13294 Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Rules and Regulations

1Regulation O also requires prior approval of the

bank’s board of directors for certain loans to

insiders and prohibits certain overdrafts by

executive officers and directors. 12 CFR 215.4(b)

and (e).

licenses and permits would still be used

and provided by the agency—only the

examples would be removed from the

regulations. It is not necessary to

include examples of the APHIS forms in

the regulations.

We solicited comments concerning

our proposal for 45 days ending October

7, 1996. We did not receive any

comments by that date.

Therefore, based on the rationale set

forth in the proposed rule, we are

adopting the provisions of the proposal

as a final rule without change.

Executive Order 12866 and Regulatory

Flexibility Act

This rule is a nonsubstantive change

related to agency management and is

therefore not subject to review by the

Office of Management and Budget under

Executive Order 12866.

This rule removes unnecessary

material from the regulations. The

APHIS forms for a U.S. Veterinary

Biologics Establishment License and

U.S. Veterinary Biological Product

License and Permit will still be used.

Only the examples of the forms are

removed from the regulations. This

amendment will not have any adverse

economic effect on producers as the

APHIS forms are produced by the

agency and provided to all qualifying

license and permit applicants.

Under these circumstances, the

Administrator of the Animal and Plant

Health Inspection Service has

determined that this action will not

have a significant economic impact on

a substantial number of small entities.

Executive Order 12372

This program/activity is listed in the

Catalog of Federal Domestic

Assistance under No. 10.025 and is

subject to Executive Order 12372, which

requires intergovernmental consultation

with State and local officials (see 7 CFR

part 3015, subpart V).

Executive Order 12988

This final rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. It is not intended to

have retroactive effect. This rule would

not preempt any State or local laws,

regulations, or policies, unless they

present an irreconcilable conflict with

this rule. There are no administrative

procedures which must be exhausted

prior to a judicial challenge to the

provisions of this rule.

Paperwork Reduction Act

This rule contains no new

information collection or recordkeeping

requirements under the Paperwork

Reduction Act of 1995 (44 U.S.C. 3501

et seq.).

Regulatory Reform

This action is part of the President’s

Regulatory Reform Initiative, which,

among other things, directs agencies to

remove obsolete and unnecessary

regulations and to find less burdensome

ways to achieve regulatory goals.

List of Subjects

9 CFR Part 102

Animal biologics, Reporting and

recordkeeping requirements.

9 CFR Part 104

Animal biologics, Imports, Reporting

and recordkeeping requirements,

Transportation.

Accordingly, 9 CFR parts 102 and 104

are amended as follows:

PART 102—LICENSES FOR

BIOLOGICAL PRODUCTS

1. The authority citation for part 102

continues to read as follows:

Authority: 21 U.S.C. 151–159; 7 CFR 2.22,

2.80, and 371.2(d).

2. Section 102.4, paragraph (c) is

revised to read as follows:

§ 102.4 U.S. Veterinary Biologics

Establishment License.

* * * * *

(c) U.S. Veterinary Biologics

Establishment Licenses shall be

numbered.

* * * * * *

§ 102.5 [Amended]

3. In § 102.5, paragraph (c) is removed

and paragraphs (d), (e), and (f) are

redesignated as paragraphs (c), (d), and

(e).

PART 104—PERMITS FOR

BIOLOGICAL PRODUCTS

4. The authority citation for part 104

continues to read as follows:

Authority: 21 U.S.C. 151–159; 7 CFR 2.22,

2.80, and 371.2(d).

5. In § 104.7, paragraph (a) is revised

to read as follows:

§ 104.7 Product permit.

(a) A permit shall be numbered and

dated.

* * * * *

Done in Washington, DC, this 14th day of

March 1997.

Terry L. Medley,

Administrator, Animal and Plant Health

Inspection Service.

[FR Doc. 97–7013 Filed 3–19–97; 8:45 am]

BILLING CODE 3410–34–P

FEDERAL RESERVE SYSTEM

12 CFR Part 215

[Regulation O; Docket No. R–0940]

Loans to Executive Officers, Directors,

and Principal Shareholders of Member

Banks; Loans to Holding Companies

and Affiliates

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Final rule.

SUMMARY: The Board is amending its

Regulation O, which implements

section 22(h) of the Federal Reserve Act

and limits how much and on what terms

a bank may lend to its own insiders and

insiders of its affiliates. Under the final

rule, Regulation O will not apply to

extensions of credit by a bank to an

executive officer or director of an

affiliate, provided that the executive

officer or director is not engaged in

major policymaking functions of the

bank and the affiliate does not account

for more than 10 percent of the

consolidated assets of the bank’s parent

holding company. Extensions of credit

to executive officers of an affiliate that

accounts for more than 10 percent of the

consolidated assets of the bank’s parent

holding company are covered by

Regulation O as a result of the Economic

Growth and Regulatory Paperwork

Reduction Act of 1996.

EFFECTIVE DATE: April 1, 1997.

FOR FURTHER INFORMATION CONTACT:

Gregory Baer, Managing Senior Counsel

(202/452–3236), or Gordon Miller,

Attorney (202/452–2534), Legal

Division, Board of Governors of the

Federal Reserve System. For the hearing

impaired only, Telecommunications

Device for the Deaf (TDD), Dorothea

Thompson (202/452–3544).

SUPPLEMENTARY INFORMATION:

Introduction

Section 22(h) of the Federal Reserve

Act restricts insider lending by banks,

and Regulation O implements section

22(h). 12 U.S.C. 375b; 12 CFR Part 215.

Regulation O limits total loans to any

one insider and aggregate loans to all

insiders to a percentage of the bank’s

capital and requires that such loans be

on non-preferential terms—that is, on

the same terms a person not affiliated

with the bank would receive.1 12 CFR

215.4(a), (c), and (d). For this purpose,

an ‘‘insider’’ means an executive officer,
Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Rules and Regulations 13295

2Pub. L. 103–325, section 334 (1994).

3Pub. L. 104–208, section 2211 (1996).

4As amended by the Federal Deposit Insurance

Corporation Improvement Act of 1991 (FDICIA),

section 22(h)(8) provides that ‘‘any executive

officer, director, or principal shareholder (as the

case may be) of any company of which the member

bank is a subsidiary, or of any other subsidiary of

that company, shall be deemed to be an executive

officer, director, or principal shareholder (as the

case may be) of the member bank.’’ 12 U.S.C.

375b(8)(A).

5Subsection (h) of section 22 was added in 1978.

Financial Institutions Regulatory and Interest Rate

Control Act of 1978, Pub. L. 95–630, section 104.

At that time, subsection (h) was ambiguous about

whether an executive officer of a bank’s affiliate

was required to be treated like an executive officer

of the bank itself. The statute provided that an

‘‘officer’’ of a bank included officers of affiliates, but

did not similarly address ‘‘executive officers.’’ The

statute’s restrictions on lending by a bank to

‘‘executive officers’’ of the bank therefore did not

clearly apply to ‘‘executive officers’’ of affiliates. No

such ambiguity existed with respect to directors

and principal shareholders of affiliates, who were

explicitly treated like their counterparts at the

lending bank. In 1980, the Board amended

Regulation O to cover insiders of affiliates, but

included a regulatory exception for executive

officers of affiliates who did not participate in major

policymaking functions at the bank.

6 The provision extending the statute to executive

officers and directors of affiliates was moved to a

new paragraph (8)(A), and the authority of the

Board to make exceptions was placed in a new

paragraph (8)(B), which reads as follows:

The Board may, by regulation, make exceptions

to subparagraph (A), except as that subparagraph

makes applicable paragraph (2), for an executive

officer or director of a subsidiary of a company that

controls the member bank, if that executive officer

or director does not have authority to participate,

and does not participate, in major policymaking

functions of the member bank. 12 U.S.C. 375b(8)(B).

‘‘Paragraph (2)’’ is the prohibition against lending

on preferential terms.

7The Conference Report stated, ‘‘It is not the

intent of the Conferees to affect the exemptions that

the Federal Reserve Board has already extended to

executive officers, but rather to allow the Board the

authority to provide appropriate treatment for

directors.’’ House Report 103–652, 103d Cong., 2d

Sess. at 180 (1994).

director, or principal shareholder, and

loans to an insider include loans to any

‘‘related interest’’ of the insider,

including any company controlled by

the insider. 12 CFR 215.2(h). Regulation

O requires banks to maintain records to

document compliance with all its

restrictions. 12 CFR 215.8.

The Board in 1980 generally

exempted executive officers of affiliates

from the restrictions of Regulation O so

long as they did not participate in major

policymaking functions of a bank. The

Board did not exempt directors of

affiliates because it lacked authority to

do so. On May 3, 1996, the Board

proposed amendments to Regulation O

to conform its exemptions for executive

officers and directors of affiliates of

banks to the requirements of section

22(h), as amended by the Riegle

Community Development and

Regulatory Improvement Act of 1994

(Riegle Act), which had modified the

authority of the Board to maintain such

exemptions.2 61 FR 19683. On

September 30, 1996, in the Economic

Growth and Regulatory Paperwork

Reduction Act of 1996 (EGRPRA),3

Congress amended section 22(h) to

modify further the Board’s exemptive

authority over affiliate insiders. In view

of the changes in the Board’s authority

and the comments received from the

public concerning the Board’s original

proposal, the Board on November 8,

1996, sought comment on a new

proposal to exempt certain insiders of

affiliates from Regulation O. 61 FR

57797.

After considering the comments

received on the notice, the Board has

decided not to apply Regulation O to

extensions of credit by a bank to an

executive officer or director of a bank

affiliate, provided that: (1) the executive

officer or director is not engaged in

major policymaking functions of the

bank; and (2) the affiliate does not

account for more than 10 percent of the

consolidated assets of the bank’s parent

holding company. All commenters

supported the Board’s new proposal,

except one commenter who complained

that executive officers of certain larger

affiliates of a bank who previously

could be exempted from Regulation O

no longer would be eligible to be

exempted.

Background

Section 22(h) restricts lending not

only to insiders of the bank that is

making the loan but also to insiders of

the bank’s parent bank holding

company and any other subsidiary of

that bank holding company.4 Prior to

FDICIA, the Board’s rules exempted

from all the provisions of Regulation O

a bank’s loans to an executive officer of

any of its affiliates (other than the

parent bank holding company),

provided that the executive officer did

not participate in major policymaking

functions at the bank.5 12 CFR 215.2(d)

(1992). The Board considered this

treatment appropriate for two reasons.

First, such persons generally were not

considered to be in a position to exert

sufficient leverage on the lending bank

to obtain a loan on anything but armslength terms, in contrast to executive

officers of the lending bank itself or its

parent. Thus, the Board considered the

benefits of restricting loans to these

affiliate insiders, in terms of protecting

the safety and soundness of bank, to be

small. Second, applying these

restrictions to executive officers of

affiliates would have required each bank

to maintain an updated list of all its

affiliates’ executive officers and all

related interests of those executive

officers, and to check all loans against

the list. Particularly for a bank in a

multi-subsidiary bank holding

company, this effort would have

constituted a significant burden not

outweighed by any substantial benefit.

However, after the FDICIA

amendment, the language of the statute

no longer appeared to allow such an

exception for executive officers of

affiliates. Under the amendment,

executive officers of affiliates were

explicitly treated like executive officers

of the bank itself. Still, nothing in the

legislative history of FDICIA indicated

that Congress intended to invalidate the

Board’s regulatory exception and extend

coverage to all executive officers of

affiliates.

In the Riegle Act, Congress addressed

this issue by amending section 22(h)(8)

again. The Riegle Act authorized the

Board to make exceptions for executive

officers and directors of affiliates,

provided that the executive officer or

director did not have the authority to

participate, and did not participate, in

major policymaking functions of the

lending bank. The Act, however, did not

authorize the Board to include any

exception from section 22(h)(2), which

prohibits lending on preferential terms.6

Although the legislative history of the

provision indicates that it was intended

to allow the Board to maintain its

existing exception for executive officers,

its language did not allow the Board to

do so. 7

The Board suggested and supported

an amendment to section 22(h) to make

its language consistent with its apparent

intent, and EGRPRA resolved the

situation by dropping the requirement

in section 22(h)(8) that the Board’s

exceptions not include the preferential

lending provision. EGRPRA therefore

restored the ability of the Board prior to

FDICIA to exempt executive officers of

a bank’s affiliates from all the provisions

of section 22(h), and granted the Board

the authority to make the same

exception for directors of a bank’s

affiliates as well.

Congress further revised section

22(h)(8) in EGRPRA, however, to

introduce an additional restriction on

the Board’s exemptive authority. Under

section 22(h), as amended, the Board

may not grant an exception to an

executive officer or director of an

affiliate that constitutes more than 10

percent of the consolidated assets of the

highest-tier holding company

controlling the affiliate and the bank

making the loan.
13296 Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Rules and Regulations

8The proposed amendment also would retain the

current provision in Regulation O that excludes

extensions of credit to exempt insiders of affiliates

from the recordkeeping requirements of § 215.8 of

Regulation O. The Board in its original proposal

retained the recordkeeping requirement because the

lending bank was required to identify loans to

exempted insiders of affiliates and their related

interests in order to ensure that such loans were not

made on preferential terms. Under the proposed

amendment, however, the Board’s exemption

would encompass all prohibitions under section

22(h), including the prohibition on preferential

terms, and therefore make recordkeeping for loans

to exempt borrowers unnecessary.

9Eleven commenters generally supported the

amendments as originally proposed but complained

that banks would continue to bear a significant

recordkeeping burden to ensure that loans to

affiliate insiders were not made on preferential

terms. The three commenters who opposed the

original proposal also objected on the basis of the

recordkeeping burden. As discussed above, the

recordkeeping requirement for loans to exempted

insiders of affiliates has been eliminated.

10One commenter also suggested that the

requirement for a board of directors resolution to

exempt insiders of a bank’s affiliates be dropped

entirely. This comment was addressed in the

Board’s notice of final rulemaking dated November

8, 1996. 61 FR 57770.

11Executive officers of affiliates of a lending bank

that account for more than 10 percent of the

consolidated assets of the lending bank’s top-tier

bank holding company previously could be

exempted from section 22(h) and Regulation O, but

they no longer can be exempted under EGRPRA,

effective September 30, 1996. The statute makes no

provision for the grandfathering of nonconforming

loans that were outstanding when the law became

effective. The Board’s practice concerning loans

that are outstanding at the time a borrower becomes

an insider has been not to require that such loans

be brought into conformity until such loans are

renewed, revised, or extended, which events are

deemed to be a new extension of credit subsequent

to the date the borrower became an insider. The

dollar amount of nonconforming loans, however, is

counted toward the individual insider and

aggregate insider lending limits whenever any

additional extensions of credit subject to these

limits are considered. See 12 CFR 215.4(c) and (d).

12When calculating the assets of any affiliate, all

inter-affiliate liabilities should be excluded, in the

same manner as such liabilities are excluded when

calculating the consolidated assets of the top-tier

bank holding company.

13See 12 CFR 215.2(d) and (e). A bank may

exclude an insider of an affiliate by using an

affirmative resolution or bylaw that lists, by name

or by title, persons authorized to participate in

major policymaking functions of the bank and does

not include the affiliate insider. A resolution or

bylaw that stated, ‘‘A, B, and C are the only persons

authorized to participate as executive officers in

major policymaking functions of the bank’’ would

Accordingly, the Board proposed an

amendment to Regulation O that would

eliminate its restrictions on a bank’s

lending to executive officers and

directors of an affiliate who are not

involved in major policymaking

functions of the lending bank, if the

assets of the affiliate did not exceed 10

percent of the consolidated assets of a

company that controlled the member

bank and such subsidiary and was not

controlled by any other company.8 As

the Board stated in its proposal, the

Board believes, for the same reasons that

it originally exempted executive officers

of affiliates, that retaining the executive

officer exemption and expanding it to

cover directors would relieve regulatory

burden on bank holding companies

without increasing the risk of excessive

or preferential lending or resultant

safety and soundness problems.

The proposal also reflected a

simplified procedure for excluding

executive officers of affiliates that was

adopted by the Board in a final rule

effective the same date as the

supplemental notice, and extended the

procedure to directors. 61 FR 57769.

The procedure allows the board of

directors of a bank to exclude affiliate

insiders without requiring any action by

the affiliate board of directors. The

Board adopted the simplified

procedures because the lending bank

and its board of directors have full and

formal control over who participates in

the bank’s policymaking. For the same

reasons, the Board stated in the proposal

that it believed that simplifying the

requirements to exempt a director of an

affiliate would relieve regulatory burden

without increasing the risk of evasion of

Regulation O.

The Board received 44 comments on

its original rulemaking proposal. Fortyone commenters supported the Board’s

proposed amendments, including 17

commenters who supported the Board’s

amendments without qualification.9

Several commenters asked the Board to

expand its proposed amendments to

provide additional relief from

Regulation O. These proposals included

extending the exception to include

§§ 215.8, 215.10, and 215.11 of

Regulation O, which impose various

recordkeeping and disclosure

requirements, and making the

amendments effective retroactively to

the effective date of the Riegle Act.10

The Board received 21 comments on

its supplemental rulemaking, including

comments from three banks, nine bank

holding companies, six Federal Reserve

Banks, and three trade associations.

Twenty commenters supported the

Board’s revised amendments, including

14 commenters who supported the

revised amendments without

qualification. The other commenters in

favor sought clarification concerning the

measurement of consolidated assets,

suggested further changes to Regulation

O concerning persons to be treated as

executive officers subject to its lending

restrictions and the manner of

exempting them, proposed technical

changes in the text of the amendment,

or requested the Board to seek further

amendments of section 22(h) by

Congress. One commenter opposed the

revised amendments because executive

officers of certain larger affiliates of a

lending bank who previously could be

exempted from section 22(h) and

Regulation O no longer can be exempted

under EGRPRA.

The Board has carefully considered

the comments received, and has decided

to adopt the amendment substantially as

proposed.

With respect to the comments

received on the original rulemaking, the

Board believes that no action is required

to make the exceptions effective with

respect to § 215.10, concerning the

reporting of loans to executive officers

of member banks in a bank’s quarterly

report of condition pursuant to 12

U.S.C. 1817(a)(3), and § 215.11,

concerning public disclosure of

extensions of credit to executive officers

and principal shareholders of member

banks pursuant to 12 U.S.C. 1817(k).

Sections 215.10 and 215.11 do not apply

to executive officers of affiliates in any

case. Accordingly, no action is

necessary to exclude executive officers

of affiliates who are covered by the

exceptions. The Board also has

determined that a retroactive effective

date for this amendment is not

appropriate.11

With respect to the comments

received on the supplemental

rulemaking, one commenter noted that

EGRPRA did not address when or how

often the assets of affiliates and the

consolidated assets of the top-tier bank

holding company should be measured

in order to determine whether insiders

of certain larger affiliates are ineligible

to be exempted from the lending

restrictions of Regulation O. The Board

has decided that assets should be

measured once per year, based on the

average assets reported by the top-tier

holding company and its banking and

nonbanking subsidiaries during the four

preceding calendar quarters or as

determined in the examination process.

This method of measurement should

minimize fluctuations in asset size (as

may occur, for example, as a result of

seasonal loan demand) and simplify the

collection of relevant data.12

Two commenters sought further

simplification of the procedure to

exclude insiders of an affiliate of a bank

from the insider lending restrictions.

The Board has amended the definitions

of ‘‘director’’ and ‘‘executive officer’’ in

Regulation O to clarify that insiders of

an affiliate may be excluded by any

form of resolution of the board of

directors or bylaw of a bank that

identifies the persons who are

excluded.13 Even under the amended
Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Rules and Regulations 13297

be sufficient to exclude all other persons. A bank

also may exclude an insider of an affiliate by using

a negative resolution or bylaw that lists, by name

or by title, persons not authorized to participate in

such functions, and includes the affiliate insider. A

resolution or bylaw that stated, ‘‘No executive

officer of X Bank or Y Company is authorized to

participate in major policymaking functions of this

bank unless that individual is directly employed by

this bank as an executive officer,’’ would be

sufficient to exclude all executive officers of the

identified affiliates. The identical procedures also

may be used to exclude officers of a company or

bank from being classified as executive officers of

the company or bank. See 12 CFR 215.2(e)(1) and

(3).

14Another commenter proposed that the Board

permit a bank or company to identify its executive

officers solely by reference to all members of a

particular senior management committee of the

bank or company, in order to avoid all

presumptions that may arise from a person’s title.

The comment did not indicate, however, and the

Board is not aware that such a procedure for

identifying persons with major policymaking

functions is so widespread or standardized that it

would serve as a reliable substitute in general, at

this time, for the traditional identification of

persons with major policymaking functions by title.

Accordingly, the Board has determined not to adopt

this proposal at this time. This procedure may be

suitable, however, in the particular circumstances

of a given bank or company, and would be

permissible under the terms of § 215.2(e)(2) as

amended.

procedures, however, a bank may not

rely solely on its resolution or bylaw to

identify all individuals subject to

Regulation O, as some affiliate officers

and directors who are excluded from

policymaking at the bank by a bylaw or

resolution may nevertheless remain

subject to Regulation O because their

employer controls the bank or controls

more than 10 percent of the

consolidated assets of the top-tier bank

holding company. 12 CFR 215.2(d)(2)(ii)

and (iii) and 215.2(e)(2)(ii) and (iii).14

Technical changes to the text of the

amendment have been made to conform

the amendment to other provisions of

Regulation O and clarify the application

of the percentage of assets test. A

technical change also has been made to

§ 215.4(a)(2) to clarify the scope of the

exception contained therein to the

provisions of § 215.4(a)(1). This

exception was added as part of the final

rule effective November 8, 1996,

implementing certain provisions of

EGRPRA. 61 FR 52769.

Determination of Effective Date

Because the final rule adjusts a

requirement on insured depository

institutions, the final rule will become

effective April 1, 1997, the first day of

the calendar quarter after the date of the

final rule’s publication. See 12 U.S.C.

4802(b).

Final Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5

U.S.C. 601 et seq.) requires an agency to

publish a final regulatory flexibility

analysis when the agency publishes a

final rule. Two of the requirements of a

final regulatory flexibility analysis (5

U.S.C. 604(b))—a succinct statement of

the need for, and the objectives of, the

rule, and a summary of the issues raised

by the public comments received, the

agency assessment thereof, and any

changes made in response thereto—are

contained in the supplementary

information above. No significant

alternatives to the final rule were

considered by the agency.

Pursuant to section 605(b) of the

Regulatory Flexibility Act (5 U.S.C.

605(b)), the Board certifies that the

amendment to Regulation O will not

have a significant adverse economic

impact on a substantial number of small

entities. The amendment will reduce the

regulatory burden for most banks by

increasing the number of insiders of

affiliates who may be excepted from the

insider lending restrictions of

Regulation O.

One aspect of the amendment may

increase the regulatory burden on multisubsidiary bank holding companies.

Because EGRPRA no longer authorizes

the Board to exempt extensions of credit

to executive officers of affiliates holding

more than 10 percent of the

consolidated assets of the bank holding

company, the Board’s existing

exemption, which covers such persons,

is being amended to do so no longer.

Although this action will increase the

recordkeeping burden on some multisubsidiary bank holding companies, the

increase in burden is required by statute

and outside the Board’s discretion, will

generally not be significant, and will not

be focused on small entities, which are

less likely to have multiple subsidiaries.

Paperwork Reduction Act

In accordance with the Paperwork

Reduction Act of 1995 (44 U.S.C. 3506;

5 CFR 1320 Appendix A.1), the Board

reviewed the final rule under the

authority delegated to the Board by the

Office of Management and Budget. The

Board may not conduct or sponsor, and

an organization is not required to

respond to, the information collection

required in the final rule unless the

Board displays a currently valid OMB

control number. The Board’s OMB

control number is 7100–0036.

This collection of information is

authorized by section 22(h)(10) of the

Federal Reserve Act (12 U.S.C.

375b(10)), and is mandatory under

Regulation O. This information is used

to evidence compliance with the

requirements of section 22(h) of the

Federal Reserve Act.

The respondents and recordkeepers

are for-profit financial institutions,

including small businesses. These

parties must retain records concerning

their insider lending for two years, and

certain information in these records

must be disclosed to the public upon

request. Because these records are

maintained at state member banks, no

issue of confidentiality under the

Freedom of Information Act arises

concerning this disclosure to the public.

The amendment is estimated to result

in a 10 percent reduction in the annual

hour burden of recordkeeping and

disclosure associated with Regulation O

for state member banks. The revisions

affecting this burden are detailed in

Section 215.2 of the final rule. The

amendment will reduce the burden for

most banks by increasing the number of

insiders of affiliates who may be

excepted from the insider lending

restrictions of Regulation O. The burden

may increase, however, for some multisubsidiary bank holding companies.

Comments on the burden are discussed

in the Background section of this notice.

The Board estimates there will be no

cost burden in addition to the annual

hour burden.

Some of the information collected by

banks on extensions of credit to insiders

of the bank and its affiliates is reported

in the Consolidated Reports of

Condition and Income (Call Report;

FFIEC 031–034; OMB No. 7100–0036).

Regulation O information is reported in

the Call Report on Schedule RC-M,

Memoranda, and Special Report on

Loans to Executive Officers, and is

available to the public upon request.

The Board has a continuing interest in

the public’s opinion of its information

collection activities. At any time,

comments regarding the burden

estimate, or any other aspect of this

information collection requirement,

including suggestions for reducing the

burden, may be sent to: Secretary, Board

of Governors of the Federal Reserve

System, 20th and C Streets, N.W.,

Washington, DC 20551; and to the

Office of Management and Budget,

Paperwork Reduction Project (7100–

0036), Washington, DC 20503.

List of Subjects in 12 CFR Part 215

Credit, Federal Reserve System,

Penalties, Reporting and recordkeeping

requirements.

For the reasons set forth in the

preamble, and pursuant to the Board’s

authority under section 22(h) of the

Federal Reserve Act (12 U.S.C. 375b),

the Board amends 12 CFR part 215,

subpart A, as follows:
13298 Federal Register / Vol. 62, No. 54 / Thursday, March 20, 1997 / Rules and Regulations

PART 215—LOANS TO EXECUTIVE

OFFICERS, DIRECTORS, AND

PRINCIPAL SHAREHOLDERS OF

MEMBER BANKS (REGULATION O)

1. The authority citation for part 215

continues to read as follows:

Authority: 12 U.S.C. 248(i), 375a(10), 375b

(9) and (10), 1817(k)(3) and 1972(2)(G)(ii);

Pub. L. 102–242, 105 Stat. 2236.

2. Section 215.2 is amended as

follows:

a. Paragraph (d) introductory text and

paragraphs (d)(1) through (d)(3) are

redesignated as paragraph (d)(1)

introductory text and paragraphs

(d)(1)(i) through (d)(1)(iii), respectively;

b. New paragraphs (d)(2) and (d)(3)

are added;

c. Paragraph (e)(2) is revised; and

d. A new paragraph (e)(3) is added.

The additions and revisions read as

follows:

§ 215.2 Definitions.

* * * * *

(d)(1) * * *

(2) Extensions of credit to a director

of an affiliate of a bank are not subject

to §§ 215.4, 215.6, and 215.8 if—

(i) The director of the affiliate is

excluded, by resolution of the board of

directors or by the bylaws of the bank,

from participation in major

policymaking functions of the bank, and

the director does not actually participate

in such functions;

(ii) The affiliate does not control the

bank;

(iii) As determined annually, the

assets of the affiliate do not constitute

more than 10 percent of the

consolidated assets of the company

that—

(A) Controls the bank; and

(B) Is not controlled by any other

company; and

(iv) The director of the affiliate is not

otherwise subject to §§ 215.4, 215.6, and

215.8.

(3) For purposes of paragraph (d)(2)(i)

of this section, a resolution of the board

of directors or a corporate bylaw may—

(i) Include the director (by name or by

title) in a list of persons excluded from

participation in such functions; or

(ii) Not include the director in a list

of persons authorized (by name or by

title) to participate in such functions.

(e)(1) * * *

(2) Extensions of credit to an

executive officer of an affiliate of a bank

are not subject to §§ 215.4, 215.6, and

215.8 if—

(i) The executive officer is excluded,

by resolution of the board of directors or

by the bylaws of the bank, from

participation in major policymaking

functions of the bank, and the executive

officer does not actually participate in

such functions;

(ii) The affiliate does not control the

bank;

(iii) As determined annually, the

assets of the affiliate do not constitute

more than 10 percent of the

consolidated assets of the company

that—

(A) Controls the bank; and

(B) Is not controlled by any other

company; and

(iv) The executive officer of the

affiliate is not otherwise subject to

§§ 215.4, 215.6, and 215.8.

(3) For purposes of paragraphs (e)(1)

and (e)(2)(i) of this section, a resolution

of the board of directors or a corporate

bylaw may—

(i) Include the executive officer (by

name or by title) in a list of persons

excluded from participation in such

functions; or

(ii) Not include the executive officer

in a list of persons authorized (by name

or by title) to participate in such

functions.

* * * * *

3. Section 215.4 is amended by

revising paragraph (a)(2) introductory

text to read as follows:

§ 215.4 General prohibitions.

(a) * * *

(2) Exception. Nothing in this

paragraph (a) or paragraph (e)(2)(ii) of

this section shall prohibit any extension

of credit made pursuant to a benefit or

compensation program—

* * * * *

By order of the Board of Governors of the

Federal Reserve System, March 14, 1997.

William W. Wiles,

Secretary of the Board.

[FR Doc. 97–7011 Filed 3–19–97; 8:45 am]

BILLING CODE 6210–01–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

15 CFR Part 902

50 CFR Parts 628 and 648

[Docket No. 970303042–7042–01; I.D.

021097C]

RIN 0648–AJ78

Fisheries of the Northeastern United

States; Consolidation of the Fishery

Management Plan for the Atlantic

Bluefish Fishery

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Final rule.

SUMMARY: This final rule adds

regulations implementing the Fishery

Management Plan (FMP) for the Atlantic

Bluefish Fishery to the consolidated

Northeast fisheries regulations at 50

CFR part 648. It also amends references

to Paperwork Reduction Act (PRA)

collection-of-information requirements

to reflect the addition. The purpose of

this final rule is to make the regulations

more concise, better organized, and

thereby easier for the public to use. This

action is part of the President’s

Regulatory Reinvention Initiative.

EFFECTIVE DATE: March 20, 1997.

ADDRESSES: Comments regarding

burden-hour estimates for collection-ofinformation requirements contained in

this rule should be sent to Andrew A.

Rosenberg, Ph.D., Regional

Administrator, 1 Blackburn Drive,

Gloucester, MA 01930 and the Office of

Information and Regulatory Affairs,

Office of Management and Budget

(OMB), Washington, D.C. 20503

(Attention: NOAA Desk Officer).

FOR FURTHER INFORMATION CONTACT:

Myles Raizin, 508–281–9104.

SUPPLEMENTARY INFORMATION:

Background

In March 1995, President Clinton

issued a directive to Federal agencies

regarding their responsibilities under

his Regulatory Reinvention Initiative.

This initiative is part of the National

Performance Review and calls for

comprehensive regulatory reform. The

President directed all agencies to

undertake a review of their regulations,

with an emphasis on eliminating or

modifying those that are obsolete,

duplicative, or otherwise in need of

reform. In response to this directive, on

July 3, 1996 (61 FR 34966), a final rule

was published that consolidated six

CFR parts setting forth Northeast Region

fishery regulations into one CFR part (50

CFR part 648). The Atlantic Bluefish

FMP was not included in this

consolidation because NMFS had

published a request for comments on a

proposal to withdraw approval of this

FMP and its implementing regulations

(61 FR 13810, March 28, 1996).

Comments received on this proposal

convinced NMFS not to withdraw this

FMP. Consequently, this final rule is

intended to carry out further the

President’s directive by adding the

regulations implementing the Atlantic

Bluefish FMP to the consolidation and

eliminating 50 CFR part 628. Portions of

the bluefish regulations that contain

identical or nearly identical provisions

to those in part 648 have been combined