Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Proposed Rules 15297

FEDERAL RESERVE SYSTEM

12 CFR Part 209

[Regulation I; Docket No. R–0966]

Issue and Cancellation of Federal

Reserve Bank Capital Stock

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Board of Governors of the

Federal Reserve System is proposing to

amend its Regulation I regarding the

issue and cancellation of Federal

Reserve Bank Capital Stock in order to

reduce regulatory burden and simplify

and update requirements. This proposal

to modernize Regulation I is in

accordance with the Board’s policy of

regular review of its regulations and the

Board’s review of its regulations

pursuant to section 303 of the Riegle

Community Development and

Regulatory Improvement Act of 1994.

DATES: Comments must be received by

May 30, 1997.

ADDRESSES: Comments, which should

refer to Docket No. R–0966, may be

mailed to Mr. William W. Wiles,

Secretary, Board of Governors of the

Federal Reserve System, 20th Street and

Constitution Avenue, N.W.,

Washington, DC 20551. Comments

addressed to Mr. Wiles may also be

delivered to the Board’s mail room

between 8:45 a.m. and 5:15 p.m., and to

the security control room outside of

those hours. Both the mail room and the

security control room are accessible

from the courtyard entrance on 20th

Street between Constitution Avenue and

C Street N.W. Comments may be

inspected in Room MP–500 between

9:00 a.m. and 5:00 p.m. weekdays,

except as provided in § 261.8 of the

Board’s Rules Regarding the Availability

of Information, 12 CFR 261.8.

FOR FURTHER INFORMATION CONTACT: Rick

Heyke, Staff Attorney (202/452–3688),

Legal Division, Board of Governors;

Elizabeth Tacik, Accountant (202/452–

2303), Division of Reserve Bank

Operations and Payment Systems, Board

of Governors; or Anthony Scafide,

Manager (215/574–6546), Wholesale

Payments Division, Federal Reserve

Bank of Philadelphia. For the hearing

impaired only, Telecommunications

Device for the Deaf (TDD), Dorothea

Thompson (202/452–3544).

SUPPLEMENTARY INFORMATION:

Background

As part of its policy of regular review

of its regulations, and consistent with

section 303 of the Riegle Community

Development and Regulatory

Improvement Act of 1994 (Riegle Act),

the Board of Governors of the Federal

Reserve System (Board) is proposing to

amend its Regulation I regarding issue

and cancellation of Federal Reserve

Bank capital stock (12 CFR part 209).

Section 303 of the Riegle Act requires

each federal banking agency to review

and streamline its regulations and

written policies to improve efficiency,

reduce unnecessary costs, and remove

inconsistencies and outmoded and

duplicative requirements. The proposed

amendments are designed to reduce

regulatory burden and simplify and

update the Regulation.

The principal amendments being

proposed are described below. In

general, the amendments simplify,

modernize, and condense the

Regulation, and reflect the replacement

of share certificates by a book-entry

system. The amendments also codify

Board and staff interpretations. Finally,

the amendments delete the many

references to specific forms. Many of

these references are incorrect because

the forms no longer exist or no longer

have the same identification numbers.

Banks Desiring To Become Member

Banks

Proposed § 209.2 combines and

condenses existing §§ 209.1 and 209.2

regarding national and state bank

applications. Existing § 209.1 also

specifies the amount of Reserve Bank

stock for which national banks should

apply, but the proposal combines all

references to amount in proposed

§ 209.4 and deletes repetitive

explanations. Proposed § 209.2 also

includes a subsection (c) that will

specify the Reserve Bank of which a

bank may become a member and that is

the subject of a separate request for

comment. See 62 FR 11117.

Cessation of Membership

Proposed § 209.3 combines and

simplifies existing §§ 209.5(b) (merger of

a member bank into a state nonmember

bank), 209.6 (conversion of a national

bank into a state nonmember bank),

209.7 (insolvency), 209.8 (voluntary

liquidation), 209.9(b) (national bank in

the hands of a conservator to be

liquidated), 209.10 (closed state member

banks not in liquidation), 209.11

(voluntary withdrawal from

membership by state bank), and 209.12

(involuntary termination of state bank

membership).

The Regulation previously

distinguished between insolvency and

voluntary liquidation (where the bank

or receiver was required to file for

cancellation of Reserve Bank stock

within three months), other cessation of

business by state member banks (where

failure by the bank to file for

cancellation within 60 days commenced

a process whereby the Board might

order termination of membership), and

other cases such as voluntary

withdrawal, merger into a nonmember

bank, or conversion of a national bank

into a nonmember state bank (where the

regulation imposed no specific timing

requirement for filing an application for

cancellation of Reserve Bank stock).

Proposed 209.3(a) provides instead that

all such banks (or receivers) shall file

promptly for cancellation of Reserve

Bank stock, failing which the Board may

order the membership of the bank

terminated under 209.3(b).

Section 6(2) of the Act (12 U.S.C. 288)

provides that the Comptroller of the

Currency may appoint a receiver for a

national bank that has discontinued

banking operations for 60 days but has

not gone into liquidation, if the

Comptroller deems it advisable. The

existing regulation includes in § 209.9(a)

a provision for the appropriate Reserve

Bank to notify the Office of the

Comptroller of the Currency in the event

a national bank has ceased business for

60 days but has not gone into

liquidation, together with a statement of

reasons why a receiver should be

appointed. The proposal omits this

provision. The appropriate procedures

for communication among the Board,

the Reserve Bank, and the Comptroller’s

office in such a case would depend on

the facts and circumstances of the

particular case.

Amounts and Payments

Proposed § 209.4(a) combines in one

section the requirement for amount of

total subscription for Reserve Bank

stock (other than for a mutual savings

bank) on becoming a member or on a

change in capital stock and surplus. The

Federal Reserve Act (the Act) requires

member banks (other than mutual

savings banks) to subscribe for Reserve

Bank capital stock in an amount equal

to 6 percent of their capital stock and

surplus. Member banks are required to

pay in half this amount and half is

subject to call by the Reserve Bank.

Proposed § 209.4(b) defines member

bank capital stock and surplus as capital

stock and paid-in surplus. Retained

earnings continue to be generally

excluded from this definition, thereby

minimizing member banks’ adjustments

in their Reserve Bank stock holdings.

The Federal Reserve System

experienced approximately 1500

adjustments in Reserve Bank capital

stock as a result of changes in member

bank capital stock and surplus in 1992.
15298 Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Proposed Rules

1Under sections 6 and 9(10) of the Act, the Board

is under no obligation to pay unearned accrued

dividends on redemption of Reserve Bank capital

stock from insolvent member banks for which a

receiver has been appointed or from state member

banks on voluntary withdrawal from or involuntary

termination of membership. See, e.g., Board

Interpretation of April 17, 1925, X–4322, and

related note, published in Federal Reserve

Regulatory Service at 3–500.

The Board estimates that this number

would increase substantially if it were

necessary to adjust for changes in

retained earnings of member banks.

Although retained earnings are

generally excluded from the definition,

the regulation incorporates previous

guidance requiring a deficit in retained

earnings to be subtracted from capital

stock and surplus unless the deficit is

relatively small and the appropriate

Reserve Bank is satisfied that it will be

extinguished by accumulation of

earnings or formal reduction of surplus,

in which case the adjustment of Reserve

Bank stock may be deferred until the

end of the quarter in which the deficit

arises.

Section 5 of the Act provides that

Federal Reserve Bank stock shall be

adjusted from time to time as member

banks increase or decrease capital stock

and surplus. The Act does not specify

whether this adjustment must be done

immediately or can be done periodically

after a number of changes in a member

bank’s capital stock and surplus have

occurred or when such changes become

in the aggregate significant. There is a

burden associated with adjusting banks’

Reserve Stock positions to reflect small

changes in the banks’ capital accounts.

The Board seeks comment on how

frequently, or after how much

cumulative dollar or percentage change,

member banks should be required to

adjust their Reserve Bank capital stock

holdings.

Proposed § 209.4(c) is a condensed

version of existing § 209.4 specifying

that mutual savings banks are required

to subscribe for Reserve Bank stock in

an amount equal to 0.6 percent of total

deposits rather than 6 percent of capital

and surplus. Mutual savings banks not

permitted to hold Reserve Bank stock

are required to maintain a deposit at the

Reserve Bank in the same amount

pending a change in state law to permit

purchase of the stock.

Proposed §§ 209.4 (d) and (e) specify

that transactions in Reserve Bank capital

stock between member banks and the

Reserve Bank take place at the

subscription price plus accrued

dividends at the rate of one-half of one

percent per month (provided that the

total price paid on redemption of

Reserve Bank stock does not exceed the

book value of such stock). Under section

5 of the Act (12 U.S.C. 287), banks

applying for Reserve Bank capital stock

are required to pay the subscription

price plus accrued dividends for such

stock. Under sections 5, 6, and 9(10) of

the Act (12 U.S.C. 287, 288 and 328),

Reserve Banks redeeming their capital

stock from member banks which are in

voluntary liquidation or which have

been declared insolvent and for which

a receiver has been appointed, or from

state member banks on voluntary

withdrawal from or involuntary

termination of membership, are required

to pay a price equal to the cash

subscription price originally paid plus

accrued dividends, but may not pay a

price exceeding the book value of the

Reserve Bank stock. The Act is silent on

whether accrued dividends are payable

by Reserve Banks in other cases such as

merger into nonmember banks. In cases

where the Act requires accrued

dividends, it specifies that they shall

accrue at one-half percent per

completed month but is silent on

whether dividends should be prorated

to accrue within a month.

In practice, Reserve Banks have

included accrued dividends in both

purchases and redemptions, including

intra-month accrued dividends, and the

proposal applies the concept of accrued

dividends to all transactions in Reserve

Bank capital stock.1 The proposal also

continues the Board’s practice of

accruing dividends within a month.

The Board seeks comment on the

appropriate method of computing

accrued dividends. Generally the

Reserve Banks have accrued intramonth dividends on the basis of the

actual number of days elapsed within a

month divided by the number of actual

days in the month. This method results

in different daily accruals depending on

the number of days in the month for

which intra-month accrued dividends

are calculated. The Board requests

comment on whether adopting another

method, such as use of a standard 30-

day month, would simplify the

computation.

Proposed § 209.4(e)(2) specifies that

in the case of any cancellation of

Reserve Bank stock under Regulation I,

the Reserve Bank may first apply the

proceeds to any liability of the member

bank to the Reserve Bank, and pay over

the remainder to the bank or receiver as

appropriate. This replaces a similar

requirement in existing § 209.5(b), and

clarifies that the principle may apply to

partial as well as total cancellations.

The Share Register

Proposed § 209.5 revises the share

register provision of the Regulation to

reflect the modern book-entry and

electronic records systems the Reserve

Banks have implemented. This change

permits eliminating the numerous and

confusing provisions of the existing

Regulation that deal with the

circumstances under which share

certificates may be retained or must be

submitted for reissue. For example,

existing § 209.13(a) requires a member

bank to surrender its certificate in the

event of a change in name for the

Reserve Bank to issue a new certificate

in the new name. Existing § 209.5(a)

includes a lengthy footnote explaining

the difference between transfer of

Reserve Bank stock certificates by

purchase and by operation of law,

because a new certificate is not required

in the case of transfer by operation of

law. Under the proposal, the Reserve

Bank in each case need merely change

the name of the stockholder in its

records.

Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5

U.S.C. 601–612) requires an agency to

publish an initial regulatory flexibility

analysis with any notice of proposed

rulemaking. Two of the requirements of

an initial regulatory flexibility analysis

(5 U.S.C. 603(b))—a description of the

reasons why action by the agency is

being considered and a statement of the

objectives of, and legal basis for, the

proposed rule—are contained in

‘‘Background’’ above. The proposed

rules do not overlap with other federal

rules.

Another requirement for the initial

regulatory flexibility analysis is a

description of and, where feasible, an

estimate of the number of small entities

to which the proposed rule will apply.

The proposal will apply to all member

banks regardless of size.

The amendments are burdenreducing. Therefore, the Board believes

that the amendments will not have a

significant adverse economic impact on

a substantial number of small entities.

Paperwork Reduction Act

In accordance with the Paperwork

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

Ch. 3506; 5 CFR Part 1320, Appendix

A.1), the Board has reviewed the rule

under the authority delegated to the

Board by the Office of Management and

Budget. No collections of information

pursuant to the Paperwork Reduction

Act are contained in the proposed rule.

List of Subjects in 12 CFR Part 209

Banks and banking, Federal Reserve

System, Reporting and recordkeeping

requirements, Securities.
Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Proposed Rules 15299

1 If such a bank desires to become a member bank

under the provisions of section 19(h) of the Federal

Reserve Act, it should communicate with the

Federal Reserve Bank with which it desires to do

business.

2A new national bank organized by the Federal

Deposit Insurance Corporation under section 11(n)

of the Federal Deposit Insurance Act (12 U.S.C.

1821(n)) should not apply until in the process of

issuing stock pursuant to section 11(n)(15) of that

act. Reserve Bank approval of such an application

shall not be effective until the issuance of a

certificate by the Comptroller of the Currency

pursuant to section 11(n)(16)of that act.

3A mutual savings bank not authorized to

purchase Federal Reserve Bank stock may apply for

membership evidenced initially by a deposit. [See

§ 208.4(c) of Regulation H, 12 CFR 208.4(c), and

§§ 208.3(a)(2) and 208.3(b) of Regulation H as

proposed to be amended and published elsewhere

in today’s Federal Register.] The membership of the

savings bank shall be terminated if the laws under

which it is organized are not amended to authorize

such purchase at the first session of the legislature

after its admission, or if it fails to purchase such

stock within six months after such an amendment.

Authority and Issuance

For the reasons set forth in the

preamble, the Board proposes to revise

part 209 of chapter II of title 12 to read

as follows:

PART 209—ISSUE AND

CANCELLATION OF FEDERAL

RESERVE BANK CAPITAL STOCK

(REGULATION I)

Sec.

209.1 Authority, purpose, and scope.

209.2 Banks desiring to become member

banks.

209.3 Cessation of membership.

209.4 Amounts and payments.

209.5 The share register.

Authority: 12 U.S.C. 248, 321–338, 466,

486.

§ 209.1 Authority, purpose, and scope.

(a) Authority. This part is issued

pursuant to 12 U.S.C. 248, 321–338,

466, and 486.

(b) Purpose. The purpose of this part

is to implement the provisions of the

Federal Reserve Act relating to the

issuance and cancellation of Federal

Reserve Bank stock upon becoming or

ceasing to be a member bank, or upon

changes in the capital and surplus of a

member bank, of the Federal Reserve

System.

(c) Scope. This part applies to

member banks of the Federal Reserve

System, to national banks in process of

organization, and to state banks

applying for membership. National

banks and locally-incorporated banks

located in United States dependencies

and possessions are eligible (with the

consent of the Board) but not required

to apply for membership under section

19(h) of the Federal Reserve Act, 12

U.S.C. 466.1

§ 209.2 Banks desiring to become member

banks.

(a) Application for stock or deposit.

Each national bank in process of

organization, 2 each nonmember state

bank converting into a national bank,

and each nonmember state bank

applying for membership in the Federal

Reserve System under Regulation H, 12

CFR part 208, shall file with the Federal

Reserve Bank in whose district it is

located an application for stock (or

deposit in the case of mutual savings

banks not authorized to purchase

Reserve Bank stock 3) in the Reserve

Bank. The bank shall pay for the stock

(or deposit) in accordance with § 209.4.

(b) Issuance of stock; acceptance of

deposit. Upon authorization to

commence business by the Comptroller

of the Currency in the case of a national

bank in organization or upon approval

of conversion by the Comptroller of the

Currency in the case of a state

nonmember bank converting to a

national bank, and when all applicable

requirements have been complied with

in the case of a state bank approved for

membership, the Reserve Bank shall

issue the appropriate number of shares

by crediting the bank with the

appropriate number of shares on its

books. In the case of a mutual savings

bank not authorized to purchase Reserve

Bank shares, the Reserve Bank shall

accept the deposit in place of issuing

shares. The bank’s membership shall

become effective on the date of such

issuance or acceptance.

(c) Location of bank. Placeholder for

location of bank.

§ 209.3 Cessation of membership.

(a) Application for cancellation. Any

bank that desires to withdraw from

membership in a Federal Reserve Bank,

voluntarily liquidates or ceases

business, is merged or consolidated into

a nonmember bank, or is involuntarily

liquidated by a receiver or conservator

or otherwise, shall promptly file with its

Reserve Bank an application for

cancellation of all its Reserve Bank

stock (or withdrawal of its deposit, as

the case may be) and payment therefor

in accordance with § 209.4.

(b) Involuntary termination of

membership. If an application is not

filed promptly after a cessation of

business by a state member bank, a vote

to place a member bank in voluntary

liquidation, or the appointment of a

receiver for (or a determination to

liquidate the bank by a conservator of)

a member bank, the Board may, after

notice and an opportunity for hearing

where required under Section 9(9) of the

Federal Reserve Act (12 U.S.C. 327),

order the membership of the bank

terminated and all of its Reserve Bank

stock canceled.

(c) Effective date of cancellation.

Cancellation in whole of a bank’s

Reserve Bank capital stock shall be

effective, in the case of:

(1) Voluntary withdrawal from

membership by a state bank, as of the

date of such withdrawal;

(2) Merger into, consolidation with, or

(for a national bank) conversion into, a

State nonmember bank, as of the

effective date of the merger,

consolidation, or conversion; and

(3) Involuntary termination of

membership, as of the date the Board

issues the order of termination.

(d) Merger of member banks. Upon a

merger or consolidation of member

banks, the surviving bank shall instruct

the relevant Reserve Bank to cancel all

the shares previously held by any

nonsurviving bank. To the extent

appropriate, proceeds payable under

§ 209.4 may be applied to purchase

additional shares in the name of the

surviving bank.

(e) Voluntary withdrawal. Any bank

withdrawing voluntarily from

membership shall give 6 months written

notice, and shall not cause the

withdrawal of more than 25 percent of

any Reserve Bank’s capital stock in any

calendar year, without waivers of these

requirements from the Board of

Governors.

§ 209.4 Amounts and payments.

(a) Amount of subscription. The total

subscription of a member bank (other

than a mutual savings bank) shall equal

six percent of its capital and surplus.

Whenever any member bank (other than

a mutual savings bank) experiences an

increase or decrease in capital and

surplus, it shall file with the appropriate

Reserve Bank an application for issue or

cancellation of Reserve Bank capital

stock in order to adjust its Reserve Bank

capital stock subscription to equal six

percent of the member bank’s capital

and surplus.

(b) Capital Stock and Surplus defined.

Capital stock and surplus of a member

bank at the end of a quarter means the

paid-up capital stock and surplus of the

bank, less any deficit in its retained

earnings account, all as shown on the

bank’s call report as of the end of the

quarter. A Reserve Bank may permit a

member bank to disregard a relatively

small deficit in its retained earnings

account until the end of the quarter in

which the deficit arises if the Reserve

Bank is satisfied that the deficit will be

extinguished by accumulation of

earnings or by a formal reduction of

surplus.
15300 Federal Register / Vol. 62, No. 61 / Monday, March 31, 1997 / Proposed Rules

4 Under sections 6 and 9(10) of the Act, the Board

is under no obligation to pay unearned accrued

dividends on redemption of Reserve Bank capital

stock from insolvent member banks for which a

receiver has been appointed or from state member

banks on voluntary withdrawal from or involuntary

termination of membership.

(c) Mutual savings banks. The total

subscription of a member bank that is a

mutual savings bank shall equal sixtenths of 1 percent of its total deposit

liabilities as shown on its most recent

report of condition. Whenever any

member bank that is a mutual savings

bank experiences an increase or

decrease in total deposit liabilities as

shown on its most recent report of

condition, it shall file with the

appropriate Reserve Bank an application

for issue or cancellation of Reserve Bank

capital stock in order to adjust its

Reserve Bank capital stock subscription

to equal six-tenths of one percent of its

total deposit liabilities. A mutual

savings bank that is applying for or has

a deposit with the appropriate Reserve

Bank in lieu of Reserve Bank capital

stock shall file for acceptance or

adjustment of its deposit in a like

manner.

(d) Payment for subscriptions. Upon

approval by the Reserve Bank of an

application for capital stock (or for a

deposit in lieu thereof), the applying

bank shall pay the Reserve Bank onehalf of the subscription amount plus

accrued dividends at the rate of one half

of one percent per month. Upon

payment (and in the case of a national

banks in organization or state

nonmember bank converting into a

national bank, upon authorization or

approval by the Comptroller of the

Currency), the Reserve Bank shall issue

the appropriate number of shares by

crediting the bank with the appropriate

number of shares on its books. In the

case of a mutual savings bank not

authorized to purchase Reserve Bank

stock, the Reserve Bank will accept the

deposit or addition to the deposit in

place of issuing shares. The remaining

half of the subscription or additional

subscription (including subscriptions

for deposits or additions to deposits)

shall be subject to call by the Board.

(e) Payment for cancellations. (1)

Upon approval of an application for

cancellation of Reserve Bank capital

stock, the Reserve Bank shall reduce the

bank’s shareholding on the Reserve

Bank’s books by the number of shares

required to be canceled and shall pay

therefor a sum equal to the cash

subscription paid on the canceled stock

plus accrued dividends at the rate of

one half of one percent per month, such

sum not to exceed the book value of the

stock. 4

(2) In the case of any cancellation of

Reserve Bank stock under this Part, the

Reserve Bank may first apply such sum

to any liability of the bank to the

Reserve Bank and pay over the

remainder to the bank (or receiver or

conservator, as appropriate).

§ 209.5 The share register.

(a) Electronic or written record. A

member bank’s holding of Reserve Bank

capital stock shall be represented by one

(or at the option of the Reserve Bank,

more than one) notation on the Reserve

Bank’s books. Such books may be

electronic or in writing. Upon any issue

or cancellation of Reserve Bank capital

stock, the Reserve Bank shall record the

member bank’s new share position in its

books (or eliminate the bank’s share

position from its books, as the case may

be).

(b) Certification. A Reserve Bank may

certify on request as to the number of

shares held by a member bank and

purchased before March 28, 1942, or as

to the purchase and cancellation dates

and prices of shares cancelled, as the

case may be.

By order of the Board of Governors of the

Federal Reserve System, March 20, 1997.

William W. Wiles,

Secretary of the Board.

[FR Doc. 97–7587 Filed 3–28–97; 8:45 am]

BILLING CODE 6210–01–P

12 CFR Part 216

[Regulation P; Docket No. R–0965]

Security Procedures

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Proposed rule.

SUMMARY: The Board is proposing to

remove Regulation P, which is no longer

necessary since its provisions have been

incorporated into Regulation H

(Membership of State Banking

Institutions in the Federal Reserve

System), as proposed by the Board

elsewhere in today’s Federal Register.

Regulation P requires each bank to

adopt appropriate security procedures.

DATES: Comments must be received by

May 30, 1997.

ADDRESSES: Comments, which should

refer to Docket No. R–0965, may be

mailed to Mr. William W. Wiles,

Secretary, Board of Governors of the

Federal Reserve System, 20th Street and

Constitution Avenue, N.W.,

Washington, DC 20551. Comments

addressed to Mr. Wiles also may be

delivered to the Board’s mail room

between 8:45 a.m. and 5:15 p.m., and to

the security control room outside of

those hours. Both the mail room and the

security control room are accessible

from the courtyard entrance on 20th

Street between Constitution Avenue and

C Street, N.W. Comments may be

inspected in Room MP–500 between

9:00 a.m. and 5:00 p.m. weekdays,

except as provided in § 261.8 of the

Board’s Rules Regarding Availability of

Information, 12 CFR 261.8.

FOR FURTHER INFORMATION CONTACT: Jean

Anderson, Staff Attorney, Legal Division

(202/452–3707). For the hearing

impaired only, Telecommunications

Device for the Deaf (TDD), Dorothea

Thompson (202/452–3544).

SUPPLEMENTARY INFORMATION:

Section 303 of the Riegle Community

Development and Regulatory

Improvement Act of 1994 (CDRI Act)

Section 303(a) of the CDRI Act (12

U.S.C. 4803(a)) requires the Board, as

well as the other federal banking

agencies, to review its regulations and

written policies in order to streamline

and modify these regulations and

policies to improve efficiency, reduce

unnecessary costs, and eliminate

unwarranted constraints on credit

availability. The Board has reviewed its

Regulation P with this purpose in mind,

and, is proposing to rescind Regulation

P in order to meet the goals of section

303(a).

Regulation P implements the

requirements of the Bank Protection Act

of 1968 (BPA). The BPA requires the

federal financial institution supervisory

agencies to establish minimum

standards for bank security devices and

procedures to discourage bank crime

and to assist in the identification of

persons who commit such crimes. 12

U.S.C. 1882. To implement this statute

a uniform regulation (Regulation P) was

adopted in 1969 by each of the

supervisory agencies—Comptroller of

the Currency, Federal Deposit Insurance

Corporation, Federal Home Loan Bank

Board (now known as the Office of

Thrift Supervision), and the Board. As

originally proposed, Regulation P

included a list of security devices that

banks were required to adopt. On March

1, 1991 (55 FR 13069)(1991

Amendments), the supervisory agencies

amended their rules to incorporate

amendments made to the BPA by the

Financial Institutions Reform Recovery

and Enforcement Act of 1989 (FIRREA)

and to address the fact that many of the

required security devices had been

rendered obsolete by virtue of

technological advances.