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FIL-87-95 Attachment

[Federal Register: December 20, 1995 (Volume 60, Number 244)]

[Rules and Regulations ]

[Page 66047-66051]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]




 

[[Page 66047]]


 

_______________________________________________________________________


 

Part VII


 

Department of the Treasury

Office of the Comptroller of the Currency




 

12 CFR Part 25


 

Federal Reserve System




 

12 CFR Part 228


 

Federal Deposit Insurance Corporation




 

12 CFR Part 345


 

Department of the Treasury

Office of Thrift Supervision




 

12 CFR Part 563e




 

_______________________________________________________________________




 

Community Reinvestment Act Regulations; Joint Final Rule



 

[[Page 66048]]



 

DEPARTMENT OF THE TREASURY


 

Office of the Comptroller of the Currency


 

12 CFR Part 25


 

[Docket No. 95-07]

RIN 1557-AB32


 

FEDERAL RESERVE SYSTEM


 

12 CFR Part 228


 

[Regulation BB; Docket No. R-0822]


 

FEDERAL DEPOSIT INSURANCE CORPORATION


 

12 CFR Part 345


 

RIN 3064-AB27


 

DEPARTMENT OF THE TREASURY


 

Office of Thrift Supervision


 

12 CFR Part 563e


 

[Docket No. 95-203]

RIN 1550-AA93


 

 

Community Reinvestment Act Regulations


 

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);

Board of Governors of the Federal Reserve System (Board); Federal

Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,

Treasury (OTS).


 

ACTION: Joint final rule.


 

-----------------------------------------------------------------------


 

SUMMARY: The OCC, Board, FDIC, and OTS, (collectively, the Federal

financial supervisory agencies or agencies) are issuing this final rule

to make technical corrections and clarifications to their regulations

concerning the Community Reinvestment Act (CRA). Since the publication

of the agencies' joint CRA regulations, financial institutions and

others have alerted the agencies that two errors exist and that the

transition rules are confusing. This final rule is intended to correct

the errors and clarify the transition rules.


 

EFFECTIVE DATE: January 1, 1996.


 

FOR FURTHER INFORMATION CONTACT:

OCC: Stephen M. Cross, Deputy Comptroller for Compliance, (202)

874-5216; Matthew Roberts, Director, or Margaret Hesse, Attorney,

Community and Consumer Law Division, (202) 874-5750, Office of the

Comptroller of the Currency, 250 E Street SW., Washington, DC 20219.

Board: Glenn E. Loney, Associate Director, Division of Consumer and

Community Affairs, (202) 452-3585; Robert deV. Frierson, Assistant

General Counsel, Legal Division, (202) 452-3711; or Leonard N. Chanin,

Managing Counsel, Division of Consumer and Community Affairs, (202)

452-3667, Board of Governors of the Federal Reserve System, 20th Street

and Constitution Avenue NW., Washington, DC 20551.

FDIC: Bobbie Jean Norris, Chief, Fair Lending Section, Division of

Compliance and Consumer Affairs, (202) 942-3090; Robert W. Mooney, Fair

Lending Specialist, Division of Compliance and Consumer Affairs, (202)

942-3092; or Ann Hume Loikow, Counsel, Regulation and Legislation

Section, Legal Division, (202) 898-3796, Federal Deposit Insurance

Corporation, 550 17th Street NW., Washington, DC 20429.

OTS: Timothy R. Burniston, Assistant Director for Compliance

Policy, (202) 906-5629; Theresa A. Stark, Program Analyst, Compliance

Policy, (202) 906-7054; or John Flannery, Attorney, Regulations and

Legislation Division, Chief Counsel's Office, (202) 906-7293, Office of

Thrift Supervision, 1700 G Street NW., Washington, DC 20552.


 

SUPPLEMENTARY INFORMATION:


 

Introduction


 

The Federal financial supervisory agencies jointly are amending

their regulations implementing the CRA (12 U.S.C. 2901 et seq.). This

final rule makes technical corrections and clarifications to the

agencies' joint CRA regulations, 12 CFR parts 25, 228, 345, and 563e.

Those regulations establish the framework and criteria by which the

agencies assess an institution's record of helping to meet the credit

needs of its community, including low- and moderate-income

neighborhoods, consistent with safe and sound operations, and provide

that the agencies will take those assessments into account in reviewing

certain applications.


 

Background


 

The agencies published a joint notice of proposed rulemaking to

amend their CRA regulations on December 21, 1993 (58 FR 67466). In

response to over 6,700 comments received, the agencies published a

second joint notice of proposed rulemaking on October 7, 1994 (59 FR

51232). After considering over 7,200 comments received in response to

the second joint proposed rule, the agencies adopted a joint final rule

on May 4, 1995 (60 FR 22156) (1995 Rule).


 

Need for Final Rule


 

The agencies are amending their recently adopted CRA regulations to

correct two technical errors and to clarify the transition rules. Since

the publication of the 1995 Rule, a number of financial institutions

have expressed confusion about the transition rules.

The agencies find that notice and public procedure concerning this

joint final rule are impracticable, unnecessary, and contrary to the

public interest under 5 U.S.C. Sec. 553(b)(B). The agencies make this

finding because: (1) This joint final rule involves only technical

corrections and clarifications to the recently adopted 1995 Rule, which

was subject to public notice and comment; (2) some institutions will be

subject to the performance tests and standards of the 1995 Rule

beginning on January 1, 1996, so it is in the public interest that the

joint final rule be effective at that time; and (3) this joint final

rule makes no substantive change to the 1995 Rule, rather it makes

corrections and eliminates ambiguities associated with the transition

requirements.

Furthermore, under 5 U.S.C. Sec. 553(d)(3), the agencies have

determined to make this joint final rule effective with less than 30

days prior publication. The agencies find that there is good cause for

shortened notice due to the minor nature of the changes, the fact that

some institutions will be subject to the performance tests and

standards of the 1995 Rule beginning January 1, 1996, and for other

reasons previously discussed.


 

Corrections


 

The agencies' 1995 Rule contains two errors. First, an internal

cross reference is incorrect. The cross reference is found in the

discussions about how an institution may amend its strategic plan,

found at 12 CFR 25.27(h), 228.27(h), 345.27(h), and 563e.27(h). These

identical sections incorrectly state that the amendment process must be

done in accordance with the public participation requirements of

``paragraph (c) of this section.'' The correct cross reference is

``paragraph (d) of this section.'' The agencies are amending their

respective regulations to reflect the correct cross reference.

Second, an external cross reference is incorrect. In their joint

preamble to the final rule, the agencies discussed the definition of

``community development'' contained in the regulations. In the

preamble, the agencies stated that ``[t]he section of the definition

that discusses activities that promote economic development by

financing small business and farms refers to 13 CFR 121.802(a)(2), the

size limitations for the Small Business Administration's (SBA's) Small

Business Investment


 

[[Page 66049]]

Company and Development Company programs'' (60 FR 22159). The agencies'

final regulations do, indeed, reference 13 CFR 121.802(a)(2). However,

because of an amendment to the SBA regulation (59 FR 16953) made during

the agencies' CRA rulemaking process, this citation refers to only the

SBA's Development Company Programs. The correct reference should be 13

CFR 121.802(a) (2) and (3), which include both the Development Company

and Small Business Investment Company Programs, as intended. Therefore,

the agencies are amending the cross references in 12 CFR 25.12(h)(3),

228.12(h)(3), 345.12(h)(3), and 563e.12(g)(3). The citations are

changed from ``13 CFR 121.802(a)(2)'' to ``13 CFR 121.802(a) (2) and

(3).''


 

Clarification


 

The agencies are amending their transition rules, found at 12 CFR

25.51, 228.51, 345.51, and 563e.51. The transition rules are correct

for purposes of incorporation into and expiration from the Code of

Federal Regulations. However, the banks and thrifts that must comply

with them have expressed confusion regarding how the rules apply.

The transition rules state the final date of applicability to all

institutions with regard to each particular provision of the CRA

regulation. However, the transition rules inadequately explain the

transition from the former regulation to the new regulation. The

agencies are clarifying that when an institution, either mandatorily or

voluntarily, becomes subject to the requirements of the performance

tests and standards in the 1995 Rule (12 CFR 25.21 through 25.27,

228.21 through 228.27, 345.21 through 345.27, and 563e.21 through

563e.27, as applicable), the institution must comply with all aspects

of the 1995 Rule (12 CFR 25.11 through 25.44, 228.11 through 228.44,

345.11 through 345.44, or 563e.11 through 563e.44) applicable to it.

For example, the transition rules state that the agencies will

evaluate small institutions under the small institution performance

standards described in 12 CFR 25.26, 228.26, 345.26, and 563e.26 on

January 1, 1996. However, so that the agencies may evaluate a small

institution under the small institution performance standards, the

small institution must also comply with other provisions of the

regulation that are pertinent. Those provisions would include

delineating an assessment area (12 CFR 25.41, 228.41, 345.41, or

563e.41, as applicable), maintaining a public file (12 CFR 25.43,

228.43, 345.43, or 563e.43, as applicable), and providing the proper

public notice (12 CFR 25.44, 228.44, 345.44, or 563e.44, as

applicable). The transition rules at 12 CFR 25.51(c) (4) and (5),

228.51(c) (4) and (5) 345.51(c) (4) and (5), and 563e.51(c) (4) and

(5), however, state that these requirements do not become applicable

until January 1 or July 1, 1997. The 1997 dates refer to the last point

in time that these requirements become effective for any institution.

However, the requirements become effective for small institutions as

soon as the small institutions are subject to evaluation under the

small institution performance standards.

In some cases, an institution may choose to comply with the

performance standards and tests of the May 1995 rule before it must do

so. For instance, a large institution may elect to be evaluated under

the lending, investment and service tests (12 CFR 25.22 through 25.24,

228.22 through 228.24, 345.22 through 345.24, or 563e.22 through

563e.24, as applicable) before it is required to do so in July of 1997.

In this case, the institution must comply with all other provisions of

the 1995 Rule.

Similarly, the transition rules state that, for example, the

section of the former CRA regulation (12 CFR 25.6, 228.6, 345.6 or

563e.6, as applicable) that addresses public notice requirements does

not expire until January 1, 1997. However, the public notice

requirements (12 CFR 25.44, 228.44, 345.44 or 563e.44, as applicable)

in the 1995 Rule are different from the former requirements.

Institutions would find it confusing, if not impossible, to comply

completely with both provisions. Therefore, once an institution either

voluntarily or mandatorily becomes subject to the performance tests and

standards of the 1995 Rule, the provisions of the former CRA regulation

(12 CFR 25.3 through 25.7, 228.3 through 25.7, 345.3 through 345.7, or

563e.3 through 563e.7, as applicable) no longer apply to that

institution, even though they may continue to apply to other

institutions.

Therefore, to clarify these provisions, the agencies are amending

12 CFR 25.51(a), 228.51(a), 345.51(a), and 563e.51(a) by adding at the

end of paragraph (a), a sentence explaining that once an institution is

either voluntarily or mandatorily subject to the performance tests and

standards of the 1995 Rule, the institution must comply with all of the

requirements of the 1995 Rule and is no longer subject to the

requirements of the former CRA regulation.


 

Regulatory Flexibility Act


 

Pursuant to section 605(b) of the Regulatory Flexibility Act, the

OCC, Board, FDIC, and OTS hereby certify that this joint final rule

will not have a significant economic impact on a substantial number of

small entities. The agencies expect that this joint final rule will not

have significant secondary or incidental effects on a substantial

number of small entities, or create any additional burden on small

entities. The joint final rule merely makes technical corrections to

two cross-references and clarifies requirements of the transition rules

already adopted by the agencies. These changes will not increase and

may, in fact, reduce the burden on institutions because they will make

the rules clearer. Accordingly, a regulatory flexibility analysis is

not required.


 

Paperwork Reduction Act of 1995


 

There are no collection of information requirements in this joint

final rule.


 

Executive Order 12866


 

OCC and OTS: The OCC and the OTS have determined that this joint

final rule is not a significant regulatory action as defined in

Executive Order 12866.


 

Unfunded Mandates Reform Act of 1995


 

OCC and OTS: Section 202 of the Unfunded Mandates Reform Act of

1995, Pub. L. 104-4, 109 Stat. 48 (1995) (Unfunded Mandates Act),

requires that covered agencies prepare a budgetary impact statement

before promulgating a rule that includes any 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. If a budgetary impact statement is required, section 205 of

the Unfunded Mandates Act also requires covered agencies to identify

and consider a reasonable number of regulatory alternatives before

promulgating a rule. As discussed in the preamble, this joint final

rule amends the agencies' CRA regulations to make two technical

corrections and one clarification. Therefore, the OCC and the OTS have

determined that the joint final rule will not result in expenditures by

State, local, and tribal governments, or by the private sector, of more

than $100 million in any one year. Accordingly, the OCC and the OTS

have not prepared a budgetary impact statement or specifically

addressed the regulatory alternatives considered.


 

[[Page 66050]]



 

List of Subjects


 

12 CFR Part 25


 

Community development, Credit, Investments, National banks,

Reporting and recordkeeping requirements.


 

12 CFR Part 228


 

Banks, Banking, Community development, Credit, Federal Reserve

System, Investments, Reporting and recordkeeping requirements.


 

12 CFR Part 345


 

Banks, Banking, Community development, Credit, Investments,

Reporting and recordkeeping requirements.


 

12 CFR Part 563e


 

Community development, Credit, Investments, Reporting and

recordkeeping requirements, Savings associations.


 

OFFICE OF THE COMPTROLLER OF THE CURRENCY


 

12 CFR CHAPTER I


 

For the reasons discussed in the joint preamble, 12 CFR part 25 is

amended as follows:


 

PART 25--[AMENDED]


 

1. The authority citation for part 25 continues to read as follows:


 

Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215,

215a, 481, 1814, 1816, 1828(c), and 2901 through 2907.



 

Sec. 25.12 [Amended]


 

2. In Sec. 25.12(h)(3), the cross reference ``13 CFR

121.802(a)(2)'' is revised to read ``13 CFR 121.802(a) (2) and (3)''.



 

Sec. 25.27 [Amended]


 

3. In the last sentence of Sec. 25.27(h), the internal cross

reference ``paragraph (c) of this section'' is revised to read

``paragraph (d) of this section''.

4. Paragraph (a) of Sec. 25.51 is amended by adding a sentence at

the end of the paragraph to read as follows:



 

Sec. 25.51 Transition rules.


 

(a) * * * Notwithstanding paragraph (c) of this section, when a

bank, either voluntarily or mandatorily, becomes subject to the

performance tests and standards of Secs. 25.21 through 25.27, the bank

must comply with all the pertinent requirements of Secs. 25.11 through

25.44, and no longer must comply with the requirements of Secs. 25.3

through 25.7.

* * * * *

Dated: December 8, 1995.

Eugene A. Ludwig,

Comptroller of the Currency.


 

FEDERAL RESERVE SYSTEM


 

12 CFR CHAPTER II


 

For the reasons discussed in the joint preamble, 12 CFR part 228 is

amended as follows:


 

PART 228--[AMENDED]


 

1. The authority citation for part 228 continues to read as

follows:


 

Authority: 12 U.S.C. 321, 325, 1828(c), 1842, 1843, 1844, and

2901 et seq.



 

Sec. 228.12 [Amended]


 

2. In Sec. 228.12(h)(3), the cross reference ``13 CFR

121.802(a)(2)'' is revised to read ``13 CFR 121.802(a) (2) and (3)''.



 

Sec. 228.27 [Amended]


 

3. In the last sentence of Sec. 228.27(h), the internal cross

reference ``paragraph (c) of this section'' is revised to read

``paragraph (d) of this section''.

4. Paragraph (a) of Sec. 228.51 is amended by adding a sentence at

the end of the paragraph to read as follows:



 

Sec. 228.51 Transition rules.


 

(a) * * * Notwithstanding paragraph (c) of this section, when a

bank, either voluntarily or mandatorily, becomes subject to the

performance tests and standards of Secs. 228.21 through 228.27, the

bank must comply with all the pertinent requirements of Secs. 228.11

through 228.44, and no longer must comply with the requirements of

Secs. 228.3 through 228.7.

* * * * *

By order of the Board of Governors of the Federal Reserve

System, December 8, 1995.

William W. Wiles,

Secretary of the Board.


 

FEDERAL DEPOSIT INSURANCE CORPORATION


 

12 CFR CHAPTER III


 

For the reasons discussed in the joint preamble, 12 CFR part 345 is

amended as follows:


 

PART 345--[AMENDED]


 

1. The authority citation for part 345 continues to read as

follows:


 

Authority: 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u and 2901-

2907, 3103-3104, and 3108(a).



 

Sec. 345.12 [Amended]


 

2. In Sec. 345.12(h)(3), the cross reference ``13 CFR

121.802(a)(2)'' is revised to read ``13 CFR 121.802(a) (2) and (3)''.



 

Sec. 345.27 [Amended]


 

3. In the last sentence of Sec. 345.27(h), the internal cross

reference ``paragraph (c) of this section'' is revised to read

``paragraph (d) of this section''.

4. Paragraph (a) of Sec. 345.51 is amended by adding a sentence at

the end of the paragraph to read as follows:



 

Sec. 345.51 Transition rules.


 

(a) * * * Notwithstanding paragraph (c) of this section, when a

bank, either voluntarily or mandatorily, becomes subject to the

performance tests and standards of Secs. 345.21 through 345.27, the

bank must comply with all the pertinent requirements of Secs. 345.11

through 345.44, and no longer must comply with the requirements of

Secs. 345.3 through 345.7.

* * * * *

By order of the Board of Directors of the Federal Deposit

Insurance Corporation.


 

Dated: December 8, 1995.

Jerry L. Langley,

Executive Secretary.


 

OFFICE OF THRIFT SUPERVISION


 

12 CFR CHAPTER V


 

For the reasons discussed in the joint preamble, 12 CFR part 563e

is amended as follows:


 

PART 563e--[AMENDED]


 

1. The authority citation for part 563e continues to read as

follows:


 

Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1814, 1816,

1828(c), and 2901 through 2907.



 

Sec. 563e.12 [Amended]


 

2. In Sec. 563e.12(g)(3), the cross reference ``13 CFR

121.802(a)(2)'' is revised to read ``13 CFR 121.802(a) (2) and (3)''.



 

Sec. 563e.27 [Amended]


 

3. In the last sentence of Sec. 563e.27(h), the internal cross

reference ``paragraph (c) of this section'' is revised to read

``paragraph (d) of this section''.

4. Paragraph (a) of Sec. 563e.51 is amended by adding a sentence at

the end of the paragraph to read as follows:



 

Sec. 563e.51 Transition rules.


 

(a) * * * Notwithstanding paragraph (c) of this section, when a

savings association, either voluntarily or mandatorily, becomes subject

to the performance tests and standards of Secs. 563e.21 through

563e.27, the savings association must comply with all the pertinent

requirements of Secs. 563e.11 through 563e.44, and no longer must

comply with the requirements of Secs. 563e.3 through 563e.7.

* * * * *


 

[[Page 66051]]


 

Dated: December 13, 1995.


 

By the Office of Thrift Supervision.

Jonathan L. Fiechter,

Acting Director.

[FR Doc. 95-30823 Filed 12-19-95; 8:45 am]

BILLING CODE 4810-33-P

Last Updated: March 24, 2024