56756 Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules 

E-Government Act Compliance 

FSA is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

List of Subjects 

7 CFR Part 761 

Accounting, Loan programs— 

agriculture, Rural areas. 

7 CFR Part 762 

Agriculture, Credit, Loan programs— 

agriculture, Grant programs— 

agriculture, Reporting and 

recordkeeping requirements. 

For the reasons set out in the 

preamble, 7 CFR parts 761 and 762 are 

proposed to be amended as follows: 

PART 761—GENERAL PROGRAM 

ADMINISTRATION 

1. The authority citation for part 761 

continues to read as follows: 

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989. 

§ 761.2 [Amended] 

2. In § 761.2(b), remove the definition 

of ‘‘average agricultural loan customer.’’ 

PART 762—GUARANTEED FARM 

LOANS 

3. The authority citation for part 762 

continues to read as follows: 

Authority: 5 U.S.C. 301, 7 U.S.C. 1989. 

4. Amend § 762.124 by revising 

paragraphs (a)(2) and (a)(3) to read as 

follows: 

§ 762.124 Interest rate, terms, charges, 

and fees. 

(a) * * * 

(2) If a variable rate is used, it must 

be tied to an index or rate specifically 

agreed to between the lender and 

borrower in the loan instruments and 

the rate adjustments must be in 

accordance with normal practices of the 

lender for unguaranteed loans. Upon 

request, the lender must provide the 

Agency with copies of written rate 

adjustment practices. 

(3) At loan closing and at the time of 

loan restructuring, the interest rate on 

the guaranteed portion and the 

unguaranteed portion of a fixed or 

variable rate loan may not exceed the 

following, as applicable: 

(i) For lenders utilizing a pricing 

model based on loan risk, the highest 

interest rate for tier of the lender’s risk 

rating matrix that reflects moderate risk. 

The lender must provide the Agency 

with this pricing model. 

(ii) For lenders without a risk based 

pricing model, the 10-year Treasury rate 

plus 350 basis points for FO and the 

New York Prime (as published in the 

Wall Street Journal) plus 250 basis 

points for OL. In the event of 

extraordinary conditions resulting in 

large interest rate changes or term 

structure changes, the Agency may 

temporarily set a different maximum 

rate under this paragraph as determined 

in consultation with the Department of 

the Treasury; and 

* * * * * 

5. Amend § 762.150 by revising 

paragraph (g) to read as follows: 

§ 762.150 Interest Assistance Program. 

* * * * * 

(g) Rate of Interest. The lender interest 

rate will be set according to 

§ 762.124(a). 

* * * * * 

Signed at Washington, DC, on September 

24, 2008. 

Glen L. Keppy, 

Acting Administrator, Farm Service Agency. 

[FR Doc. E8–22871 Filed 9–29–08; 8:45 am] 

BILLING CODE 3410–05–P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 3 

[Docket ID OCC–2008–0014] 

RIN 1557–AD13 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 208 and 225 

[Regulations H and Y; Docket No. R–1329] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 325 

RIN 3064–AD32 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Part 567 

[Docket No. OTS–2008–0010] 

RIN 1550–AC22 

Minimum Capital Ratios; Capital 

Adequacy Guidelines; Capital 

Maintenance; Capital: Deduction of 

Goodwill Net of Associated Deferred 

Tax Liability 

AGENCIES: Office of the Comptroller of 

the Currency, Treasury; Board of 

Governors of the Federal Reserve 

System; Federal Deposit Insurance 

Corporation; and Office of Thrift 

Supervision, Treasury. 

ACTION: Joint notice of proposed 

rulemaking. 

SUMMARY: The Office of the Comptroller 

of the Currency (OCC), the Board of 

Governors of the Federal Reserve 

System (Board), the Federal Deposit 

Insurance Corporation (FDIC), and the 

Office of Thrift Supervision (OTS) 

(collectively, the Agencies) are 

proposing to permit banks, bank holding 

companies, and savings associations 

(collectively, banking organizations) to 

reduce the amount of goodwill that a 

banking organization must deduct from 

tier 1 capital by the amount of any 

deferred tax liability associated with 

that goodwill. The proposed change 

would effectively reduce the amount of 

goodwill that a banking organization 

must deduct from tier 1 capital and 

would reflect a banking organization’s 

maximum exposure to loss in the event 

that such goodwill is impaired or 

derecognized for financial reporting 

purposes. 

DATES: Comments must be received on 

or before October 30, 2008. 

ADDRESSES: Comments should be 

directed to: 

OCC: Because paper mail in the 

Washington, DC area and at the OCC is 

subject to delay, commenters are 

encouraged to submit comments by the 

Federal eRulemaking Portal or e-mail, if 

possible. Please use the title ‘‘Capital 

Adequacy Guidelines; Deduction of 

Goodwill Net of Associated Deferred 

Tax Liability’’ to facilitate the 

organization and distribution of the 

comments. You may submit comments 

by any of the following methods: 

• Federal eRulemaking Portal— 

‘‘Regulations.gov’’: Go to http:// 

www.regulations.gov, under the ‘‘More 

Search Options’’ tab click next to the 

‘‘Advanced Docket Search’’ option 

where indicated, select ‘‘Comptroller of 

the Currency’’ from the agency dropdown menu, then click ‘‘Submit.’’ In the 

‘‘Docket ID’’ column, select ‘‘OCC– 

2008–0014’’ to submit or view public 

comments and to view supporting and 

related materials for this notice of 

proposed rulemaking. The ‘‘How to Use 

This Site’’ link on the Regulations.gov 


ebenthall on PROD1PC60 with PROPOSALS
Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules 56757 

home page provides information on 

using Regulations.gov, including 

instructions for submitting or viewing 

public comments, viewing other 

supporting and related materials, and 

viewing the docket after the close of the 

comment period. 

• E-mail: 

regs.comments@occ.treas.gov. 

• Mail: Office of the Comptroller of 

the Currency, 250 E Street, SW., Mail 

Stop 1–5, Washington, DC 20219. 

• Fax: (202) 874–4448. 

• Hand Delivery/Courier: 250 E 

Street, SW., Attn: Public Information 

Room, Mail Stop 1–5, Washington, DC 

20219. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

Number OCC–2008–0014’’ in your 

comment. In general, OCC will enter all 

comments received into the docket and 

publish them on the Regulations.gov 

Web site without change, including any 

business or personal information that 

you provide such as name and address 

information, e-mail addresses, or phone 

numbers. Comments received, including 

attachments and other supporting 

materials, are part of the public record 

and subject to public disclosure. Do not 

enclose any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

You may review comments and other 

related materials that pertain to this 

notice of proposed rulemaking by any of 

the following methods: 

• Viewing Comments Electronically: 

Go to http://www.regulations.gov, under 

the ‘‘More Search Options’’ tab click 

next to the ‘‘Advanced Document 

Search’’ option where indicated, select 

‘‘Comptroller of the Currency’’ from the 

agency drop-down menu, then click 

‘‘Submit.’’ In the ‘‘Docket ID’’ column, 

select ‘‘OCC–2008–0014’’ to view public 

comments for this rulemaking action. 

• Viewing Comments Personally: You 

may personally inspect and photocopy 

comments at the OCC’s Public 

Information Room, 250 E Street, SW., 

Washington, DC. For security reasons, 

the OCC requires that visitors make an 

appointment to inspect comments. You 

may do so by calling (202) 874–5043. 

Upon arrival, visitors will be required to 

present valid government-issued photo 

identification and submit to security 

screening in order to inspect and 

photocopy comments. 

• Docket: You may also view or 

request available background 

documents and project summaries using 

the methods described above. 

Board: You may submit comments, 

identified by Docket No. R–1329, 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 form in Room MP–500 of the 

Board’s Martin Building (20th and C 

Streets, NW., Washington, DC) between 

9 a.m. and 5 p.m. on weekdays. 

FDIC: You may submit comments by 

any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Agency Web Site: http:// 

www.FDIC.gov/regulations/laws/ 

federal/propose.html. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments/Legal 

ESS, Federal Deposit Insurance 

Corporation, 550 17th Street, NW., 

Washington, DC 20429. 

• Hand Delivered/Courier: The guard 

station at the rear of the 550 17th Street 

Building (located on F Street) on 

business days between 7 a.m. and 5 p.m. 

• E-mail: comments@FDIC.gov. 

Instructions: Comments submitted 

must include ‘‘FDIC’’ and ‘‘RIN # 3064– 

AD32.’’ Comments received will be 

posted generally without change to 

http://www.FDIC.gov/regulations/laws/ 

federal/propose.html, including any 

personal information provided. 

OTS: You may submit comments, 

identified by OTS–2008–0010 by any of 

the following methods: 

• Federal eRulemaking Portal— 

‘‘Regulations.gov’’: Go to http:// 

www.regulations.gov, under the ‘‘More 

Search Options’’ tab click next to the 

‘‘Advanced Docket Search’’ option 

where indicated, select ‘‘Office of Thrift 

Supervision’’ from the agency dropdown menu, then click ‘‘Submit.’’ In the 

‘‘Docket ID’’ column, select ‘‘OTS– 

2008–0010’’ to submit or view public 

comments and to view supporting and 

related materials for this notice of 

proposed rulemaking. The ‘‘How to Use 

This Site’’ link on the Regulations.gov 

home page provides information on 

using Regulations.gov, including 

instructions for submitting or viewing 

public comments, viewing other 

supporting and related materials, and 

viewing the docket after the close of the 

comment period. 

• E-mail address: 

regs.comments@ots.treas.gov. Please 

include OTS–2008–0010 in the subject 

line of the message and include your 

name and telephone number in the 

message. 

• Fax: (202) 906–6518. 

• Mail: Regulation Comments, Chief 

Counsel’s Office, Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552, Attention: OTS– 

2008–0010. 

• Hand Delivery/Courier: Guard’s 

Desk, East Lobby Entrance, 1700 G 

Street, NW., from 9 a.m. to 4 p.m. on 

business days, Attention: Regulation 

Comments, Chief Counsel’s Office, 

OTS–2008–0010. 

Instructions: All submissions received 

must include the agency name and 

docket number or Regulatory 

Information Number (RIN) for this 

rulemaking. All comments received will 

be posted without change to the OTS 

Internet Site at http://www.ots.treas.gov/ 

Supervision&Legal.Laws&Regulations, 

including any personal information 

provided. Comments received, 

including attachments and other 

supporting materials, are part of the 

public record and subject to public 

disclosure. Do not enclose any 

information in your comment or 

supporting materials that could be 

considered confidential or inappropriate 

for public disclosure. 

• Viewing Comments Electronically: 

Go to http://www.regulations.gov, under 

the ‘‘More Search Options’’ tab click 

next to the ‘‘Advanced Document 

Search’’ option where indicated, select 

‘‘Office of Thrift Supervision’’ from the 

agency drop-down menu and click 

‘‘Submit.’’ In the ‘‘Docket ID’’ column, 

select ‘‘OTS–2008–0010’’ to view public 

comments for this rulemaking action. 

• Viewing Comments On-Site: You 

may inspect comments at the Public 

Reading Room, 1700 G Street, NW., by 

appointment. To make an appointment 

call (202) 906–5922, send an e-mail to 

public.info@ots.treas.gov, or send a 

facsimile transmission to (202) 906– 

6518. (Prior notice identifying the 

materials you will be requesting will 

assist us in serving you.) We schedule 


ebenthall on PROD1PC60 with PROPOSALS
56758 Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules 

1Unless otherwise indicated, the term ‘‘banking 

organization’’ includes banks, savings associations, 

and bank holding companies (BHCs). The terms 

‘‘bank holding company’’ and ‘‘BHC’’ refer only to 

bank holding companies regulated by the Board. 

2See the Agencies’ capital rules for more detail 

on what assets are required to be deducted from 

regulatory capital and how these deductions are 

calculated. See 12 CFR part 3 (national banks); 12 

CFR part 208 (state member banks); 12 CFR part 225 

(bank holding companies); 12 CFR part 325 (state 

nonmember banks); and 12 CFR part 567 (savings 

associations). This proposal is focused on the 

deduction of goodwill from tier 1 capital. 

3Under FAS 141, application of the purchase 

method to combinations between mutual 

institutions was deferred, pending the issuance of 

interpretive guidance. A revised statement issued in 

December 2007, FAS 141(R), supersedes FAS 141 

for financial reporting years starting after December 

15, 2008. The revisions to FAS 141 incorporated in 

FAS 141(R) do not conflict with this proposal. FAS 

141(R) retains the fundamental requirements in 

FAS 141 that the acquisition method of accounting 

(which FAS 141 called the ‘‘purchase method’’) be 

used for all business combinations and extends 

these requirements to combinations between two or 

more mutual institutions. This proposal uses the 

term ‘‘purchase method’’ in order to be consistent 

with the current terminology under GAAP. 

4This example assumes that, throughout the tax 

amortization period, there is no impairment or 

appointments on business days between 

10 a.m. and 4 p.m. In most cases, 

appointments will be available the next 

business day following the date we 

receive a request. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Paul Podgorski, Risk Expert, 

Capital Policy (202–874–4755); or Jean 

Campbell, Senior Attorney, or Ron 

Shimabukuro, Special Counsel, 

Legislative and Regulatory Activities 

Division (202–874–5090). 

Board: Barbara Bouchard, Associate 

Director (202–452–3072 or 

barbara.bouchard@frb.gov), Mary 

Frances Monroe, Manager (202–452– 

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

Snyder, Supervisory Financial Analyst 

(202–728–5893 or 

david.snyder@frb.gov), Division of 

Banking Supervision and Regulation; or 

Mark Van Der Weide, Assistant General 

Counsel (202–452–2263 or 

mark.vanderweide@frb.gov) or Dinah 

Knight, Senior Attorney (202–452–3838 

or dinah.r.knight@frb.gov), Legal 

Division. For users of 

Telecommunications Device for the Deaf 

(‘‘TDD’’) only, contact 202–263–4869. 

FDIC: Christine M. Bouvier, Senior 

Policy Analyst (Bank Accounting) (202– 

898–7289), Accounting and Securities 

Disclosure Section, Division of 

Supervision and Consumer Protection; 

Nancy Hunt, Senior Policy Analyst 

(202–898–6643), Capital Markets 

Branch, Division of Supervision and 

Consumer Protection; Mark Handzlik, 

Senior Attorney (202–898–3990), or 

Michael Phillips, Counsel (202–898– 

3581), Supervision Branch, Legal 

Division. 

OTS: Christine A. Smith, Project 

Manager, Capital Policy (202–906– 

5740); Marvin Shaw, Senior Attorney, 

Regulations and Legislation (202–906– 

6639); Patricia M. Hildebrand, Senior 

Policy Accountant, Accounting (202– 

906–7048); or Craig Phillips, Senior 

Policy Accounting Fellow, Accounting 

(202–906–5628). 

SUPPLEMENTARY INFORMATION: 

Proposed Capital Treatment for 

Goodwill Arising From a Taxable 

Business Combination 

Under the Agencies’ existing 

regulatory capital rules, a banking 

organization 1 must deduct certain 

assets from tier 1 capital.2 A banking 

organization is permitted to net any 

associated deferred tax liability against 

some of those assets prior to deduction 

from tier 1 capital. Included among 

those assets are certain intangible assets 

arising from a nontaxable business 

combination. Such netting generally is 

not permitted for goodwill and other 

intangible assets arising from a taxable 

business combination. In these cases, 

the full or gross carrying amount of the 

asset is deducted. 

Statement of Financial Accounting 

Standards No. 141, Business 

Combinations (FAS 141), requires that 

all business combinations be accounted 

for using the purchase method of 

accounting for financial reporting 

purposes under generally accepted 

accounting principles (GAAP).3 FAS 

141 also requires that the acquiring 

entity assign the cost of the acquired 

entity to each identifiable asset acquired 

and liability assumed. The amounts 

assigned are based generally upon the 

fair values of such assets and liabilities 

at the acquisition date. If the cost of the 

acquired entity exceeds the net of the 

amounts so assigned, the acquiring 

entity must recognize the excess amount 

as goodwill. 

Statement of Financial Accounting 

Standards No. 142, Goodwill and Other 

Intangible Assets (FAS 142), prohibits 

the amortization of goodwill for 

financial reporting purposes under 

GAAP and requires periodic testing of 

the carrying amount of goodwill for 

impairment. However, a banking 

organization generally amortizes 

goodwill for tax purposes. This 

difference in treatment generally results 

in the recognition of a deferred tax 

liability under GAAP. The deferred tax 

liability increases over time and is 

reflected in corresponding reductions in 

earnings for financial reporting 

purposes until the goodwill has been 

fully amortized for tax purposes. The 

deferred tax liability generally is not 

reduced or reversed for financial 

reporting purposes unless the associated 

goodwill is written down upon a finding 

of impairment, or is otherwise 

derecognized. 

The Agencies have received requests 

from several banking organizations to 

permit the amount of goodwill arising 

from a taxable business combination 

that must be deducted from tier 1 

capital to be reduced by any associated 

deferred tax liability. The Agencies 

believe that this treatment would 

appropriately reflect a banking 

organization’s maximum exposure to 

loss if the goodwill becomes impaired or 

is derecognized under GAAP. 

Accordingly, the Agencies are 

proposing to amend their respective 

capital rules to permit a banking 

organization to reduce the amount of 

goodwill it must deduct from tier 1 

capital by the amount of any deferred 

tax liability associated with that 

goodwill. However, a banking 

organization that reduces the amount of 

goodwill deducted from tier 1 capital by 

the amount of the associated deferred 

tax liability would not be permitted to 

net this deferred tax liability against 

deferred tax assets when determining 

regulatory capital limitations on 

deferred tax assets. The proposed 

change would permit a banking 

organization to effectively reduce its 

regulatory capital deduction for 

goodwill to an amount equal to the 

maximum regulatory capital reduction 

that could occur as a result of the 

goodwill becoming completely impaired 

or derecognized. This would increase a 

banking organization’s tier 1 capital, 

which is used to determine the banking 

organization’s leverage ratio and riskbased capital ratios. 

For example, assume that goodwill in 

the amount of $9,000 arises from a 

taxable business combination. For 

income tax purposes, this goodwill is 

amortized over 15 years at a rate of $600 

per year ($9,000/15 years). However, the 

banking organization cannot recognize 

the $600 annual tax deduction for 

goodwill amortization in current income 

for financial reporting purposes. 

Assuming an income tax rate of 30 

percent, each year the banking 

organization would have an income tax 

reduction of $180 ($600 × 30%) and 

would recognize this amount as a 

deferred tax liability. Under GAAP, at 

the end of the first year, the banking 

organization would report a deferred tax 

liability of $180. At the end of the 15- 

year tax amortization period, it would 

report a cumulative deferred tax liability 

of $2,700 ($180 × 15 years).4


ebenthall on PROD1PC60 with PROPOSALS
Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules 56759 

derecognition of the goodwill and there is no 

change in the income tax rate. 

5As discussed above, under the Agencies’ 

existing regulatory capital rules, the full amount of 

any intangible asset acquired in a taxable business 

combination generally is deducted from tier 1 

capital, without netting of any associated deferred 

tax liability. 

6The FDIC’s and OTS’s regulatory capital rules 

do not include a definition of goodwill. Therefore, 

this aspect of the proposal would not affect the 

FDIC’s or OTS’s regulations. 

7See 5 U.S.C. 603(a). 

8See 5 U.S.C. 605(b). 

9See 13 CFR 121.201. 

10As of December 31, 2007, there were 

approximately 2,785 small bank holding 

companies, 932 small national banks, 467 small 

state member banks, 3,274 small state nonmember 

banks, and 428 small savings associations. 

Under the Agencies’ existing 

regulatory capital rules, the full carrying 

amount of goodwill ($9,000) is deducted 

from tier 1 capital. However, since the 

amortization of this asset for income tax 

purposes reduces income taxes by 

$2,700 over the 15-year period, the 

maximum amount of reduction in tier 1 

capital that the banking organization 

could experience in the event of total 

impairment of the goodwill at the end 

of the 15-year period is $6,300 ($9,000 

minus $2,700), not $9,000. Under this 

proposed rule, the total deduction from 

tier 1 capital at the end of the first year 

would be $8,820 ($9,000 minus $180) 

and, at the end of the fifteenth year, the 

deduction from tier 1 capital would be 

$6,300. 

The Agencies request comment on all 

aspects of this proposal. Specifically, 

the Agencies request comment on the 

impact that the proposed treatment 

could have on a banking organization’s 

regulatory capital ratios. 

The Agencies are considering for 

purposes of any final rule whether they 

should extend the treatment proposed 

for goodwill to other intangible assets 

acquired in a taxable business 

combination that currently are not 

deductible from tier 1 capital net of 

associated deferred tax liabilities.5

Accordingly, the Agencies request 

comment on whether they should 

permit any additional intangible assets 

to be deducted from tier 1 capital net of 

associated deferred tax liabilities. For 

such assets, the Agencies request 

information regarding the type of 

intangible asset and an estimate of the 

potential impact on banking 

organizations’ capital ratios from 

extending this proposal to cover those 

assets, as well as any other relevant data 

or pertinent information. 

Other Revisions 

The OCC is proposing to consolidate 

the various provisions permitting a bank 

to deduct assets from tier 1 capital on 

a basis net of any associated deferred tax 

liability together in one section of the 

regulatory text to make it easier to 

locate. In addition, the current 

regulatory text’s special treatment of 

intangible assets acquired due to a 

nontaxable purchase business 

combination exempts purchased 

mortgage servicing rights and purchased 

credit card relationships but does not 

make clear whether those assets may be 

netted, and also does not make clear 

whether intangible assets acquired in a 

taxable purchase business combination 

may be netted. 

The OCC is clarifying the appropriate 

treatment of disallowed servicing assets 

and purchased credit card relationships 

to be as follows: (1) Disallowed 

servicing assets may be deducted net of 

any associated deferred tax liability, 

regardless of the method by which the 

bank acquired such assets; and (2) 

servicing assets that are includable in 

tier 1 capital and purchased credit card 

relationships may not be deducted net 

of any associated deferred tax liability, 

regardless of the method by which the 

bank acquired such assets. The OCC is 

proposing these changes for the 

following reasons. The term ‘‘purchased 

mortgage servicing rights’’ is obsolete 

under GAAP. The OCC is replacing this 

term with the broader term ‘‘servicing 

assets’’ and making other clarifying 

changes to more accurately reflect the 

OCC’s existing interpretation of the 

current regulatory text. 

The OCC also is proposing technical 

changes to its regulatory capital rules. 

The OCC is proposing to amend the 

definition of goodwill to conform to 

FAS 141 and FAS 142. These changes 

are non-substantive and are being made 

because portions of the existing 

regulatory text became obsolete when 

FAS 141 made application of the 

purchase method of accounting for 

business combinations mandatory. In 

addition, the OCC is proposing 

technical amendments to revise cross 

references and other miscellaneous 

changes. 

The Board also is proposing technical 

changes to conform the definition of 

goodwill in its regulatory capital rules 

to GAAP, in particular, to the 

terminology used in FAS 141 and FAS 

142.6 These changes are non-substantive 

and are being made because parts of the 

existing regulatory text became obsolete 

when FAS 141 made application of the 

purchase method of accounting for 

business combinations mandatory. 

Further, the Board is proposing to 

amend Appendix A to 12 CFR part 225 

to remove obsolete text that relates to 

goodwill recognized by a BHC prior to 

December 31, 1992. 

The OTS is proposing four changes to 

its capital regulations. First, OTS is 

proposing a change to amend its 

definition of ‘‘intangible assets’’ in 12 

CFR 567.1 to delete obsolete text that 

excluded servicing assets from the 

definition of intangible assets, and to 

add regulatory text to the definition to 

include servicing assets as intangible 

assets. Second, OTS is proposing a 

change to its definition of ‘‘intangible 

assets’’ in 12 CFR 567.9 that would 

reference servicing assets as intangible 

assets according to 12 CFR 567.1. Third, 

OTS is proposing a change to conform 

its regulatory text to that of the other 

Agencies by adding regulatory text that 

provides for netting a deferred tax 

liability specifically related to an 

intangible asset (other than disallowed 

servicing assets that are already 

permitted to be deducted on a basis net 

of associated deferred tax liabilities, and 

purchased credit card relationships that 

may not be deducted on a basis net of 

associated deferred tax liabilities) 

arising from a nontaxable business 

combination against that intangible 

asset. Fourth, OTS is proposing other 

regulatory rule text changes that will 

conform its regulatory text to that of the 

other Agencies by adding language to its 

rules addressing the regulatory capital 

limitation on deferred tax assets. 

Regulatory Flexibility Act Analysis 

The Regulatory Flexibility Act (RFA) 

generally requires an agency that is 

issuing a proposed rule to prepare and 

make available for public comment an 

initial regulatory flexibility analysis that 

describes the impact of the proposed 

rule on small entities.7 The RFA 

provides that an agency is not required 

to prepare and publish an initial 

regulatory flexibility analysis if the 

agency certifies that the proposed rule 

will not, if promulgated, have a 

significant economic impact on a 

substantial number of small entities.8

Under regulations issued by the Small 

Business Administration,9 a small entity 

includes a bank holding company, 

commercial bank, or savings association 

with assets of $175 million or less 

(collectively, small banking 

organizations).10 The proposed rule 

would permit a banking organization to 

compute its deduction from regulatory 

capital of goodwill net of any associated 

deferred tax liability. The Agencies 

believe that this proposed rule will not 

have a significant economic impact on 

a substantial number of small entities 

because the proposed rule is elective 

and, thus, does not require a bank to 


ebenthall on PROD1PC60 with PROPOSALS
56760 Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules 

11See 44 U.S.C. 3506; 5 CFR 1320 Appendix A.1. 

12Consolidated Reports of Condition and Income 

(Call Report) (OMB Nos. 7100–0036, 3064–0052, 

1557–0081), Thrift Financial Report (TFR) (OMB 

No. 1550–0023), Consolidated Financial Statements 

for Bank Holding Companies (FR Y–9C) (OMB No. 

7100–0128). 

compute its deduction from regulatory 

capital of goodwill net of any associated 

deferred tax liability. Each agency 

certifies that the proposed rule will not, 

if promulgated in final form, have a 

significant economic impact on a 

substantial number of small entities. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995, the Agencies 

reviewed the proposed rule regarding 

the deduction of goodwill net of 

associated deferred tax liability as 

required by the Office of Management 

and Budget.11 No collections of 

information pursuant to the Paperwork 

Reduction Act are contained in the 

proposed rule. However, 

implementation of this proposed rule 

would necessitate clarifications to the 

Agencies’ quarterly regulatory reports 12

to reflect the proposed change in a 

banking organization’s tier 1 capital. 

Plain Language 

Section 722 of the Gramm-LeachBliley Act requires the Agencies to use 

plain language in all proposed and final 

rules published after January 1, 2000. In 

light of this requirement, the Agencies 

have sought to present the proposed 

rule in a simple and straightforward 

manner. The Agencies invite comment 

on whether the Agencies could take 

additional steps to make the proposed 

rule easier to understand. 

OCC and OTS Executive Order 12866 

Determinations 

Executive Order 12866 requires 

Federal agencies to prepare a regulatory 

impact analysis for agency actions that 

are found to be significant regulatory 

actions. Significant regulatory actions 

include, among other things, 

rulemakings that have an annual effect 

on the economy of $100 million or more 

or adversely affect in a material way the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

state, local, or tribal governments or 

communities. The OCC and OTS each 

have determined that its portion of the 

proposed rule is not a significant 

regulatory action. 

OCC and OTS Executive Order 13132 

Determinations 

The OCC and OTS each determined 

that its portion of the proposed 

rulemaking does not have any 

federalism implications for purposes of 

Executive Order 13132. 

OCC and OTS Unfunded Mandates 

Reform Act of 1995 Determinations 

Section 202 of the Unfunded 

Mandates Reform Act of 1995, Public 

Law 104–4 (UMRA) requires that an 

agency prepare a budgetary impact 

statement before promulgating a rule 

that includes a 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 (adjusted annually 

for inflation) in any one year. If a 

budgetary impact statement is required, 

section 205 of the UMRA also requires 

an agency to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating a rule. 

The OCC and OTS each have 

determined that its proposed rule will 

not result in expenditures by state, 

local, and tribal governments, or by the 

private sector, of $133 million or more. 

Accordingly, neither OCC nor OTS has 

prepared a budgetary impact statement 

or specifically addressed the regulatory 

alternatives considered. 

List of Subjects 

12 CFR Part 3 

Accounting, Administrative practice 

and procedure, Banks, Banking, Capital, 

National banks, Reporting and 

recordkeeping requirements, Risk. 

12 CFR Part 208 

Accounting, Administrative practice 

and procedure, Banks, Banking, Capital, 

Reporting and recordkeeping 

requirements, Risk. 

12 CFR Part 225 

Accounting, Administrative practice 

and procedure, Banks, Banking, Capital, 

Federal Reserve System, Reporting and 

recordkeeping requirements, Risk. 

12 CFR Part 325 

Accounting, Banks, Banking, 

Administrative practice and procedure, 

Capital, Reporting and recordkeeping 

requirements, Risk. 

12 CFR Part 567 

Capital, Reporting and recordkeeping 

requirements, Risk, Savings 

associations. 

Department of the Treasury 

Office of the Comptroller of the 

Currency 

12 CFR Chapter I 

Authority and Issuance 

For the reasons set forth in the 

common preamble, part 3 of chapter I of 

title 12 of the Code of Federal 

Regulations is proposed to be amended 

as follows: 

PART 3—MINIMUM CAPITAL RATIOS; 

ISSUANCE OF DIRECTIVES 

1. The authority citation for part 3 

continues to read as follows: 

Authority: 12 U.S.C. 93a, 161, 1818, 

1828(n), 1828 note, 1831n note, 1835, 3907 

and 3909. 

2. In appendix A to part 3, Section 1 

is amended by: 

a. Removing, in paragraph (c)(1), the 

third sentence, the phrase ‘‘section 

1(c)(8)’’ and by adding in lieu thereof 

the phrase ‘‘section 1(c)(10)’’; and 

b. Revising paragraph (c)(17) to read 

as follows: 

Appendix A to Part 3—Risk-Based 

Capital Guidelines 

Section 1. Purpose, Applicability of 

Guidelines, and Definitions. 

* * * * * 

(c) * * * 

(17) Goodwill is an intangible asset that 

represents the excess of the cost of an 

acquired entity over the net of the amounts 

assigned to assets acquired and liabilities 

assumed. 

* * * * * 

3. In appendix A to part 3, Section 2 

is amended by: 

a. Removing, in paragraphs (c) 

introductory text and (c)(1) introductory 

text, the word ‘‘items’’, and by adding 

in lieu thereof the word ‘‘assets’’; 

b. Removing, in paragraph (c)(1)(iii), 

the phrase ‘‘section 2(c)(3)’’ and by 

adding in lieu thereof the phrase 

‘‘sections 2(c)(3) and (2)(c)(6)’’; 

c. Removing, in paragraph (c)(1)(iv), 

the phrase ‘‘section 4(a)(3)’’ and by 

adding in lieu thereof the phrase 

‘‘section 4(a)(2)’’; 

d. Removing, in footnote 6, the phrase 

‘‘section 1(c)(14)’’ and by adding in lieu 

thereof the phrase ‘‘section 1(c)(18)’’, 

and removing the phrase ‘‘section 

4(a)(3)’’ and by adding in lieu thereof 

the phase ‘‘section 4(a)(2)’’; 

e. Removing paragraph (c)(2)(iv); 

f. Adding a heading to paragraph 

(c)(3)(i); 

g. Removing paragraph (c)(3)(iii) and 

redesignating paragraph (c)(3)(iv) as 

paragraph (c)(3)(iii); 

h. Removing paragraph (c)(4)(iii); 


ebenthall on PROD1PC60 with PROPOSALS
Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules 56761 

i. Redesignating paragraph (c)(6) as 

paragraph (c)(7) and adding a new 

paragraph (c)(6) to read as follows; and 

j. Revising the introductory text of 

newly designated paragraph (c)(7) by 

removing the word ‘‘items’’ and adding 

in lieu thereof the word ‘‘assets’’. 

The revision and addition are set forth 

below. 

Section 2. Components of Capital. 

* * * * * 

(c) * * * 

(3) * * * (i) Net unrealized gains and 

losses on available-for-sale securities. * * * 

* * * * * 

(6) Netting of Deferred Tax Liability. (i) 

Banks may elect to deduct the following 

assets from Tier 1 capital on a basis that is 

net of any associated deferred tax liability: 

(A) Goodwill; 

(B) Intangible assets acquired due to a 

nontaxable purchase business combination, 

except banks may not elect to deduct from 

Tier 1 capital on a basis that is net of any 

associated deferred tax liability, regardless of 

the method by which they were acquired: 

(1) Purchased credit card relationships; 

and 

(2) Servicing assets that are includable in 

Tier 1 capital; 

(C) Disallowed servicing assets; 

(D) Disallowed credit-enhancing interestonly strips; and 

(E) Nonfinancial equity investments, as 

defined in section 1(c)(1) of this appendix A. 

(ii) Deferred tax liabilities netted in this 

manner cannot also be netted against 

deferred tax assets when determining the 

amount of deferred tax assets that are 

dependent upon future taxable income as 

calculated under section 2(c)(1)(iii) of this 

appendix A. 

* * * * * 

Federal Reserve System 

12 CFR Chapter II 

Authority and Issuance 

For the reasons set forth in the 

common preamble, the Board of 

Governors of the Federal Reserve 

System proposes to amend parts 208 

and 225 of chapter II of title 12 of the 

Code of Federal Regulations as follows: 

PART 208—MEMBERSHIP OF STATE 

BANKING INSTITUTIONS IN THE 

FEDERAL RESERVE SYSTEM 

(REGULATION H) 

1. The authority citation for part 208 

continues to read as follows: 

Authority: 12 U.S.C. 24, 92(a), 248(a), 

248(c), 321–328a, 371d, 461, 481–486, 601, 

611, 1814, 1816, 1818, 1820(d)(9), 1823(j), 

1828(o), 1831, 1831o, 1831p–1, 1831r–1, 

1831w, 1831x, 1835(a), 1882, 2901–2907, 

3105, 3310, 3331–3351, and 3906–3909; 15 

U.S.C. 78b, 781(b), 781(g), 781(i), 78o–4(c)(5), 

78q, 78q–1, and 78w, 1681s, 1681w, 6801 

and 6805; 31 U.S.C. 5318; 42 U.S.C. 4012a, 

4104a, 4104b, 4106, and 4128. 

2. In appendix A to part 208, amend 

section II.B. by revising paragraphs 1.a., 

1.e.iii., and 1.f. to read as follows: 

Appendix A to Part 208—Capital 

Adequacy Guidelines for State Member 

Banks: Risk-Based Measure 

* * * * * 

II. * * * 

B. * * * 

1. * * * 

a. Goodwill. Goodwill is an intangible asset 

that represents the excess of the cost of an 

acquired entity over the net of the amounts 

assigned to assets acquired and liabilities 

assumed. Goodwill is deducted from the sum 

of core capital elements in determining Tier 

1 capital. 

* * * * * 

e. * * * 

iii. Banks may elect to deduct goodwill, 

disallowed mortgage servicing assets, 

disallowed nonmortgage servicing assets, and 

disallowed credit-enhancing I/Os (both 

purchased and retained) on a basis that is net 

of any associated deferred tax liability. 

Deferred tax liabilities netted in this manner 

cannot also be netted against deferred tax 

assets when determining the amount of 

deferred tax assets that are dependent upon 

future taxable income. 

f. Valuation. Banks must review the book 

value of goodwill and other intangible assets 

at least quarterly and make adjustments to 

these values as necessary. The fair value of 

mortgage servicing assets, nonmortgage 

servicing assets, purchased credit card 

relationships, and credit-enhancing I/Os also 

must be determined at least quarterly. This 

determination shall include adjustments for 

any significant changes in original valuation 

assumptions, including changes in 

prepayment estimates or account attrition 

rates. Examiners will review both the book 

value and the fair value assigned to these 

assets, together with supporting 

documentation, during the examination 

process. In addition, the Federal Reserve may 

require, on a case-by-case basis, an 

independent valuation of a bank’s goodwill, 

other intangible assets, or credit-enhancing 

I/Os. 

* * * * * 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

3. 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, 3906, 

3907, and 3909; 15 U.S.C. 1681s, 1681w, 

6801 and 6805. 

4. In appendix A to part 225, amend 

section II.B. by revising paragraphs 1.a., 

1.e.iii, and 1.f. to read as follows: 

Appendix A to Part 225—Capital 

Adequacy Guidelines for Bank Holding 

Companies: Risk-Based Measure 

* * * * * 

II. * * * 

B. * * * 

1. * * * 

a. Goodwill. Goodwill is an intangible asset 

that represents the excess of the cost of an 

acquired entity over the net of the amounts 

assigned to assets acquired and liabilities 

assumed. Goodwill is deducted from the sum 

of core capital elements in determining tier 

1 capital. 

* * * * * 

e. * * * 

iii. Bank holding companies may elect to 

deduct goodwill, disallowed mortgage 

servicing assets, disallowed nonmortgage 

servicing assets, and disallowed creditenhancing I/Os (both purchased and 

retained) on a basis that is net of any 

associated deferred tax liability. Deferred tax 

liabilities netted in this manner cannot also 

be netted against deferred tax assets when 

determining the amount of deferred tax assets 

that are dependent upon future taxable 

income. 

f. Valuation. Bank holding companies must 

review the book value of goodwill and other 

intangible assets at least quarterly and make 

adjustments to these values as necessary. The 

fair value of mortgage servicing assets, 

nonmortgage servicing assets, purchased 

credit card relationships, and creditenhancing I/Os also must be determined at 

least quarterly. This determination shall 

include adjustments for any significant 

changes in original valuation assumptions, 

including changes in prepayment estimates 

or account attrition rates. Examiners will 

review both the book value and the fair value 

assigned to these assets, together with 

supporting documentation, during the 

inspection process. In addition, the Federal 

Reserve may require, on a case-by-case basis, 

an independent valuation of a bank holding 

company’s goodwill, other intangible assets, 

or credit-enhancing I/Os. 

* * * * * 

Federal Deposit Insurance Corporation 

12 CFR Chapter III 

Authority and Issuance 

For the reasons set forth in the 

common preamble, part 325 of chapter 

III of title 12 of the Code of Federal 

Regulations is proposed to be amended 

as follows: 

PART 325—CAPITAL MAINTENANCE 

1. The authority citation for part 325 

continues to read as follows: 

Authority: 12 U.S.C. 1815(a), 1815(b), 

1816, 1818(a), 1818(b), 1818(c), 1818(t), 

1819(Tenth), 1828(c), 1828(d), 1828(i), 

1828(n), 1828(o), 1831o, 1835, 3907, 3909, 

4808; Pub. L. 102–233, 105 Stat. 1761, 1789, 

1790 (12 U.S.C. 1831n note); Pub. L. 102– 

242, 105 Stat. 2236, 2355, as amended by 

Pub. L. 103–325, 108 Stat. 2160, 2233 (12 

U.S.C. 1828 note); Pub. L. 102–242, 105 Stat. 

2236, 2386, as amended by Pub. L. 102–550, 

106 Stat. 3672, 4089 (12 U.S.C. 1828 note). 


ebenthall on PROD1PC60 with PROPOSALS
56762 Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules 

2. Section 325.5 is amended by 

revising paragraph (g)(5) to read as 

follows: 

§ 325.5 Miscellaneous. 

* * * * * 

(g) * * * 

(5) Goodwill and other intangible 

assets. This paragraph (g)(5) provides 

the capital treatment for intangible 

assets acquired in a nontaxable business 

combination, and goodwill acquired in 

a taxable business combination. 

(i) Intangible assets acquired in 

nontaxable purchase business 

combinations. A deferred tax liability 

that is specifically related to an 

intangible asset (other than mortgage 

servicing assets, nonmortgage servicing 

assets, and purchased credit card 

relationships) acquired in a nontaxable 

purchase business combination may be 

netted against this intangible asset. Only 

the net amount of this intangible asset 

must be deducted from Tier 1 capital. 

(ii) Goodwill acquired in a taxable 

purchase business combination. A 

deferred tax liability that is specifically 

related to goodwill acquired in a taxable 

purchase business combination may be 

netted against this goodwill. Only the 

net amount of this goodwill must be 

deducted from Tier 1 capital. 

(iii) Treatment of a netted deferred 

tax liability. When a deferred tax 

liability is netted in accordance with 

paragraph (g)(5)(i) or (ii) of this section, 

the taxable temporary difference that 

gives rise to this deferred tax liability 

must be excluded from existing taxable 

temporary differences when 

determining the amount of deferred tax 

assets that are dependent upon future 

taxable income and calculating the 

maximum allowable amount of such 

assets. 

(iv) Valuation. The FDIC in its 

discretion may require independent fair 

value estimates for goodwill and other 

intangible assets on a case-by-case basis 

where it is deemed appropriate for 

safety and soundness purposes. 

Office of Thrift Supervision 

12 CFR Chapter V 

For the reasons set forth in the 

common preamble, part 567 of chapter 

V of title 12 of the Code of Federal 

Regulations is proposed to be amended 

as follows: 

PART 567—CAPITAL 

1. The authority citation for part 567 

continues to read as follows: 

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

1464, 1467a, 1828 (note). 

2. Section 567.1 is amended by 

revising the definition for intangible 

assets to read as follows: 

§ 567.1 Definitions. 

* * * * * 

Intangible assets. The term intangible 

assets means assets considered to be 

intangible assets under generally 

accepted accounting principles. These 

assets include, but are not limited to, 

goodwill, core deposit premiums, 

purchased credit card relationships, 

favorable leaseholds, and servicing 

assets (mortgage and non-mortgage). 

Interest-only strips receivable and other 

nonsecurity financial instruments are 

not intangible assets under this 

definition. 

* * * * * 

3. Section 567.5 is amended by 

adding new paragraph (a)(2)(vii) to read 

as follows: 

§ 567.5 Components of capital. 

* * * * * 

(a) * * * 

(2) * * * 

(vii) Deferred tax assets that are not 

includable in core capital pursuant to 

§ 567.12 of this part are deducted from 

assets and capital in computing core 

capital. 

* * * * * 

4. Section 567.9 is amended by 

revising paragraph (c)(1) to read as 

follows: 

§ 567.9 Tangible capital requirements. 

* * * * * 

(c) * * * 

(1) Intangible assets (as defined in 

§ 567.1) and credit enhancing interestonly strips not includable in tangible 

capital under § 567.12. 

* * * * * 

5. Section 567.12 is amended by: 

a. Revising the heading and 

paragraphs (a) and (b)(3); 

b. Adding paragraph (b)(5); 

c. Revising paragraph (e)(3); and 

d. Adding paragraph (h) to read as 

follows: 

§ 567.12 Purchased credit card 

relationships, servicing assets, intangible 

assets (other than purchased credit card 

relationships and servicing assets), creditenhancing interest-only strips, and deferred 

tax assets. 

(a) Scope. This section prescribes the 

maximum amount of purchased credit 

card relationships, serving assets, 

intangible assets (other than purchased 

credit card relationships and servicing 

assets), credit-enhancing interest-only 

strips, and deferred tax assets that 

savings associations may include in 

calculating tangible and core capital. 

(b) * * * 

(3) Intangible assets, as defined in 

§ 567.1 of this part, other than 

purchased credit card relationships 

described in paragraph (b)(1) of this 

section, servicing assets described in 

paragraph (b)(2) of this section, and core 

deposit intangibles described in 

paragraph (g)(3) of this section, are 

deducted in computing tangible and 

core capital, subject to paragraph 

(e)(3)(ii) of this section. 

* * * * * 

(5) Deferred tax assets may be 

included (that is not deducted) in 

computing core capital subject to the 

restrictions of paragraph (h) of this 

section, and may be included in tangible 

capital in the same amount. 

* * * * * 

(e) * * * 

(3) * * * 

(i) For purposes of computing the 

limits and sublimits in paragraphs (e) 

and (h) of this section, core capital is 

computed before the deduction of 

disallowed servicing assets, disallowed 

purchased credit card relationships, 

disallowed credit-enhancing interestonly strips (purchased and retained), 

and disallowed deferred tax assets. 

(ii) A savings association may elect to 

deduct the following items on a basis 

net of deferred tax liabilities: 

(A) Disallowed servicing assets; 

(B) Goodwill such that only the net 

amount must be deducted from Tier 1 

capital; 

(C) Disallowed credit-enhancing 

interest only strips (both purchased and 

retained); and 

(D) Other intangible assets arising 

from non-taxable business 

combinations. A deferred tax liability 

that is specifically related to an 

intangible asset (other than purchased 

credit card relationships) arising from a 

nontaxable business combination may 

be netted against this intangible asset. 

The net amount of the intangible asset 

must be deducted from Tier 1 capital. 

(iii) Deferred tax liabilities that are 

netted in accordance with paragraph 

(e)(3)(ii) of this section cannot also be 

netted against deferred tax assets when 

determining the amount of deferred tax 

assets that are dependent upon future 

taxable income. 

* * * * * 

(h) Treatment of deferred tax assets. 

For purposes of calculating Tier 1 

capital under this part (but not for 

financial statement purposes) deferred 

tax assets are subject to the conditions, 

limitations, and restrictions described in 

this section. 

(1) Deferred tax assets that are 

dependent upon future taxable income. 

These assets are: 


ebenthall on PROD1PC60 with PROPOSALS
Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules 56763 

(i) Deferred tax assets arising from 

deductible temporary differences that 

exceed the amount of taxes previously 

paid that could be recovered through 

loss carrybacks if existing temporary 

differences (both deductible and taxable 

and regardless of where the related 

deferred tax effects are reported on the 

balance sheet) fully reverse at the 

calendar quarter-end date; and 

(ii) Deferred tax assets arising from 

operating loss and tax credit 

carryforwards. 

(2) Tier 1 capital limitations. (i) The 

maximum allowable amount of deferred 

tax assets that are dependent upon 

future taxable income, net of any 

valuation allowance for deferred tax 

assets, will be limited to the lesser of: 

(A) The amount of deferred tax assets 

that are dependent upon future taxable 

income that is expected to be realized 

within one year of the calendar quarterend date, based on a projected future 

taxable income for that year; or 

(B) Ten percent of the amount of Tier 

1 capital that exists before the deduction 

of any disallowed servicing assets, any 

disallowed purchased credit card 

relationships, any disallowed creditenhancing interest-only strips, and any 

disallowed deferred tax assets. 

(ii) For purposes of this limitation, all 

existing temporary differences should 

be assumed to fully reverse at the 

calendar quarter-end date. The recorded 

amount of deferred tax assets that are 

dependent upon future taxable income, 

net of any valuation allowance for 

deferred tax assets, in excess of this 

limitation will be deducted from assets 

and from equity capital for purposes of 

determining Tier 1 capital under this 

part. The amount of deferred tax assets 

that can be realized from taxes paid in 

prior carryback years and from the 

reversal of existing taxable temporary 

differences generally would not be 

deducted from assets and from equity 

capital. 

(iii) Notwithstanding paragraph 

(h)(2)(B)(ii) of this section, the amount 

of carryback potential that may be 

considered in calculating the amount of 

deferred tax assets that a savings 

association that is part of a consolidated 

group (for tax purposes) may include in 

Tier 1 capital may not exceed the 

amount which the association could 

reasonably expect to have refunded by 

its parent. 

(3) Projected future taxable income. 

Projected future taxable income should 

not include net operating loss 

carryforwards to be used within one 

year of the most recent calendar quarterend date or the amount of existing 

temporary differences expected to 

reverse within that year. Projected 

future taxable income should include 

the estimated effect of tax planning 

strategies that are expected to be 

implemented to realize tax 

carryforwards that will otherwise expire 

during that year. Future taxable income 

projections for the current fiscal year 

(adjusted for any significant changes 

that have occurred or are expected to 

occur) may be used when applying the 

capital limit at an interim calendar 

quarter-end date rather than preparing a 

new projection each quarter. 

(4) Unrealized holding gains and 

losses on available-for-sale debt 

securities. The deferred tax effects of 

any unrealized holding gains and losses 

on available-for-sale debt securities may 

be excluded from the determination of 

the amount of deferred tax assets that 

are dependent upon future taxable 

income and the calculation of the 

maximum allowable amount of such 

assets. If these deferred tax effects are 

excluded, this treatment must be 

followed consistently over time. 

Dated: September 18, 2008. 

John C. Dugan, 

Comptroller of the Currency. 

By order of the Board of Governors of the 

Federal Reserve System, September 23, 2008. 

Jennifer J. Johnson, 

Secretary of the Board. 

Dated at Washington, DC, this 18th day of 

September 2008. 

By order of the Board of Directors. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

Dated: September 23, 2008. 

By the Office of Thrift Supervision. 

John Reich, 

Director. 

[FR Doc. E8–22741 Filed 9–29–08; 8:45 am] 

BILLING CODE 4810–33–P (25%), 6210–01–P (25%), 

6714–01–P (25%), 6720–01–P (25%) 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2008–1043; Directorate 

Identifier 2008–NM–036–AD] 

RIN 2120–AA64 

Airworthiness Directives; 328 Support 

Services GmbH Dornier Model 328–100 

Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to adopt a new 

airworthiness directive (AD) for the 

products listed above. This proposed 

AD results from mandatory continuing 

airworthiness information (MCAI) 

originated by an aviation authority of 

another country to identify and correct 

an unsafe condition on an aviation 

product. The MCAI describes the unsafe 

condition as: 

During overhaul on a Dornier 328–100 

landing gear unit, parts of the MLG (main 

landing gear) main body and trailing arm 

bushings have been found corroded. 

Investigation showed that over time, these 

bushings can migrate, creating the risk of 

corrosion in adjacent areas. Such corrosion, 

if not detected, could cause damage to the 

MLG, possibly resulting in MLG functional 

problems or failure. 

* * * * * 

Functional problems or failure of the 

MLG could result in the inability of the 

MLG to extend or retract. The proposed 

AD would require actions that are 

intended to address the unsafe 

condition described in the MCAI. 

DATES: We must receive comments on 

this proposed AD by October 30, 2008. 

ADDRESSES: You may send comments by 

any of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: (202) 493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue, SE., 

Washington, DC 20590. 

• Hand Delivery: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–40, 1200 New Jersey Avenue, SE., 

Washington, DC, between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Operations office between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The AD docket 

contains this proposed AD, the 

regulatory evaluation, any comments 

received, and other information. The 

street address for the Docket Operations 

office (telephone (800) 647–5527) is in 

the ADDRESSES section. Comments will 

be available in the AD docket shortly 

after receipt. 

FOR FURTHER INFORMATION CONTACT: Dan 

Rodina, Aerospace Engineer, 

International Branch, ANM–116, FAA, 

Transport Airplane Directorate, 1601 

Lind Avenue, SW., Renton, Washington 


ebenthall on PROD1PC60 with PROPOSALS