65144 Federal Register / Vol. 66, No. 243 / Tuesday, December 18, 2001 / Proposed Rules

gather information to verify that a

licensee is meeting the objective of

ensuring adequate protection of worker

health and safety from exposure to

radiation from radioactive material

during routine operation.

In addition to performing these

inspection procedures, NRC resident

inspectors regularly tour the plant,

including areas containing radioactive

waste management systems. If a

degraded condition is identified by the

licensee or reported to the licensee by

the NRC, the condition is evaluated and

corrective action taken as appropriate in

accordance with the plant’s corrective

action program. In addition, condition

reports are trended by licensees. Further

evaluation is done and appropriate

corrective actions are taken if an adverse

trend is identified. Periodic inspections

of the corrective action program are

conducted in accordance with NRC

Inspection Procedure 71152,

‘‘Identification and Resolution of

Problems,’’ to verify that licensees are

identifying and correcting plant

problems. The regulatory oversight

process increases public confidence and

complements the performance-based

regulations that establish exposure

limits and design objectives to not only

meet those limits but to keep

radiological dose levels ALARA.

In summary, the NRC has regulatory

requirements and licensees implement

programs and practices that provide

reasonable assurance that exposures to

radiation will remain within

permissible levels consistent with

Appendix I to 10 CFR part 50 design

objectives for public exposures and

within 10 CFR part 20 limits and

ALARA for occupational exposures,

irrespective of the cause. The

Commission has determined that

maintaining doses within these design

objectives and dose limits represent

‘‘small’’ environmental consequences.

The petitioner did not raise any

information that would challenge the

conclusions of the GEIS that the impacts

of radiation doses to the public and

occupational exposures will be ‘‘small’’

for the license renewal term.

Conclusion

The NRC staff finds that the

information presented in the petition

does not support rulemaking to revise

10 CFR parts 51 and 54 to include aging

management of the liquid and gaseous

radioactive waste management systems

during the license renewal term. If new

information in the future provides a

basis that aging degradation of the

liquid and gaseous radioactive waste

management systems needs aging

management consideration under 10

CFR parts 51 and 54, then the NRC may

revisit the need for rulemaking.

For the reasons cited in this

document, the NRC denies the petition.

Dated at Rockville, Maryland, this 5th day

of December, 2001.

For the Nuclear Regulatory Commission.

William D. Travers,

Executive Director for Operations.

[FR Doc. 01–30927 Filed 12–17–01; 8:45 am]

BILLING CODE 7590–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 360

RIN 3064–AB92

Payment of Post-insolvency Interest in

Receiverships With Surplus Funds

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Federal Deposit

Insurance Corporation is publishing for

notice and comment a proposed rule

regarding the payment of postinsolvency interest in insured

depository institution receiverships

with surplus funds. The purpose of the

rule is to establish a single uniform

interest rate, calculation method, and

payment priority for post-insolvency

interest. The proposed rule provides

that where funds remain after the

satisfaction of the principal amount of

all creditor claims, post-insolvency

interest will be paid in the order of

priority set forth in section 11(d)(11)(A)

of the Federal Deposit Insurance Act;

paid at the coupon equivalent yield of

the average discount rate set on the

three-month Treasury bill at the last

auction held by the United States

Treasury Department during the

preceding calendar quarter; adjusted

each quarter after the receivership is

established; and based on a simple

interest method of calculation.

DATES: Comments must be received by

February 19, 2002.

ADDRESSES: Send written comments to

Robert E. Feldman, Executive Secretary,

Attention: comments/OES, Federal

Deposit Insurance Corporation, 550 17th

Street, NW., Washington, DC 20429.

Comments may be hand-delivered to the

guard station located at the rear of the

17th Street building on F Street on

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

Comments may also be faxed or emailed

(FAX number (202) 898–3838; Internet

address: comments@FDIC.gov).

Comments may be posted on the FDIC

internet site at http://www.fdic.gov/

regulations/laws/ Federal/propose.html

and may be inspected and photocopied

at the FDIC Public Information Center,

Room 100, 801 17th Street, NW.,

Washington, DC between 9 a.m. and

4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT:

Thomas Bolt, (202) 736–0168; or

Rodney Ray, (202) 898–3556.

SUPPLEMENTARY INFORMATION:

I. Background

For receiverships established after

August 10, 1993, payment of

receivership claims is governed by

section 11(d)(11)(A) of the Federal

Deposit Insurance Act, which section is

also known as the national depositor

preference statute. Because the national

depositor preference statute does not

specifically mention post-insolvency

interest, and in the absence of a

regulation regarding its payment, the

FDIC’s practice in receiverships subject

to the national depositor preference

statute that have surplus funds has been

to follow the common law rule. The

common law rule is that postinsolvency interest should be paid pro

rata to all creditors regardless of

priority. The exception to this approach

is the case of an institution subject to a

state law that specifically provides for a

different distribution priority. (Several

states’ statutes provide that after the

principal amounts of all claims within

the same class have been satisfied,

interest is to be paid at the same priority

as the claim on which it accrues.) With

respect to the interest rate for postinsolvency interest, the FDIC, in

receiverships subject to the national

depositor preference statute, has used

the federal judgment rate for federal or

‘‘federalized’’ institutions (statechartered institutions where the FDIC

has exercised its self-appointment

authority under section 11(c) of the FDI

Act). For state institutions, the FDIC

used the applicable rate provided for by

state law. Consequently, different

distribution priorities and interest rates

have been used depending on the type

of institution involved and the

applicable law.

In December 2000, Congress granted

the FDIC express rulemaking authority

regarding the payment of postinsolvency interest in receiverships

with surplus funds. The American

Homeownership and Economic

Opportunity Act of 2000 added new

subparagraph (C) to section 11(d)(10) of

the FDI Act, which reads as follows:

(C) Rulemaking Authority of Corporation.

The Corporation may prescribe such rules,

including definitions of terms, as it deems

appropriate to establish a single uniform

Federal Register / Vol. 66, No. 243 / Tuesday, December 18, 2001 / Proposed Rules 65145

1According to the legislative history, Congress

enacted depositor preference primarily to reduce

the FDIC’s cost of resolving failed institutions by

increasing its recoveries as subrogee of insured

deposit claims, thereby benefiting the deposit

insurance funds. ‘‘Under depositor preference, the

FDIC and RTC will have a first claim on the assets

of all failed banks and thrifts, thereby increasing the

savings to the Federal deposit insurance funds.’’

139 Con. Rec. H6150 (daily ed. Aug. 5, 1993)

(statement of Rep. Gonzalez). Furthermore,

Congress was aware that depositor preference

would result in diminished recoveries for general

creditors. See H.R. Rep. No. 111, 103d Cong., 1st

Sess. 1993, U.S.C.C.A.N. 378.

2The following discussion is provided to

illustrate the potential impact that selecting one

distribution method over the other could have on

different classes of receivership creditors. The FDIC

believes, however, that the actual impact of either

approach will depend significantly on the

particular facts and circumstances surrounding

future receiverships, therefore, the following

discussion is based on generalized observations of

how receivership distributions in future FDICadministered receiverships might be affected and is

not an attempt to describe definitively how any

particular class of creditors will be affected by

either approach.

3The proposed rule would not affect the

calculation or accrual of interest on any federal

income tax liability pursuant to sections 6601 and

6621 of the Internal Revenue Code.

interest rate for or to make payment of postinsolvency interest to creditors holding

proven claims against the receivership estates

of insured Federal or State depository

institutions following satisfaction by the

receiver of the principal amount of all

creditor claims.

By virtue of this rulemaking authority,

the proposed rule regarding postinsolvency interest would preempt any

inconsistent state law by providing a

single uniform interest rate and priority

of distribution for post-insolvency

interest in receiverships established

after the rule becomes effective. See City

of New York v. FCC, 486 U.S. 57, 63

(1988) (regulation promulgated by

federal agency acting within the scope

of its congressionally delegated

authority may preempt state law). The

proposed rule will apply to

receiverships established after the

effective date of the rule. Historically,

relatively few receiverships have

generated sufficient recoveries to enable

post-insolvency interest to be paid.

Consequently, the proposed rule will

probably apply to only a small number

of receiverships in the future.

II. The Proposed Rule

New section 11(d)(10)(C) of the FDI

Act provides that post-insolvency

interest will be paid after satisfaction of

the principal amount of all creditor

claims. The proposed rule provides that

after the satisfaction of the principal

amount of all creditor claims, postinsolvency interest will be paid in the

order of priority set forth in section

11(d)(11)(A), the national depositor

preference statute. This differs from the

FDIC’s existing practice of following the

common law rule that post-insolvency

interest should be paid pro rata to all

creditors regardless of priority, except in

the case of an institution subject to a

state law that specifically provides for a

different distribution priority.

Nevertheless, the approach in the

proposed rule appears to be more

consistent with Congress’s objective, as

expressed in the national depositor

preference statute, that the deposit

liabilities be preferred over other

liabilities in the liquidation of an

insured depository institution.1

The alternative approach would be to

follow the common law rule and pay

post-insolvency interest on a pro rata

basis to all creditors, without regard to

the priority of payment of the principal

amount of a creditor’s claim under

section 11(d)(11)(A). Depending on the

amount of assets available in a

receivership to pay post-insolvency

interest, either approach could affect the

recoveries of certain classes of

creditors.2

If post-insolvency interest was paid to

receivership creditors based on the

priority accorded the principal amount

of a creditor’s claim under section

11(d)(11)(A), creditors holding deposit

claims (including the FDIC’s subrogated

deposit claim against the receivership)

would receive all of their postinsolvency interest payments, before the

receivership creditors holding claims in

the lower priority classes received any

post-insolvency interest payments. This

approach, therefore, would result in

post-insolvency interest payments being

made to the depositors of the failed

institution, but it may also result in

little or no post-insolvency interest

payments being made to creditors

holding claims in the lower priority

classes. Also, if federal income tax

claims have been allowed against the

receivership estate, this approach,

combined with federal tax laws and tax

regulations, may result in the federal

income tax claims being paid pro rata

with post-insolvency interest payments

to the general creditors of the

receivership estate.3

Alternatively, if post-insolvency

interest was paid to all receivership

creditors holding allowed claims on a

pro rata basis, regardless of the priority

accorded the principal amount of the

underlying claim under section

11(d)(11)(A), all of the receivership’s

creditors (except the Internal Revenue

Service) would receive a pro rata share

of the assets available for postinsolvency interest payments. Again, a

combination of this approach with

federal tax laws and tax regulations,

however, may result in the federal

income tax claims against the

receivership being paid only after all of

the other receivership creditors

(including subordinated debt holders)

had received post-insolvency interest

payments, but before any distributions

were made to the equityholders of the

failed institution.

Another component of the proposed

rule involves the interest rate to be

applied for purposes of calculating postinsolvency interest payments. The FDIC

believes a publicly available, marketbased rate would be preferable to a

single numerical interest rate because

the market-based rate should be more

reflective of the interest rate

environment in existence during the life

of future receiverships. In addition, as

indicated earlier, the FDIC has utilized

the federal judgment rate in

receiverships of federally chartered

institutions and in federalized

receiverships of state institutions to

calculate post-insolvency interest

payments. In the proposed rule,

however, the post-insolvency interest

rate for all FDIC-administered

receiverships would be based on the

coupon equivalent yield of the average

discount rate set on the three-month

Treasury bill, rather than the federal

judgment rate. This rate was selected,

instead of the federal judgment rate,

because the three-month Treasury bill is

considered to be widely recognized as a

cash management investment

performance benchmark and its yield

has historically tracked, to some degree,

changes in the rate of inflation.

Whether the interest rate should be

fixed or ‘‘float’’ is also an issue

addressed in the proposed rule.

Presently, when a new receivership is

established, if assets ultimately become

available for post-insolvency interest

payments, the rate that exists on the

date the receivership is established is

fixed for purposes of calculating postinsolvency interest. This approach is

consistent with the way the federal

judgment rate is applied to judgments

entered by the federal courts because

the allowance of a claim against a

receivership estate has been viewed as

the general equivalent of a judgment

being entered against the receivership

estate. This approach may not be

reflective, however, of the economic

conditions and interest rate

environment in existence during the life

of the receivership. Therefore, the

proposed rule provides that the postinsolvency interest rate would be

adjusted quarterly. This is being

proposed to mitigate interest rate risk

65146 Federal Register / Vol. 66, No. 243 / Tuesday, December 18, 2001 / Proposed Rules

due to changes in economic conditions

during the life of the receivership.

Finally, the proposed rule provides

that post-insolvency interest

distributions would be calculated using

a simple interest method, rather than a

compound interest method. The simple

interest method is proposed because it

appears to provide a reasonable amount

of interest to compensate receivership

creditors for the time value of money

owed from the time the receivership is

established until dividend payments are

received.

III. Request for Public Comment

The FDIC hereby solicits comments

on all aspects of the proposed rule, and

specifically whether post-insolvency

interest should be paid according to the

order of priority described in the

national depositor preference statute or

alternatively pro rata to all creditors

regardless of priority.

IV. Paperwork Reduction Act

The proposed rule will not involve

any collection of information under the

Paperwork Reduction Act (44 U.S.C.

3501 et seq.). Consequently, no

information has been submitted to the

Office of Management and Budget for

review.

V. Regulatory Flexibility Act

Pursuant to section 605(b) of the

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

et seq.) the FDIC certifies that the

proposed rule will not have a significant

economic impact on a substantial

number of small entities. The proposed

rule will only apply to FDICadministered receiverships established

after the effective date of the rule, and

it does not impose new reporting,

recordkeeping or other compliance

requirements on receivership creditors.

The proposed rule continues the FDIC’s

existing practice of making postinsolvency interest distributions to

creditors holding proven claims in

surplus receiverships prior to making

distributions to equityholders, based on

their equity interests, in a failed insured

depository institution. In addition, the

proposed rule will provide interested

parties, including small entities, with

greater certainty in future FDICadministered receiverships by

establishing a single uniform interest

rate and method for making postinsolvency interest distributions.

Accordingly, the Act’s requirements

relating to an initial regulatory

flexibility analysis are not applicable.

VI. The Treasury and General

Government Appropriations Act,

1999—Assessment of Federal

Regulations and Policies on Families

The FDIC has determined that the

proposed rule will not affect family

well-being within the meaning of

section 654 of the Treasury and General

Government Appropriations Act,

enacted as part of the Omnibus

Consolidated and Emergency

Supplemental Appropriations Act of

1999 (Public Law 105–277, 112 Stat.

2681).

List of Subjects in 12 CFR Part 360

Banks, banking, Savings associations.

For the reasons set forth in the

preamble, the FDIC Board of Directors

proposes to amend 12 CFR part 360 as

follows:

PART 360—RESOLUTION AND

RECEIVERSHIP RULES

1. The authority for part 360 is revised

to read as follows:

Authority: 12 U.S.C. 1821(d)(1),

1821(d)(10)(C), 1821(d)(11), 1821(e)(1),

1821(e)(8)(D)(i), 1823(c)(4), 1823(e)(2); Sec.

401(h), Pub. L .101–73, 103 Stat. 357.

2. Section 360.7 is added to part 360

to read as follows:

§ 360.7 Post-insolvency interest.

(a) Purpose and scope. This section

establishes rules governing the

calculation and distribution of postinsolvency interest to creditors with

proven claims in all FDIC-administered

receiverships established after [effective

date of final rule].

(b) Definitions—(1) Equityholder. The

owner of an equity interest in a failed

depository institution, whether such

ownership is represented by stock,

membership in a mutual association, or

otherwise.

(2) Post-insolvency interest. Interest

calculated from the date the

receivership is established on proven

creditor claims in receiverships with

surplus funds.

(3) Post-insolvency interest rate. For

any calendar quarter, the coupon

equivalent yield of the average discount

rate set on the three-month Treasury bill

at the last auction held by the United

States Treasury Department during the

preceding calendar quarter, and

adjusted each quarter thereafter.

(4) Principal amount. The proven

claim amount and any interest accrued

thereon as of the date the receivership

is established.

(5) Proven claim. A claim that is

allowed by a receiver or upon which a

final non-appealable judgment has been

entered in favor of a claimant against a

receivership by a court with jurisdiction

to adjudicate the claim.

(c) Post-insolvency interest

distributions. (1) Post-insolvency

interest shall only be distributed

following satisfaction by the receiver of

the principal amount of all creditor

claims.

(2) The receiver shall distribute postinsolvency interest at the postinsolvency interest rate prior to making

any distribution to equityholders. Postinsolvency interest distributions shall

be made in the order of priority set forth

in section 11(d)(11)(A) of the Federal

Deposit Insurance Act, 12 U.S.C.

1821(d)(11)(A).

(3) Post-insolvency interest

distributions shall be made at such time

as the receiver determines that such

distributions are appropriate and only to

the extent of funds available in the

receivership estate. Post-insolvency

interest shall be distributed on the

outstanding balance of a proven claim,

as reduced from time to time by any

interim dividend distributions, from the

date the receivership is established until

such time as the principal amount of a

proven claim has been distributed but

not thereafter.

(4) Post-insolvency interest shall be

determined using a simple interest

method of calculation.

By order of the Board of Directors.

Dated at Washington, DC this 10th day of

December, 2001.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 01–31162 Filed 12–17–01; 8:45 am]

BILLING CODE 6714–01–P

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Office of Federal Housing Enterprise

Oversight

12 CFR Part 1750

RIN 2550–AA23

Risk-Based Capital

AGENCY: Office of Federal Housing

Enterprise Oversight, HUD.

ACTION: Proposed regulation.

SUMMARY: The Office of Federal Housing

Enterprise Oversight (OFHEO) is

proposing to amend Appendix A to

Subpart B of 12 CFR Part 1750 RiskBased Capital. The effect of these

amendments would be to modify

provisions relating to counterparty

haircuts, multifamily loans, and

refunding and to make several technical