Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules 63461

Six-rowed malting barley Two-rowed malting barley

Protein (dry basis) ............................................. 14.0% maximum ............................................... 14.0% maximum.

Plump kernels ................................................... 65.0% minimum ................................................ 75.0% minimum.

Thin kernels ....................................................... 10.0% maximum ............................................... 10.0% maximum.

Germination ....................................................... 95.0% minimum ................................................ 95.0% minimum.

Blight damaged ................................................. 4.0% maximum ................................................. 4.0% maximum.

Injured by mold ................................................. 5.0% maximum ................................................. 5.0% maximum.

Mold damaged .................................................. 0.4% maximum ................................................. 0.4% maximum.

Sprout damaged ................................................ 1.0% maximum ................................................. 1.0% maximum.

Injured by frost .................................................. 5.0% maximum ................................................. 5.0% maximum.

Frost damaged .................................................. 0.4% maximum ................................................. 0.4% maximum.

(c) Harvested production that does not

meet the minimum acceptance standards for

the factors listed in subsection 4(b) of this

option, but that is accepted by a buyer for

malting purposes.

(d) No reduction in value will be allowed

for moisture content; damage due to

uninsured causes; costs or reduced value

associated with drying, handling, processing,

or quality factors other than those contained

in subsection (b) of this section; or any other

costs associated with normal handling and

marketing of malting barley. All grade and

quality determinations must be based on the

results of objective tests. No indemnity will

be paid for any loss established by subjective

tests. We may obtain one or more samples of

the insured crop and have tests performed at

an official grain inspection location

established under the Grain Standards Act to

verify the result of any test. In the event of

a conflict in the test results, our results will

be used to determine the amount of

production to count. If failure to meet the

quality standards is due to insurable causes,

the quantity of such production may be

reduced for quality deficiencies by:

(1) Adding the maximum barley price

election under the Small Grains Crop

Provisions and the maximum additional

value price;

(2) Dividing this sum into the value per

bushel of the damaged production; and

(3) Multiplying the resulting factor (not to

exceed 1.0) by the number of bushels of

damaged production.

5. No claim under this option may be

settled until the earlier of :

(a) The date final disposition of production

from all acreage planted to approved malting

barley varieties is completed; or

(b) May 31 of the calendar year

immediately following the calendar year in

which the insured malting barley is normally

harvested. Production to count for malting

barley that has not been sold by this May 31

date will include all production established

in accordance with subsection 4(b) of this

option.

The limitations specified in subsections 5

(a) and (b) will not apply when all

production from the insured malting barley

unit grades U.S. No. 4 or worse in accordance

with the grades and grade requirements for

the subclasses Six-rowed barley, Two-rowed

barley, and the class Barley in accordance

with the Official United States Standards for

Grain.

6. In the event of loss or damage covered

by this policy, we will settle your claim by:

(a) Multiplying the insured acreage by the

malting barley production guarantee per acre;

(b) Multiplying the result by your elected

additional value price per bushel;

(c) Multiplying the number of bushels of

production to count by your elected

additional value price per bushel; and

(d) Subtracting the result of step (c) from

the result of step (b).

7. For example, assume you insure two

units of barley under the Small Grains Crop

Provisions in which you have a 100% share

and that are planted to approved malting

varieties. Assume that unit contains 40 acres.

Further assume that your production

guarantee under the Small Grains Crop

Provisions is 30 bushels per acre or a total

of 2,400 bushels. Your malting barley unit

production guarantee is limited to 2,100

bushels by subsection 2(b). A loss causes the

total production to count under the basic

barley policy to drop to 1,000 bushels, none

of which meet the minimum acceptance

standards covered under this option. The

indemnity for the malting barley unit would

be based on a combined production and

quality loss of 2,100 bushels. The indemnity

would be paid at the additional value price

per bushel. If the price were $0.60 per

bushel, the indemnity for the malting barley

unit would be $1,260.00 (2,100 × $0.60). The

basic loss is paid under the Small Grains

Crop Provisions for feed barley.

Done in Washington, D.C., on December 5,

1995.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 95–30085 Filed 12–6–95; 4:03 pm]

BILLING CODE 3410–FA–P

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Part 31

[Docket No. 95–29]

RIN 1557–AB40

Extensions of Credit to Insiders and

Transactions With Affiliates

AGENCY: Office of the Comptroller of the

Currency, Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Office of the Comptroller

of the Currency (OCC) proposes to

revise its rules governing extensions of

credit to national bank insiders and to

relocate to part 31 several interpretive

rulings dealing with transactions with

affiliates. This proposal is another

component of the OCC’s Regulation

Review Program to update and

streamline OCC regulations and to

reduce unnecessary regulatory costs and

other burdens. The proposal modernizes

and clarifies the insider lending rules

and reduces unnecessary regulatory

burdens where feasible, consistent with

statutory requirements.

DATES: Comments must be received by

February 9, 1996.

ADDRESSES: Comments should be

directed to: Office of the Comptroller of

the Currency, Communications

Division, 250 E Street, SW, Washington,

DC 20219, Attention: Docket No. 95–29.

Comments will be available for public

inspection and photocopying at the

same location. In addition, comments

may be sent by facsimile transmission to

FAX number (202) 874–5274 or by

electronic mail to

reg.comments@occ.treas.gov.

FOR FURTHER INFORMATION CONTACT:

Aline Henderson, Senior Attorney, Bank

Activities and Structure (202) 874–5300;

Emily McNaughton, National Bank

Examiner, Credit & Management Policy

(202) 874–5170; or Mark Tenhundfeld,

Senior Attorney, Legislative and

Regulatory Activities (202) 874–5090.

SUPPLEMENTARY INFORMATION:

Background

Summary of Regulation Review Program

The OCC proposes to revise 12 CFR

part 31 as another component of its

Regulation Review Program (Program).

The goal of the Program is to review all

of the OCC’s rules and to eliminate

provisions that do not contribute

significantly to maintaining the safety

and soundness of national banks or to

accomplishing the OCC’s other statutory

responsibilities. Another goal of the

Program is to clarify regulations so that

they more effectively convey the

standards the OCC seeks to apply.
63462 Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules

1Regulation O uses the term ‘‘unimpaired capital

and unimpaired surplus.’’ See 12 CFR 215.2(i). The

Board of Governors of the Federal Reserve System

(Board) recently amended Regulation O to conform

the definition of ‘‘unimpaired capital and

unimpaired surplus’’ to the definition of ‘‘capital

and surplus’’ as defined in part 32 (60 FR 31053,

June 13, 1995). Accordingly, the capital base from

which different limits are measured now is the

same, despite the different terminology.

2Section 22(g)(2) of the Federal Reserve Act

permits a member bank (and, therefore, a national

bank) to make a loan to one of its executive officers

if the loan is secured by a first lien on a dwelling

that the officer will own and use as his or her

residence after the loan is made. Section 22(g)(3)

permits a member bank to make a loan to an

executive officer to finance the education of the

officer’s children.

3The OCC currently exempts these loans from the

limits on loans to one borrower. See 12 CFR

32.3(c)(3), (4), and (6). The only difference between

the exceptions in proposed part 31 and the

exceptions currently available under part 32 is that

the proposal does not include the exemption for

loans to a Federal agency (12 CFR 32.3(c)(4)(i)),

given that this exemption does not apply to loans

to executive officers.

4Section 22(g)(1) of the Federal Reserve Act

requires that any loan by a member bank to one of

its executive officers be promptly reported to the

bank’s board of directors. The bank may make the

loan to the executive officer only if it is authorized

to make the loan to borrowers other than its officers,

the loan is on terms not more favorable than those

afforded other borrowers, and the officer has

submitted a detailed current financial statement.

Section 22(h)(2) authorizes a member bank to make

a loan to a bank insider only if the loan is made

on substantially the same terms as those prevailing

at the time for comparable transactions by the bank

with persons who are not insiders, the loan does

not involve more than the normal risk of repayment

or present other unfavorable features, and the bank

follows credit underwriting procedures that are not

less stringent than those applicable to comparable

transactions by the bank with non-insiders.

5The Office of Thrift Supervision’s regulation

automatically applies the Board’s insider lending

rule to thrifts. See 12 CFR 563.43. Accordingly, the

amendment to 12 CFR 215.5 also applies to thrifts.

The OCC also believes that the current restrictions

run counter to section 303(a)(1)(A) of the CDRI,

which requires the Federal banking agencies to

eliminate unwarranted constraints on credit

availability. The OCC has observed no significant

problems arising from the exemptions in the loansto-one-borrower context. This experience, coupled

with the safeguards provided by sections 22(g) and

The OCC intends for this proposal to

reduce regulatory costs and other

burdens on national banks by

eliminating regulatory requirements that

are neither essential to maintaining the

safety and soundness of national banks

nor needed to accomplish the OCC’s

statutory responsibilities. The proposal

also seeks comments on whether it

would be useful for the OCC to issue

additional guidance on the differences

between the requirements of part 31 and

12 CFR part 32 (Lending Limits).

Discussion

Current part 31 contains two subparts.

Subpart A implements 12 U.S.C. 375a(4)

and 375b(3) by setting a limit on the

amount that a national bank may lend

to any one of its executive officers other

than for housing- and education-related

loans and by establishing a threshold

above which approval of the bank’s

board of directors is required for any

loan to an insider. Subpart B

implements 12 U.S.C. 1817(k) and

1972(2)(G)(ii) by requiring a national

bank to disclose, upon request, the

names of its executive officers and

principal shareholders who borrow

more than specified amounts from the

bank itself or the bank’s correspondent

banks and to maintain records related to

requests for this information. Subpart B

also implements 12 U.S.C. 1972(2)(G)(i),

which requires a national bank’s

executive officers and principal

shareholders to report on loans they or

their related interests receive from the

bank’s correspondent banks.

This proposal creates three exceptions

to the limit on loans that a national bank

may make to its executive officers for

situations where the lending bank’s

position is clearly protected by virtue of

the type of collateral involved. It also

clarifies and simplifies the current rule

by removing provisions that are no

longer necessary. Finally, it invites

comments on whether guidance would

be helpful on the differences between

the insider lending limits and the loansto-one-borrower limits and, if so, the

areas where clarification may be most

needed.

The following discussion identifies

and explains material proposed changes

to part 31. The OCC invites general

comments on the proposed regulation as

well as specific comments on the areas

identified.

Title of Regulation

The current rule is titled ‘‘Extensions

of Credit to National Bank Insiders.’’

The proposed rule changes the title to

‘‘Extensions of Credit to Insiders and

Transactions with Affiliates.’’ This

change reflects the proposed relocation

to 12 CFR part 31 of several

interpretations regarding transactions

with affiliates that currently are set out

in part 7. (See ‘‘Interpretations’’ and text

that follows for further discussion of the

relocation.)

Subpart A—Loans to Insiders

Definitions (Proposed § 31.2)

Current § 31.3 states that the

definitions contained in §§ 215.2 and

215.3 of Regulation O (12 CFR part 215)

apply to subpart A of part 31.

Proposed § 31.2 also states that the

definitions used in §§ 215.2 and 215.3 of

Regulation O apply. However, because

proposed § 31.3 uses a term (capital and

surplus) that is Not defined in

Regulation O, proposed § 31.2 states that

‘‘capital and surplus’’ will be defined in

the same way as that term is defined in

part 32 (Lending Limits) (12 CFR

32.2(b)). This clarifies that national

banks calculate their loans-to-oneborrower lending limits and their

insider lending limits using the same

capital base.1

Loan Limits (Proposed § 31.3)

Current § 31.2(a) prohibits a national

bank from making a loan to an executive

officer if the loan, when aggregated with

all other loans outstanding from the

bank to the officer, would exceed the

higher of $25,000 or 2.5 percent of the

bank’s capital and unimpaired surplus,

up to $100,000. However, the current

rule exempts home mortgage and

educational loans from this limit

pursuant to sections 22(g)(2) and

22(g)(3) of the Federal Reserve Act (12

U.S.C. 375a (2) and (3)).2 Loans that do

not comply with sections 22(g)(2) or

22(g)(3) often are referred to as ‘‘other

purpose loans,’’ because they are for

purposes other than those identified in

those sections of the Federal Reserve

Act.

Pursuant to the rulemaking authority

in 12 U.S.C. 375(a)(4), proposed

§ 31.3(a) exempts a loan from the limits

applicable to ‘‘other purpose loans’’ if

the loan is secured by United States

obligations, obligations guaranteed by a

Federal agency, or a segregated deposit

account.3 The proposal effects this

change by incorporating the exceptions

set forth in the OCC’s Lending Limits

regulation at 12 CFR 32.3(c)(3), (c)(4)(ii),

and (c)(6). The proposal also clarifies

that the limits prescribed by § 31.3(a) do

not apply to executive officers of

affiliates of the lending bank.

The OCC believes that the proposed

exceptions, which entail situations

where the lending bank’s position is

secure by the nature of the collateral

required, are consistent with safe and

sound banking practices and would

eliminate unnecessary restrictions on

lending by national banks. Moreover, in

the insider lending context, loans that

qualify for the exceptions remain

subject to the safeguards found in

sections 22(g)(1) and 22(h)(2) of the

Federal Reserve Act (12 U.S.C. 375a(1)

and 375b(2)), thereby providing

additional protection against abuse.4

Both the Federal Deposit Insurance

Corporation (FDIC) and the Board have

amended their insider lending rules to

include exemptions similar to those

noted above. See 59 FR 66666

(December 28, 1994) (amending the

FDIC’s rule at 12 CFR 337.3) and 59 FR

8831 (February 24, 1994) (amending the

Board’s rule at 12 CFR 215.5).5 The OCC
Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules 63463

22(h), leads the OCC to conclude that limiting the

amount of loans secured in the manner in question

is unwarranted.

6This requirement applies only to aggregate

indebtedness that exceeds $25,000.

believes the disparity between its rule

and those of the other Federal banking

agencies is both unnecessary and

inconsistent with section 303 of the

Riegle Community Development and

Regulatory Improvement Act of 1994

(CDRI) (12 U.S.C. 4803), which requires

each agency to work with the other

Federal banking agencies to make

uniform all regulations and guidelines

implementing common statutory or

supervisory policies. CDRI, section

303(a)(2).

For these reasons, the OCC proposes

to eliminate the special restrictions on

extensions of credit by national banks to

their executive officers, provided the

loans are secured in the manner

previously described. The OCC seeks

comment on whether interested parties

agree that the exemptions are

appropriate for national banks.

Current § 31.2(b) requires a majority

of the directors of a national bank to

approve in advance a loan to one of the

bank’s executive officers, principal

shareholders, or directors (or to any

related interest of such persons) if the

amount of the loan, when aggregated

with other loans outstanding to that

insider and his or her related interests,

exceeds the higher of $25,000 or 5

percent of the bank’s capital and

surplus. In no event may a national

bank lend more than $500,000 to an

insider and his or her related interests

without the majority of the bank’s board

first approving the loan. Interested

directors must abstain from the voting.

Proposed § 31.3(b) amends the OCC’s

rule to conform to recent changes made

to the definitions of ‘‘director,’’

‘‘executive officer,’’ and ‘‘principal

shareholder’’ in Regulation O (12 CFR

215.2(d), (e), and (m), respectively). The

Board narrowed these definitions so that

they generally apply just to insiders of

the bank and not to its affiliates. At the

same time the Board narrowed these

definitions, it also clarified, in 12 CFR

215.4(b)(1), that the prior approval

requirements continue to apply to

insiders of the bank as well as insiders

of the bank’s affiliates. Proposed

§ 31.3(b) also makes this clarification.

It should be noted that the

exemptions set forth in proposed

§ 31.3(a) do not apply to proposed

§ 31.3(b). Thus, a loan secured, for

instance, by a segregated deposit

account still must be counted for

purposes of determining whether prior

approval is required under proposed

§ 31.3(b). This provides an additional

protection against insider abuse by

insuring that a bank’s directors will

have the opportunity to review loans to

insiders in amounts that exceed the

specified thresholds.

Subpart B—Reports and Public

Disclosure

Authority and OMB Control Number

(§ 31.4)

Current § 31.4 states the authority

pursuant to which subpart B is issued

and sets forth the Office of Management

and Budget (OMB) control number.

The proposed rule removes the

statement of the OMB control number

from part 31 but retains the statement of

authority. In a separate rulemaking, the

OCC will relocate all OMB control

numbers to 12 CFR part 4.

Definitions (Proposed § 31.5)

Current § 31.5(d) states, as a general

matter, that the definitions found in

subpart B of Regulation O (12 CFR

215.20 through 215.23) apply to subpart

B of part 31. Current § 31.5(d) also states

that, for purposes of the requirement

governing reports of loans to insiders

from the insider’s bank, the term ‘‘bank’’

means Federally-chartered insured

bank.

The proposal relocates the definition

section to proposed § 31.5 and

incorporates into subpart B of part 31

the definitions found in subpart B of

Regulation O. The proposal also

clarifies, for the reasons stated in the

discussion of proposed § 31.2, that the

term ‘‘capital and surplus’’ in part 31

has the same meaning as ‘‘capital and

surplus’’ as that term is used in 12 CFR

part 32. The proposal also removes an

obsolete reference to 12 U.S.C. 1817.

Disclosure of Insider Indebtedness

(Proposed § 31.6)

Current § 31.5 requires a national

bank to disclose, if requested, the names

of each executive officer and principal

shareholder whose aggregate

indebtedness (including debt of the

insider’s related interests) from either

the bank or its correspondent banks

equals or exceeds the lesser of 5 percent

of the bank’s capital and unimpaired

surplus or $500,000.6 The current rule

also requires a national bank to

maintain records of requests for

information for two years following the

request.

Proposed § 31.6 makes no substantive

change, but revises the current section’s

style in order to improve clarity.

Proposed § 31.6(a) uses the term

‘‘capital and surplus’’ instead of ‘‘capital

and unimpaired surplus,’’ which is used

in the current regulation. This change

conforms subpart B of part 31 to subpart

A. The proposal also clarifies, in

§ 31.6(c), that the two-year period for

retaining records of requests and the

disposition of requests begins on the

date of the request.

Reports by Executive Officers and

Principal Shareholders (Proposed

§ 31.7)

Current § 31.6 implements 12 U.S.C.

1972(2)(G)(i), which requires national

bank executive officers and principal

shareholders to file annual reports with

their bank’s board of directors showing

indebtedness from correspondent banks

to the insiders or their related interests.

The current rule states that ‘‘This

requirement is restated in Regulation O,

12 CFR 215.22,’’ thereby implicitly

incorporating the provisions of the

section cited.

Proposed § 31.7 clarifies that 12

U.S.C. 1972(2)(G)(i) requires reports

only if the executive officer or principal

shareholder (or their related interests)

have credit outstanding at some point

during the year. The proposed rule also

clarifies that all of the provisions of 12

CFR 215.22 apply. The OCC does not

intend any substantive change by these

proposed amendments.

Interpretations

On March 3, 1995, the OCC proposed

to relocate several interpretations that

currently appear in part 7. See 60 FR

11924, 11930 (proposing to relocate 12

CFR 7.7355 (debts of affiliates), 7.7360

(loans secured by stock or obligations of

an affiliate), 7.7365 (Federal funds

transactions between affiliates), and

7.7370 (deposits between affiliated

banks)). The OCC proposed to relocate

these interpretations to part 31 because

the interpretations and part 31 stem

from the same concern about persons or

entities taking undue advantage of

positions of influence and thereby

adversely affecting the safety and

soundness of a national bank. Given the

similarities in the supervisory concerns

that prompted both part 31 and the

interpretations, the OCC believes that it

is more appropriate to include the

interpretations in part 31 rather than in

a collection of unrelated interpretations.

The OCC also believes that relocating

the interpretations to part 31 will make

them easier to find.

The proposed rule restates the latter

three of these interpretations at new

§§ 31.100–31.102. Current § 7.7355,

which interprets the prohibition against

a national bank withdrawing its capital,

will be relocated to part 5 to consolidate

all provisions related to changes in a

national bank’s equity capital. The OCC
63464 Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules

invites comments on these

interpretations.

Additional Guidance Regarding

Differences Between Lending Limits

and Insider Lending Standards

The OCC seeks comment on whether

it would be useful for the OCC to issue

guidance clarifying the differences

between the loans-to-one-borrower

limits (12 CFR part 32) and the insider

lending limits (part 31). For instance,

the attribution rules and the definition

of ‘‘extension of credit’’ applied by the

OCC in the two regulations are similar

but sufficiently different that a banker or

bank counsel must keep straight two

different sets of rules that often will

apply to the same transaction. In many

cases, these differences are compelled

by differences in the underlying

statutory authority for the two parts.

The OCC requests that commenters who

believe that this type of guidance would

be helpful also identify areas where the

intersection of the two rules gives rise

to the most uncertainty. In this way, the

OCC can focus any guidance it provides

on those areas where help is most

needed. The OCC also requests

comment on whether the guidance

should appear in an appendix to part

31, as an OCC bulletin, or in some other

format.

The following table directs readers to

the provision(s) of the current

regulation, if any, upon which the

proposed provision is based, and

identifies generally the action taken.

DERIVATION TABLE

Revised sectionOriginal section Comments

31.1 ............. 31.1 ............. No change.

31.2 ............. 31.3 ............. Relocated and

modified.

31.3(a)(1) .... 31.2(a) ......... Modified.

31.3(a)(2) .... ..................... Added.

31.3(b) ......... 31.2(b) ......... Modified.

31.4 ............. 31.4 ............. Modified.

31.5 ............. 31.5(d) ......... Relocated and

modified.

31.6(a) ......... 31.5(a) ......... Modified.

31.6(b) ......... 31.5(b) ......... Modified.

31.6(c) ......... 31.5(c) ......... Modified.

31.7 ............. 31.6 ............. Modified.

31.100 ......... 7.7360 ......... Relocated and

modified.

31.101 ......... 7.7365 ......... Relocated.

31.102 ......... 7.7370 ......... Relocated and

modified.

Regulatory Flexibility Act

It is hereby certified that this

regulation will not have a significant

economic impact on a substantial

number of small entities. Accordingly, a

regulatory flexibility analysis is not

required. This regulation will reduce the

regulatory burden on national banks,

regardless of size, by eliminating and

clarifying current regulatory

requirements.

Executive Order 12866

The OCC has determined that this

proposal is not a significant regulatory

action under Executive Order 12866.

Unfunded Mandates Act of 1995

Section 202 of the Unfunded

Mandates Act of 1995 (Unfunded

Mandates Act) requires that an agency

prepare a budgetary impact statement

before promulgating a proposal likely to

result in a rule that includes a Federal

mandate that may result in the annual

expenditure of $100 million or more in

any one year by State, local, and tribal

governments, in the aggregate, or by the

private sector. If a budgetary impact

statement is required, section 205 of the

Unfunded Mandates Act requires an

agency to identify and consider a

reasonable number of alternatives before

promulgating a proposal. The OCC has

determined that the proposal, if

adopted, 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.

List of Subjects in 12 CFR Part 31

Credit, Disclosure, Executive officers,

National banks, Principal shareholders,

Reporting and recordkeeping

requirements.

Authority and Issuance

For the reasons set out in the

preamble, the OCC proposes to revise

part 31 of chapter I of title 12 of the

Code of Federal Regulations as set forth

below:

PART 31—EXTENSIONS OF CREDIT

TO INSIDERS AND TRANSACTIONS

WITH AFFILIATES

Subpart A—Loans to Insiders

Sec.

31.1 Authority.

31.2 Definitions.

31.3 Loan limits.

Subpart B—Reports and Public Disclosure

31.4 Authority.

31.5 Definitions.

31.6 Disclosure of insider indebtedness.

31.7 Reports by executive officers and

principal shareholders.

Interpretations

31.100 Loans secured by stock or

obligations of an affiliate.

31.101 Federal funds transactions between

affiliates.

31.102 Deposits between affiliated banks.

Authority: 12 U.S.C. 375a(4), 375b(3),

1817(k), and 1972(2)(G)(ii), as amended.

Subpart A—Loans to Insiders

§ 31.1 Authority.

The part is issued by the Comptroller

of the Currency pursuant to 12 U.S.C.

375a(4) and 375b(3), as amended.

§ 31.2 Definitions.

For the purposes of this subpart, the

definitions of the terms contained in

Regulation O, 12 CFR 215.2 and 215.3,

apply, except that the term ‘‘capital and

surplus’’ as used in this subpart has the

same meaning as ‘‘capital and surplus’’

as defined in 12 CFR 32.2(b).

§ 31.3 Loan limits.

(a) Lending limit on loans to executive

officer—(1) General limit. Except as

provided in paragraph (a)(2) of this

section, a national bank may not extend

credit to an executive officer of the bank

in an amount that, when aggregated

with all other outstanding extensions of

credit to that officer, exceeds the greater

of $25,000 or 2.5 percent of the bank’s

capital and surplus, or in any event

$100,000. The restrictions of this section

apply only to executive officers of the

national bank and not to executive

officers of its affiliates.

(2) Exceptions. The general limit

specified in paragraph (a)(1) of this

section does not apply to the following:

(i) A loan made for the purpose

described in 12 U.S.C. 375a(2) (housingrelated loans) or 12 U.S.C. 375a(3)

(loans made to finance the education of

the officer’s children); and

(ii) A loan secured in a manner

described in 12 CFR 32.3(c)(3) (secured

by United States obligations), 12 CFR

32.3(c)(4)(ii) (secured by obligations

guaranteed by a Federal agency), or 12

CFR 32.3(c)(6) (secured by a segregated

deposit account).

(b) Approval limits on all loans to an

insider. Notwithstanding paragraph (a)

of this section, a national bank may not

extend credit to an insider of the bank

or insider of its affiliates in an amount

that, when aggregated with all other

extensions of credit to that insider,

exceeds the greater of $25,000 or 5

percent of the bank’s capital and

surplus, or in any event $500,000,

unless:

(1) A majority of the lending bank’s

entire board of directors approves the

loan in advance; and

(2) The interested party abstains from

participating directly or indirectly in the

vote.
Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules 63465

Subpart B—Reports and Public

Disclosure

§ 31.4 Authority.

This subpart is issued by the

Comptroller of the Currency pursuant to

12 U.S.C. 1817(k) and 12 U.S.C.

1972(2)(G)(ii), as amended.

§ 31.5 Definitions.

The definitions set forth in 12 CFR

215.21 apply to this subpart, except that

‘‘capital and surplus’’ has the same

meaning as ‘‘capital and surplus’’ as

defined in 12 CFR 32.2(b), and, for

purposes of § 31.5(a)(1), ‘‘bank’’ means

an insured national bank.

§ 31.6 Disclosure of insider indebtedness.

(a) Upon receipt of a written request,

a national bank shall disclose the name

of each of its executive officers and

principal shareholders whose aggregate

indebtedness (including indebtedness of

related interests of such persons) from

either—

(1) The insider’s bank as of the latest

calendar quarter, or

(2) The bank’s correspondent banks at

any time during the previous calendar

year, equals or exceeds the lesser of 5

percent of the bank’s capital and surplus

or $500,000. This requirement applies

only if the insider’s (and his or her

related interest’s) aggregate

indebtedness described in paragraphs

(a)(1) or (a)(2) of this section exceeds

$25,000.

(b) A national bank need not disclose

additional information concerning

indebtedness of its executive officers

and principal shareholders. The bank

may base its disclosure under paragraph

(a)(1) of this section on the bank’s most

recent Consolidated Report of Condition

and Income. The bank may base its

disclosure under paragraph (a)(2) of this

section on information contained in the

reports referred to in § 31.6.

(c) A national bank shall maintain

records of any requests for information

under paragraph (a) of this section and

records of the disposition of these

requests for two years from the date of

the request.

§ 31.7 Reports by executive officers and

principal shareholders.

Pursuant to 12 U.S.C. 1972(2)(G)(i),

each executive officer and principal

shareholder of a national bank shall

report annually to the bank’s board of

directors his or her indebtedness, and

the indebtedness of his or her related

interests, from correspondent banks of

the insider’s bank. For purposes of this

section, the requirements stated in 12

CFR 215.22 (which implements the

insider reporting requirements imposed

by 12 U.S.C. 1972(2)(G)(i)) apply.

Interpretations

§ 31.100 Loans secured by stock or

obligations of an affiliate.

If a loan to an affiliate is otherwise

adequately secured in compliance with

12 U.S.C. 371c(c), a national bank may

take a security interest in the securities

of an affiliate as additional collateral

without the loan being considered a

covered transaction for purposes of the

limits on transactions with affiliates in

12 U.S.C. 371c(a)(1) (A) and (B).

§ 31.101 Federal funds transactions

between affiliates.

The limitations contained in 12 U.S.C.

371c apply to the sale of federal funds

by a national bank to an affiliate of the

bank.

§ 31.102 Deposits between affiliated

banks.

(a) General rule. The OCC considers a

deposit made by a bank in an affiliated

bank to be a loan or extension of credit

to the affiliate under 12 U.S.C. 371c.

These deposits must be secured in

accordance with 12 U.S.C. 371c(c).

However, a national bank may not

pledge assets to secure private deposits

unless otherwise permitted by law (see,

e.g., 12 U.S.C. 90 (permitting

collateralization of deposits of public

funds); 12 U.S.C. 92a (trust funds); and

25 U.S.C. 156 and 162a (Native

American funds)). Thus, unless one of

the exceptions to 12 U.S.C. 371c noted

in paragraph (b), of this section, applies

or unless another exception applies that

enables a bank to meet the collateral

requirements of 12 U.S.C. 371c(c), a

national bank may not:

(1) Make a deposit in an affiliated

national bank;

(2) Make a deposit in an affiliated

State-chartered bank unless the

affiliated State-chartered bank can

legally offer collateral for the deposit in

conformance with applicable State law

and 12 U.S.C. 371c; or

(3) Receive deposits from an affiliated

bank.

(b) Exceptions. The restrictions of 12

U.S.C. 371c (other than 12 U.S.C.

371c(a)(4), which requires affiliate

transactions to be consistent with safe

and sound banking practices) do not

apply to deposits:

(1) Made in the ordinary course of

correspondent business; or

(2) Made in an affiliate that qualifies

as a ‘‘sister bank’’ under 12 U.S.C.

371c(d)(1).

Dated: November 28, 1995.

Eugene A. Ludwig,

Comptroller of the Currency.

[FR Doc. 95–30028 Filed 12–8–95; 8:45 am]

BILLING CODE 4810–33–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 94–NM–226–AD]

Airworthiness Directives; Boeing

Model 747 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Supplemental notice of

proposed rulemaking; reopening of

comment period.

SUMMARY: This document revises an

earlier proposed airworthiness directive

(AD), applicable to certain Boeing

Model 747 series airplanes, that would

have required modification of the left

and right inboard elevator servo

assemblies and the hydraulic routing of

the right inboard elevator power control

package (PCP). That proposal was

prompted by a report of an

uncommanded right elevator deflection

after takeoff and reports of elevator/

control column bumps during landing

gear retraction on these airplanes. This

action revises the proposed rule by

revising the applicability of the

proposed AD to add additional

airplanes and additional part numbers

of the elevator PCP’s, and by including

additional service information. The

actions specified by this proposed AD

are intended to prevent uncommanded

elevator deflection, which could result

in structural damage and reduced

controllability of the airplane.

DATES: Comments must be received by

January 5, 1996.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, ANM–103,

Attention: Rules Docket No. 94–NM–

226–AD, 1601 Lind Avenue, SW.,

Renton, Washington 98055–4056.

Comments may be inspected at this

location between 9:00 a.m. and 3:00

p.m., Monday through Friday, except

Federal holidays.

The service information referenced in

the proposed rule may be obtained from

Boeing Commercial Airplane Group,

P.O. Box 3707, Seattle, Washington

98124–2207; and Parker Hannifin

Corporation, Customer Support

Operations, 16666 Von Karman Avenue,

Irvine, California 92714. This

information may be examined at the

FAA, Transport Airplane Directorate,

1601 Lind Avenue, SW., Renton,

Washington.

FOR FURTHER INFORMATION CONTACT:

Kathi N. Ishimaru, Aerospace Engineer,