53320 Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 

period of geologic stability. The 

constant value to be used to represent 

climate change is to be based on a loguniform probability distribution for 

deep percolation rates from 13 to 64 

mm/year (0.5 to 2.5 inches/year). 

(3) DOE must assess the effects of 

general corrosion on the engineered 

barriers. DOE may use a constant 

representative corrosion rate throughout 

the period of geologic stability or a 

distribution of corrosion rates correlated 

to other repository parameters. 

Dated at Rockville, Maryland, this 1st day 

of September, 2005. 

For the Nuclear Regulatory Commission. 

Annette Vietti-Cook, 

Secretary of the Commission. 

[FR Doc. 05–17778 Filed 9–7–05; 8:45 am] 

BILLING CODE 7590–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 225 

[Regulation Y; Docket No. R–1235] 

Capital Adequacy Guidelines for Bank 

Holding Companies; Small Bank 

Holding Company Policy Statement; 

Definition of a Qualifying Small Bank 

Holding Company 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (Board) is 

proposing to raise the asset size 

threshold and revise the other criteria 

for determining whether a bank holding 

company (BHC) qualifies for the Board’s 

Small Bank Holding Company Policy 

Statement (Regulation Y, Appendix C) 

(Policy Statement) and an exemption 

from the Board’s risk-based and leverage 

capital adequacy guidelines for BHCs 

(Regulation Y, Appendices A and D) 

(Capital Guidelines). The proposal 

would increase the asset size threshold 

from $150 million to $500 million in 

consolidated assets for determining 

whether a BHC would qualify for the 

Policy Statement and an exemption 

from the Capital Guidelines; modify the 

qualitative criteria used in determining 

whether a BHC that is under the asset 

size threshold nevertheless would not 

qualify for the Policy Statement or the 

exemption from the Capital Guidelines; 

and clarify the treatment under the 

Policy Statement of subordinated debt 

associated with trust preferred 

securities. 

DATES: Comments must be received no 

later than November 7, 2005. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1235, by any 

of the following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• FAX: 202/452–3819 or 202/452–

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room MP–500 of the Board’s 

Martin Building (20th and C Streets, 

NW.) between 9 a.m. and 5 p.m. on 

weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Barbara Bouchard, Deputy Associate 

Director (202/452–3072 or 

barbara.bouchard@frb.gov), Mary 

Frances Monroe, Manager (202/452–

5231 or mary.f.monroe@frb.gov), 

William Tiernay, Supervisory Financial 

Analyst (202/872–7579 or 

william.h.tiernay@frb.gov), Supervisory 

and Risk Policy; Robert Maahs, 

Manager, Regulatory Reports (202/872–

4935 or robert.maahs@frb.gov); or 

Robert Brooks, Supervisory Financial 

Analyst (202/452–3103 or 

robert.brooks@frb.gov), Applications, 

Division of Banking Supervision and 

Regulation; or Mark Van Der Weide, 

Senior Counsel (202/452–2263 or 

mark.vanderweide@frb.gov), Legal 

Division. For the hearing impaired only, 

Telecommunication Device for the Deaf 

(TDD), contact 202/263–4869. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Board issued the Policy 

Statement in 1980 to facilitate the 

transfer of ownership of small 

community-based banks in a manner 

that is consistent with bank safety and 

soundness. The Board generally has 

discouraged the use of debt by BHCs to 

finance the acquisition of banks or other 

companies because high levels of debt at 

a BHC can impair the ability of the BHC 

to serve as a source of strength to its 

subsidiary banks. The Board has 

recognized, however, that small BHCs 

have less access to equity financing than 

larger BHCs and that, therefore, the 

transfer of ownership of small banks 

often requires the use of acquisition 

debt. Accordingly, the Board adopted 

the Policy Statement to permit the 

formation and expansion of small BHCs 

with debt levels that are higher than 

what would be permitted for larger 

BHCs. The Policy Statement contains 

several conditions and restrictions that 

are designed to ensure that small BHCs 

that operate with the higher levels of 

debt permitted by the Policy Statement 

do not present an undue risk to the 

safety and soundness of their subsidiary 

banks. 

Currently, the Policy Statement 

applies to BHCs with pro forma 

consolidated assets of less than $150 

million that (i) are not engaged in any 

nonbanking activities involving 

significant leverage; (ii) are not engaged 

in any significant off-balance sheet 

activities; and (iii) do not have a 

significant amount of outstanding debt 

that is held by the general public 

(‘‘qualifying small BHCs’’). Under the 

Policy Statement, qualifying small BHCs 

may use debt to finance up to 75 percent 

of the purchase price of an acquisition 

(that is, they may have a debt-to-equity 

ratio of up to 3:1), but are subject to a 

number of ongoing requirements. The 

principal ongoing requirements are that 

a qualifying small BHC (i) reduce its 

parent company debt in such a manner 

that all debt is retired within 25 years 

of being incurred; (ii) reduce its debt-toequity ratio to .30:1 or less within 12 

years of the debt being incurred; (iii) 

ensure that each of its subsidiary 

insured depository institutions is well 

capitalized; and (iv) refrain from paying 

dividends until such time as it reduces 

its debt-to-equity ratio to 1.0:1 or less. 

The Policy Statement also specifically 

provides that a qualifying small BHC 

may not use the expedited applications 

procedures or obtain a waiver of the 

stock redemption filing requirements 

applicable to BHCs under the Board’s 

Regulation Y (12 CFR 225.4(b), 225.14, 

and 225.23) unless the BHC has a pro 

forma debt-to-equity ratio of 1.0:1 or 

less. 

The Board adopted the risk-based 

capital guidelines in 1989 to assist in 

the assessment of the capital adequacy 

of BHCs. The risk-based capital 

guidelines establish for BHCs minimum 

ratios of tier 1 capital and total capital 

to risk-weighted assets. One of the 

Board’s principal objectives in adopting 

Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 53321 

1Trust preferred securities are undated 

cumulative preferred securities issued out of a 

special purpose entity, usually in the form of a 

Continued 

the risk-based capital guidelines was to 

make regulatory capital requirements 

more sensitive to differences in risk 

profiles among banking organizations. 

Supplemental to the risk-based capital 

guidelines, the Board in 1991 adopted 

the tier 1 leverage measure, a minimum 

ratio of tier 1 capital to total assets, to 

further assist in the assessment of the 

capital adequacy of BHCs with the 

principal objective of placing a 

constraint on the maximum degree to 

which a banking organization can 

leverage its equity capital base. Because 

qualifying small BHCs may, consistent 

with the Policy Statement, operate at a 

level of leverage that generally is 

inconsistent with the Capital 

Guidelines, the Capital Guidelines 

provide an exemption for qualifying 

small BHCs. 

II. The Proposal 

New Asset Threshold of $500 Million 

When the Board issued the Policy 

Statement in 1980, $150 million in 

consolidated assets represented a 

reasonable threshold for identifying 

those BHCs that might need additional 

flexibility for the purpose of enabling 

the transfer of ownership of small 

community-based banks. However, over 

the last two decades, inflation, industry 

consolidation, and the normal asset 

growth of BHCs have caused the $150 

million threshold to lose much of its 

relevance. 

For these reasons, the Board proposes 

to increase the asset size threshold for 

qualifying small BHCs in the Policy 

Statement from $150 million to $500 

million in pro forma consolidated 

assets. While approximately 55 percent 

of all top tier BHCs currently qualify for 

the Policy Statement, under this 

proposal that number would increase to 

85 percent and would encompass 

approximately 4,400 BHCs. The Board 

notes that raising the threshold to $500 

million, as proposed, goes well beyond 

the level (approximately $340 million) 

that would be appropriate to adjust the 

current threshold for inflation since the 

Board adopted the Policy Statement. 

The Board believes that raising the 

threshold to $500 million represents an 

appropriate balance between the goals 

of facilitating the transfer of ownership 

of small banks, on the one hand, and 

ensuring capital adequacy and access to 

necessary supervisory information on 

the other hand. The proposal also would 

make a conforming change to the asset 

size threshold in the Capital Guidelines. 

The Board does not believe that 

raising the asset threshold above $500 

million would be appropriate at this 

time. BHCs that have more than $500 

million in consolidated assets typically 

have sufficient access to equity markets 

and other sources of funding to enable 

them to finance acquisitions with a 

lower proportion of debt-to-equity than 

smaller BHCs. 

Other Criteria for Identifying a 

Qualifying Small BHC 

As noted above, a BHC currently 

qualifies for the Policy Statement and is 

exempt from the Capital Guidelines 

only if the BHC falls below the asset 

threshold and (i) does not engage in any 

nonbanking activities involving 

significant leverage; (ii) does not engage 

in any significant off-balance sheet 

activities; and (iii) does not have a 

significant amount of outstanding debt 

that is held by the general public. The 

Board also is proposing to revise these 

qualitative criteria for determining 

whether a small BHC qualifies for the 

Policy Statement and generally is 

exempt from the Capital Guidelines. 

Specifically, the Board proposes to 

amend these criteria to provide that a 

BHC with less than $500 million in 

consolidated assets does not qualify for 

the Policy Statement (and is subject to 

the Capital Guidelines) if the BHC (i) is 

engaged in significant nonbanking 

activities either directly or through a 

nonbank subsidiary; (ii) conducts 

significant off-balance sheet activities, 

including securitizations or managing or 

administering assets for third parties, 

either directly or through a nonbank 

subsidiary; or (iii) has a material amount 

of debt or equity securities (other than 

trust preferred securities) outstanding 

that are registered with the Securities 

and Exchange Commission (SEC). The 

proposal also would make conforming 

changes to the Capital Guidelines. 

The Board expects that few BHCs 

with consolidated assets of less than 

$500 million would meet any of these 

criteria. In those cases where a BHC’s 

management is uncertain whether the 

BHC meets any of these criteria, 

management should consult with the 

BHC’s appropriate Reserve Bank. 

The Board believes these changes to 

the eligibility criteria under the Policy 

Statement are necessary or appropriate 

to reflect changes in the banking 

industry over the last two decades, 

including the nature of operations of 

many small BHCs. The enactment of the 

Gramm-Leach-Bliley Act in 1999 

expanded significantly the range of 

nonbanking activities in which BHCs 

may engage, both directly and through 

their nonbank subsidiaries. Therefore, 

the Board is proposing to revise the 

criteria so as to exclude from the Policy 

Statement any BHC that engages in 

significant nonbanking activities or offbalance sheet activities, either directly 

or through a nonbank subsidiary. The 

more limiting reference to significantly 

leveraged nonbanking activities would 

be deleted, since nonleveraged activities 

may also entail significant risk, such as 

operational risk. The examples 

provided—securitizations and managing 

or administering assets for third 

parties—highlight two areas of offbalance sheet activities that may involve 

substantially larger operations and risk 

than balance sheet measures would 

indicate. These examples are not 

intended to be exclusive and other 

activities may well present similar 

concerns. The revision of the final 

criterion to exclude from the Policy 

Statement any BHC that has outstanding 

a material amount of SEC-registered 

debt or equity securities reflects the fact 

that SEC registrants typically exhibit a 

degree of complexity of operations and 

access to multiple funding sources that 

warrants excluding them from the 

Policy Statement and subjecting them to 

consolidated capital requirements. 

Moreover, the application of 

consolidated reporting requirements to 

these BHCs should not impose 

significant additional burden, as they 

are required to have consolidated 

financial statements for SEC reporting 

purposes. 

The Board is of the view that the 

amended criteria represent a prudent 

balance of its interest in expanding the 

Policy Statement treatment to a larger 

pool of small BHCs, while ensuring that 

larger and more complex BHCs remain 

well capitalized and continue to serve 

as a source of strength to their 

subsidiary banks. 

In addition, the Board is proposing to 

amend the Policy Statement and the 

Capital Guidelines to make explicit the 

Federal Reserve’s existing authority to 

require on a case by case basis that a 

qualifying small BHC maintain 

consolidated capital when such action 

is warranted for supervisory reasons. 

In addition to the foregoing, a 

qualifying small BHC may voluntarily 

elect to comply with the Capital 

Guidelines. 

Treatment of Subordinated Debt 

Associated With Trust Preferred 

Securities 

The Policy Statement currently does 

not address the treatment of 

subordinated debt that is issued in 

connection with the issuance of trust 

preferred securities.1 Currently, for 

53322 Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 

trust, in which a BHC owns all of the common 

securities. The special purpose entity’s sole asset is 

a deeply subordinated note issued by the BHC that 

typically has a fixed maturity of 30 years. 

2The Board also would consider subordinated 

debt associated with the issuance of trust preferred 

securities as covered by any supervisory debt 

commitments with the Federal Reserve. 

3A BHC that is subject to the Capital Guidelines 

generally may count an amount of qualifying trust 

preferred securities as tier 1 capital up to 25 percent 

of the sum of the BHC’s core 1 capital elements. 12 

CFR part 225, appendix A, § II.A.1.b. 

4See 12 CFR part 225, appendix A, § II.A.1.b.ii. 

purposes of the Policy Statement, such 

subordinated debt on the parent 

company balance sheet is not treated as 

debt; however, the cash-flow impact of 

the subordinated debt is included in the 

Board’s review of the financial 

condition of a BHC. The Board is now 

proposing to clarify that subordinated 

debt associated with trust preferred 

securities would be considered debt for 

most purposes under the Policy 

Statement. In particular, such 

subordinated debt would be included as 

debt in determining whether (i) a 

qualifying small BHC’s acquisition debt 

is 75 percent or less of the purchase 

price; or (ii) a qualifying small BHC’s 

debt-to-equity ratio is greater than 1.0:1 

(the ratio above which a qualifying 

small BHC is subject to dividend 

restrictions and is not permitted to use 

the expedited applications processing 

procedures or obtain a waiver of stock 

redemption filing requirements under 

Regulation Y).2 However, in order to 

provide for more equitable treatment 

between qualifying small BHCs and 

larger BHCs that are subject to the 

Capital Guidelines,3 a qualifying small 

BHC may exclude from debt an amount 

of subordinated debt associated with 

trust preferred securities equaling up to 

25 percent of a small BHC’s equity (as 

defined in the Policy Statement), less 

parent company goodwill in 

determining compliance with these 

requirements. 

In addition, in order to give qualifying 

small BHCs sufficient time to conform 

their debt structures, the Board is 

proposing to provide for a five-year 

transition period during which 

subordinated debt associated with trust 

preferred securities issued on or prior to 

the publication date of this proposed 

rule would not be considered debt 

under the Policy Statement. Such a 

transition period generally would be 

consistent with the five-year transition 

period afforded to larger BHCs to meet 

the Board’s risk-based capital guidelines 

with respect to trust preferred 

securities.4 However, in the event that a 

qualifying small BHC issues additional 

subordinated debt associated with a 

new issuance of trust preferred 

securities after the date of this proposed 

rule, the temporary non-debt status of 

all the qualifying small BHC’s existing 

subordinated debt associated with trust 

preferred securities would be 

terminated. 

In any event, subordinated debt 

associated with trust preferred securities 

would not be included as debt in 

determining compliance with the 12- 

year debt reduction and 25-year debt 

retirement requirements of the Policy 

Statement. 

Small BHC Regulatory Reporting 

In order to assist the Federal Reserve 

in monitoring the financial health and 

operations of BHCs, the Board requires 

all BHCs to file certain reports with the 

Federal Reserve. One of the most 

important of the Federal Reserve 

reporting requirements is the Financial 

Statements for Bank Holding Companies 

(FR Y–9 series of reports; OMB No. 

7100–0128). Currently, BHCs with 

consolidated assets of less than $150 

million (and that also meet qualitative 

criteria similar to those in the Policy 

Statement) submit limited summary 

parent-only financial data semiannually 

on the FR Y–9SP. Currently, BHCs with 

consolidated assets of $150 million or 

more submit parent only financial data 

on the FR Y–9LP and consolidated 

financial data on the FR Y–9C quarterly. 

In the near future, the Federal Reserve 

plans to propose for comment revisions 

to the FR Y–9 series of reports for 2006 

(2006 proposal). Pending approval, 

these revisions would include 

increasing the FR Y–9SP reporting 

threshold from $150 million to $500 

million and conforming the FR Y–9SP 

reporting exception criteria to the 

proposed qualitative exception criteria 

under the Policy Statement and the 

Capital Guidelines. Under the 2006 

proposal, BHCs that meet the criteria for 

filing the FR Y–9SP would be exempt 

from filing the FR Y–9LP and FR Y–9C. 

Conversely, BHCs subject to the Capital 

Guidelines, including small BHCs that 

do not qualify under the revised Policy 

Statement and qualifying small BHCs 

that voluntarily elect to comply with the 

Capital Guidelines, would file the FR Y–

9LP and the FR Y–9C on a quarterly 

basis. 

Comments 

The Board seeks comments on all 

aspects of this proposal. Interested 

parties are encouraged to provide 

comments on the proposed increase to 

the asset threshold for the Policy 

Statement and the Capital Guidelines, 

and on whether the proposed $500 

million threshold should be further 

adjusted over time based upon an index 

and, if so, what would constitute an 

appropriate index for this purpose. 

Interested parties also are encouraged to 

provide comments on the proposed 

qualitative criteria that would determine 

whether the Policy Statement or the 

Capital Guidelines apply to a BHC with 

consolidated assets of less than $500 

million. 

Regulatory Flexibility Act Analysis 

Pursuant to section 605(b) of the 

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

et seq.), the Board has determined that 

this proposed rule would not have a 

significant impact on a substantial 

number of small entities, as defined in 

the Regulatory Flexibility Act. However, 

the proposed rule would reduce 

regulatory burden by exempting most 

BHCs with total consolidated assets of 

between $150 million and $500 million 

from the application of the Board’s 

Capital Guidelines. Moreover, although 

the proposal would treat subordinated 

debt associated with trust preferred 

securities as debt for most purposes 

under the Policy Statement, the 

proposal provides a substantial five-year 

transition period for subordinated debt 

associated with trust preferred securities 

issued on or prior to the publication 

date of the proposed rule. 

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 

has reviewed this proposed rulemaking 

under the authority delegated to the 

Board by the Office of Management and 

Budget. The Board has determined that 

this proposed rule does not involve a 

collection of information pursuant to 

the provisions of the Paperwork 

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

et seq.). As mentioned previously, 

related amendments to the FR Y–9 

series of reports will be proposed 

separately for comment in the near 

future. 

Plain Language 

Section 722 of the Gramm-LeachBliley Act requires the Federal banking 

agencies to use ‘‘plain language’’ in all 

proposed and final rules published after 

January 1, 2000. In light of this 

requirement, the Board has sought to 

present the proposed rule in a simple 

and straightforward manner. The Board 

invites comments on whether there are 

additional steps it could take to make 

the rule easier to understand. 

List of Subjects in 12 CFR Part 225 

Administrative practice and 

procedure, Banks, banking, Federal 

Reserve System, Holding companies, 

Federal Register / Vol. 70, No. 173 / Thursday, September 8, 2005 / Proposed Rules 53323 

Reporting and recordkeeping 

requirements, Securities. 

Federal Reserve System 

12 CFR Chapter II 

Authority and Issuance 

For the reasons set forth in the 

preamble, part 225 of chapter II of title 

12 of the Code of Federal Regulations is 

proposed to be amended as set forth 

below: 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

1. The authority citation for part 225 

continues to read as follows: 

Authority: 12 U.S.C. 1817(j)(13), 1818, 

1828(o), 1831i, 1831p–1, 1843( c)(8), 1844(b), 

1972(1), 3106, 3108, 3310, 3331–3351, 3907, 

and 3909; 15 U.S.C. 6801 and 6805. 

2. Appendix A to part 225 is amended 

as follows: 

a. In section I, the fifth undesignated 

paragraph is revised. 

b. In section I, footnote 4 is removed 

and reserved. 

Appendix A to Part 225—Capital 

Adequacy Guidelines for Bank Holding 

Companies: Risk Based Measure 

I. * * * 

* * * * * 

The risk-based guidelines apply on a 

consolidated basis to any bank holding 

company with consolidated assets of $500 

million or more. The risk-based guidelines 

also apply on a consolidated basis to any 

bank holding company with consolidated 

assets of less than $500 million if the holding 

company (i) is engaged in significant 

nonbanking activities either directly or 

through a nonbank subsidiary; (ii) conducts 

significant off-balance sheet activities 

(including securitization and asset 

management or administration) either 

directly or through a nonbank subsidiary; or 

(iii) has a material amount of debt or equity 

securities outstanding (other than trust 

preferred securities) that are registered with 

the Securities and Exchange Commission 

(SEC). The Federal Reserve may apply the 

risk-based guidelines at its discretion to any 

bank holding company, regardless of asset 

size, if such action is warranted for 

supervisory purposes. 

* * * * * 

3. Appendix C to part 225 is amended 

as follows: 

a. In section 1, the first undesignated 

paragraph is revised. 

b. In section 1, footnote 1 is removed 

and reserved. 

c. In section 2.A., a new paragraph is 

added after the first paragraph in 

footnote 3. 

Appendix C to Part 225—Small Bank 

Holding Company Policy Statement 

* * * * * 

1. * * * 

This policy statement applies only to bank 

holding companies with pro forma 

consolidated assets of less than $500 million 

that (i) are not engaged in significant 

nonbanking activities either directly or 

through a nonbank subsidiary; (ii) do not 

conduct significant off-balance sheet 

activities (including securitization and asset 

management or administration) either 

directly or through a nonbank subsidiary; 

and (iii) do not have a material amount of 

debt or equity securities outstanding (other 

than trust preferred securities) that are 

registered with the Securities and Exchange 

Commission. The Board may in its discretion 

exclude any bank holding company, 

regardless of asset size, from the policy 

statement if such action is warranted for 

supervisory purposes. 

* * * * * 

2. * * * 

A. * * * 

3 * * * 

Subordinated debt associated with trust 

preferred securities generally would be 

treated as debt for purposes of paragraphs 2C, 

3A, 4Ai, and 4Bi of this policy statement. A 

bank holding company, however, may 

exclude from debt an amount of subordinated 

debt associated with trust preferred securities 

up to 25 percent of the holding company’s 

equity (as defined below) less goodwill on 

the parent company’s balance sheet in 

determining compliance with the 

requirements of such paragraphs of the 

policy statement. In addition, a bank holding 

company that has not issued subordinated 

debt associated with trust preferred securities 

after September 8, 2005, may exclude from 

debt any subordinated debt associated with 

trust preferred securities until September 8, 

2010. Subordinated debt associated with 

trust preferred securities will not be included 

as debt in determining compliance with any 

other requirements of this policy statement. 

* * * * * 

4. Appendix D to part 225 is amended as 

follows: 

a. In section I., paragraph b. is revised. 

b. In section I.b., footnote 2 is removed and 

reserved. 

Appendix D to Part 225—Capital 

Adequacy Guidelines for Bank Holding 

Companies: Tier 1 Leverage Measure 

I. * * * 

b. The tier 1 leverage guidelines apply on 

a consolidated basis to any bank holding 

company with consolidated assets of $500 

million or more. The tier 1 leverage 

guidelines also apply on a consolidated basis 

to any bank holding company with 

consolidated assets of less than $500 million 

if the holding company (i) is engaged in 

significant nonbanking activities either 

directly or through a nonbank subsidiary; (ii) 

conducts significant off-balance sheet 

activities (including securitization and asset 

management or administration) either 

directly or through a nonbank subsidiary; or 

(iii) has a material amount of debt or equity 

securities outstanding (other than trust 

preferred securities) that are registered with 

the Securities and Exchange Commission. 

The Federal Reserve may apply the tier 1 

leverage guidelines at its discretion to any 

bank holding company, regardless of asset 

size, if such action is warranted for 

supervisory purposes. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, September 1, 2005. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 05–17740 Filed 9–7–05; 8:45 am] 

BILLING CODE 6210–02–P 

SOCIAL SECURITY ADMINISTRATION 

20 CFR Parts 404 and 416 

[Regulation Nos. 4 and 16] 

RIN 0960–AG28 

Revised Medical Criteria for Evaluating 

Growth Impairments 

AGENCY: Social Security Administration. 

ACTION: Advance notice of proposed 

rulemaking. 

SUMMARY: We are planning to update 

and revise the rules we use to evaluate 

growth impairments of individuals 

under age 18 who apply for, or receive, 

disability benefits under title II and 

Supplemental Security Income (SSI) 

payments based on disability under title 

XVI of the Social Security Act (the Act). 

The rules we plan on revising are in 

section 100.00 in the Listing of 

Impairments in appendix 1 to subpart P 

of part 404 of our regulations (the 

listings). We invite you to send us 

comments and suggestions for updating 

and revising these rules. 

After we have considered your 

comments and suggestions, as well as 

information about advances in medical 

knowledge, treatment, and methods of 

evaluating growth impairments, along 

with our program experience, we intend 

to publish for public comment a Notice 

of Proposed Rulemaking (NPRM) that 

will propose specific revisions to the 

rules. 

DATES: To be sure your comments are 

considered, we must receive them by 

November 7, 2005. 

ADDRESSES: You may give us your 

comments by: using our Internet site 

facility (i.e., Social Security Online) at 

http://policy.ssa.gov/erm/ 

rules.nsf.Rules+Open+To+Comment or 

the Federal eRulemaking Portal at 

http://www.regulations.gov; e-mail to 

regulations@ssa.gov; telefax to (410) 

966–2830, or letter to the Commissioner 

of Social Security, P.O. Box 17703, 

Baltimore, Maryland 21235–7703. You 

may also deliver them to the Office of