66048 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the

Currency

12 CFR Part 25

[Docket No. 95–07]

RIN 1557–AB32

FEDERAL RESERVE SYSTEM

12 CFR Part 228

[Regulation BB; Docket No. R–0822]

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 345

RIN 3064–AB27

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563e

[Docket No. 95–203]

RIN 1550–AA93

Community Reinvestment Act

Regulations

AGENCIES: Office of the Comptroller of

the Currency, Treasury (OCC); Board of

Governors of the Federal Reserve

System (Board); Federal Deposit

Insurance Corporation (FDIC); Office of

Thrift Supervision, Treasury (OTS).

ACTION: Joint final rule.

SUMMARY: The OCC, Board, FDIC, and

OTS, (collectively, the Federal financial

supervisory agencies or agencies) are

issuing this final rule to make technical

corrections and clarifications to their

regulations concerning the Community

Reinvestment Act (CRA). Since the

publication of the agencies’ joint CRA

regulations, financial institutions and

others have alerted the agencies that two

errors exist and that the transition rules

are confusing. This final rule is

intended to correct the errors and clarify

the transition rules.

EFFECTIVE DATE: January 1, 1996.

FOR FURTHER INFORMATION CONTACT:

OCC: Stephen M. Cross, Deputy

Comptroller for Compliance, (202) 874–

5216; Matthew Roberts, Director, or

Margaret Hesse, Attorney, Community

and Consumer Law Division, (202) 874–

5750, Office of the Comptroller of the

Currency, 250 E Street SW.,

Washington, DC 20219.

Board: Glenn E. Loney, Associate

Director, Division of Consumer and

Community Affairs, (202) 452–3585;

Robert deV. Frierson, Assistant General

Counsel, Legal Division, (202) 452–

3711; or Leonard N. Chanin, Managing

Counsel, Division of Consumer and

Community Affairs, (202) 452–3667,

Board of Governors of the Federal

Reserve System, 20th Street and

Constitution Avenue NW., Washington,

DC 20551.

FDIC: Bobbie Jean Norris, Chief, Fair

Lending Section, Division of

Compliance and Consumer Affairs,

(202) 942–3090; Robert W. Mooney, Fair

Lending Specialist, Division of

Compliance and Consumer Affairs,

(202) 942–3092; or Ann Hume Loikow,

Counsel, Regulation and Legislation

Section, Legal Division, (202) 898–3796,

Federal Deposit Insurance Corporation,

550 17th Street NW., Washington, DC

20429.

OTS: Timothy R. Burniston, Assistant

Director for Compliance Policy, (202)

906–5629; Theresa A. Stark, Program

Analyst, Compliance Policy, (202) 906–

7054; or John Flannery, Attorney,

Regulations and Legislation Division,

Chief Counsel’s Office, (202) 906–7293,

Office of Thrift Supervision, 1700 G

Street NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

Introduction

The Federal financial supervisory

agencies jointly are amending their

regulations implementing the CRA (12

U.S.C. 2901 et seq.). This final rule

makes technical corrections and

clarifications to the agencies’ joint CRA

regulations, 12 CFR parts 25, 228, 345,

and 563e. Those regulations establish

the framework and criteria by which the

agencies assess an institution’s record of

helping to meet the credit needs of its

community, including low- and

moderate-income neighborhoods,

consistent with safe and sound

operations, and provide that the

agencies will take those assessments

into account in reviewing certain

applications.

Background

The agencies published a joint notice

of proposed rulemaking to amend their

CRA regulations on December 21, 1993

(58 FR 67466). In response to over 6,700

comments received, the agencies

published a second joint notice of

proposed rulemaking on October 7,

1994 (59 FR 51232). After considering

over 7,200 comments received in

response to the second joint proposed

rule, the agencies adopted a joint final

rule on May 4, 1995 (60 FR 22156) (1995

Rule).

Need for Final Rule

The agencies are amending their

recently adopted CRA regulations to

correct two technical errors and to

clarify the transition rules. Since the

publication of the 1995 Rule, a number

of financial institutions have expressed

confusion about the transition rules.

The agencies find that notice and

public procedure concerning this joint

final rule are impracticable,

unnecessary, and contrary to the public

interest under 5 U.S.C. § 553(b)(B). The

agencies make this finding because: (1)

This joint final rule involves only

technical corrections and clarifications

to the recently adopted 1995 Rule,

which was subject to public notice and

comment; (2) some institutions will be

subject to the performance tests and

standards of the 1995 Rule beginning on

January 1, 1996, so it is in the public

interest that the joint final rule be

effective at that time; and (3) this joint

final rule makes no substantive change

to the 1995 Rule, rather it makes

corrections and eliminates ambiguities

associated with the transition

requirements.

Furthermore, under 5 U.S.C.

§ 553(d)(3), the agencies have

determined to make this joint final rule

effective with less than 30 days prior

publication. The agencies find that there

is good cause for shortened notice due

to the minor nature of the changes, the

fact that some institutions will be

subject to the performance tests and

standards of the 1995 Rule beginning

January 1, 1996, and for other reasons

previously discussed.

Corrections

The agencies’ 1995 Rule contains two

errors. First, an internal cross reference

is incorrect. The cross reference is found

in the discussions about how an

institution may amend its strategic plan,

found at 12 CFR 25.27(h), 228.27(h),

345.27(h), and 563e.27(h). These

identical sections incorrectly state that

the amendment process must be done in

accordance with the public

participation requirements of

‘‘paragraph (c) of this section.’’ The

correct cross reference is ‘‘paragraph (d)

of this section.’’ The agencies are

amending their respective regulations to

reflect the correct cross reference.

Second, an external cross reference is

incorrect. In their joint preamble to the

final rule, the agencies discussed the

definition of ‘‘community development’’

contained in the regulations. In the

preamble, the agencies stated that ‘‘[t]he

section of the definition that discusses

activities that promote economic

development by financing small

business and farms refers to 13 CFR

121.802(a)(2), the size limitations for the

Small Business Administration’s

(SBA’s) Small Business Investment
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations 66049

Company and Development Company

programs’’ (60 FR 22159). The agencies’

final regulations do, indeed, reference

13 CFR 121.802(a)(2). However, because

of an amendment to the SBA regulation

(59 FR 16953) made during the agencies’

CRA rulemaking process, this citation

refers to only the SBA’s Development

Company Programs. The correct

reference should be 13 CFR 121.802(a)

(2) and (3), which include both the

Development Company and Small

Business Investment Company

Programs, as intended. Therefore, the

agencies are amending the cross

references in 12 CFR 25.12(h)(3),

228.12(h)(3), 345.12(h)(3), and

563e.12(g)(3). The citations are changed

from ‘‘13 CFR 121.802(a)(2)’’ to ‘‘13 CFR

121.802(a) (2) and (3).’’

Clarification

The agencies are amending their

transition rules, found at 12 CFR 25.51,

228.51, 345.51, and 563e.51. The

transition rules are correct for purposes

of incorporation into and expiration

from the Code of Federal Regulations.

However, the banks and thrifts that

must comply with them have expressed

confusion regarding how the rules

apply.

The transition rules state the final

date of applicability to all institutions

with regard to each particular provision

of the CRA regulation. However, the

transition rules inadequately explain the

transition from the former regulation to

the new regulation. The agencies are

clarifying that when an institution,

either mandatorily or voluntarily,

becomes subject to the requirements of

the performance tests and standards in

the 1995 Rule (12 CFR 25.21 through

25.27, 228.21 through 228.27, 345.21

through 345.27, and 563e.21 through

563e.27, as applicable), the institution

must comply with all aspects of the

1995 Rule (12 CFR 25.11 through 25.44,

228.11 through 228.44, 345.11 through

345.44, or 563e.11 through 563e.44)

applicable to it.

For example, the transition rules state

that the agencies will evaluate small

institutions under the small institution

performance standards described in 12

CFR 25.26, 228.26, 345.26, and 563e.26

on January 1, 1996. However, so that the

agencies may evaluate a small

institution under the small institution

performance standards, the small

institution must also comply with other

provisions of the regulation that are

pertinent. Those provisions would

include delineating an assessment area

(12 CFR 25.41, 228.41, 345.41, or

563e.41, as applicable), maintaining a

public file (12 CFR 25.43, 228.43,

345.43, or 563e.43, as applicable), and

providing the proper public notice (12

CFR 25.44, 228.44, 345.44, or 563e.44,

as applicable). The transition rules at 12

CFR 25.51(c) (4) and (5), 228.51(c) (4)

and (5) 345.51(c) (4) and (5), and

563e.51(c) (4) and (5), however, state

that these requirements do not become

applicable until January 1 or July 1,

1997. The 1997 dates refer to the last

point in time that these requirements

become effective for any institution.

However, the requirements become

effective for small institutions as soon as

the small institutions are subject to

evaluation under the small institution

performance standards.

In some cases, an institution may

choose to comply with the performance

standards and tests of the May 1995 rule

before it must do so. For instance, a

large institution may elect to be

evaluated under the lending, investment

and service tests (12 CFR 25.22 through

25.24, 228.22 through 228.24, 345.22

through 345.24, or 563e.22 through

563e.24, as applicable) before it is

required to do so in July of 1997. In this

case, the institution must comply with

all other provisions of the 1995 Rule.

Similarly, the transition rules state

that, for example, the section of the

former CRA regulation (12 CFR 25.6,

228.6, 345.6 or 563e.6, as applicable)

that addresses public notice

requirements does not expire until

January 1, 1997. However, the public

notice requirements (12 CFR 25.44,

228.44, 345.44 or 563e.44, as applicable)

in the 1995 Rule are different from the

former requirements. Institutions would

find it confusing, if not impossible, to

comply completely with both

provisions. Therefore, once an

institution either voluntarily or

mandatorily becomes subject to the

performance tests and standards of the

1995 Rule, the provisions of the former

CRA regulation (12 CFR 25.3 through

25.7, 228.3 through 25.7, 345.3 through

345.7, or 563e.3 through 563e.7, as

applicable) no longer apply to that

institution, even though they may

continue to apply to other institutions.

Therefore, to clarify these provisions,

the agencies are amending 12 CFR

25.51(a), 228.51(a), 345.51(a), and

563e.51(a) by adding at the end of

paragraph (a), a sentence explaining that

once an institution is either voluntarily

or mandatorily subject to the

performance tests and standards of the

1995 Rule, the institution must comply

with all of the requirements of the 1995

Rule and is no longer subject to the

requirements of the former CRA

regulation.

Regulatory Flexibility Act

Pursuant to section 605(b) of the

Regulatory Flexibility Act, the OCC,

Board, FDIC, and OTS hereby certify

that this joint final rule will not have a

significant economic impact on a

substantial number of small entities.

The agencies expect that this joint final

rule will not have significant secondary

or incidental effects on a substantial

number of small entities, or create any

additional burden on small entities. The

joint final rule merely makes technical

corrections to two cross-references and

clarifies requirements of the transition

rules already adopted by the agencies.

These changes will not increase and

may, in fact, reduce the burden on

institutions because they will make the

rules clearer. Accordingly, a regulatory

flexibility analysis is not required.

Paperwork Reduction Act of 1995

There are no collection of information

requirements in this joint final rule.

Executive Order 12866

OCC and OTS: The OCC and the OTS

have determined that this joint final rule

is not a significant regulatory action as

defined in Executive Order 12866.

Unfunded Mandates Reform Act of

1995

OCC and OTS: Section 202 of the

Unfunded Mandates Reform Act of

1995, Pub. L. 104–4, 109 Stat. 48 (1995)

(Unfunded Mandates Act), requires that

covered agencies prepare a budgetary

impact statement before promulgating a

rule that includes any Federal mandate

that may result in the expenditure by

State, local, and tribal governments, in

the aggregate, or by the private sector, of

$100 million or more in any one year.

If a budgetary impact statement is

required, section 205 of the Unfunded

Mandates Act also requires covered

agencies to identify and consider a

reasonable number of regulatory

alternatives before promulgating a rule.

As discussed in the preamble, this joint

final rule amends the agencies’ CRA

regulations to make two technical

corrections and one clarification.

Therefore, the OCC and the OTS have

determined that the joint 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 and the OTS have not prepared

a budgetary impact statement or

specifically addressed the regulatory

alternatives considered.
66050 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations

List of Subjects

12 CFR Part 25

Community development, Credit,

Investments, National banks, Reporting

and recordkeeping requirements.

12 CFR Part 228

Banks, Banking, Community

development, Credit, Federal Reserve

System, Investments, Reporting and

recordkeeping requirements.

12 CFR Part 345

Banks, Banking, Community

development, Credit, Investments,

Reporting and recordkeeping

requirements.

12 CFR Part 563e

Community development, Credit,

Investments, Reporting and

recordkeeping requirements, Savings

associations.

OFFICE OF THE COMPTROLLER OF THE

CURRENCY

12 CFR CHAPTER I

For the reasons discussed in the joint

preamble, 12 CFR part 25 is amended as

follows:

PART 25—[AMENDED]

1. The authority citation for part 25

continues to read as follows:

Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36,

93a, 161, 215, 215a, 481, 1814, 1816, 1828(c),

and 2901 through 2907.

§ 25.12 [Amended]

2. In § 25.12(h)(3), the cross reference

‘‘13 CFR 121.802(a)(2)’’ is revised to

read ‘‘13 CFR 121.802(a) (2) and (3)’’.

§ 25.27 [Amended]

3. In the last sentence of § 25.27(h),

the internal cross reference ‘‘paragraph

(c) of this section’’ is revised to read

‘‘paragraph (d) of this section’’.

4. Paragraph (a) of § 25.51 is amended

by adding a sentence at the end of the

paragraph to read as follows:

§ 25.51 Transition rules.

(a) * * * Notwithstanding paragraph

(c) of this section, when a bank, either

voluntarily or mandatorily, becomes

subject to the performance tests and

standards of §§ 25.21 through 25.27, the

bank must comply with all the pertinent

requirements of §§ 25.11 through 25.44,

and no longer must comply with the

requirements of §§ 25.3 through 25.7.

* * * * *

Dated: December 8, 1995.

Eugene A. Ludwig,

Comptroller of the Currency.

FEDERAL RESERVE SYSTEM

12 CFR CHAPTER II

For the reasons discussed in the joint

preamble, 12 CFR part 228 is amended

as follows:

PART 228—[AMENDED]

1. The authority citation for part 228

continues to read as follows:

Authority: 12 U.S.C. 321, 325, 1828(c),

1842, 1843, 1844, and 2901 et seq.

§ 228.12 [Amended]

2. In § 228.12(h)(3), the cross

reference ‘‘13 CFR 121.802(a)(2)’’ is

revised to read ‘‘13 CFR 121.802(a) (2)

and (3)’’.

§ 228.27 [Amended]

3. In the last sentence of § 228.27(h),

the internal cross reference ‘‘paragraph

(c) of this section’’ is revised to read

‘‘paragraph (d) of this section’’.

4. Paragraph (a) of § 228.51 is

amended by adding a sentence at the

end of the paragraph to read as follows:

§ 228.51 Transition rules.

(a) * * * Notwithstanding paragraph

(c) of this section, when a bank, either

voluntarily or mandatorily, becomes

subject to the performance tests and

standards of §§ 228.21 through 228.27,

the bank must comply with all the

pertinent requirements of §§ 228.11

through 228.44, and no longer must

comply with the requirements of

§§ 228.3 through 228.7.

* * * * *

By order of the Board of Governors of the

Federal Reserve System, December 8, 1995.

William W. Wiles,

Secretary of the Board.

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR CHAPTER III

For the reasons discussed in the joint

preamble, 12 CFR part 345 is amended

as follows:

PART 345—[AMENDED]

1. The authority citation for part 345

continues to read as follows:

Authority: 12 U.S.C. 1814–1817, 1819–

1820, 1828, 1831u and 2901–2907, 3103–

3104, and 3108(a).

§ 345.12 [Amended]

2. In § 345.12(h)(3), the cross

reference ‘‘13 CFR 121.802(a)(2)’’ is

revised to read ‘‘13 CFR 121.802(a) (2)

and (3)’’.

§ 345.27 [Amended]

3. In the last sentence of § 345.27(h),

the internal cross reference ‘‘paragraph

(c) of this section’’ is revised to read

‘‘paragraph (d) of this section’’.

4. Paragraph (a) of § 345.51 is

amended by adding a sentence at the

end of the paragraph to read as follows:

§ 345.51 Transition rules.

(a) * * * Notwithstanding paragraph

(c) of this section, when a bank, either

voluntarily or mandatorily, becomes

subject to the performance tests and

standards of §§ 345.21 through 345.27,

the bank must comply with all the

pertinent requirements of §§ 345.11

through 345.44, and no longer must

comply with the requirements of

§§ 345.3 through 345.7.

* * * * *

By order of the Board of Directors of the

Federal Deposit Insurance Corporation.

Dated: December 8, 1995.

Jerry L. Langley,

Executive Secretary.

OFFICE OF THRIFT SUPERVISION

12 CFR CHAPTER V

For the reasons discussed in the joint

preamble, 12 CFR part 563e is amended

as follows:

PART 563e—[AMENDED]

1. The authority citation for part 563e

continues to read as follows:

Authority: 12 U.S.C. 1462a, 1463, 1464,

1467a, 1814, 1816, 1828(c), and 2901 through

2907.

§ 563e.12 [Amended]

2. In § 563e.12(g)(3), the cross

reference ‘‘13 CFR 121.802(a)(2)’’ is

revised to read ‘‘13 CFR 121.802(a) (2)

and (3)’’.

§ 563e.27 [Amended]

3. In the last sentence of § 563e.27(h),

the internal cross reference ‘‘paragraph

(c) of this section’’ is revised to read

‘‘paragraph (d) of this section’’.

4. Paragraph (a) of § 563e.51 is

amended by adding a sentence at the

end of the paragraph to read as follows:

§ 563e.51 Transition rules.

(a) * * * Notwithstanding paragraph

(c) of this section, when a savings

association, either voluntarily or

mandatorily, becomes subject to the

performance tests and standards of

§§ 563e.21 through 563e.27, the savings

association must comply with all the

pertinent requirements of §§ 563e.11

through 563e.44, and no longer must

comply with the requirements of

§§ 563e.3 through 563e.7.

* * * * *
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations 66051

Dated: December 13, 1995.

By the Office of Thrift Supervision.

Jonathan L. Fiechter,

Acting Director.

[FR Doc. 95–30823 Filed 12–19–95; 8:45 am]

BILLING CODE 4810–33–P