Proposed Rule: Regulatory Review Amendments

Tuesday,
July 3, 2007
Part II
Department of the
Treasury
Office of the Comptroller of the
Currency
12 CFR Parts 1, 2, et al.

Regulatory Review Amendments;
Proposed Rule
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36550 Federal Register / Vol. 72, No. 127 / Tuesday, July 3, 2007 / Proposed Rules
DEPARTMENT OF THE TREASURY • Mail: Office of the Comptroller of Director, Bank Information Technology,
the Currency, 250 E Street, SW., Mail (202) 874–4593, Office of the
Office of the Comptroller of the Stop 1–5, Washington, DC 20219. Comptroller of the Currency, 250 E
Currency • Hand Delivery/Courier: 250 E Street SW., Washington, DC 20219.
Street, SW., Attn: Public Information SUPPLEMENTARY INFORMATION:
12 CFR Parts 1, 2, 3, 4, 5, 7, 9, 10, 11, Room, Mail Stop 1–5, Washington, DC
12, 16, 19, 21, 22, 23, 24, 26, 27, 28, 31, 20219. Introduction
32, 34, 37, and 40 Instructions: You must include The OCC seeks to ensure that our
[Docket ID OCC–2007–0008] ‘‘OCC’’ as the agency name and ‘‘Docket regulations effectively advance our
Number OCC–2007–0008’’ in your mission to promote the safety and
RIN 1557–AC79 comment. In general, OCC will enter all soundness of the national banking
comments received into the docket and system, ensure that national banks can
Regulatory Review Amendments publish them on Regulations.gov compete effectively in the financial
AGENCY: Office of the Comptroller of the without change, including any business services marketplace, and foster fairness
Currency, Treasury. or personal information that you and integrity in national banks’ dealings
ACTION: Notice of proposed rulemaking. provide such as name and address with their customers, without imposing
information, e-mail addresses, or phone regulatory burden unnecessary to the
SUMMARY: The Office of the Comptroller numbers. Comments, including achievement of those objectives.
of the Currency (OCC) is proposing to attachments and other supporting Unnecessary regulatory burden not only
revise its rules in order to reduce materials, received are part of the public imposes costs on banks that may
unnecessary regulatory burden, to record and subject to public disclosure. translate into higher prices for
update certain rules, and to make Do not enclose any information in your consumers, but also can hamper
certain technical, clarifying, and comment or supporting materials that competition and lead to inefficient use
conforming changes to its regulations. you consider confidential or of resources.
This proposal results from the OCC’s inappropriate for public disclosure. The OCC regularly reviews its
most recent review of its regulations to You may review comments and other regulations to identify opportunities to
ensure that they effectively advance our related materials by any of the following streamline regulations or regulatory
mission to promote the safety and methods: processes. This proposal results from
soundness of the national banking • Viewing Comments Electronically: our most recent review. Moreover, the
system, ensure that national banks can Go to http://www.regulations.gov, select proposal furthers the purposes of
compete effectively in the financial ‘‘Comptroller of the Currency’’ from the section 2222 of the Economic Growth
services marketplace, and foster fairness agency drop-down menu, then click and Regulatory Paperwork Reduction
and integrity in national banks’ dealings ‘‘Submit.’’ In the ‘‘Docket ID’’ column, Act of 1996 (EGRPRA),1 which directs
with their customers, without imposing select ‘‘OCC–2007–0008’’ to view public the OCC, along with the other agencies
regulatory burden unnecessary to the comments for this notice of proposed that are members of the Federal
achievement of those objectives. The rulemaking. Financial Institutions Examination
proposal also furthers the purposes of • Viewing Comments Personally: You Council, to identify regulations that are
the Economic Growth and Regulatory may personally inspect and photocopy outdated, unnecessary, or unduly
Paperwork Reduction Act of 1996, comments at the OCC’s Public burdensome, and to eliminate them if
which, among other provisions, directs Information Room, 250 E Street, SW., appropriate.2 Finally, the proposal
the OCC, to identify and, if appropriate, Washington, DC. You can make an revises certain of our regulations to
eliminate regulations that are outdated, appointment to inspect comments by conform with the statutory changes
unnecessary, or unduly burdensome. calling (202) 874–5043. made by the Financial Services
DATES: Comments must be received by • Docket: You may also view or Regulatory Relief Act of 2006 (FSRRA),
September 4, 2007. request available background which was enacted on October 13,
ADDRESSES: You may submit comments documents and project summaries using 2006.3
the methods described above. To reduce or eliminate unnecessary
by any of the following methods:
• Federal eRulemaking Portal— FOR FURTHER INFORMATION CONTACT: regulatory burden, the OCC is proposing
‘‘Regulations.gov’’: Go to http:// Stuart E. Feldstein, Assistant Director, amendments to a variety of regulations
www.regulations.gov, select Legislative and Regulatory Activities, that would: (1) Provide additional
‘‘Comptroller of the Currency’’ from the (202) 874–5090 and Heidi Thomas, flexibility with respect to certain aspects
agency drop-down menu, then click Special Counsel, Legislative and of national banks’ structure and
‘‘Submit.’’ In the ‘‘Docket ID’’ column, Regulatory Activities, (202) 874–5090, activities; (2) streamline procedures
select ‘‘OCC–2007–0008’’ to submit or Office of the Comptroller of the required in connection with particular
view public comments and to view Currency, 250 E Street SW., types of changes in structure and the
supporting and related materials for this Washington, DC 20219. In addition, you 1 See EGRPRA, Pub. L. 104–208, § 2222, 110 Stat.
notice of proposed rulemaking. The may also contact the following OCC staff 3009–394, 3009–314–315 (Sept. 30, 1996), codified
‘‘User Tips’’ link at the top of the for further information regarding at 12 U.S.C. 3311.
Regulations.gov home page provides specific amendments: licensing/ 2 Pursuant to EGRPRA’s regulatory review
information on using Regulations.gov, corporate applications-related requirement, the OCC, together with the Board of
amendments: Colleen Coughlin, Senior Governors of the Federal Reserve System (Federal
including instructions for submitting or Reserve Board), the Federal Deposit Insurance
viewing public comments, viewing Licensing Analyst, Licensing Activities
Corporation (FDIC), and the Office of Thrift

other supporting and related materials, Division, (202) 874–4465, Jan Kalmus, Supervision (OTS), has published six notices
and viewing the docket after the close NBE-Senior Licensing Analyst, 202– seeking comment on ways to reduce unnecessary
874–4608, and Yoo Jin Na, Licensing regulatory burden and has conducted outreach
of the comment period. meetings with bankers and consumer groups. For
• E-mail: Analyst, Licensing Activities Division, additional information about the agencies’ EGRPRA
regs.comments@occ.treas.gov. 202–874–4604; electronic banking- review, see http://www.EGRPRA.gov.
• Fax: (202) 874–4448. related amendments: Aida Plaza Carter, 3 Pub. L. 109–351, 120 Stat. 1966 (Oct. 13, 2006).
Federal Register / Vol. 72, No. 127 / Tuesday, July 3, 2007 / Proposed Rules 36551
conduct of certain activities; (3) • Amendments to part 34, which Æ Amendments to part 5 that simplify
incorporate into our rules interpretive pertains to real estate lending and a national bank’s authority to pay a
opinions that the OCC has previously appraisals, to provide national banks dividend and that remove the
published; (4) harmonize the OCC’s with additional flexibility in selecting geographic limits with respect to bank
rules with rules issued by other Federal indices from which adjustments to service companies;
agencies that apply to national banks; interest rates in adjustable rate Æ Amendments to the OCC’s Change
(5) eliminate inconsistencies in certain mortgages (ARMs) are derived. in Bank Control Act (CBCA) regulation,
of our rules; (6) update our rules to We also propose to make certain § 5.50, that (1) Provide that a CBCA
reflect recent statutory changes; and (7) technical and conforming amendments notice must include information on the
make technical and conforming to our rules, including: future prospects of the national bank to
amendments to our rules to improve • Changes to part 4 (the OCC’s be acquired, (2) permit the OCC to
their clarity and consistency. organizational rules) and part 5 consider the future prospects of the
The most significant of these (corporate application requirements for bank as a basis to issue a notice of
amendments include the following: national banks) to reflect the OCC’s disapproval, and (3) permit the OCC to
• Amendments to part 1, which most current organizational structure. impose conditions on its action not to
pertain to investment securities, to • Changes to conform the OCC’s disapprove a CBCA notice;
provide the OCC with additional regulations—at parts 5 (corporate Æ Amendments to part 7 that permit
flexibility in administering part 1 as activities), 23 (leasing), 31 (extensions of national banks to choose whether to
investment products evolve, codify credit to insiders and transactions with provide for cumulative voting in the
existing precedent, and clarify affiliates), and 32 (lending limits)—to election of their directors;
applicable standards. Regulation W issued by the Board of Æ Amendments to part 19 that reflect
• Amendments to part 5, which Governors of the Federal Reserve changes to the OCC’s enforcement
governs national banks’ corporate System (Federal Reserve Board),4 which authority with respect to institution-
activities, to: governs transactions between Federal affiliated parties; and
Æ Codify prior OCC interpretive Reserve member banks and their Æ Amendments to part 24
opinions recognizing that national bank affiliates and implements sections 23A (community development investments)
operating subsidiaries may take the form and 23B of the Federal Reserve Act.5 that implement section 305 of the
of limited partnerships; • Amendments to part 9 (fiduciary FSRRA.
Æ Update the standards the OCC uses activities of national banks) and part 12 Set forth below is a detailed section-
to determine that a national bank (Securities Exchange Act disclosure by-section description of the proposed
exercises control over its operating rules) to reflect changes in certain changes. For ease of reference, the
subsidiary to address changes in regulations adopted by the Securities changes are presented in the numerical
relevant accounting principles; and Exchange Commission (SEC). order of the parts of the OCC’s rules that
Æ Clarify when a national bank may
• Amendments to part 31 to remove we propose to amend.
file an after-the-fact notice to establish
an obsolete interpretation relating to
or acquire an operating subsidiary and Section-by-Section Description of
loans to third parties secured by both
when the bank must file an application; Proposed Changes
affiliate-issued securities and
and
nonaffiliate collateral. Part 1—Investment Securities
Æ Expand the list of operating
• Amendments to parts 1, 2, 3, 5, 10, Part 1 of our regulations (12 CFR part
subsidiary activities eligible for after-
11, 16, 19, 21, 22, 26, 27, 28, and 40 to 1) prescribes the standards under which
the-fact notice.
• Amendments to part 5 to eliminate implement section 8 of the 2004 District national banks may purchase, sell, deal
multiple, repetitive applications when a of Columbia Omnibus Authorization in, underwrite, and hold securities,
national bank opens an intermittent Act,6 which removed the OCC as the consistent with the National Bank Act
branch to provide branch banking appropriate Federal banking agency for (12 U.S.C. 24 (Seventh)) and safe and
services for one or more limited periods financial institutions established under sound banking practices. The proposed
of time each year at a specified site the Code of Law for the District of amendments to this part clarify the
during a specified recurring event, such Columbia (DC banks) and substituted applicable standards by codifying
as during a college registration period or the FDIC or the Federal Reserve Board, existing precedent and provide the OCC
a State fair. as appropriate to the bank’s charter with additional flexibility to administer
• Amendments to part 7, which type.7 part 1 as investment products evolve.
pertains to national banks’ activities and • Amendments to conform our
operations, to provide national banks regulations to the changes made by the Authority, Purpose, and Scope (§ 1.1)
greater flexibility to facilitate customers’ FSRRA, including: National banking law explicitly
financial transactions by issuing authorizes the OCC to determine the
4 12
CFR part 223.
financial guarantees, provided the types of investment securities a national
5 12
U.S.C. 371c and 371c–1.
guarantees are reasonably ascertainable 6 Pub. L. 108–386, 118 Stat. 2228 (2004) (the DC
bank may purchase.8 Part 1 currently
in amount and comply with applicable Bank Act). The DC Bank Act took effect on October
provides a general definition of the term
law. 30, 2004. ‘‘investment security,’’ describes several
• Amendments to part 7, to codify 7 Under the DC Bank Act, the FDIC is the categories, or types, of permissible
OCC electronic banking precedent and appropriate Federal banking agency for an insured investment securities, and prescribes
adapt the OCC’s rules to certain current bank chartered under District of Columbia law that such limitations as apply to a national
is not a member of the Federal Reserve System, and
developments. bank’s investment in each type. The
the Federal Reserve Board is the appropriate

• Amendments to part 16, the OCC’s Federal banking agency for a bank chartered under proposal complements these specifics
securities offering disclosure rules, to District of Columbia law that is a member of the by adding a provision recognizing that
eliminate unnecessary filing Federal Reserve System, whether or not insured. the OCC also may determine, on a case-
Thus, while DC banks are no longer covered by
requirements and clarify the exemptions these OCC regulations, they are subject to by-case basis, that a national bank may
to the OCC’s registration requirements comparable regulatory regimes administered by the
for certain transactions. FDIC or the Federal Reserve Board. 8 12 U.S.C. 24 (Seventh).
acquire an investment security that is credit quality and marketability issuance of individual minimum capital
not set out as one of the generic types standards generally applicable to requirements and capital directives. The
of securities listed in the regulation, investment securities. current rule provides that local currency
provided the bank’s investment is claims on, or unconditionally
Securities Held Based on Estimates of
consistent with section 24 (Seventh) and guaranteed by, non-OECD central
Obligor’s Performance (§ 1.3(i))
with safe and sound banking practices. governments receive a zero percent risk
In making that determination, the OCC Part 1 defines an investment security weight to the extent the bank has local
will consider all relevant factors, in terms of both asset quality and currency liabilities in that country. We
including an evaluation of the risk marketability.10 Section 1.2(f) further propose to remove the current
characteristics of the particular defines a ‘‘marketable’’ security as one restriction on the location of the
instrument in comparison with the risk that is: (1) Registered under the offsetting liability. Thus, the proposal
characteristics of investments that the Securities Act of 1933 (Securities Act),11 would provide a zero percent risk
OCC has previously authorized, as well (2) a municipal revenue bond exempt weight to the extent the bank has
as the bank’s ability effectively to from registration under the Securities liabilities in that currency. This would
manage such risks. In approving such an Act, (3) offered or sold pursuant to align the rule more closely with foreign
investment, the OCC may impose limits Securities and Exchange Commission exchange risk.
or conditions as appropriate under the (SEC) Rule 144A 12 and rated investment This proposal also removes DC banks
circumstances for safety and soundness grade or the credit equivalent, or (4) from the definition of ‘‘bank’’ in § 3.2(b).
considerations. ‘‘can be sold with reasonable Pursuant to the DC Bank Act, DC banks
In addition, this proposal removes the promptness at a price that corresponds will be subject to the regulatory capital
now-obsolete reference to DC banks reasonably to its fair value.’’ 13 requirements prescribed either by the
from the scope of part 1 (§ 1.1(c)), thus Section 1.3(i), in contrast, articulates FDIC or the Federal Reserve Board,
eliminating the applicability of part 1 to different asset quality and marketability depending on whether the bank is a
DC banks. standards. That section permits a member of the Federal Reserve System.
Pooled Investments (§ 1.3(h)) national bank to treat a debt security as Part 4—Organization and Functions,
an investment security ‘‘if the bank Availability and Release of
Current § 1.3(h) allows a national concludes, on the basis of estimates that Information, Contracting Outreach
bank to purchase and sell shares in an the bank reasonably believes are
investment company provided that the Program, Post-Employment Restrictions
reliable, that the obligor will be able to for Senior Examiners
portfolio of the investment company is satisfy its obligations under that
limited to investment securities security,’’ and the bank believes that the The proposal updates § 4.4 to reflect
authorized in part 1. However, markets security may be sold with reasonable the fact that, under the OCC’s current
increasingly are offering securitized, organizational structure, the Large Bank
promptness at a price that corresponds
pooled investment vehicles that hold Supervision Department supervises the
reasonably to its fair value.14 The
bank-permissible assets not limited to largest national banks. It also amends
standard of marketability in the
investment securities. For example, a § 4.5 by updating OCC district office
‘‘reliable estimates’’ provision differs
bank may seek to purchase investment addresses and the geographical coverage
from, and is more restrictive than, the
grade shares in an investment company of those offices resulting from the OCC’s
marketability definition in § 1.2(f), in
where the underlying assets are loans. district office reorganization.
that it does not contain all of the
In that case, the bank’s risk exposure is
elements of the definition in § 1.2(f). Part 5—Rules, Policies, and Procedures
comparable to, or lower than, its
This proposal harmonizes these for Corporate Activities
exposure when it purchases shares of
identically rated and marketable pooled marketability standards by amending
Part 5 establishes rules, policies, and
vehicles composed of part 1 investment § 1.3 to reflect the same standard as in
procedures for national banks’ corporate
securities. § 1.2.
activities and corporate structure. It also
Recent OCC precedents permit a Part 2—Sales of Credit Life Insurance contains procedural requirements for
national bank to purchase shares in the filing of corporate applications,
investment vehicles where the Part 2 sets forth the principles and
underlying assets are not limited to standards that apply to a national bank’s including the circumstances under
provision of credit life insurance and which applications or notices are
permissible investment securities so required, and the required content of the
long as the underlying assets otherwise the limitations that apply to the receipt
of income from those sales by certain filing. A description of our amendments
are bank permissible.9 This proposal
codifies the precedents by amending individuals and entities associated with to part 5 is set forth below, with
the bank. This proposed rule removes substantive amendments presented first,
§ 1.3(h) to clarify that banks have the followed by technical or conforming
authority to invest in entities holding DC banks from the definition of ‘‘bank’’
set forth in § 2.2(a). amendments.
pooled assets, provided that the
underlying assets are those that a Part 3—Minimum Capital Ratios; Fiduciary Powers (§ 5.26)
national bank may purchase and sell for Issuance of Directives The OCC’s current rule requires a
its own account. Specifically, this national bank filing an application for
proposal deletes the phrase ‘‘under this Part 3 establishes the minimum
approval to offer fiduciary services to
part’’ both times it appears in § 1.3(h) capital ratios that apply to national
provide an opinion of counsel that the
and revises the heading to read ‘‘Pooled banks, sets out in appendices the rules
proposed fiduciary activities do not
investments.’’ Investments made under governing the computation of those
violate applicable Federal or State law.
the proposed § 1.3(h) must meet certain ratios, and provides procedures for the
Our experience has been, however, that
10 12 CFR 1.2(e).
an opinion of counsel often is not
9 See, e.g., Interpretive Letter No. 911 (June 4,
11 15 U.S.C. 77a, et seq. necessary to enable the OCC to conclude
2001) (national bank may purchase interests in loan
fund either pursuant to lending authority or as
12 17 CFR 230.144A. that the proposed fiduciary activities are
securities on the basis of reliable estimates of the 13 12 CFR 1.2(f). permissible. Moreover, an opinion of
issuer). 14 See 12 CFR 1.3(i)(1). counsel currently is not required for
expedited applications filed by ‘‘eligible does not affect the legal requirements Second, control may be established if
banks.’’15 Accordingly, the proposal prescribing the conditions under which the parent bank ‘‘otherwise controls’’
eliminates the requirement for an a national bank may establish or retain the operating subsidiary and no other
opinion of counsel with respect to all branches pursuant to the national bank party controls more than 50 percent of
applications to exercise fiduciary branching statute at 12 U.S.C. 36. the voting interest (or similar type of
activities, unless the OCC specifically controlling interest) in the subsidiary.
Operating Subsidiaries (§ 5.34) The proposal revises the current
requests an opinion. We note that the
removal of the requirement to provide Section 5.34 of the OCC’s rules standard to provide that a national bank
the OCC with an opinion of counsel authorizes national banks to establish or may invest in an operating subsidiary if
does not relieve the bank of its acquire operating subsidiaries as a it satisfies the following two
responsibility to ensure that its vehicle to exercise their powers to requirements: (1) The bank has the
fiduciary activities comport with conduct the business of banking.18 ability to control the management and
applicable Federal and State law. We propose to make several changes operations of the subsidiary by owning
to § 5.34 to update the standards for more than 50 percent of the voting
Establishment, Acquisition, and determining whether a subsidiary is interest in the subsidiary, or otherwise;
Relocation of a Branch—Intermittent controlled by the parent bank in light of and (2) the operating subsidiary is
Branches (§ 5.30) changes in accounting standards, to consolidated with the bank under
Section 5.30 describes the procedures clarify the type of entity that may Generally Accepted Accounting
and standards governing OCC review qualify as an operating subsidiary, and Principles (GAAP).
and approval of a national bank’s to modify the standards under which The first requirement relating to the
application to establish a new branch or transactions to establish or acquire ability to control the subsidiary refines
to relocate a branch. It is unclear under operating subsidiaries qualify for after- the current standard by tying
the current regulation whether a bank the-fact notice procedures rather than qualification as an operating subsidiary
must refile an application under § 5.30 the filing of an application. None of the more closely to the bank’s control of the
each year to operate branches on a proposed revisions alters the business activities of the subsidiary, a
recurring basis at the same location or fundamental characteristics of an factor that better reflects the status of
event (such as an annual State fair or at operating subsidiary, that is, that an the operating subsidiary as a vehicle
a specific college campus during operating subsidiary may conduct only used by the bank to exercise its powers
registration periods) even where all of bank-permissible activities and to engage in the business of banking.
the facts relevant to the branch conducts those activities pursuant to the The proposed revision would not affect
application remain the same as those same ‘‘authorization, terms and a national bank’s ability to control a
previously approved. As a result, some conditions’’ as apply to the parent bank. subsidiary by holding a majority of
banks have filed for approval of such Moreover, while the proposal revises voting interests in the subsidiary.
branches each time the bank seeks to the standards applicable to the use of The second element of the proposed
operate the branch. after-the-fact notice procedures, it does qualification standard would reflect
We therefore propose to eliminate not materially alter the licensing recent changes to GAAP that change the
these subsequent applications for framework currently in place for test for determining whether
recurring, temporary branches that serve operating subsidiaries. These changes consolidation is appropriate as an
the same site at regular intervals.16 will enhance OCC’s ability to conduct accounting matter. The OCC historically
Accordingly, the proposal adds to § 5.30 appropriate review of proposed has considered whether an entity is
the new term, ‘‘intermittent branch,’’ operating subsidiaries. consolidated with the parent bank for
which is defined to mean a branch that Qualifying standards. Under current accounting and other purposes as an
provides branch banking services, § 5.34(e)(2), an entity qualifies as an element in determining whether that
where legally permissible under the operating subsidiary only if the parent entity is an operating subsidiary under
national bank branching statute,17 for bank ‘‘controls’’ the subsidiary. The rule OCC regulations and has long provided
one or more limited periods of time provides for two alternative means of for that result in the application of
each year at a specified site during a establishing control. First, a national regulatory standards. Since as early as
specified recurring event. Under the bank controls an operating subsidiary if 1971, the OCC has directed national
proposal, if the OCC grants a national the bank owns more than 50 percent of banks to consolidate their book figures
bank approval to operate an intermittent the voting interest (or similar type of with those of the operating subsidiary
branch, no further application or notice controlling interest) in the subsidiary. for the ‘‘purpose of applying applicable
to the OCC is required. This proposal statutory or regulatory limitations
18 The statutory authority underlying § 5.34 is 12
* * *’’ 19 In addition, at the time we
U.S.C. 24(Seventh), which authorizes national adopted current § 5.34(e)(2), GAAP
15 An ‘‘eligible bank’’ is a national bank that is banks to exercise ‘‘all such incidental powers as
well capitalized, has a composite rating of 1 or 2 shall be necessary to carry on the business of generally required a parent company to
under the Uniform Financial Institutions Rating banking.’’ See NationsBank of North Carolina, N.A. consolidate the financial statements of a
System, has a CRA rating of ‘‘Outstanding’’ or v. Variable Annuity Life Insurance Co., 513 U.S. subsidiary entity (that is, the parent
‘‘Satisfactory,’’ and is not subject to a cease and 251, 258 n.2 (1995) (VALIC) (the Comptroller may
desist order, consent order, formal written company was deemed under GAAP to
exercise reasonable discretion to determine what
agreement, or prompt corrective action directive. 12 activities are part of the ‘‘business of banking’’ have a ‘‘controlling financial interest’’ in
CFR 5.3(g). authorized pursuant to 12 U.S.C. 24 (Seventh)). the subsidiary) if the parent held a
16 The definition of ‘‘mobile branch’’ in current
Congress has recognized the operating subsidiary as majority of the voting interests in the
§ 5.30 specifies that such a branch may provide a means through which national banks conduct the
services at irregular times and locations, such as at
subsidiary entity. This GAAP standard
business of banking. See 12 U.S.C. 24a(g); see also
for consolidation influenced the OCC’s
county fairs, sporting events or during school Watters v. Wachovia Bank, N.A., No. 05–13542 at
registration periods. However, a mobile branch may 11–13, 15n.12, 2007 WL 1119539 at *11 and 12, adoption of the majority of voting (or
not have a single permanent site and travels to 13n.12 (U.S. Apr. 17, 2007) (discussing national similar controlling) interests standard as
various public locations. Therefore, this type of banks’ authority to conduct their banking business
branch differs from the intermittent branch
one of the measures of control in the
through operating subsidiaries and noting
recognized in this proposal, which would have only ‘‘Congress’ formal recognition that national banks current rule. The control standard
one recurring temporary location. have the incidental power to do business through
17 12 U.S.C. 36. operating subsidiaries.’’). 19 36 FR 17015 (August 26, 1971).
assured consolidation under the prior limitation of the subsidiary’s activities reviewed under the full application
GAAP standard. to those that are bank-permissible, the process.
Since our adoption of the regulatory application to the subsidiary of the same The proposal also adds to the list of
control standards in § 5.34(e)(2), the substantive standards and requirements activities eligible for after-the-fact notice
GAAP standard for consolidation has as apply to the parent bank, and the activities that the OCC has approved
changed. In December 2003, the requirement that the bank ‘‘control’’ the since part 5 was comprehensively
Financial Accounting Standards Board subsidiary. revised in 1996. These activities are:
(FASB) issued an accounting In order to clarify that a limited • Providing data processing, and data
interpretation that revised the criteria partnership is a permissible form of transmission services, facilities
for determining when an entity must operating subsidiary, the proposal (including equipment, technology, and
consolidate another entity for financial expressly recognizes that a bank may personnel), data bases, advice and
reporting purposes.20 In issuing FIN invest in an operating subsidiary access to such services, facilities, data
46R, FASB recognized that the organized as a limited partnership, bases and advice, for the parent bank
application of the voting interest provided it satisfies the other and for others, pursuant to 12 CFR
requirement to certain types of entities requirements of § 5.34. 7.5006, to the extent permitted by
may not identify the party with a After-the-fact notice procedures. published OCC precedent. Currently,
controlling financial interest because Current § 5.34(e)(5) provides that a well only data processing activity provided
the controlling financial interest may be to the bank itself or its affiliates
capitalized and well managed national
achieved through arrangements that do qualifies for after-the-fact notice
bank may establish or acquire an
not involve voting interests. FIN 46R treatment under § 5.34(e)(5)(v)(H).
operating subsidiary, or conduct a new • Providing bill presentment, billing,
addresses this issue by providing, activity in an existing operating
generally, that the party that holds the collection, and claims-processing
subsidiary, by providing the OCC services.22
majority of the entity’s risks or rewards, written notice within 10 days after • Providing safekeeping for personal
rather than voting interests, is the doing so if the activity to be conducted information or valuable confidential
primary beneficiary and must in the subsidiary is specified in the rule trade or business information, such as
consolidate the entity. FIN 46R became as eligible for notice processing. The encryption keys, to the extent permitted
effective at different times, ranging from proposal revises this after-the-fact notice by published OCC precedent.23
December, 2003 to January 1, 2005, procedure to take account of the • Payroll processing.24
depending on the type of entity and the proposed changes to § 5.34(e)(2) • Branch management services.25
date it was created. To assure discussed above. Thus, a national bank • Merchant processing except when
conformance with these new GAAP seeking to hold a limited partnership as the activity involves the use of third
standards, the OCC proposes to an operating subsidiary would qualify parties to solicit or underwrite
preclude a national bank from treating for the after-the-fact notice procedure merchants.26
as an operating subsidiary an entity that only in the limited circumstance where • Administrative tasks involved in
it controls through majority ownership, the bank controls, directly or indirectly, benefits administration.27
but which is held under an arrangement all of the ownership interests in the Because the OCC has previously
where another party reaps most of the limited partnership (and the other found these activities to be permissible
financial rewards from the subsidiary’s requirements of § 5.34 are satisfied). for a national bank and its subsidiaries,
operations. This change would allow the OCC to and that they generally pose low safety
Form of operating subsidiary. Current review through the full application and soundness risks, we are proposing
§ 5.34(e)(2) permits national banks to process more complex arrangements that after-the-fact notices be permissible
conduct activities through operating involving limited partnerships. when operating subsidiaries undertake
subsidiaries organized in a variety of The proposal also would revise the to engage in these activities.
forms, including as a corporation or notice procedure criteria for control In addition to these activities, the
limited liability company. In recent when the subsidiary is a corporation or proposal provides that an activity is
years, national banks have sought to a limited liability company. In those eligible for the after-the-fact notice if it
hold limited partnerships as operating cases, the proposal would permit the has been approved for a non-controlling
subsidiaries as states have amended bank to use the after-the-fact notice investment by a national bank or its
their limited liability company and procedure when it meets all the operating subsidiary pursuant to 12 CFR
limited partnership laws to provide requirements for a notice not relevant to 5.36(e)(2). The after-the-fact procedure
more structural flexibility. The OCC has control, the financial statements of the is only available if the activity will be
recognized this and previously bank and subsidiary are consolidated conducted in accordance with the same
permitted a limited partnership to under GAAP, and the bank has the terms and conditions applicable to the
qualify as an operating subsidiary where ability to control the management and activity covered by the precedent as
the parent bank exercised ‘‘all economic operations of the subsidiary by holding: well as with any other restrictions that
and management control over the (i) More than 50% of the voting interests would be imposed due to its status as
activities’’ of the partnership.21 in the subsidiary; or (ii) voting interests an operating subsidiary.
Nothing about the limited partnership sufficient to select the number of
structure should necessarily disqualify directors needed to control the
22 See OCC Interpretive Letter No. 712 (Feb. 29,
such an entity as an operating 1996).

subsidiary’s board and to select and 23 See 12 CFR 7.5002(a)(4).
subsidiary, provided the other terminate senior management. These 24 See Conditional Approval No. 384 (April 25,
requirements of the rule are satisfied. control arrangements are the most
2000) and Corporate Decision No. 2002–2 (Jan. 9,

These requirements include the suitable for the after-the-fact notice 2002).
25 See Conditional Approval No. 612 (Dec. 21,
procedures because the OCC generally is
20 FASB Interpretation No. 46 (revised), 2003).
familiar with these structural
Consolidation of Variable Interest Entities 26 See Conditional Approvals Nos. 582 (March 12,
(December 2003) (FIN 46R). arrangements and they do not ordinarily 2003) and 583 (March 12, 2003).
21 See Corporate Decision No. 2004–16 (Sept. 10, present unusual safety and soundness 27 See Corporate Decision No. 98–13 (Feb. 9,
2004). concerns. Other arrangements will be 1998).
Application procedures. Current which the bank certifies, among other provides no procedure for a national
§ 5.34(e)(5)(i) sets forth the rules for things, that it is well capitalized and bank to follow when it cannot provide
when a national bank must file an well managed and will account for its all of the required representations and
operating subsidiary application. The investment under the equity or cost certifications. We propose to revise
OCC is proposing to modify these rules method of accounting.29 This section § 5.36(f) to establish an application
to make them consistent with the currently does not, however, provide a procedure that a national bank may use
proposed changes to the qualifying procedure for a national bank to follow to seek approval for non-controlling
subsidiary and after-the-fact notice when it cannot provide the investments that do not qualify for after-
provisions of § 5.34 discussed certifications needed for after-the-fact the-fact notice either because the bank
previously. In particular, the proposal notice. is not well capitalized or well managed
would require the bank to describe in Representations concerning or because the proposed activity does
full detail structural arrangements accounting treatment. Current not qualify for after-the-fact notice
where control is based on a factor other § 5.36(e)(5) requires a national bank to under the standards set forth in the rule.
than bank ownership of more than 50 certify in its notice that it will account However, a national bank would not be
percent of the voting interest of the for its non-controlling investment under required to file either an application or
subsidiary. Finally, the proposal makes the equity or cost method of accounting. notice under this section if the
conforming changes to § 5.34(e)(5)(vi), The OCC had adopted this requirement investment is authorized by a separate
which sets forth the circumstances because an investment accounted for in provision of the OCC regulations, such
under which an application or notice is this manner was not previously as 12 CFR part 1 (investment securities)
waived, to reflect the changes discussed considered under then current GAAP or part 24 (public welfare investments).
above. The OCC specifically requests standards to be controlled by the parent In these cases, a national bank would
comment on how it should treat bank and, accordingly, the parent bank follow the procedures required by these
operating subsidiaries that were did not consolidate the investment on provisions.
lawfully established prior to the date of its books. Thus, the unconsolidated If the bank is unable to make the
the proposal. entity could be considered a non- representation in paragraph (e)(2), the
controlling investment and not an bank’s application must explain why
Bank Service Companies (§ 5.35)
operating subsidiary. However, as we the activity is a permissible activity for
Section 602 of the FSRRA amends the have noted, under FIN 46R this a national bank and why the bank
Bank Service Company Act 28 to repeal assumption is no longer valid in all should be permitted to hold a non-
the geographic limits that prohibited a cases, and an investment previously controlling investment in an enterprise
bank service company from performing accounted for using the equity or cost engaged in that activity. In addition, the
services for persons other than method today may in some instances application must provide the
depository institutions in any State result in consolidation of the investment representations and certifications
except the State where its shareholders with the bank, depending on which required pursuant to the after-the-fact
and members are located. Section 602 party holds the majority of risks or notice procedure, to the extent possible.
retains the requirements that the rewards. A bank may not make a non-controlling
services and the location at which these To address this issue, the proposal investment in an entity if the bank
services are provided must be otherwise removes the requirement that a bank cannot provide the representations or
permissible for all depository institution certify in its notice that it will account information that the rule requires (other
shareholders or members and that for its non-controlling investment under than those in paragraphs (e)(2) or (e)(3)
Federal Reserve Board approval be the equity or cost method of accounting. pertaining to the bank’s level of capital,
obtained before a bank service company The proposal also removes as its rating for management, or to the
engages in activities that are only unnecessary the requirement in current OCC’s prior determination that the
authorized under the Bank Holding § 5.36(e)(7) that a bank certify that its investment is permissible).
Company Act. Section 602 also permits loss exposure related to the non-
savings associations to invest in bank This application requirement would
controlling investment is limited as an fill the gap in the current rule for
service companies under the same rules accounting matter. The proposal retains
that apply to banks. investments where a national bank
the requirement in paragraph (e)(7) that cannot meet all of the after-the-fact
The proposal amends 12 CFR 5.35 to the bank certify that as a legal matter its
reflect this change in the statutory notice requirements. The use of an
loss exposure is limited and that it does application procedure provides
geographic restrictions on the not have open-ended liability for the
operations of bank service companies. It certainty to the applicant and also
obligations of the enterprise. permits the OCC to ensure that all non-
also changes ‘‘insured bank’’ to ‘‘insured Application procedure. Current § 5.36
institution’’ throughout the section, controlling investments comport with
permits use of the after-the-fact notice
where relevant, to reflect the fact that appropriate supervisory requirements.
procedure only when the bank can make
savings associations now may invest in the representations and certifications
bank service companies. activity that is substantively the same as the
required by that section.30 The rule proposed activity; (3) certification that the bank is
Other Equity Investments (§ 5.36) 29 Under the equity method, the carrying value of
well capitalized and well managed; (4) a statement
of how the bank can control the activities of the
Section 5.36(e) provides an expedited the bank’s investment is originally recorded at cost enterprise in which it is investing or ensure its
process for OCC review of a non- but subsequently adjusted periodically to reflect the ability to withdraw its investment; (5) the
bank’s proportionate share of the entity’s earnings accounting certification, described in text, that this
controlling investment by a national and losses and decreased by the amount of any cash rule proposes to remove; (6) a description of how
bank. Under this section, a national
dividends or similar distributions received from the the investment relates to the bank’s business; (7)
bank may make, directly or through an entity. certification that the bank’s loss exposure is limited
operating subsidiary, certain non- 30 Section 5.36(e) currently requires that a written as a legal and accounting matter (the certification
controlling investments in entities by after-the-fact notice contain the following 8 pertaining to accounting is proposed to be
elements, set out in numbered paragraphs, as removed); and (8) certification that the enterprise in
filing an after-the-fact written notice in follows: (1) A description of the proposed which the bank is investing agrees to be subject to
investment; (2) identification of the regulatory OCC examination and supervision, subject to limits
28 12 U.S.C. 1861 et seq. provision or prior precedent that has authorized an provided elsewhere in Federal law.
This proposal also makes two in guidance issued by the OCC procedures for increases in permanent
conforming changes to § 5.36(b), scope. regarding the activities. capital in the Capital and Dividends
First, it amends the scope section to The proposal also would amend Booklet of the Comptroller’s Licensing
provide that § 5.36 governs the § 5.36 to clarify that an application or Manual and on E-Corp (the OCC’s
procedures for applications in addition notice is not required when a national electronic filing system).
to notices. Currently, the scope section bank acquires a non-controlling
only applies to notices. Second, it Change in Bank Control (§ 5.50)
investment in shares of a company
removes the last sentence of § 5.36(b), through foreclosure or otherwise in Section 5.50 sets forth the OCC’s
which currently states that other good faith to compromise a doubtful procedures for change in bank control
investments authorized under § 5.36 claim, or in the ordinary course of transactions. Under this rule, any
may be reviewed on a case-by-case collecting a debt previously contracted. person seeking to acquire control of a
basis. Because the proposal amends This change would conform this section national bank, i.e., acquire the power,
§ 5.36 to include an application process, with § 5.34, which provides that a directly or indirectly, to direct the
this sentence is unnecessary and could subsidiary in which the bank has management or policies, or to vote 25
create confusion once the proposal is acquired, in good faith, shares through percent or more of a class of voting
finalized. foreclosure on collateral, by way of securities of a national bank, must
DPC assets. The proposal also makes compromise of a doubtful claim, or to provide 60 days prior written notice of
two changes to expedite non-controlling avoid a loss in connection with a debt the proposed acquisition to the OCC,
investments involving assets acquired previously contracted is not an with certain exceptions. Currently, the
through foreclosure or otherwise in operating subsidiary for purposes of OCC has the burden of proof in
good faith to compromise a doubtful § 5.34 and, therefore, no application or establishing that a group of persons are
claim or in the ordinary course of notice is required. acting in concert and will control, as a
collecting a debt previously contracted group, the bank after the acquisition of
(DPC assets). Under the current rule, a Changes in Permanent Capital (§ 5.46)
shares. When a member of a family
national bank making a non-controlling The proposal streamlines the acquires stock in a national bank in
investment in an entity that holds or application process for a national bank which other family members own or
manages DPC assets for the bank must seeking OCC approval of a change in its control substantial interests, the OCC
meet all of the requirements in § 5.36, permanent capital. The OCC’s rules at frequently will review potential control
including the required certifications. § 5.46(i)(1) and (2) currently require a issues by requesting additional
However, under the current operating national bank to submit an application documentation from, and making
subsidiary rules, a national bank and obtain prior approval for a change additional inquiries of, the family
investing in an operating subsidiary in permanent capital. Under the members. These additional steps can
engaged in the same activity need only expedited review procedures in delay the notice process and increase
file a written notice within 10 days after § 5.46(i)(2), the application of an eligible the burden associated with the
acquiring or establishing the subsidiary bank is deemed approved within 30 transaction for these individuals.
or commencing the activity. These days of receipt, unless the OCC notifies
procedural differences can be disruptive The proposal amends § 5.50(f)(2) to
the applicant otherwise. The proposal establish a rebuttable presumption that
in workouts involving a jointly-held amends § 5.46(i)(2) to change the
entity to resolve loans with multiple immediate family members are acting in
expedited review period from 30 days to concert when acquiring shares of a
lenders where each lender will hold 15 days.
minority interests in the joint venture. bank. The proposal also amends
The proposal also simplifies the § 5.50(d) to define immediate family as
The proposal harmonizes these certification process for a national bank
provisions by providing that a national a person’s spouse, father, mother,
that increases its permanent capital. stepfather, stepmother, brother, sister,
bank making a non-controlling Section 5.46 currently requires a
investment in an entity that holds or stepbrother, stepsister, children,
national bank that increases permanent stepchildren, grandparent,
manages DPC assets for the bank need capital to submit a letter of notification
only file a simplified written notice grandchildren, father-in-law, mother-in-
to the OCC in order to receive a law, brother-in-law, sister-in-law, son-
with the appropriate district office 31 no certification of the increase as required
later than 10 days after making the non- in-law, daughter-in-law, and the spouse
by 12 U.S.C. 57.32 Under the proposal, of any of the foregoing. Establishing a
controlling investment. The notice must
a national bank seeking to increase clear, but rebuttable, presumption
contain a complete description of the
permanent capital continues to be provides notice to prospective investors
bank’s investment in the enterprise and
required to send a notice to the OCC, of their filing obligations and reduces
the activities conducted, a description
but the bank would no longer receive a delays in processing the notice
of how the bank plans to divest the non-
paper certification from the OCC. The associated with repeat requests for
controlling investment or the DPC assets
OCC would deem the transaction information. In addition, this
within the statutory time frames, and a
approved and certified by operation of amendment would conform our
representation and undertaking that the
law seven days after our receipt of the regulations to the procedures regarding
bank will conduct the activities in
bank’s notice. If this proposal is adopted control by family members in these
accordance with OCC policies contained
in final form, the OCC will provide transactions set forth in OTS and
31 Part 5 defines ‘‘appropriate district office’’ as updated notification and certification Federal Reserve Board regulations. If the
the Licensing Department for all national bank proposal is adopted in final form, we
32 Section 57 provides that increases to
subsidiaries of those holding companies assigned to
would amend the Comptroller’s
the Washington, DC, licensing unit; the appropriate permanent capital are not effective until the bank
OCC district office for all national bank subsidiaries provides notice to the OCC and the OCC certifies Licensing Manual to address the process
of certain holding companies assigned to a district the amount of the increase and approves it. The by which an applicant can rebut this
office licensing unit; the OCC’s district office where precise terms of the bank’s notification and the presumption.33
the national bank’s supervisory office is located for OCC’s approval vary slightly depending on whether
all other banks; or the licensing unit in the the increase to permanent capital occurs through
Northeastern District Office for Federal branches the declaration of a stock dividend or otherwise. 33 See 12 CFR 574.4 (OTS) and 12 CFR
and agencies of foreign banks. 12 CFR 5.3. See 12 U.S.C. 57. 225.41(b)(3) and 225.41(d) (Federal Reserve Board).
Section 705 of the FSRRA amends the OCC may require additional information regulations set forth in Part 16. These
CBCA to allow the OCC, and the other if necessary to evaluate the application, requirements are explained in greater
Federal banking agencies, to extend the and may deem a filing abandoned if the detail in the Comptroller’s Licensing
time period for considering a CBCA information required or requested is not Manual.
notice so that the agency may consider furnished within the time period This proposal also makes a change to
the acquiring party’s business plans and specified by the OCC. The OCC also paragraph (i)(3) of section 5.20, which
the future prospects of the institution may return an application that it deems requires the organizing group to
and use that information in determining materially deficient when filed, and the designate a spokesperson to represent
whether to disapprove the notice. The proposal amends § 5.13(c) to specifically the group in its contacts with the OCC.
proposal amends § 5.50(f) of our define ‘‘materially deficient’’ to mean The proposal would amend this section
regulations to implement this filings that lack sufficient information by replacing the term ‘‘spokesperson’’
amendment by providing that the CBCA for the OCC to make a determination with the term ‘‘contact person’’ each
notice must include information on the under the applicable statutory or time that term appears in order to align
future prospects of the institution and regulatory criteria. Examples of material the wording of this section with the
that the OCC may consider the future deficiencies that could cause the OCC to terminology used on the Interagency
prospects of the institution as a basis to return a filing include failure to provide Charter and Deposit Application and in
issue a notice of disapproval. answers to all questions or failure to the ‘‘Charters’’ booklet of the
Sections 702 and 716 of the FSRRA provide required financial information. Comptroller’s Licensing Manual.
amend the Federal Deposit Insurance Paragraph (f) of this section provides Business combinations (§ 5.33).
Act (FDI Act) to provide that the OCC, that an applicant may appeal an OCC Section 5.33 contains the provisions
and the other Federal banking agencies, decision to the Deputy Comptroller for governing business combinations
may enforce under 12 U.S.C. 1818 the Licensing or to the OCC Ombudsman. In involving national banks. Section
terms of: (1) Conditions imposed in some cases, however, the Deputy 5.33(e)(1) sets forth factors used by the
writing by the agency on a depository Comptroller for Licensing is the OCC in evaluating applications for
institution, including a national bank, or deciding official for OCC licensing ‘‘business combinations,’’ including
an institution-affiliated party in decisions or has personal and factors required pursuant to the Bank
connection with an application, notice, substantial involvement in the decision- Merger Act (BMA) 35 and the
or other request, and (2) written making process. Accordingly, we are Community Reinvestment Act of 1977
agreements between the agency and the amending this paragraph to provide that (CRA).36 As currently worded, this
institution or the institution-affiliated an appeal may be referred instead to the section could be read incorrectly to
party. The amendment also clarifies that Chief Counsel when the Deputy imply that the BMA and CRA apply to
a condition imposed by a banking Comptroller for Licensing was the all business combinations even though
agency in connection with the deciding official of the matter appealed, these laws do not apply to certain
nondisapproval of a notice, e.g., a notice or was involved personally and business combinations, such as the
under the CBCA, can be enforced under substantially in the matter. merger of two uninsured national banks.
the FDI Act. Accordingly, the proposal In addition, the proposal replaces the The proposal revises the wording of
amends § 5.50(f) to provide that the OCC title ‘‘Deputy Comptroller for Bank § 5.33(e)(1) to make it clear that the OCC
may impose conditions on its Organization and Structure’’ with the considers the factors under the BMA
nondisapproval of a CBCA notice to title ‘‘Deputy Comptroller for and the CRA for transactions that are
assure satisfaction of the relevant Licensing.’’ This reflects the OCC’s subject to those laws. The factors as set
statutory criteria for nondisapproval of current organizational structure. out in the current rule are substantively
the notice. Organizing a bank (§ 5.20). Section unchanged.
5.20 sets forth the procedures and Section 5.33 also requires a national
Technical and Conforming requirements governing OCC review and bank with one or more classes of
Amendments to Part 5 approval of an application to establish securities subject to the registration
The proposal makes the following a national bank. Paragraph (i)(5) of this provisions of sections 12(b) or 12(g) of
conforming and technical changes to section requires a proposed national the Securities Exchange Act of 1934 (the
part 5. bank to be established as a legal entity Exchange Act) 37 to file preliminary
Definition of national bank (§ 5.3(j)). before the OCC grants final approval. As proxy materials or information
This proposed change removes the currently drafted, our regulations may statements with both the OCC’s Director
reference to DC banks from the be read to imply that organizers must of Securities and Corporate Practices
definition of ‘‘national bank’’ found in receive OCC preliminary approval Division in Washington, DC and the
§ 5.3(j). DC banks are no longer subject before they may raise capital, which is appropriate district office. The proposal
to the OCC’s rules, policies, and not OCC policy.34 streamlines the OCC’s filing process by
procedures for corporate activities and Therefore, this proposal amends eliminating the requirement in
transactions, including the OCC’s filing § 5.20(i)(5) to make clear that OCC § 5.33(e)(8)(ii) that a registered national
requirements. preliminary approval is not required bank also file proxy materials with the
Filing required (§ 5.4). The proposal prior to a securities offering by a district office. This change is consistent
replaces the terms ‘‘Licensing Manager’’ proposed national bank, provided that with the instructions in the OCC’s
with ‘‘Director for District Licensing’’ the proposed national bank has filed Business Combinations Booklet of the
and replaces ‘‘Bank Organization and articles of association, an organization Comptroller’s Licensing Manual.
Structure’’ with the term ‘‘Licensing certificate and a charter application that Section 5.33(g)(2)(ii) provides the
Department.’’ This reflects the OCC’s is completed and the bank complies
rules for a national bank consolidation

current organizational structure. with the OCC’s securities offering and merger with a Federal savings
Decisions (§ 5.13). Section 5.13 sets association when the resulting
34 The Comptroller’s Licensing Manual permits
forth the procedures for OCC decisions
organizers of a national bank to raise capital prior
on corporate filings. Paragraph (c) of to preliminary OCC approval. See Comptroller’s
35 12 U.S.C. 1828(c).
§ 5.13 requires a filing with the OCC to Licensing Manual, Charters, pgs. 20–21, March 36 12 U.S.C. 2901 et seq.
contain all required information. The 2007. 37 15 U.S.C. 78l(b) or 78l(g).
institution is a national bank. This because it is engaged in insurance sales officer or of any director occurring in
proposal removes the reference to as agent or broker in a manner not the next 12-month period, including in
merger transactions in paragraph permitted to a national bank. Such a this report a statement of the past and
(g)(2)(ii), which provides for appraisal financial subsidiary is not an affiliate for current business and professional
or reappraisal of dissenters’ shares, Regulation W purposes (unless it falls affiliations of the new chief executive
because there are no dissenters’ rights into another category of affiliate). This officer or director. This proposal would
for national bank shareholders in a proposal would add a cross-reference to add a new paragraph to § 5.50(h) to
merger between a national bank and a Regulation W in the definition of codify this statutory requirement in
Federal savings association when the ‘‘affiliate’’ at § 5.39(d)(1) and amend order to provide clearer notice for
resulting institution is a national bank. § 5.39(h)(5) to reflect this exception in national banks of their reporting
In addition, the proposal corrects a Regulation W’s definition of financial obligation under section 1817(j)(12).
statutory citation in paragraph (g)(3)(i). subsidiary. Earnings limitations under 12 U.S.C.
The proposal also makes clarifying In addition, this proposal updates 60 (§ 5.64). Section 302 of the FSRRA
changes to § 5.33(h), which sets forth § 5.39(h)(5), which describes how amends 12 U.S.C. 60 to simplify
the standards, requirements, and sections 23A and 23B apply to financial dividend calculations and provide a
procedures that apply to mergers subsidiaries, by conforming these national bank more flexibility to pay
between insured banks with different provisions to Regulation W. dividends as deemed appropriate by its
home States pursuant to 12 U.S.C. Specifically, in addition to adding a board of directors. The proposal amends
1831u. Although this paragraph cross-reference to Regulation W in § 5.46 (governing changes in permanent
references the standards, requirements, § 5.39(h)(5), the proposal amends capital) and § 5.64 (governing dividend
and procedures applicable to § 5.39(h)(5)(iii) to state that a bank’s earnings limitations) to conform to the
transactions that result in a national purchase of, or investment in, a security new language of section 60. In addition,
bank, it currently does not do so for issued by a financial subsidiary of the the OCC is codifying and clarifying the
transactions that result in a State bank. bank must be valued at the greater of: (a) interpretation of 12 U.S.C. 60 contained
The proposal adds a reference in this The total amount of consideration given in Interpretive Letter No. 816, issued
paragraph to 12 U.S.C. 214a, 214b, and (including liabilities assumed) by the December 22, 1997.
214c to cover these transactions. The bank, reduced to reflect amortization of Prior to its amendment by FSRRA,
proposal also amends § 5.33(h) to the security to the extent consistent section 60 provided that a national bank
include a reference to 12 U.S.C. 1831u with GAAP, or (b) the carrying value of could only declare a dividend if its
to clarify that an interstate, single- the security (adjusted so as not to reflect surplus fund was at least equal to its
branch acquisition is treated as the the bank’s pro rata portion of any common capital or, in accordance with
acquisition of a bank only for purposes earnings retained or losses incurred by a computation prescribed by the statute,
of determining compliance with the the financial subsidiary after the bank’s it transferred 10 percent of its net
Riegle-Neal Act.38 This change would acquisition of the security). This income to surplus. Historically, stock
eliminate any implication in this proposal also adds a new reference to was assigned a par value equivalent to
paragraph that the procedures of 12 the requirement in Regulation W that its estimated market value and the
U.S.C. 215 or 215a were intended to any extension of credit to a financial purpose of the transfer requirement was
apply to branch acquisitions. subsidiary of a bank by an affiliate of the to provide an additional cushion. This
Finally the proposal specifies that the bank is treated as an extension of credit requirement is obsolete under modern
definitions set forth in § 5.33(d) are only by the bank to the financial subsidiary securities underwriting practices
applicable to § 5.33, and revises the if the extension of credit is treated as because stock is issued with a nominal
headings of paragraphs (g), (g)(1) and capital of the financial subsidiary under par value and most of the proceeds
(g)(3) to conform to the heading format any Federal or State law, regulation, or received are credited to the issuer’s
used in other paragraphs in the interpretation applicable to the surplus account. Section 302 of the
regulation. subsidiary. FSRRA eliminates this requirement and
Financial subsidiaries (§ 5.39). Change in bank control (§ 5.50). makes other minor changes to clarify
Section 5.39 sets forth authorized Twelve U.S.C. 1817(j) provides the and simplify dividend calculations.
activities, approval procedures, and standards and procedures for a change The proposal makes conforming
conditions for a national bank engaging in control of insured depository changes to § 5.64 (earnings limitation
in activities through a financial institutions. As we have discussed, under 12 U.S.C. 60) and § 5.46 (changes
subsidiary. The proposal would make a § 5.50 of our rules implements section in permanent capital) by eliminating
number of technical changes to § 5.39 to 1817(j) in the case of a change in control references to the surplus fund
conform this section to the Federal of a national bank.40 Section 5.50, requirement. The proposal also
Reserve Board’s Regulation W, which however, does not include one of the reorganizes and renumbers § 5.64 and
governs transactions between Federal procedures required by section 1817(j) adds new paragraphs (a) and (c)(2). New
Reserve member banks and their relating to changes in management paragraph (a) adds several defined terms
affiliates and implements sections 23A officials following a change in control. to make the description of the national
and 23B of the Federal Reserve Act.39 This omission may be misleading to bank dividend calculation clearer. The
In general, under sections 23A and banks that consult our rule to ascertain terms are: current year, current year
23B and Regulation W, a financial what change in control procedures minus one, current year minus two,
subsidiary of a national bank is treated apply. Specifically, section 1817(j)(12) current year minus three, and current
as an affiliate of the bank. Regulation W, provides that whenever a change in year minus four. New paragraph (c)(2)
codifies Interpretive Letter No. 816,
however, excepts from its definition of control occurs, the bank will promptly
a financial subsidiary a subsidiary that report to the appropriate Federal which discussed the treatment of
would be a financial subsidiary only banking agency any changes or dividends in excess of a single year’s
replacements of its chief executive current net income and concluded that
38 Pub. L. 103–328, 108 Stat. 2338 (Sept. 29, a national bank may offset certain
1994). 40 Section 5.50 covers uninsured national banks excess dividends against retained net
39 12 U.S.C. 371c and 371c–1. as well as insured national banks. income from each of the prior two years.
The proposal also clarifies how to the transaction is for the benefit of a with greater flexibility to provide
calculate permissible dividends customer and the bank obtains from that financial services in evolving markets.44
applying the carry-back interpretation customer a segregated deposit account For all of these reasons, the OCC
described in Interpretive Letter No. 816. sufficient to cover the amount of the concludes that acting as a guarantor or
The proposal is intended to eliminate bank’s potential liability. The proposed surety is permissible for a national bank,
confusion by providing that excess rule adds a new subsection authorizing provided the customer’s obligation, and
dividends may be offset by retained net national banks to issue guarantees under the guaranty or surety are financial in
income in the two years immediately additional circumstances, provided the nature, reasonably ascertainable in
preceding the year in which the excess guaranty is financial in nature, amount, and otherwise consistent with
occurred. reasonably ascertainable in amount, and applicable law.
Specifically, paragraph (c)(2)(i) complies with applicable law. The proposed requirement that the
describes how to calculate permissible A financial guaranty or suretyship is guaranty or surety be ‘‘reasonably
dividends for the current year if a bank essentially a promise to pay if the ascertainable’’ is intended to ensure that
has declared a dividend in excess of net primary obligor defaults on its the issuing bank can determine the
income in the first or second years obligation. A guarantor or surety that extent of its exposure and engage in the
immediately preceding the current year. makes good on its promise is entitled to activity in a safe and sound manner.
For example, when the excess dividend reimbursement by the primary obligor. Similarly, the statement that the
occurs in current year minus one, the National banks have authority to guaranty or surety must be ‘‘consistent
excess is offset by retained net income ‘‘promise to pay’’ or ‘‘guarantee’’ the with applicable law’’ simply recognizes
first in current year minus three and obligations of their customers through that other provisions of law may be
then in current year minus two. When bankers’ acceptances and letters of applicable to particular transactions.
the excess dividend occurs in current credit. In these transactions, the bank These other provisions of law include,
year minus two, the excess is offset by substitutes its credit for that of its among others, limitations on the amount
retained net income first in current year customer and participates in exchanges of loans and extensions of credit a
minus four and then in current year of payments as a financial intermediary. national bank may lend to a borrower
minus three. This paragraph limits the These activities involve the core (12 CFR part 32), limitations on
availability of offsets to a maximum of banking powers of both lending and transactions between a bank and its
four years prior to the current year, acting as financial intermediary.41 affiliates (sections 23A and 23B of the
consistent with the carry-back concept In approving various types of Federal Reserve Act), and limitations on
in Interpretive Letter No. 816. The guarantees in the past, and in approving transactions that would constitute
Interpretive Letter was not intended to a number of arrangements that are ‘‘insurance’’ as principal pursuant to
permit a bank to restate retroactively its functionally similar to guarantees, the section 302 of Gramm-Leach-Bliley
dividend paying capacity beyond the OCC has emphasized that banks must be Act.45
four-year period prior to the current able to respond to the evolving needs of The OCC is considering whether to
year. their customers, provided always that provide guidance on risks and risk
Paragraph (c)(2)(ii) clarifies that if a such guarantees be issued and managed management in connection with the
bank still has excess dividends in a safe and sound manner.42 Most issuance of guarantees by national
remaining even after permissible offsets recently, the OCC approved a national banks. For example, one of the primary
have been applied in accordance with bank’s membership in a Group Self distinctions between guarantees and
paragraph (c)(2)(i), the bank must use Insurance Plan (GSIP) organized by a letters of credit is that letters of credit
the remaining excess dividend amount consortium of banks to provide workers’ are structured in such a way that the
in calculating its dividend paying compensation insurance in which each bank does not face any uncertainty on
capacity. Paragraph (c)(2)(iii) also member was required to become joint its obligation to pay on the letter of
clarifies that the carry-back applies only and severally liable for the group’s credit despite the possibility of defenses
to retained net loss that results from obligations.43 Permitting national banks and disputes between the primary
dividends declared in excess of a single to exercise their broad authority to act parties to the underlying transaction.
year’s net income, not any other type of as guarantor or surety benefits Guarantees, on the other hand, may be
current earnings deficit. As part of the customers by giving banks greater subject to different transactional and
reorganization of § 5.64, information on ability to facilitate customers’ financial legal risks than letters of credit. We
how to request a waiver of the dividend transactions and by providing banks invite comment on the nature and
limitation was moved to new paragraph extent of those differences.
(c)(3) to make it easier to locate. 41 See OCC Interpretive Letter No. 937 (June 27,
Cumulative Voting in Election of
The proposal also makes a technical 2002).
Directors
42 See, e.g., OCC Interpretive Letter No. 177 (Jan.
amendment to 12 CFR 5.46, governing
changes in permanent capital, to reflect 14, 1981) (national bank guaranty/reimbursement of Prior to FSRRA, national banking law
third-party payors in connection with direct deposit imposed mandatory cumulative voting
that, as amended by the FSRRA, section pension fund program was permissible; a contrary
60 no longer requires transfers to the holding ‘‘would directly inhibit the growth and requirements on all national banks.
surplus fund as a condition of declaring development of direct deposit programs.’’); OCC Section 301 of the FSRRA amends
a dividend. Interpretive Letter No. 1010 (Sept. 7, 2004) (national section 5144 of the Revised Statutes of
bank may issue financial warranties on the the United States (12 U.S.C. 61) to
Part 7—Bank Activities and Operations investment advice and asset allocation services
provided by the bank in the creation and operation provide that a national bank may state
National Bank as Guarantor or Surety of a mutual fund). in its articles of association whether to
(§ 7.1017) 43 The OCC determined that the GSIP’s cross- provide for cumulative voting in the
liability aspect could be viewed as a guaranty. election of its directors. Section 301 is
Section 7.1017 of the OCC’s rules Noting that membership in the GSIP would benefit
consistent with the Model Business
currently provides that a national bank the bank, the OCC determined the guaranty was not
solely for another party’s benefit. Therefore, the
may act as guarantor or surety when it bank had a substantial interest of its own in the 44 See VALIC, 513 U.S. 251 (1995).
has a substantial interest in the transaction. OCC Interpretive Letter No. 1022 (Feb. 45 Pub. L. 106–102, 113 Stat. 1338, 1407 (Nov. 12,
performance of the transaction or when 15, 2005). 1999), codified at 15 U.S.C. 6712.
Corporation Act and most States’ incidental electronic activities: the sale safety and soundness. Commenters are
corporate codes, which provide that of excess electronic capacity and by- invited to identify any other areas of
cumulative voting is optional. Our products (§ 7.5004) and incidental non- subpart E that should be revised to
proposal amends 12 CFR 7.2006 to financial data processing (§ 7.5006). We recognize the evolving role of
incorporate this change. propose to amend § 7.5001(d) to add technology.
Electronic Banking-Related other examples of electronic incidental
activities that we have since approved Part 9—Fiduciary Activities of National
Amendments Banks
for national banks. These activities are:
Twelve CFR part 7, Subpart E web site development where incidental
contains OCC regulations relating to In response to recent amendments
to other electronic banking services; 46 made by the SEC to its rules and forms
various electronic activities. In 2002, the Internet access and e-mail provided on
OCC undertook revisions to part 7 to under section 17A of the Exchange Act,
a non-profit basis as a promotional the OCC is proposing to amend its
address the ways in which technological activity; 47 advisory and consulting
developments were affecting the transfer agent rule at § 9.20 to clarify the
services on electronic activities where procedures applicable to national bank
business of banking. The proposal the services are incidental to customer
includes several additions to this transfer agents. Under the SEC’s
use of electronic banking services; 48 amended rules, all transfer agents,
regulation. and the sale of equipment that is
Electronic Letters of Credit. Section including national bank transfer agents,
convenient or useful to customers’ use are required to file annual reports
7.1016 permits national banks to issue of related electronic banking services,
letters of credit within the scope of electronically with the SEC through the
such as specialized terminals for
applicable laws or rules of practice SEC’s Electronic Data Gathering,
scanning checks that will be deposited
recognized by law, and includes an Analysis, and Retrieval (‘‘EDGAR’’)
electronically by wholesale customers of
illustrative footnote that cites examples system. In addition, nonbank transfer
banks under the Check Clearing for the
of these laws and practices. Section agents now must file registration and
21st Century Act, Pub. L. 108–100 (12
7.5002 permits a national bank to withdrawal forms electronically with
U.S.C. 5001–5018).49 This list is
perform, provide or deliver through the SEC through the EDGAR system.
illustrative and not exclusive, and the
electronic means and facilities any The SEC’s amended rules do not require
OCC may determine in the future that
activity, function, product, or service national bank transfer agents to file
activities not on this list are permissible
that a bank is otherwise authorized to registration or withdrawal forms with
pursuant to this authority.
perform, provide, or deliver, if the Software That Is Part of the Business the SEC electronically or otherwise. The
electronic activity is subject to OCC is revising its transfer agent rules
of Banking. Currently, OCC regulations
standards or conditions designed to to make this clear.
list software acquired or developed by
provide that the activity functions as Currently, § 9.20(a) of the OCC’s rules
the bank for banking purposes or to
intended, is conducted safely and cross-references to the SEC’s rules with
support its banking business as an
soundly, and accords with other
example of an electronic by-product that respect to registration. This cross-
applicable statutes, regulations, or
a national bank can sell to others as a reference may make it appear that
supervisory policies and guidance of the
permissible ‘‘incidental’’ activity.50 This national bank transfer agents also are
OCC. Section 7.5002 includes a list of
proposal also expands § 7.5006 to subject to the requirement to file
permissible electronic activities that
address, as ‘‘part of the business of registration and withdrawal forms
currently does not include electronic
banking,’’ the sale of software that through the SEC’s EDGAR system. To
letters of credit. Because the OCC has
performs services or functions that a avoid confusion regarding electronic
determined that a national bank may
national bank can perform directly, filing, the proposal replaces the cross-
issue an electronic letter of credit in a
thereby codifying previous OCC reference in § 9.20(a) to the SEC’s
safe and sound manner in accordance
with applicable laws and OCC guidance interpretations.51 We note that software transfer agent registration and
and policies, the OCC is proposing to that is part of the business of banking withdrawal rules with specific
amend § 7.5002 by adding the issuance can be sold without regard to any other procedures for filing applications for
of electronic letters of credit within the banking product or service, whereas registration, amending registrations, and
scope of § 7.1016 to the list of banking software that is incidental must be withdrawals from registration. This
activities that a national bank can shown to be convenient or useful to amendment will not result in any
conduct by electronic means and another activity that is authorized for substantive changes for national bank
facilities. The OCC also is proposing to national banks.52 transfer agents. National bank transfer
amend the footnote in § 7.1016 to The OCC also recognizes that national agents will continue to file applications
include a reference to the International banks’ use of technology is constantly for registration, amendments to
Chamber of Commerce supplement to evolving and therefore we regularly registration and withdrawals from
UCP 500 for Electronic Presentation review our regulations with the goal of registration as previously required.
(eUCP) (the uniform customs and revising them in ways that facilitate the The proposed rule also would make
practices for documentary credits for use of that technology consistent with conforming changes to § 9.20(b) to
electronic presentations) as a law that 46 See OCC Corporate Decision No. 2002–13, July
reflect the SEC’s revision and
supports electronic letters of credits. 31, 2002.
renumbering of its transfer agent rules.
Incidental Electronic Activities. 47 See OCC Conditional Approval No. 612, Nov. Specifically, we are removing the
Currently, 12 CFR 7.5001(d) sets forth 21, 2003. specific citations to the SEC’s rules in
the standards that the OCC uses to favor of a more general reference. The
48 See OCC Corporate Decision No. 2002–11, June
determine whether an electronic activity 28, 2002. proposed amendment makes no

49 See OCC Interpretive Letter No. 1036, Aug. 10,
is incidental to, though not part of, the substantive changes to § 9.20(b). This
2005.
business of banking because the activity 50 12 CFR 7.5004. change will, however, avoid the need
is convenient or useful to the conduct 51 See, e.g., Corporate Decision 2003–6, March 17, for the OCC to revise our regulation
of the business of banking. The OCC has 2003. each time the SEC makes changes to its
already codified in its regulations two 52 See 12 CFR 7.5001(c) and 7.5001(d). transfer agent rules.
Part 10—Municipal Securities Dealers Part 16—Securities Offering Disclosure particular purpose, and the OCC does
This proposal amends § 10.1(a) to Rules not treat the requirement to file a Form
eliminate the application of part 10 to Part 16 governs offers and sales of D as a condition to the availability of an
DC banks. bank securities by issuers, underwriters, exemption under part 16. Furthermore,
and dealers. the SEC adopted Form D for reasons that
Part 11—Securities Exchange Act do not directly apply to the OCC.57
Disclosure Rules Definitions (§ 16.2) Therefore, we propose to eliminate the
Part 11 addresses the rules, The proposal eliminates DC banks requirement to file a Form D.
regulations, and filing requirements that from the definition of ‘‘bank’’ in Securities Offered and Sold in Bank
apply to national banks with one or § 16.2(b). Holding Company Dissolution (New
more classes of securities subject to the § 16.9)
Sales of Nonconvertible Debt (§ 16.6)
registration provisions of sections 12(b)
and (g) of the Exchange Act (15 U.S.C. Section 16.6(a)(3) requires bank debt The OCC’s current securities offering
78l(b) & (g)). This proposal amends issued under § 16.6 to be in a minimum disclosure rules, at part 16, have
§ 11.1(a) to remove DC banks from the denomination of $250,000 and requires resulted in some confusion as to
scope of part 11, consistent with the DC that each note or debenture to show on whether offers and sales of bank-issued
Bank Act. its face that it cannot be exchanged for securities in connection with the
notes or debentures in smaller dissolution of the bank’s holding
Part 12—Recordkeeping and denominations. However, this legend company are exempt from the § 16.3
Confirmation Requirements for requirement cannot be satisfied ‘‘ and registration statement and prospectus
Securities Transactions would serve no purpose ‘‘ if the bank is requirements. The proposal would
Section 12.7(a)(4) requires bank using a paperless book entry form, resolve the uncertainty by codifying
officers and employees who make which has become the more current specific requirements that apply in
investment recommendations or form of issuance used by banks and order for the offer and sale of bank
decisions for customers to report their other securities issuers. This proposal securities in a bank holding company
personal transactions in securities to the would amend § 16.6(a)(3) to provide dissolution to be exempt from the § 16.3
bank within ten business days after the that this legend requirement only registration statement and prospectus
end of the calendar quarter. The OCC applies to debt issued in certificate requirements.
modeled this reporting requirement on form. All other requirements of § 16.6, Specifically, the proposal adds a new
SEC Rule 17j–1 (17 CFR 270.17j–1), including the requirement of minimum § 16.9 that would expressly exempt from
issued pursuant to the Investment denominations of $250,000, will the § 16.3 registration statement and
Company Act of 1940, which, at the continue to apply to all bank sales of prospectus requirements offers and sales
time of the most recent revision to this nonconvertible debt, whether issued in of bank-issued securities in connection
OCC requirement in 1996, required certificate or book entry form. with the dissolution of the holding
‘‘access persons’’ to report their company of the bank if those
Nonpublic Offerings (§ 16.7) transactions satisfy the following
personal transactions in securities
within ten days after the end of the Part 16 provides that, absent an requirements: (1) The offer and sale of
calendar quarter.53 However, in July available exemption, no person may bank-issued securities occurs solely as
2004 the SEC amended Rule 17j–1 to offer and sell a security issued by a part of a dissolution in which the
expand this ten-day deadline to 30 national bank without meeting the security holders exchange their shares
days.54 registration and prospectus delivery of stock in a holding company that had
To conform part 12 with the current requirements of part 16. Part 16 no significant assets other than
SEC filing deadline in SEC Rule 17j–1, generally incorporates by reference the securities of the bank, for bank stock; (2)
this proposal amends § 12.7(a)(4) by definitions, registration and prospectus the security holders receive, after the
replacing the 10-business day filing delivery requirements of the Securities dissolution, substantially the same
deadline for reporting personal Act and SEC implementing rules, proportional share of interests in the
transactions in securities with the including Regulation D under the bank as they held in the holding
deadline specified in SEC rule 17j–1. Securities Act.55 Section 16.7(a) of the company; (3) the rights and interests of
This will enable bank employees that OCC’s nonpublic offering regulation the security holders in the bank are
are subject to SEC Rule 17j–1 and to the provides that the OCC will deem offers substantially the same as those in the
OCC’s securities recordkeeping and and sales of bank-issued securities to be holding company prior to the
confirmation regulation to file by the exempt from the registration and transaction; and (4) the bank has
same deadline, thereby eliminating prospectus requirements of part 16 if substantially the same assets and
employee confusion as well as the they meet certain requirements, liabilities as the holding company had
regulatory burden associated with including filing with the OCC a notice on a consolidated basis prior to the
complying with two separate filing on Form D that meets the requirements transaction.
deadlines. of Regulation D.56 These proposed requirements parallel
Form D requires the issuer to disclose the conditions that must be satisfied in
53 See 61 FR 63958 (Dec. 2, 1996). The OCC’s basic information concerning the order for securities issued in connection
reporting requirement under 12 CFR 12.7(a)(4) is a identity of the issuer and the offering, with an acquisition by a holding
separate requirement from any applicable including the exemption being claimed
requirements under SEC Rule 17j–1. However, an 57 Specifically, Form D serves a useful purpose for
‘‘access person’’ required to file a report with a and information regarding the offering
the SEC in creating a uniform State notification
national bank pursuant to SEC Rule 17j–1 need not price, number of investors, expenses, form for purposes of the States’ Uniform Limited
file a separate report under the OCC’s reporting and use of proceeds. However, the OCC Offering Exemption, which is inapplicable to
requirement if the required information is the same. does not use the information in the national banks. In addition, the SEC uses the
See 12 CFR 12.7(d). The SEC rule defines ‘‘access information in the forms to conduct economic and
person’’ as including directors, officers, and certain Form D for any supervisory or other other analyses of the private placement market in
employees of the investment adviser. 17 CFR general. The OCC does not use the information in
270.17j–1(a)(1). 55 17 CFR 230.501 et seq. the Form D for this purpose. See Sec. Act. Release
54 See 69 FR 41696 (July 9, 2004). 56 17 CFR 230.503. No. 33–6339, 46 FR 41,791 (Aug. 18, 1981).
company of a bank (pursuant § 3(a) of current reporting requirement to ensure determination whether to issue such
the Bank Holding Company Act of 1956) that potential purchasers in a bank’s orders would be made by the Federal
to be eligible for exemption from the public offering had access to updated Reserve Board. Section 303 of the
registration requirements of § 3(a)(12) of information necessary for their FSRRA repeals that requirement, so that
the Securities Act, and are equally investment decisions, in the same the OCC now has the authority to issue
appropriate in the reverse context where manner as investors in other companies. such orders, as it does with respect to
bank-issued securities are offered and The periodic and current reporting other types of orders resulting from an
sold in connection with the dissolution requirements of § 16.20 applies to OCC-initiated enforcement action. The
of the bank’s holding company. national banks until the securities to proposal amends § 19.100 of the OCC’s
From a shareholder protection which the national bank’s registration rules, pertaining to OCC adjudications,
standpoint, the rationale for not statement relates are held of record by to reflect the change in the law.
requiring a registration statement for the fewer than 300 persons. The FDIC and Section 8(g) of the FDI Act pertains to
formation of a shell holding company— the Federal Reserve Board have not the suspension, removal, or prohibition
that the interests of the bank and imposed a comparable obligation on of an IAP when the IAP is the subject
company shareholders are essentially State banks. Instead, a State bank that of an information, indictment, or
the same—would apply equally to conducts public offerings of their complaint involving certain crimes set
dissolution of a shell holding company. securities are subject to Exchange Act forth in the statute or when the IAP has
The business rationale—reduction of periodic and current reporting been convicted of such a crime.63
costs of dissolution of a holding requirements only if the bank has more Section 708 of the FSRRA revises the
company if a bank decides it does not than 500 shareholders. statutory grounds that warrant
need the flexibility of a holding We propose to eliminate § 16.20 in suspension, removal or prohibition of
company structure—also is similar. order to reduce regulatory burden with an IAP from further participation in the
The proposal also makes conforming respect to small national banks that file conduct of the affairs of a depository
amendments to part 16 by deleting the registration statements with the OCC for institution, including a national bank, in
current cross-reference in § 16.5(a) to the public offering of their securities. such a case. Section 708 also clarifies
section 3(a)(12) of the Exchange Act and Thus, only a national bank that has 500 that, if grounds exist, an appropriate
adding a reference to new § 16.9 in the or more shareholders of record would be Federal banking agency, including the
listing of exempt securities under § 16.5. subject to the Exchange Act periodic OCC, may suspend or prohibit the IAP
and current reporting requirements.61 from participating in the affairs of any
Removal of Current and Periodic Report We also make a conforming change to depository institution, and not only the
Filing (§ 16.20) § 16.6, by deleting the reference to institution with which the party is, or
State banks and national banks are § 16.20 in that section. was last, affiliated. The amendment
both subject to the Exchange Act’s This proposal would not significantly further clarifies that this authority
periodic and current reporting diminish financial information about applies even if the IAP is no longer
requirements if they have one or more the banks that will be available to associated with the depository
classes of securities subject to the investors, since updated financial institution at which the offense
registration provisions of section 12(g) information, including the bank’s most allegedly occurred or if the depository
of the Exchange Act.58 Pursuant to that recent balance sheet and statement of institution with which the IAP was
statute, banks having a class of equity income filed with the OCC as part of the affiliated no longer exists. The proposal
securities held by 500 or more owners bank’s most recent Consolidated Report amends §§ 19.110 and 19.111 of our
of record are required to register that of Condition (Call Report), will still be rules to conform to these amendments.
class of securities under § 12(g) of the publicly available to investors. This The proposal also updates the titles of
Exchange Act.59 Once registered, a bank proposal also will have no effect on the OCC officials referenced in §§ 19.111
becomes subject to the periodic and requirement under the OCC’s Exchange and 19.112.
current reporting requirements of the Act disclosure rule at 12 CFR part 11 Finally, the proposed rule eliminates
Exchange Act. that a national bank whose securities are the applicability of part 19 to DC banks
Section 16.20 of the OCC’s regulations registered under section 12(b) or 12(g) of by deleting a reference to DC banks in
imposes periodic and current reporting the Exchange Act must file current and the definition of ‘‘institution’’ in
requirements for national banks that file periodic reports that conform to section § 19.3(g). The proposal also deletes a
registration statements with the OCC for 13 of the Exchange Act. reference to DC banks in the scope
the public offering of their securities. section (§ 19.241) of subpart P, which
Part 19—Rules of Practice and relates to the removal, suspension, and
Pursuant to § 16.20, a national bank Procedure debarment of accountants from
must file periodic and current reports
after the registration statement becomes The FSRRA made several changes performing audit services.
effective, even if the bank is not affecting the OCC’s exercise of its Part 21—Minimum Security Devices
otherwise required to register its enforcement authority pursuant to and Procedures, Reports of Suspicious
securities under the Exchange Act. This section 8 of the FDI Act.62 Section 303 Activities, and Bank Secrecy Act
periodic and current reporting of the FSRRA changes the procedures Compliance Program
requirement was based on that imposed for issuing orders of suspension,
removal or prohibition against Part 21 consists of three subparts.
by section 15(d) of the Exchange Act on Subpart A requires each bank to adopt
other entities filing Securities Act institution-affiliated parties (IAPs) of
national banks. Previously, section appropriate security procedures to
registration statements with the SEC.60 discourage robberies, burglaries, and
The OCC adopted this periodic and 8(e)(4) of the FDI Act required that,
following proceedings before an larcenies and to assist in identifying and
58 See Exchange Act Section 12(i), 15 U.S.C. administrative law judge, the apprehending persons who such acts.
78l(i), 12 CFR part 335, and 12 CFR part 11. Subpart B ensures that national banks
59 Section 12(g) of the Exchange Act also requires 61 See Exchange Act Section 12(i), 15 U.S.C. 78l(i) file a Suspicious Activity Report when
a bank to have more than $ 1 million of assets. and 12 CFR part 11.
60 59 FR 54789 (Nov. 2, 1994). 62 12 U.S.C. 1818. 63 Id. at 1818(g).
they detect a known or suspected purchasing interests in an entity areas or individuals.’’ This proposed
violation of Federal law or a suspicious primarily engaged in making such definition is consistent with the way in
transaction related to a money investments.’’ which the OCC and the other Federal
laundering activity or a violation of the The FSRRA narrowed the grant of banking agencies have construed the
Bank Secrecy Act. Subpart C requires authority in section 24(Eleventh) by concept of ‘‘primary’’ in the phrase
that all national banks establish and providing that a national bank may ‘‘primary purpose’’ for community
maintain procedures reasonably ‘‘make investments, directly or development activities pursuant to the
designed to assure and monitor their indirectly, each of which promotes the CRA rules.66
compliance with the requirements of the public welfare by benefiting primarily
Bank Secrecy Act and its implementing low- and moderate-income communities Public Welfare Investments (§§ 24.3,
regulations. or families (such as by providing 24.1)
This proposed rule removes housing, services, or jobs).’’ 64 The Section 24.3 contains the
references to DC banks in the scope FSRRA also revised section authorization to make investments
section of part 21 to clarify that part 21 24(Eleventh) to state explicitly that the pursuant to section 24(Eleventh). The
no longer applies to DC banks. authority to make public welfare proposal revises the authorizing
investments applies to investments language to conform with the changes
Part 22—Loans in Areas Having Special
made by a national bank directly and by made by the FSRRA. Here and
Flood Hazards
its subsidiaries.65 elsewhere in the proposal where the
Part 22 applies to loans secured by The FSRRA also raised the maximum ‘‘benefiting primarily’’ standard
buildings or mobile homes located or to aggregate outstanding investment limit appears, the phrases ‘‘low- and
be located in areas subject to special under section 24(Eleventh) from 10 to moderate-income individuals’’ and
flood hazards. It implements the 15 percent of the bank’s unimpaired ‘‘low- and moderate income areas’’ are
requirements of the National Flood capital and surplus. retained to describe the beneficiaries of
Insurance Act of 1968 and the Flood The proposal revises part 24, which national banks’ section 24(Eleventh)
Disaster Protection Act of 1973. This implements section 24(Eleventh) to investments since the statutory language
proposal eliminates the applicability of conform to the statutory changes. underlying those phrases was not
part 22 to DC banks by removing DC Definition of ‘‘Community and revised by the FSRRA.67 The proposal
banks from the definition of ‘‘bank’’ in Economic Development Entity’’ (CEDE) also adds a new section 24.1(e) to clarify
§ 22.2(b). § 24.2(c) that investments made, or written
Part 23—Leasing commitments to make investments
The definition of a CEDE in proposed
entered into, before the enactment of the
Part 23 contains the standards for § 24.2(c) implements the FSRRA change
FSRRA continue to be subject to the
personal property lease financing to the public welfare test. Proposed
statutes and regulations in effect prior to
transactions authorized for national paragraph (c) defines a CEDE as ‘‘an
October 13, 2006.68
banks. Section 23.6 applies the lending entity that makes investments or
limits of 12 U.S.C. 84 or, if the lessee is conducts activities that promote the Investment Limits (§ 24.4)
an affiliate of the bank, the restrictions public welfare by benefiting primarily The proposed revisions to § 24.4(a)
on transactions with affiliates low- and moderate-income areas or implement the statutory change to the
prescribed by 12 U.S.C. 371c and individuals’. aggregate investment limit in section
371c–1 to these lease transactions. This Definition of ‘‘Benefiting Primarily Low- 24(Eleventh) from 10 to 15 percent of
proposal would add to § 23.6 cross- and Moderate-Income Areas or unimpaired capital and surplus.
references to the Federal Reserve Individuals’’ (§ 24.2(g)) This proposal also modifies the
Board’s Regulation W, 12 CFR part 223, procedure that applies when a national
which implements 12 U.S.C. 371c and 12 U.S.C. 24(Eleventh) authorizes a
bank requests OCC approval to exceed
371c–1. This is necessary because national bank and its subsidiaries to
the investment limit. The current rule
Regulation W contains new provisions make investments that promote the
permits a national bank’s aggregate
that do not appear in 12 U.S.C. 371c and public welfare by ‘‘benefiting primarily’’
outstanding investments to exceed 5
371c–1. In addition Regulation W low- and moderate-income areas or
percent of its capital and surplus if the
contains a definition of the term individuals. The proposal defines
bank is well capitalized and the OCC
‘‘affiliate’’ that is broader than the ‘‘benefiting primarily low and moderate-
determines, by written approval of a
definition that appears in § 371c and income areas or individuals’’ when used
bank’s proposed investment pursuant to
§ 371c–1. With these cross-references to to describe an investment to mean that:
the procedures set out at § 24.5(b), that
Regulation W, these rules will more (1) A majority (more than 50 percent) of
clearly reflect whether the requirements the investment benefits low- and 66 See Interagency Questions and Answers
of 12 U.S.C. 84 or of Regulation W apply moderate-income areas or individuals; Regarding Community Reinvestment, Q&A §§ .12(i)
to a particular lease transaction. or (2) the express, primary purpose of and 563e.12(h) ‘‘ 7, 66 FR 36620, 36627 (July 12,
the investment (evidenced, for example, 2001) (explaining ‘‘primary purpose’’ for
Part 24—Community Development by government eligibility requirements) community development activities in the context of
Investments the CRA rules).
is to benefit ‘‘low- and moderate-income 67 We also note that the OCC has consistently
Prior to its amendment by the FSRRA, used the term ‘‘areas’’ interchangeably with
12 U.S.C. 24(Eleventh) authorized a 64 We note that on February 27, 2007, the U.S. ‘‘communities’’ and the term ‘‘individuals’’
national bank to ‘‘make investments House of Representatives passed legislation that interchangeably with ‘‘families.’’
would reinstate the wording of the former grant of 68 See 152 Cong. Rec. H7586 (daily ed. Sept. 29,
designed primarily to promote the
authority to national banks to make community 2006) (colloquy between Chairman Oxley of the
public welfare, including the welfare of development investments. See H.R. 1066, the House Financial Services Committee and Ranking
low- and moderate-income communities Depository Institution Community Development Member Frank) (explaining that the revised
or families (such as by providing Investments Enhancement Act. The enactment of standard in section 24(Eleventh) applies
legislation further amending section 24(Eleventh) prospectively only and does not affect investments
housing, services, or jobs)’’ (the public may affect the content or timing of the OCC’s made, or written commitments to make investments
welfare test). A national bank could issuance of final rules revising part 24. that were entered into, prior to the enactment of the
‘‘make such investments directly or by 65 FSRRA, section 305, 120 Stat. at 1970–71. new standard).
a higher amount will pose no significant investments that benefit primarily low- consistent with how that phrase appears
risk to the deposit insurance fund. and moderate-income areas or throughout part 24. In addition, a
Section 24.5(b) describes the application individuals and that: (1) Finance conforming technical amendment is
process that is required for the OCC’s minority- and women-owned small proposed for paragraph (d)(3) that
prior approval of an investment when a businesses; (2) provide technical would permit other public welfare
bank does not satisfy the requirements assistance for minority- and women- investments, including investments of a
for using an after-the-fact notice. Thus, owned small businesses; or (3) are made type determined by the OCC to be
the investment limits provision in in minority- and women-owned permissible under the proposed
current § 24.4(a) requires a national depository institutions. The OCC revisions to part 24. Grandfathered
bank to submit a request to exceed the expects these qualifying investments to investments that are subject to statutes
5 percent limit together with a specific be made in minority- and women- and regulations in effect prior to
investment proposal, and to use the owned entities that conform to the October 13, 2006 would not be affected.
prior approval procedures for that ownership and control, profit and loss These terms are familiar to national
investment proposal. taking, and senior management banks and correspond to similar terms
This particular prior approval representation requirements of the in existing part 24 and the part 25 CRA
procedure is not required by the statute CRA’s provision governing operation of regulations. Therefore, this proposal
and the OCC has determined that the branch facilities by minorities and makes no change to the use of the terms
burden it imposes is not warranted in women (see 12 U.S.C. 2907(b)(1)–(3)). In ‘‘areas’’ and ‘‘individuals’’ in part 24.
view of the low level of risk generally addition, the proposal revises references The proposal also revises Appendix 1
presented by the types of investments to investments in ‘‘targeted to part 24, the CD–1 National Bank
authorized pursuant to section redevelopment areas,’’ which, after Community Development (Part 24)
24(Eleventh). Accordingly, the proposal FSRRA, would be permissible only if Investments Form, to reflect the
removes the requirement that a national they promote the public welfare by proposed changes to the regulation.
bank submit a specific investment benefiting primarily low- and moderate-
proposal for prior approval under income areas or individuals. Finally, the Part 26—Management Officials
§ 24.5(b) when it also seeks approval to proposal amends § 24.6(d)(1) to include Interlocks
exceed the 5 percent investment limit. investments that provide financial Part 26 implements the provisions of
Under the proposed simpler procedure, literacy as an additional example of a the Depository Institution Management
the bank would submit a written request qualifying public welfare investment. Interlocks Act (Interlocks Act) 69 which
to the OCC to exceed the 5 percent limit generally prohibits a management
and would not be required to tie this Technical Amendments
official from serving two nonaffiliated
request to a specific investment The proposal also revises several
depository organizations in situations
proposal. If the OCC provides written sections of part 24 to eliminate language
where the management interlock likely
approval of the request, the bank may that is inconsistent or unnecessary in
would have an anticompetitive effect.
make investments above the 5 percent light of the revised statutory standard
Section 610 of the FSRRA raised the
limit. However, as is the case for for community development
asset-size amount from $20 million to
investments below the 5 percent limit, investments and to make technical
$50 million for small banks that are
for each investment above the limit the changes, including:
• A revision to § 24.2(f) to update a exempt under certain provisions of the
bank would submit either an after-the- Interlocks Act. Because the OCC’s
fact notice under § 24.5(a) if it satisfies cross-reference to the definitions of
‘‘low-income’’ and ‘‘moderate-income’’ current substantive rules implementing
the requirements for after-the-fact
in § 25.12. The revision to § 24.2(f) does the Interlocks Act were issued together
notice, or an application under § 25.4(b)
not result in any substantive change to with the other Federal banking agencies,
if it does not. These revisions facilitate
the definition of ‘‘low- and moderate- the OCC has implemented this FSRRA
national banks’ ability to plan their
income.’’ provision through a separate rulemaking
investment activity while enabling the
• Technical amendments to § 24.5 to conducted jointly with those agencies.70
OCC to monitor the bank’s use of the
part 24 authority on a case-by-case reflect an address change for sending However, this proposal amends part
basis. Thus, proposed § 24.4(a) permits certain notices, letters, and proposals to 26 by deleting the reference to DC banks
a national bank’s aggregate outstanding the OCC. These materials are proposed in the scope section, § 26.1(c), deleting
investments to exceed 5 percent of its to be sent to the OCC’s Community the definition of ‘‘District bank’’ in
capital and surplus, provided that the Affairs Department; the current § 26.2(i), and deleting the reference to
bank is at least adequately capitalized regulation directs the materials to the DC banks in the enforcement section,
and the OCC determines, by written Director, Community Development § 26.8.
approval of a written request submitted Division. Technical amendments to Part 27—Fair Housing Home Loan Data
by the bank, that a higher amount of paragraphs (a)(2) and (b)(1) would System
investment will pose no significant risk permit national banks to submit after-
to the deposit insurance fund. the-fact notices and investment Part 27 applies to activities of national
proposals needing prior approval via e- banks and their subsidiaries that make
Examples of Qualifying Public Welfare mail, fax, or electronically through home loans for the purpose of
Investments (§ 24.6) National BankNet, rather than mailing purchasing, construction-permanent
Current § 24.6 contains examples of the submissions. A technical financing, or refinancing of residential
qualifying public welfare investments. amendment is proposed for paragraph real property. The proposed rule would
The proposal revises § 24.6 as necessary (a)(1) to correct the format of a citation remove DC banks from the scope of part
to reflect the revision to the language of to 12 U.S.C. 24(Eleventh).

the statutory standard effected by • Proposed § 24.6 would make a 69 12 U.S.C. 3201 et seq.
70 The OCC and the other Federal banking
section 305 of the FSRRA. The proposal technical amendment to paragraph
agencies recently issued an interim final rule with
also makes conforming amendments to (b)(2) by removing the phrase ‘‘low-or request for comments amending their management
§ 24.6 to clarify that the examples of moderate-income’’ and replacing it with interlocks rules to implement this change. See 72
qualifying public investments include ‘‘low- and moderate-income,’’ which is FR 1274 (Jan. 11, 2007).
27 in § 27.1(a) and the definition of definition of ‘‘banking institution’’, operating subsidiaries to a bank
‘‘bank’’ in § 27.2(c). § 28.51(a). ‘‘affiliate,’’ as that term is defined in
section 23A(b)(1) of the Federal Reserve
Part 28—International Banking Part 31—Extensions of Credit to
Act. After the OCC adopted part 32 in
Activities Insiders and Transactions With
its current form, the Gramm-Leach-
Affiliates
This proposal makes a technical Bliley Act 71 authorized a national bank
change to the definition of ‘‘limited Sections 23A and 23B of the Federal (as well as insured State member banks)
Federal branch’’ in 12 CFR 28.11(s). Reserve Act, as implemented by the to hold financial subsidiaries and
Currently, this regulation defines a Federal Reserve Board’s Regulation W, provided generally that financial
limited foreign branch as a Federal impose quantitative and qualitative subsidiaries would be treated as
branch or agency that, pursuant to an limitations on a bank’s transactions with ‘‘affiliates’’ for purposes of sections 23A
agreement between the parent foreign its ‘‘affiliates.’’ Appendix A to part 31 of and 23B of the Federal Reserve Act.
bank and the FRB, may receive only the OCC’s rules contains two This treatment appears in the statute at
those deposits permissible for an Edge interpretations of section 23A pertaining section 23A(e). Accordingly, the Federal
corporation to receive. However, this to a national bank’s transactions with an Reserve Board’s Regulation W generally
agreement is not required for a foreign affiliate. One of these interpretations defines as ‘‘affiliates’’ financial
bank to operate a limited Federal branch provides that a loan to an unaffiliated subsidiaries established pursuant to the
in the United States. Therefore, we are third party that is collateralized by authorization in the Gramm-Leach-
removing the unnecessary reference to securities issued by an affiliate is not a Bliley Act.
this agreement from this definition. This ‘‘covered transaction’’ (that is, a This proposal adds to § 32.1(c)(1)
change, however, does not in any transaction to which the requirements of cross-references to section 23A(e) and to
manner affect the requirement in section 23A apply) so long as: the § 223.2(a) of the Federal Reserve Board’s
§ 28.11(s) that a limited Federal branch borrower provides additional collateral Regulation W. This change would
licensed by the OCC may accept only that meets or exceeds the collateral directly cite the specific statute that
those deposits that are permissible for requirements of § 23A (i.e., up to 130% defines an affiliate to include a financial
an Edge corporation. of the loan); and the loan proceeds are subsidiary as well as the implementing
not used to purchase the affiliate-issued provision of Regulation W. This
We also are proposing a technical
securities or otherwise used for the amendment to § 32.1 would make clear
change to part 28 with respect to the
benefit of, or transferred to, any affiliate. that a bank’s loan to its financial
expedited time periods for processing
The Federal Reserve Board’s Regulation subsidiary is not covered by the lending
applications by eligible foreign banks to
W, which was issued subsequent to the limit and that, instead, Regulation W
establish or relocate an interstate
OCC’s adoption of these interpretations, applies to such a loan.72 The
Federal branch or agency. Current 12
treats this transaction differently. amendment also serves more generally
CFR 28.12(e)(3) provides that an
Accordingly, we are proposing to to reflect the fact that Regulation W
application by an eligible foreign bank
remove our interpretation on that issue contains a definition of the term
to establish and operate a de novo
from Appendix A to part 31. ‘‘affiliate’’ that is broader than the
interstate Federal branch or agency is
In addition, we have made minor definition that appears in § 371c.
conditionally approved as of the 30th
changes to section 2 of Appendix A to
day after the OCC receives the Part 34—Real Estate Lending and
part 31 to reflect the applicability of 12
application unless the OCC notifies the Appraisals
U.S.C. 371c, 371c–1, and their
bank otherwise. However, the OCC is Under current § 34.22, if a national
implementing regulation, Regulation W,
finding that the expedited process in the bank makes an adjustable rate mortgage
to deposits between affiliated banks.
current regulation is not allowing (ARM) loan, the loan documents must
Furthermore, we have added an
sufficient time for the 30-day comment specify an index to which a change in
exception to this provision in order to
period to expire and for consideration of the interest rate will be linked. Section
clarify that a national bank may make or
the comments received. As a result, the 34.22 describes the requirements that
receive a deposit if a party other than
OCC is routinely notifying the eligible generally apply to such an index. This
the depositary can legally offer and does
banks that the time period is extended. proposal amends § 34.22 to provide
post the collateral.
The proposal amends § 28.12(e) to The proposal also removes the
provide that all expedited approvals to reference to 12 U.S.C. 1972(2)(G), which 71 See Pub. L. 106–102, Section 121, 113 Stat.
establish or relocate a Federal branch or was repealed by section 601 of the

1338, 1373–81 (Nov. 12, 1999).
72 However, subsidiaries that are financial
agency are approved as of the 15th day FSRRA, in the authority section of part subsidiaries solely because they sell insurance as
after the close of the applicable public 31 as well as in § 31.1. agent or broker in a manner not permitted to the
comment period, or the 45th day after Finally, the proposal makes a parent bank are not considered ‘‘affiliates’’ under
the filing is received by the OCC, technical amendment to Appendix B to Regulation W (see 12 CFR 223.3(p)(2)(i)) (unless the
whichever is later, unless the OCC subsidiary is an affiliate for reasons other than its
part 31. This appendix compares the status as a financial subsidiary under the Gramm-
notifies the bank otherwise. These are requirements of part 31 and part 32. Leach-Bliley Act). Loans to such subsidiaries are
the same time frames that would apply However, it currently contains an not subject to the lending limit for the same reason
under 12 CFR 5.20(f)(5) if a national that the lending limit does not apply to loans to
inaccurate description of part 32 companies that meet the general definition of
bank were engaging in a similar relating to exclusions to the definition ‘‘affiliate’’ in § 371c(b)(1) but are excepted from
transaction. of ‘‘loans or extensions of credit.’’ The § 371c by another provision, e.g., operating
The proposal also would eliminate proposal removes this inaccuracy. subsidiaries or companies engaged solely in holding
the applicability to DC banks of subpart the premises of the bank (see section 371c(b)(2)).
Part 32—Lending Limits The OCC does not apply the lending limit to loans
C of part 28, which implements the to any financial subsidiary since it is not necessary
International Lending Supervision Act Part 32 sets forth the lending limits given that another statutory scheme—the affiliate
of 1988 (12 U.S.C. 3901 et seq.). that are applicable to a national bank. transaction restrictions—is generally applicable.
This reason applies even where a specific
Specifically, the proposal would Section 32.1(c)(1) excludes from the exemption—such as for the entities described in 12
eliminate the references to DC banks in scope of part 32’s coverage loans made CFR 223.3(p)(2)(i)—causes the affiliate transaction
the scope section, § 28.50(c), and in the by a national bank and its domestic restrictions to be inapplicable.
national banks with additional not, how could the regulation be more regulatory action set forth in Executive
flexibility with respect to the indices clearly stated? Order 12866.
upon which ARM rates may be based. • Does the proposed regulation
Paperwork Reduction Act
Specifically, the amendment permits contain language or jargon that is not
national banks to use a combination of clear? If so, which language requires In accordance with the requirements
indices to which changes in the interest clarification? of the Paperwork Reduction Act of 1995
rate will be linked, in addition to a • Would a different format (grouping (PRA), the Agencies may not conduct or
single index. The amendment also and order of sections, use of headings, sponsor, and the respondent is not
permits a national bank to use an index paragraphing) make the regulation required to respond to, an information
other than one already permissible easier to understand? If so, what collection unless it displays a currently
under the rule, if the bank files a notice changes to the format would make the valid Office of Management and Budget
with the OCC and the OCC does not regulation easier to understand? (OMB) control number.
notify the bank within 30 days that the • What else could we do to make the The information collection
notice raises supervisory concerns or regulation easier to understand? requirements contained in this notice of
significant issues of law or policy. If the proposed rulemaking have been
Community Bank Comment Request submitted to OMB for review and
OCC notifies the bank about such issues
or concerns, the bank may not proceed In addition, we invite your comments approval under existing OMB control
unless it has obtained the OCC’s written on the impact of this proposal on numbers 1557–0014 (Comptroller’s
approval. The approval could include community banks. The OCC recognizes Licensing Manual), 1557–0120
any restrictions or conditions necessary that community banks operate with (Securities Offering Disclosure Rules),
to address the issues or concerns the more limited resources than larger 1557–0194 (Community and Economic
OCC has identified. institutions and may present a different Development Entities, Community
risk profile. Thus, the OCC specifically Development Projects, and Other Public
Part 37—Debt Cancellation Contracts requests comments on the impact of this Welfare Investments), and 1557–0190
and Debt Suspension Agreements proposal on community banks’ current (Real Estate Lending and Appraisals).
On September 19, 2002, the OCC resources and available personnel with The OCC is proposing to revise part
published a final rule in the Federal the requisite expertise, and whether the 5 to reflect organizational restructuring,
Register that added a new 12 CFR part goals of the proposal could be achieved, and to simplify, clarify and make
37, which establishes standards for community banks, through an conforming and technical corrections to
governing DCCs and DSAs.73 In the last alternative approach. corporate application procedures and
sentence of § 37.7(a), the cross-reference standards. The PRA burden in part 5 is
to standards in § 37.6 is incorrect. The Regulatory Analysis currently approved under OMB Control
rule should say § 37.6(d), not § 37.6(b). Regulatory Flexibility Act No. 1557–0014, which also covers the
This amendment corrects that error. Comptroller’s Licensing Manual.
Pursuant to § 605(b) of the Regulatory Therefore, we submitted the entire
Part 40—Privacy of Consumer Flexibility Act, 5 U.S.C. 605(b) (RFA), information collection to OMB for
Financial Information the regulatory flexibility analysis review. The numbers below reflect the
Part 40 governs the treatment of otherwise required under Section 604 of total burden under part 5 and the
nonpublic personal information about the RFA is not required if the agency Comptroller’s Licensing Manual
consumers by financial institutions. certifies that the rule will not have a following adoption of the rule and the
Pursuant to the DC Bank Act, the significant economic impact on a review of the entire information
proposal would amend the scope substantial number of small entities and collection to ensure accuracy of the
section, § 40.1(b), to eliminate the publishes its certification and a short, estimates.
applicability of part 40 to DC banks. explanatory statement in the Federal Title of Information Collection:
Register along with its rule. Comptroller’s Licensing Manual.
Request for Comments We have estimated that the economic OMB Number: 1557–0014.
The OCC welcomes comments on any costs associated with the changes made Estimated Number of Respondents:
aspect of this proposal, particularly by this proposal will not be significant 5,894.
those issues specifically noted in this and that the majority of banks affected Estimated Number of Responses:
preamble. by these costs will be those with assets 5,894.
greater than $250 million. Therefore, Average Hours Per Response: 2.98
Solicitation of Comments on Use of pursuant to Section 605(b) of the RFA, hours.
Plain Language the OCC hereby certifies that this Total Estimated Annual Burden:
Section 722 of the Gramm-Leach- proposal will not have a significant 17,572 hours.
Bliley Act, Public Law 106–102, sec. economic impact on a substantial Affected Public: National banks.
722, 113 Stat. 1338, 1471 (Nov. 12, number of small entities. Accordingly, a Estimated Net Burden
1999), requires the Federal banking regulatory flexibility analysis is not Change: ¥7,975 hours.
agencies to use plain language in all needed. The OCC is proposing to revise part
proposed and final rules published after 16 to delete the public and periodic
Executive Order 12866 requirements in 12 CFR 16.20 and the
January 1, 2000. We invite your
comments on how to make this proposal The OCC has determined that this requirement to submit to the OCC a
easier to understand. For example: proposal is not a significant regulatory Form D required in 12 CFR 16(a)(3). The
• Have we organized the material to action under Executive Order 12866. We PRA burden in part 16 is currently
suit your needs? If not, how could this have concluded that the changes made approved under OMB Control No. 1557–
material be better organized? by this rule will not have an annual 0120. Therefore, we submitted the entire
• Are the requirements in the effect on the economy of $100 million information collection for review. The
proposed regulation clearly stated? If or more. The OCC further concludes numbers below reflect the entire burden
that this proposal does not meet any of for part 16 following adoption of the
73 67 FR 58962. the other standards for a significant rule and the review of the entire
information collection to ensure Affected Public: National banks. promulgating a rule. The OCC has
accuracy of the estimates. Estimated Net Burden Change: determined that this proposed rule will
Title of Information Collection: ¥12,900 hours. not result in expenditures by State,
Securities Offering Disclosure Rules—12 The information collection local, and tribal governments, or by the
CFR Part 16. requirements enable the OCC to ensure private sector, of $100 million or more
OMB Number: 1557–0120. that the proposed transactions are in any one year. Accordingly, this
Estimated Number of Respondents: permissible under law and regulation proposal is not subject to Section 202 of
48. and are consistent with safe and sound the Unfunded Mandates Act.
Estimated Number of Responses: 48. banking practices.
Average Hours Per Response: 10.63. Comments are invited on: List of Subjects
Total Estimated Annual Burden: 510. (a) Whether the collection of
Affected Public: National banks. 12 CFR Part 1
information is necessary for the proper
Estimated Net Burden performance of the Agencies’ functions, Banks, Banking, National banks,
Change: ¥4,823 hours. including whether the information has Reporting and recordkeeping
The OCC is proposing to revise part practical utility; requirements, Securities.
24 to incorporate changes made by the (b) The accuracy of the estimates of
FSRRA to community development 12 CFR Part 2
the burden of the information
investment authority. The OCC is also collection, including the validity of the Credit life insurance, National banks.
proposing to revise its community methodology and assumptions used;
development investment form contained 12 CFR Part 3
(c) Ways to enhance the quality,
in Appendix 1 to Part 24. The PRA utility, and clarity of the information to Administrative practice and
burden for part 24 is currently approved be collected; procedure, National banks, Reporting
under OMB Control No. 1557–0194. (d) Ways to minimize the burden of and recordkeeping requirements.
Therefore, the OCC submitted the entire the information collection on
information collection for review. The respondents, including through the use 12 CFR Part 4
numbers below reflect the entire burden of automated collection techniques or Administrative practice and
for part 24 following adoption of the other forms of information technology; procedure, Freedom of information,
rule and the review of the entire and Individuals with disabilities, Minority
information collection to ensure (e) Estimates of capital or start up businesses, Organization and functions
accuracy of the estimates. costs and costs of operation, (Government agencies), Reporting and
Title of Information Collection: maintenance, and purchase of services recordkeeping requirements, Women.
Community and Economic Development to provide information.
Entities, Community Development Comments on these burden estimates 12 CFR Part 5
Projects—Part 24. should be submitted using one of the
OMB Number: 1557–0194. Administrative practice and
methods outlined in the ADDRESSES procedure, National banks, Reporting
Estimated Number of Respondents: caption set forth above, and a copy
400. and recordkeeping requirements,
should also be sent to OCC Desk Officer, Securities.
Estimated Number of Responses: 400. 1557–0014, 1557–0120, 1557–0194, or
Average Hours Per Response: 1.475 12 CFR Part 7
1557–0190 by mail to U.S. Office of
hours.
Management and Budget, 725 17th
Total Estimated Annual Burden: 590 Bank Activities and Operations.
Street, NW., #10235, Washington, DC
hours.
Affected Public: National banks. 20503, or by fax to (202) 395–6974. You 12 CFR Part 9
Estimated Net Burden Change: + 219 may request additional information or
Estates, Investments, National banks,
hours. copies of the collections and supporting
Reporting and recordkeeping
The OCC is proposing to revise part documentation submitted to OMB by
requirements, Trusts and trustees.
34 to provide national banks with contacting: Mary H. Gottlieb or Camille
additional flexibility with respect to the Y. Dickerson, (202) 874–5090, 12 CFR Part 10
indices upon which ARM rates may be Legislative and Regulatory Activities
Division, Office of the Comptroller of National banks, Reporting and
based. The PRA burden for part 34 is recordkeeping requirements, Securities.
currently approved under OMB Control the Currency, 250 E Street, SW.,
No. 1557–0190. Therefore, the OCC Washington, DC 20219. 12 CFR Part 11
submitted the entire information Unfunded Mandates Reform Act of 1995 Confidential business information,
collection for review. The numbers National banks, Reporting and
below reflect the entire burden for part Section 202 of the Unfunded
Mandates Reform Act of 1995, Public recordkeeping requirements, Securities.
34 following adoption of the rule and
the review of the entire information Law 104–4 (2 .S.C. 1532) (Unfunded 12 CFR Part 12
collection to ensure accuracy of the Mandates Act), requires that an agency
prepare a budgetary impact statement National banks, Reporting and
estimates.
Title of Information Collection: Real before promulgating any rule likely to recordkeeping requirements, Securities.
Estate Lending and Appraisals—12 CFR result in a Federal mandate that may 12 CFR Part 16
Part 34. result in the expenditure by State, local,
OMB Number: 1557–0190. and tribal governments, in the aggregate, National banks, Reporting and
or by the private sector of $100 million recordkeeping requirements, Securities.
Estimated Number of Respondents:

1,800. or more in any one year. If a budgetary 12 CFR Part 19
Estimated Number of Responses: impact statement is required, Section
1,800. 205 of the Unfunded Mandates Act also Administrative practice and
Average Hours Per Response: 57. requires an agency to identify and procedure, Crime, Equal access to
Total Estimated Annual Burden: consider a reasonable number of justice, Investigations, National banks,
102,650 hours. regulatory alternatives before Penalties, Securities.
12 CFR Part 21 a. Revising the heading of § 1.1; Authority: 12 U.S.C. 24 (Seventh), 93a, and
b. Revising the first sentence of 1818(n).
Crime, Currency, National banks,
paragraph (c); and 5. In § 2.2 revise paragraph (a) to read
Reporting and recordkeeping c. Adding a new paragraph (d).
requirements, Security measures. as follows:
The additions and revisions read as
12 CFR Part 22 follows: § 2.2 Definitions.
Flood insurance, Mortgages, National § 1.1 Authority, purpose, scope, and (a) Bank means a national banking
banks, Reporting and recordkeeping reservation of authority. association.
requirements. * * * * * * * * * *
(c) Scope. The standards set forth
12 CFR Part 23 PART 3—MINIMUM CAPITAL RATIOS;
apply to national banks and federal
National banks branches of foreign banks. * * * ISSUANCE OF DIRECTIVES
(d) Reservation of authority. The OCC
12 CFR Part 24 6. The authority citation for part 3
may determine, on a case-by-case basis,
Community development, Credit that a national bank may acquire an continues to read as follows:
investments, Low and moderate income investment security other than an Authority: 12 U.S.C. 93a, 161, 1818,
housing, National banks, Reporting and investment security of a type set forth in 1828(n), 1828 note, 1831n note, 1835, 3907,
recordkeeping requirements, Rural this part, provided the OCC determines and 3909.
areas, Small businesses that the bank’s investment is consistent 7. In § 3.2, revise paragraph (b) to read
with section 24 (Seventh) and with safe as follows:
12 CFR Part 26
and sound banking practices. The OCC
Antitrust, Holding companies, will consider all relevant factors, § 3.2 Definitions.
National banks. including the risk characteristics of the * * * * *
12 CFR Part 27 particular investment in comparison (b) Bank means a national banking
with the risk characteristics of association.
Civil rights, Credit, Fair housing, investments that the OCC has * * * * *
Mortgages, National banks, Reporting previously authorized, and the bank’s 8. In Appendix A of part 3, revise the
and recordkeeping requirements. ability effectively to manage such risks. first sentence of section 3(a)(1)(v) to
12 CFR Part 28 The OCC may impose limits or read as follows:
conditions in connection with approval
Foreign banking, National banks, of an investment security under this Appendix A to Part 3—Risk-Based
Reporting and recordkeeping subsection. Capital Guidelines
requirements. 3. Amend § 1.3 by: * * * * *
12 CFR Part 31 a. In paragraph (h), removing the Section 3. Risk Categories/Weights for On-
heading ‘‘Investment company shares’’ Balance Sheet Assets and Off-Balance Sheet
Credit, National banks, Reporting and and in its place add the heading ‘‘Pooled Items
recordkeeping requirements investments’’; * * * * *
12 CFR Part 32 b. In paragraph (h)(1)(i), removing the (a) * * *
phrase ‘‘under this part’’; (1) * * *
National banks, Reporting and c. In paragraph (h)(2), removing the (v) That portion of local currency claims
recordkeeping requirements phrase ‘‘under this part’’; on, or unconditionally guaranteed by, central
d. Adding a new paragraph (h)(3) to governments of non-OECD countries, to the
12 CFR Part 34
read as follows; and extent the bank has liabilities in that
Mortgages, National banks, Reporting e. In paragraph (i)(1), adding the currency. * * *
and recordkeeping requirements phrase ‘‘the security is marketable and’’ * * * * *
12 CFR Part 37 after the word ‘‘if’’ and removing the
phrase ‘‘, and the bank believes that the PART 4—ORGANIZATION AND
Banks, banking, Consumer protection, security may be sold with reasonable FUNCTIONS, AVAILABILITY AND
National banks, Reporting and promptness at a price that corresponds RELEASE OF INFORMATION,
recordkeeping requirements. reasonably to its fair value’’. CONTRACTING OUTREACH
12 CFR Part 40 The addition reads as follows: PROGRAM, POST-EMPLOYMENT
RESTRICTIONS FOR SENIOR
Banks, Banking, Consumer protection, § 1.3 Limitations on dealing in,
underwriting, and purchase and sale of
EXAMINERS
National banks, Privacy, Reporting and
securities. 9. The authority citation for part 4 is
recordkeeping requirements.
* * * * * revised to read as follows:
Authority and Issuance (h) * * *
(3) Investments made under § 1.3(h) Authority: 12 U.S.C. 93a. Subpart A also
For the reasons set forth in the issued under 5 U.S.C. 552. Subpart B also
preamble, chapter I of title 12 of the must be: issued under 5 U.S.C. 552; E.O. 12600 (3 CFR
Code of Federal Regulations is proposed (i) Marketable and rated investment 1987 Comp., p. 235). Subpart C also issued
to be amended as follows: grade or the credit equivalent of a under 5 U.S.C. 301, 552; 12 U.S.C. 161, 481,
security rated investment grade, or 482, 484(a), 1442, 1817(a)(2) and (3), 1818(u)
PART 1—INVESTMENT SECURITIES (ii) Satisfy the requirements of § 1.3(i). and (v), 1820(d)(6), 1920(k), 1821(c), 1821(o),
* * * * * 1821(t), 1831m, 1831p–1, 1831o, 1867, 1951

1. The authority citation for part 1 et seq., 2601 et seq., 2801 et seq., 2901 et seq.,
continues to read as follows: PART 2—SALES OF CREDIT LIFE 3101 et seq., 3401 et seq.; 15 U.S.C. 77uu(b),
INSURANCE 78q(c)(3); 18 U.S.C. 641, 1905, 1906; 29
Authority: 12 U.S.C. 1 et seq., 24 (Seventh),
U.S.C. 1204; 31 U.S.C. 9701; 42 U.S.C. 3601;
and 93a. 4. The authority citation for part 2 44 U.S.C. 3506, 3510. Subpart D also issued
2. Amend § 1.1 by: continues to read as follows: under 12 U.S.C. 1833e.
10. In § 4.4, revise the second and is responsible for the direct 11. In § 4.5(a), revise the table to read
sentence to read as follows: supervision of certain national banks, as follows:
including the largest national banks
§ 4.4 Washington office. § 4.5 District and field offices.
(through its Large Bank Supervision
* * * The Washington office directs Department) and other national banks (a) * * *
OCC policy, oversees OCC operations, requiring special supervision. * * *
District Office address Geographical composition
Northeastern District ............ Office of the Comptroller of the Currency, 340 Madison Connecticut, Delaware, District of Columbia, Maine,
Avenue, 5th Floor, New York, NY 10017–2613. Maryland, Massachusetts, New Hampshire, New Jer-
sey, New York, North Carolina, eastern Ohio, Penn-
sylvania, Puerto Rico, Rhode Island, South Carolina,
Vermont, the Virgin Islands, Virginia, and West Vir-
ginia.
Central District ..................... Office of the Comptroller of the Currency, One Finan- Illinois, Indiana, eastern Iowa, northern Kentucky,
cial Place, Suite2700, 440 South LaSalle Street, Chi- Michigan, Minnesota, eastern Missouri, North Dakota,
cago, IL 60605. Ohio (except for eastern Ohio), and Wisconsin.
Southern District .................. Office of the Comptroller of the Currency, 500 North Alabama, Arkansas, Florida, Georgia, southern Ken-
Akard Street, Suite 1600, Dallas, TX 75201. tucky, Louisiana, Mississippi, Oklahoma, Tennessee,
and Texas.
Western District .................... Office of the Comptroller of the Currency, 1225 17th Alaska, Arizona, California, Colorado, Hawaii, Idaho,
Street, Suite 300, Denver, CO 80202. western Iowa, Kansas, western Missouri, Montana,
Nebraska, Nevada, New Mexico, Oregon, South Da-
kota, Utah, Washington, Wyoming, and Guam.
* * * * * the filing to be materially deficient. A certificate, and a charter application that

filing is materially deficient if it lacks is completed and the bank complies
PART 5—RULES, POLICIES, AND sufficient information for the OCC to with the OCC’s securities offering
PROCEDURES FOR CORPORATE make a determination under the regulations, 12 CFR part 16. * * *
ACTIVITIES applicable statutory or regulatory 17. Amend § 5.26 as follows:
criteria. a. Remove paragraph (e)(2)(i)(B);
12. The authority citation for part 5 b. Redesignate paragraphs (e)(2)(i)(C),
continues to read as follows: * * * * *
(f) * * * In the event the Deputy (e)(2)(i)(D), (e)(2)(i)(E), as paragraphs
Authority: 12 U.S.C. 1 et seq.; 93a; 215a–
Comptroller for Licensing was the (e)(2)(i)(B), (e)(2)(i)(C), (e)(2)(i)(D),
2; 215a-3, 481, and section 5136A of the respectively;
Revised Statutes (12 U.S.C. 24a). deciding official of the matter appealed,
c. At the end of newly redesignated
or was involved personally and
paragraph (e)(2)(i)(C), remove the word
§ 5.3 [Amended] substantially in the matter, the appeal
‘‘and’;
13. In § 5.3 remove paragraph (j) and may be referred instead to the Chief d. At the end of newly redesignated
redesignate paragraphs (k) and (l) as Counsel. * * * paragraph (e)(2)(i)(D), remove the period
paragraphs (j) and (k), respectively. * * * * * and add in its place the phrase ‘‘; and’;
16. Amend § 5.20 by: e. Add a new paragraph (e)(2)(i)(E) to
§ 5.4 [Amended] a. In paragraph (i)(3), removing the read as follows;
14. Amend § 5.4(d) by: term ‘‘spokesperson’’ wherever it f. In paragraph (e)(3), remove the
a. Removing ‘‘Licensing Manager’’ in appears and in its place adding the term designation ‘‘(i)’’ for paragraph (e)(3)(i);
the first sentence and adding in its place ‘‘ contact person’’; and and
‘‘Director for District Licensing’’; and b. In paragraph (i)(5) by: g. Remove paragraph (e)(3)(ii) in its
b. Removing the phrase ‘‘Bank i. Revising the heading; and entirety.
Organization and Structure ii. Adding a sentence after the second The addition reads as follows:
Department’’ in the second sentence and sentence of paragraph (i)(5)(i); and
adding in its place the phrase iii. Redesignating paragraphs (i)(5)(ii) § 5.26 Fiduciary powers.
‘‘Licensing Department’’. and (i)(5)(iii) as paragraphs (i)(5)(iii) and * * * * *
15. Amend § 5.13 by: (i)(5)(iv), respectively; and (e) * * *
a. In paragraph (c), adding two iv. Redesignating the last sentence of (2) * * *
sentences at the end of the paragraph; paragraph (i)(5)(i) as new paragraph (i) * * *
b. In paragraph (f): (i)(5)(ii). (E) If requested by the OCC, an
i. Removing the phrase ‘‘Deputy The addition and revision read as opinion of counsel that the proposed
Comptroller for Bank Organization and follows: activities do not violate applicable
Structure’’ in the first sentence and Federal or State law, including citations
adding in its place the phrase ‘‘Deputy § 5.20 Organizing a bank. to applicable law.
Comptroller for Licensing’’; and (i) * * * * * * * *
ii. Adding a sentence after the first (5) Activities. 18. Amend § 5.30 as follows:
(i) * * * A proposed national bank a. In paragraph (d)(1)(i), add
sentence.
The additions read as follows: may offer and sell securities prior to ‘‘intermittent facility,’’ after ‘‘temporary
OCC preliminary approval of the facility,’ ’’; and
§ 5.13 Decisions. proposed national bank’s charter b. Redesignate paragraphs (d)(3)
* * * * * application, provided that the proposed though (d)(5) as paragraphs (d)(4)
(c) * * * The OCC may return an national bank has filed articles of through (d)(6), respectively; and add a
application without a decision if it finds association and an organization new paragraph (d)(3);
c. Redesignate paragraphs (f)(4) and e. Revise redesignated paragraph the assets of a bank is treated as the
(f)(5) as paragraphs (f)(5) and (f)(6), (e)(1)(ii); acquisition of a bank whose home State
respectively, and add a new paragraph f. Remove the phrase ‘‘, and with the is the State in which the branch is
(f)(4) to read as follows. appropriate district office’’ from the first located.
The additions read as follows: sentence of paragraph (e)(8)(ii); * * * * *
g. Revise the headings of paragraphs 20. Amend § 5.34 as follows:
§ 5.30 Establishment, acquisition, and
relocation of a branch.
(g), (g)(1) and (g)(3); a. Amend paragraph (e)(2) by:
h. Remove the phrase ‘‘or merger’’ in i. Redesignating paragraphs (e)(2)(i)
* * * * * paragraph (g)(2)(ii);
(d) * * * and (e)(2)(ii) as paragraphs (e)(2)(ii)(A)
i. Remove the phrase ‘‘12 U.S.C. and (e)(2)(ii)(B), respectively;
(3) Intermittent branch means a
214c’’ in paragraph (g)(3)(i) and add in ii. Redesignating the first sentence of
branch that is operated for one or more
its place ‘‘12 U.S.C. 214b’’; and paragraph (e)(2) introductory text as
limited periods of time to provide
j. Revise paragraph (h). paragraph (e)(2)(i) and revising it; and
branch banking services at a specified
The additions and revisions read as iii. Redesignating the second sentence
recurring event, on the grounds or
follows: of paragraph (e)(2) introductory text as
premises where the event is held or at
a fixed site adjacent to the grounds or paragraph (e)(2)(ii) introductory text,
§ 5.33 Business combinations.
premises where the event is held, and republishing it for reader reference;
* * * * * b. Amend paragraph (e)(5) by:
exclusively during the occurrence of the (d) Definitions—For purposes of this i. Revising paragraph (e)(5)(i);
event. Examples of an intermittent § 5.33: * * * ii. Removing paragraph (e)(5)(iv);
branch include the operation of a (e) Policy.—(1) Factors.—(i) Bank iii. Redesignating paragraphs (e)(5)(ii)
branch on the campus of, or at a fixed Merger Act. When the OCC evaluates an and (e)(5)(iii) as paragraphs (e)(5)(iii)
site adjacent to the campus of, a specific application for a business combination and (e)(5)(iv);
college during school registration under the Bank Merger Act, the OCC iv. Removing the word ‘‘and’’ at the
periods; or the operation of a branch considers the following factors: * * * end of paragraph (e)(5)(v)(X), and the
during a State fair on State fairgrounds (ii) Community Reinvestment Act. period at the end of paragraph
or at a fixed site adjacent to the When the OCC evaluates an application (e)(5)(v)(Y) and adding in its place ‘‘;
fairgrounds. for a business combination under the and’’;
* * * * * Community Reinvestment Act, the OCC v. Revising paragraph (e)(5)(vi)
(f) * * * considers the performance of the introductory text;
(4) Intermittent branches. Prior to applicant and the other depository vi. Removing the word ‘‘and’’ at the
operating an intermittent branch, a institutions involved in the business end of paragraph (e)(5)(vi)(B);
national bank shall file a branch combination in helping to meet the vii. Replacing the period with a
application and publish notice in credit needs of the relevant semicolon and adding the word ‘‘and’’
accordance with § 5.8, both of which communities, including low- and at the end of (e)(5)(vi)(C); and
shall identify the event at which the moderate-income neighborhoods, viii. Adding new paragraphs (e)(5)(ii),
branch will be operated; designate a consistent with safe and sound banking (e)(5)(v)(Z), (e)(5)(v)(AA), (e)(5)(v)(BB),
location for operation of the branch practices. (e)(5)(v)(CC), (e)(5)(v)(DD), (e)(5)(v)(EE),
which shall be on the grounds or * * * * * (e)(5)(v)(FF), (e)(5)(v)(GG), and
premises at which the event is held or (g) Provisions governing (e)(5)(vi)(D).
on a fixed site adjacent to those grounds consolidations and mergers with The additions and revisions read as
or premises; and specify the different types of entities.—(1) follows:
approximate time period during which Consolidations and mergers under 12
the event will be held and during which § 5.34 Operating subsidiaries.
U.S.C. 215 or 215a of a national bank
the branch will operate, including with other national banks and State * * * * *
whether operation of the branch will be (e) * * *
banks as defined in 12 U.S.C. 215b(1)
on an annual or otherwise recurring (2) Qualifying subsidiaries. (i) An
resulting in a national bank. * * *
basis. If the branch is approved, then the operating subsidiary in which a national
bank need not obtain approval each * * * * * bank may invest includes a corporation,
time it seeks to operate the branch in (3) Consolidation or merger of a limited liability company, limited
accordance with the original application national bank resulting in a State bank partnership, or similar entity if:
and approval. as defined in 12 U.S.C. 214(a) under 12 (A) The bank has the ability to control
U.S.C. 214a or a Federal savings the management and operations of the
* * * * * association under 12 U.S.C. 215c. * * *
19. Amend § 5.33 to read as follows: subsidiary by owning more than 50
a. Add introductory text at the * * * * * percent of the voting interest in the
beginning of paragraph (d); (h) Interstate combinations under 12 subsidiary, or otherwise; and
b. Remove the introductory text in U.S.C. 1831u. A business combination (B) The operating subsidiary is
paragraph (e)(1); between insured banks with different consolidated with the bank under
c. Redesignate paragraphs (e)(1)(i)(A) home States under the authority of 12 Generally Accepted Accounting
and (e)(1)(i)(B) as paragraphs U.S.C. 1831u must satisfy the standards Principles (GAAP).
(e)(1)(i)(A)(1) and (e)(1)(i)(A)(2), and requirements and comply with the (ii) However, the following
respectively, and paragraphs (e)(1)(i) procedures of 12 U.S.C. 1831u and subsidiaries are not operating
through (e)(1)(iii) as paragraphs either 12 U.S.C. 215, 215a, and 215a–1, subsidiaries subject to this section:
(e)(1)(i)(A) through (e)(1)(i)(C), as applicable, if the resulting bank is a * * *

respectively; paragraph (e)(1)(iv) as national bank, or 12 U.S.C. 214a, 214b, (5) Procedures.—(i) Notice required.
paragraph (e)(1)(ii); and paragraph and 214c if the resulting bank is a State (A) Except for operating subsidiaries
(e)(1)(v) as paragraph (e)(1)(iii); bank. For purposes of 12 U.S.C. 1831u, subject to the application procedures set
d. Add paragraph (e)(1)(i) the acquisition of a branch without the forth in paragraph (e)(5)(ii) of this
introductory text; acquisition of all or substantially all of section or exempt from notice or
application procedures under paragraph establishment or acquisition of an (CC) Providing payroll processing;
(e)(5)(vi) of this section, a national bank operating subsidiary, or the performance (DD) Providing branch management
that is ‘‘well capitalized’’ and ‘‘well of a new activity in an existing services;
managed’’ may establish or acquire an operating subsidiary. (EE) Providing merchant processing
operating subsidiary, or perform a new (B) The application must explain, as services except when the activity
activity in an existing operating appropriate, how the bank ‘‘controls’’ involves the use of third parties to
subsidiary, by providing the appropriate the enterprise, describing in full detail solicit or underwrite merchants;
district office written notice within 10 structural arrangements where control is (FF) Performing administrative tasks
days after acquiring or establishing the based on factors other than bank involved in benefits administration; and
subsidiary, or commencing the new ownership of more than 50 percent of (GG) Performing an activity approved
activity, if: the voting interest of the subsidiary. The in published OCC precedent for a non-
(1) The activity is listed in paragraph application also must include a controlling investment by a national
(e)(5)(v) of this section; complete description of the bank’s bank or its operating subsidiary
(2) The entity is a corporation or a investment in the subsidiary, the pursuant to 12 CFR 5.36(e)(2), provided
limited liability company, or it is a proposed activities of the subsidiary, the the activity is conducted in accordance
limited partnership and the bank organizational structure and with the same terms and conditions
controls, directly or indirectly, all of the management of the subsidiary, the applicable to the activity covered by the
ownership interests in the limited relations between the bank and the precedent as well as with any other
partnership; subsidiary, and other information restrictions that would be imposed due
(3) If the entity is not organized in the necessary to adequately describe the to its status as an operating subsidiary.
form of a limited partnership, the bank proposal. To the extent that the (vi) No application or notice required.
has the ability to control the application relates to the initial A national bank may acquire or
management and operations of the affiliation of the bank with a company establish an operating subsidiary, or
subsidiary by holding: engaged in insurance activities, the bank engage in the performance of a new
(i) More than 50 percent of the voting should describe the type of insurance activity in an existing operating
interests in the subsidiary, or activity in which the company is subsidiary, without filing an application
(ii) Voting interests sufficient to select engaged and has present plans to or providing notice to the OCC, if the
the number of directors needed to conduct. The bank must also list for bank is well managed and adequately
control the subsidiary’s board and to each state the lines of business for capitalized or well capitalized and the:
select and terminate senior which the company holds, or will hold, * * *
management; and an insurance license, indicating the (D) The standards set forth in
(4) The financial statements of the state where the company holds a paragraphs (e)(5)(i)(A)(2), (3), and (4) of
bank and the subsidiary are resident license or charter, as this section are satisfied.
consolidated under Generally Accepted applicable. The application must state * * * * *
Accounting Principles. whether the operating subsidiary will
(B) The written notice must include a 21.Amend § 5.35 as follows:
conduct any activity at a location other a. In paragraph (d)(1) remove ‘‘insured
complete description of the bank’s than the main office or a previously banks’’ each time it appears and add in
investment in the subsidiary and of the approved branch of the bank. The OCC its place ‘‘insured depository
activity conducted and a representation may require an applicant to submit a institutions’’;
and undertaking that the activity will be legal analysis if the proposal is novel, b. In paragraph (d)(3) add ‘‘, except
conducted in accordance with OCC unusually complex, or raises substantial when such term appears in connection
policies contained in guidance issued unresolved legal issues. In these cases, with the term ‘insured depository
by the OCC regarding the activity. To the OCC encourages applicants to have institution’ ’’ after ‘‘means’’;
the extent that the notice relates to the a pre-filing meeting with the OCC. Any c. Redesignate paragraphs (d)(4) and
initial affiliation of the bank with a bank receiving approval under this (d)(5) as paragraphs (d)(5) and (d)(6),
company engaged in insurance paragraph is deemed to have agreed that respectively;
activities, the bank should describe the the subsidiary will conduct the activity d. Add new paragraph (d)(4);
type of insurance activity in which the in a manner consistent with published e. In newly redesignated paragraph
company is engaged and has present OCC guidance. (d)(6):
plans to conduct. The bank also must * * * * * i. Remove ‘‘insured bank’’ and add in
list for each State the lines of business (v) * * * its place ‘‘insured depository
for which the company holds, or will (Z) Providing data processing, and institution’’;
hold, an insurance license, indicating data transmission services, facilities ii. Remove ‘‘insured banks’’ and add
the State where the company holds a (including equipment, technology, and in its place ‘‘insured depository
resident license or charter, as personnel), data bases, advice and institutions’’; and
applicable. Any bank receiving approval access to such services, facilities, data iii. Remove ‘‘banks as its principal
under this paragraph is deemed to have bases and advice, for the parent bank investor’’ and add in its place ‘‘insured
agreed that the subsidiary will conduct and for others, pursuant to 12 CFR depository institutions as its principal
the activity in a manner consistent with 7.5006 to the extent permitted by investor’’;
published OCC guidance. published OCC precedent; f. Add the word ‘‘and’’ at the end of
(ii) Application required. (A) Except (AA) Providing bill presentment, paragraph (g)(3);
where the operating subsidiary is billing, collection, and claims- g. Revise paragraph (g)(4);
exempt from notice or application processing services; h. Revise the heading in paragraph (i);
requirements under paragraph (e)(5)(vi) (BB) Providing safekeeping for and

of this section, or subject to the notice personal information or valuable i. Remove paragraphs (g)(5) and (i)(2)
procedures in paragraph (e)(5)(i), a confidential trade or business and the paragraph designation for
national bank must first submit an information, such as encryption keys, to paragraph (i)(1).
application to, and receive approval the extent permitted by published OCC The additions and revisions read as
from, the OCC with respect to the precedent; follows:
§ 5.35 Bank service companies. (f) Non-controlling investment; description of the bank’s investment in
* * * * * application procedure. Unless the the enterprise and the activities
(d) * * * procedures governing a national bank’s conducted, a description of how the
(4) Insured depository institution, for non-controlling investment are bank plans to divest the non-controlling
purposes of this section, has the same prescribed by OCC rules implementing investment or the underlying assets
meaning as in section 3 of the Federal a separate legal authorization of the within applicable statutory time frames,
Deposit Insurance Act. investment, a national bank must file an and a representation and undertaking
* * * * * application and obtain prior approval that the bank will conduct the activities
(g) * * * before making or acquiring, either in accordance with OCC policies
(4) Information demonstrating that the directly or through an operating contained in guidance issued by the
bank service company will perform only subsidiary, a non-controlling investment OCC regarding the activities. Any
those services that each insured in an enterprise if the non-controlling national bank receiving approval under
depository institution shareholder or investment does not qualify for the this paragraph (g)(i) is deemed to have
member is authorized to perform under notice procedure set forth in paragraph agreed that the enterprise will conduct
applicable Federal or State law and will (e) because the bank is unable to make the activity in a manner consistent with
perform such services only at locations the representations set forth in published OCC guidance.
in a State in which each such paragraph (e)(2) or (e)(3) of this section. (2) No notice or application required.
shareholder or member is authorized to The application must include the A national bank is not required to file
perform such services unless performing information required in paragraphs a notice or application under this § 5.36
services that are authorized by the (e)(1) and (e)(4) through (e)(7) of this if it acquires a non-controlling
Federal Reserve Board under the section and (e)(2) or (e)(3), as investment in shares of a company
authority of 12 U.S.C. 1865(b). appropriate. If the bank is unable to through foreclosure or otherwise in
* * * * * make the representation set forth in good faith to compromise a doubtful
(i) Investment limitations. * * * paragraph (e)(2) of this section, the claim, or in the ordinary course of
22. Add § 5.36 as follows: bank’s application must explain why collecting a debt previously contracted.
a. Add ‘‘application or’’ before the activity in which the enterprise
* * * * *
‘‘notice’’ in paragraph (b); engages is a permissible activity for a
b. Remove the last sentence of 23. Amend § 5.39 as follows:
national bank and why the applicant
paragraph (b); a. Amend paragraph (d) by adding the
should be permitted to hold a non-
c. Revise paragraph (e) introductory phrase ‘‘, as implemented by Regulation
controlling investment in an enterprise
text; engaged in that activity. A bank may not W, 12 CFR part 223’’ before ‘‘as
d. Remove paragraph (e)(5); make a non-controlling investment if it applicable’’ in paragraph (d)(1);
e. Redesignate paragraphs (e)(6) is unable to make the representations b. Revise paragraph (h) by:
through (e)(8) as paragraphs (e)(5) and provide the information specified in i. Removing the word ‘‘Sections’’ at
through (e)(7), respectively, and paragraphs (e)(1) and (e)(4) through the beginning of paragraph (h)(5) and
paragraphs (f) and (g) as paragraphs (h) (e)(7) of this section. adding in its place the phrase ‘‘Except
and (i), respectively; (g) Non-controlling investments in for a subsidiary of a bank that is
f. Revise redesignated paragraph entities holding assets in satisfaction of considered a financial subsidiary under
(e)(6); debts previously contracted. Certain paragraph (a)(6) of this section solely
g. Add new paragraphs (f) and (g) to non-controlling investments may be because the subsidiary engages in the
read as follows: eligible for expedited treatment where sale of insurance as agent or broker in
the bank’s investment is in an entity a manner that is not permitted for
§ 5.36 Other equity investments.
holding assets in satisfaction of debts national banks, sections’’;
* * * * * ii. Adding the phrase ‘‘, as
(e) Non-controlling investments; previously contracted or the bank
acquires shares of a company in implemented by Regulation W, 12 CFR
notice procedure. Unless the procedures part 223,’’ before the word ‘‘apply’’ in
governing a national bank’s non- satisfaction of debts previously
contracted. paragraph (h)(5);
controlling investment are prescribed by iii. Revising paragraph (h)(5)(iii);
(1) Notice required. A national bank
OCC rules implementing a separate legal iv. Redesignating paragraph (h)(5)(v)
that is well capitalized and well
authorization of the investment and managed may acquire a non-controlling as paragraph (h)(5)(vi) and adding in
except as provided in paragraphs (f) and investment, directly or through its redesignated paragraph (h)(5)(vi) the
(g) of this section, a national bank may operating subsidiary, in an enterprise word ‘‘other’’ after the word ‘‘Any’’; and
make a non-controlling investment, that engages in the activities of holding v. Adding paragraph (h)(5)(v).
directly or through its operating and managing assets acquired by the The additions and revisions read as
subsidiary, in an enterprise that engages parent bank through foreclosure or follows:
in the activities described in paragraph otherwise in good faith to compromise
(e)(2) of this section by filing a written a doubtful claim, or in the ordinary § 5.39 Financial subsidiaries.
notice. The bank must file this written course of collecting a debt previously * * * * *
notice with the appropriate district contracted, by filing a written notice in (h) * * *
office no later than 10 days after making accordance with this paragraph (g)(i). (5) * * *
the investment. The written notice The activities of the enterprise must be (iii) A bank’s purchase of or
must: conducted pursuant to the same terms investment in a security issued by a
* * * * * and conditions as would be applicable financial subsidiary of the bank must be
(6) Certify that the bank’s loss if the activity were conducted directly valued at the greater of:
exposure is limited as a legal matter and by a national bank. The bank must file (A) The total amount of consideration
that the bank does not have unlimited the written notice with the appropriate given (including liabilities assumed) by
liability for the obligations of the district office no later than 10 days after the bank, reduced to reflect amortization
enterprise; and making the non-controlling investment. of the security to the extent consistent
* * * * * This notice must include a complete with GAAP, or
(B) The carrying value of the security l. Adding a new paragraph (h). the directors of a national bank may
(adjusted so as not to reflect the bank’s The additions and revisions read as declare and pay dividends of so much
pro rata portion of any earnings retained follows: of the undivided profits as they judge to
or losses incurred by the financial be expedient.
§ 5.50 Change in bank control; reporting of (c) Earnings limitations under 12
subsidiary after the bank’s acquisition of stock loans.
the security). U.S.C. 60.—(1) General rule. For
(a) Authority. 12 U.S.C. 93a, 1817(j), purposes of 12 U.S.C. 60, unless
* * * * * and 12 U.S.C. 1831aa.
(v) Any extension of credit to a approved by the OCC in accordance
* * * * * with paragraph (c)(3) of this section, a
financial subsidiary of a bank by an
(d) * * * national bank may not declare a
affiliate of the bank is treated as an (4) Immediate family includes a
extension of credit by the bank to the dividend if the total amount of all
person’s spouse, father, mother, dividends (common and preferred),
financial subsidiary if the extension of stepfather, stepmother, brother, sister,
credit is treated as capital of the including the proposed dividend,
stepbrother, stepsister, children, declared by the national bank in any
financial subsidiary under any Federal stepchildren, grandparent,
or State law, regulation, or current year exceeds the total of the
grandchildren, father-in-law, mother-in- national bank’s net income for the
interpretation applicable to the law, brother-in-law, sister-in-law, son-
subsidiary. current year to date, combined with its
in-law, daughter-in-law, and the spouse retained net income of current year
* * * * * of any of the forgoing. minus one and current year minus two,
24. Amend § 5.46 as follows: * * * * * less the sum of any transfers required by
a. Remove the phrase ‘‘letter of (f) * * * the OCC and any transfers required to be
notification’’ wherever it appears and (2) * * * made to a fund for the retirement of any
replace it with the word ‘‘notice’’; (ii) The OCC presumes, unless
b. Revise paragraph (e)(3)(iii); preferred stock.
rebutted, that a person is acting in (2) Excess dividends in prior periods.
c. Amend the first sentence of concert with his or her immediate (i) If in current year minus one or
paragraph (i)(2) by removing the number family. current year minus two the bank
‘‘30’’ and replacing it with the number
* * * * * declared dividends in excess of that
‘‘15’’; and (4) Conditional actions. The OCC may
d. Remove the phrase ‘‘in order to year’s net income, the excess shall not
impose conditions on its action not to reduce retained net income for the
obtain a certification from the OCC’’ in disapprove a notice to assure three-year period specified in paragraph
the first sentence in paragraph (i)(3). satisfaction of the relevant statutory
The revision reads as follows: (c)(1) of this section, provided that the
criteria for non-objection to a notice. amount of excess dividends can be
§ 5.46 Changes in permanent capital. * * * * * offset by retained net income in current
* * * * * (h) Reporting requirement. After the year minus three or current year minus
(e) * * * consummation of the change in control, four. If the bank declared dividends in
(3) * * * the national bank shall notify the OCC excess of net income in current year
(iii) The amount transferred from in writing of any changes or minus one, the excess is offset by
undivided profits; and replacements of its chief executive retained net income in current year
* * * * * officer or of any director occurring minus three and then by retained net
25. Amend § 5.50 by: during the 12-month period beginning income in current year minus two. If the
a. Revising paragraph (a); on the date of consummation. This bank declared dividends in excess of net
b. Redesignating paragraphs (d)(4) notice must be filed within 10 days of income in current year minus two, the
through (d)(6) as paragraphs (d)(5) such change or replacement and must excess is first offset by retained net
through (d)(7), respectively; include a statement of the past and income in current year minus four and
c. Adding a new paragraph (d)(4); current business and professional then by retained net income in current
d. Redesignating paragraphs (f)(2)(ii) affiliations of the new chief executive year minus three.
through (f)(2)(v) as paragraphs (f)(2)(iii) officers or directors. (ii) If the bank’s retained net income
through (f)(2)(vi), respectively; * * * * * in current year minus three and current
e. Adding a new paragraph (f)(2)(ii); 26. Revise § 5.64 to read as follows: year minus four was insufficient to
f. Removing the phrase ‘‘paragraph offset the full amount of the excess
(f)(2)(ii)’’ in newly redesignated § 5.64 Earnings limitation under 12 U.S.C. dividends declared, as calculated in
paragraph (f)(2)(vi) and adding in its 60. accordance with paragraph (c)(2)(i) of
place ‘‘paragraphs (f)(2)(ii) and (iii)’’; (a) Definitions. As used in this this section, then the amount that is not
g. Adding the phrase ‘‘information section, the term ‘‘current year’’ means offset will reduce the retained net
regarding the future prospects of the the calendar year in which a national income available to pay dividends in
institution,’’ after ‘‘detailed financial bank declared, or proposes to declare, a the current year.
information,’’ in paragraph (f)(3)(i)(A); dividend. The term ‘‘current year minus (iii) The calculation in paragraph
h. Redesignating paragraphs (f)(4) and one’’ means the year immediately (c)(2) of this section shall apply only to
(f)(5) as paragraphs (f)(5) and (f)(6), preceding the current year. The term retained net loss that results from
respectively; ‘‘current year minus two’’ means the dividends declared in excess of a single
i. Adding a new paragraph (f)(4); year that is two years prior to the year’s net income and does not apply to
j. Removing the phrase ‘‘The financial current year. The term ‘‘current year other types of current earnings deficits.
condition of any acquiring person’’ and minus three’’ means the year that is (3) Prior approval required. A national
adding in its place ‘‘Either the financial three years prior to the current year. The bank may declare a dividend in excess
condition of any acquiring person or the term ‘‘current year minus four’’ means of the amount described in paragraph (c)
future prospects of the institution’’ in the year that is four years prior to the of this section, provided that the
newly redesignated paragraph (f)(5)(iii); current year. dividend is approved by the OCC. A
k. Redesignating paragraph (h) as (b) Dividends from undivided profits. national bank shall submit a request for
paragraph (i); and Subject to 12 U.S.C. 56 and this subpart, prior approval of a dividend under 12
U.S.C. 60 to the appropriate district § 7.5001 Electronic activities that are part Authority: 12 U.S.C. 24 (Seventh), 92a, and
office. of, or incidental to, the business of banking. 93a; 15 U.S.C. 78q, 78q–1, and 78w.
(d) Surplus surplus. Any amount in * * * * *
capital surplus in excess of capital stock (d) * * * 35. Revise § 9.20 to read as follows:
(referred to as ‘‘surplus surplus’’) may (3) In addition to the electronic § 9.20 Transfer agents.
be transferred to undivided profits and activities specifically permitted in
available as dividends, provided: § 7.5004 (sale of excess electronic (a)(1) Registration. An application for
(1) The bank can demonstrate that the capacity and by-products) and § 7.5006 registration under Section 17A(c) of the
amount came from earnings in prior (incidental non-financial data Securities Exchange Act of 1934 of a
periods, excluding the effect of any processing), the OCC has determined transfer agent for which the OCC is the
stock dividend; and that the following electronic activities appropriate regulatory agency, as
(2) The board of directors of the bank are incidental to the business of defined in section 3(a)(34)(B) of the
approves the transfer of the amount banking, pursuant to this section. This Securities Exchange Act of 1934, shall
from capital surplus to undivided list of activities is illustrative and not be filed with the OCC on FFIEC Form
profits. exclusive; the OCC may determine that TA–1, in accordance with the
other activities are permissible pursuant instructions contained therein.
PART 7—BANK ACTIVITIES AND to this authority. Registration shall become effective 30
OPERATIONS (i) Web site development where days after the date an application on
27. The authority citation for part 7 incidental to other banking services; Form TA–1 is filed unless the OCC
continues to read as follows: (ii) Internet access and e-mail accelerates, denies, or postpones such
provided on a non-profit basis as a registration in accordance with section
Authority: 12 U.S.C. 1 et seq., 71, 71a, 92,
92a, 93, 93a, 481, and 1818. promotional activity; 17A(c) of the Securities Exchange Act of
(iii) Advisory and consulting services 1934.
§ 7.1016 [Amended] on electronic activities where the (2) Amendments to registration.
28. Amend footnote 1 to part 7 by services are incidental to customer use Within 60 days following the date on
adding ‘‘Supplement to UCP 500 for of electronic banking services; and which any information reported on
Electronic Presentation (eUCP) (iv) Sale of equipment that is
Form TA–1 becomes inaccurate,
(available from ICC Publishing, Inc., convenient or useful to customer’s use
misleading, or incomplete, the registrant
212/206–1150; http://www.iccwbo.org);’’ of related electronic banking services,
shall file an amendment on FFIEC Form
before ‘‘the International Standby such as specialized terminals for
TA–1 correcting the inaccurate,
Practices (ISP98) (ICC Publication No. scanning checks that will be deposited
misleading, or incomplete information.
590)’’. electronically by wholesale customers of
banks under the Check Clearing for the The filing of an amendment to an
29. Amend § 7.1017 by:
a. Redesignating the introductory text, 21st Century Act, Public Law 108–100 application for registration as a transfer
paragraph (a), paragraph (b) (12 U.S.C. 5001–5018) (the Check 21 agent under this section, which
introductory text, paragraphs (b)(1) Act). registration has not become effective,
through (b)(3), and paragraphs (b)(2)(i) 32. Amend § 7.5002 by: shall postpone the effective date of the
through (b)(2)(iv) as paragraph (a) a. Removing the word ‘‘and’’ at the registration for 30 days following the
introductory text, paragraph (a)(1), end of paragraph (a)(3), date on which the amendment is filed
paragraph (a)(2) introductory text, b. Removing the period at the end of unless the OCC accelerates, denies, or
paragraphs (a)(2)(i) through (a)(2)(iii), paragraph (a)(4) and adding in its place postpones the registration in accordance
and paragraphs (a)(2)(ii)(A) through the ‘‘; and’’; and with Section 17A(c) of the Securities
(a)(2)(ii)(D), respectively; and c. Adding a new paragraph (a)(5) to Exchange Act of 1934.
b. Adding a new paragraph (b) to read read as follows: (3) Withdrawal from registration. Any
as follows: registered national bank transfer agent
§ 7.5002 Furnishing of products and
§ 7.1017 National bank as guarantor or services by electronic means and facilities.
that ceases to engage in activities that
surety on indemnity bond. require registration under Section
(a) * * * 17A(c) of the Securities Exchange Act of
* * * * * (5) Issuing electronic letters of credit
(b) In addition to the foregoing, a 1934 may file a written notice of
within the scope of 12 CFR 7.1016.
national bank may guarantee financial withdrawal from registration with the
* * * * * OCC. Deregistration shall be effective 60
obligations of a customer, subsidiary or 33. In § 7.5006, add a new paragraph
affiliate, provided the amount of the days after filing.
(c) as follows:
bank’s obligation is reasonably (4) Reports. Every registration or
ascertainable and otherwise consistent § 7.5006 Data processing. amendment filed under this section
with applicable law. * * * * * shall constitute a report or application
30. In § 7.2006, revise the second (c) Software for performance of within the meaning of Sections 17,
sentence to read as follows: authorized banking functions. A 17A(c), and 32(a) of the Securities
national bank may produce, market, or Exchange Act of 1934.
§ 7.2006 Cumulative voting in election of
directors. sell software that performs services or (b) Operational and Reporting
functions that the bank could perform Requirements. The rules adopted by the
* * * If permitted by the national
directly, as part of the business of Securities and Exchange Commission
bank’s articles of association, the
banking. pursuant to Section 17A of the

shareholder may cast all these votes for
one candidate or distribute the votes Securities Exchange Act of 1934
PART 9—FIDUCIARY ACTIVITIES OF
among as many candidates as the prescribing operational and reporting
NATIONAL BANKS
shareholder chooses. * * * requirements for transfer agents apply to
31. In § 7.5001, add a new paragraph 34. The authority citation for part 9 the domestic activities of registered
(d)(3) to read as follows: continues to read as follows: national bank transfer agents.
PART 10—MUNICIPAL SECURITIES CFR 270.17j–1) for quarterly transaction (a) The offer and sale of bank-issued
DEALERS reports’’ in its place. securities occurs solely as part of a
dissolution in which the security
36. The authority citation for part 10 PART 16—SECURITIES OFFERING holders exchange their shares of stock in
is revised to read as follows: DISCLOSURE RULES a holding company that had no
Authority: 12 U.S.C. 93a, 481, and 1818; 15 42. The authority citation for part 16 significant assets other than securities of
U.S.C. 78o–4(c)(5) and 78q–78w.
continues to read as follows: the bank, for bank stock;
(b) The security holders receive, after
37. In § 10.1 revise paragraph (a) to Authority: 12 U.S.C. 1 et seq. and 93a. the dissolution, substantially the same
read as follows:
43. In § 16.2 revise paragraph (b) to proportional share interests in the bank
§ 10.1 Scope. read as follows: as they held in the holding company;
* * * (c) The rights and interests of the
§ 16.2 Definitions. security holders in the bank are
(a) Any national bank and separately
* * * * * substantially the same as those in the
identifiable department or division of a
(b) Bank means an existing national holding company prior to the
national bank (collectively, a national
bank, a national bank in organization, or transaction; and
bank) that acts as a municipal securities
a Federal branch or agency of a foreign (d) The bank has substantially the
dealer, as that term is defined in section
bank. same assets and liabilities as the holding
3(a)(30) of the Securities Exchange Act
* * * * * company had on a consolidated basis
of 1934 (15 U.S.C. 78c(a)(30)); and
44. Amend § 16.5 as follows: prior to the transaction.
* * * * *
a. Revise paragraph (a); and
§ 16.20 [Removed]
PART 11—SECURITIES EXCHANGE b. Add a new paragraph (h), to read
as follows: 48. Remove § 16.20.
ACT DISCLOSURE RULES
§ 16.5 Exemptions. PART 19—RULES OF PRACTICE AND
38. The authority citation for part 11 PROCEDURE
continues to read as follows: * * * * *
(a) If the securities are exempt from 49. The authority citation for part 19
Authority: 12 U.S.C. 93a, 15 U.S.C. 78l,
78m, 78n, 78p, 78w, 7241, 7242, 7243, 7244,
registration under section 3 of the continues to read as follows:
7261, 7262, 7264, and 7265. Securities Act (15 U.S.C. 77c), but only
Authority: 5 U.S.C. 504, 554–557; 12
by reason of an exemption other than U.S.C. 93(b), 93a, 164, 505, 1817, 1818, 1820,
39. In § 11.1 revise paragraph (a) to section 3(a)(2) (exemption for bank 1831m, 1831o, 1972, 3102, 3018(a), 3909 and
read as follows: securities), section 3(a)(11) (exemption 4717; 15 U.S.C. 78(h) and (i), 78o–4(c), 78o–
§ 11.1 Authority and OMB control number. for intrastate offerings), and section 5, 78q–1, 78s, 78u, 78u–2, 78u–3, and 78w;
3(a)(12) of the Securities Act (exemption 28 U.S.C. 2461 note, 31 U.S.C. 330, 5321; and
(a) Authority. The Office of the for bank holding company formation). 42 U.S.C. 4012a.
Comptroller of the Currency (OCC) is
vested with the powers, functions, and * * * * * 50. In § 19.3, revise paragraph (g) to
duties otherwise vested in the Securities (h) In a transaction that satisfies the read as follows:
and Exchange Commission requirements of § 16.9 of this part.
§ 19.3 Definitions.
(Commission) to administer and enforce § 16.6 [Amended] * * * * *
the provisions of sections 12, 13, 14(a), 45. Amend § 16.6 by: (g) Institution includes any national
14(c), 14(d), 14(f), and 16 of the a. In paragraph (a) introductory text, bank or Federal branch or agency of a
Securities Exchange Act of 1934, as removing the phrase ‘‘§§ 16.3, 16.15(a) foreign bank.
amended (1934 Act) (15 U.S.C. 78l, and (b), and 16.20’’ and adding in its
78m, 78n(a), 78n(c), 78n(d), 78n(f), and * * * * *
place ‘‘§§ 16.3 and 16.15(a) and (b)’’;
78p), regarding national banks with one b. In paragraph (a)(3), adding ‘‘, if § 19.100 [Amended]
or more classes of securities subject to issued in certificate form,’’ after ‘‘each 51. In § 19.100, second sentence,
the registration provisions of sections note or debenture’’. remove the phrase ‘‘(except that in
12(b) and (g) of the 1934 Act (registered removal and prohibition cases instituted
national banks). Further, the OCC has § 16.7 [Amended]
pursuant to 12 U.S.C. 1818, the
general rulemaking authority under 12 46. Amend § 16.7 as follows: administrative law judge will file the
U.S.C. 93a, to promulgate rules and a. Remove paragraph (a)(3); record and the recommended decision
regulations concerning the activities of b. In paragraph (a)(1), add the word with the Board of Governors of the
national banks. ‘‘and’’ after the semicolon; and Federal Reserve System)’’.
* * * * * c. In paragraph (a)(2), remove ‘‘; and’’
and replace it with a period. § 19.110 [Amended]
PART 12—RECORDKEEPING AND 47. Add a new § 16.9 to read as 52. In § 19.110, remove the phrase
CONFRIMATION REQUIREMENTS FOR follows: ‘‘bank affairs’’ and add in its place ‘‘the
SECURITIES TRANSACTIONS affairs of any depository institution’’.
§ 16.9 Securities offered and sold in
53. Revise § 19.111 to read as follows:
40. The authority citation for part 12 holding company dissolution.
continues to read as follows: Offers and sales of bank issued § 19.111 Suspension, removal, or
securities in connection with the prohibition.
Authority: 12 U.S.C. 24, 92a, and 93a.

dissolution of the holding company of The Comptroller may serve a notice of
§ 12.7 [Amended] the bank are exempt from the suspension or order of removal or
41. Amend § 12.7(a)(4) by removing registration and prospectus prohibition on an institution-affiliated
‘‘ten business days after the end of the requirements of § 16.3 pursuant to party. A copy of such notice or order
calendar quarter’’ and adding ‘‘the § 16.5(h), provided all of the following will be served on any depository
deadline specified in SEC rule 17j–1 (17 requirements are met: institution that the subject of the notice
or order is affiliated with at the time the § 19.113 [Amended] part 223’’ after ‘‘12 U.S.C. 371c and
notice or order is issued, whereupon the 55. In § 19.113, amend paragraph (c) 371c-1’’ in the first sentence and before
institution-affiliated party involved by removing the phrase ‘‘ the bank’’ and ‘‘as applicable’’ in the third sentence;
must immediately cease service to, or adding in its place ‘‘any depository b. Adding ‘‘, as implemented by 12
participation in the affairs of, that institution’’. CFR part 32’’ after ‘‘12 U.S.C. 84’’ in the
depository institution and, if so 56. Revise § 19.241 to read as follows: first sentence; and
determined by the OCC, any other c. Adding ‘‘, as implemented by part
§ 19.241 Scope. 32’’, after ‘‘12 U.S.C. 84’’ in the fourth
depository institution. The notice or
order will indicate the basis for This subpart, which implements sentence.
suspension, removal or prohibition and section 36(g)(4) of the Federal Deposit
Insurance Act (FDI Act) (12 U.S.C. PART 24—COMMUNITY AND
will inform the institution-affiliated ECONOMIC DEVELOPMENT ENTITIES,
1831m(g)(4)), provides rules and
party of the right to request in writing COMMUNITY DEVELOPMENT
procedures for the removal, suspension,
an opportunity to show at an informal PROJECTS, AND OTHER PUBLIC
or debarment of independent public
hearing that continued service to or WELFARE INVESTMENTS
accountants and their accounting firms
participation in the conduct of the
from performing independent audit and 63. The authority citation for part 24
affairs of any depository institution has
attestation services required by section continues to read as follows:
not posed, does not pose, or is not likely 36 of the FDI Act (12 U.S.C. 1831m) for
to pose a threat to the interests of the insured national banks and Federal Authority: 12 U.S.C. 24 (Eleventh), 93a,
depositors of, or has not threatened, 481, and 1818.
branches and agencies of foreign banks.
does not threaten, or is not likely to 64. Amend § 24.1 by:
threaten to impair public confidence in, PART 21—MINIMUM SECURITY a. Removing in paragraph (a) the
any relevant depository institution. The DEVICES AND PROCEDURES, colon after the word ‘‘Authority’’ and
written request must be sent by certified REPORTS OF SUSPICIOUS adding a period in its place;
mail to, or served personally with a ACTIVITIES, AND BANK SECRECY b. Revising paragraphs (b) and (d);
signed receipt on the District Deputy ACT COMPLIANCE PROGRAM and
Comptroller in the OCC district in c. Adding paragraph (e).
which the bank in question is located; 57. The authority citation for part 21 The revisions and addition read as
if the bank is supervised by Large Bank continues to read as follows: follows:
Supervision, to the Senior Deputy Authority: 12 U.S.C. 93a, 1818, 1881–1884, § 24.1 Authority, purpose, and OMB
Comptroller for Large Bank Supervision and 3401–3422; 31 U.S.C. 5318. control number.
for the Office of the Comptroller of the 58. In § 21.1, revise the first sentence * * * * *
Currency; if the bank is supervised by of paragraph (a) to read as follows: (b) Purpose. This part implements 12
Mid-Size/Community Bank U.S.C. 24 (Eleventh). It is the OCC’s
§ 21.1 Purpose and scope of subpart A of
Supervision, to the Senior Deputy policy to encourage a national bank to
this part.
Comptroller for Mid-Size/Community make investments described in § 24.3,
Bank Supervision for the Office of the (a) This subpart is issued by the consistent with safety and soundness.
Comptroller of the Currency; or if the Comptroller of the Currency pursuant to This part provides the standards and
institution-affiliated party is no longer section 3 of the Bank Protection Act of procedures that apply to these
affiliated with a particular national 1968 (12 U.S.C. 1882) and is applicable investments.
to all national banking associations.
bank, to the Deputy Comptroller for * * * * *
* * *
Special Supervision, Washington, DC (d) A national bank that makes loans
20219. The request must state * * * * * or investments that are authorized
specifically the relief desired and the under both 12 U.S.C. 24 (Eleventh) and
PART 22—LOANS IN AREAS HAVING
grounds on which that relief is based. other provisions of the Federal banking
SPECIAL FLOOD HAZARDS
For purposes of this section, the term laws may do so under such other
depository institution means any 59. The authority citation for part 22 provisions without regard to the
depository institution of which the continues to read as follows: provisions of 12 U.S.C. 24 (Eleventh) or
petitioner is or was an institution- Authority: 12 U.S.C. 93a, 42 U.S.C. 4012a, this part.
affiliated party at the time at which the 4104a, 4104b, 4106, and 4128. (e) Investments made, or written
notice or order was issued by the 60. In § 22.2 revise paragraph (b) to commitments to make investments
Comptroller. read as follows: made, prior to October 13, 2006,
pursuant to 12 U.S.C. 24 (Eleventh) and
§ 19.112 [Amended] § 22.2 Definitions. this part, continue to be subject to the
54. In § 19.112, amend paragraphs (a), * * * * * statutes and regulations in effect prior to
(b), and (c) by removing the phrase ‘‘the (b) Bank means a national bank. the enactment of the Financial Services
District Deputy Comptroller or * * * * * Regulatory Relief Act of 2006 (Pub. L.
Administrator, the Deputy Comptroller 109–351).
PART 23—LEASING 65. Amend § 24.2 by:
for Multinational Banking, or the a. Revising paragraph (c);
Deputy Comptroller or Director for 61. The authority citation for part 23 b. Amending paragraph (f) by
Special Supervision,’’ wherever it continues to read as follows: removing ‘‘12 CFR 25.12(n)’’ and adding
appears and adding in its place ‘‘the
Authority: 12 U.S.C. 1 et seq., 24 (Seventh), ‘‘12 CFR 25.12(m)’’ in its place;

District Deputy Comptroller, the Senior 24 (Tenth), and 93a. c. Redesignating paragraphs (g)
Deputy Comptroller for Large Bank through (i) as paragraphs (h) through (j),
Supervision, the Senior Deputy § 23.6 [Amended] respectively; and
Comptroller for Mid-Size/Community 62. Amend § 23.6 by: d. Adding new paragraph (g).
Bank Supervision or the Deputy a. Adding the phrase ‘‘, as The revision and addition read as
Comptroller for Special Supervision,’’. implemented by Regulation W, 12 CFR follows:
§ 24.2 Definitions. significant risk to the deposit insurance f. Adding paragraph (d)(4).
* * * * * fund. * * * The revisions and addition read as
(c) Community and economic * * * * * follows:
development entity (CEDE) means an 68. Amend § 24.5 by:
entity that makes investments or § 24.6 Examples of qualifying public
a. Removing, in paragraph (a)(1), the welfare investments.
conducts activities that promote the space between the number ‘‘24’’ and the
public welfare by benefiting primarily term ‘‘(Eleventh)’’; The following are examples of
low- and moderate-income areas or b. Amending paragraphs (a)(2) and qualifying public welfare investments to
individuals. (b)(1) by removing ‘‘Director, the extent they benefit primarily low-
* * * * * Community Development Division,’’ and moderate-income areas or
(g) Benefiting primarily low- and and adding ‘‘Community Affairs individuals as set forth in § 24.3:
moderate-income areas or individuals, Department,’’ in its place; * * * * *
when used to describe an investment, c. Adding a second sentence at the (b) * * *
means: end of paragraph (a)(2); (2) Investments that finance small
(1) A majority (more than 50 percent) d. In paragraph (a)(5), removing businesses or small farms, including
of the investment benefits low- and ‘‘Community Development Division’’ minority- and women-owned small
moderate-income areas or individuals; where it appears in the first and second businesses or small farms that, although
or sentences and adding ‘‘Community not located in low- and moderate-
(2) The express, primary purpose of Affairs Department’’ in its place; and income areas, create a significant
the investment (evidenced, for example, e. Adding a new sentence after the number of permanent jobs for low- and
by government eligibility requirements) first sentence in paragraph (b)(1). moderate-income individuals.
is to benefit low- and moderate-income The additions read as follows: * * * * *
areas or individuals. (d) * * *
§ 24.5 Public welfare investment after-the-
* * * * * fact notice and prior approval procedures. (1) Investments that provide credit
66. Revise § 24.3 to read as follows: (a) * * * counseling, financial literacy, job
§ 24.3 Public welfare investments. (2) * * * The after-the-fact training, community development
notification may also be e-mailed to research, and similar technical
A national bank or national bank assistance for non-profit community
subsidiary may make an investment CommunityAffairs@occ.treas.gov, faxed
to (202) 874–4652, or provided development organizations, low- and
directly or indirectly under this part if moderate-income individuals or areas,
the investment promotes the public electronically via National BankNet at
http://www.occ.treas.gov. or small businesses, including minority-
welfare by benefiting primarily low- and and women-owned small businesses,
moderate-income areas or individuals. * * * * *
(b) * * * (1) * * * The investment located in low- and moderate income
67. Amend § 24.4 by:
proposal may also be e-mailed to areas or that produce or retain
a. Revising the first sentence in
CommunityAffairs@occ.treas.gov, faxed permanent jobs, the majority of which
paragraph (a); and
to (202) 874–4652, or submitted are held by low- and moderate-income
b. Removing, in the second sentence
electronically via National BankNet at individuals.
of paragraph (a), ‘‘10’’ and adding ‘‘15’’
in its place. http://www.occ.treas.gov. * * * * * * * *
The revision reads as follows: 69. Amend § 24.6 by: (4) Investments in minority- and
a. Revising the introductory text; women-owned depository institutions
§ 24.4 Investment limits. b. Amending paragraph (b)(1) by that serve primarily low- and moderate-
(a) * * * A national bank’s aggregate removing the phrase ‘‘or other targeted income individuals or low- and
outstanding investments under this part redevelopment areas’’; moderate-income areas.
may not exceed 5 percent of its capital c. Revising paragraphs (b)(2) and 70. Revise Appendix 1 to Part 24 to
and surplus, unless the bank is at least (d)(1); read as follows:
adequately capitalized and the OCC d. Amending paragraphs (b)(3) and
determines, by written approval of a (b)(4) by removing the phrase ‘‘or Appendix 1 to Part 24—CD–1—
written request by the bank to exceed targeted redevelopment areas’’; National Bank Community
the 5 percent limit, that a higher amount e. Amend paragraph (d)(3) by Development (Part 24) Investments
of investments will not pose a removing the word ‘‘previously’’ and BILLING CODE 4810–33–P
EP03JY07.000</GPH>
EP03JY07.001</GPH>
EP03JY07.002</GPH>
EP03JY07.003</GPH>
BILLING CODE 4810–33–C

EP03JY07.004</GPH>
PART 26—MANAGEMENT OFFICIAL PART 28—INTERNATIONAL BANKING exemption from Regulation W is

INTERLOCKS ACTIVITIES available, these deposits must be
secured in accordance with 12 CFR
71. The authority citation for part 26 78. The authority citation for part 28 223.14. However, a national bank may
continues to read as follows: continues to read as follows: not pledge assets to secure private
Authority: 12 U.S.C. 93a and 3201–3208. Authority: 12 U.S.C. 1 et seq., 24 (Seventh), deposits unless otherwise permitted by
93a, 161, 602, 1818, 3101 et seq., and 3901 law (see, e.g., 12 U.S.C. 90 (permitting
72. In § 26.1 revise paragraph (c) to et seq. collateralization of deposits of public
read as follows: funds); 12 U.S.C. 92a (trust funds); and
§ 28.11 [Amended]
25 U.S.C. 156 and 162a (Native
§ 26.1 Authority, purpose, and scope. 79. In § 28.11, remove the phrase ‘‘,
American funds)). Thus, unless one of
* * * * * pursuant to an agreement between the
the exceptions to 12 CFR part 223 noted
(c) Scope. This part applies to parent foreign bank and the FRB,’’ in
in paragraph b. of this interpretation
management officials of national banks paragraph (s).
applies, unless another exception
and their affiliates. § 28.12 [Amended]. applies that enables a bank to meet the
80. In § 28.12, remove the phrase collateral requirements of § 223.14, or
§ 26.2 [Amended]
‘‘30th day after the OCC receives the unless a party other than the bank in
73. In § 26.2 remove paragraph (i) and filing,’’ in paragraph (e)(3) and add in its which the deposit is made can legally
redesignate paragraphs (j) through (q) as place ‘‘15th day after the close of the offer and does post the required
(i) through (p), respectively. applicable public comment period, or collateral, a national bank may not:
74. Revise § 26.8 to read as follows: the 45th day after the filing is received 1. Make a deposit in an affiliated
by the OCC, whichever is later,’’. national bank;
§ 26.8 Enforcement. 2. Make a deposit in an affiliated
81. In § 28.50, revise paragraph (c) to
Except as provided in this section, the read as follows: State-chartered bank unless the
OCC administers and enforces the affiliated State-chartered bank can
Interlocks Act with respect to national § 28.50 Authority, purpose, and scope. legally offer collateral for the deposit in
banks and their affiliates, and may refer * * * * * conformance with applicable State law
any case of a prohibited interlocking (c) Scope. This subpart requires and 12 CFR 223.14; or
relationship involving these entities to national banks to establish reserves 3. Receive deposits from an affiliated
the Attorney General of the United against the risks presented in certain bank.
international assets and sets forth the b. Exceptions. The restrictions of 12
States to enforce compliance with the
accounting for various fees received by CFR part 223 (other than 12 CFR 223.13,
Interlocks Act and this part. If an
the banks when making international which requires affiliate transactions to
affiliate of a national bank is subject to
loans. be consistent with safe and sound
the primary regulation of another
82. In § 28.51, revise paragraph (a) to banking practices) do not apply to
Federal depository organization
read as follows: deposits:
supervisory agency, then the OCC does
1. Made in an affiliated depository
not administer and enforce the § 28.51 Definitions. institution or affiliated foreign bank
Interlocks Act with respect to that
* * * * * provided that the deposit represents an
affiliate.
(a) Banking institution means a ongoing, working balance maintained in
PART 27—FAIR HOUSING HOME national bank. the ordinary course of correspondent
LOAN DATA SYSTEM * * * * * business. See 12 CFR 223.42(a); or
2. Made in an affiliated, insured
75. The authority citation for part 27 PART 31—EXTENSIONS OF CREDIT depository institution that meets the
continues to read as follows: TO INSIDERS AND TRANSACTIONS requirements of the ‘‘sister bank’’
WITH AFFILIATES exemption under 12 CFR 223.41(a) or
Authority: 5 U.S.C. 301; 12 U.S.C. 1 et seq.,
93a, 161, 481, and 1818; 15 U.S.C. 1691 et
(b).
83. The authority citation for part 31
seq.; 42 U.S.C. 3601 et seq.; 12 CFR part 202. Appendix B to Part 31—[Amended]
is revised to read as follows:
76. In § 27.1 revise paragraph (a) to Authority: 12 U.S.C. 93a, 375a(4), 375b(3), 86. Amend Appendix B to part 31 by
read as follows: and 1817(k). removing the third sentence under the
heading ‘‘Exclusions to Definition.’’
§ 27.1 Scope and OMB control number. § 31.1 [Amended]
(a) Scope. This part applies to the 84. Amend § 31.1 by removing PART 32—LENDING LIMITS
activities of national banks and their ‘‘1817(k), and 1972(2)(G),’’ and adding 87. The authority citation for part 32
subsidiaries, which make home loans in its place ‘‘and 1817(k),’’. continues to read as follows:
for the purpose of purchasing, 85. Revise Appendix A to part 31 as
follows: Authority: 12 U.S.C. 1 et seq., 84, and 93a.
construction-permanent financing, or
refinancing of residential real property. Appendix A to Part 31— § 32.1 [Amended]
* * * * * Interpretations: Deposits Between 88. In § 32.1(c)(1), add the phrase
77. In § 27.2 revise paragraph (c) to Affiliated Banks ‘‘and (e), as implemented by section
read as follows: a. General rule. A deposit made by a 223.2(a) of Regulation W’’ after ‘‘12
bank in an affiliated bank is treated as U.S.C. 371c(b)(1)’’.

§ 27.2 Definitions.
a loan or extension of credit to the
* * * * * PART 34—REAL ESTATE LENDING
affiliate bank under 12 U.S.C. 371c, as
(c) Bank means a national bank and AND APPRAISALS
this statute is implemented by the
any subsidiaries of a national bank. Federal Reserve Board’s Regulation W, 89. The authority citation for part 34
* * * * * 12 CFR part 223. Thus, unless an continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 29, 93a, 371, PART 37—DEBT CANCELLATION Federal agencies of foreign banks, and
1701j–3, 1828(o), and 3331 et seq. CONTRACTS AND DEBT SUSPENSION any subsidiaries of such entities except
90. Amend § 34.22 by: AGREEMENTS a broker or dealer that is registered
a. Designating the existing text as under the Securities Exchange Act of
paragraph (a), and by adding the 91. The authority citation for part 37
1934, a registered investment adviser
following heading; continues to read as follows:
(with respect to the investment advisory
b. In newly designated paragraph (a), Authority: 12 U.S.C. 1 et seq., 24 (Seventh), activities of the adviser and activities
adding to the first sentence the words 93a, 1818.
incidental to those investment advisory
‘‘or combination of indices’’ after the activities), an investment company
§ 37.7 [Amended]
words ‘‘specify an index’’; and
c. Adding a new paragraph (b). 92. Amend the last sentence in registered under the Investment
The addition and revision read as § 37.7(a) by removing the phrase Company Act of 1940, an insurance
follows: ‘‘§ 37.6(b)’’ and adding the phrase company that is subject to supervision
‘‘§ 37.6(d)’’ in its place. by a State insurance regulator (with
§ 34.22 Index. respect to insurance activities of the
(a) In General. * * * PART 40—PRIVACY OF CONSUMER company and activities incidental to
(b) Exception. Thirty days after filing FINANCIAL INFORMATION those insurance activities), and an entity
a notice with the OCC, a national bank that is subject to regulation by the
may use an index other than one 93. The authority citation for part 40
continues to read as follows: Commodity Futures Trading
described in paragraph (a) of this Commission.
section unless, within that 30-day Authority: 12 U.S.C. 93a; 15 U.S.C. 6801 et
period, the OCC has notified the bank seq. * * * * *
that the notice presents supervisory 94. In § 40.1 revise the last sentence Dated: May 25, 2007.
concerns or raises significant issues of of paragraph (b)(1) to read as follows: John C. Dugan,
law or policy. If the OCC provides such
§ 40.1 Purpose and scope. Comptroller of the Currency.
notice to the bank, the bank may not use
[FR Doc. 07–3206 Filed 7–2–07; 8:45 am]
that index unless it applies for and * * * * *
receives the OCC’s prior written (b) Scope. (1) * * * These are BILLING CODE 4810–33–P
approval. national banks, Federal branches and


Proposed Rule: Regulatory Review Amendments

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Tuesday,

12 CFR Parts 1, 2, et al.

Corporation (FDIC), and the Office of Thrift

the Federal Reserve Board is the appropriate

such an entity as an operating 1996).

2000) and Corporate Decision No. 2002–2 (Jan. 9,

2004). concerns. Other arrangements will be 1998).

rules for a national bank consolidation

48 See OCC Corporate Decision No. 2002–11, June

determine whether an electronic activity 28, 2002. proposed amendment makes no

to reflect the revision to the language of to 12 U.S.C. 24(Eleventh).

establish or relocate a Federal branch or was repealed by section 601 of the

Estimated Number of Respondents:

* * * * * 1821(t), 1831m, 1831p–1, 1831o, 1867, 1951

District Office address Geographical composition

* * * * * the filing to be materially deficient. A certificate, and a charter application that

(e)(1)(i)(A) through (e)(1)(i)(C), as applicable, if the resulting bank is a * * *

requirements under paragraph (e)(5)(vi) (BB) Providing safekeeping for and

banking. pursuant to Section 17A of the

Authority: 12 U.S.C. 24, 92a, and 93a.

Authority: 12 U.S.C. 1 et seq., 24 (Seventh), ‘‘12 CFR 25.12(m)’’ in its place;

BILLING CODE 4810–33–C

PART 26—MANAGEMENT OFFICIAL PART 28—INTERNATIONAL BANKING exemption from Regulation W is

bank in an affiliated bank is treated as U.S.C. 371c(b)(1)’’.

approval. national banks, Federal branches and

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