[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 33842-33843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16724]


=======================================================================
-----------------------------------------------------------------------

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 324

RIN 3067-AB77


Agricultural Loan Loss Amortization

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: As part of the FDIC's systematic review of its regulations and 
written policies under section 303(a) of the Riegle Community 
Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is 
removing its regulation governing agricultural loan loss amortization. 
This action is needed to eliminate the regulation when it becomes 
obsolete on January 1, 1999.

EFFECTIVE DATE: January 1, 1999.

FOR FURTHER INFORMATION CONTACT: Robert W. Walsh, Manager, Planning and 
Program Development, (202) 898-6896, Division of Supervision; Susan van 
den Toorn, Counsel, (202) 898-8707, Legal Division, FDIC, 550 17th 
Street, N.W., Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION: The FDIC is conducting a systematic review 
of its regulations and written policies. Section 303(a) of the CDRI (12 
U.S.C. 4803(a)) requires each federal banking agency to streamline and 
modify its regulations and written policies in order to improve 
efficiency, reduce unnecessary costs, and eliminate unwarranted 
constraints on credit availability. Section 303(a) also requires each 
federal banking agency to remove inconsistencies and outmoded and 
duplicative requirements from its regulations and written policies.
    As part of this review, the FDIC is removing 12 CFR part 324. This 
action is appropriate because the regulation implemented legislation 
which permitted agricultural banks to amortize qualified agricultural 
loan losses incurred only between 1984 and 1991 with a resulting 
amortization period not to exceed seven years. Consequently, this 
regulation will become obsolete at the end of the permissible 
amortization period. Therefore, the FDIC is eliminating the rule 
effective January 1, 1999. The Office of the Comptroller of the 
Currency (OCC), as part of its Regulation Review Program, has 
previously reviewed its regulation on Agricultural Loan Loss 
Amortization, 12 CFR part 35, and determined that the regulation 
becomes obsolete on January 1, 1999. The OCC issued a proposed rule on 
February 8, 1995 (60 FR 7467) and a final rule on May 24, 1995 (60 FR 
27401) to remove its regulation on January 1, 1999. The Federal Reserve 
Board (FRB) has under consideration a similar proposal with regard to 
12 CFR 208.15.
    Title VIII of the Competitive Equality Banking Act of 1987 (Act), 
Pub. L. 100-86, 101 Stat. 635 (1987), added 12 U.S.C. 1823(j) in an 
attempt to alleviate some of the financial pressures then facing 
agricultural banks. In particular, 12 U.S.C. 1823(j) permits an 
agricultural bank to amortize over a period not to exceed seven years: 
(1) Any loss on a qualified agricultural loan that the bank would 
otherwise be required to show on its annual financial statement for any 
year between December 31, 1983, and January 1, 1992; and (2) any loss 
resulting from the reappraisal of property that the bank owned or 
acquired between January 1, 1983, and January 1, 1992, in connection 
with a qualified agricultural loan. The FDIC implemented this statutory 
provision by promulgating 12 CFR part 324 with a final rule published 
on November 2, 1987 (52 FR 41968). Pursuant to section 1823(j)(3) of 
the Act, the OCC and the FRB issued substantively similar regulations. 
See, 12 CFR part 35 and 12 CFR 208.15 respectively.
    Because the statute requires that a loss occur on or before 
December 31, 1991, to qualify, and that the amortization period may not 
exceed seven years, the program becomes obsolete on January 1,

[[Page 33843]]

1999. Reflecting this fact, the FDIC's rule requires that loans under 
the program must be fully amortized by December 31, 1998. 12 CFR 
324.3(b).
    In light of the statutory termination of the agricultural loan loss 
amortization program, the FDIC is removing 12 CFR part 324, effective 
January 1, 1999, to obviate the need for any regulatory action in the 
future. Prior to that date, an annotation to part 324 in title 12 of 
the Code of Federal Regulations would indicate the effective date for 
removal of the part.

Exemption from Public Notice and Comment

    The FDIC believes that it is unnecessary to seek public comment on 
this rule because the agricultural loan loss amortization program 
becomes obsolete by operation of law on January 1, 1999. Accordingly, 
the rule is being adopted in final, rather than proposed, form with a 
protracted effective date that will coincide with cessation of the 
statutory program.

Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 605(b)), the FDIC hereby certifies that this regulation will not 
have a significant economic impact on a substantial number of small 
entities because only three institutions are affected. Accordingly, a 
regulatory flexibility analysis is not required. This regulation has no 
material impact on insured depository institutions and state nonmember 
banks, regardless of size.

Paperwork Reduction Act

    The collection of information contained in 12 CFR 324.7 has been 
approved by the Office of Management and Budget (OMB) under OMB Control 
Number 3064-0091. This final rule will remove as unnecessary, for the 
reasons set forth in the preamble, that collection of information 
effective January 1, 1999.

List of Subjects in 12 CFR Part 324

    Accounting, Agriculture, Banks, Banking, State nonmember banks, 
Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons set out in the preamble, and under the authority of 
12 U.S.C. 1823(j), chapter III of title 12 of the Code of Federal 
Regulations is amended as follows:

PART 324--[REMOVED]

    1. Part 324 is removed effective January 1, 1999.

    By Order of the Board of Directors.

    Dated at Washington, D.C., this 17th day of June, 1996.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Deputy Executive Secretary.
[FR Doc. 96-16724 Filed 6-28-96; 8:45 am]
BILLING CODE 6714-01-P