29092 Federal Register / Vol. 63, No. 102 /Thursday, May 28, 1998 /Rules and Regulations

families seeking to purchase an existing

home, and did not provide sufficient

flexibility. The Agency received

tremendous support when the previous

standards were eliminated.

As mentioned, the new standards for

modest housing became effective in

1995. As the Agency began the process

of reinventing and reengineering the

program in 1996, we became aware of

concerns which impacted our ability to

provide financing on modest homes for

very-low and low-income families in

rural America. For example, in some

rural areas, the section 203(b) loan limit

is higher than the cost of housing the

Agency financed under previous

standards. This is evidenced by an

increase in the average cost of a house

financed by the Agency under the

previous standards and the average cost

of a house financed under the section

203(b) standards, even when the rise in

construction costs is taken into account.

This limits our ability to provide the

maximum number of homeownership

opportunities in rural America within

allocated funds. Concomitantly, in other

areas of rural America, the section

203(b) limits are too low for the Agency

to finance the cost of constructing a

modest home. The percentage of newly

constructed homes financed by the

Agency has dropped significantly since

the Agency began utilizing the section

203(b) limits. This severely limits our

ability to provide homeownership

opportunities for families in many

growing rural communities which are in

dire need of new housing.

For these reasons, when the Agency

published the aforementioned interim

final rule comments were solicited on

alternative methods the Agency could

utilize to ensure that only modest

housing was financed. Seven comments

were received. None of the commentors

wanted the Agency to return to its

previous standards and most supported

continuing with the section 203(b)

limits. No additional criteria were

provided by the commentors. In

retrospect, the Agency believes that at

the time of publication of the interim

final rule, most of the commentors were

not fully aware of the impact of the use

of the 203(b) loan limits in the direct

SFH program. The Agency is again

seeking recommendations on alternative

methods for establishing a standard for

modest housing. The Agency is

currently considering two options.

The first option being considered is to

utilize a multiple of the median income

for the area to establish the maximum

loan amount. In this manner, the

income of the area would assist in

determining a typical modest home for

the area. RHS is considering

establishing a maximum loan amount of

2.5 times the median income for a

family of four. For example, if the

median income for a family of four was

$30,000 in a given county, the

maximum loan would be $75,000

($30,000 times 2.5). For families in

excess of four, the loan limit would be

2.5 times the median income for that

family size.

The second option being considered

is a square footage limitation. The

Agency has no intention of

reconsidering the previous standards in

which amenities were considered and

square footage maximums were set by

specific family size. The proposed

standard is simple and straightforward.

The maximum square footage allowable

would be 1300 square feet of finished

living area. This standard would apply

to existing homes and new construction.

For family sizes in excess of four, the

square footage standard may be

increased by 150 square feet for each

family member over four. The Agency

also proposes to allow the State Director

the authority to provide exceptions on

a case-by-case basis provided the

proposed housing is modest and

alternative homes within the square

footage standards are not readily

available in the market. There would be

no amenity standards except for the

existing requirements that the property

may not have an in-ground pool or be

used for income producing purposes.

Under this option, the Agency is

particularly interested in comments on

how to further satisfy our statutory

mandate to finance only modest

housing, without the need to establish

specific amenity standards. In addition,

the Agency is proposing only one square

footage standard; whereas in the past,

different square footage standards for

existing homes and new construction

existed. The Agency wants comments

on whether a single standard is

appropriate, or whether and why

separate standards should be

established. Also, if two standards are

recommended, what square footage

standards should be established for

existing homes and new construction?

And finally, how should the Agency

define ‘‘finished’’ living area?

The Agency would appreciate

comments on these two options,

together with any recommended

enhancements or changes. In addition,

the Agency is also interested in other

potential standards by which to

determine that housing is modest

provided such standards are simple,

straightforward and not overly

burdensome to our customers.

The Agency generally provides a 60-

day comment period for proposed

changes. However, since the Agency is

only requesting comments on one

standard, a 30-day comment period is

provided. It is the Agency’s objective to

publish a final rule with the proposed

change by September 1, 1998, with an

effective date of October 1, 1998. The

rule would be effective for any current

applicant who had not submitted a sales

contract for the purchase of a home to

the Agency.

Dated: May 21, 1998.

Jan E. Shadburn,

Administrator, Rural Housing Service.

[FR Doc. 98–14149 Filed 5–27–98; 8:45 am]

BILLING CODE 3410–XV–U

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Part 10

[Docket No. 98–08]

RIN 1557–AB62

Municipal Securities Dealers

AGENCY: Office of the Comptroller of the

Currency, Treasury.

ACTION: Final rule.

SUMMARY: The Office of the Comptroller

of the Currency (OCC) is issuing a final

rule to revise its Municipal Securities

Dealers regulation to remove

unnecessary provisions. This change

would not have any substantive effect

on the operations of national banks, but

would simplify the OCC’s rule regarding

bank municipal securities dealers

(MSDs) by removing a redundant

restatement of rules found elsewhere.

DATES: The final rule is effective June

29, 1998.

FOR FURTHER INFORMATION CONTACT:

Joseph W. Malott, National Bank

Examiner, Treasury and Market Risk

(202) 874–5670; Donald Lamson,

Assistant Director, Securities and

Corporate Practices (202) 874–5210; or

Ursula Pfeil, Attorney, Legislative and

Regulatory Activities (202) 874–5090.

SUPPLEMENTARY INFORMATION:

Background and Discussion of Final

Rule

The OCC is issuing a final rule to

revise its Municipal Securities Dealers

regulation to remove unnecessary

provisions. The OCC had previously

published a notice of proposed

rulemaking on January 16, 1998, and at

that time requested comment on the
Federal Register / Vol. 63, No. 102 /Thursday, May 28, 1998 /Rules and Regulations 29093

1The MSRB rules may be obtained by contacting

the Municipal Securities Rulemaking Board by

telephone at (202) 223–9347 or by mail at 1150 18th

Street, NW, Suite 400, Washington, DC 20036–3816.

2Subsidiaries of national banks that engage in

municipal securities activities must register with

the NASD and are regulated by NASD Regulation,

Inc., the subsidiary of NASD charged with

regulating the securities industry and the Nasdaq

Stock Market.

3The Board of Governors of the Federal Reserve

System (Board) and Federal Deposit Insurance

Corporation (FDIC) each have published proposed

amendments to each agency’s MSD regulation. See

62 FR 15272 (March 31, 1997) (Board) and 62 FR

26994 (May 16, 1997) (FDIC). Both the Board and

the FDIC propose to repeal their MSD rules

altogether. However, both agencies intend for banks

within their respective jurisdictions to continue

filing the MSD–4 and MSD–5 forms with those

agencies. Accordingly, the OCC, Board, and FDIC

intend to impose substantively identical

requirements on bank MSDs. The stylistic

differences between the OCC’s final rule and those

of the Board and FDIC reflect the OCC’s view that

it is necessary and helpful to national bank MSDs

for the OCC’s rule to address those areas identified

in Rule G–7 where bank dealers are to look to the

rules of their primary regulator.

changes. 63 FR 2640. The OCC received

no comments and, therefore, is now

issuing a final rule unchanged from its

proposed rule.

Section 15B(b) of the Securities

Exchange Act of 1934 (Exchange Act)

(15 U.S.C. 78o–4(b)) created the

Municipal Securities Rulemaking Board

(MSRB) and mandated that the MSRB

adopt rules that establish qualification

criteria for municipal securities brokers

or dealers and associated persons. To

implement section 15B(b), the MSRB

adopted Rule G–7 (Information

Concerning Associated Persons) (Rule

G–7).1 Rule G–7 requires, among other

things, that municipal securities

principals and representatives

associated with a bank MSD file with

the bank either (a) Form MSD–4

(Uniform Application for Municipal

Securities Principal or Municipal

Securities Representative Associated

with a Bank Municipal Securities

Dealer) or (b) a similar form prescribed

by the bank’s primary regulator. A

national bank MSD is in turn required

by Rule G–7 to submit to the OCC the

form that the bank’s associated

municipal securities principals and

representatives file with it. Rule G–7

also requires bank MSDs to update

information as necessary, to retain

records for specified periods of time,

and to file with the appropriate banking

agency ‘‘such of the information

prescribed by [Rule G–7] as such * * *

agency * * * shall by rule or regulation

require.’’ Rule G–7(g).

Shortly after the MSRB adopted Rule

G–7, the OCC adopted part 10 in order

to prescribe the information and forms

that national bank MSDs are to submit.

(42 FR 16813 (March 30, 1977)). Part 10

currently sets out the scope of the rule

(§ 10.1); definitions used therein

(§ 10.2); information about where and

how to file the appropriate forms

(§ 10.3); and requirements governing the

submission and retention of Form MSD–

4 and Form MSD–5 (Uniform

Termination Notice for Municipal

Securities Principal or Municipal

Securities Representative Associated

with a Bank Municipal Securities

Dealer) (§ 10.4).

As explained in the following sectionby-section analysis, much of current

part 10 either is substantively identical

to the requirements contained in Rule

G–7 or is otherwise unnecessary.

Section-by-Section Analysis

Section 10.1 of Current and Final Rules

This section identifies the entities and

individuals covered by part 10. Section

10.1 of the final rule clarifies that

subsidiaries of national banks are not

covered by the rule. This clarification is

consistent with MSRB Rule G–7, which

states that ‘‘bank dealers’’ are to comply

with the rules and requirements

adopted by the appropriate bank

regulatory agency. The term ‘‘bank

dealer’’ is defined in Rule D–8 of the

MSRB’s rules to include ‘‘a municipal

securities dealer which is a bank or a

separately identifiable department or

division of a bank as defined in rule G–

1 of the [Municipal Securities

Rulemaking] Board.’’ Subsidiaries of

banks are not included in the definition

of ‘‘bank dealer,’’ and are, therefore,

governed directly by the MSRB’s filing

requirements. The change to § 10.1

reflects this fact. It does not, however,

affect the content of what these

subsidiaries are to file or who regulates

their municipal securities activities.2

Section 10.2 of Current Rule

The terms defined in current § 10.2

are not used in part 10. Accordingly,

this section is removed.

Section 10.3 of Current Rule

Section 10.3 provides information

about the mechanics of filing the MSD–

4 and MSD–5 forms with the OCC. This

information is unnecessary in light of

the filing instructions that accompany

these forms. Therefore, the final rule

removes this section.

Section 10.4 of Current Rule/§ 10.2 of

Final Rule

Section 10.4(a)(1) of the current rule

states that Form MSD–4 is an

appropriate means of carrying out the

purposes of Rule G–7(b). Two

provisions in Rule G–7 make it

appropriate for the final rule to retain a

provision identifying which form

national bank MSDs are to use and what

information is to be submitted in order

to comply with Rule G–7. First,

paragraph (b) of Rule G–7 states that ‘‘in

the case of a bank dealer a completed

Form MSD–4 or similar form prescribed

by the appropriate regulatory agency for

such bank dealer, containing the

foregoing information [i.e., the

information listed in Rule G–7(b)(i)–(x)],

shall satisfy the requirements of this

paragraph [(b)].’’ Given that Rule G–7(b)

provides bank regulators the option of

using a form other than Form MSD–4,

there remains a need for the OCC to

clarify which form national banks

should use. Second, as previously

noted, paragraph (g) of Rule G–7 states

that bank MSDs are to file with their

appropriate regulatory agency ‘‘such of

the information prescribed by this rule

[i.e., Rule G–7] as such * * * agency

* * * shall by rule or regulation

require.’’ Repealing all of part 10

arguably would create an unintended

gap in the filing requirements for bank

MSDs, because there would be no rule

or regulation requiring national banks to

file.

In light of paragraphs (b) and (g) of

Rule G–7, the final rule retains a

requirement, at § 10.2(a), stating that a

national bank is to use Form MSD–4 to

submit the information required by Rule

G–7(b)(i)–(x) to be obtained from a

person identified in § 10.1(b). Section

10.2(a) also states that a national bank

receiving completed MSD–4 forms must

submit these forms to the OCC before

permitting any person to be associated

with it as a municipal securities

principal or a municipal securities

representative. Should the MSRB amend

Rule G–7 to remove the reference to

rules or regulations issued by the

banking agencies, the OCC will revisit

the need for a continued reference to the

MSRB rules in part 10.3

Section 10.4(a)(2) of the current rule

repeats filing requirements found in

Rule G–7 and, therefore, is removed.

Section 10.4(b) of the current rule

instructs national bank MSDs regarding

how they should proceed if a Form

MSD–4 contains materially inaccurate

or incomplete information. This section

is unnecessary, given that paragraph (c)

of Rule G–7 requires that the

information required to be submitted

must remain accurate and complete. A

national bank MSD receiving updated

information from an associated

municipal securities representative or
29094 Federal Register / Vol. 63, No. 102 /Thursday, May 28, 1998 /Rules and Regulations

1The MSRB rules may be obtained by contacting

the Municipal Securities Rulemaking Board at 1150

18th Street, NW, Suite 400, Washington, DC 20036–

3816.

municipal securities principal is

obligated pursuant to Rule G–7 to

submit the amended information to the

OCC in order to ensure that the

individuals are properly registered.

Accordingly, the final rule removes

current § 10.4(b).

Current § 10.4(c) requires national

bank MSDs to file Form MSD–5 within

30 days of terminating a person’s

association with the bank as a

municipal securities representative or

principal. This requirement does not

appear in Rule G–7. In order to facilitate

the effective supervision of MSD

activity by national banks, the final rule

retains the requirement, at § 10.2(b), that

a termination notice be submitted.

Finally, current § 10.4(d)(1) restates

record retention requirements found in

Rule G–7(e), while § 10.4(d)(2) states

that the MSD–4 and MSD–5 forms are

covered by section 32(a) of the Exchange

Act (15 U.S.C. 78ff). These provisions in

current § 10.4 are unnecessary and are,

therefore, removed.

Regulatory Flexibility Act

The OCC hereby certifies that this rule

will not have a significant economic

impact on a substantial number of small

entities. Accordingly, a regulatory

flexibility analysis is not required.

As noted earlier, the OCC has only

eliminated unnecessary provisions that

appear in the current rule. This rule

will, therefore, reduce the regulatory

burden on national banks, regardless of

size. No new burden is added by the

changes.

Executive Order 12866

The OCC has determined that this

final rule is not a significant regulatory

action under Executive Order 12866.

Unfunded Mandates Act of 1995

The OCC has determined that the

final rule will not result in expenditures

by State, local, and tribal governments,

or by the private sector, of more than

$100 million in any one year.

Accordingly, the OCC has not prepared

a budgetary impact statement or

specifically addressed the regulatory

alternatives considered as would

otherwise be required by the Unfunded

Mandates Act of 1995.

List of Subjects in 12 CFR Part 10

National banks, Reporting and

recordkeeping requirements, Securities.

Authority and Issuance

For the reasons set out in the

preamble, the OCC revises part 10 of

chapter I of title 12 of the Code of

Federal Regulations as set forth below:

PART 10—MUNICIPAL SECURITIES

DEALERS

Sec.

10.1 Scope.

10.2 Filing requirements.

Authority: 5 U.S.C. 93a, 481, and 1818; 15

U.S.C. 78o–4(c)(5) and 78q–78w.

§ 10.1 Scope.

This part applies to:

(a) Any national bank, District bank,

and separately identifiable department

or division of either (collectively, a

national bank) that acts as a municipal

securities dealer, as that term is defined

in section 3(a)(30) of the Securities

Exchange Act of 1934 (15 U.S.C.

78c(a)(30)); and

(b) Any person who is associated or

to be associated with a national bank in

the capacity of a municipal securities

principal or a municipal securities

representative, as those terms are

defined in Rule G–3 of the Municipal

Securities Rulemaking Board (MSRB).1

§ 10.2 Filing requirements.

(a) A national bank shall use Form

MSD–4 (Uniform Application for

Municipal Securities Principal or

Municipal Securities Representative

Associated with a Bank Municipal

Securities Dealer) for obtaining the

information required by MSRB Rule G–

7(b)(i)–(x) from a person identified in

§ 10.1(b). A national bank receiving a

completed MSD–4 form from a person

identified in § 10.1(b). A national bank

receiving a completed MSD–4 form from

a person identified in § 10.1(b) must

submit this form to the OCC before

permitting the person to be associated

with it as a municipal securities

principal or a municipal securities

representative.

(b) A national bank must submit Form

MSD–5 (Uniform Termination Notice

for Municipal Securities Principal or

Municipal Securities Representative

Associated with a Bank Municipal

Securities Dealer) to the OCC within 30

days of terminating a person’s

association with the bank as a

municipal securities principal or

municipal securities representative.

(c) Forms MSD–4 and MSD–5, with

instructions, may be obtained by

contacting the OCC at 250 E Street, SW.,

Washington, DC 20219, Attention: Bank

Dealer Activities.

Dated: May 9, 1998.

Julie L. Williams,

Acting Comptroller of the Currency.

[FR Doc. 98–14016 Filed 5–27–98; 8:45 am]

BILLING CODE 4810–33–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 96–NM–211–AD; Amendment

39–10532; AD 98–11–05]

RIN 2120–AA64

Airworthiness Directives; Saab Model

SAAB 2000 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a

new airworthiness directive (AD),

applicable to certain Saab Model SAAB

2000 series airplanes, that requires

performing a one-time inspection of the

dropout boxes of the passenger oxygen

system to detect discrepancies and

determine whether the system operates

properly; correcting any discrepancy

found; and reworking or installing new

components, if necessary. This

amendment is prompted by a report

indicating that the oxygen system failed

to operate correctly after activation at a

low cabin pressure due to the incorrect

installation of the oxygen masks or

oxygen generators during

manufacturing. The actions specified by

this AD are intended to ensure that a

sufficient supply of oxygen is provided

to airplane passengers in the event of

rapid decompression of the airplane.

DATES: Effective July 2, 1998.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of July 2, 1998.

ADDRESSES: The service information

referenced in this AD may be obtained

from Saab Aircraft AB, SAAB Aircraft

Product Support, S–581.88, Linkping,

Sweden. This information may be

examined at the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, Rules Docket,

1601 Lind Avenue, SW., Renton,

Washington; or at the Office of the

Federal Register, 800 North Capitol

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

FOR FURTHER INFORMATION CONTACT:

Norman B. Martenson, Manager,

International Branch, ANM–116, FAA,

Transport Airplane Directorate, 1601

Lind Avenue, SW., Renton, Washington