This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

40495 

Vol. 82, No. 164 

Friday, August 25, 2017 

DEPARTMENT OF TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 3 

[Docket ID OCC–2017–0012] 

RIN 1557–AE 23 

FEDERAL RESERVE SYSTEM 

12 CFR Part 217 

[Regulation Q; Docket No. R–1571] 

RIN 7100–AE 83 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 324 

RIN 3064–AE 63 

Regulatory Capital Rules: Retention of 

Certain Existing Transition Provisions 

for Banking Organizations That Are 

Not Subject to the Advanced 

Approaches Capital Rules 

AGENCY: Office of the Comptroller of the 

Currency, Treasury; the Board of 

Governors of the Federal Reserve 

System; and the Federal Deposit 

Insurance Corporation. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Office of the Comptroller 

of the Currency (OCC), the Board of 

Governors of the Federal Reserve 

System (Board), and the Federal Deposit 

Insurance Corporation (FDIC) 

(collectively, the agencies) are inviting 

public comment on a notice of proposed 

rulemaking (NPR) that would extend the 

current treatment under the regulatory 

capital rules (capital rules) for certain 

regulatory capital deductions and risk 

weights and certain minority interest 

requirements, as they apply to banking 

organizations that are not subject to the 

advanced approaches capital rules (nonadvanced approaches banking 

organizations). Specifically, for nonadvanced approaches banking 

organizations, the agencies propose to 

extend the current regulatory capital 

treatment of: Mortgage servicing assets; 

deferred tax assets arising from 

temporary differences that could not be 

realized through net operating loss 

carrybacks; significant investments in 

the capital of unconsolidated financial 

institutions in the form of common 

stock; non-significant investments in the 

capital of unconsolidated financial 

institutions; significant investments in 

the capital of unconsolidated financial 

institutions that are not in the form of 

common stock; and common equity tier 

1 minority interest, tier 1 minority 

interest, and total capital minority 

interest exceeding the capital rules’ 

minority interest limitations. The 

agencies expect in the near term to issue 

a separate NPR seeking public comment 

on a proposal to simplify the regulatory 

capital treatment of these items. 

Providing the proposed extension to 

non-advanced approaches banking 

organizations for these items would 

avoid potential burden on banking 

organizations that may be subject in the 

near future to a different regulatory 

capital treatment for these items. 

DATES: Comments must be received by 

September 25, 2017. 

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 

through the Federal eRulemaking Portal 

or email, if possible. Please use the title 

‘‘Retaining existing transition provisions 

for certain elements of the regulatory 

capital rules’’ 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 

www.regulations.gov. Enter ‘‘Docket ID 

OCC–2017–0012’’ in the Search Box and 

click ‘‘Search.’’ Click on ‘‘Comment 

Now’’ to submit public comments. 

• Click on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov, 

including instructions for submitting 

public comments. 

• Email: regs.comments@

occ.treas.gov. 

• Mail: Legislative and Regulatory 

Activities Division, Office of the 

Comptroller of the Currency, 400 7th 

Street SW., Suite 3E–218, Mail Stop 

9W–11, Washington, DC 20219. 

• Hand Delivery/Courier: 400 7th 

Street SW., Suite 3E–218, Mail Stop 

9W–11, Washington, DC 20219. 

• Fax: (571) 465–4326. 

Instructions: You must include 

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

ID OCC–2017–0012’’ 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, email 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 

include 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 

rulemaking action by any of the 

following methods: 

• Viewing Comments Electronically: 

Go to www.regulations.gov. Enter 

‘‘Docket ID OCC–2017–0012’’ in the 

Search box and click ‘‘Search.’’ Click on 

‘‘Open Docket Folder’’ on the right side 

of the screen and then ‘‘Comments.’’ 

Comments can be filtered by clicking on 

‘‘View All’’ and then using the filtering 

tools on the left side of the screen. 

• Click on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov. 

Supporting materials may be viewed by 

clicking on ‘‘Open Docket Folder’’ and 

then clicking on ‘‘Supporting 

Documents.’’ The docket may be viewed 

after the close of the comment period in 

the same manner as during the comment 

period. 

• Viewing Comments Personally: You 

may personally inspect and photocopy 

comments at the OCC, 400 7th Street 

SW., Washington, DC 20219. For 

security reasons, the OCC requires that 

visitors make an appointment to inspect 

comments. You may do so by calling 

(202) 649–6700 or, for persons who are 

deaf or hard of hearing, TTY, (202) 649– 

5597. Upon arrival, visitors will be 

required to present valid governmentissued photo identification and submit 

to security screening in order to inspect 

and photocopy comments. 

Board: You may submit comments, 

identified by Docket No. R–1571 and 


pmangrum on DSK3GDR082PROD with PROPOSALS
40496 Federal Register / Vol. 82, No. 164 / Friday, August 25, 2017 / Proposed Rules 

1Banking organizations covered by the agencies’ 

capital rules include national banks, state member 

banks, state nonmember banks, savings 

associations, and top-tier bank holding companies 

and savings and loan holding companies domiciled 

in the United States not subject to the Board’s Small 

Bank Holding Company Policy Statement (12 CFR 

part 225, appendix C), but excluding certain savings 

and loan holding companies that are substantially 

engaged in insurance underwriting or commercial 

activities or that are estate trusts, or bank holding 

companies and savings and loan holding companies 

that are employee stock ownership plans. The 

Board and the OCC issued a joint final rule on 

October 11, 2013 (78 FR 62018) and the FDIC issued 

a substantially identical interim final rule on 

September 10, 2013 (78 FR 55340). In April 2014, 

the FDIC adopted the interim final rule as a final 

rule with no substantive changes. 79 FR 20754 

(April 14, 2014). 

2See 12 CFR 217.21 (Board); 12 CFR 3.21 (OCC); 

12 CFR 324.21 (FDIC). 

3 12 CFR 217.21 (Board); 12 CFR 3.21 (OCC); 12 

CFR 324.21 (FDIC). 

4See 12 CFR 217.22(c)(4), (c)(5), and (d)(1) 

(Board); 12 CFR 3.22(c)(4), (c)(5), and (d)(1) (OCC); 

12 CFR 324.22(c)(4), (c)(5), and (d)(1) (FDIC). 

Banking organizations are permitted to net 

associated deferred tax liabilities against assets 

subject to deduction. 

5 12 CFR 217.300 (Board); 12 CFR 3.300 (OCC); 

12 CFR 324.300 (FDIC). 

6 12 CFR 217.300(b)(4) and (d) (Board); 12 CFR 

3.300(b)(4) and (d) (OCC); 12 CFR 324.300(b)(4) and 

(d) (FDIC). 

RIN 7100 AE 83, 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. 

• Email: regs.comments@

federalreserve.gov. Include docket 

number and RIN in the subject line of 

the message. 

• Fax: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Ann E. Misback, 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, 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 

3515, 1801 K Street NW. (between 18th 

and 19th Streets NW.), Washington, DC 

20006 between 9:00 a.m. and 5:00 p.m. 

on weekdays. 

FDIC: You may submit comments, 

identified by RIN 3064–AE 63 by any of 

the following methods: 

• Agency Web site: http://

www.FDIC.gov/regulations/laws/ 

federal/propose.html. Follow 

instructions for submitting comments 

on the Agency Web site. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments/Legal 

ESS, Federal Deposit Insurance 

Corporation, 550 17th Street NW., 

Washington, DC 20429. 

• Hand Delivered/Courier: Comments 

may be hand-delivered to the guard 

station at the rear of the 550 17th Street 

Building (located on F Street) on 

business days between 7:00 a.m. and 

5:00 p.m. 

• Email: comments@FDIC.gov. 

Include the RIN 3064–AE 63 on the 

subject line of the message. 

• Public Inspection: All comments 

received must include the agency name 

and RIN 3064–AE 63 for this 

rulemaking. All comments received will 

be posted without change to http://

www.fdic.gov/regulations/laws/federal/, 

including any personal information 

provided. Paper copies of public 

comments may be ordered from the 

FDIC Public Information Center, 3501 

North Fairfax Drive, Room E–1002, 

Arlington, VA 22226 by telephone at 

(877) 275–3342 or (703) 562–2200. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Mark Ginsberg, Senior Risk 

Expert (202) 649–6983; or Benjamin 

Pegg, Risk Expert (202) 649–7146, 

Capital and Regulatory Policy; or Carl 

Kaminski, Special Counsel (202) 649– 

5869; or Rima Kundnani, Attorney (202) 

649–5545, Legislative and Regulatory 

Activities Division, (202) 649–5490, for 

persons who are deaf or hard of hearing, 

TTY, (202) 649–5597, Office of the 

Comptroller of the Currency, 400 7th 

Street SW., Washington, DC 20219. 

Board: Constance M. Horsley, Deputy 

Associate Director, (202) 452–5239; Juan 

Climent, Manager, (202) 872–7526; 

Elizabeth MacDonald, Manager, (202) 

475–6316; Andrew Willis, Supervisory 

Financial Analyst, (202) 912–4323; Sean 

Healey, Supervisory Financial Analyst, 

(202) 912–4611 or Matthew McQueeney, 

Senior Financial Analyst, (202) 425– 

2942, Division of Supervision and 

Regulation; or Benjamin McDonough, 

Assistant General Counsel, (202) 452– 

2036; David W. Alexander, Counsel 

(202) 452–2877, or Mark Buresh, Senior 

Attorney (202) 452–5270, Legal 

Division, Board of Governors of the 

Federal Reserve System, 20th and C 

Streets NW., Washington, DC 20551. For 

the hearing impaired only, 

Telecommunication Device for the Deaf 

(TDD), (202) 263–4869. 

FDIC: Benedetto Bosco, Chief, Capital 

Policy Section, bbosco@fdic.gov; 

Michael Maloney, Capital Markets 

Senior Policy Analyst, mmaloney@

fdic.gov, Capital Markets Branch, 

Division of Risk Management 

Supervision, (202) 898–6888; or Michael 

Phillips, Counsel, mphillips@fdic.gov; 

Catherine Wood, Counsel, cawood@

fdic.gov; Rachel Ackmann, Counsel, 

rackmann@fdic.gov; Supervision 

Branch, Legal Division, Federal Deposit 

Insurance Corporation, 550 17th Street 

NW., Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In 2013, the Office of the Comptroller 

of the Currency (OCC), the Board of 

Governors of the Federal Reserve 

System (Board), and the Federal Deposit 

Insurance Corporation (FDIC) 

(collectively, the agencies) adopted 

rules that strengthened the capital 

requirements applicable to banking 

organizations supervised by the 

agencies (capital rules).1 The capital 

rules include limits on the amount of 

capital that would count toward these 

regulatory requirements in cases where 

the capital is issued by a consolidated 

subsidiary of a banking organization and 

not owned by the banking organization 

(minority interest).2 Because capital 

issued at the subsidiary level is not 

always available to absorb losses at the 

consolidated level, these limits prevent 

highly-capitalized subsidiaries from 

overstating the amount of capital 

available to absorb losses at the 

consolidated level.3 With the goal of 

strengthening the resiliency of banking 

organizations, the capital rules also 

require that amounts of mortgage 

servicing assets (MSAs), deferred tax 

assets arising from temporary 

differences that could not be realized 

through net operating loss carrybacks 

(temporary difference DTAs), and 

certain investments in the capital of 

unconsolidated financial institutions 

above certain thresholds be deducted 

from a banking organization’s regulatory 

capital.4

The capital rules contain transition 

provisions that phase in certain 

requirements over several years in order 

to give banking organizations sufficient 

time to adjust and adapt to such 

requirements.5 The minority interest 

limitations in the capital rules will 

become fully effective on January 1, 

2018. The deduction treatments for 

investments in the capital of 

unconsolidated financial institutions, 

MSAs, and temporary difference DTAs 

are subject to transition provisions until 

December 31, 2017.6 Also starting on 

January 1, 2018, the risk weight for 

MSAs, temporary difference DTAs, and 

significant investments in the capital of 

unconsolidated financial institutions in 


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Federal Register / Vol. 82, No. 164 / Friday, August 25, 2017 / Proposed Rules 40497 

7The EGRPRA report stated that such 

amendments likely would include: (a) Simplifying 

the current regulatory capital treatment for MSAs, 

timing difference DTAs, and holdings of regulatory 

capital instruments issued by financial institutions; 

and (b) simplifying the current limitations on 

minority interest in regulatory capital. See 82 FR 

15900 (March 30, 2017). 

the form of common stock that are not 

deducted from regulatory capital will 

increase from 100 percent to 250 

percent. 

II. Retaining Certain 2017 Transition 

Provisions 

Since the issuance of the capital rules 

in 2013, banking organizations and 

other members of the public have raised 

concerns regarding the regulatory 

burden, complexity, and costs 

associated with certain aspects of the 

capital rules, particularly for 

community banking organizations. As 

explained in the Federal Financial 

Institutions Examination Council’s 

March 2017 Joint Report to Congress on 

the Economic Growth and Regulatory 

Paperwork Reduction Act (EGRPRA 

report), the agencies are developing a 

proposal to simplify certain aspects of 

the capital rules with the goal of 

meaningfully reducing regulatory 

burden on community banking 

organizations while at the same time 

maintaining safety and soundness and 

the quality and quantity of regulatory 

capital in the banking system 

(simplifications NPR).7

Consistent with that goal and in 

anticipation of the simplifications NPR, 

the agencies propose to extend certain 

transition provisions currently in the 

capital rules for banking organizations 

that are not advanced approaches 

banking organizations (non-advanced 

approaches banking organizations) 

while the simplifications NPR is 

pending. This extension proposal is 

referred to as the transitions NPR. As 

such, for non-advanced approaches 

banking organizations the transition 

provisions for certain items would not 

be fully phased in. The agencies will 

review the transition provisions again in 

connection with the simplifications 

NPR. 

The agencies believe the stringency 

and complexity of the current capital 

rules’ treatment for items affected by the 

transitions NPR remains appropriate for 

banking organizations that are subject to 

the advanced approaches (typically 

those with consolidated assets greater 

than or equal to $250 billion, or total 

consolidated on-balance sheet foreign 

exposures of at least $10 billion), given 

the business models and risk profiles of 

such banking organizations. The 

agencies believe that the current 

treatment for these items strikes an 

appropriate balance between complexity 

and risk sensitivity for the largest and 

most complex banking organizations. 

Therefore, the transitions NPR would 

not apply to advanced approaches 

banking organizations. 

The agencies propose to extend the 

transitions period, as it applies to nonadvanced approaches banking 

organizations, for changes to section 300 

of the capital rules otherwise due to 

become effective on January 1, 2018, 

applicable to the risk weight and 

deduction treatment for MSAs, 

temporary difference DTAs, significant 

investments in the capital of 

unconsolidated financial institutions in 

the form of common stock, nonsignificant investments in the capital of 

unconsolidated financial institutions, 

and significant investments in the 

capital of unconsolidated financial 

institutions that are not in the form of 

common stock. The agencies would 

expect to propose modifications in these 

areas as part of the simplifications NPR. 

Under the transitions NPR, until the 

simplifications NPR is completed or the 

agencies otherwise determine, in 

accordance with Table 7 of section 300 

of the capital rules, non-advanced 

approaches banking organizations 

would continue to: 

• Deduct from regulatory capital 80 

percent of the amount of any of these 

five items that is not includable in 

regulatory capital; 

• Apply a 100 percent risk weight to 

any amounts of MSAs, temporary 

difference DTAs, and significant 

investments in the capital of 

unconsolidated financial institutions in 

the form of common stock that are not 

deducted from capital, and continue to 

apply the current risk weights under the 

capital rules to amounts of nonsignificant investments in the capital of 

unconsolidated financial institutions 

and significant investments in the 

capital of unconsolidated financial 

institutions not in the form of common 

stock that are not deducted from capital; 

and 

• Include 20 percent of any common 

equity tier 1 minority interest, tier 1 

minority interest, and total capital 

minority interest exceeding the capital 

rule’s minority interest limitations 

(surplus minority interest) in regulatory 

capital. 

For example, under the transitions 

NPR, a non-advanced approaches 

banking organization with an amount of 

MSAs above the 10 percent common 

equity tier 1 capital deduction threshold 

in the capital rules would deduct from 

common equity tier 1 capital only 80 

percent of the amount of MSAs above 

this threshold, and would apply a 100 

percent risk weight to the MSAs that are 

not deducted from common equity tier 

1 capital, including the MSAs that 

otherwise would have been deducted 

but for the transition provisions. 

Similarly, for purposes of the capital 

rules’ 15 percent common equity tier 1 

capital deduction threshold (the 

aggregate 15 percent threshold) that 

applies collectively across MSAs, 

temporary difference DTAs, and 

significant investments in the capital of 

unconsolidated financial institutions in 

the form of common stock, under the 

transitions NPR, a non-advanced 

approaches banking organization would 

deduct from common equity tier 1 

capital 80 percent of the amount of 

these items that exceed the aggregate 15 

percent threshold. 

Because the transitions NPR would 

not apply to advanced approaches 

banking organizations, such firms 

would be required to continue to apply 

the existing transition provisions in the 

capital rules. Specifically, advanced 

approaches banking organizations 

would be required to apply, starting on 

January 1, 2018, the capital rules’ fully 

phased-in regulatory capital treatment 

for MSAs, temporary difference DTAs, 

significant investments in the capital of 

unconsolidated financial institutions in 

the form of common stock, nonsignificant investments in the capital of 

unconsolidated financial institutions, 

significant investments in the capital of 

unconsolidated financial institutions 

that are not in the form of common 

stock, and surplus minority interest. 

III. Amendments to Reporting Forms 

The agencies are proposing to clarify 

the reporting instructions for the 

Consolidated Reports of Condition and 

Income (Call Report) (FFIEC 031, FFIEC 

041, and FFIEC 051; OMB Control Nos. 

1557–0081, 7100–0036, 3604–0052), the 

OCC is proposing to clarify the 

instructions for OCC DFAST 14A (OMB 

Control No. 1557–0319), the FDIC is 

proposing to clarify the instructions for 

FDIC DFAST 14A (OMB Control No. 

3064–0189), and the Board is proposing 

to clarify the instructions for the FR Y– 

9C (OMB Control No. 7100–0128), and 

the FR Y–14A and FR Y–14Q (OMB 

Control No. 7100–0341) to reflect the 

changes to the capital rules that would 

be required under this proposal. 

IV. Request for Comments 

At this time, the agencies are seeking 

comment more narrowly on changes 

proposed in this transitions NPR. As 

noted previously, the agencies plan to 

issue a simplifications NPR to simplify 

certain aspects of the capital rules with 


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40498 Federal Register / Vol. 82, No. 164 / Friday, August 25, 2017 / Proposed Rules 

8The OCC calculated the number of small entities 

using the SBA’s size thresholds for commercial 

banks and savings institutions, and trust 

companies, which are $550 million and $38.5 

million, respectively. Consistent with the General 

Principles of Affiliation, 13 CFR 121.103(a), the 

OCC counted the assets of affiliated financial 

institutions when determining whether to classify 

a national bank or Federal savings association as a 

small entity. 

9See 13 CFR 121.201. Effective July 14, 2014, the 

Small Business Administration revised the size 

standards for banking organizations to $550 million 

in assets from $500 million in assets. 79 FR 33647 

(June 12, 2014). 

10See 12 CFR 217.1(c)(1)(ii) and (iii); 12 CFR part 

225, appendix C; 12 CFR 238.9. 

the goal of meaningfully reducing 

regulatory burden on community 

banking organizations as explained in 

the EGRPRA report. That simplifications 

NPR would be published in the Federal 

Register for public notice and comment 

at a later date. 

Question 1. What, if any, operational 

or administrative challenges would the 

proposed changes in this transitions 

NPR pose to banking organizations? 

What, if any, alternatives should the 

agencies consider to address such 

challenges? 

Question 2. What, if any, 

modifications should the agencies 

consider making to the scope of 

application of this proposal? 

V. Regulatory Analyses 

A. Paperwork Reduction Act 

In accordance with the requirements 

of the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3521) (PRA), the 

agencies may not conduct or sponsor, 

and a respondent is not required to 

respond to, an information collection 

unless it displays a currently valid 

Office of Management and Budget 

(OMB) control number. The agencies 

reviewed the proposed rule and 

determined that it does not create any 

new or revise any existing collection of 

information under section 3504(h) of 

title 44. However, the agencies would 

clarify the reporting instructions for the 

Call Report. The OCC and FDIC would 

clarify the instructions for DFAST 14A, 

and the Board would clarify the 

instructions for the FR Y–9C, the FR Y– 

14A, and the FR Y–14Q to reflect the 

changes to the capital rules that would 

be required under this proposal. The 

draft redlined Call Report instructions 

would be available at https://

www.ffiec.gov/ffiec_report_forms.htm, 

the draft redlined OCC DFAST 14A 

instructions would be available at 

https://www.occ.gov/tools-forms/forms/ 

bank-operations/stress-testreporting.html, the draft redlined FDIC 

DFAST 14A instructions would be 

available at https://www.fdic.gov/ 

regulations/reform/dfast/, and the draft 

redlined FR Y–9C, FR Y–14A, and FR 

Y–14Q instructions would be available 

at https://www.federalreserve.gov/apps/ 

reportforms/review.aspx. 

B. Regulatory Flexibility Act Analysis 

OCC: The Regulatory Flexibility Act, 

5 U.S.C. 601 et seq., (RFA), requires an 

agency, in connection with a final rule, 

to prepare a Final Regulatory Flexibility 

Analysis describing the impact of the 

rule on small entities (defined by the 

Small Business Administration (SBA) 

for purposes of the RFA to include 

banking entities with total assets of $550 

million or less) or to certify that the rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 

As of March 31, 2017, the OCC 

supervised 928 small entities.8 The rule 

applies to all OCC-supervised entities 

that are not subject to the advanced 

approaches risk-based capital rules, and 

thus potentially affects a substantial 

number of small entities. The OCC has 

determined that 135 such entities 

engage in affected activities to an extent 

that they would be impacted directly by 

the proposed rule. However, the 

proposed rule would provide a small 

economic benefit to those entities. Thus, 

the OCC has determined that rule would 

not have a significant impact on any 

OCC-supervised small entities. 

Therefore, the OCC certifies that the 

proposed rule will not have a significant 

economic impact on a substantial 

number of OCC-supervised small 

entities. 

Board: The Board is providing an 

initial regulatory flexibility analysis 

with respect to this proposed rule. As 

discussed in the Supplemental 

Information, the proposal would revise 

the transition provisions in the 

regulatory capital rules to extend the 

treatment effective for calendar year 

2017 for several regulatory capital 

adjustments and deductions that are 

subject to multi-year phase-in 

schedules. Through the simplifications 

NPR, the agencies intend in the near 

term to seek public comment on a 

proposal to simplify certain items of the 

regulatory capital rules and, thus, the 

agencies believe it is appropriate to 

extend the transition provisions 

currently in effect for these items while 

the simplifications NPR is pending. The 

Regulatory Flexibility Act, 5 U.S.C. 601 

et seq. (RFA), generally requires that an 

agency prepare and make available an 

initial regulatory flexibility analysis in 

connection with a notice of proposed 

rulemaking. Under regulations issued by 

the Small Business Administration, a 

small entity includes a bank, bank 

holding company, or savings and loan 

holding company with assets of $550 

million or less (small banking 

organization).9 As of March 31, 2017, 

there were approximately 3,546 small 

bank holding companies, 234 small 

savings and loan holding companies, 

and 584 small state member banks. 

The proposed rule would apply to all 

state member banks, as well as all bank 

holding companies and savings and 

loan holding companies that are subject 

to the Board’s regulatory capital rule, 

but excluding state member banks, bank 

holding companies, and savings and 

loan holding companies that are subject 

to the advanced approaches in the 

capital rules. In general, the Board’s 

capital rules only apply to bank holding 

companies and savings and loan 

holding companies that are not subject 

to the Board’s Small Bank Holding 

Company Policy Statement, which 

applies to bank holding companies and 

savings and loan holding companies 

with less than $1 billion in total assets 

that also meet certain additional 

criteria.10 Thus, most bank holding 

companies and savings and loan 

holding companies that would be 

subject to the proposed rule exceed the 

$550 million asset threshold at which a 

banking organization would qualify as a 

small banking organization. 

Given the proposed rule does not 

impact the recordkeeping and reporting 

requirements that affected small 

banking organizations are currently 

subject to, there would be no change to 

the information that small banking 

organizations must track and report. The 

proposal would merely retain the 

transition provisions in effect for 

calendar year 2017 for the items that 

would be affected by the simplifications 

NPR until the simplifications NPR is 

finalized or the agencies determine 

otherwise. 

The proposal would permit affected 

small banking organizations, beginning 

in 2018 and thereafter, to deduct less 

investments in the capital of 

unconsolidated financial institutions, 

MSAs, and temporary difference DTAs 

from common equity tier 1 capital than 

would otherwise be required under the 

current transition provisions. The 

proposal would also allow small 

banking organizations to continue using 

a 100 percent risk weight for nondeducted MSAs, temporary difference 

DTAs and significant investments in the 

capital of unconsolidated financial 

institutions rather than the 250 percent 

risk weight for these items which is 

scheduled to take effect beginning 

January 1, 2018. Thus, for small banking 


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organizations that have significant 

amounts of MSAs or temporary 

difference DTAs, the proposal could 

have a temporary positive impact in 

their capital ratios during 2018 and 

thereafter. 

The impact from increasing the 

deduction of investments in the capital 

of unconsolidated financial institutions, 

MSAs, and temporary difference DTAs 

from 80 percent of the amounts to be 

deducted under the capital rules in 2017 

to 100 percent in 2018 is estimated to 

decrease common equity tier 1 capital 

by 0.01 percent on average across all 

covered small bank holding companies, 

savings and loan holding companies, 

and state member banks. Similarly, the 

impact from increasing from 80 percent 

in 2017 to 100 percent in 2018 the 

exclusion of surplus minority interest is 

estimated to decrease total regulatory 

capital by 0.04 percent across the same 

set of institutions. Based on March 31, 

2017 data for the same set of 

institutions, increasing the risk-weight 

for non-deducted MSAs and temporary 

difference DTAs to 250 percent from 

100 percent would result in an increase 

in risk-weighted assets of 0.64 percent. 

Therefore, retaining the transition 

provisions for the regulatory capital 

treatment of MSAs, temporary 

difference DTAs, investments in the 

capital of unconsolidated financial 

institutions, and minority interests, 

would have a marginally positive 

impact on the regulatory capital ratios of 

small banking organizations. 

The Board does not believe that the 

proposed rule duplicates, overlaps, or 

conflicts with any other Federal rules. 

In addition, the primary alternative to 

the proposed rule would be to retain the 

transition provisions as currently 

written in the capital rules, which 

would mean that the transitions would 

become fully phased-in starting on 

January 1, 2018. As discussed, this 

would result in marginally lower 

regulatory capital ratios than if the 

proposal were finalized. In light of the 

foregoing, the Board does not believe 

that the proposed rule, if adopted in 

final form, would have a significant 

economic impact on a substantial 

number of small entities. Nonetheless, 

the Board seeks comment on whether 

the proposed rule would impose undue 

burdens on, or have unintended 

consequences for, small organizations, 

and whether there are ways such 

potential burdens or consequences 

could be minimized in a manner 

consistent with the purpose of the 

proposed rule. A final regulatory 

flexibility analysis will be conducted 

after consideration of comments 

received during the public comment 

period. 

FDIC: The Regulatory Flexibility Act 

(RFA) generally requires that, in 

connection with a notice of proposed 

rulemaking, an agency prepare and 

make available for public comment an 

initial regulatory flexibility analysis 

describing the impact of the proposed 

rule on small entities. A regulatory 

flexibility analysis is not required, 

however, if the agency certifies that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities. The Small 

Business Administration has defined 

‘‘small entities’’ to include banking 

organizations with total assets less than 

or equal to $550 million. As of March 

31, 2017, the FDIC supervises 3,750 

banking institutions, 3,028 of which 

qualify as small entities according to the 

terms of the RFA. 

The proposed rule would extend the 

current regulatory capital treatment of: 

(i) Mortgage servicing assets (MSAs); (ii) 

deferred tax assets (DTAS) arising from 

temporary differences that could not be 

realized through net operating loss 

carrybacks; (iii) significant investments 

in the capital of unconsolidated 

financial institutions in the form of 

common stock; (iv) non-significant 

investments in the capital of 

unconsolidated financial institutions; 

(v) significant investments in the capital 

of unconsolidated financial institutions 

that are not in the form of common 

stock; and (vi) common equity tier 1 

minority interest, tier 1 minority 

interest, and total capital minority 

interest exceeding the capital rules’ 

minority interest limitations. The 

transitions NPR would likely pose small 

economic benefits for small FDICsupervised institutions by preventing 

any increase in risk-based capital 

requirements due to the completion of 

the transition provisions for the above 

items. 

According to Call Report data (as of 

March 31, 2017), 431 FDIC-supervised 

small banking entities reported holding 

some volume of the above asset classes. 

Additionally, as of March 31, 2017, the 

risk-based capital deduction related to 

these assets under the capital rules has 

been incurred by only 53 FDICsupervised small banking entities. 

The impact from increasing the 

deduction of investments in the capital 

of unconsolidated financial institutions, 

MSAs, and temporary difference DTAs 

from 80 percent of the amounts to be 

deducted under the capital rules (12 

CFR 324.300) in 2017 to 100 percent in 

2018 would decrease common equity 

tier 1 capital by 0.02 percent on average 

across all covered small FDICsupervised banking institutions. 

Similarly, the impact from increasing 

from 80 percent in 2017 to 100 percent 

under the capital rules (12 CFR 324.300) 

in 2018 the exclusion of surplus 

minority interest would decrease total 

regulatory capital by 0.01 percent across 

the same set of institutions. Based on 

March 31, 2017 data for the same set of 

institutions, increasing the risk-weight 

for non-deducted MSAs and temporary 

difference DTAs to 250 percent from 

100 percent would result in an increase 

in risk-weighted assets of 0.37 percent. 

Therefore, retaining the transition 

provisions for the regulatory capital 

treatment of MSAs, temporary 

difference DTAs, investments in the 

capital of unconsolidated financial 

institutions, and minority interests, 

would have a marginally positive 

impact on the regulatory capital ratios of 

substantially all small FDIC-supervised 

banking institutions. 

FDIC analysis has identified that 

absent the transitions NPR, 23 small 

FDIC-supervised banking institutions 

would have a decrease of 1 percent or 

more in common equity tier 1 capital, 

tier 1 capital and or total capital. 

Furthermore, 33 small FDIC-supervised 

banking institutions would have an 

increase in risk weighted assets greater 

than 3 percent absent the transitions 

NPR. Therefore, the FDIC certifies that 

this proposed rule would not have a 

significant economic impact on a 

substantial number of small entities that 

it supervises. 

C. Plain Language 

Section 722 of the Gramm-LeachBliley Act requires the Federal banking 

agencies to use plain language in all 

proposed and final rules published after 

January 1, 2000. The agencies have 

sought to present the transitions NPR in 

a simple and straightforward manner, 

and invite comment on the use of plain 

language. For example: 

• Have the agencies organized the 

material to suit your needs? If not, how 

could they present the transitions NPR 

rule more clearly? 

• Are the requirements in the 

transitions NPR clearly stated? If not, 

how could the transitions NPR 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 achieve that? 


pmangrum on DSK3GDR082PROD with PROPOSALS
40500 Federal Register / Vol. 82, No. 164 / Friday, August 25, 2017 / Proposed Rules 

11The OCC estimates that the proposed rule 

would lead to an aggregate increase in reported 

regulatory capital of $665.5 million in 2018 for 

national banks and Federal savings associations 

compared to the amount they would report if they 

were required to complete the 2018 phase-in 

provisions. The OCC estimates that this increase in 

reported regulatory capital—which could allow 

banking organizations to increase their leverage and 

thus increase their tax deductions for interest paid 

on debt—would have a total aggregate value of 

approximately $16 million per year across all 

directly impacted OCC-supervised entities (that is, 

national banks and Federal savings associations not 

subject to the advanced approaches risk-based 

capital rules). 

• What other changes can the 

agencies incorporate to make the 

regulation easier to understand? 

D. OCC Unfunded Mandates Reform Act 

of 1995 Determination 

The OCC analyzed the proposed rule 

under the factors set forth in the 

Unfunded Mandates Reform Act of 1995 

(2 U.S.C. 1532). Under this analysis, the 

OCC considered whether the proposed 

rule 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 in any one year 

(adjusted for inflation). The OCC has 

determined that this proposed rule 

would not result in expenditures by 

State, local, and Tribal governments, or 

the private sector, of $100 million or 

more in any one year.11 Accordingly, 

the OCC has not prepared a written 

statement to accompany this NPR. 

List of Subjects 

12 CFR Part 3 

Administrative practice and 

procedure, Capital, National banks, 

Risk. 

12 CFR Part 217 

Administrative practice and 

procedure, Banks, Banking, Capital, 

Federal Reserve System, Holding 

companies. 

12 CFR Part 324 

Administrative practice and 

procedure, Banks, Banking, Capital 

adequacy, Savings associations, State 

non-member banks. 

Office of the Comptroller of the 

Currency 

For the reasons set out in the joint 

preamble, the OCC proposes to amend 

12 CFR part 3 as follows. 

PART 3—CAPITAL ADEQUACY 

STANDARDS 

■ 1. The authority citation for part 3 

continues to read as follows: 

Authority: 12 U.S.C. 93a, 161, 1462, 

1462a, 1463, 1464, 1818, 1828(n), 1828 note, 

1831n note, 1835, 3907, 3909, and 

5412(b)(2)(B). 

■ 2. Section 3.300 is amended by 

revising paragraph (b)(4), adding 

paragraph (b)(5), and revising paragraph 

(d)(1) and table 10 to § 3.300 to read as 

follows: 

§ 3.300 Transitions. 

* * * * * 

(b) * * * 

(4) Additional transition deductions 

from regulatory capital. Except as 

provided in paragraph (b)(5) of this 

section: 

(i) Beginning January 1, 2014 for an 

advanced approaches national bank or 

Federal savings association, and 

beginning January 1, 2015 for a national 

bank or Federal savings association that 

is not an advanced approaches national 

bank or Federal savings association, and 

in each case through December 31, 

2017, a national bank or Federal savings 

association, must use Table 7 to § 3.300 

to determine the amount of investments 

in capital instruments and the items 

subject to the 10 and 15 percent 

common equity tier 1 capital deduction 

thresholds (§ 3.22(d)) (that is, MSAs, 

DTAs arising from temporary 

differences that the national bank or 

Federal savings association could not 

realize through net operating loss 

carrybacks, and significant investments 

in the capital of unconsolidated 

financial institutions in the form of 

common stock) that must be deducted 

from common equity tier 1 capital. 

(ii) Beginning January 1, 2014 for an 

advanced approaches national bank or 

Federal savings association, and 

beginning January 1, 2015 for a national 

bank or Federal savings association that 

is not an advanced approaches national 

bank or Federal savings association, and 

in each case through December 31, 

2017, a national bank or Federal savings 

association must apply a 100 percent 

risk weight to the aggregate amount of 

the items subject to the 10 and 15 

percent common equity tier 1 capital 

deduction thresholds that are not 

deducted under this section. As set forth 

in § 3.22(d)(2), beginning January 1, 

2018, a national bank or Federal savings 

association must apply a 250 percent 

risk weight to the aggregate amount of 

the items subject to the 10 and 15 

percent common equity tier 1 capital 

deduction thresholds that are not 

deducted from common equity tier 1 

capital. 

TABLE 7 TO § 3.300 

Transition period 

Transitions for 

deductions 

under 

§ 3.22(c) and 

(d)—Percentage 

of additional 

deductions 

from 

regulatory 

capital 

Calendar year 2014 ........ 20 

Calendar year 2015 ........ 40 

Calendar year 2016 ........ 60 

Calendar year 2017 ........ 80 

Calendar year 2018 and 

thereafter ..................... 100 

(iii) For purposes of calculating the 

transition deductions in this paragraph 

(b)(4) beginning January 1, 2014 for an 

advanced approaches national bank or 

Federal savings association, and 

beginning January 1, 2015 for a national 

bank or Federal savings association that 

is not an advanced approaches national 

bank or Federal savings association, and 

in each case through December 31, 

2017, a national bank’s or Federal 

savings association’s 15 percent 

common equity tier 1 capital deduction 

threshold for MSAs, DTAs arising from 

temporary differences that the national 

bank or Federal savings association 

could not realize through net operating 

loss carrybacks, and significant 

investments in the capital of 

unconsolidated financial institutions in 

the form of common stock is equal to 15 

percent of the sum of the national 

bank’s or Federal savings association’s 

common equity tier 1 elements, after 

regulatory adjustments and deductions 

required under § 3.22(a) through (c) 

(transition 15 percent common equity 

tier 1 capital deduction threshold). 

(iv) Beginning January 1, 2018, a 

national bank or Federal savings 

association must calculate the 15 

percent common equity tier 1 capital 

deduction threshold in accordance with 

§ 3.22(d). 

(5) Special transition provisions for 

non-significant investments in the 

capital of unconsolidated financial 

institutions, significant investments in 

the capital of unconsolidated financial 

institutions that are not in the form of 

common stock, MSAs, DTAs arising 

from temporary differences that the 

national bank or Federal savings 

association could not realize through 

net operating loss carrybacks, and 

significant investments in the capital of 

unconsolidated financial institutions in 

the form of common stock. Beginning 

January 1, 2018, a national bank or 

Federal savings association that is not 

an advanced approaches national bank 


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or Federal savings association must 

continue to apply the transition 

provisions described in paragraphs 

(b)(4)(i), (ii), and (iii) of this section 

applicable to calendar year 2017 to 

items that are subject to deduction 

under § 3.22(c)(4), (c)(5), and (d), 

respectively. 

* * * * * 

(d) Minority interest—(1) Surplus 

minority interest—(i) Advanced 

approaches national bank or Federal 

savings association surplus minority 

interest. Beginning January 1, 2014 

through December 31, 2017, an 

advanced approaches national bank or 

Federal savings association may include 

in common equity tier 1 capital, tier 1 

capital, or total capital the percentage of 

the common equity tier 1 minority 

interest, tier 1 minority interest, and 

total capital minority interest 

outstanding as of January 1, 2014, that 

exceeds any common equity tier 1 

minority interest, tier 1 minority 

interest, or total capital minority interest 

includable under § 3.21 (surplus 

minority interest), respectively, as set 

forth in Table 10 to § 3.300. 

(ii) Non-advanced approaches 

national bank and Federal savings 

association surplus minority interest. A 

national bank or Federal savings 

association that is not an advanced 

approaches national bank or Federal 

savings association may include in 

common equity tier 1 capital, tier 1 

capital, or total capital 20 percent of the 

common equity tier 1 minority interest, 

tier 1 minority interest and total capital 

minority interest outstanding as of 

January 1, 2014, that exceeds any 

common equity tier 1 minority interest, 

tier 1 minority interest, or total capital 

minority interest includable under 

§ 3.21 (surplus minority interest), 

respectively. 

* * * * * 

TABLE 10 TO § 3.300 

Transition period 

Percentage 

of the amount 

of surplus or 

non-qualifying 

minority 

interest that 

can be 

included in 

regulatory 

capital 

during the 

transition period 

Calendar year 2014 ........ 80 

Calendar year 2015 ........ 60 

Calendar year 2016 ........ 40 

Calendar year 2017 ........ 20 

Calendar year 2018 and 

thereafter ..................... 0 

* * * * * 

12 CFR Part 217 

Board of Governors of the Federal 

Reserve System 

For the reasons set out in the joint 

preamble, part 217 of chapter II of title 

12 of the Code of Federal Regulations is 

proposed to be amended as follows: 

PART 217—CAPITAL ADEQUACY OF 

BANK HOLDING COMPANIES, 

SAVINGS AND LOAN HOLDING 

COMPANIES, AND STATE MEMBER 

BANKS (REGULATION Q) 

■ 3. The authority citation for part 217 

continues to read as follows: 

Authority: 12 U.S.C. 248(a), 321–338a, 

481–486, 1462a, 1467a, 1818, 1828, 1831n, 

1831o, 1831p–l, 1831w, 1835, 1844(b), 1851, 

3904, 3906–3909, 4808, 5365, 5368, 5371. 

■ 4. Section 217.300 is amended by 

revising paragraph (b)(4), adding 

paragraph (b)(5), and revising paragraph 

(d)(1) and table 10 to § 217.300 to read 

as follows: 

§ 217.300 Transitions. 

* * * * * 

(b) * * * 

(4) Additional transition deductions 

from regulatory capital. Except as 

provided in paragraph (b)(5) of this 

section: 

(i) Beginning January 1, 2014 for an 

advanced approaches Board-regulated 

institution, and beginning January 1, 

2015 for a Board-regulated institution 

that is not an advanced approaches 

institution, and in each case through 

December 31, 2017, an institution, must 

use Table 7 to § 217.300 to determine 

the amount of investments in capital 

instruments and the items subject to the 

10 and 15 percent common equity tier 

1 capital deduction thresholds 

(§ 217.22(d)) (that is, MSAs, DTAs 

arising from temporary differences that 

the institution could not realize through 

net operating loss carrybacks, and 

significant investments in the capital of 

unconsolidated financial institutions in 

the form of common stock) that must be 

deducted from common equity tier 1 

capital. 

(ii) Beginning January 1, 2014 for an 

advanced approaches institution, and 

beginning January 1, 2015 for an 

institution that is not an advanced 

approaches institution, and in each case 

through December 31, 2017, an 

institution must apply a 100 percent 

risk-weight to the aggregate amount of 

the items subject to the 10 and 15 

percent common equity tier 1 capital 

deduction thresholds that are not 

deducted under this section. As set forth 

in § 217.22(d)(2), beginning January 1, 

2018, a Board-regulated institution must 

apply a 250 percent risk-weight to the 

aggregate amount of the items subject to 

the 10 and 15 percent common equity 

tier 1 capital deduction thresholds that 

are not deducted from common equity 

tier 1 capital. 

TABLE 7 TO § 217.300 

Transition period 

Transitions 

for deductions 

under 

§ 217.22(c) 

and (d)— 

percentage 

of additional 

deductions 

from regulatory 

capital 

Calendar year 2014 ........ 20 

Calendar year 2015 ........ 40 

Calendar year 2016 ........ 60 

Calendar year 2017 ........ 80 

Calendar year 2018 and 

thereafter ..................... 100 

(iii) For purposes of calculating the 

transition deductions in this paragraph 

(b)(4) beginning January 1, 2014 for an 

advanced approaches Board-regulated 

institution, and beginning January 1, 

2015 for Board-regulated institution that 

is not an advanced approaches Boardregulated institution, and in each case 

through December 31, 2017, an 

institution’s 15 percent common equity 

tier 1 capital deduction threshold for 

MSAs, DTAs arising from temporary 

differences that the institution could not 

realize through net operating loss 

carrybacks, and significant investments 

in the capital of unconsolidated 

financial institutions in the form of 

common stock is equal to 15 percent of 

the sum of the institution’s common 

equity tier 1 elements, after regulatory 

adjustments and deductions required 

under § 217.22(a) through (c) (transition 

15 percent common equity tier 1 capital 

deduction threshold). 

(iv) Beginning January 1, 2018 a 

Board-regulated institution must 

calculate the 15 percent common equity 

tier 1 capital deduction threshold in 

accordance with § 217.22(d). 

(5) Special transition provisions for 

non-significant investments in the 

capital of unconsolidated financial 

institutions, significant investments in 

the capital of unconsolidated financial 

institutions that are not in the form of 

common stock, MSAs, DTAs arising 

from temporary differences that the 

Board-regulated institution could not 

realize through net operating loss 

carrybacks, and significant investments 

in the capital of unconsolidated 

financial institutions in the form of 

common stock. Beginning January 1, 


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2018, a Board-regulated institution that 

is not an advanced approaches Boardregulated institution must continue to 

apply the transition provisions 

described in paragraphs (b)(4)(i), (ii), 

and (iii) of this section applicable to 

calendar year 2017 to items that are 

subject to deduction under 

§ 217.22(c)(4), (c)(5), and (d), 

respectively. 

* * * * * 

(d) Minority interest—(1) Surplus 

minority interest—(i) Advanced 

approaches institution surplus minority 

interest. Beginning January 1, 2014 

through December 31, 2017, an 

advanced approaches Board-regulated 

institution may include in common 

equity tier 1 capital, tier 1 capital, or 

total capital the percentage of the 

common equity tier 1 minority interest, 

tier 1 minority interest and total capital 

minority interest outstanding as of 

January 1, 2014 that exceeds any 

common equity tier 1 minority interest, 

tier 1 minority interest or total capital 

minority interest includable under 

§ 217.21 (surplus minority interest), 

respectively, as set forth in Table 10 to 

§ 217.300. 

(ii) Non-advanced approaches 

institution surplus minority interest. A 

Board-regulated institution that is not 

an advanced approaches Boardregulated institution may include in 

common equity tier 1 capital, tier 1 

capital, or total capital 20 percent of the 

common equity tier 1 minority interest, 

tier 1 minority interest and total capital 

minority interest outstanding as of 

January 1, 2014, that exceeds any 

common equity tier 1 minority interest, 

tier 1 minority interest or total capital 

minority interest includable under 

§ 217.21 (surplus minority interest), 

respectively. 

* * * * * 

TABLE 10 TO § 217.300 

Transition period 

Percentage 

of the amount 

of surplus or 

non-qualifying 

minority 

interest 

that can be 

included in 

regulatory 

capital 

during the 

transition 

period 

Calendar year 2014 ........ 80 

Calendar year 2015 ........ 60 

Calendar year 2016 ........ 40 

Calendar year 2017 ........ 20 

Calendar year 2018 and 

thereafter ..................... 0 

* * * * * 

12 CFR Part 324 

Federal Deposit Insurance Corporation 

For the reasons set out in the joint 

preamble, the FDIC proposes to amend 

12 CFR part 324 as follows. 

PART 324—CAPITAL ADEQUACY OF 

FDIC-SUPERVISED INSTITUTIONS 

■ 5. The authority citation for part 324 

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; 5371; 5412; 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); 

Pub. L. 111–203, 124 Stat. 1376, 1887 (15 

U.S.C. 78o–7 note). 

■ 6. Section 324.300 is amended by 

revising paragraph (b)(4), adding 

paragraph (b)(5), and revising paragraph 

(d)(1) and table 9 to § 324.300 to read as 

follows: 

§ 324.300 Transitions. 

* * * * * 

(b) * * * 

(4) Additional transition deductions 

from regulatory capital. Except as 

provided in paragraph (b)(5) of this 

section: 

(i) Beginning January 1, 2014, for an 

advanced approaches FDIC-supervised 

institution, and beginning January 1, 

2015, for an FDIC-supervised institution 

that is not an advanced approaches 

FDIC-supervised institution, and in each 

case through December 31, 2017, an 

FDIC-supervised institution, must use 

Table 7 to § 324.300 to determine the 

amount of investments in capital 

instruments and the items subject to the 

10 and 15 percent common equity tier 

1 capital deduction thresholds 

(§ 324.22(d)) (that is, MSAs, DTAs 

arising from temporary differences that 

the FDIC-supervised institution could 

not realize through net operating loss 

carrybacks, and significant investments 

in the capital of unconsolidated 

financial institutions in the form of 

common stock) that must be deducted 

from common equity tier 1 capital. 

(ii) Beginning January 1, 2014, for an 

FDIC-supervised advanced approaches 

institution, and beginning January 1, 

2015, for an FDIC-supervised institution 

that is not an advanced approaches 

FDIC-supervised institution, and in each 

case through December 31, 2017, an 

FDIC-supervised institution must apply 

a 100 percent risk-weight to the 

aggregate amount of the items subject to 

the 10 and 15 percent common equity 

tier 1 capital deduction thresholds that 

are not deducted under this section. As 

set forth in § 324.22(d)(2), beginning 

January 1, 2018, an FDIC-supervised 

institution must apply a 250 percent 

risk-weight to the aggregate amount of 

the items subject to the 10 and 15 

percent common equity tier 1 capital 

deduction thresholds that are not 

deducted from common equity tier 1 

capital. 

TABLE 7 TO § 324.300 

Transition period 

Transitions for 

deductions under 

§ 324.22(c) and 

(d)— 

Percentage of 

additional 

deductions from 

regulatory capital 

Calendar year 2014 ........ 20 

Calendar year 2015 ........ 40 

Calendar year 2016 ........ 60 

Calendar year 2017 ........ 80 

Calendar year 2018 and 

thereafter ..................... 100 

(iii) For purposes of calculating the 

transition deductions in this paragraph 

(b)(4) beginning January 1, 2014, for an 

advanced approaches FDIC-supervised 

institution, and beginning January 1, 

2015, for an FDIC-supervised institution 

that is not an advanced approaches 

FDIC-supervised institution, and in each 

case through December 31, 2017, an 

FDIC-supervised institution’s 15 percent 

common equity tier 1 capital deduction 

threshold for MSAs, DTAs arising from 

temporary differences that the FDICsupervised institution could not realize 

through net operating loss carrybacks, 

and significant investments in the 

capital of unconsolidated financial 

institutions in the form of common 

stock is equal to 15 percent of the sum 

of the FDIC-supervised institution’s 

common equity tier 1 elements, after 

regulatory adjustments and deductions 

required under § 324.22(a) through (c) 

(transition 15 percent common equity 

tier 1 capital deduction threshold). 

(iv) Beginning January 1, 2018, an 

FDIC-supervised institution must 

calculate the 15 percent common equity 

tier 1 capital deduction threshold in 

accordance with § 324.22(d). 

(5) Special transition provisions for 

non-significant investments in the 

capital of unconsolidated financial 

institutions, significant investments in 

the capital of unconsolidated financial 

institutions that are not in the form of 

common stock, MSAs, DTAs arising 

from temporary differences that the 

FDIC-supervised institution could not 


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Federal Register / Vol. 82, No. 164 / Friday, August 25, 2017 / Proposed Rules 40503 

realize through net operating loss 

carrybacks, and significant investments 

in the capital of unconsolidated 

financial institutions in the form of 

common stock. Beginning January 1, 

2018, an FDIC-supervised institution 

that is not an advanced approaches 

FDIC-supervised institution must 

continue to apply the transition 

provisions described in paragraphs 

(b)(4)(i), (ii), and (iii) of this section 

applicable to calendar year 2017 to 

items that are subject to deduction 

under § 324.22(c)(4), (c)(5), and (d), 

respectively. 

* * * * * 

(d) Minority interest—(1) Surplus 

minority interest—(i) Advanced 

approaches FDIC-supervised institution 

surplus minority interest. Beginning 

January 1, 2014, through December 31, 

2017, an advanced approaches FDICsupervised institution may include in 

common equity tier 1 capital, tier 1 

capital, or total capital the percentage of 

the common equity tier 1 minority 

interest, tier 1 minority interest and 

total capital minority interest 

outstanding as of January 1, 2014 that 

exceeds any common equity tier 1 

minority interest, tier 1 minority interest 

or total capital minority interest 

includable under § 324.21 (surplus 

minority interest), respectively, as set 

forth in Table 9 to § 324.300. 

(ii) Non-advanced approaches FDICsupervised institution surplus minority 

interest. An FDIC-supervised institution 

that is not an advanced approaches 

FDIC-supervised institution may 

include in common equity tier 1 capital, 

tier 1 capital, or total capital 20 percent 

of the common equity tier 1 minority 

interest, tier 1 minority interest and 

total capital minority interest 

outstanding as of January 1, 2014 that 

exceeds any common equity tier 1 

minority interest, tier 1 minority interest 

or total capital minority interest 

includable under § 324.21 (surplus 

minority interest), respectively. 

* * * * * 

TABLE 9 TO § 324.300 

Transition period 

Percentage of the 

amount of surplus 

or non-qualifying 

minority 

interest that 

can be 

included in 

regulatory capital 

during the 

transition period 

Calendar year 2014 ........ 80 

Calendar year 2015 ........ 60 

Calendar year 2016 ........ 40 

Calendar year 2017 ........ 20 

TABLE 9 TO § 324.300—Continued 

Transition period 

Percentage of the 

amount of surplus 

or non-qualifying 

minority 

interest that 

can be 

included in 

regulatory capital 

during the 

transition period 

Calendar year 2018 and 

thereafter ..................... 0 

* * * * * 

Dated: August 2, 2017. 

Keith A. Noreika, 

Acting Comptroller of the Currency. 

By order of the Board of Governors of the 

Federal Reserve System, August 16, 2017. 

Ann E. Misback, 

Secretary of the Board. 

Dated at Washington, DC this 9th of 

August, 2017. 

By order of the Board Directors. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 2017–17822 Filed 8–24–17; 8:45 am] 

BILLING CODE 4810–33–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2013–0024; Product 

Identifier 2000–NE–12–AD] 

RIN 2120–AA64 

Airworthiness Directives; Safran 

Helicopter Engines, S.A., Turboshaft 

Engines 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to supersede 

airworthiness directive (AD) 2013–11– 

09 that applies to all Safran Helicopter 

Engines, S.A., Arrius 2B1 and 2F 

turboshaft engines. Depending on the 

engine model, AD 2013–11–09 requires 

the repetitive replacement of the fuel 

injector manifolds and privilege 

injector, or only the privilege injector. 

Since we issued AD 2013–11–09, we 

received reports of engine flameouts as 

a result of reduced fuel flow due to the 

presence of coking. This proposed AD 

would retain the repetitive hardware 

replacement requirements of AD 2013– 

11–09, but only allow replacement pipe 

injector preferred assembly, part 

number (P/N) 0 319 73 044 0, on the 

Arrius 2F engines. We are proposing 

this AD to correct the unsafe condition 

on these products. 

DATES: We must receive comments on 

this proposed AD by October 10, 2017. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, 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: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

For service information identified in 

this NPRM, contact Safran Helicopter 

Engines, S.A., 40220 Tarnos, France; 

phone: (33) 05 59 74 40 00; fax: (33) 05 

59 74 45 15. You may view this service 

information at the FAA, Engine and 

Propeller Standards Branch, Policy and 

Innovation Division, 1200 District 

Avenue, Burlington, MA. For 

information on the availability of this 

material at the FAA, call 781–238–7125. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http://

www.regulations.gov by searching for 

and locating Docket No. FAA–2013– 

0024; or in person at the Docket 

Management Facility between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The AD docket 

contains this proposed AD, the 

mandatory continuing airworthiness 

information, regulatory evaluation, any 

comments received, and other 

information. The address for the Docket 

Office (phone: 800–647–5527) is in the 

ADDRESSES section. Comments will be 

available in the AD docket shortly after 

receipt. 

FOR FURTHER INFORMATION CONTACT: 

Robert Green, Aerospace Engineer, FAA, 

ECO Branch, Compliance and 

Airworthiness Division, 1200 District 

Avenue, Burlington, MA 01803; phone: 

781–238–7754; fax: 781–238–7199; 

email: robert.green@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposed AD. Send your comments 

to an address listed under the 

ADDRESSES section. Include ‘‘Docket No. 


pmangrum on DSK3GDR082PROD with PROPOSALS