

(1) Charge-off Policy for Open-End and

Closed-End Credit

The agencies recognize the

inconsistency between the level of risk

associated with open-end and closedend credit and the policy for chargingoff delinquent accounts. Under the 1980

policy, open-end credit, which is

generally unsecured, should be chargedoff when an account is 180 days

delinquent. Conversely, closed-end

credit, which is normally secured by

some type of collateral, is subject to a

more stringent policy of 120 days

delinquent before a loan is charged off.

Over the years this inconsistency has

become more apparent as the market for

open-end credit evolved.

In 1980, open-end credit generally

consisted of credit card accounts with

small credit lines that limited the

exposure an institution had to an

individual borrower. In today’s

environment, open-end credit generally

includes accounts with much larger

lines of credit and higher risk levels.

The change in the nature of these

accounts, combined with the variety of

charge-off practices examiners recently

encountered, raised the concern of the

agencies. To address this concern, the

FFIEC is seeking public comment on

whether a charge-off policy that is more

consistent with the risk associated with

open-end and closed-end accounts

should be adopted and if so, what that

policy should be. Specifically, the

FFIEC requests comment on:

(1)(a) Should a uniform time frame be

used to charge-off both open-end and

closed-end accounts?

(1)(b) If so, what should that time

frame be?

(1)(c) If a uniform time frame for both

types of credit is not considered

appropriate, what time frames are

reasonable for charging off open-end

credit and closed-end credit? Please

explain.

(1)(d) If there was a change in the time

frames for charging-off delinquent

accounts, what is a reasonable time

frame to allow institutions to comply

with such a change?

(1)(e) Should the current regulatory

practice be continued of classifying

open-end and closed-end credit

Substandard when the account is 90

days or more delinquent? If not, what

alternative would you suggest? Please

explain the benefits of a suggested

alternative.

(1)(f) Should a standard for the

Doubtful classification be adopted and,

if so, what should be the standard and

why?

(1)(g) Currently, no requirement exists

to place retail credit loans on

nonaccrual status. Should guidance for

placing loans on a nonaccrual status be

adopted and, if so, at how many days

delinquent should open-end credit and

closed-end credit be placed on a

nonaccrual status?

(1)(h) An alternative to a requirement

that accounts be charged-off after a

designated delinquency is the creation

of an allocated or specific reserve.

Should the FFIEC require an allocated

or specific reserve, and if so, when

should it be established? Please discuss

the advantages and disadvantages of

such a proposal.

(2) Bankruptcy, Fraud, and Deceased

Accounts

No FFIEC guidance exists for

bankruptcy, fraud, and deceased

accounts. The FFIEC believes guidance

on these accounts is needed to ensure

recognition of loss among regulated

institutions is timely and consistent.

Comment is requested on the need to

provide such guidance and on the

following more specific issues.

(2)(a) Should there be separate

guidance for determining when an

account should be charged-off for

Chapter 7 bankruptcies and Chapter 13

bankruptcies? If so, what should that

guidance be?

(2)(b) What event in the bankruptcy

process should trigger loss recognition:

the filing date, the date of notification

to the creditor by the bankruptcy court

that a borrower has filed for bankruptcy,

the date that the bankruptcy trustee
Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Notices 48091

meets with the creditors, or some other

date? Please explain why one date is

better than another.

(2)(c) How much time is needed by an

institution to process the charge-off after

any one of the bankruptcy events

identified in question 2(a)?

(2)(d) As an alternative to an

immediate charge off, would it be

beneficial to set up a specific reserve

account at the time of the filing and

charge the loss to that reserve account

at the bankruptcy discharge date? Please

explain the pros and cons of this

alternative.

(2)(e) Subsequent to notification, how

much time is needed by an institution

to charge-off losses due to loan fraud?

(2)(f) Subsequent to notification, how

much time is needed by an institution

to charge-off losses on loans to deceased

borrowers?

(3) Partial Payments

The 1980 policy includes a provision

that 90 percent of a contractual payment

will be considered a full payment.

However, if less than 90 percent is

received, no recognition of any payment

is given. The FFIEC is considering

eliminating this policy provision and

giving credit for any partial payments

received. If such a change is adopted, a

loan will be considered one month

delinquent when the sum of the missed

portions of the payments equals one full

payment. A series of partial payments

could result in accumulating

delinquencies. For example, if a regular

installment payment is $300 and the

borrower makes payments of only $150

per month for a six-month period, the

loan would be $900, or three full

months delinquent.

(3)(a) Should borrowers receive credit

for partial payments in determining

delinquency using the method

described? If so, would such a change

require significant computer

programming changes? Are there other

reasonable alternatives?

(3)(b) If partial payments are allowed,

how should the payment be applied?

(3)(b)(1) Pro rata, equally to principle

and interest.

(3)(b)(2) First to principle, any

remaining to interest.

(3)(b)(3) Other.

No guidance currently exists on fixed

payment programs. Fixed payment

accounts are accounts for which a

payment plan (less than contractual) has

been established as a result of credit

counseling, bankruptcy proceedings, or

direct negotiations.

(3)(c) Should the FFIEC adopt policy

guidance on fixed payment programs?

What should that guidance be?

(4) Re-Aging, Extension, Renewal, or

Deferral Policy

Re-aging is the practice of bringing a

delinquent account current after the

borrower has demonstrated a renewed

willingness and ability to repay the loan

by making some, but not all, past due

payments. A permissive re-aging policy

on credit card accounts or an extension,

renewal, or deferral policy on other

types of retail credit can distort the true

performance and delinquency status of

individual accounts and the entire

portfolio. Re-aging, extension, renewal,

or deferral of delinquent loans is an

acceptable practice when it is based on

recent, satisfactory performance and

other positive credit factors of the

borrower and when it is structured in

accordance with prudent internal

policies. Institutions that re-age, extend,

renew, or defer accounts should

establish a reasonable policy and ensure

that it is followed by adopting

appropriate operating standards. While

no FFIEC guidance currently addresses

this issue, it is an area where uniform

guidance is appropriate to protect

against distortions in the performance of

the consumer loan portfolio. The

following standards are under

consideration:

(4)(a) The borrower shows a renewed

willingness and ability to repay the

loan. Is this standard appropriate?

(4)(b) The borrower makes a certain

number of contractual payments or the

equivalent amount. How many

payments are appropriate?

(4)(c) The loan can only be re-aged,

extended, renewed, or deferred once

within a specified time. What time

frame is appropriate? Should there be a

limit to the number of re-agings over the

life of an account? If so, what should

that limit be?

(4)(d) The account must be in

existence for a certain period of time

before it can be re-aged, extended,

renewed, or deferred. What time period

is appropriate?

(4)(e) The loan balance should not

exceed the predelinquency credit limits

(last limit approved by bank). Is this

standard appropriate?

(4)(f) Other. What other standards

should be considered?

(5) Residential and Home Equity Loans

No FFIEC uniform classification

policy exists for residential and home

equity loans. Since most of these loans

are underwritten using uniform credit

criteria, the FFIEC supports reviewing

and classifying these portfolios on an

aggregate basis. The FFIEC is

considering the substandard

classification based on delinquency

status.

As the delinquency progresses,

repayment becomes dependent on the

sale of the real estate collateral. For

collateral dependent loans, GAAP

requires that any loan amount in excess

of the collateral’s fair value less cost to

sell should be charged off, or that a

valuation allowance be established for

that excess amount. The FFIEC is

considering requiring that an evaluation

of the residential collateral be made

within a prescribed delinquency time

frame to determine fair value.

(5)(a) Should residential and home

equity loans be classified substandard at

a certain delinquency (similar to the

time period used in open-end and

closed-end credit)? If so, what should

that delinquency be?

(5)(b) Should the FFIEC require a

collateral evaluation at a certain

delinquency? If so, what should that

delinquency time frame be?

(6) Need for Additional Retail Credit

Guidance

The FFIEC notes that classification

policies are just one component of

prudent loan portfolio management.

Classification policies, by themselves,

do not address potential problems or

weaknesses that may exist in the

origination and underwriting of such

loans.

(6)(a) What type of additional

supervisory guidance is needed or

would be beneficial to address this or

other aspects of retail credit portfolio

management?

(6)(b) Should there be additional

supervisory guidance on the loan loss

reserve for retail credit?

(7) Industry Experience and Impact

The FFIEC welcomes comment on any

other issues that it should consider in

updating this policy. Additionally, the

FFIEC would benefit from receiving

financial institutions’ data on their

charge off and recovery experience rates

for charged-off open-end credit, closedend credit, loans in bankruptcy,

fraudulent loans, or loans of deceased

persons. The FFIEC is also interested in

understanding the financial and

business practice impact that these

policy changes may have. Revisions to

the 1980 policy may result in changes

to the Call Report, which may require

banks to make reporting system

changes. If an institution’s

recommendations vary from current

business practice, please provide an

estimate of the programming costs or

other costs that will be incurred to

change the practice and report

accurately. Some institutions have

securitized and sold their loans, but

such loans are still under institution
48092 Federal Register / Vol. 62, No. 177 / Friday, September 12, 1997 / Notices

management. Please comment on how

the FFIEC should treat such loans.

Dated: September 9, 1997.

Joe M.Cleaver,

Executive Secretary, Federal Financial

Institutions Examination Council.

[FR Doc. 97–24235 Filed 9–11–97; 8:45 am]

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

6720–01–P

FEDERAL RESERVE SYSTEM

Change in Bank Control Notices;

Acquisitions of Shares of Banks or

Bank Holding Companies

The notificants listed below have

applied under the Change in Bank

Control Act (12 U.S.C. 1817(j)) and §

225.41 of the Board’s Regulation Y (12

CFR 225.41) to acquire a bank or bank

holding company. The factors that are

considered in acting on the notices are

set forth in paragraph 7 of the Act (12

U.S.C. 1817(j)(7)).

The notices are available for

immediate inspection at the Federal

Reserve Bank indicated. The notices

also will be available for inspection at

the offices of the Board of Governors.

Interested persons may express their

views in writing to the Reserve Bank

indicated for that notice or to the offices

of the Board of Governors. Comments

must be received not later than

September 29, 1997.

A. Federal Reserve Bank of Kansas

City (D. Michael Manies, Assistant Vice

President) 925 Grand Avenue, Kansas

City, Missouri 64198-0001:

1. Steven L. Voorhees, Harvard,

Nebraska; to acquire voting shares of

Harvard State Company, Harvard,

Nebraska, and thereby indirectly acquire

Harvard State Bank, Harvard, Nebraska.

Board of Governors of the Federal Reserve

System, September 9, 1997.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 97–24265 Filed 9–11–97; 8:45 am]

BILLING CODE 6210–01–F

FEDERAL RESERVE SYSTEM

Formations of, Acquisitions by, and

Mergers of Bank Holding Companies

The companies listed in this notice

have applied to the Board for approval,

pursuant to the Bank Holding Company

Act of 1956 (12 U.S.C. 1841 et seq.)

(BHC Act), Regulation Y (12 CFR Part

225), and all other applicable statutes

and regulations to become a bank

holding company and/or to acquire the

assets or the ownership of, control of, or

the power to vote shares of a bank or

bank holding company and all of the

banks and nonbanking companies

owned by the bank holding company,

including the companies listed below.

The applications listed below, as well

as other related filings required by the

Board, are available for immediate

inspection at the Federal Reserve Bank

indicated. The application also will be

available for inspection at the offices of

the Board of Governors. Interested

persons may express their views in

writing on the standards enumerated in

the BHC Act (12 U.S.C. 1842(c)). If the

proposal also involves the acquisition of

a nonbanking company, the review also

includes whether the acquisition of the

nonbanking company complies with the

standards in section 4 of the BHC Act.

Unless otherwise noted, nonbanking

activities will be conducted throughout

the United States.

Unless otherwise noted, comments

regarding each of these applications

must be received at the Reserve Bank

indicated or the offices of the Board of

Governors not later than October 9,

1997.

A. Federal Reserve Bank of New

York (Betsy Buttrill White, Senior Vice

President) 33 Liberty Street, New York,

New York 10045-0001:

1. Olympian New York Corporation,

Brooklyn, New York; to become a bank

holding company by acquiring 100

percent of the voting shares of

Olympian Bank, Brooklyn, New York.

B. Federal Reserve Bank of Chicago

(Philip Jackson, Applications Officer)

230 South LaSalle Street, Chicago,

Illinois 60690-1413:

1. Albrecht Financial Services, Inc.,

Norwalk, Iowa; to acquire 100 percent of

the voting shares of Heartland

Bankshares, Inc., Madrid, Iowa, and

thereby indirectly acquire City State

Bank, Grimes, Iowa.

2. Mercantile Bank Corporation,

Grand Rapids, Michigan; to become a

bank holding company by acquiring 100

percent of the voting shares of

Mercantile Bank of West Michigan,

Grand Rapids, Michigan (in

organization).

C. Federal Reserve Bank of

Minneapolis (Karen L. Grandstrand,

Vice President) 250 Marquette Avenue,

Minneapolis, Minnesota 55480-2171:

1. Rice Lake Bancorp, Inc., Rice Lake,

Wisconsin; to acquire 100 percent of the

voting shares of TALCO, Inc.,

Menomonie, Wisconsin, and thereby

indirectly acquire Menomonie Shares,

Inc., Menomonie, Wisconsin;

Menomonie Financial Services, Inc.,

Menomonie, Wisconsin; and First Bank

and Trust, Menomonie, Wisconsin.

Board of Governors of the Federal Reserve

System, September 9, 1997.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 97–24264 Filed 9–11–97; 8:45 am]

BILLING CODE 6210–01–F

FEDERAL RESERVE SYSTEM

Sunshine Act Meeting

AGENCY HOLDING THE MEETING: Board of

Governors of the Federal Reserve

System.

TIME AND DATE: 10:00 a.m., Wednesday,

September 17, 1997.

PLACE: Marriner S. Eccles Federal

Reserve Board Building, C Street

entrance between 20th and 2lst Streets,

N.W., Washington, D.C. 20551.

STATUS: Closed.

MATTERS TO BE CONSIDERED:

1. Proposals concerning

reorganization of Federal Reserve Board

functions.

2. Personnel actions (appointments,

promotions, assignments,

reassignments, and salary actions)

involving individual Federal Reserve

System employees.

3. Any items carried forward from a

previously announced meeting.

CONTACT PERSON FOR MORE INFORMATION:

Mr. Joseph R. Coyne, Assistant to the

Board; (202) 452–3204. You may call

(202) 452–3207, beginning at

approximately 5 p.m. two business days

before this meeting, for a recorded

announcement of bank and bank

holding company applications

scheduled for the meeting.

Dated: September 10, 1997.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 97–24351 Filed 9–10–97; 12:00 pm]

BILLING CODE 6210–01–P

FEDERAL TRADE COMMISSION

Granting of Request for Early

Termination of the Waiting Period

Under the Premerger Notification

Rules

Section 7A of the Clayton Act, 15

U.S.C. § 18a, as added by Title II of the

Hart-Scott-Rodino Antitrust

Improvements Act of 1976, requires

persons contemplating certain mergers

or acquisitions to give the Federal Trade

Commission and the Assistant Attorney

General advance notice and to wait

designated periods before

consummation of such plans. Section

7A(b)(2) of the Act permits the agencies,