Source: https://regulations.justia.com/regulations/fedreg/2018/12/27/2018-27952.html
Timestamp: 2020-07-11 22:25:50
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Matched Legal Cases: ['art 30', 'art 30', 'art 30', 'art 30', 'art 30', 'art 30', 'art 23', 'ART 30', 'art 30', 'art 30', 'art 30', '§ 25', '§ 21', 'art 23', 'art 23', 'art 23', '§ 21', 'art 30', 'art 30', 'art 30', 'art 30', 'art 30', 'ART 30', 'art 30', 'art 30']

OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches; Technical Amendments, 66604-66607 [2018-27952] :: Office Of The Comptroller Of The Currency :: Department Of Treasury :: Regulation Tracker :: Justia
Justia Regulation Tracker Department Of Treasury Office Of The Comptroller Of The Currency OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches; Technical Amendments, 66604-66607 [2018-27952]
OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches; Technical Amendments, 66604-66607 [2018-27952]
Download as PDF 66604 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Rules and Regulations Dated: December 18, 2018. Bao Nguyen, Acting Senior Deputy Comptroller and Chief Counsel. By order of the Board of Governors of the Federal Reserve System, acting through the Secretary of the Board under delegated authority, December 17, 2018. Ann E. Misback, Secretary of the Board. By order of the Board of Directors. Dated at Washington, DC, this 13th day of December, 2018. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. 2018–27791 Filed 12–26–18; 8:45 am] BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 30 [Docket ID OCC–2018–0028] RIN 1557–AE51 OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches; Technical Amendments Office of the Comptroller of the Currency, Treasury. ACTION: Final guidelines. AGENCY: The Office of the Comptroller of the Currency (OCC) is amending its enforceable guidelines relating to recovery planning standards for insured national banks, insured federal savings associations, and insured federal branches (Guidelines) by increasing the average total consolidated assets threshold for applying the Guidelines from $50 billion to $250 billion. In addition, the OCC is changing the Guidelines to decrease from 18 months to 12 months the time within which a bank should comply with the Guidelines after the bank becomes subject to them. Finally, the OCC is making technical amendments to remove outdated compliance dates. DATES: The final guidelines are effective on January 28, 2019. FOR FURTHER INFORMATION CONTACT: Andra Shuster, Senior Counsel or Rima Kundnani, Attorney, Chief Counsel’s Office, (202) 649–5490; or, for persons who are deaf or hard of hearing, TTY, (202) 649–5597, 400 7th Street SW, Washington, DC 20219. khammond on DSK30JT082PROD with RULES SUMMARY: VerDate Sep<11>2014 16:19 Dec 26, 2018 Jkt 247001 SUPPLEMENTARY INFORMATION: I. Background The 2008 financial crisis provided valuable lessons about the need for financial institutions to have strong risk governance frameworks, including plans for how to respond to and recover from the financial effects of severe stress. This was particularly true for larger, more complex banks given the potential they pose for systemic risk. In response to these lessons, on September 29, 2016, the OCC published the Guidelines establishing minimum standards for recovery planning by insured national banks, insured federal savings associations, and insured federal branches of foreign banks (banks) with average total consolidated assets 1 equal to or greater than $50 billion (covered banks).2 The Guidelines state that a recovery plan should identify (1) quantitative or qualitative indicators of the risk or existence of severe stress that reflect a covered bank’s particular vulnerabilities and (2) a wide range of credible options that a covered bank could undertake in response to the stress to restore its financial strength and viability. Under the Guidelines, a recovery plan should also address: (1) Procedures for escalating decision-making to senior management or the board of directors, (2) management reports, and (3) communication procedures. In addition, the Guidelines explain how a bank should calculate its average total consolidated assets and reserve the OCC’s authority to apply the Guidelines to a bank below the $50 billion threshold if the agency determines a bank is highly complex or otherwise presents a heightened risk. Finally, the Guidelines set out phased-in compliance dates based on bank size. II. Description of the Proposal, Comments Received, and Final Guidelines The OCC received three comments on the proposal. One comment came from an individual, one from a trade association (Trade Association Comment), and the other from four regional national banks (Banks Comment). 1 Average total consolidated assets is defined in the Guidelines and means the average total consolidated assets of the bank or covered bank as reported on the bank’s or covered bank’s Consolidated Reports of Condition and Income for the four most recent consecutive quarters. See 12 CFR part 30, appendix E, paragraph I.E.1. 2 81 FR 66791 (Sep. 29, 2016). The Guidelines were issued pursuant to section 39 of the Federal Deposit Insurance Act, 12 U.S.C. 1831p-1, which authorizes the OCC to prescribe enforceable safety and soundness standards. PO 00000 Frm 00048 Fmt 4700 Sfmt 4700 Asset Threshold. The OCC noted in the SUPPLEMENTARY INFORMATION section of the Guidelines that large, complex institutions should undertake recovery planning to be able to respond quickly to and recover from the financial effects of severe stress on the institution. Based on its experience to date in reviewing recovery plans, the OCC believes that it is appropriate to raise the threshold for the Guidelines to focus on those institutions that present greater risk to the banking system. These larger, more complex, or potentially more interconnected banks present the types of risks that could benefit most from having the types of governance and planning processes that identify and assist in responding to significant stress events. In addition, at the time the Guidelines were published, the $50 billion recovery planning threshold was consistent with the scope of Federal Deposit Insurance Corporation and Board of Governors of the Federal Reserve System regulations 3 that require certain entities to prepare resolution plans under section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.4 On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (Act) was enacted to promote economic growth, provide tailored economic relief, and enhance consumer protections.5 Section 401 of the Act raises from $50 billion to $250 billion the section 165 resolution planning threshold. Accordingly, the OCC proposed to increase from $50 billion to $250 billion the average total consolidated assets threshold at which the Guidelines apply to banks.6 This change would reduce the number of covered banks to which the Guidelines apply from 25 to 8, based on the most recent data available. All three of the comments received addressed the threshold change. The individual commenter expressed concern that raising the Guidelines’ asset threshold would provide too much leniency for banks in light of the 2008 financial crisis. The Trade Association Comment strongly supported the OCC’s proposal to raise the threshold for the Guidelines from $50 billion to $250 billion in average total consolidated assets because it provides burden relief to the affected banks and permits the OCC to allocate its resources over a smaller number of banks. The Banks 3 See 12 CFR 381.2(f) and 243.2(f), respectively. See also 12 CFR 360.10. 4 Public Law 111–203, 124 Stat. 1376 (July 21, 2010). 5 Public Law 115–174, 132 Stat. 1296 (May 24, 2018). 6 83 FR 47313 (Sep. 19, 2018). E:\FR\FM\27DER1.SGM 27DER1 khammond on DSK30JT082PROD with RULES Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Rules and Regulations Comment suggested that the OCC replace the threshold with a risksensitive alternative that more accurately reflects a bank’s business model and risk profile, like the systemic indicator score, which was described as a more useful and better-calibrated measure of the complexity and risk inherent in a bank’s business model. The OCC believes this threshold change is consistent with providing necessary and appropriate burden relief to the affected banks while retaining the requirements for the largest, most complex institutions. Furthermore, the increased threshold is consistent with section 401 of the Act’s increase in the section 165 resolution planning threshold applicable to systemically important bank holding companies. Therefore, the OCC is adopting as final the proposed Guidelines’ $250 billion average total consolidated assets threshold. Tailoring Approach for Banks Subject to the Guidelines. Both the Trade Association Comment and the Banks Comment requested that the OCC consider a tailored approach to the application of the Guidelines to covered banks in order to focus recovery planning on issues that are most relevant to the bank based on its risk profile and business model. The trade association also requested that the OCC consider whether the Guidelines should be applicable to all covered banks given the varying degree of riskiness and complexity of these banks. The Guidelines already recognize that each covered bank is unique and expressly permit a bank to tailor its recovery plan so that it is ‘‘specific to that covered bank and appropriate for its individual size, risk profile, activities, and complexity, including the complexity of its organizational and legal entity structure.’’ 7 Therefore, a covered bank that is less complex or has less risk may tailor its recovery plan under the Guidelines accordingly. Given this flexibility, the OCC does not think it is necessary to specifically tailor the Guidelines based on different business models and risk profiles of the covered banks nor do we think it is appropriate to further reduce the number of banks subject to the Guidelines. In fact, it may be even more important for a covered bank that is less complex or has less risk due to fewer interconnections to have a robust recovery plan. Such a bank may have identified fewer options for recovery and therefore may be 7 Appendix E to part 30, II.A. See also Comptroller’s Handbook for Recovery Planning, version 1.0 April 2018 at p. 6. VerDate Sep<11>2014 16:19 Dec 26, 2018 Jkt 247001 constrained in its ability to restore financial strength in severe stress. Biennial Cycle. Both the Trade Association Comment and the Banks Comment suggested that the OCC should consider moving from an annual to a biennial recovery plan cycle. The Trade Association Comment noted that as was the case with resolution planning, this would give the OCC more time to provide feedback and would give the covered banks more time to prepare the plans, likely resulting in a better quality plan. Both commenters also requested that the OCC allow each covered bank to elect the timing of its two-year recovery plan cycle. This would permit each bank to make a determination of whether or not to align the preparation of its recovery plan with the preparation of its resolution plan. Further, the Trade Association Comment requested that the OCC not require re-approval of the recovery plan by the board of directors if there has been no material change or event that has had a fundamental and major impact on the covered bank’s recovery plan since the board previously approved the recovery plan. The recovery plan and the recovery planning framework are important to a bank’s safety and soundness and enterprise governance and, thus, the OCC believes that covered banks should review and revise the recovery plan as necessary at least annually. With regard to electing the timing of the recovery plan cycle, the preamble to the Guidelines noted that ‘‘management should have flexibility to conduct its annual reviews on its preferred schedule’’ and that ‘‘OCC examiners will assess the appropriateness and adequacy of the covered bank’s ongoing recovery planning process as part of the agency’s regular supervisory activities . . . [to] provide covered banks with the flexibility they need.’’ 8 In addition to this flexibility, the Guidelines already permit an appropriate committee of the board, rather than the entire board, to review and approve the recovery plan.9 Therefore, no change has been made to this part of the Guidelines. Transparency of Standards and Horizontal Review. The Trade Association Comment suggested that recovery planning standards should be more transparent in the future and that a supervisory horizontal review of recovery plans may be difficult and less meaningful given the differences in risk profiles and business models among the covered banks. The OCC believes that the current process, which includes 8 81 FR 66797 (Sept. 29, 2016). E to part 30, III.B. 9 Appendix PO 00000 Frm 00049 Fmt 4700 Sfmt 4700 66605 discussion between the examiners and the covered banks, provides the necessary transparency for recovery planning standards. While other agencies may use horizontal review for resolution planning purposes, the OCC does not intend to use such reviews in connection with recovery planning. Clarification for Banks under $250 Billion. The Trade Association Comment requested that the OCC immediately clarify that no recovery plans are expected of banks on or after January 1, 2019 if they do not meet the $250 billion average total consolidated assets threshold in order to avoid the significant and needless burden associated with preparing the recovery plan. Given that these revised final Guidelines will be effective in a short period of time, the OCC would not expect banks with less than $250 billion in average total consolidated assets to complete the annual process for review by management and review and approval by the board of their 2018 recovery plans or to begin preparing a 2019 recovery plan. Compliance Date. Under the current Guidelines, a bank with less than $50 billion in average total consolidated assets that subsequently becomes a covered bank is required to comply with the Guidelines within 18 months. The OCC proposed amending this provision so that a bank that has less than $250 billion in average total consolidated assets on the effective date of the final rule and subsequently becomes a covered bank should comply with the Guidelines within 12 months. Based upon supervisory experience, the OCC has observed that 12 months is a sufficient period of time for any bank that becomes a covered bank to comply with the Guidelines. Finally, the OCC proposed technical amendments to remove the compliance dates listed in the current Guidelines, as the dates have all passed. The OCC did not receive any comments on these changes. Therefore, these amendments will be adopted as proposed. Regulatory Analysis Regulatory Flexibility Act In general, the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) requires that in connection with a rulemaking, an agency prepare and make available for public comment a regulatory flexibility analysis that describes the impact of the rule on small entities. Under section 605(b) of the RFA, this analysis is not required if an agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and E:\FR\FM\27DER1.SGM 27DER1 66606 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Rules and Regulations publishes its certification and a brief explanatory statement in the Federal Register along with its rule. As part of its analysis, the OCC considered whether these revised final Guidelines will have a significant economic impact on a substantial number of small entities, pursuant to the RFA. Because these revised final Guidelines will generally have no impact on banks with less than $50 billion in total consolidated assets, no OCC-supervised small entities will be affected. Therefore, the OCC certifies that these revised final Guidelines will not have a significant economic impact on a substantial number of small entities. khammond on DSK30JT082PROD with RULES Paperwork Reduction Act of 1995 These revised final Guidelines include changes to an approved collection of information pursuant to the provisions of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). In accordance with the PRA, the OCC may not conduct or sponsor, and an organization is not required to respond to, an information collection unless the information collection displays a currently valid Office of Management and Budget (OMB) control number. The OCC submitted the information collection requirements contained in the rule to the OMB at the proposed rule stage. Pursuant to 5 CFR 1320.11(c), the OMB filed a comment on the submission directing the OCC to examine any public comment in response to the information collection requirements, prepare a description of how the OCC has responded to the comments (including comments on maximizing the practical utility of the collection and minimizing the burden), and resubmit the information collection requirements in connection with these revised final Guidelines. The Guidelines found in 12 CFR part 30, appendix E, sections II.B., II.C., and III contain information collection requirements previously approved by the OMB. Section II.B. specifies the elements of the recovery plan, including an overview of the covered bank; triggers; options for recovery; impact assessments; escalation procedures; management reports; and communication procedures. Section II.C. addresses the relationship of the plan to other covered bank processes and coordination with other plans, including the processes and plans of its bank holding company. Section III outlines management’s and the board’s responsibilities. The threshold triggering these requirements is being VerDate Sep<11>2014 16:19 Dec 26, 2018 Jkt 247001 changed under these revised final Guidelines, resulting in a reduction in the number of respondents under this collection. The following revised information collection was submitted to OMB for review. Title: OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches OMB Control No.: 1557–0333. Frequency of Response: On occasion. Affected Public: Businesses or other for-profit organizations. Burden Estimates: Total Number of Respondents: 8 National Banks. Total Burden per Respondent: 7,543 hours. Total Burden for Collection: 60,344 hours. Comments were invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the OCC’s functions, including whether the information has practical utility; (2) the accuracy of the OCC’s estimate of the burden of the proposed information collection, including the cost of compliance; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. We received no comments on the proposed information collection. Unfunded Mandates Reform Act of 1995 The OCC analyzed these revised final Guidelines under the factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the OCC considered whether these revised final Guidelines include 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 these revised final Guidelines do not impose new mandates. Therefore, we conclude that these revised final Guidelines will not result in an expenditure of $100 million or more annually by State, local, and tribal governments, or by the private sector. Effective Date The Administrative Procedure Act (APA) requires that a substantive rule must be published not less than 30 days PO 00000 Frm 00050 Fmt 4700 Sfmt 4700 before its effective date, unless, among other things, the rule grants or recognizes an exemption or relieves a restriction. Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA) requires that regulations imposing additional reporting, disclosure, or other requirements on insured depository institutions take effect on the first day of the calendar quarter after publication of the final rule, unless, among other things, the agency determines for good cause that the regulations should become effective before such time. These revised final Guidelines will be effective 30 days after publication in the Federal Register, which meets the APA effective date requirements. Given that these revised final Guidelines do not impose any additional reporting, disclosure, or other requirements on insured depository institutions, but rather reduce reporting requirements, the effective date of 30 days after publication in the Federal Register, rather than the first day of the calendar quarter following publication, is consistent with RCDRIA. Section 302 of RCDRIA also requires the OCC to consider, consistent with the principles of safety and soundness and the public interest, any administrative burdens these revised final Guidelines would place on insured depository institutions, including small depository institutions, and their customers as well as the benefits of such regulations when determining the effective date and administrative compliance requirements of new regulations that impose new reporting, disclosure, or other requirements on insured depository institutions. The OCC has considered the changes made by these revised final Guidelines and believes that the effective date of 30 days after publication in the Federal Register is appropriate. Plain Language Section 722 of the Gramm-LeachBliley Act (12 U.S.C. 4809(a)), requires the OCC to use plain language in all proposed and final rules published after January 1, 2000. The OCC received no comment on these matters and believes that these revised final Guidelines are written plainly and clearly. List of Subjects in 12 CFR Part 30 Banks, Banking, Consumer protection, National banks, Privacy, Safety and soundness, Reporting and recordkeeping requirements. E:\FR\FM\27DER1.SGM 27DER1 Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Rules and Regulations Office of the Comptroller of the Currency DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 12 CFR Chapter I Authority and Issuance 14 CFR Part 23 For the reasons set forth in the preamble, and under the authority of 12 U.S.C. 93a and 12 U.S.C. 1831p–1, chapter I of title 12 of the Code of Federal Regulations is amended as follows: [Docket No.FAA–2018–0918; Notice No. 23– 291–SC] PART 30—SAFETY AND SOUNDNESS STANDARDS AGENCY: 1. The authority citation for part 30 continues to read as follows: ■ 2. Appendix E to part 30 is amended by: ■ a. Removing the phrase ‘‘$50 billion’’ and adding in its place the phrase ‘‘$250 billion’’ everywhere that it appears; ■ b. Revising section I.B.1; ■ c. Removing section I.B.2 and I.B.3; ■ d. Redesignating section I.B.4 as section I.B.2; ■ e. In newly redesignated section I.B.2: ■ i. Removing ‘‘January 1, 2017’’ and adding in its place the words‘‘January 28, 2019’’; and ■ ii. Removing the phrase ‘‘18 months’’ and adding in its place the phrase ‘‘12 months’’. The revision reads as follows: ■ Appendix E to Part 30—OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches * * * * I. * * * B. * * * 1. A covered bank with average total consolidated assets, calculated according to paragraph I.E.1. of this appendix, equal to or greater than $250 billion as of January 28, 2019 should be in compliance with this appendix on January 28, 2019. khammond on DSK30JT082PROD with RULES * * * * * Dated: December 18, 2018. William A. Rowe, Chief Risk Officer. [FR Doc. 2018–27952 Filed 12–26–18; 8:45 am] BILLING CODE 4810–33–P VerDate Sep<11>2014 16:19 Dec 26, 2018 Jkt 247001 Federal Aviation Administration (FAA), DOT. ACTION: Final special conditions. These special conditions are issued for Textron Aviation, Inc. B200series airplanes. These airplanes as modified by Innovative Solutions & Support, Inc., will have a novel or unusual design feature associated with an autothrust system. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. DATES: These special conditions are effective December 27, 2018. FOR FURTHER INFORMATION CONTACT: Jeff Pretz, AIR–691, Regulations & Policy Section, Small Airplane Standards Branch, Policy & Innovation Division, Aircraft Certification Service, Federal Aviation Administration, 901 Locust; Kansas City, Missouri 64106; telephone (816) 329–3239; facsimile (816) 329– 4090; email Jeff.Pretz@faa.gov. SUPPLEMENTARY INFORMATION: SUMMARY: Authority: 12 U.S.C. 1, 93a, 371, 1462a, 1463, 1464, 1467a, 1818, 1828, 1831p–1, 1881–1884, 3102(b) and 5412(b)(2)(B); 15 U.S.C. 1681s, 1681w, 6801, and 6805(b)(1). * Special Conditions: Innovative Solutions & Support, Inc.; Textron Aviation, Inc. Model B200-Series Airplanes; Autothrust Functions Background On December 14, 2017, Innovative Solutions & Support, Inc. (Innovative Solutions), applied for a supplemental type certificate for installation of an autothrust system (ATS)—also known as an autothrottle system—in Textron Aviation, Inc., (Textron) B200-series airplanes. The B200-series airplanes are powered by two Pratt & Whitney PT6A turbo-propeller engines—depending on airplane model—that can carry thirteen passengers, including two flightcrew members. These airplanes have a service ceiling up to 35,000-feet and a maximum takeoff weight of up to 12,500 pounds in the normal category. These airplanes are approved for single-pilot operation. The installation of an ATS in Textron B200-series airplanes is intended to reduce pilot workload. The ATS is useable in all phases of flight except PO 00000 Frm 00051 Fmt 4700 Sfmt 4700 66607 below decision height on approach. The system includes torque control and airspeed modes along with monitors to prevent the system from exceeding critical engine or airspeed limits. Throttle movement is provided by a stepper motor acting through a linear actuator, which acts as a link between the stepper motor and throttle. The liner actuator can be overridden by pilot movement of the throttle and automatically disengages upon disagreement in the expected throttle position versus its actual position. Section 23.1329, amendment 23–49, only contained requirements for automatic pilot systems that act on the airplane flight controls. Autothrust systems are automatic systems that act on the thrust controls. These systems provide enhanced automation and safety, but may also introduce pilot confusion, countering the safety benefit. Transport Airplane regulation 14 CFR 25.1329, amendment 25–119, addresses these concerns. Therefore, these special conditions are based on § 25.1329 and provide additional requirements to standardize the pilot interface and system behavior and enhance pilot awareness of system active and armed modes. Type Certification Basis Under the provisions of § 21.101, Innovative Solutions must show that B200-series airplanes, as changed, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate (TC) No. A24CE 2 or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the ‘‘original type certification basis.’’ The regulations incorporated by reference in TC No. A24CE are as follows: 14 CFR part 23, amendments 23–1 through 23–9, plus various later part 23 amendments— depending on the model and serial number of the airplane—as noted on Type Certification Data Sheet A24CE. If the Administrator finds the applicable airworthiness regulations (i.e., 14 CFR part 23) do not contain adequate or appropriate safety standards for B200-series airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16. Special conditions are initially applicable to the model(s) for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on 2 See E:\FR\FM\27DER1.SGM http://rgl.faa.gov/. 27DER1
[Pages 66604-66607]
[FR Doc No: 2018-27952]
[Docket ID OCC-2018-0028]
OCC Guidelines Establishing Standards for Recovery Planning by
Certain Large Insured National Banks, Insured Federal Savings
Associations, and Insured Federal Branches; Technical Amendments
SUMMARY: The Office of the Comptroller of the Currency (OCC) is
amending its enforceable guidelines relating to recovery planning
standards for insured national banks, insured federal savings
associations, and insured federal branches (Guidelines) by increasing
the average total consolidated assets threshold for applying the
Guidelines from $50 billion to $250 billion. In addition, the OCC is
changing the Guidelines to decrease from 18 months to 12 months the
time within which a bank should comply with the Guidelines after the
bank becomes subject to them. Finally, the OCC is making technical
amendments to remove outdated compliance dates.
DATES: The final guidelines are effective on January 28, 2019.
FOR FURTHER INFORMATION CONTACT: Andra Shuster, Senior Counsel or Rima
Kundnani, Attorney, Chief Counsel's Office, (202) 649-5490; or, for
persons who are deaf or hard of hearing, TTY, (202) 649-5597, 400 7th
The 2008 financial crisis provided valuable lessons about the need
for financial institutions to have strong risk governance frameworks,
including plans for how to respond to and recover from the financial
effects of severe stress. This was particularly true for larger, more
complex banks given the potential they pose for systemic risk. In
response to these lessons, on September 29, 2016, the OCC published the
Guidelines establishing minimum standards for recovery planning by
insured national banks, insured federal savings associations, and
insured federal branches of foreign banks (banks) with average total
consolidated assets \1\ equal to or greater than $50 billion (covered
banks).\2\ The Guidelines state that a recovery plan should identify
(1) quantitative or qualitative indicators of the risk or existence of
severe stress that reflect a covered bank's particular vulnerabilities
and (2) a wide range of credible options that a covered bank could
undertake in response to the stress to restore its financial strength
\1\ Average total consolidated assets is defined in the
Guidelines and means the average total consolidated assets of the
bank or covered bank as reported on the bank's or covered bank's
Consolidated Reports of Condition and Income for the four most
recent consecutive quarters. See 12 CFR part 30, appendix E,
paragraph I.E.1.
\2\ 81 FR 66791 (Sep. 29, 2016). The Guidelines were issued
pursuant to section 39 of the Federal Deposit Insurance Act, 12
U.S.C. 1831p-1, which authorizes the OCC to prescribe enforceable
Under the Guidelines, a recovery plan should also address: (1)
Procedures for escalating decision-making to senior management or the
board of directors, (2) management reports, and (3) communication
procedures. In addition, the Guidelines explain how a bank should
calculate its average total consolidated assets and reserve the OCC's
authority to apply the Guidelines to a bank below the $50 billion
threshold if the agency determines a bank is highly complex or
otherwise presents a heightened risk. Finally, the Guidelines set out
phased-in compliance dates based on bank size.
II. Description of the Proposal, Comments Received, and Final
The OCC received three comments on the proposal. One comment came
from an individual, one from a trade association (Trade Association
Comment), and the other from four regional national banks (Banks
Asset Threshold. The OCC noted in the SUPPLEMENTARY INFORMATION
section of the Guidelines that large, complex institutions should
undertake recovery planning to be able to respond quickly to and
recover from the financial effects of severe stress on the institution.
Based on its experience to date in reviewing recovery plans, the OCC
believes that it is appropriate to raise the threshold for the
Guidelines to focus on those institutions that present greater risk to
the banking system. These larger, more complex, or potentially more
interconnected banks present the types of risks that could benefit most
from having the types of governance and planning processes that
identify and assist in responding to significant stress events.
In addition, at the time the Guidelines were published, the $50
billion recovery planning threshold was consistent with the scope of
Federal Deposit Insurance Corporation and Board of Governors of the
Federal Reserve System regulations \3\ that require certain entities to
prepare resolution plans under section 165 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.\4\ On May 24, 2018, the
Economic Growth, Regulatory Relief, and Consumer Protection Act (Act)
was enacted to promote economic growth, provide tailored economic
relief, and enhance consumer protections.\5\ Section 401 of the Act
raises from $50 billion to $250 billion the section 165 resolution
planning threshold.
\3\ See 12 CFR 381.2(f) and 243.2(f), respectively. See also 12
CFR 360.10.
\4\ Public Law 111-203, 124 Stat. 1376 (July 21, 2010).
\5\ Public Law 115-174, 132 Stat. 1296 (May 24, 2018).
Accordingly, the OCC proposed to increase from $50 billion to $250
billion the average total consolidated assets threshold at which the
Guidelines apply to banks.\6\ This change would reduce the number of
covered banks to which the Guidelines apply from 25 to 8, based on the
\6\ 83 FR 47313 (Sep. 19, 2018).
All three of the comments received addressed the threshold change.
The individual commenter expressed concern that raising the Guidelines'
asset threshold would provide too much leniency for banks in light of
the 2008 financial crisis. The Trade Association Comment strongly
supported the OCC's proposal to raise the threshold for the Guidelines
from $50 billion to $250 billion in average total consolidated assets
because it provides burden relief to the affected banks and permits the
OCC to allocate its resources over a smaller number of banks. The Banks
[[Page 66605]]
Comment suggested that the OCC replace the threshold with a risk-
sensitive alternative that more accurately reflects a bank's business
model and risk profile, like the systemic indicator score, which was
described as a more useful and better-calibrated measure of the
complexity and risk inherent in a bank's business model.
The OCC believes this threshold change is consistent with providing
necessary and appropriate burden relief to the affected banks while
retaining the requirements for the largest, most complex institutions.
Furthermore, the increased threshold is consistent with section 401 of
the Act's increase in the section 165 resolution planning threshold
applicable to systemically important bank holding companies. Therefore,
the OCC is adopting as final the proposed Guidelines' $250 billion
average total consolidated assets threshold.
Tailoring Approach for Banks Subject to the Guidelines. Both the
Trade Association Comment and the Banks Comment requested that the OCC
consider a tailored approach to the application of the Guidelines to
covered banks in order to focus recovery planning on issues that are
most relevant to the bank based on its risk profile and business model.
The trade association also requested that the OCC consider whether the
Guidelines should be applicable to all covered banks given the varying
degree of riskiness and complexity of these banks.
The Guidelines already recognize that each covered bank is unique
and expressly permit a bank to tailor its recovery plan so that it is
``specific to that covered bank and appropriate for its individual
size, risk profile, activities, and complexity, including the
complexity of its organizational and legal entity structure.'' \7\
Therefore, a covered bank that is less complex or has less risk may
tailor its recovery plan under the Guidelines accordingly. Given this
flexibility, the OCC does not think it is necessary to specifically
tailor the Guidelines based on different business models and risk
profiles of the covered banks nor do we think it is appropriate to
further reduce the number of banks subject to the Guidelines. In fact,
it may be even more important for a covered bank that is less complex
or has less risk due to fewer interconnections to have a robust
recovery plan. Such a bank may have identified fewer options for
recovery and therefore may be constrained in its ability to restore
financial strength in severe stress.
\7\ Appendix E to part 30, II.A. See also Comptroller's Handbook
for Recovery Planning, version 1.0 April 2018 at p. 6.
Biennial Cycle. Both the Trade Association Comment and the Banks
Comment suggested that the OCC should consider moving from an annual to
a biennial recovery plan cycle. The Trade Association Comment noted
that as was the case with resolution planning, this would give the OCC
more time to provide feedback and would give the covered banks more
time to prepare the plans, likely resulting in a better quality plan.
Both commenters also requested that the OCC allow each covered bank to
elect the timing of its two-year recovery plan cycle. This would permit
each bank to make a determination of whether or not to align the
preparation of its recovery plan with the preparation of its resolution
plan. Further, the Trade Association Comment requested that the OCC not
require re-approval of the recovery plan by the board of directors if
there has been no material change or event that has had a fundamental
and major impact on the covered bank's recovery plan since the board
previously approved the recovery plan.
The recovery plan and the recovery planning framework are important
to a bank's safety and soundness and enterprise governance and, thus,
the OCC believes that covered banks should review and revise the
recovery plan as necessary at least annually. With regard to electing
the timing of the recovery plan cycle, the preamble to the Guidelines
noted that ``management should have flexibility to conduct its annual
reviews on its preferred schedule'' and that ``OCC examiners will
assess the appropriateness and adequacy of the covered bank's ongoing
recovery planning process as part of the agency's regular supervisory
activities . . . [to] provide covered banks with the flexibility they
need.'' \8\ In addition to this flexibility, the Guidelines already
permit an appropriate committee of the board, rather than the entire
board, to review and approve the recovery plan.\9\ Therefore, no change
has been made to this part of the Guidelines.
\8\ 81 FR 66797 (Sept. 29, 2016).
\9\ Appendix E to part 30, III.B.
Transparency of Standards and Horizontal Review. The Trade
Association Comment suggested that recovery planning standards should
be more transparent in the future and that a supervisory horizontal
review of recovery plans may be difficult and less meaningful given the
differences in risk profiles and business models among the covered
banks. The OCC believes that the current process, which includes
discussion between the examiners and the covered banks, provides the
necessary transparency for recovery planning standards. While other
agencies may use horizontal review for resolution planning purposes,
the OCC does not intend to use such reviews in connection with recovery
Clarification for Banks under $250 Billion. The Trade Association
Comment requested that the OCC immediately clarify that no recovery
plans are expected of banks on or after January 1, 2019 if they do not
meet the $250 billion average total consolidated assets threshold in
order to avoid the significant and needless burden associated with
preparing the recovery plan. Given that these revised final Guidelines
will be effective in a short period of time, the OCC would not expect
banks with less than $250 billion in average total consolidated assets
to complete the annual process for review by management and review and
approval by the board of their 2018 recovery plans or to begin
preparing a 2019 recovery plan.
Compliance Date. Under the current Guidelines, a bank with less
than $50 billion in average total consolidated assets that subsequently
becomes a covered bank is required to comply with the Guidelines within
18 months. The OCC proposed amending this provision so that a bank that
has less than $250 billion in average total consolidated assets on the
effective date of the final rule and subsequently becomes a covered
bank should comply with the Guidelines within 12 months. Based upon
supervisory experience, the OCC has observed that 12 months is a
sufficient period of time for any bank that becomes a covered bank to
comply with the Guidelines. Finally, the OCC proposed technical
amendments to remove the compliance dates listed in the current
Guidelines, as the dates have all passed. The OCC did not receive any
comments on these changes. Therefore, these amendments will be adopted
In general, the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.) requires that in connection with a rulemaking, an agency prepare
that describes the impact of the rule on small entities. Under section
605(b) of the RFA, this analysis is not required if an agency certifies
substantial number of small entities and
[[Page 66606]]
publishes its certification and a brief explanatory statement in the
Federal Register along with its rule.
As part of its analysis, the OCC considered whether these revised
final Guidelines will have a significant economic impact on a
substantial number of small entities, pursuant to the RFA. Because
these revised final Guidelines will generally have no impact on banks
with less than $50 billion in total consolidated assets, no OCC-
supervised small entities will be affected. Therefore, the OCC
certifies that these revised final Guidelines will not have a
These revised final Guidelines include changes to an approved
collection of information pursuant to the provisions of the Paperwork
Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). In accordance
with the PRA, the OCC may not conduct or sponsor, and an organization
is not required to respond to, an information collection unless the
information collection displays a currently valid Office of Management
and Budget (OMB) control number.
The OCC submitted the information collection requirements contained
in the rule to the OMB at the proposed rule stage. Pursuant to 5 CFR
1320.11(c), the OMB filed a comment on the submission directing the OCC
to examine any public comment in response to the information collection
requirements, prepare a description of how the OCC has responded to the
comments (including comments on maximizing the practical utility of the
collection and minimizing the burden), and resubmit the information
collection requirements in connection with these revised final
The Guidelines found in 12 CFR part 30, appendix E, sections II.B.,
II.C., and III contain information collection requirements previously
approved by the OMB. Section II.B. specifies the elements of the
recovery plan, including an overview of the covered bank; triggers;
options for recovery; impact assessments; escalation procedures;
management reports; and communication procedures. Section II.C.
addresses the relationship of the plan to other covered bank processes
and coordination with other plans, including the processes and plans of
its bank holding company. Section III outlines management's and the
board's responsibilities. The threshold triggering these requirements
is being changed under these revised final Guidelines, resulting in a
reduction in the number of respondents under this collection.
The following revised information collection was submitted to OMB
Title: OCC Guidelines Establishing Standards for Recovery Planning
by Certain Large Insured National Banks, Insured Federal Savings
Associations, and Insured Federal Branches
OMB Control No.: 1557-0333.
Total Number of Respondents: 8 National Banks.
Total Burden per Respondent: 7,543 hours.
Total Burden for Collection: 60,344 hours.
Comments were invited on: (1) Whether the proposed collection of
information is necessary for the proper performance of the OCC's
functions, including whether the information has practical utility; (2)
the accuracy of the OCC's estimate of the burden of the proposed
information collection, including the cost of compliance; (3) ways to
collected; and (4) ways to minimize the burden of information
collection on respondents, including through the use of automated
collection techniques or other forms of information technology. We
received no comments on the proposed information collection.
The OCC analyzed these revised final Guidelines under the factors
set forth in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C.
1532). Under this analysis, the OCC considered whether these revised
final Guidelines include a Federal mandate that may result in the
or by the private sector, of $100 million or more in any one year
(adjusted for inflation). The OCC has determined that these revised
final Guidelines do not impose new mandates. Therefore, we conclude
that these revised final Guidelines will not result in an expenditure
of $100 million or more annually by State, local, and tribal
governments, or by the private sector.
The Administrative Procedure Act (APA) requires that a substantive
rule must be published not less than 30 days before its effective date,
unless, among other things, the rule grants or recognizes an exemption
or relieves a restriction. Section 302 of the Riegle Community
Development and Regulatory Improvement Act of 1994 (RCDRIA) requires
that regulations imposing additional reporting, disclosure, or other
first day of the calendar quarter after publication of the final rule,
unless, among other things, the agency determines for good cause that
the regulations should become effective before such time. These revised
final Guidelines will be effective 30 days after publication in the
Federal Register, which meets the APA effective date requirements.
Given that these revised final Guidelines do not impose any additional
reporting, disclosure, or other requirements on insured depository
institutions, but rather reduce reporting requirements, the effective
date of 30 days after publication in the Federal Register, rather than
the first day of the calendar quarter following publication, is
consistent with RCDRIA.
Section 302 of RCDRIA also requires the OCC to consider, consistent
with the principles of safety and soundness and the public interest,
any administrative burdens these revised final Guidelines would place
on insured depository institutions, including small depository
institutions, and their customers as well as the benefits of such
regulations when determining the effective date and administrative
compliance requirements of new regulations that impose new reporting,
disclosure, or other requirements on insured depository institutions.
The OCC has considered the changes made by these revised final
Guidelines and believes that the effective date of 30 days after
publication in the Federal Register is appropriate.
Section 722 of the Gramm-Leach-Bliley Act (12 U.S.C. 4809(a)),
requires the OCC to use plain language in all proposed and final rules
published after January 1, 2000. The OCC received no comment on these
matters and believes that these revised final Guidelines are written
List of Subjects in 12 CFR Part 30
Banks, Banking, Consumer protection, National banks, Privacy,
Safety and soundness, Reporting and recordkeeping requirements.
[[Page 66607]]
For the reasons set forth in the preamble, and under the authority
of 12 U.S.C. 93a and 12 U.S.C. 1831p-1, chapter I of title 12 of the
PART 30--SAFETY AND SOUNDNESS STANDARDS
Authority: 12 U.S.C. 1, 93a, 371, 1462a, 1463, 1464, 1467a,
1818, 1828, 1831p-1, 1881-1884, 3102(b) and 5412(b)(2)(B); 15 U.S.C.
1681s, 1681w, 6801, and 6805(b)(1).
2. Appendix E to part 30 is amended by:
a. Removing the phrase ``$50 billion'' and adding in its place the
phrase ``$250 billion'' everywhere that it appears;
b. Revising section I.B.1;
c. Removing section I.B.2 and I.B.3;
d. Redesignating section I.B.4 as section I.B.2;
e. In newly redesignated section I.B.2:
i. Removing ``January 1, 2017'' and adding in its place the
words``January 28, 2019''; and
ii. Removing the phrase ``18 months'' and adding in its place the
phrase ``12 months''.
Appendix E to Part 30--OCC Guidelines Establishing Standards for
Recovery Planning by Certain Large Insured National Banks, Insured
Federal Savings Associations, and Insured Federal Branches
1. A covered bank with average total consolidated assets,
calculated according to paragraph I.E.1. of this appendix, equal to
or greater than $250 billion as of January 28, 2019 should be in
compliance with this appendix on January 28, 2019.
[FR Doc. 2018-27952 Filed 12-26-18; 8:45 am]