27976 Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices

2. Discussion on the guidelines for

prospective groundwater studies.

3. Update on the State Management

Plan (SMP) rule.

4. Status of the groundwater SMP

program, review and teleconferences.

5. Discussion of the United States

Geological Survey (U.S.G.S.)

groundwater and surface water

monitoring for pesticides and

metabolites.

6. Update on Amber registration.

7. Discussion of cross contamination

of bulk pesticides.

8. Status of the part 165 regulations.

9. Other topics as appropriate.

List of Subjects

Environmental protection.

Dated: May 18, 1995.

William L. Jordan,

Acting Director, Field Operations Division,

Office of Pesticide Programs.

[FR Doc. 95–13138 Filed 5–25–95; 8:45 am]

BILLING CODE 6560–50–F

FEDERAL DEPOSIT INSURANCE

CORPORATION

Statement of Policy Regarding

Treatment of Collateralized Letters of

Credit After Appointment of the

Federal Deposit Insurance Corporation

as Conservator or Receiver

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Statement of policy.

SUMMARY: The FDIC has adopted a

statement of policy that sets forth how

the FDIC, as conservator or receiver for

an insured depository institution,

proposes to treat letters of credit backed

by a pledge of collateral by the insured

depository institution. Only those

collateralized letters of credit (CLOCs)

that were initially issued prior to the

enactment of the Financial Institutions

Reform, Recovery, and Enforcement Act

of 1989 (FIRREA) are covered by this

policy.

EFFECTIVE DATE: May 19, 1995.

FOR FURTHER INFORMATION CONTACT:

Sharon Powers Sivertsen, Assistant

General Counsel (202–736–0112), or

Michael H. Krimminger, Senior Counsel

(202–736–0336), Legal Division, Federal

Deposit Insurance Corporation, 550 17th

Street, NW., Washington, DC 20429.

Statement of Policy Regarding

Treatment of Collateralized Letters of

Credit After Appointment of the

Federal Deposit Insurance Corporation

as Conservator or Receiver

This Statement of Policy sets forth the

treatment that the Federal Deposit

Insurance Corporation (FDIC) as the

conservator or receiver of an insured

depository institution will give certain

collateralized letters of credit issued by

insured depository institutions prior to

August 9, 1989.

Background

On August 9, 1989, the Financial

Institutions Reform, Recovery, and

Enforcement Act of 1989 (FIRREA) was

signed into law. This statute amended

the Federal Deposit Insurance Act (FDI

Act) to clarify the FDIC’s rights as

conservator or receiver to repudiate

contracts and to limit claims for

damages upon repudiation to those

actual, direct compensatory damages

determined as of the date of the

appointment of the conservator or

receiver. 12 U.S.C. 1821(e)(3)(A). With

regard to secured contracts, the FDI Act

provides that the repudiation provisions

contained in 12 U.S.C. 1821(e) are not

to be construed as permitting the

avoidance of any legally enforceable or

perfected security interest in any assets

of the institution, except where such

interest is taken in contemplation of the

institution’s insolvency or with the

intent to hinder, delay, or defraud the

institution or the institution’s creditors.

12 U.S.C. 1821(e)(11).

Generally, contingent obligations do

not give rise to provable claims against

a receivership or conservatorship, and

any claims based upon such obligations

have no provable damages because the

damages are not fixed and certain as of

the date of the appointment of the

receiver or conservator. Accordingly, no

provable claims in a receivership or

conservatorship can be based on

contingent obligations unless the default

by the account party conferring a right

to draw under the obligations occurred

prior to the appointment of the receiver

or conservator.

Reading section 11(e) of the FDI Act,

12 U.S.C. 1821(e), as a whole, it is clear

that even secured contracts may be

repudiated; that damages are limited to

the extent set forth in the statute; and

that legally enforceable or perfected

security agreements will be honored to

the extent of such damages but no

further or otherwise. In other words, if

there is a repudiation, the collateral

securing the contract may be liquidated

and the proceeds paid to or retained by

the creditor up to the damages allowed

by the statute. The remaining collateral

or proceeds will be remitted or returned

to the conservator or receiver as

property of the institution or its estate,

or to a bona fide junior lienholder to the

extent applicable.

Statement of Policy

The FDIC has considered a number of

relevant policy factors with respect to

the treatment of certain collateralized

letters of credit after its appointment as

conservator or receiver of insured

depository institutions. Specifically, it

has considered its legal rights and

powers under FIRREA; the assurances

provided by the Federal Home Loan

Bank Board prior to the enactment of

FIRREA; the assurances provided by the

Resolution Trust Corporation in its

September 15, 1990 statement of policy

on the treatment of collateralized letters

of credit; market reliance on these

assurances; the need for market

certainty and stability; and the potential

long-term cost to the FDIC of the

repudiation of certain collateralized

letters of credit. Based on its

consideration and balancing of such

factors, the FDIC has determined to

adopt and implement the following

Policy on the treatment of certain

collateralized letters of credit after its

appointment as conservator or receiver

of insured depository institutions. This

Policy is substantively the same as the

RTC’s September 25, 1990 policy

statement on collateralized letters of

credit and conforms to the RTC and

FDIC policy statements on collateralized

put obligations. As a consequence,

adoption of the proposed policy

statement will promote market certainty

and stability upon the transition of

receivership responsibilities from the

RTC to the FDIC on July 1, 1995. 12

U.S.C. 1441a(b)(3)(A)(ii).

This Policy will apply only to

collateralized letters of credit utilized in

capital markets financing transactions

originally issued by insured depository

institutions prior to August 9, 1989, and

any subsequent renewal, replacement or

extension of such letters of credit. In

addition, this Policy will apply only in

such transactions where the underlying

security interest is in collateral owned

and pledged by the insured depository

institution to secure its obligations and

the security interest is both perfected

and legally enforceable under applicable

law. These financing transactions

include transactions involving publiclyoffered obligations rated by one or more

nationally-recognized credit rating

agencies and transactions involving

non-rated privately placed obligations

structured in a manner substantially

similar to such rated obligations. The
Federal Register / Vol. 60, No. 102 / Friday, May 26, 1995 / Notices 27977

policy does not apply to trade letters of

credit or letters of credit issued for any

other purpose.

After its appointment as conservator

or receiver of any insured depository

institution, the FDIC may either (1)

continue any collateralized letters of

credit as enforceable under the terms of

the contract during the pendency of the

conservatorship or receivership or (2)

call, redeem or prepay any

collateralized letters of credit by

repudiation or disaffirmance.

If the FDIC as conservator or receiver

exercises its right to call, redeem or

prepay any collateralized letters of

credit by repudiation or disaffirmance,

it may do so either directly by cash

payment in exchange for the release of

the collateral or by repudiation of the

contract followed by liquidation of the

collateral by a trustee or other secured

party. If the FDIC in its capacity as

conservator or receiver accelerates the

collateralized letters of credit by

repudiation or disaffirmance, payment

will be made to the extent of available

collateral up to an amount equal to the

outstanding principal amount or

accreted value of the secured

obligations, together with interest at the

contract rate up to and including the

date of payment and expenses of

liquidation, if provided in the contract.

If any collateral or proceeds remain after

payment of such amounts, such

collateral or proceeds then must be

remitted or returned to the conservator

or receiver as property of the institution

or its estate, or to a bona fide junior

lienholder to the extent applicable. If,

however, the collateral securing the

contract is insufficient to pay in full the

amounts owing under the contract, the

holder will receive a receivership

certificate for any balance remaining

due under the contract.

The FDIC shall have a reasonable

time, generally no more than 180 days

from the date of the appointment of the

FDIC as conservator or receiver, to elect

whether to disaffirm, repudiate, or

accelerate a collateralized letter of

credit. In the case of institutions for

which the FDIC already has been so

appointed, the period in which to make

such an election shall begin to run as of

the date of the adoption of this Policy

and continue for 180 days.

This Policy Statement does not

change or amend the FDIC’s

longstanding position that standby

letters of credit are contingent

obligations. Based on its consideration

and balancing of the policy issues

presented, however, the FDIC has

adopted this statement of policy for

collateralized letters of credit initially

issued prior to August 9, 1989, and any

subsequent renewal, replacement or

extension of such letters of credit. It is

understood that the persons involved in

such secured transactions with insured

depository institutions may reasonably

rely upon this Policy Statement.

Dated at Washington, D.C., this 18th day of

May, 1995.

By order of the Board of Directors.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Acting Executive Secretary.

[FR Doc. 95–12992 Filed 5–25–95; 8:45 am]

BILLING CODE 6714–01–M

FEDERAL RESERVE SYSTEM

Union Planters Corporation, et al.;

Formations of; Acquisitions by; and

Mergers of Bank Holding Companies

The companies listed in this notice

have applied for the Board’s approval

under section 3 of the Bank Holding

Company Act (12 U.S.C. 1842) and §

225.14 of the Board’s Regulation Y (12

CFR 225.14) to become a bank holding

company or to acquire a bank or bank

holding company. The factors that are

considered in acting on the applications

are set forth in section 3(c) of the Act

(12 U.S.C. 1842(c)).

Each application is available for

immediate inspection at the Federal

Reserve Bank indicated. Once the

application has been accepted for

processing, it will also be available for

inspection at the offices of the Board of

Governors. Interested persons may

express their views in writing to the

Reserve Bank or to the offices of the

Board of Governors. Any comment on

an application that requests a hearing

must include a statement of why a

written presentation would not suffice

in lieu of a hearing, identifying

specifically any questions of fact that

are in dispute and summarizing the

evidence that would be presented at a

hearing.

Unless otherwise noted, comments

regarding each of these applications

must be received not later than June 19,

1995.

A. Federal Reserve Bank of St. Louis

(Randall C. Sumner, Vice President) 411

Locust Street, St. Louis, Missouri 63166:

1. Union Planters Corporation,

Memphis, Tennessee; to acquire 100

percent of the voting shares of Union

Planters Bank of Central Misissippi,

Jackson, Mississippi, a de novo bank,

and to acquire 100 percent of the voting

shares of Union Planters Bank of

Southern Mississippi, Hattiesburg,

Mississippi, a de novo bank.

B. Federal Reserve Bank of Dallas

(Genie D. Short, Vice President) 2200

North Pearl Street, Dallas, Texas 75201-

2272:

1. Andrews Bancshares, Inc.,

Andrews, Texas; to become a bank

holding company by acquiring 100

percent of the voting shares of Andrews

Delaware Financial Corporation, Dover,

Delaware, and thereby indirectly

acquire National Bank of Andrews,

Andrews, Texas.

In connection with this application,

Andrews Delaware Financial

Corporation, Dover, Delaware; has also

applied to become a bank holding

company by acquiring 100 percent of

the voting shares of National Bank of

Andrews, Andrews, Texas.

Board of Governors of the Federal Reserve

System, May 22, 1995.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 95-12976 Filed 05-25-95; 8:45 am]

BILLING CODE 6210-01-F

Farmers & Merchants Bank Employee

Stock Ownership Plan; Change in

Bank Control Notices; Acquisitions of

Shares of Banks or Bank Holding

Companies; Correction

This notice corrects a notice (FR Doc.

95–11754) published on page 25723 of

the issue for Friday, May 12, 1995.

Under the Federal Reserve Bank of

Atlanta heading, the entry for Farmers &

Merchants Bank Employee Stock

Ownership Plan, is revised to read as

follows:

1. Farmers & Merchants Bank

Employee Stock Ownership Plan, Forest,

Mississippi; to acquire Bankers Capital

Corporation, Forest, Mississippi, and

thereby engage in making, acquiring or

servicing loans or other extensions of

credit, pursuant to § 225.25(b)(1) of the

Board’s Regulation Y. The proposed

activity will be conducted throughout

the United States.

Comments on this application must

be received by May 26, 1995.

Board of Governors of the Federal Reserve

System, May 22, 1995.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 95–11754 Filed 5–11–95; 8:45 am]

BILLING CODE 6210–01–F

Michael J. Corliss; Change in Bank

Control Notice

Acquisition of Shares of Banks or

Bank Holding Companies

The notificant listed below has

applied under the Change in Bank

Control Act (12 U.S.C. 1817(j)) and §

225.41 of the Board’s Regulation Y (12