Federal Register / Vol. 62, No. 226 / Monday, November 24, 1997 / Rules and Regulations 62509

1 12 U.S.C. 1465.

2 12 U.S.C. 1465(b)(2).

3 12 CFR 566.1(g) (1997).

4 62 FR 26449.

By order of the Board of Governors of the

Federal Reserve System, November 18, 1997.

William W. Wiles,

Secretary of the Board.

[FR Doc. 97–30711 Filed 11–21–97; 8:45 am]

BILLING CODE 6210–01–P

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 566

[No. 97–116]

RIN 1550–AA77

Liquidity

AGENCY: Office of Thrift Supervision,

Treasury.

ACTION: Final rule.

SUMMARY: The Office of Thrift

Supervision (OTS) is issuing a final rule

that updates, simplifies, and streamlines

its liquidity regulation. This final rule

follows a detailed review of the

regulation to determine whether it is

necessary, imposes the least possible

burden consistent with statutory

requirements and safety and soundness,

and is written in a clear, straightforward

manner. Today’s final rule is made

pursuant to the Regulatory Reinvention

Initiative of the Vice President’s

National Performance Review and

section 303 of the Community

Development and Regulatory

Improvement Act of 1994.

EFFECTIVE DATE: November 24, 1997.

FOR FURTHER INFORMATION CONTACT:

Francis Raue, Program Analyst, (202)

906–5750, Robyn Dennis, Manager,

Thrift Policy, (202) 906–5751,

Supervision Policy, or Susan Miles,

Attorney, (202) 906–6798, Karen

Osterloh, Assistant Chief Counsel, (202)

906–6639, Regulations and Legislation

Division, Chief Counsel’s Office, Office

of Thrift Supervision, 1700 G Street,

NW, Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Background

Section 6 of the Home Owners’ Loan

Act (HOLA) 1 requires savings

associations to hold a prescribed

amount of statutorily defined liquid

assets. The Director of the OTS may, by

regulation, vary the amount of the

liquidity requirement, but only within

pre-established statutory limits. The

requirement must be no less than four

percent and no greater than ten percent

of ‘‘the obligation of the institution on

withdrawable accounts and borrowings

payable on demand or with unexpired

maturities of one year or less.’’ 2 The

Director may issue regulations defining

the terms used in the statute,

prescribing or limiting the extent to

which certain assets included on the

statutory liquidity list may be used to

meet the liquidity requirement, and

prescribing how to calculate the

liquidity requirement.

Regulations implementing the

Director’s authority under section 6 of

the HOLA appear at 12 CFR part 566

(1997). These rules define liquid assets

to include cash and certain securities

with detailed maturity limitations and

marketability requirements.3 The rules

currently impose a liquidity

requirement of five percent of an

institution’s liquidity base and a

separate, ‘‘short-term’’ liquidity

requirement of one percent of that base.

The liquidity base in defined as net

withdrawable accounts plus short-term

borrowings. Except for institutions with

less than $25,000,000 in assets, liquidity

requirements are based on the ‘‘average

daily balance’’ of the liquidity base

during the preceding month.

Institutions with less than $25,000,000

in assets may calculate their liquidity

base using month-end figures.

On May 14, 1997, the OTS published

a notice of proposed rulemaking (NPR)

seeking comment on its liquidity

regulation.4 The OTS sought to reduce

the burden of compliance with the

statutory liquidity requirement to the

maximum extent possible, consistent

with statutory requirements and safety

and soundness considerations.

Specifically, the OTS proposed to: (1)

reduce the liquidity requirement from

five percent of net withdrawable

accounts and short-term borrowings to

four percent; (2) remove the one percent

short-term liquidity requirement; (3) set

forth an explicit requirement that thrifts

maintain a safe and sound level of

liquidity; (4) streamline the calculations

used to measure compliance with the

liquidity requirement; (5) expand the

categories of liquid assets that may

count toward satisfying a savings

association’s liquidity requirement; and

(6) reduce the liquidity base by

excluding withdrawable accounts

payable in more than one year form the

definition of the term ‘‘net

withdrawable accounts.’’

II. Summary of Comments and

Description of the Final Rule

The public comment period on the

proposed rule closed on July 14, 1997.

The OTS received twelve comments on

its proposal. Commenters included eight

savings associations, two trade

associations, one holding company, and

one individual. Commenters generally

concurred that the statutory liquidity

requirement imposes an unnecessary

burden on institutions and no longer

serves any useful purpose. Seven

commenters specifically urged the OTS

to continue to seek legislation that

would eliminate this requirement. Two

of these commenters urged the

elimination of the requirement for

institutions rated 1 or 2 under the

CAMELS system.

Eleven commenters supported the

proposed rule. These commenters

generally concluded that the proposed

rule would reduce the regulatory burden

to the extent permitted by the statute,

while maintaining the safety and

soundness of institutions. Several

commenters suggested revisions to the

proposed rule which are discussed

below. One commenter opposed the

proposed rule.

Today’s final rule is substantially

similar to the May proposal, but

incorporates several changes and

clarifications in response to comments

received. Specific comments are

discussed where appropriate in the

analysis below.

A. Reducing the Liquid Asset

Requirement From Five to Four Percent

and Removing the One Percent ShortTerm Requirement

The OTS proposed to reduce the

liquid asset requirement from five

percent of the liquidity base to four

percent, the lowest percentage

permissible by statute. Additionally, the

OTS proposed to eliminate the one

percent short-term liquidity

requirement, which is not mandated by

statute. The agency believed that these

changes were consistent with safety and

soundness and the goal of reducing

unnecessary burdens on the industry.

Commenters generally supported the

reduction of the liquid asset

requirement and the elimination of the

short term liquidity requirement. One

commenter noted that the OTS would

retain sufficient flexibility through its

examination process to determine the

proper amount of liquid assets to

support safe and sound operations. One

commenter expressed general concern

about this change, but did not cite

specific reasons for its concern. These

changes are adopted as proposed.

B. Adding a General Safety and

Soundness Requirement

The OTS proposed to incorporate a

general requirement that a savings
62510 Federal Register / Vol. 62, No. 226 / Monday, November 24, 1997 / Rules and Regulations

5See 12 CFR 559.1, 560.1, 562.2, and 563.161

(1997).

6For additional guidance, savings associations

should refer to the Thrift Activities Handbook,

Liquidity-Asset/Liability Management, Chapter 500.

7See Section 530, Cash Flow and Liquidity

Management, Thrift Activities Handbook. 8See 12 U.S.C. 1465(b)(1).

9 12 U.S.C. 1465(b)(1)(C)(vi), (vii).

10Pub. L. 101–73, 103 Stat. 183, 313–314 (1989).

association must maintain sufficient

liquidity to ensure its safe and sound

operation. This requirement reflects the

OTS’s position that the statutory

requirement is not necessarily

indicative of a safe level of liquidity.

The OTS would determine the adequacy

of an institution’s liquidity on a case-bycase basis.

Most commenters agreed that it is

appropriate to determine liquidity

requirements based on factors unique to

each association, and supported this

proposed requirement. One commenter,

however, opposed the general safety and

soundness requirement, suggesting that

the proposed rule was vague. The OTS

disagrees. The ‘‘safe and sound

operation’’ standard is commonly used

in banking parlance and in OTS

regulations.5 Safety and soundness

determinations are generally made on a

case-by-case basis in light of the

particular circumstances of each

institution. In the context of liquidity, a

thrift is generally required to ensure that

its current and prospective sources of

liquidity are sufficient to permit it to

meet its obligations in a timely manner

and to fulfill the legitimate banking

needs of its community.6

One commenter encouraged the OTS

to consider latent sources of liquidity

when determining whether an

association is maintaining sufficient

liquidity for safety and soundness

purposes. When OTS evaluates an

institution’s liquidity, examiners

consider additional sources of liquidity,

not only those assets that meet the

regulatory definition of liquid assets.

Examiners consider the institution’s

visible liquidity position (i.e., liquid

assets such as cash and marketable

securities) and the institution’s invisible

liquidity position (i.e., available

borrowing capacity).7

C. Streamlining the Average Balance

Calculations of Liquid Assets and

Liquidity Base

The current rule requires each savings

association (except certain small

associations and mutual savings banks)

to calculate monthly average daily

balances of liquid assets and the

liquidity base. Thus, a savings

association must calculate liquid assets

and the liquidity base at the close of

each business day, and then compute

the average daily balance of the liquid

assets and liquidity base for each

month.

The proposal would streamline these

calculations. While an institution would

be required to continually satisfy the

liquidity requirement, it would be

required to calculate the liquidity base

only on the last day of the preceding

calendar quarter. This change would

eliminate the need to calculate the

average daily balance of the liquidity

base for each month.

Commenters generally supported the

proposed change to the liquidity base

calculation as less burdensome, but

suggested certain clarifications and

modifications to further reduce the

burden of compliance. For example, one

commenter noted that it may be difficult

or burdensome for some institutions to

make the change to the new liquidity

base calculation. The OTS goal is to

decrease, rather than increase,

regulatory burden connected with the

statutory liquidity calculation.

Accordingly, the final rule permits

institutions to choose to use either the

current or new method as set forth in

the proposal of calculating the liquidity

base.

Several commenters asked OTS to

clarify how the liquid asset amount is

to be calculated. For example,

commenters asked whether liquid assets

would be based on the actual balance at

the end of each business day, the end of

each calendar month, or the end of each

quarter, and whether liquid assets

would be based on the average daily

balance for each month or quarter.

The final rule does not require a

savings association to hold the required

amount of liquid assets every day. Such

a requirement would increase, rather

than decrease, the regulatory burden

imposed on institutions under the

current regulation. Conversely, while a

requirement that a savings association

must hold the required amount of liquid

assets only on one day during a quarter

or month would reduce regulatory

burden, such a requirement would, in

effect, nullify the statutory liquidity

requirement, and would be contrary to

the statutory directive that liquid assets

be maintained at a level specified by the

Director.8 Accordingly, the final rule

continues to require savings

associations to calculate liquid assets

based on an average daily balance over

a period of time. However, instead of

determining the average daily balance

for each month, a savings association

will now determine the average daily

balance for each quarter.

Under the final rule, a savings

association may choose to calculate its

liquidity ratio in one of two ways. It can

maintain an average daily balance of

liquid assets in each calendar quarter of

not less than four percent of either: (1)

its liquidity base at the end of the

preceding quarter, or (2) the average

daily balance of its liquidity base during

the preceding quarter. The method of

calculating the average daily balances

for a period would be unchanged under

the final rule.

D. Expanding the Categories of Liquid

Assets That Count Toward Satisfaction

of the Liquidity Requirement

Under sections 6(b)(1)(C) (vi) and (vii)

of the HOLA,9 as added by the Financial

Institutions Reform, Recovery, and

Enforcement Act of 1989 (FIRREA),10

certain mortgage-related securities and

mortgage loans qualify as liquid assets

to the extent approved by the Director

of the OTS. The first category consists

of mortgage-related securities that are

defined in section 3(a)(41) of the

Securities Exchange Act of 1934. The

second category consists of mortgage

loans on the security of a first lien on

residential real property, if the mortgage

loans qualify as backing for mortgagebacked securities issued by the Federal

National Mortgage Association (FNMA)

or the Federal Home Loan Mortgage

Corporation (FHLMC) or are guaranteed

by the Government National Mortgage

Association (GNMA). The qualifying

mortgage-related securities and

mortgage loans must have one year or

less remaining until maturity, or be

subject to an agreement (including a

repurchase agreement, put option, right

of redemption, or takeout commitment)

that requires another person to purchase

the securities within a period that does

not exceed one year. In addition, the

person that agrees to purchase the

securities must be an insured depository

institution (as defined in section 3 of the

Federal Deposit Insurance Act) that is in

compliance with applicable capital

standards, a primary dealer in United

States Government securities, or a

broker or dealer registered under the

Securities Exchange Act of 1934.

The OTS proposed to add the FIRREA

categories to the definition of liquid

assets. Commenters generally supported

the addition of these new categories.

Accordingly, these new categories are

added in the final rule.

The proposed rule text described the

specific requirements for loans and

mortgage-related securities with crossreferences to other regulations and

statutes. One commenter argued that the

cross-references are different to
Federal Register / Vol. 62, No. 226 / Monday, November 24, 1997 / Rules and Regulations 62511

11 12 U.S.C. 1465(b)(1)(c)(ii).

12See 12 CFR 566.1(g)(3) (1997).

13See 39 FR 41263 (November 26, 1974).

14We note that the agency has adjusted this

maturity requirement in the past. See 39 FR 17219

(May 14, 1974).

15 12 CFR 566.1(c) (1997).

16 12 CFR 566.1(d) (1997).

17 12 CFR 566.1(e) (1997).

understand and urged the OTS to restate

all applicable requirements in the rule

text. The statutes and regulations crossreferenced by the proposed rule are

rather lengthy. The OTS believes that

the benefit of having a concise rule

outweighs the inconvenience of having

to look to the HOLA, the statute

governing most savings association

activities. Consequently, the crossreferences are retained.

Another commenter recommended

that the OTS should also include, in the

definition of liquid assets, adjustable

rate mortgage-backed securities issued

by the FNMA, the FHLMC, or the

GNMA. This commenter pointed out

that the definition of liquid assets in the

regulation suggests that an asset’s final

maturity always has a link to its price

sensitivity or liquidity. The commenter

noted that over the years the more

common types of adjustable rate

mortgage-backed securities have

developed significant secondary market

liquidity, and have price sensitivities

that are lower than many of the

currently qualifying liquid asset

alternatives.

Section 6(b)(1) of the HOLA describes

the specific types of assets that the OTS

may consider to be liquid assets. The

statutory listing includes ‘‘such

obligations, including such special

obligations, of the United States, a State,

any territory or possession of the United

States, or a political subdivision, agency

or instrumentality of any one or more of

the foregoing, and bankers’ acceptances,

as the Director may approve.’’ 11 The

OTS, and its predecessor, the Federal

Home Loan Bank Board (FHLBB), have

long included obligations of FNMA,

GNMA, and FHLMC among such special

obligations.12 While section 6(b)(1)(c)(ii)

of the HOLA does not contain any

maturity requirement for such

obligations, the current OTS regulation

provides that, in order to qualify as a

liquid asset, such obligations must have

five years or less remaining until

maturity. The ostensible basis for the

imposition of these liquidity

requirements was to reduce the risk of

loss on the securities held as liquid

assets.13

Upon review, the OTS believes that

the maximum five-year maturity

requirement for these specific

obligations under § 566.1(g)(3) and the

related maturity requirement for

obligations of the United States under

§ 566.1(g)(2) are outdated and

unnecessary.14 In addition, we note that

the other federal banking agencies do

not impose, for liquidity purposes, a

five-year maturity requirement for

obligations. The continuing imposition

of this requirement is contrary to our

objectives of relieving unnecessary

burden on the industry, and is

consistent with the treatment of these

assets by the other federal banking

regulators in their safety and soundness

examinations. Therefore, the OTS has

removed the maturity requirement for

these obligations.

E. Excluding Accounts With Unexpired

Maturities Exceeding One Year From

the Definition of ‘‘Net Withdrawable

Accounts’’

A savings association must maintain

liquid assets of not less than a stated

percentage of the amount of its liquidity

base. The regulation defines ‘‘liquidity

base’’ as net withdrawable accounts

plus short term borrowings.15 It defines

‘‘net withdrawable accounts’’ as all

withdrawable accounts less the unpaid

balance of all loans secured by such

accounts with certain exclusions.16

‘‘Short term borrowings’’ is defined as

borrowings where any portion of the

principal is payable on demand or in

one year or less.17

The OTS proposed to redefine ‘‘net

withdrawable accounts’’ by excluding

accounts with unexpired maturities

exceeding one year and by deleting the

word ‘‘all’’ from the phrase ‘‘all

withdrawable accounts’’ in the first part

of the definition. These changes would

reduce a savings association’s liquidity

base which would reduce the

association’s liquid asset requirement.

Three commenters addressed this

change. One commenter observed that

this change is consistent with the

regulation’s current exclusion from the

liquidity base of borrowings payable in

more than one year. The commenter

also noted that the statute does not

specify different maturity requirements

for withdrawable accounts and

borrowings in the liquidity base.

Another commenter agreed with the

proposed exclusion, provided that

excluded accounts with maturities of

more than one year are subject to an

effective early withdrawal penalty. The

OTS has decided not to impose an early

withdrawal penalty requirement for

excluded accounts with maturities of

more than one year. Such a requirement

is unnecessary and would place an

additional burden on savings

associations, which is contrary to the

spirit of this rulemaking.

Two commenters noted that

associations would have to create new

reports in order to exclude deposits

with unexpired maturities exceeding

one year from their liquidity bases.

These commenters requested that the

final rule explicitly permit institutions

to elect to use either the proposed or the

current, more stringent, method of

calculating the liquidity base.

The OTS agrees. Accordingly, the

final rule provides a savings association

with the option to exclude deposits with

unexpired maturities exceeding one

year from its liquidity base as proposed,

or to continue to use the more stringent

method of calculating the liquidity base.

To implement this change, the OTS has

amended the current definition of net

withdrawable accounts to give

institutions the option of either

applying the current definition of net

withdrawable accounts or excluding

withdrawable account deposits with

maturities exceeding one year from the

computation of net withdrawable

accounts.

F. Technical Revisions

The OTS has made several technical

revisions to § 566.1. These revisions

include appropriate cross-references in

paragraph (g)(8) to new paragraphs

(g)(12) and (g)(13) and punctuation and

other minor changes throughout

paragraph (g).

III. Paperwork Reduction Act

The recordkeeping requirements

contained in this final rule have been

submitted to and approved by the Office

of Management and Budget in

accordance with the Paperwork

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

3507(d)) under OMB control number

1550–0011.

Comments on all aspects of this

information collection should be sent to

the Office of Management and Budget,

Paperwork Reduction Project (1550),

Washington, DC 20503 with copies to

the OTS, 1700 G Street, NW.,

Washington, DC 20552.

Under the Paperwork Reduction Act

of 1995, no persons are required to

respond to a collection of information

unless it displays a valid OMB control

number. The valid OMB control number

assigned to the collection of information

in this final rule is displayed at 12 CFR

506.1(b).

The recordkeeping requirements

contained in this final rule are found at

12 CFR 566.4 (1997). The information is

needed by the OTS in order to ensure

that associations comply with a
62512 Federal Register / Vol. 62, No. 226 / Monday, November 24, 1997 / Rules and Regulations

statutory liquidity requirement. The

likely recordkeepers are OTS-regulated

savings associations. Records are to be

maintained in accordance with basic

business practices, but not less than a

period of three years.

IV. Executive Order 12866

The Director of the OTS has

determined that this final rule does not

constitute a ‘‘significant regulatory

action’’ for purposes of Executive Order

12866.

V. Regulatory Flexibility Act

Pursuant to section 605(b) of the

Regulatory Flexibility Act (Pub. L. 96–

354, 5 U.S.C. 601), the OTS certifies that

this regulation will not have a

significant economic impact on a

substantial number of small entities. It

reduces the liquidity requirement from

five percent to four percent, which

should increase all savings associations’

abilities to manage their assets.

Additionally, the final regulation should

ease the administrative burden of

calculating compliance with liquidity

requirements for all savings

associations, including small savings

associations.

VI. Unfunded Mandates Act of 1995

Section 202 of the Unfunded

Mandates Reform Act of 1995, Pub. L.

104–4 (Unfunded Mandates Act),

requires that an agency prepare a

budgetary impact statement before

promulgating a rule that includes a

federal mandate that may result in

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

an agency to identify and consider a

reasonable number of regulatory

alternatives before promulgating a rule.

As discussed in the preamble, this final

rule reduces regulatory burden. The

OTS has determined that the final rule

will not result in expenditures by state,

local, or tribal governments or by the

private sector of $100 million or more.

Accordingly, this rulemaking is not

subject to section 202 of the Unfunded

Mandates Act.

VII. Effective Date

Section 302 of the CDRIA requires

that regulations that impose additional

reporting, disclosure, or other new

requirements take effect on the first day

of the calendar quarter following

publication of the rule unless, among

other things, the agency determines, for

good cause, that the regulations should

become effective before that date. The

OTS believes that CDRIA does not apply

because this final rule imposes no new

burden on thrifts. Further, the OTS

believes that an immediate effective

date is appropriate since the final rule

relieves regulatory burden on savings

associations. An immediate effective

date would permit savings associations

to better manage their assets by reducing

the liquidity requirement from five to

four percent and by eliminating the

short-term liquidity requirement.

Additionally, the final rule should ease

administrative burden of computing

compliance with liquidity requirements.

For these reasons, the OTS believes that

an immediate effective date is

appropriate for this final rule.

Section 553(d) of the Administrative

Procedure Act requires an agency to

publish a substantive rule at least 30

days before its effective date. Section

553(d) of the APA permits waiver of the

30-day delayed effective date

requirement for, inter alia, good cause

or where a rule relieves a restriction.

The OTS further finds that the 30-day

delayed effective date requirement may

be waived because this final rule

relieves regulatory restrictions.

List of Subjects in 12 CFR Part 566

Liquidity, Reporting and

recordkeeping requirements, Savings

associations.

Accordingly, the Office of Thrift

Supervision hereby amends part 566,

chapter V, title 12, Code of Federal

Regulations, as set forth below:

PART 566—LIQUIDITY

1. The authority citation for part 566

continues to read as follows:

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

1464, 1465, 1467a; 15 U.S.C. 1691, 1691a.

2. Section 566.1 is amended by:

a. Revising paragraph (d);

b. Revising paragraph (g)(2);

c. Revising paragraph (g)(3)

introductory text;

d. Revising paragraphs (g)(4)(i)(A) and

(g)(4)(i)(B);

e. Revising paragraphs (g)(8), (g)(9)

and (g)(10);

f. In paragraph (g)(11)(i), removing

‘‘(‘‘Association member’’).’’ and adding

‘‘(‘‘Association member’’) or’’ in its

place;

g. In paragraph (g)(11), removing the

period at the end of the concluding text

and adding a semicolon in its place;

h. Adding paragraphs (g)(12) and

(g)(13); and

i. Removing paragraph (h).

The additions and revisions read as

follows:

§ 566.1 Definitions.

* * * * *

(d) Net withdrawable accounts. The

term net withdrawable accounts means

withdrawable accounts less the unpaid

balance of loans secured by such

accounts. In computing net

withdrawable accounts, a savings

association may, at its option, exclude

withdrawable accounts maturing in

more than one year. Tax and loan

accounts, note accounts, accounts to the

extent that security has been given upon

them pursuant to any applicable

regulations, U.S. Treasury General

Accounts, and U.S. Time Deposit

Accounts are not withdrawable

accounts.

* * * * *

(g) * * *

(2) Except as the Office may otherwise

direct in a specific case, obligations of

the United States;

(3) Obligations issued or fully

guaranteed as to principal and interest,

by:

* * * * *

(4) * * *

(i) * * *

(A) Negotiable and will mature in one

year or less;

(B) Not negotiable and will mature in

90 days or less; or

* * * * *

(8) Shares or certificates in any openend management investment company

registered with the Securities and

Exchange Commission under the

Investment Company Act of 1940, while

the portfolio of such company is

restricted by its investment policy,

changeable only by vote of the

shareholders, to investments described

in the other provisions of paragraphs

(g)(1) through (g)(7), (g)(9), (g)(12), and

(g)(13) of this section;

(9) Corporate debt obligations and

commercial paper denominated in

dollars, Provided, That:

(i) Such corporate debt obligations:

(A) Continue to be rated in one of the

four highest categories by the most

recently published rating of such

obligations by a nationally recognized

investment rating service;

(B) Are marketable as defined by

§ 541.7 of this chapter;

(C) Will mature in three years or less;

and

(D) Are not convertible to common

stock;

(ii) Such commercial paper:

(A) Continues to be rated in one of the

two highest categories by the most

recently published rating of such paper

by two nationally recognized

investment rating services, or, if

unrated, is guaranteed by a company

having outstanding paper that is so

rated; and
Federal Register / Vol. 62, No. 226 / Monday, November 24, 1997 / Rules and Regulations 62513

(B) Will mature in 270 days or less;

and

(iii) An amount not in excess of one

percent of such institution’s assets

invested in eligible corporate debt

obligations or commercial paper of a

single issuer shall be counted as a liquid

asset;

(10) Reserves required to be

maintained pursuant to title I of the

Depository Institution Deregulation and

Monetary Control Act of 1980 (94 Stat.

132) and established pursuant to 12 CFR

part 204, whether in the form of:

(i) Vault cash, as defined in 12 CFR

204.2, provided that vault cash shall be

included only once in calculating the

aggregate amount of liquid assets;

(ii) Balances maintained directly with

the Federal Reserve Bank in the district

in which the savings association is

located; or

(iii) A pass through account as

defined in 12 CFR 204.2;

* * * * *

(12) Mortgage-related securities as

described in 12 U.S.C. 1465(b)(1)(C)(vi);

and

(13) Mortgage loans on the security of

a first lien on residential real property

as described in 12 U.S.C.

1465(b)(1)(C)(vii).

3. Section 566.2 is revised to read as

follows:

§ 566.2 Requirements.

(a) Safety and soundness requirement.

In addition to meeting the minimum

requirement under paragraph (b) of this

section, each saving association must

maintain sufficient liquidity to ensure

its safe and sound operation.

(b) Minimum statutory liquidity

requirement. (1) Except as otherwise

provided in paragraph (c) of this

section, each savings association shall

maintain an average daily balance of

liquid assets in each calendar quarter of

not less than 4 percent of:

(i) The amount of its liquidity base at

the end of the preceding calendar

quarter; or

(ii) The average daily balance of its

liquidity base during the preceding

quarter.

(2) The average daily balance of either

liquid assets or liquidity base in a

quarter is calculated by adding the

respective balance as of the close of

each business day in a quarter, and for

any non-business day, as of the close of

the nearest preceding business day, and

dividing the total by the number of days

in the quarter.

(c) Reduction and suspension of

liquidity requirements. The Office may,

to the extent and under conditions it

may prescribe, permit a savings

association to reduce its liquid assets

below the minimum amount required by

paragraph (b) of this section to meet

withdrawals or pay obligations. The

Office may suspend part or all of the

liquidity requirements of paragraph (b)

of this section whenever it determines

that conditions of national emergency or

unusual economic stress exist. Any such

suspension, unless sooner terminated by

its terms or by the Office, shall

terminate after 90 days, but the Office

may again suspend part or all of such

requirement at any time.

Dated: November 13, 1997.

By the Office of Thrift Supervision.

Ellen S. Seidman,

Director.

[FR Doc. 97–30431 Filed 11–21–97; 8:45 am]

BILLING CODE 6720–01–M

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 92–CE–46–AD; Amendment 39–

10214; AD 97–24–07]

RIN 2120–AA64

Airworthiness Directives; Jetstream

Aircraft Limited Jetstream Models 3101

and 3201 Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a

new airworthiness directive (AD) that

applies to Jetstream Aircraft Limited

(JAL) Jetstream Models 3101 and 3201

airplanes that have kit JK 2496 and

modification JM 7537 installed. This

action requires installing magnetic

latching relays on the ignition system

because of the auto-ignition system

becoming disabled when switching from

ground power to the airplane’s internal

power. This AD is the result of

mandatory continuing airworthiness

information (MCAI) issued by the

airworthiness authority for the United

Kingdom. The actions specified by this

AD are intended to prevent loss of the

airplane’s internal power connection to

the auto-ignition system, which could

cause loss of engine power and possible

loss of control of the airplane.

DATES: Effective December 31, 1997.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of December

31, 1997.

ADDRESSES: Service information that

applies to this AD may be obtained from

Jetstream Aircraft Limited, Prestwick

Airport, Ayrshire, KA9 2RW, Scotland;

telephone (0292) 79888; facsimile (0292)

79703. This information may also be

examined at the Federal Aviation

Administration (FAA), Central Region,

Office of the Regional Counsel,

Attention: Rules Docket 92–CE–46–AD,

Room 1558, 601 E. 12th Street, Kansas

City, Missouri 64106; or at the Office of

the Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Mr.

S. M. Nagarajan, Project Officer, Small

Airplane Directorate, 1201 Walnut, suite

900, Kansas City, Missouri, 64106;

telephone (816) 426–6932, facsimile

(816) 426–2169.

SUPPLEMENTARY INFORMATION:

Events Leading to the Issuance of This

AD

A proposal to amend part 39 of the

Federal Aviation Regulations (14 CFR

part 39) to include an AD that would

apply to certain JAL Jetstream Models

3101 and 3201 airplanes, serial numbers

693 through 870, that have kit JK 2496

and modification JM 7537 installed and

are registered in the United States, was

published in the Federal Register on

April 14, 1997 (62 FR 18062). The

action proposed to require installing

magnetically latching relays with wiring

changes.

Accomplishment of the installation

would be in accordance with Jetstream

Service Bulletin No. 74–JM 7693A,

Original Issue dated May 17, 1990;

Revision No. 3 dated January 28, 1993.

Interested persons have been afforded

an opportunity to participate in the

making of this amendment. No

comments were received on the

proposed rule or the FAA’s

determination of the cost to the public.

The FAA’s Determination

After careful review of all available

information related to the subject

presented above, the FAA has

determined that air safety and the

public interest require the adoption of

the rule as proposed except for minor

editorial corrections. The FAA has

determined that these minor corrections

will not change the meaning of the AD

and will not add any additional burden

upon the public than was already

proposed.

Cost Impact

The FAA estimates that 126 airplanes

in the U.S. registry will be affected by

this AD, that it will take approximately

9 workhours per airplane to accomplish

this action, and that the average labor

rate is approximately $60 an hour. The