21494 Federal Register / Vol. 77, No. 69 / Tuesday, April 10, 2012 / Proposed Rules 

1The NPR refers to these activities as ‘‘activities 

that are financial in nature under Title I.’’ 

2See section 113 of the Dodd-Frank Act; 12 

U.S.C. 5323. 

3See id. 

4See section 102(a)(4)(B) of the Dodd-Frank Act 

(emphasis added); 12 U.S.C. 5311(a)(4)(B) 

(emphasis added). Besides bank holding companies, 

meeting and participate in Committee 

deliberations on all issues. Like all 

Committee meetings, the August 23, 

2011, meeting was a public meeting and 

all entities, both large and small, were 

able to express views on this issue. 

Finally, interested persons are invited to 

submit comments on this proposed rule, 

including the regulatory and 

informational impacts of this action on 

small businesses. 

In accordance with the Paperwork 

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

Chapter 35), the order’s information 

collection requirements have been 

previously approved by the Office of 

Management and Budget (OMB) and 

assigned OMB No. 0581–0178 Vegetable 

and Specialty Crops. No changes in 

those requirements as a result of this 

action are necessary. Should any 

changes become necessary, they would 

be submitted to OMB for approval. 

This proposed rule would impose no 

additional reporting or recordkeeping 

requirements on either small or large 

Florida tomato handlers. As with all 

Federal marketing order programs, 

reports and forms are periodically 

reviewed to reduce information 

requirements and duplication by 

industry and public sector agencies. 

AMS is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

USDA has not identified any relevant 

Federal rules that duplicate, overlap, or 

conflict with this rule. 

A small business guide on complying 

with fruit, vegetable, and specialty crop 

marketing agreements and orders may 

be viewed at: www.ams.usda.gov/ 

MarketingOrdersSmallBusinessGuide. 

Any questions about the compliance 

guide should be sent to Laurel May at 

the previously-mentioned address in the 

FOR FURTHER INFORMATION CONTACT

section. 

A 15-day comment period is provided 

to allow interested persons to respond 

to this proposed rule. Fifteen days is 

deemed appropriate because: (1) The 

2011–12 fiscal period began on August 

1, 2011, and the marketing order 

requires that the rate of assessment for 

each fiscal period apply to all assessable 

tomatoes handled during such fiscal 

period; (2) the Committee needs to have 

sufficient funds to pay its expenses 

which are incurred on a continuous 

basis; and (3) handlers are aware of this 

action which was unanimously 

recommended by the Committee at a 

public meeting and is similar to other 

assessment rate actions issued in past 

years. 

List of Subjects in 7 CFR Part 966 

Marketing agreements, Reporting and 

recordkeeping requirements, Tomatoes. 

For the reasons set forth in the 

preamble, 7 CFR part 966 is proposed to 

be amended as follows: 

PART 966—TOMATOES GROWN IN 

FLORIDA 

1. The authority citation for 7 CFR 

part 966 continues to read as follows: 

Authority: 7 U.S.C. 601–674. 

2. Section 966.234 is revised to read 

as follows: 

§ 966.234 Assessment rate. 

On and after August 1, 2011, an 

assessment rate of $0.037 per 25-pound 

carton is established for Florida 

tomatoes. 

Dated: April 4, 2012. 

Robert C. Keeney, 

Acting Administrator, Agricultural Marketing 

Service. 

[FR Doc. 2012–8532 Filed 4–9–12; 8:45 am] 

BILLING CODE 3410–02–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 225 

[Regulation Y; Docket No. R–1405] 

RIN 7100–AD64 

Definition of ‘‘Predominantly Engaged 

in Financial Activities’’ 

AGENCY: Board of Governors of the 

Federal Reserve System (Board). 

ACTION: Supplemental notice of 

proposed rulemaking and request for 

comment. 

SUMMARY: On February 11, 2011, the 

Board published a notice of proposed 

rulemaking (‘‘February 2011 NPR’’) that 

would amend Regulation Y to establish 

the criteria for determining whether a 

company is ‘‘predominantly engaged in 

financial activities’’ and define the 

terms ‘‘significant nonbank financial 

company’’ and ‘‘significant bank 

holding company’’ for purposes of Title 

I of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act of 2010 

(the ‘‘Dodd-Frank Act’’ or ‘‘Act’’). Based 

on comments received, the Board 

believes that clarification is needed 

regarding the scope of activities that 

would be considered to be financial 

activities under that proposal. 

Accordingly, this notice supplements 

the February 2011 NPR amending 

specific portions of the regulation for 

clarity. 

DATES: Comments should be received on 

or before May 25, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Laurie S. Schaffer, Associate General 

Counsel, (202) 452–2272, Paige E. 

Pidano, Senior Attorney, (202) 452– 

2803 or Christine E. Graham, Senior 

Attorney, (202) 452–3005, Legal 

Division; Mark Van Der Weide, Senior 

Associate Director, (202) 452–2263, 

Division of Banking Supervision and 

Regulation, Board of Governors of the 

Federal Reserve System, 20th Street and 

Constitution Avenue NW, Washington, 

DC 20551. Users of Telecommunication 

Device for Deaf (TDD) only, call (202) 

263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

This Notice of Proposed Rulemaking 

(‘‘NPR’’) amends the February 2011 NPR 

and invites public comment on the 

definition of activities that are financial 

solely for purposes of determining 

whether a company qualifies as a 

nonbank financial company under Title 

I of the Dodd-Frank Act.1

The Dodd-Frank Act established the 

Council, which, among other authorities 

and duties, may require that a ‘‘nonbank 

financial company’’ become subject to 

supervision by the Board and prudential 

standards if the Council determines that 

the material financial distress of the 

company, or the nature, scope, size, 

scale, concentration, 

interconnectedness, or mix of the 

company’s activities, could pose a threat 

to the financial stability of the United 

States.2 Nonbank financial companies 

that are designated by the Council under 

section 113 of the Dodd-Frank Act are 

referred to as ‘‘nonbank financial 

companies supervised by the Board.’’ 3

Title I of the Dodd-Frank Act defines 

a ‘‘nonbank financial company’’ to 

include both a U.S. nonbank financial 

company and a foreign nonbank 

financial company. The statute, in turn, 

defines a ‘‘U.S. nonbank financial 

company’’ as a company (other than a 

bank holding company and certain other 

specified types of entities) that is (i) 

incorporated or organized under the 

laws of the United States or any State; 

and (ii) predominantly engaged in 

financial activities.4 A ‘‘foreign nonbank 


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the statute specifically provides that the term ‘‘U.S. 

nonbank financial company’’ does not include (i) a 

Farm Credit System institution chartered and 

subject to the Farm Credit Act of 1971 (12 U.S.C. 

2001 et seq.), (ii) a national securities exchange (or 

parent thereof), clearing agency (or parent thereof, 

unless the parent is a bank holding company), 

security-based swap execution facility, or securitybased swap data repository that in each case is 

registered with the SEC, or (iii) a board of trade 

designated as a contract market (or parent thereof), 

or a derivatives clearing organization (or parent 

thereof, unless the parent is a bank holding 

company), swap execution facility or a swap data 

repository that in each case is registered with the 

CFTC. 

5See section 102(a)(4)(A) of the Dodd-Frank Act 

(emphasis added); 12 U.S.C. 5311(a)(4)(A) 

(emphasis added). A foreign bank, or foreign 

company controlling a foreign bank, is treated as a 

bank holding company for purposes of the BHC Act 

if the foreign bank has a branch, agency, or 

commercial lending company subsidiary in the 

United States and does not control a U.S. bank. 

6See section 102(a)(6) of the Dodd-Frank Act; 

12 U.S.C. 5311(a)(6). 

7Section 102(b) of the Dodd-Frank Act 12 U.S.C. 

5311(b). 

8 76 FR 7731 (February 11, 2011). The February 

2011 NPR also proposed definitions of the terms 

‘‘significant nonbank financial company’’ and 

‘‘significant bank holding company,’’ as required by 

the Dodd-Frank Act. See sections 102(a)(7) and (b) 

of the Dodd-Frank Act; 12 U.S.C. 5311(a)(7) and (b). 

9As noted below, conditions that do not define 

the activity itself include those conditions that were 

imposed to ensure that the activity is conducted in 

a safe and sound manner, to prevent a financial 

holding company from controlling a commercial 

firm, or to comply with another provision of law. 

10See remarks by Senator Cardin at 156 Cong. 

Rec. S5873, July 15, 2010, in which he indicates 

that mutual funds and their advisers would be 

eligible for designation by the Council (stating that 

115 of the Dodd-Frank Act would ‘‘ensure that 

mutual funds and their advisers are not 

inadvertently subjected to unworkable standards in 

the unlikely event the Financial Stability Oversight 

Council designates [mutual funds] as systemically 

risky.’’); See also remarks by Senator Kerry at 156 

Cong. Rec. S5902–5903, July 15, 2010, in which he 

indicates that although mutual funds and their 

advisers would be eligible for designation by the 

Council, regulation by the Board may not be 

appropriate for such companies because they do not 

pose a risk to United States financial stability 

(stating that ‘‘there are large companies providing 

financial services that are in fact traditionally lowrisk businesses, such as mutual funds and mutual 

fund advisers’’ and that Congress did ‘‘not envision 

nonbank financial companies that pose little risk to 

the stability of the financial system,’’ such as 

‘‘mutual funds and mutual fund advisers,’’ to be 

supervised by the Federal Reserve.’’). 

financial company’’ is defined as a 

company (other than a bank holding 

company or foreign bank or company 

that is, or is treated as, a bank holding 

company) that is (i) incorporated or 

organized outside the United States; and 

(ii) predominantly engaged in financial 

activities.5

For purposes of Title I of the DoddFrank Act, a company is considered to 

be ‘‘predominantly engaged’’ in 

financial activities if either 

(i) The annual gross revenues derived by 

the company and all of its subsidiaries from 

activities that are financial in nature (as 

defined in section 4(k) of the Bank Holding 

Company Act), and, if applicable, from the 

ownership or control of an insured 

depository institution, represents 85 percent 

or more of the consolidated annual gross 

revenues of the company; or 

(ii) The consolidated assets of the company 

and all of its subsidiaries related to activities 

that are financial in nature (as defined in 

section 4(k) of the Bank Holding Company 

Act), and, if applicable, related to the 

ownership or control of an insured 

depository institution, represents 85 percent 

or more of the consolidated assets of the 

company.6

The Dodd-Frank Act requires the 

Board to establish the requirements for 

determining whether a company is 

‘‘predominantly engaged in financial 

activities.’’ 7 In accordance with this 

requirement, the Board requested 

comment on the February 2011 NPR 

that, among other things, set forth the 

requirements for determining if a 

company is ‘‘predominantly engaged in 

financial activities’’ under Title I of the 

Act.8 The public comment period on the 

proposed rule closed on March 30, 

2011. 

In light of comments received on the 

February 2011 NPR, the Board is 

amending that NPR to clarify the 

activities that are financial for purposes 

of Title I. 

II. Overview of Comments 

The Board received 23 comments on 

the February 2011 NPR. The comments 

received by the Board relating to the 

definition of activities that are financial 

for purposes of Title I raised questions 

as to whether the conduct of certain 

financial activities—in particular, 

investment activities—that did not 

comply with the conditions applicable 

to bank holding companies engaging in 

such activities should be considered to 

be financial activities for purposes of 

Title I. The Board intends to provide a 

complete discussion of the comments 

submitted in response to the February 

2011 NPR after considering the 

comments received on this second 

proposal. 

The Board has considered the 

comments it received regarding the 

definition of activities that are financial 

in nature for purposes of Title I, as well 

as the language and legislative intent 

and history of the Dodd-Frank Act and 

the Bank Holding Company Act (‘‘BHC 

Act’’), as amended by the Gramm-LeachBliley Act (‘‘GLB Act’’). Based on these 

considerations, the Board is proposing 

to amend the February 2011 NPR to 

clarify that, consistent with the purpose 

of Title I any activity referenced in 

section 4(k) will be considered to be a 

financial activity without regard to 

conditions that were imposed on bank 

holding companies that do not define 

the activity itself.9 To provide clarity, 

the Board further is issuing as an 

appendix to the NPR a list of the 

activities that would be considered to be 

financial activities as of April 2, 2012, 

including conditions necessary to the 

definition of the activity as a financial 

activity, for purposes of determining 

whether a company is predominantly 

engaged in financial activities. 

The Board is proposing this approach 

for several reasons. First, section 4(k) of 

the BHC Act and Regulation Y, which 

is incorporated by reference, contain 

broad lists of financial activities and 

impose conditions on bank holding 

companies conducting those activities. 

Many of these conditions were imposed 

so that a bank holding company, which, 

by definition, controls a bank, could 

engage in the activities without 

threatening the safety and soundness of 

its subsidiary depository institution and 

are distinct from the definition of the 

activity itself. Other conditions were 

required to comply with another 

provision of law, such as the GlassSteagall Act. 

Defining financial activities for 

purposes of Title I to include all of the 

conditions imposed on the conduct of 

the activities by bank holding 

companies likely would enable some 

companies that are predominantly 

engaged in financial activities to avoid 

consideration for designation by the 

Council simply by choosing not to abide 

by conditions that were imposed by the 

Board on bank holding companies to 

ensure the safe and sound conduct of 

the activity or compliance with other 

legal restrictions unrelated to whether 

the activity is a financial activity. For 

example, some commenters suggested 

that a firm that organizes, sponsors, and 

manages an open-end investment 

company (including a mutual fund or 

money market mutual fund) should not 

be considered to be engaged in a 

financial activity if the firm owns or 

controls more than a given percentage of 

the fund because a financial holding 

company may not own or control more 

than that amount of the fund. 

This proposal is consistent with the 

purpose and legislative history of Title 

I, which demonstrate that Congress 

believed that the statutory definition of 

a ‘‘nonbank financial company’’ would 

make eligible for Council designation 

companies that were not bank holding 

companies but that engaged in a broad 

range of financial activities.10 A reading 

of Title I that limited the scope of 

companies considered to be 


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11Committee on Banking, Housing, and Urban 

Affairs Report, S. Rep. No. 111–176, April 15 2010, 

page 3, citing Testimony of Timothy Geithner, 

Secretary of the Treasury, to the Banking 

Committee, June 18, 2009. 

12See 12 U.S.C. 5367. 

13 Id. 14 12 U.S.C. 5323(c). 

15See 62 FR 9290, 9305 (February 28, 1997). The 

Board stated that the revisions made by the 1997 

release were necessary to remove conditions that 

‘‘[were] outmoded, [were] superseded by Board 

order, or [did] not apply to insured depository 

institutions conducting those same activities,’’ and 

the conditions it retained in section 225.28 were 

‘‘necessary to establish the definition of the 

permitted activity or to prevent circumvention of 

another statute, such as the Glass-Steagall Act.’’ The 

Board further noted that its ‘‘removal of [such] 

restrictions from the regulation does not affect the 

Board’s determination that’’ these activities are ‘‘so 

closely related to banking as to be a proper incident 

thereto’’ and thus permissible for bank holding 

companies. 

16See Conf. Rep. 106–434, 154 (November 2, 

1999). (‘‘The authorization of merchant banking 

‘‘predominantly engaged in financial 

activities’’ to only those companies that 

conduct such activities in compliance 

with the conditions applicable to bank 

holding companies would severely 

undermine the purpose of Title I and 

the authority granted by Congress to the 

Council to protect U.S. financial 

stability by taking certain actions to 

ensure such stability, such as the 

authority to subject to prudential 

standards financial firms that compete 

in financial markets and could threaten 

financial stability.11

Second, section 167(a) of the DoddFrank Act supports the view that 

Congress intended that companies could 

be eligible for designation by the 

Council regardless of whether these 

companies complied with the nondefinitional conditions applied to bank 

holding companies in the 

implementation of section 4(k).12

Section 167(a) provides that a nonbank 

financial company supervised by the 

Board ‘‘* * * shall not be required to 

conform its activities to the 

requirements of section 4 of the BHC 

Act.’’ 13

This section demonstrates that 

Congress recognized that nonbank 

financial companies do not conduct 

their activities in compliance with the 

requirements applicable to bank holding 

companies. It would be illogical to 

conclude that a company would be 

eligible for Council designation only if it 

conducted its financial activities in 

conformance with the requirements 

imposed on bank holding companies’ 

conduct of financial activities set forth 

in section 4(k), but would not be 

required to conform its financial 

activities to the conditions imposed on 

bank holding companies by section 4(k) 

after being designated by the Council for 

Board supervision. 

Third, the Council’s anti-evasion 

authority appears to demonstrate 

Congress’s intent to broadly define 

‘‘nonbank financial companies’’ to 

capture firms predominantly engaged in 

the type of financial activities 

authorized by section 4(k). A nonbank 

company could slightly alter the manner 

in which it conducts a financial activity 

so that the activity does not comply 

with one of the non-definitional 

conditions that governs the conduct of 

the activity by a bank holding company 

to reduce the company’s financial 

revenues and assets for purposes of the 

asset and revenue tests set forth in 

section 102(a)(6). The nonbank 

company could thereby avoid qualifying 

as a nonbank financial company and 

thus be ineligible for consideration by 

the Council for designation under 

section 113. Section 113(c) of the DoddFrank Act gives the Council the 

authority to subject the financial 

activities of any company to supervision 

by the Board if the Council determines, 

either on its own or pursuant to a 

recommendation by the Board, that: 

(i) The company is organized and 

operates in such a manner to evade 

application of Title I of the Dodd-Frank 

Act; and (ii) material financial distress 

related to, or the nature, scope, size, 

scale, concentration, 

interconnectedness, or mix of, the 

company’s financial activities would 

pose a threat to the financial stability of 

the United States.14 Companies that are 

engaged in activities that are financial in 

nature, but that alter the manner in 

which they conduct those activities for 

purposes of evading designation by the 

Council under section 113 and 

supervision by the Board may be subject 

to designation by the Council under the 

special anti-evasion authority in section 

113(c). 

III. Overview of Proposed Rule 

Activities as Defined in Section 4(k) 

The proposal would revise section 

225.301(d)(1) of the NPR to provide that 

any activity described in section 4(k) of 

the BHC Act will be considered 

financial in nature under Title I 

regardless of conformance with the 

conditions applicable to bank holding 

companies conducting such activity that 

do not define the financial activity 

itself. 

The proposed appendix would 

enumerate the activities that will be 

considered financial in nature as of 

April 2, 2012. These activities are 

identical to those in section 4(k) that are 

permissible for financial holding 

companies as of such date, but do not 

include the conditions imposed on the 

conduct of the activity by a bank 

holding company that do not describe 

the financial activity. These financial 

activities include those activities that 

were permitted by regulation or order as 

‘‘closely related to banking’’ under the 

BHC Act, permitted as ‘‘usual in 

connection with banking abroad,’’ under 

the International Banking Act, and those 

that were authorized for financial 

holding companies by the GLB Act in 

1999. 

In order to distinguish between 

conditions that are definitional from 

those that are imposed for other reasons, 

the Board considered its prior 

authorizations of permissible financial 

activities for bank holding companies. 

For instance, the Board reviewed its 

1997 revisions to section 225.28 of 

Regulation Y that describes activities 

that are ‘‘closely related to banking,’’ in 

which the Board removed several of the 

conditions imposed on bank holding 

companies conducting these activities. 

In this release, the Board distinguished 

between the activities that were 

‘‘necessary to establish the definition of 

the permitted activity’’ and those that 

were imposed for other purposes, such 

as ‘‘to prevent circumvention of another 

statute, such as the Glass-Steagall 

Act.’’ 15 The 1997 rulemaking is an 

example of the Board’s use of its 

longstanding authority to define the 

parameters of permissible nonbanking 

activities for bank holding companies 

and impose conditions on the conduct 

of such activities by bank holding 

companies, and the Board’s practice of 

distinguishing between the activities 

themselves and the conditions imposed 

on the conduct of those activities. 

The GLB Act authorized certain 

financial activities and repealed many 

of the conditions imposed on bank 

holding companies under section 225.28 

for bank holding companies that qualify 

as financial holding companies. To the 

extent that an activity was originally 

authorized by the GLB Act, the Board 

has reviewed the legislative history of 

that Act to identify the conditions 

defining that activity. For instance, the 

legislative history related to Congress’s 

authorization of ‘‘underwriting, 

merchant, and investment banking 

activities’’ distinguishes between the 

activities themselves and certain 

conditions imposed on the conduct of 

these activities by a financial holding 

company that do not define the 

activities, such as the requirement that 

a financial holding company have a 

securities or insurance affiliate.16


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activities as provided in new section 4(k)(4)(H) of 

the BHCA is designed to recognize the essential role 

that these activities play in modern finance and 

permits an FHC that has a securities affiliate or an 

affiliate of an insurance company engaged in 

underwriting life, accident and health, or property 

and casualty insurance, or providing and issuing 

annuities, to conduct such activities.’’) (emphasis 

added). 

17 12 U.S.C. 1843(k)(4)(A). 

18 12 U.S.C. 1843(k)(4)(B). 

19 12 U.S.C. 1843(k)(4)(C). 

20 12 U.S.C. 1843(k)(4)(D). 

21 12 U.S.C. 1843(k)(4)(E). 

22 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(1). 

23 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(2). 

24 Id. 

25Neither real estate brokerage nor real estate 

management is an activity that is financial in 

nature. See 12 U.S.C. 1843 note; Public Law 111– 

8, sec. 624 (Mar. 11, 2009). 

Because section 4(k) references 

financial activities that were authorized 

by the Board under various authorities 

at different points in time, certain of 

these financial activities overlap with, 

or are wholly subsumed by, other 

financial activities permissible for 

financial holding companies. For 

purposes of the proposal, the Board has 

maintained the complete list of financial 

activities authorized under section 4(k), 

including the overlapping and 

redundant activities. Generally, the 

Board seeks comment on whether 

overlapping or redundant financial 

activities should be combined or 

removed, as appropriate, solely for 

purposes of determining whether a 

nonbank company is predominantly 

engaged in financial activities, in order 

to simplify the proposed appendix. 

It is possible that the Board may 

modify, interpret, or authorize activities 

under section 4(k) of the BHC Act in the 

future. Thus, the proposed revision to 

section 225.301(d)(1) would clarify that 

neither the rule nor the appendix would 

affect the authority of the Board under 

any other provision of law or regulation 

to modify these activities or to provide 

interpretations of section 4(k) in the 

future, which may affect those activities 

that are financial in nature under 

Title I. 

The following discussion describes 

the activities enumerated in the 

proposed appendix and identifies the 

conditions imposed by section 4(k) of 

the BHC Act and the Board’s 

implementing regulations that are not 

reflected in the proposed appendix 

because they do not define the essential 

nature of the activity. 

• Lending, exchanging, transferring, 

investing for others, or safeguarding 

money and securities 

The activities of lending, exchanging, 

transferring, investing for others, or 

safeguarding money and securities were 

authorized as permissible for financial 

holding companies by the GLB Act.17

• Insurance activities 

A broad range of insurance activities, 

including insuring, guaranteeing, or 

indemnifying against loss, harm, 

damage, illness, disability, or death, or 

providing and issuing annuities, and 

acting as principal, agent, or broker for 

purposes of the foregoing, in any State, 

were authorized as permissible for 

financial holding companies by the GLB 

Act.18

• Financial, investment, and economic 

advisory services 

The activities of providing 

investment, financial, or economic 

advisory services were authorized as 

permissible for financial holding 

companies by the GLB Act.19

• Securitizing 

The activity of issuing or selling 

instruments representing interests in 

pools of assets was authorized as 

permissible for financial holding 

companies by the GLB Act.20 The GLB 

Act also imposed the condition that the 

assets being securitized must be 

permissible for a bank to hold directly. 

This condition appears to address both 

safety and soundness matters and 

restrictions imposed by other provisions 

of law unrelated to the financial nature 

of the activity, and is not reflected in the 

proposed appendix. 

• Underwriting, dealing, and market 

making 

The activities of underwriting, dealing 

in, and making a market in securities 

were authorized as permissible for 

financial holding companies by the GLB 

Act.21

• Extending credit and servicing loans 

The activities of making, acquiring, 

brokering, or servicing loans or other 

extensions of credit (including factoring, 

issuing letters of credit and accepting 

drafts) for the company’s account or for 

the account of others were authorized 

by the Board as activities that are 

closely related to banking and thus 

permissible for bank holding 

companies.22 The Board requests 

comment on whether these lending 

activities are included in the broad 

authorization of lending under section 

4(k)(4)(A) and need not be separately 

reflected in the appendix. 

• Activities related to extending credit 

Activities usual in connection with 

making, acquiring, brokering, or 

servicing loans or other extensions of 

credit were determined to be 

permissible by the Board for bank 

holding companies as activities that are 

closely related to banking.23 These 

activities include performing appraisals 

of real estate and personal property 

(including securities), acting as an 

intermediary for commercial or 

industrial real estate financing, 

providing check guarantee services, 

providing collection agency services, 

providing credit bureau services, 

engaging in asset management, 

servicing, and collection activities, 

acquiring debt in default, and providing 

real estate settlement services.24 The 

proposed appendix reflects these 

activities without the conditions 

imposed on the conduct of these 

activities by a bank holding company 

that do not describe the financial 

activities themselves. 

For instance, under the Board’s 

regulations, a bank holding company 

may not have an interest in, participate 

in managing or developing, or promote 

or sponsor the development of the 

property for which it is arranging 

commercial real estate equity financing. 

The proposed appendix does not reflect 

these conditions because they are not 

essential to the activity of arranging 

commercial real estate equity 

financing.25 Similarly, under the 

Board’s regulations, bank holding 

companies conducting asset 

management activities may engage in 

these activities only if the company 

does not also engage in real property 

management or real estate brokerage. 

The proposed appendix does not reflect 

that condition because, for purposes of 

determining whether a company is 

predominantly engaged in financial 

activities, the restriction could be read 

to exclude any asset management 

activity from being treated as financial 

if the company also engaged in any real 

estate brokerage or property 

management activities. While neither 

real estate brokerage nor real estate 

management is a permissible financial 

activity for financial holding companies, 

nor are such activities considered to be 

financial for purposes of Title I, a 

company may engage in these activities 

and still be predominantly engaged in 

financial activities so long as these 

activities comprise no more than fifteen 

percent of the company’s activities. 

With respect to acquiring debt in 

default, under the Board’s regulations, a 

bank holding company acquiring debt in 

default must divest impermissible assets 

securing debt in default within a certain 

time period, stand only in the position 

of a creditor and not purchase equity of 

obligors of debt in default, and not 


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26 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(3). 

27 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(4). 

28 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(5). 

29 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(6). 

30 Id. 

31 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(7). 

32 62 FR 9290, 9308. 

33 Id. at 9309. 

acquire debt in default secured by 

shares of a bank or bank holding 

company. The proposed appendix does 

not reflect these conditions because they 

do not appear to be part of the essential 

nature of the activity of acquiring debt 

in default. The conditions requiring the 

bank holding company to divest 

impermissible assets and stand only in 

the position of a creditor and not 

purchase equity of obligors are intended 

to prevent the bank holding company 

from owning assets prohibited by the 

BHC Act or other provisions of law and 

are not related to the activity of 

acquiring debt in default. Similarly, the 

condition requiring that the debt not be 

secured by shares of a bank or bank 

holding company was imposed to 

prevent the bank holding company from 

circumventing the BHC Act’s 

requirement that a bank holding 

company obtain approval from the 

Board before acquiring control of 

another bank or bank holding company. 

• Leasing 

Leasing personal or real property, and 

acting as an agent, broker, or adviser for 

personal or real property was 

determined to be closely related to 

banking by the Board.26

• Operating nonbank depository 

institutions 

The activities of owning, controlling, 

and operating nonbank depository 

institutions, including industrial banks, 

Morris Plan banks, industrial loan 

companies and thrifts, was determined 

to be closely related to banking by the 

Board.27 While the Board’s regulations 

require that a target thrift be engaged 

only in deposit-taking activities and 

activities permissible for bank holding 

companies, the proposed appendix does 

not include these conditions because 

they are not essential elements of the 

activity of owning a nonbank depository 

institution. 

• Trust company functions 

The activities performed by a trust 

company were determined to be closely 

related to banking by the Board.28 The 

Board requests comment on whether 

trust company functions are 

incorporated in the broad authorization 

provided under section 4(k)(4)(A) to 

engage in lending, exchanging, 

transferring, investing for others, and 

safeguarding financial assets and need 

not be separately reflected in the 

appendix. 

• Financial and investment advisory 

activities 

The activities of acting as an 

investment or financial advisor to any 

person were determined to be closely 

related to banking by the Board.29 These 

activities have been defined to include, 

without limitation, serving as a 

registered investment adviser to a 

registered investment company, 

including sponsoring, organizing, and 

managing a closed-end investment 

company; furnishing general economic 

information and advice, general 

economic statistical forecasting services, 

and industry studies; providing advice 

in connection with mergers, 

acquisitions, divestitures, investments, 

joint ventures, leveraged buyouts, 

recapitalizations, capital structurings, 

financing transactions and similar 

transactions; and conducting financial 

feasibility studies; providing 

information, statistical forecasting, and 

advice with respect to any transaction in 

foreign exchange, swaps, and similar 

transactions, commodities, and any 

forward contract, option, future, option 

on a future, and similar instruments; 

providing educational courses and 

instructional materials to consumers on 

individual financial management 

matters; and providing tax-planning and 

tax-preparation services to any person.30

The Board requests comment on 

whether these financial and investment 

advisory activities are incorporated in 

the broad authorization provided by 

section 4(k)(4)(C) of the BHC Act to 

provide financial, investment, and 

economic advisory services and need 

not be separately reflected in the 

appendix. 

• Agency transactional services 

Agency transactional services, 

including providing securities brokerage 

services, acting as a riskless principal, 

providing private placement services, 

and acting as a futures commission 

merchant, were determined to be closely 

related to banking by the Board.31

Conditions that were imposed on bank 

holding companies conducting these 

activities in order to prevent 

circumvention of the Glass-Steagall Act 

or for safety and soundness reasons are 

not reflected in the proposed appendix. 

For instance, bank holding companies 

providing securities brokerage services 

under this authority are limited to 

buying and selling securities solely as 

agent for the account of customers and 

not conducting securities underwriting 

or dealing activities, those providing 

private placement services under this 

authority cannot purchase or repurchase 

for their own account the securities 

being placed or hold in inventory 

unsold portions of issues of those 

securities, and those acting as riskless 

principal under this authority are 

subject to conditions with respect to 

bank-ineligible securities. These 

conditions were intended to prevent a 

bank holding company from using 

securities brokerage or riskless principal 

authority to engage in activities that 

were impermissible under the GlassSteagall Act.32

In order to act as a futures 

commission merchant, a bank holding 

company must conduct the activity 

through a separately incorporated 

subsidiary, the contract must be traded 

on an exchange, and the parent bank 

holding company cannot guarantee that 

subsidiary’s liabilities. The proposed 

appendix does not reflect these 

conditions, as they were imposed for 

safety and soundness reasons to limit 

the bank holding company’s exposure to 

contingent obligations under the loss 

sharing rules of exchange 

clearinghouses in order to preserve the 

holding company’s ability to serve as a 

source of strength to its insured 

depository institutions.33

In order to provide agent transactional 

services to customers on certain 

commodity derivatives transactions, the 

derivative must relate to a commodity 

that is traded on an exchange (regardless 

of whether the contract being traded is 

traded on an exchange). The proposed 

appendix does not reflect this limitation 

because it appears to have been imposed 

for safety and soundness reasons and 

does not describe the underlying 

activity of providing transactional 

services on commodity derivatives 

transactions. The Board requests 

comment on whether the agency 

transactional services discussed above 

are included in the broad authorization 

provided under section 4(k)(5) to engage 

in arranging, effecting, or facilitating 

financial transactions for the account of 

third parties and need not be separately 

reflected in the appendix. 

• Investment transactions as principal 

Engaging in investment transactions 

as principal, including underwriting 

and dealing in government obligations 

and money market instruments and 

investing and trading as principal in 

foreign exchange and derivatives, and 

buying and selling bullion, are activities 

that were determined to be closely 


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34 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(8). 

35 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(9)(i). 

36 62 FR 9290, 9312. 

37 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(9)(ii). 

38 12 U.S.C. 1843(k)(4)(F); 12 CFR 

225.28(b)(9)(iii). 

39 12 U.S.C. 1843(k)(4)(F); 12 CFR 

225.28(b)(10)(i). 

40 12 U.S.C. 1843(k)(4)(F); 12 CFR 

225.28(b)(10)(ii). 

41 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(11). 

42 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(12). 

43 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(13). 

44 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.28(b)(14). 

45 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.86(a)(2)(i). 

46 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.86(a)(2)(ii). 

47 12 U.S.C. 1843(k)(4)(F); 12 CFR 

225.86(a)(2)(iii). 

related to banking by the Board.34 Under 

the Board’s regulations, bank holding 

companies engaged in underwriting and 

dealing in government obligations and 

money market instruments are subject to 

the same conditions imposed on 

member banks engaged in these 

activities. The proposed appendix does 

not reflect these conditions because they 

were intended to prevent circumvention 

of the Glass-Steagall Act. In addition, 

under the Board’s regulations, bank 

holding companies engaged in 

derivatives transactions are subject to 

certain conditions, including that the 

derivative contract itself cannot be a 

bank-ineligible security and either that 

the asset underlying the contract be a 

bank permissible asset or that the 

contract contain protections against 

physical settlement. The proposed 

appendix does not include these 

conditions imposed on derivatives 

activities because these conditions 

appear to have been imposed to prevent 

circumvention of the Glass-Steagall 

Act’s limitations on underwriting and 

dealing activities and for safety and 

soundness reasons. 

The Board requests comment on 

whether the activity of underwriting 

and dealing in government obligations 

and money market instruments is 

included in the broad authorization 

provided under section 4(k)(4)(E) to 

engage in underwriting, dealing in, or 

making a market in securities and need 

not be separately reflected in the 

appendix. 

• Management Consulting and 

Counseling Activities 

Providing management consulting 

services on any matter to unaffiliated 

depository institutions and on any 

financial, economic, accounting, or 

audit matter to any other company was 

determined to be closely related to 

banking by the Board.35 Under the 

Board’s regulations, bank holding 

companies engaged in management 

consulting activities may not own more 

than 5 percent of the client institution 

or have a management interlock. The 

proposed appendix does not reflect this 

condition because it was intended to 

ensure that a bank holding company 

does not exercise control over a client 

company through a management 

consulting contract and to prevent 

conflicts of interest.36 The Board 

requests comment on whether the 

activity of management consulting is 

subsumed by the broader authority to 

engage in management consulting 

services that was determined to be usual 

in connection with banking abroad and 

need not be separately reflected in the 

appendix. 

Providing employee benefits 

consulting services was determined to 

be closely related to banking by the 

Board 37 and is included in the proposed 

appendix. Providing career counseling 

services also was determined to be 

closely related to banking by the 

Board,38 subject to the conditions that 

the services are provided to a financial 

organization, to individuals who are 

seeking employment at a financial 

institution, or to individuals currently 

employed in or who are seeking 

positions in the finance, accounting, 

and audit departments of any company. 

These conditions appear to be essential 

to this activity’s being considered 

financial and thus are included in the 

definition of the financial activity in the 

proposed appendix. 

• Courier Services and Printing and 

Selling MICR-Encoded Items 

Providing courier services for certain 

instruments and audit and accounting 

media was determined to be closely 

related to banking by the Board.39

Printing and selling MICR-encoded 

items was determined to be closely 

related to banking by the Board.40 These 

activities are included in the proposed 

appendix. 

• Insurance Agency and Underwriting 

Activities related to the provision of 

credit insurance and insurance in small 

towns were determined to be closely 

related to banking by the Board.41 The 

Board requests comment on whether 

these insurance activities are included 

in the broad authorization of insurance 

activities provided under section 

4(k)(4)(B) of the BHC Act and thus need 

not be separately reflected in the 

appendix. 

• Community Development Activities 

Making debt and equity investments 

in corporations or projects that are 

designed primarily to promote 

community welfare, and providing 

advisory and related services for such 

programs, was determined to be closely 

related to banking by the Board.42 This 

activity is included in the proposed 

appendix. 

• Money Orders, Savings Bonds, and 

Traveller’s Checks 

The issuance and sale of money 

orders and traveller’s checks, and the 

issuance of savings bonds, was 

determined to be closely related to 

banking by the Board and is included in 

the proposed appendix.43

• Data Processing 

Providing data processing services 

and related activities with respect to 

financial, banking, or economic data 

was determined to be closely related to 

banking by the Board.44 Under the 

Board’s regulations, a bank holding 

company’s data processing activities 

must comply with the condition that the 

hardware provided in connection with 

these services is offered only in 

conjunction with software related to the 

processing, storage, and transmission of 

financial, banking, or economic data, 

and where the general purpose 

hardware does not constitute more than 

30 percent of the cost of any packaged 

offering. The proposed appendix does 

not include these conditions because 

they do not define the activity of 

financial data processing. 

• Mutual Fund Advisory Services 

Providing administrative and other 

services to mutual funds was 

determined be closely related to banking 

by the Board 45 and is included in the 

proposed appendix. 

• Owning Shares of a Securities 

Exchange 

Owning shares of a securities 

exchange was determined to be closely 

related to banking by the Board 46 and 

is included in the proposed appendix. 

• Certification Services 

Acting as a certification authority for 

digital signatures and authenticating the 

identity of persons conducting financial 

and nonfinancial transactions was 

determined to be closely related to 

banking by the Board 47 and is included 

in the proposed appendix. 

• Providing Employment Histories 

Providing employment histories to 

third parties for use in making credit 

decisions and to depository institutions 

and their affiliates for use in the 

ordinary course of business was 


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48 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.86(a)(2)(iv). 

49 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.86(a)(2)(v). 

50 12 U.S.C. 1843(k)(4)(F); 12 CFR 225.86(a)(2)(vi). 

51 12 U.S.C. 1843(k)(4)(F); 12 CFR 

225.86(a)(2)(vii). 

52 12 U.S.C. 1843(k)(4)(G); 12 CFR 225.86(b)(1). 

53 12 U.S.C. 1843(k)(4)(G); 12 CFR 225.86(b)(2). 

54 12 U.S.C. 1843(k)(4)(G); 12 CFR 225.86(b)(3). 55 12 U.S.C. 1843(k)(4)(H). 

56The Board and the Secretary of the Treasury 

jointly implemented regulations interpreting the 

holding period for merchant banking investments 

by financial holding companies. This regulatory 

interpretation is separate from the activity of 

merchant banking set forth in section 4(k)(4)(H) of 

the BHC Act and would not apply for determining 

whether an activity is a financial activity for 

purposes of Title I. See 12 CFR 225.172 and 12 CFR 

1500.3, respectively. 

determined to be closely related to 

banking by the Board 48 and is included 

in the proposed appendix. 

• Check-Cashing and WireTransmission Services 

Providing check-cashing and wiretransmission services was determined to 

be closely related to banking by the 

Board 49 and is included in the proposed 

appendix. 

• Postage, Vehicle Registration, Public 

Transportation Services 

Providing notary-public services, 

selling postage stamps and postage-paid 

envelopes, providing vehicle 

registration services, and selling publictransportation tickets and tokens in 

connection with offering banking 

services was determined to be closely 

related to banking by the Board 50 and 

is included in the proposed appendix. 

• Real Estate Title Abstracting 

Engaging in real estate title abstracting 

was determined to be closely related to 

banking by the Board 51 and is included 

in the proposed appendix. 

• Management Consulting Services 

Providing management consulting 

services was determined to be usual in 

connection with the transaction of 

banking or other financial operations 

abroad.52 Under the Board’s regulations, 

bank holding companies are prohibited 

from controlling the person to which the 

services are provided. The proposed 

appendix does not reflect this condition 

because it appears to have been 

intended to ensure that a bank holding 

company does not exercise control over 

a client company through a management 

consulting contract and to prevent 

conflicts of interest. 

• Travel Agency 

Operating a travel agency in 

connection with financial services was 

determined to be usual in connection 

with the transaction of banking or other 

financial operations abroad 53 and is 

included in the proposed appendix. 

• Mutual Fund Activities 

Organizing, sponsoring, and managing 

a mutual fund was determined to be 

usual in connection with the transaction 

of banking or other financial operations 

abroad.54 Under the Board’s regulations, 

bank holding companies are prohibited 

from exerting managerial control over 

the companies in which the fund 

invests and must reduce their 

ownership to less than 25 percent of the 

equity of the fund within one year of 

sponsoring the fund. The proposed 

appendix does not reflect these 

conditions because they were imposed 

to prevent circumvention of the 

investment restrictions in the BHC Act. 

• Merchant Banking 

Section 4(k)(4)(H) of the BHC Act 

authorizes financial holding companies 

to acquire ‘‘shares, assets or ownership 

interests,’’ including debt or equity 

securities, in a company engaged in any 

activity not authorized under section 4 

‘‘as part of a bona fide underwriting or 

merchant or investment banking 

activity, including investment activities 

engaged in for the purpose of 

appreciation and ultimate resale or 

disposition of the investment,’’ subject 

to the following conditions: (i) The 

shares may not be acquired or held by 

a depository institution; (ii) the shares 

must be acquired and held by a 

securities affiliate or an affiliate thereof, 

or in the case of a financial holding 

company that has an insurance 

company affiliate, the shares must be 

acquired and held by an affiliate that 

provides investment advice to an 

insurance company and is registered 

pursuant to the Investment Advisers Act 

of 1940, or an affiliate thereof, as part 

of a bona fide underwriting or merchant 

or investment banking activity, 

including investment activities engaged 

in for the purpose of appreciation and 

ultimate resale or disposition of the 

investment; (iii) the shares must be held 

for a period of time to enable the sale 

or disposition on a reasonable basis 

consistent with the financial viability of 

the company’s underwriting, merchant, 

or investment banking activities; and 

(iv) during the period the shares are 

held, the bank holding company may 

not routinely manage or operate the 

company except as may be necessary to 

obtain a reasonable return on 

investment upon resale or disposition.55

The proposed appendix reflects those 

conditions that appear to define the 

essential nature of the activities of 

underwriting, merchant, or investment 

banking activities, and omits those that 

do not. 

First, the condition requiring that the 

shares be held for a period of time to 

enable their sale or disposition on a 

reasonable basis consistent with the 

financial viability of the company’s 

underwriting, merchant, or investment 

banking activities appears to be an 

essential element of a bona fide 

underwriting, merchant, or investment 

banking activity. Thus, this condition is 

reflected in the proposed appendix. 

Companies engaging in bona fide 

underwriting, merchant, or investment 

banking activities do not invest in 

investee companies for the purpose of 

engaging in the activity in which the 

investee company is engaged, but 

instead invest with the intent to sell 

such instruments at some later point in 

time at which a profit is expected to be 

realized. The length of time that the 

shares are held will vary by 

investment.56

For example, certain companies, such 

as private equity firms, that are engaged 

in bona fide underwriting, merchant, or 

investment banking activities typically 

invest in firms that the private equity 

firm believes will increase in value over 

time and can be resold at a profit. The 

holding period for an investment will 

vary based on the investee company, 

and in some cases the private equity 

firm may hold the shares for several 

years. A firm such as a hedge fund or 

a mutual fund invests in firms with the 

expectation to sell those instruments at 

a future date in order to realize profits 

consistent with its particular investment 

strategy. The holding period for an 

investment by a hedge fund or a mutual 

fund will depend on the length of time 

necessary to recognize gains consistent 

with the fund’s investment strategy. 

The prohibition on routinely 

managing an investee company in 

which it has purchased shares, other 

than for purposes of recognizing a 

reasonable return, appears to be an 

essential element of bona fide 

underwriting, merchant, or investment 

banking activities. Thus, this 

prohibition is reflected in the proposed 

appendix. As previously discussed, 

companies engaging in these activities 

purchase shares of investee companies 

to recognize an ultimate profit, rather 

than to engage in the underlying activity 

in which the investee company engages 

as its primary business activity. 

Routinely managing the companies, 

other than for the goal of recognizing a 

reasonable return, would be 

inconsistent with the underlying nature 

of the activities. Therefore, in order for 

an activity to qualify as a bona fide 


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57The Board and the Secretary of the Treasury 

jointly implemented regulations interpreting the 

limitation on routine management and operation for 

merchant banking investments by financial holding 

companies. This regulatory interpretation is 

separate from the activity of merchant banking set 

forth in section 4(k)(4)(H) of the BHC Act and 

would not apply for determining whether an 

activity is a financial activity for purposes of Title 

I. See 12 CFR 225.171 and 12 CFR 1500.2 et seq., 

respectively. 

58See, e.g., 12 U.S.C. 24, (Seventh); 12 U.S.C. 24, 

(Eleventh); 12 CFR 1. 

59Similarly, the Council has indicated its belief 

that nonbank companies such as hedge funds, 

private equity firms, and mutual funds will be 

eligible for designation. The Council noted in its 

second notice of proposed rulemaking that it will 

consider whether to establish an additional set of 

metrics or thresholds tailored to evaluate hedge 

funds and private equity firms and their advisers for 

potential designation under section 113. See 76 FR 

64264, 64269 (October 18, 2011). 

60See, e.g., 12 U.S.C. 24, (Seventh); 12 U.S.C. 24, 

(Eleventh), 12 CFR 1. 

61 12 U.S.C. 1843(k)(5). 

62See 66 FR 257 (January 3, 2001). 

63 12 U.S.C. 1843(k)(2). 

64 12 U.S.C. 1843(k)(3). 

underwriting, merchant, or investment 

banking activity, a nonbank company 

must comply with this restriction.57

By contrast, the condition requiring 

that shares acquired as part of a bona 

fide underwriting or merchant or 

investment banking activity not be 

acquired or held by a depository 

institution is not an essential element of 

such activities, and thus is not reflected 

in the proposed appendix. This 

restriction was imposed because banks 

are restricted from investing in certain 

types of companies by statute and 

regulation.58 Similarly, the condition in 

section 4(k) requiring a financial 

holding company engaging in 

underwriting or merchant or investment 

banking activities to either have (i) a 

securities affiliate, or (ii) in the case of 

a financial holding company that has an 

insurance company affiliate, an affiliate 

that provides investment advice to an 

insurance company and is registered 

pursuant to the Investment Advisers Act 

of 1940, does not appear to be an 

essential element of these activities 

because the condition does not require 

that the activity be conducted through 

the securities affiliate or investment 

adviser affiliate of the financial holding 

company. The condition was designed 

to ensure that only those financial 

holding companies with experience 

engaging in underwriting, merchant, or 

investment banking activities conducted 

such activities. The Board proposes to 

define the activities of underwriting, 

merchant, and investment banking to 

include only the conditions that appear 

to be essential elements of the activities 

themselves, as discussed above.59

In addition, the proposed appendix 

does not reflect the provision of section 

4(k)(4)(H) that the investment be in 

company engaged in any activity not 

authorized under section 4 of the BHC 

Act because this provision does not 

affect the scope of activities that are 

financial activities for purposes of Title 

I. An investment in a company solely 

engaged in activities permissible under 

section 4 would otherwise be treated as 

a financial activity. 

Section 4(k)(4)(I) of the BHC Act 

similarly authorizes financial holding 

companies to acquire ‘‘shares, assets or 

ownership interests,’’ including debt or 

equity securities, of a company or other 

entity engaged in any activity not 

authorized by section 4(k) if (i) the 

shares, assets, or ownership interests are 

not acquired or held by a depository 

institution or a subsidiary of a 

depository institution; (ii) such shares, 

assets, or ownership interests are 

acquired and held by an insurance 

company that is predominantly engaged 

in underwriting life, accident and 

health, or property and casualty 

insurance (other than credit-related 

insurance) or providing and issuing 

annuities; (iii) such shares, assets, or 

ownership interests represent an 

investment made in the ordinary course 

of business of such insurance company 

in accordance with relevant State law 

governing such investments; and (iv) 

during the period such shares, assets, or 

ownership interests are held, the bank 

holding company does not routinely 

manage or operate such company except 

as may be necessary or required to 

obtain a reasonable return on 

investment. 

The condition requiring that shares, 

assets, or ownership interests not be 

acquired or held by a depository 

institution does not appear to be an 

essential element of the investment 

activities authorized by section 

4(k)(4)(I), and thus is not reflected in the 

proposed appendix. This restriction was 

imposed because banks are restricted 

from investing in certain types of 

companies by statute and regulation.60

Each of the other conditions imposed on 

the conduct of the activity by a bank 

holding company appears to be an 

essential element of the activity of 

investing in connection with engaging 

in insurance activities. The Board 

proposes to define the investment 

activities authorized by section 4(k)(4)(I) 

to include only the conditions that 

appear to be essential elements of these 

activities, as discussed above. 

• Lending, Safeguarding, Exchanging, 

and Investing for Others With Respect to 

Financial Assets Other Than Money and 

Securities 

The GLB Act authorizes the activities 

of lending, exchanging, transferring, 

investing for others, or safeguarding 

financial assets other than money or 

securities; providing any device or other 

instrumentality for transferring money 

or other financial assets; and arranging, 

effecting, or facilitating financial 

transactions for the account of third 

parties for financial holding 

companies.61 The statute requires the 

Board to define these activities as 

financial in nature and the extent to 

which such activities are financial in 

nature or incidental thereto. The Board 

and the Secretary of the Treasury issued 

a joint interim rule authorizing such 

activities as permissible for financial 

holding companies.62 These activities 

are included in the proposed appendix. 

Implications for Bank Holding 

Companies 

The Board is proposing to define the 

activities listed in the proposed 

appendix as financial solely for 

purposes of Title I of the Dodd-Frank 

Act. The proposed appendix is not 

intended to amend section 4(k) of the 

BHC Act for purposes of defining those 

activities that are permissible for 

financial holding companies or the 

manner in which bank holding 

companies and financial holding 

companies are permitted to conduct 

those activities. The Board notes that it 

does not have the authority to 

unilaterally expand the list of 

permissible financial activities under 

section 4(k) as it applies to financial 

holding companies without first 

consulting with the Secretary of the 

Treasury.63 In making its determination, 

the Board also must take into account 

four factors: (1) The purposes of the GLB 

Act and BHC Act; (2) the changes or 

reasonably expected changes in the 

marketplace in which financial holding 

companies compete; (3) the changes or 

reasonably expected changes in 

technology for delivering financial 

services; and (4) whether the proposed 

activity is necessary or appropriate to 

allow a financial holding company to 

compete effectively with companies 

seeking to provide financial services in 

the United States, efficiently deliver 

financial information and services 

through technological means, and offer 

customers any available or emerging 

technological means for using financial 

services or for the document imaging of 

data.64 Additionally, Congress clearly 

did not intend to expand the list of 

permissible financial activities for bank 

holding companies in enacting the 

Dodd-Frank Act. In fact, Congress 


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21502 Federal Register / Vol. 77, No. 69 / Tuesday, April 10, 2012 / Proposed Rules 

65See 12 U.S.C. 1851. 

demonstrated a clear intent to restrict 

the conduct of financial activities by 

bank holding companies and other 

companies affiliated with depository 

institutions, as evidenced by the new 

restrictions imposed by section 619 of 

the Act (the ‘‘Volcker Rule’’) on certain 

financial activities, such as securities 

underwriting and dealing, conducted by 

bank holding companies and other 

depository institution affiliates.65

IV. Administrative Law Matters 

A. Paperwork Reduction Act 

In accordance with the Paperwork 

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

chapter 3506; 5 CFR 1320 Appendix 

A.1), the Board reviewed this NPR 

under the authority delegated to the 

Board by the Office of Management and 

Budget (‘‘OMB’’). 

As noted in the Supplementary 

Information, the Board published the 

February 2011 NPR to amend the 

sections of Regulation Y that establish 

the criteria for determining whether a 

company is ‘‘predominantly engaged in 

financial activities’’ and define the 

terms ‘‘significant nonbank financial 

company’’ and ‘‘significant bank 

holding company’’ for purposes of Title 

I of the Dodd-Frank Act. The comment 

period for the February 2011 NPR 

closed on March 30, 2011; the Board 

received 23 comment letters. Based on 

comments received, the Board believes 

that clarification is needed regarding the 

scope of activities that would be 

considered to be financial activities 

under that proposal. 

Although this NPR supplements the 

February 2011 NPR by amending 

specific portions of the regulation for 

clarity, it does not affect the collections 

of information that are proposed by the 

February 2011 NPR that are found in 

12 CFR 225.301(f). This NPR proposes 

no new collections nor makes any 

revisions to the collections that were 

proposed under the February 2011 NPR. 

The Board may not conduct or 

sponsor, and an organization is not 

required to respond to, this information 

collection unless it displays a currently 

valid OMB control number. The OMB 

control number will be assigned once 

the rulemaking has been finalized. 

B. Regulatory Flexibility Act 

In accordance with Section 3(a) of the 

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

et seq. (‘‘RFA’’), the Board is publishing 

an initial regulatory flexibility analysis 

with this rulemaking. The RFA requires 

an agency either to provide an initial 

regulatory flexibility analysis with a 

proposed rule for which a general notice 

of proposed rulemaking is required or to 

certify that the proposed rule will not 

have a significant economic impact on 

a substantial number of small entities. 

As noted in the Supplementary 

Information, the Board published the 

February 2011 NPR to amend the 

sections of Regulation Y that establish 

the criteria for determining whether a 

company is ‘‘predominantly engaged in 

financial activities’’ and define the 

terms ‘‘significant nonbank financial 

company’’ and ‘‘significant bank 

holding company’’ for purposes of Title 

I of the Dodd-Frank Act. The comment 

period for the February 2011 NPR 

closed on March 30, 2011; the Board 

received 23 comment letters. Based on 

comments received, the Board believes 

that clarification is needed regarding the 

scope of activities that would be 

considered to be financial activities 

under that proposal. Although this NPR 

supplements the February 2011 NPR by 

amending specific portions of that 

proposal for clarity, it does not affect the 

Board’s initial regulatory flexibility 

analysis with respect to the February 

2011 NPR. A final regulatory flexibility 

analysis will be conducted after 

consideration of comments received 

during the public comment period. 

List of Subjects in 12 CFR Part 225 

Administrative practice and 

procedure, Banks, banking, Holding 

companies, Reporting and 

recordkeeping requirements, Securities. 

Authority and Issuance 

For the reasons stated in the 

preamble, the Board proposes to further 

amend Regulation Y, 12 CFR part 225, 

as proposed to be amended at 76 FR 

7731 (February 11, 2011), as follows: 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

1. The authority citation for part 225 

is revised to read as follows: 

Authority: 12 U.S.C. 1844(b), 3106 and 

3108, 1817(j)(13), 1818(b)), 1831i, 1972, Pub. 

L. 98–181, title IX, and 5311(a)(6) and (b). 

2. In § 225.301 which was proposed to 

be added on February 11, 2011 at 76 FR 

7731, is further amended by revising 

paragraph (d)(1) as follows: 

§ 225.301 Nonbank companies 

‘‘predominantly engaged’’ in financial 

activities. 

* * * * * 

(d) Activities that are financial in 

nature. 

(1) In general. Any activity described 

in section 4(k) of the BHC Act, 

regardless of conformance with the 

conditions applicable to financial 

holding companies conducting such 

activity that do not define the financial 

activity, shall be considered financial in 

nature for purposes of this section. 

These activities as of April 2, 2012 are 

set forth in the appendix. Nothing in 

this part limits the authority of the 

Board under any other provision of law 

or regulation to modify the activities it 

has determined to be financial in nature 

or to provide interpretations of section 

4(k) of the BHC Act. 

* * * * * 

3. Add Appendix A to Subpart N to 

read as follows: 

Appendix A to Subpart N—Financial 

Activities for Purposes of Title I 

(1) Lending, exchanging, transferring, 

investing for others, or safeguarding money 

and securities. 

(2) Insuring, guaranteeing, or indemnifying 

against loss, harm, damage, illness, disability, 

or death, or providing and issuing annuities, 

and acting as principal, agent, or broker for 

purposes of the foregoing, in any state. 

(3) Providing financial, investment, or 

economic advisory services, including 

advising an investment company (as defined 

in section 3 of the Investment Company Act 

of 1940). 

(4) Issuing or selling instruments 

representing interests in pools of assets. 

(5) Underwriting, dealing in, or making a 

market in securities. 

(6) Extending credit and servicing loans. 

Making, acquiring, brokering, or servicing 

loans or other extensions of credit (including 

factoring, issuing letters of credit and 

accepting drafts) for the company’s account 

or for the account of others. 

(7) Activities related to extending credit. 

Any activity usual in connection with 

making, acquiring, brokering or servicing 

loans or other extensions of credit, including 

the following activities: 

(i) Real estate and personal property 

appraising. Performing appraisals of real 

estate and tangible and intangible personal 

property, including securities. 

(ii) Arranging commercial real estate equity 

financing. Acting as intermediary for the 

financing of commercial or industrial 

income-producing real estate by arranging for 

the transfer of the title, control, and risk of 

such a real estate project to one or more 

investors. 

(iii) Check-guaranty services. Authorizing a 

subscribing merchant to accept personal 

checks tendered by the merchant’s customers 

in payment for goods and services, and 

purchasing from the merchant validly 

authorized checks that are subsequently 

dishonored. 

(iv) Collection agency services. Collecting 

overdue accounts receivable, either retail or 

commercial. 

(v) Credit bureau services. Maintaining 

information related to the credit history of 

consumers and providing the information to 

a credit grantor who is considering a 


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1Asset management services include acting as 

agent in the liquidation or sale of loans and 

collateral for loans, including real estate and other 

assets acquired through foreclosure or in 

satisfaction of debts previously contracted. 

2For purposes of this section, real estate 

settlement services do not include providing title 

insurance as principal, agent, or broker. 

3The requirement that the lease be on a 

nonoperating basis means that the company may 

not, directly or indirectly, engage in operating, 

servicing, maintaining, or repairing leased property 

during the lease term. For purposes of the leasing 

of automobiles, the requirement that the lease be on 

a nonoperating basis means that the company may 

not, directly or indirectly: (1) Provide servicing, 

repair, or maintenance of the leased vehicle during 

the lease term; (2) purchase parts and accessories 

in bulk or for an individual vehicle after the lessee 

has taken delivery of the vehicle; (3) provide the 

loan of an automobile during servicing of the leased 

vehicle; (4) purchase insurance for the lessee; or 

(5) provide for the renewal of the vehicle’s license 

merely as a service to the lessee where the lessee 

could renew the license without authorization from 

the lessor. The company may arrange for a third 

party to provide these services or products. 

4Feasibility studies do not include assisting 

management with the planning or marketing for a 

given project or providing general operational or 

management advice. 

5 In performing this activity, companies are not 

authorized to perform tasks or operations or provide 

services to client institutions either on a daily or 

continuing basis, except as necessary to instruct the 

client institution on how to perform such services 

for itself. See also the Board’s interpretation of bank 

management consulting advice (12 CFR 225.131). 

borrower’s application for credit or who has 

extended credit to the borrower. 

(vi) Asset management, servicing, and 

collection activities. Engaging under contract 

with a third party in asset management, 

servicing, and collection 1 of assets of a type 

that an insured depository institution may 

originate and own. 

(vii) Acquiring debt in default. Acquiring 

debt that is in default at the time of 

acquisition. 

(viii) Real estate settlement servicing. 

Providing real estate settlement services.2

(8) Leasing personal or real property. 

Leasing personal or real property or acting as 

agent, broker, or adviser in leasing such 

property if: 

(i) The lease is on a nonoperating basis; 3

(ii) The initial term of the lease is at least 

90 days; and 

(iii) In the case of leases involving real 

property: 

(A) At the inception of the initial lease, the 

effect of the transaction will yield a return 

that will compensate the lessor for not less 

than the lessor’s full investment in the 

property plus the estimated total cost of 

financing the property over the term of the 

lease from rental payments, estimated tax 

benefits, and the estimated residual value of 

the property at the expiration of the initial 

lease; and 

(B) The estimated residual value of 

property for purposes of paragraph 

(b)(3)(iii)(A) of this section shall not exceed 

25 percent of the acquisition cost of the 

property to the lessor. 

(9) Operating nonbank depository 

institutions. 

(i) Industrial banking. Owning, controlling, 

or operating an industrial bank, Morris Plan 

bank, or industrial loan company that is not 

a bank for purposes of the BHC Act. 

(ii) Operating savings associations. 

Owning, controlling, or operating a savings 

association. 

(10) Trust company functions. Performing 

functions or activities that may be performed 

by a trust company (including activities of a 

fiduciary, agency, or custodial nature), in the 

manner authorized by federal or state law 

that is not a bank for purposes of section 2(c) 

of the Bank Holding Company Act. 

(11) Financial and investment advisory 

activities. Acting as investment or financial 

advisor to any person, including (without, in 

any way, limiting the foregoing): 

(i) Serving as investment adviser (as 

defined in section 2(a)(20) of the Investment 

Company Act of 1940, 15 U.S.C. 80a– 

2(a)(20)), to an investment company 

registered under that act, including 

sponsoring, organizing, and managing a 

closed-end investment company; 

(ii) Furnishing general economic 

information and advice, general economic 

statistical forecasting services, and industry 

studies; 

(iii) Providing advice in connection with 

mergers, acquisitions, divestitures, 

investments, joint ventures, leveraged 

buyouts, recapitalizations, capital 

structurings, financing transactions and 

similar transactions, and conducting 

financial feasibility studies; 4

(iv) Providing information, statistical 

forecasting, and advice with respect to any 

transaction in foreign exchange, swaps, and 

similar transactions, commodities, and any 

forward contract, option, future, option on a 

future, and similar instruments; 

(v) Providing educational courses, and 

instructional materials to consumers on 

individual financial management matters; 

and 

(vi) Providing tax-planning and taxpreparation services to any person. 

(12) Agency transactional services for 

customer investments. 

(i) Securities brokerage. Providing 

securities brokerage services (including 

securities clearing and/or securities 

execution services on an exchange), whether 

alone or in combination with investment 

advisory services, and incidental activities 

(including related securities credit activities 

and custodial services). 

(ii) Riskless principal transactions. Buying 

and selling in the secondary market all types 

of securities on the order of customers as a 

‘‘riskless principal’’ to the extent of engaging 

in a transaction in which the company, after 

receiving an order to buy (or sell) a security 

from a customer, purchases (or sells) the 

security for its own account to offset a 

contemporaneous sale to (or purchase from) 

the customer. 

(iii) Private placement services. Acting as 

agent for the private placement of securities 

in accordance with the requirements of the 

Securities Act of 1933 (1933 Act) and the 

rules of the Securities and Exchange 

Commission. 

(iv) Futures commission merchant. Acting 

as a futures commission merchant (FCM) for 

unaffiliated persons in the execution, 

clearance, or execution and clearance of any 

futures contract and option on a futures 

contract. 

(v) Other transactional services. Providing 

to customers as agent transactional services 

with respect to swaps and similar 

transactions, any transaction described in 

paragraph (b)(8) of this section, any 

transaction that is permissible for a state 

member bank, and any other transaction 

involving a forward contract, option, futures, 

option on a futures or similar contract 

(whether traded on an exchange or not). 

(13) Investment transactions as principal. 

(i) Underwriting and dealing in 

government obligations and money market 

instruments. Underwriting and dealing in 

obligations of the United States, general 

obligations of states and their political 

subdivisions, and other obligations that state 

member banks of the Federal Reserve System 

may be authorized to underwrite and deal in 

under 12 U.S.C. 24 and 335, including 

banker’s acceptances and certificates of 

deposit. 

(ii) Investing and trading activities. 

Engaging as principal in: 

(A) Foreign exchange; 

(B) Forward contracts, options, futures, 

options on futures, swaps, and similar 

contracts, whether traded on exchanges or 

not, based on any rate, price, financial asset 

(including gold, silver, platinum, palladium, 

copper, or any other metal), nonfinancial 

asset, or group of assets. 

(C) Forward contracts, options, futures, 

options on futures, swaps, and similar 

contracts, whether traded on exchanges or 

not, based on an index of a rate, a price, or 

the value of any financial asset, nonfinancial 

asset, or group of assets. 

(ii) Buying and selling bullion, and related 

activities. Buying, selling and storing bars, 

rounds, bullion, and coins of gold, silver, 

platinum, palladium, copper, and any other 

metal for the company’s own account and the 

account of others, and providing incidental 

services such as arranging for storage, safe 

custody, assaying, and shipment. 

(14) Management consulting and 

counseling activities 

(i) Management consulting. (A) Providing 

management consulting advice: 5

(1) On any matter to unaffiliated depository 

institutions, including commercial banks, 

savings and loan associations, savings banks, 

credit unions, industrial banks, Morris Plan 

banks, cooperative banks, industrial loan 

companies, trust companies, and branches or 

agencies of foreign banks; 

(2) On any financial, economic, 

accounting, or audit matter to any other 

company. 

(ii) Employee benefits consulting services. 

Providing consulting services to employee 

benefit, compensation and insurance plans, 

including designing plans, assisting in the 

implementation of plans, providing 

administrative services to plans, and 

developing employee communication 

programs for plans. 

(iii) Career counseling services. Providing 

career counseling services to: 


tkelley on DSK3SPTVN1PROD with PROPOSALS
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6Financial organization refers to insured 

depository institution holding companies and their 

subsidiaries, other than nonbanking affiliates of 

diversified savings and loan holding companies that 

engage in activities not permissible under section 

4(c)(8) of the Bank Holding Company Act (12 U.S.C. 

1842(c)(8)). 

7See also the Board’s interpretation on courier 

activities (12 CFR 225.129), which sets forth 

conditions for company entry into the activity. 

8Extension of credit includes direct loans to 

borrowers, loans purchased from other lenders, and 

leases of real or personal property so long as the 

leases are nonoperating and full-payout leases that 

meet the requirements of paragraph (b)(3) of this 

section. 

9Finance company includes all non-deposittaking financial institutions that engage in a 

significant degree of consumer lending (excluding 

lending secured by first mortgages) and all financial 

institutions specifically defined by individual states 

as finance companies and that engage in a 

significant degree of consumer lending. 

10These limitations increase at the end of each 

calendar year, beginning with 1982, by the 

percentage increase in the Consumer Price Index for 

Urban Wage Earners and Clerical Workers 

published by the Bureau of Labor Statistics. 

11Nothing contained in this provision shall 

preclude a company subsidiary that is authorized 

to engage in a specific insurance-agency activity 

under this clause from continuing to engage in the 

particular activity after merger with an affiliate, if 

the merger is for legitimate business purposes and 

prior notice has been provided to the Board. 

12For the purposes of this paragraph, activities 

engaged in on May 1, 1982, include activities 

carried on subsequently as the result of an 

application to engage in such activities pending 

before the Board on May 1, 1982, and approved 

subsequently by the Board or as the result of the 

acquisition by such company pursuant to a binding 

written contract entered into on or before May 1, 

1982, of another company engaged in such 

activities at the time of the acquisition. 

(A) A financial organization 6 and 

individuals currently employed by, or 

recently displaced from, a financial 

organization; 

(B) Individuals who are seeking 

employment at a financial organization; and 

(C) Individuals who are currently 

employed in or who seek positions in the 

finance, accounting, and audit departments 

of any company. 

(15) Support services. 

(i) Courier services. Providing courier 

services for: 

(A) Checks, commercial papers, 

documents, and written instruments 

(excluding currency or bearer-type negotiable 

instruments) that are exchanged among banks 

and financial institutions; and 

(B) Audit and accounting media of a 

banking or financial nature and other 

business records and documents used in 

processing such media.7

(ii) Printing and selling MICR-encoded 

items. Printing and selling checks and related 

documents, including corporate image 

checks, cash tickets, voucher checks, deposit 

slips, savings withdrawal packages, and other 

forms that require Magnetic Ink Character 

Recognition (MICR) encoding. 

(16) Insurance agency and underwriting. 

(i) Credit insurance. Acting as principal, 

agent, or broker for insurance (including 

home mortgage redemption insurance) that 

is: 

(A) Directly related to an extension of 

credit by the company or any of its 

subsidiaries; and 

(B) Limited to ensuring the repayment of 

the outstanding balance due on the extension 

of credit 8 in the event of the death, 

disability, or involuntary unemployment of 

the debtor. 

(ii) Finance company subsidiary. Acting as 

agent or broker for insurance directly related 

to an extension of credit by a finance 

company 9 that is a subsidiary of a company, 

if: 

(A) The insurance is limited to ensuring 

repayment of the outstanding balance on 

such extension of credit in the event of loss 

or damage to any property used as collateral 

for the extension of credit; and 

(B) The extension of credit is not more than 

$10,000, or $25,000 if it is to finance the 

purchase of a residential manufactured 

home 10 and the credit is secured by the 

home; and 

(C) The applicant commits to notify 

borrowers in writing that: 

(1) They are not required to purchase such 

insurance from the applicant; 

(2) Such insurance does not insure any 

interest of the borrower in the collateral; and 

(3) The applicant will accept more 

comprehensive property insurance in place 

of such single-interest insurance. 

(iii) Insurance in small towns. Engaging in 

any insurance agency activity in a place 

where the company or a subsidiary has a 

lending office and that: 

(A) Has a population not exceeding 5,000 

(as shown in the preceding decennial 

census); or 

(B) Has inadequate insurance agency 

facilities, as determined by the Board, after 

notice and opportunity for hearing. 

(iv) Insurance-agency activities conducted 

on May 1, 1982. Engaging in any specific 

insurance-agency activity 11 if the company, 

or subsidiary conducting the specific activity, 

conducted such activity on May 1, 1982, or 

received Board approval to conduct such 

activity on or before May 1, 1982.12 A 

company or subsidiary engaging in a specific 

insurance agency activity under this clause 

may: 

(A) Engage in such specific insurance 

agency activity only at locations: 

(1) In the state in which the company has 

its principal place of business (as defined in 

12 U.S.C. 1842(d)); 

(2) In any state or states immediately 

adjacent to such state; and 

(3) In any state in which the specific 

insurance-agency activity was conducted (or 

was approved to be conducted) by such 

company or subsidiary thereof or by any 

other subsidiary of such company on May 1, 

1982; and 

(B) Provide other insurance coverages that 

may become available after May 1, 1982, so 

long as those coverages insure against the 

types of risks as (or are otherwise 

functionally equivalent to) coverages sold or 

approved to be sold on May 1, 1982, by the 

company or subsidiary. 

(v) Supervision of retail insurance agents. 

Supervising on behalf of insurance 

underwriters the activities of retail insurance 

agents who sell: 

(A) Fidelity insurance and property and 

casualty insurance on the real and personal 

property used in the operations of the 

company or its subsidiaries; and 

(B) Group insurance that protects the 

employees of the company or its subsidiaries. 

(vi) Small companies. Engaging in any 

insurance-agency activity if the company has 

total consolidated assets of $50 million or 

less. A company performing insuranceagency activities under this paragraph may 

not engage in the sale of life insurance or 

annuities except as provided in paragraphs 

(b)(11)(i) and (iii) of this appendix, and it 

may not continue to engage in insuranceagency activities pursuant to this provision 

more than 90 days after the end of the 

quarterly reporting period in which total 

assets of the holding company and its 

subsidiaries exceed $50 million. 

(vii) Insurance-agency activities conducted 

before 1971. Engaging in any insuranceagency activity performed at any location in 

the United States directly or indirectly by a 

company that was engaged in insuranceagency activities prior to January 1, 1971, as 

a consequence of approval by the Board prior 

to January 1, 1971. 

(17) Community development activities. 

(i) Financing and investment activities. 

Making equity and debt investments in 

corporations or projects designed primarily 

to promote community welfare, such as the 

economic rehabilitation and development of 

low-income areas by providing housing, 

services, or jobs for residents. 

(ii) Advisory activities. Providing advisory 

and related services for programs designed 

primarily to promote community welfare. 

(18) Money orders, savings bonds, and 

traveler’s checks. The issuance and sale at 

retail of money orders and similar consumertype payment instruments; the sale of U.S. 

savings bonds; and the issuance and sale of 

traveler’s checks. 

(19) Data processing. Providing data 

processing, data storage and data 

transmission services, facilities (including 

data processing, data storage and data 

transmission hardware, software, 

documentation, or operating personnel), 

databases, advice, and access to such 

services, facilities, or databases by any 

technological means, if the data to be 

processed, stored or furnished are financial, 

banking or economic. 

(20) Providing administrative and other 

services to mutual funds. 

(21) Owning shares of a securities 

exchange. 

(22) Acting as a certification authority for 

digital signatures and authenticating the 

identity of persons conducting financial and 

nonfinancial transactions. 

(23) Providing employment histories to 

third parties for use in making credit 

decisions and to depository institutions and 

their affiliates for use in the ordinary course 

of business. 

(24) Check cashing and wire transmission 

services. 

(25) In connection with offering banking 

services, providing notary public services, 

selling postage stamps and postage-paid 

envelopes, providing vehicle registration 

services, and selling public transportation 

tickets and tokens. 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 77, No. 69 / Tuesday, April 10, 2012 / Proposed Rules 21505 

(26) Real estate title abstracting. 

(27) Providing management consulting 

services, including to any person with 

respect to nonfinancial matters, so long as the 

management consulting services are 

advisory. 

(28) Operating a travel agency in 

connection with financial services. 

(29) Organizing, sponsoring, and managing 

a mutual fund. 

(30) Directly, or indirectly acquiring or 

controlling, whether as principal, on behalf 

of 1 or more entities, or otherwise, shares, 

assets, or ownership interests (including debt 

or equity securities, partnership interests, 

trust certificates, or other instruments 

representing ownership) of a company or 

other entity, whether or not constituting 

control of such company or entity, if: 

(i) Such shares, assets, or ownership 

interests are acquired and held as part of a 

bona fide underwriting or merchant or 

investment banking activity, including 

investment activities engaged in for the 

purpose of appreciation and ultimate resale 

or disposition of the investment; 

(ii) Such shares, assets, or ownership 

interests are held for a period of time to 

enable the sale or disposition thereof on a 

reasonable basis consistent with the financial 

viability of the activities described in 

paragraph (30)(i) of this appendix; and 

(iii) During the period such shares, assets, 

or ownership interests are held, the company 

does not routinely manage or operate such 

company or entity except as may be 

necessary or required to obtain a reasonable 

return on investment upon resale or 

disposition. 

(31) Directly or indirectly acquiring or 

controlling, whether as principal, on behalf 

of 1 or more entities, or otherwise, shares, 

assets, or ownership interests (including debt 

or equity securities, partnership interests, 

trust certificates or other instruments 

representing ownership) of a company or 

other entity, whether or not constituting 

control of such company or entity if— 

(i) Such shares, assets, or ownership 

interests are acquired and held by an 

insurance company that is predominantly 

engaged in underwriting life, accident and 

health, or property and casualty insurance 

(other than credit-related insurance) or 

providing and issuing annuities; 

(ii) Such shares, assets, or ownership 

interests represent an investment made in the 

ordinary course of business of such insurance 

company in accordance with relevant State 

law governing such investments; and 

(iii) During the period such shares, assets, 

or ownership interests are held, the company 

does not routinely manage or operate such 

company except as may be necessary or 

required to obtain a reasonable return on 

investment. 

(32) Lending, exchanging, transferring, 

investing for others, or safeguarding financial 

assets other than money or securities. 

(33) Providing any device or other 

instrumentality for transferring money or 

other financial assets. 

(34) Arranging, effecting, or facilitating 

financial transactions for the account of third 

parties. 

By order of the Board of Governors of the 

Federal Reserve System, April 2, 2012. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. 2012–8515 Filed 4–9–12; 8:45 am] 

BILLING CODE 6210–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2011–0621; Airspace 

Docket No. 11–ASO–28] 

Proposed Amendment of Class D and 

E Airspace; Blountville, TN, and 

Revocation of Class E Airspace; 

Tri-City, TN 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: This action proposes to 

amend Class D and Class E surface 

airspace at Blountville, TN, and remove 

Class E airspace at Tri-City, TN, as new 

Standard Instrument Approach 

Procedures have been developed at TriCities Regional Airport. This action 

would enhance the safety and airspace 

management of Instrument Flight Rules 

(IFR) operations for SIAPs at the airport. 

This action would also update the 

geographic coordinates, airport name, 

and airspace designation. 

DATES: Comments must be received on 

or before May 25, 2012. The Director of 

the Federal Register approves this 

incorporation by reference action under 

title 1, Code of Federal Regulations, part 

51, subject to the annual revision of 

FAA, Order 7400.9 and publication of 

conforming amendments. 

ADDRESSES: Send comments on this rule 

to: U. S. Department of Transportation, 

Docket Operations, West Building 

Ground Floor, Room W12–140, 1200 

New Jersey Avenue SE., Washington, 

DC 20590–0001; Telephone: 1–800– 

647–5527; Fax: 202–493–2251. You 

must identify the Docket Number FAA– 

2011–0621; Airspace Docket No. 11– 

ASO–28, at the beginning of your 

comments. You may also submit and 

review received comments through the 

Internet at http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: John 

Fornito, Operations Support Group, 

Eastern Service Center, Federal Aviation 

Administration, P.O. Box 20636, 

Atlanta, Georgia 30320; telephone (404) 

305–6364. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

Interested persons are invited to 

comment on this rule by submitting 

such written data, views, or arguments, 

as they may desire. Comments that 

provide the factual basis supporting the 

views and suggestions presented are 

particularly helpful in developing 

reasoned regulatory decisions on the 

proposal. Comments are specifically 

invited on the overall regulatory, 

aeronautical, economic, environmental, 

and energy-related aspects of the 

proposal. 

Communications should identify both 

docket numbers (FAA Docket No. FAA– 

2011–0621; Airspace Docket No. 11– 

ASO–28) and be submitted in triplicate 

to the Docket Management System (see 

ADDRESSES section for address and 

phone number). You may also submit 

comments through the Internet at http:// 

www.regulations.gov. 

Persons wishing the FAA to 

acknowledge receipt of their comments 

on this action must submit with those 

comments a self-addressed stamped 

postcard on which the following 

statement is made: ‘‘Comments to 

Docket No. FAA–2011–0621; Airspace 

Docket No. 11–ASO–28.’’ The postcard 

will be date/time stamped and returned 

to the commenter. 

All communications received before 

the specified closing date for comments 

will be considered before taking action 

on the proposed rule. The proposal 

contained in this notice may be changed 

in light of the comments received. A 

report summarizing each substantive 

public contact with FAA personnel 

concerned with this rulemaking will be 

filed in the docket. 

Availability of NPRMs 

An electronic copy of this document 

may be downloaded from and 

comments submitted through http:// 

www.regulations.gov. Recently 

published rulemaking documents can 

also be accessed through the FAA’s Web 

page at http://www.faa.gov/airports_

airtraffic/air_traffic/publications/

airspace_amendments/. 

You may review the public docket 

containing the proposal, any comments 

received, and any final disposition in 

person in the Dockets Office (see the 

ADDRESSES section for address and 

phone number) between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal Holidays. An informal docket 

may also be examined during normal 

business hours at the office of the 

Eastern Service Center, Federal Aviation 

Administration, room 210, 1701 

Columbia Avenue, College Park, 

Georgia 30337. 


tkelley on DSK3SPTVN1PROD with PROPOSALS