Federal Register / Vol. 74, No. 103 / Monday, June 1, 2009 / Rules and Regulations 26081 

• Are the requirements in the rule 

clearly stated? If not, how could the rule 

be more clearly stated? 

• Do the regulations contain technical 

language or jargon that is not clear? If 

so, which language requires 

clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the regulation 

easier to understand? If so, what 

changes would make the regulation 

easier to understand? 

• Would more, but shorter, sections 

be better? If so, which sections should 

be changed? 

• What else could we do to make the 

regulation easier to understand? 

List of Subjects in 12 CFR Part 225 

Administrative practice and 

procedure, Banks, Banking, Federal 

Reserve System, Holding companies, 

Reporting and recordkeeping 

requirements, Securities. 

Board of Governors of the Federal 

Reserve System 

12 CFR Chapter II 

Authority and Issuance 

■ For the reasons stated in the preamble, 

the Board of Governors of the Federal 

Reserve System amends part 225 of 

chapter II of title 12 of the Code of 

Federal Regulations as follows: 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

■ 1. The authority citation for part 225 

continues to read as follows: 

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

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

1972(1), 3106, 3108, 3310, 3331–3351, 3906, 

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

6801 and 6805. 

■ 2. Appendix A to part 225 is amended 

as set forth below: 

■ a. In section II.A.1.a.iv., remove ‘‘and’’ 

from the end of paragraph (3), remove 

the period from the end of paragraph 

(4), add a semicolon and ‘‘and’’ to the 

end of subparagraph (4), and add a new 

paragraph (5) to read as follows; and 

■ b. In section II.A.1.b.i., amend 

paragraph (1) by adding the following 

sentence to the end of paragraph (1) to 

read as follows: 

Appendix A to Part 225—Capital 

Adequacy Guidelines for Bank Holding 

Companies: Risk-Based Measure 

II. * * * 

A. * * * 

1. * * * 

a. * * * 

iv. * * * 

(5) Subordinated debentures issued to the 

Treasury under the TARP (TARP 

Subordinated Securities) established by the 

EESA by a bank holding company that has 

made a valid election to be taxed under 

Subchapter S of Chapter 1 of the U.S. Internal 

Revenue Code (S–Corp BHC) or by a bank 

holding company organized in mutual form 

(Mutual BHC). 

b. * * * 

i. * * * 

(1) * * * Notwithstanding the foregoing, 

the full amount of TARP Subordinated 

Securities issued by an S–Corp BHC or 

Mutual BHC may be included in its tier 1 

capital, provided that the banking 

organization must include the TARP 

Subordinated Securities in restricted core 

capital elements for the purposes of 

determining the aggregate amount of other 

restricted core capital elements that may be 

included in tier 1 capital in accordance with 

this section. 

* * * * * 

■ 3. In appendix C to part 225, revise 

footnote 3 in section 2 to read as 

follows: 

Appendix C to Part 225—Small Bank 

Holding Company Policy Statement 

* * * * * 

2. * * * 

3 The term debt, as used in the ratio of debt 

to equity, means any borrowed funds 

(exclusive of short-term borrowings that arise 

out of current transactions, the proceeds of 

which are used for current transactions), and 

any securities issued by, or obligations of, the 

holding company that are the functional 

equivalent of borrowed funds. 

Subordinated debt associated with trust 

preferred securities generally would be 

treated as debt for purposes of paragraphs 

2.C., 3.A., 4.A.i., and 4.B.i. of this policy 

statement. A bank holding company, 

however, may exclude from debt an amount 

of subordinated debt associated with trust 

preferred securities up to 25 percent of the 

holding company’s equity (as defined below) 

less goodwill on the parent company’s 

balance sheet in determining compliance 

with the requirements of such paragraphs of 

the policy statement. In addition, a bank 

holding company subject to this policy 

statement that has not issued subordinated 

debt associated with a new issuance of trust 

preferred securities after December 31, 2005, 

may exclude from debt any subordinated 

debt associated with trust preferred securities 

until December 31, 2010. Bank holding 

companies subject to this policy statement 

also may exclude from debt until December 

31, 2010, any subordinated debt associated 

with refinanced issuances of trust preferred 

securities originally issued on or prior to 

December 31, 2005, provided that the 

refinancing does not increase the bank 

holding company’s outstanding amount of 

subordinated debt. Subordinated debt 

associated with trust preferred securities will 

not be included as debt in determining 

compliance with any other requirements of 

this policy statement. 

In addition, notwithstanding any other 

provision of this policy statement and for 

purposes of compliance with paragraphs 2.C., 

3.A., 4.A.i., and 4.B.i. of this policy 

statement, both a bank holding company that 

is organized in mutual form and a bank 

holding company that has made a valid 

election to be taxed under Subchapter S of 

Chapter 1 of the U.S. Internal Revenue Code 

may exclude from debt subordinated 

debentures issued to the United States 

Department of the Treasury under the 

Troubled Asset Relief Program established by 

the Emergency Economic Stabilization Act of 

2008, Division A of Pub. L. No. 110–343, 122 

Stat. 3765 (2008). 

The term equity, as used in the ratio of debt 

to equity, means the total stockholders’ 

equity of the bank holding company as 

defined in accordance with generally 

accepted accounting principles. In 

determining the total amount of stockholders’ 

equity, the bank holding company should 

account for its investments in the common 

stock of subsidiaries by the equity method of 

accounting. 

Ordinarily the Board does not view 

redeemable preferred stock as a substitute for 

common stock in a small bank holding 

company. Nevertheless, to a limited degree 

and under certain circumstances, the Board 

will consider redeemable preferred stock as 

equity in the capital accounts of the holding 

company if the following conditions are met: 

(1) The preferred stock is redeemable only at 

the option of the issuer; and (2) the debt to 

equity ratio of the holding company would 

be at or remain below .30:1 following the 

redemption or retirement of any preferred 

stock. Preferred stock that is convertible into 

common stock of the holding company may 

be treated as equity. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, May 21, 2009. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. E9–12626 Filed 5–29–09; 8:45 am] 

BILLING CODE 6210–02–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 225 

[Regulation Y; Docket No. R–1336] 

Capital Adequacy Guidelines: 

Treatment of Perpetual Preferred Stock 

Issued to the United States Treasury 

Under the Emergency Economic 

Stabilization Act of 2008 

AGENCY: Board of Governors of the 

Federal Reserve System (Board). 

ACTION: Final rule. 

SUMMARY: The Board is adopting a final 

rule to allow bank holding companies 

that have issued senior perpetual 

preferred stock to the U.S. Department 

of the Treasury under the capital 

purchase and other programs 

established by the Secretary of the 

Treasury under the Emergency 

26082 Federal Register / Vol. 74, No. 103 / Monday, June 1, 2009 / Rules and Regulations 

1 73 FR 62851 (October 22, 2008). A correction to 

a citation in the interim rule was published on 

October 27, 2008. 73 FR 63624 (October 27, 2008). 

2This final rule addresses only the regulatory 

capital treatment of the Senior Perpetual Preferred 

Stock. Details about the Capital Purchase Program 

and other programs established by the Treasury 

under the EESA, including eligibility requirements 

and the general terms and conditions of the senior 

perpetual preferred stock issued to Treasury and 

warrants associated with such stock, are available 

at http://www.financialstability.gov/. 

3See 12 U.S.C. 5201(1). 

4On November 17, 2008, the Treasury announced 

a term sheet under the CPP for privately-held 

financial institutions. On April 7, 2009, the 

Treasury announced term sheets for public and 

non-public holding companies with a top-tier 

parent that is organized in mutual form. These term 

sheets have substantially the same terms as the term 

sheet that was announced on October 14, 2008, for 

publicly-held financial institutions. For purposes of 

the interim rule and the final rule, the preferred 

stock issued to Treasury pursuant to these term 

sheets is considered to be senior perpetual preferred 

stock issued to Treasury under the TARP. 

5 In a separate rule document published 

elsewhere in today’s issue of the Federal Register, 

the Board is publishing an interim final rule to 

allow bank holding companies that are ‘‘Scorporations’’ to include in tier 1 capital 

subordinated notes issued to the Treasury under the 

CPP for purposes of the Board’s risk-based and 

leverage capital guidelines for bank holding 

companies. (June 1, 2009). 

6Treasury has announced that it is considering 

re-opening the Capital Purchase Program for 

institutions with total assets under $500 million 

and raising—from 3 percent to 5 percent of riskweighted assets—the amount of capital instruments 

for which qualifying institutions can apply. 

7See 12 CFR part 225, Appendix A, sections 

II.A.1.a.ii., II.A. a.iv.(1), II.A.1.b.i., and 

II.A.1.b.ii.(2). Until March 31, 2011, internationallyactive banking organizations generally are expected, 

but not required, to limit the amount of qualifying 

cumulative perpetual preferred stock (including 

related surplus) and qualifying trust preferred 

securities included in tier 1 capital to 15 percent 

of the sum of core capital elements. 12 CFR part 

225, Appendix A, section II.A.1.b.ii.(3). 

8One commenter recommended that the Board 

take steps to make its capital adequacy guidelines 

easier to understand. This comment is addressed 

below. 

Economic Stabilization Act of 2008, to 

include such capital instruments in tier 

1 capital for purposes of the Board’s 

risk-based and leverage capital 

guidelines for bank holding companies. 

DATES: The final rule will become 

effective on July 1, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Norah M. Barger, Deputy Director, (202) 

452–2402, or John F. Connolly, 

Manager, (202) 452–3621, Division of 

Banking Supervision and Regulation; or 

Kieran J. Fallon, Assistant General 

Counsel, (202) 452–5270, or Benjamin 

W. McDonough, Senior Attorney, (202) 

452–2036, Legal Division; Board of 

Governors of the Federal Reserve 

System, 20th Street and Constitution 

Ave., NW., Washington, DC 20551. For 

the hearing impaired only, 

Telecommunication Device for the Deaf 

(TDD), (202) 263–4869. 

SUPPLEMENTARY INFORMATION: On 

October 17, 2008, the Board issued an 

interim final rule (interim rule) to allow 

bank holding companies that issue 

senior perpetual preferred stock to the 

U.S. Department of Treasury (Treasury) 

under the Troubled Asset Relief 

Program (TARP) established by section 

101 of the Emergency Economic 

Stabilization Act of 2008 (Senior 

Perpetual Preferred Stock), to include 

such capital instruments in tier 1 capital 

for purposes of the Board’s risk-based 

and leverage capital guidelines for bank 

holding companies.1 The Board is now 

adopting the interim rule as a final rule 

without substantive changes.2

The Emergency Economic 

Stabilization Act of 2008 (EESA), 

Division A of Public Law 110–343, 122 

Stat. 3765 (2008), was intended, among 

other things, ‘‘to immediately provide 

authority and facilities that the 

Secretary of the Treasury can use to 

restore liquidity and stability to the 

financial system of the United States.’’ 3

Pursuant to the authorities granted by 

the EESA, and in order to restore 

liquidity and stability to the financial 

system, on October 14, 2008, Treasury 

announced the establishment of the 

Capital Purchase Program (CPP) under 

the TARP.4 Through the CPP, Treasury 

has provided capital to eligible banks, 

bank holding companies, savings and 

loan holding companies, and savings 

associations (collectively, banking 

organizations) by purchasing Senior 

Perpetual Preferred Stock of the banking 

organizations.5 As of April 20, 2009, the 

Treasury had invested approximately 

$198 billion in U.S. banking 

organizations through the CPP. 

The Senior Perpetual Preferred Stock 

issued under the CPP is perpetual 

preferred stock in the issuing banking 

organization, is senior to the issuer’s 

common stock, and is pari passu with 

the issuer’s existing preferred shares as 

to liquidation preference and dividends 

(other than preferred shares which by 

their terms rank junior to the issuer’s 

most senior class of existing preferred 

shares). All Senior Perpetual Preferred 

Stock issued by bank holding 

companies provide for cumulative 

dividends. The aggregate amount of 

Senior Perpetual Preferred Stock that 

may be issued by a banking organization 

to Treasury under the CPP must be (i) 

not less than one percent of the 

organization’s risk-weighted assets, and 

(ii) not more than the lesser of (A) $25 

billion and (B) three percent of the 

organization’s risk-weighted assets.6

As noted in the preamble to the 

interim rule, the Senior Perpetual 

Preferred Stock issued under the CPP 

includes several features that are 

designed to make it attractive to a wide 

array of generally sound banking 

organizations and encourage such 

banking organizations to replace the 

Senior Perpetual Preferred with private 

capital in an expeditious, but prudent, 

manner. 

In particular, the Senior Perpetual 

Preferred Stock issued under the CPP 

has an initial dividend rate of five 

percent per annum, which will increase 

to nine percent per annum five years 

after issuance. In addition, following the 

redemption of all the Senior Perpetual 

Preferred Stock issued under the CPP, a 

banking organization will have the right 

to repurchase any other equity security 

of the organization (such as warrants or 

equity securities acquired through the 

exercise of such warrants) held by 

Treasury. 

In the preamble to the interim rule, 

the Board recognized that some of the 

features of the Senior Perpetual 

Preferred Stock issued under the CPP if 

included in preferred stock issued to 

private investors would render the 

preferred stock ineligible for tier 1 

capital treatment or limit its inclusion 

in tier 1 capital under the Board’s 

capital guidelines for bank holding 

companies. Bank holding companies 

generally may not include in tier 1 

capital perpetual preferred stock 

(whether cumulative or noncumulative) 

that has a dividend rate step-up. 

Furthermore, the amount of eligible 

cumulative perpetual preferred stock 

that a bank holding company may 

include in its tier 1 capital generally is 

subject to a 25 percent limit.7

The interim rule permits bank holding 

companies to include all Senior 

Perpetual Preferred Stock issued to 

Treasury under the TARP in tier 1 

capital without limit. The Board sought 

comment on all aspects of the interim 

rule, including this treatment. The 

Board has carefully reviewed and 

analyzed the issues raised by 

commenters and has decided to adopt 

the interim rule as a final rule without 

substantive changes. The Board received 

seven comments on the interim rule 

from individuals and trade groups. 

Commenters largely supported the 

interim rule.8 Commenters 

acknowledged the Board’s concerns 

with certain features of the Senior 

Perpetual Preferred Stock, including its 

dividend rate step-up. However, 

commenters noted that other factors 

mitigate these concerns. Commenters 

noted, for example, that issuers will not 

be allowed to repurchase other stock or 

increase common dividends for three 

years after the issuance of the Senior 

Federal Register / Vol. 74, No. 103 / Monday, June 1, 2009 / Rules and Regulations 26083 

9 Details about the TIP, CAP, and AGP are 

available at http://www.financialstability.gov. 

10After conversion, the Convertible Preferred, as 

qualifying common stockholders’ equity, would be 

includable without limit in the tier 1 capital of a 

bank holding company as a core capital element for 

purposes of the Board’s risk-based and leverage 

capital guidelines for bank holding companies. See 

12 CFR part 225, Appendix A, section II.A.1.a.i. 

11See supra, n. 3. 

12See 12 U.S.C. 5230. Treasury’s authority under 

the TARP may be extended until October 3, 2010, 

only upon a written certification to the Congress by 

the Secretary of the Treasury. This certification 

must ‘‘include a justification of why the extension 

is necessary to assist American families and 

stabilize financial markets, as well as the expected 

cost to the taxpayers for such an extension.’’ Id. 

13See section 7001 of the American Recovery and 

Reinvestment Act of 2009 (ARRA), Public Law 111– 

5, 123 Stat. 115 (2009). Previously, during the first 

three years that the Senior Perpetual Preferred 

Stock was outstanding, a banking organization was 

required to redeem the stock with cash proceeds 

from the banking organization’s issuance of 

common stock or perpetual preferred stock that (i) 

qualifies as tier 1 capital of the organization and (ii) 

the proceeds of which are no less than 25 percent 

of the aggregate issue price of the Senior Perpetual 

Preferred Stock. See 73 FR 62852 (October 22, 

2008). 

14See section 7001 of the ARRA. 

15See 12 CFR part 225, Appendix A, section 

II.A.1.c.ii.(2). 

16SR 09–4, ‘‘Applying Supervisory Guidance and 

Regulations on the Payment of Dividends, Stock 

Redemptions, and Stock Repurchases at Bank 

Holding Companies,’’ March 27, 2009. 

17See 12 CFR 225.4(b)(1); 12 CFR part 225, 

Appendix A, sections II.(iii) and II.A.1.c.ii.(2). 

18See 12 CFR part 225, Appendices A and D. 

Perpetual Preferred Stock. In addition, 

commenters argued that the dividend 

rate step-up of the Senior Perpetual 

Preferred Stock would help achieve the 

fundamental public policy objective of 

replacing the U.S. Government’s equity 

investment with private capital in a 

prompt, safe, and sound manner. 

The Board concurs that the specific 

features of the Senior Perpetual 

Preferred Stock and the unique 

circumstances and purposes of the 

Capital Purchase Program and TARP 

largely mitigate the Board’s concerns 

about the dividend rate step-up. The 

Senior Perpetual Preferred Stock is 

issued to Treasury as part of a 

nationwide, temporary, and emergency 

program, established by Treasury under 

the EESA, to provide capital to eligible 

banking organizations and thereby 

promote stability in the financial 

markets and the banking industry as a 

whole and help restore economic 

growth. 

Since publication of the interim rule, 

the Treasury has established two 

additional programs under the EESA 

pursuant to which Treasury may 

purchase Senior Perpetual Preferred 

Stock from bank holding companies— 

the Targeted Investment Program (TIP) 

and Capital Assistance Program (CAP). 

In addition, the Treasury has 

established the Asset Guarantee 

Program (AGP), under which Treasury 

may receive Senior Perpetual Preferred 

Stock from a bank holding company as 

a premium for guaranteeing assets of the 

company.9

The interim final rule adopted by the 

Board, by its terms, applies to all Senior 

Perpetual Preferred Stock issued to 

Treasury under the TARP, including 

any Senior Perpetual Preferred Stock 

issued under the TIP, CAP, or AGP. The 

Board recognizes that the Senior 

Perpetual Preferred Stock issued by 

bank holding companies to Treasury 

under the TIP and AGP (TIP/AGP 

Preferred) and under the CAP (CAP 

Preferred) has certain features that differ 

from the Senior Perpetual Preferred 

Stock issued under the CPP. For 

example, both the TIP/AGP Preferred 

and CAP Preferred have a higher initial 

interest rate, but no interest rate step-up 

feature. In addition, the CAP Preferred 

is convertible to common stock of the 

issuing banking organization at the 

organization’s option (subject to the 

approval of the appropriate Federal 

banking agency), and must convert to 

common stock of the issuer after seven 

years.10 Although the higher initial 

interest rate makes the TIP/AGP 

Preferred and CAP Preferred somewhat 

less desirable from a capital perspective 

because of its added cost to the issuing 

bank holding company, the Board 

believes that this feature is mitigated by 

the lack of an interest rate step-up (in 

the case of both instruments) and the 

convertibility of the CAP Preferred. 

In addition, the CPP, TIP, CAP, and 

AGP each seek to advance the same key 

government objectives underlying the 

EESA—fostering financial market 

stability, and supporting the availability 

of credit to consumers during the 

current stressed market conditions. As 

noted above, the EESA was adopted to 

‘‘immediately provide authority and 

facilities that the Secretary of the 

Treasury can use to restore liquidity and 

stability to the financial system of the 

United States.’’ 11 Treasury’s authority 

to make investments, and to provide 

commitments to make investments, 

under the TARP, including through the 

CPP and other programs, ends on 

December 31, 2009, subject to a 

potential extension to October 3, 2010.12

The emergency nature and statutorilylimited duration of the TARP helps to 

ensure that the Senior Perpetual 

Preferred Stock issued by banking 

organizations will serve its intended 

purpose as a provisional vehicle for 

buttressing the capital bases of banking 

organizations and stabilizing the 

financial system during a period of 

severe economic stress, while 

preserving the preeminent importance 

of private capital to the stability of 

banking organizations in the longerterm. 

The Board also notes that, since the 

adoption of the interim rule, the EESA 

has been amended to permit a banking 

organization to redeem the Senior 

Perpetual Preferred Stock without 

regard to the source of the funds used 

to redeem the stock and without regard 

to any waiting period.13 The Board 

notes, however, that the amendment 

requires that Treasury consult with the 

appropriate Federal banking agency 

before a banking organization may make 

such a redemption.14 In addition, the 

terms of the Senior Perpetual Preferred 

Stock issued under the CPP, TIP, CAP, 

and AGP provide that redemption is 

subject to the approval of the Federal 

Reserve, which provision remains 

effective.15 In light of this provision, the 

Board recently noted in Federal Reserve 

SR letter 09–4 16 that any bank holding 

company that intends to redeem Senior 

Perpetual Preferred Stock issued to 

Treasury under the CPP, TIP, CAP, or 

AGP should first consult with Federal 

Reserve supervisory staff. After 

reviewing a request by a bank holding 

company to redeem Senior Perpetual 

Preferred Stock, the Board may take 

such actions as are necessary or 

appropriate to restrict the bank holding 

company from redeeming such 

securities if the redemption would be 

inconsistent with the safety and 

soundness of the bank holding 

company.17

For these reasons and in order to 

continue to support the strong public 

policy objectives of the CPP, TIP, CAP, 

and AGP and promote the stability of 

banking organizations and the financial 

system, the Board has adopted the 

interim rule in final form. The final 

rule—like the interim rule—permits 

bank holding companies that have 

issued Senior Perpetual Preferred Stock 

to the Treasury under the TARP to 

include such stock without limit as tier 

1 capital for purposes of the Board’s 

risk-based and leverage capital 

guidelines for bank holding 

companies.18 The Board’s decision to 

include Senior Perpetual Preferred 

Stock as an unrestricted core capital 

element in bank holding companies’ tier 

1 capital is based on each of the factors 

discussed above—including the 

emergency and temporary nature of the 

legislation authorizing the acquisition of 

such stock by the Treasury—as well as 

26084 Federal Register / Vol. 74, No. 103 / Monday, June 1, 2009 / Rules and Regulations 

19 5 U.S.C. 603(a). 

20 5 U.S.C. 605(b). 

21See 13 CFR 121.201. 

those presented in the interim rule, and 

is further supported by the commenters 

and the points they raised. 

As noted in the preamble to the 

interim rule, the Board expects bank 

holding companies that issue Senior 

Perpetual Preferred Stock under the 

CPP, TIP, CAP, and AGP like all other 

bank holding companies, to hold capital 

commensurate with the level and nature 

of the risks to which they are exposed. 

In addition, the Board expects bank 

holding companies that issue Senior 

Perpetual Preferred Stock to 

appropriately incorporate the dividend 

features of the stock into the 

organization’s liquidity and capital 

funding plans. Bank holding companies 

should not construe the Board’s 

decision to allow the inclusion of the 

Senior Perpetual Preferred Stock as an 

unrestricted core capital element in 

bank holding companies’ tier 1 capital 

as in any way (1) detracting from the 

Board’s longstanding stance regarding 

the unacceptability of a rate step-up in 

other tier 1 capital instruments or (2) 

reflecting a decision by the Board to 

allow cumulative perpetual preferred 

stock to be includable in bank holding 

companies’ tier 1 capital in excess of the 

limits established for restricted core 

capital elements under the Board’s 

capital guidelines for bank holding 

companies. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires an agency that is issuing a final 

rule to prepare and make available a 

regulatory flexibility analysis that 

describes the impact of the final rule on 

small entities.19 The RFA provides that 

an agency is not required to prepare and 

publish a regulatory flexibility analysis 

if the agency certifies that the final rule 

will not have a significant economic 

impact on a substantial number of small 

entities.20 Under regulations issued by 

the Small Business Administration,21 a 

small entity includes a bank holding 

company with assets of $175 million or 

less (a small bank holding company). As 

of December 31, 2008, there were 

approximately 2,586 small bank holding 

companies. 

As a general matter, the Board’s riskbased and leverage capital guidelines for 

bank holding companies apply only to 

a bank holding company that has 

consolidated assets of $500 million or 

more. Accordingly, this final rule will 

not affect small bank holding companies 

and, for this reason, the Board hereby 

certifies that the rule will not have a 

significant impact on a substantial 

number of small bank holding 

companies. 

Paperwork Reduction Act 

In accordance with the requirements 

of the Paperwork Reduction Act of 1995 

(44 U.S.C. 3506), the Board has 

reviewed the final rule to assess any 

information collections. There are no 

collections of information as defined by 

the Paperwork Reduction Act in the 

final rule. 

Use of Plain Language 

Section 722 of the Gramm-LeachBliley Act, Public Law 106–102, 

requires the Federal banking agencies to 

use plain language in all proposed and 

final rules published after January 1, 

2000. The Board invited comment on 

how to make the interim rule easier to 

understand. The Board received one 

comment generally criticizing the 

Board’s capital adequacy guidelines as 

difficult to understand. 

The Board acknowledges that the 

regulation of a banking organization’s 

capital is a complex area. The Board’s 

capital guidelines necessarily must 

reflect this complexity. Nevertheless, 

the Board has endeavored to present 

this final rule, like all of its capital 

rules, in a manner that, in light of the 

nature and complexity of the subject 

matter, is as brief, comprehensible, and 

straightforward as possible. 

List of Subjects in 12 CFR Part 225 

Administrative practice and 

procedure, Banks, Banking, Federal 

Reserve System, Holding companies, 

Reporting and recordkeeping 

requirements, Securities. 

Board of Governors of the Federal 

Reserve System 

12 CFR Chapter II 

Authority and Issuance 

■ For the reasons stated in the preamble, 

the Board of Governors of the Federal 

Reserve System amends part 225 of 

chapter II of title 12 of the Code of 

Federal Regulations as follows: 

PART 225—BANK HOLDING 

COMPANIES AND CHANGE IN BANK 

CONTROL (REGULATION Y) 

■ 1. The authority citation for part 225 

continues to read as follows: 

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

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

1972(1), 3106, 3108, 3310, 3331–3351, 3906, 

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

6801 and 6805. 

■ 2. In appendix A to part 225: 

■ a. Revise section II.A.1.a.ii.; and 

■ b. Revise footnote 8 in section 

II.A.1.c.ii.(2) to read as follows: 

Appendix A to Part 225—Capital 

Adequacy Guidelines for Bank Holding 

Companies: Risk-Based Measure 

II. * * * 

A. * * * 

1. * * * 

a. * * * 

ii. Qualifying noncumulative perpetual 

preferred stock, including related surplus, 

and senior perpetual preferred stock issued 

to the United States Department of the 

Treasury (Treasury) under the Troubled 

Asset Relief Program (TARP), established by 

the Emergency Economic Stabilization Act of 

2008 (EESA), Division A of Public Law 110– 

343 (which for purposes of this appendix 

shall be considered qualifying 

noncumulative perpetual preferred stock), 

including related surplus; 

* * * * * 

c. * * * 

ii. * * * 

(2) * * * 

8Notwithstanding this provision, senior 

perpetual preferred stock issued to the 

Treasury under the TARP, established by the 

EESA, may be included in tier 1 capital. In 

addition, traditional convertible perpetual 

preferred stock, which the holder must or can 

convert into a fixed number of common 

shares at a preset price, generally qualifies for 

inclusion in tier 1 capital provided all other 

requirements are met. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, May 21, 2009. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. E9–12628 Filed 5–29–09; 8:45 am] 

BILLING CODE 6210–02–P 

DEPARTMENT OF THE TREASURY 

Fiscal Service 

31 CFR Part 356 

[Docket No. BPD GSRS 09–01; Department 

of the Treasury Circular, Public Debt Series 

No. 1–93] 

Sale and Issue of Marketable BookEntry Treasury Bills, Notes, and Bonds 

AGENCY: Bureau of the Public Debt, 

Fiscal Service, Treasury. 

ACTION: Final rule. 

SUMMARY: The Department of the 

Treasury (‘‘Treasury’’ or ‘‘We’’) is 

issuing in final form amendments to the 

Uniform Offering Circular for the Sale 

and Issue of Marketable Book-Entry 

Treasury Bills, Notes, and Bonds. This 

final rule makes conforming changes to 

several sections of the Uniform Offering 

Circular to be consistent with Treasury’s