[Federal Register: January 5, 2001 (Volume 66, Number 4)]
[Rules and Regulations]
[Page 1018-1031]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05ja01-3]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 303, 337, and 362
RIN 3064-AC38
Activities and Investments of Insured State Banks
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rule and confirmation of interim final rule with changes.
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SUMMARY: The FDIC is adopting a final rule to implement certain
provisions of the Gramm-Leach-Bliley Act (G-L-B Act), governing
activities and investments of insured state banks. Under the final
rule, the FDIC adopts a streamlined certification process for insured
state nonmember banks to follow before they may conduct activities as
principal through a financial subsidiary. State nonmember banks will
self-certify that they meet the requirements to carry out these
activities, which will allow the banks to conduct the new activities
immediately. There will be no delay for administrative approval or
review, although the FDIC will evaluate these activities as part of its
normal supervision process for safety and soundness standards pursuant
to the FDIC's authority under section 8 of the Federal Deposit
Insurance Act (FDI Act). The final rule confirms, with modifications,
an interim rule that has been in effect since March 11, 2000. To
eliminate unnecessary provisions and make technical amendments, the
FDIC also has revised its rule implementing sections 24 and 18(m) of
the FDI Act dealing with other activities and investments of insured
state banks.
EFFECTIVE DATE: January 5, 2001.
[[Page 1019]]
FOR FURTHER INFORMATION CONTACT: Curtis Vaughn, Examination Specialist
((202) 898-6759), Division of Supervision; Linda L. Stamp, Counsel
((202) 898-7310), Legal Division, FDIC, 550 17th Street, NW.,
Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
On March 23, 2000, the FDIC published an interim final rule with
request for comment (65 FR 15526) to implement certain provisions of
the G-L-B Act (Pub. L. 106-102), which President Clinton signed into
law on November 12, 1999. Section 121(d) of the G-L-B Act amended the
FDI Act (12 U.S.C. 1811 et seq.) by adding a new section 46 (12 U.S.C.
1831w). New section 46(a) of the FDI Act provides that an insured state
bank may control or hold an interest in a subsidiary that engages as
principal in activities that would be permissible for a national bank
to conduct only through a ``financial subsidiary,'' subject to certain
conditions. Because section 46(a) applies only to ``as principal''
activities, state nonmember banks may engage in agency activities
without considering the requirements of this rule or section.
As set forth in the interim final rule, section 121(a) of the G-L-B
Act permits national banks to control or hold an interest in a
financial subsidiary, which is a new type of subsidiary governed by new
section 5136A of the Revised Statutes. A financial subsidiary may
engage in specified newly authorized activities that are financial in
nature and activities that are incidental to financial activities, if
the bank and the subsidiary meet certain requirements and comply with
stated safeguards. A financial subsidiary also may combine these
financial subsidiary activities with activities that are permissible
for national banks to engage in directly. The financial subsidiary
activities include many of the activities which are authorized for the
new ``financial holding companies'' as laid out in new section 4(k) of
the Bank Holding Company Act (BHCA) (12 U.S.C. 1841 et seq.) as created
by section 103(a) of the G-L-B Act. In the future, the Secretary of the
Treasury (Treasury) and the Board of Governors of the Federal Reserve
System (FRB) may determine that additional activities are financial in
nature and therefore authorized for a financial subsidiary of a
national bank.
Section 121(d) of the G-L-B Act, which creates new section 46 of
the FDI Act, permits state banks to control or hold an interest in a
financial subsidiary that engages in activities as principal. To
qualify, a state bank must comply with four statutory conditions and a
mandatory Community Reinvestment Act (CRA) (12 U.S.C. 2901 et seq.)
requirement found in section 103(a) of the G-L-B Act, which added a new
subsection (4)(l)(2) to the BHCA (12 U.S.C. 1843(l)(2)).
The FDIC has a long history of reviewing applications from state
banks to engage in activities not permissible for national banks under
section 24 of the FDI Act (12 U.S.C. 1831a) as implemented through part
362 of the FDIC's rules and regulations. As stated in the preamble to
the interim final rule, certain activities which the FDIC previously
addressed under section 24 and subpart A of part 362, such as general
securities underwriting, are now authorized for a financial subsidiary
of a national bank. As a result, the FDIC will now analyze the
commencement of such activities under section 46(a) rather than section
24, and the FDIC will apply the restrictions contained in subpart E
rather than those in subpart A of part 362. These statutory changes
necessitate that the FDIC conform its regulation by limiting the
sections pertaining to such activities from subpart A to existing
subsidiaries.
Other activities conducted as principal, such as real estate
development or investment, which are prohibited to national bank
financial subsidiaries, are outside the scope of section 46(a). These
activities will continue to be governed by section 24 and subpart A of
part 362. State banks that wish to engage in activities prohibited to
national banks may continue to seek the FDIC's consent by filing a
notice or application. Should the Treasury and FRB in the future
determine that additional activities are authorized for a financial
subsidiary of a national bank, state nonmember banks commencing such
activities for the first time after such determinations will have to
proceed under section 46(a). However, banks that obtained FDIC consent
under section 24, whether by notice, order, or regulation before such
determination may continue to engage in any such activity pursuant to
the requirements imposed under section 24.
II. Comments Received
The FDIC received 15 comments in response to the interim final
rule. The comments came from four trade associations, four state
banking departments, two community-based associations, a law firm, a
state regulators association, a bank holding company, and four United
States Senators. Three commenters expressed support for the FDIC's
interim final rule. The other commenters expressed various objections
to the rule. Several of the commenters recommended specific changes to
the interim final rule. A discussion of these comments and the changes
and additions made to the interim final rule and the rule implementing
sections 24 and 18(m) of the FDI Act are discussed in the section by
section analysis. The final rule adopts a more streamlined process than
the interim rule. A summary of the comments follows.
The FDIC's interim rule to implement section 46 of the G-L-B Act
provided that section 46 is the exclusive method for an insured state
nonmember bank to engage in ``financial subsidiary activities.'' Six of
the comments, including a comment from three United States Senators,
argued that Congress intended to preserve the FDIC's authority to
approve activities under section 24. These commenters argued that the
preservation of authority provision \1\ was meant to ensure that the
FDIC's authority to approve activities under section 24 is not
diminished by section 46, and that section 46 was intended to permit
(but not require) state banks to use the financial subsidiary vehicle
to conduct financial or incidental activities. On the other hand,
another United States Senator argued that the interim final rule was
consistent with the statutory language and legislative history of the
G-L-B Act and that the interim final rule correctly applies the G-L-B
Act to require state banks to use the financial subsidiary vehicle to
conduct financial or incidental activities.
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\1\ 12 U.S.C. 1831w(d)(1).
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Four commenters argued that if section 46 was read as the only
method under which a state nonmember bank could engage in financial
subsidiary activities, then innovation in the state bank system would
be stifled and the dual banking system would be undermined. Some
commenters argued that Congress' purpose behind section 46 was to
assure state banks that they would not be disadvantaged if national
banks are authorized to engage in activities through financial
subsidiaries that the FDIC concludes would not be permitted to state
banks under section 24. The four commenters also noted that although
certain activities which were previously addressed by the FDIC under
section 24 are now authorized for a national bank financial subsidiary,
the grandfather provisions of the G-L-B Act \2\ make it clear that any
activities lawfully conducted prior to the G-L-B Act through a
subsidiary under section
[[Page 1020]]
24 survive. These commenters believed that Congress intended to
preserve the FDIC's section 24 authority regardless of whether the
activities are permissible for national bank financial subsidiaries and
that the requirements placed on state banks under section 24 have
proven to be appropriate.
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\2\ 12 U.S.C. 1831w(b).
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With regard to the structure of the FDIC's interim rule, half of
the commenters believed the FDIC's rule was more restrictive than the
Office of the Comptroller of the Currency's (OCC's) and the FRB's
comparable rules. They argued that the inconsistencies between the
FDIC's rule and the other federal banking agencies' rules have the
effect of competitively disadvantaging state nonmember banks. Some of
them believed that the potential disadvantage to state nonmember banks
could lead to confusion and increased regulatory burden, all for no
apparent safety and soundness reason.
One commenter noted that while section 24 of the FDI Act expressly
requires state banks to apply to the FDIC before they can engage in any
activity not authorized for national banks, section 46 does not have a
similar requirement. This commenter contended that the FDIC recognized
that section 46 does not include a discretionary ``gatekeeping''
regulatory authority since the FDIC stated in its preamble to the
interim final rule that it was imposing requirements in addition to
those specified in the G-L-B Act. Other commenters read section 46 as
not requiring state banks to seek FDIC approval prior to engaging in
covered activities. One commenter argued that section 8 of the FDI Act
and section 114(c) of the G-L-B Act, which provides that the FDIC may
impose restrictions or requirements on relationships or transactions
between a state nonmember bank and a subsidiary of a state nonmember
bank, do not provide the FDIC with authority to require state nonmember
banks to obtain prior approval before a subsidiary engages in financial
subsidiary activity.
Another commenter contended that the prior approval requirement is
not necessary because the activities will have been approved by the
Congress or the Treasury and the FRB. This commenter believed that an
approval process is only appropriate where the activity is not already
authorized for a national bank and noted that the FDIC has sufficient
authority under general supervisory authority to intervene should it be
necessary.
Also with regard to the structure of the FDIC's rule, several of
the commenters favored a more uniform approach to the rules. These
commenters believed that all of the federal banking agencies' rules on
financial subsidiary activities should be consistent, and that because
the rules of the OCC and the FRB are similar, the FDIC should adopt a
rule that is as consistent with those rules as is possible given the
differing statutes. Specifically, some of the commenters state that the
OCC's self-certification, streamlined approval process should be
adopted by the FDIC because it would reduce regulatory burden and
establish parity for state banks and national banks. Other commenters
believed the FDIC's rule should be consistent with the FRB's rule that
requires only a 15-day approval as opposed to the FDIC's 30-day
approval.
The FDIC also received comment on the scope of the activities
covered by the rule. Some of the commenters contended that the FRB's
rule provides more flexibility to the state system because it excludes
from coverage activities that the state member bank is permitted to
engage in directly, but chooses to do so in a subsidiary, or conducts
in a subsidiary as is otherwise authorized by federal law. These
commenters believed the FDIC should permit state nonmember banks to
follow section 24 if the state nonmember bank is authorized to engage
in the activity directly or in any state bank subsidiary that is
otherwise expressly permitted under state or federal law. They believe
this would allow state nonmember banks to continue to choose where to
conduct these activities and not force state banking authorities to
conform determinations to that of the OCC.
Some commenters expressed concern that the FDIC's rule would
require a state nonmember bank that is conducting an activity approved
under section 24 after the effective date of the G-L-B Act that is
later determined to be permissible for a national bank financial
subsidiary to switch from section 24 to section 46. These commenters
are concerned about the burden and uncertainty entailed in altering the
subsidiary's structure and operations so as to bring it into compliance
with the statutory conditions of section 46(a), rather than the
conditions the FDIC previously imposed under section 24. Several
commenters believed this will create potentially significant
administrative, compliance, personnel, and legal burdens, and will cast
a pall of uncertainty over the FDIC's section 24 post G-L-B Act
approvals because it will be unclear whether the conditions placed upon
the activity will change at some unknown date in the future. They
contend that this uncertainty also would be disruptive to bank
supervisors who would have to examine banks under a different set of
conditions. One of the commenters found this to be inconsistent with
FDIC practice and detrimental to its authority under section 24 and
believed that once an activity is approved under section 24, it should
not have to be re-qualified under section 46.
The FDIC received a small number of comments on other areas of
concern. Two commenters contended that the FDIC's rule would limit
existing state authority. Three commenters raised concern about the CRA
rating requirement. Two of them asked that the FDIC's rule allow for
public comment with regard to the CRA rating requirement because they
felt the public should be given the opportunity to comment on a bank's
plans to engage in financial subsidiary activity. These commenters also
asked that in cases where the CRA rating is a low satisfactory, the
FDIC should condition approval of new activities on specific
improvements in a bank's CRA performance rating. One of the commenters
believed the FDIC was importing a CRA standard that Congress did not
impose on section 24 directly or through the G-L-B Act by forcing state
banks to conduct activities in financial subsidiaries under section 46
requirements instead of section 24 requirements. This commenter
suggested that because most state banks have a satisfactory or better
rating, the FDIC rule disadvantages a majority of them for the purpose
of preventing a few banks from evading the CRA requirements.
Another commenter believed that the FDIC's rule should require that
state nonmember banks be well-managed just like national banks and
state member banks because this will promote consistency and alleviate
FDIC concerns that may be behind the FDIC's reason for advance review
of section 46 activities.
Last, the FDIC received some comments seeking clarification of
certain provisions in the interim final rule. One commenter asked that
the FDIC's rule clearly provide that authorizations given to state
nonmember banks prior to the FDIC's adoption of the current subpart A
of part 362 are covered by the grandfather provision. Another commenter
asked for further clarification on the financial and operational
safeguards requirement.
We have responded to these comments by conforming the FDIC's
definition of ``financial subsidiary'' to the definition adopted by the
FRB and adopting a streamlined self-certification
[[Page 1021]]
process similar to the OCC but without any waiting period. More
specific discussions of the FDIC's particular responses to the comments
are found in the section by section analysis.
III. Final Rule--Section by Section Analysis
Part 362
A. Subpart A--Activities of Insured State Banks
The FDIC made several technical amendments to subpart A. As noted
in the preamble to the interim final rule, the G-L-B Act provisions
amending the FDI Act created a need for the elimination and
clarification of certain provisions of subparts A and B. We discuss the
specific changes below.
Section 362.1 Purpose and Scope
The references to safety and soundness concerns relating to real
estate investment activities of insured state nonmember banks and their
subsidiaries in subpart B of part 362 have been eliminated from
paragraph (c) of Sec. 362.1. The G-L-B Act expressly provides that
national banks may not engage in real estate development and real
estate investment activities \3\ through a financial subsidiary or
operating subsidiary. Thus, the safety and soundness standards set
forth in subpart B of part 362 relating to real estate investment
activities of a type that are not permissible for a national bank, but
may be otherwise permissible for a subsidiary of a national bank, are
not necessary. Any insured state nonmember bank desiring to engage in
real estate investment activities through a subsidiary will continue to
be subject to the requirements relating to such activities in subpart
A.
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\3\ 12 U.S.C. 24a(a)(2)(B)(ii).
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Section 362.2 Definitions
We are changing the definition of ``subsidiary'' in paragraph (r)
of Sec. 362.2 to make it consistent with the exception in
Sec. 362.4(b)(3)(ii), which permits a subsidiary of an insured state
bank to own equity securities of certain companies if, among other
things, the subsidiary controls the company or the company is
controlled by insured depository institutions. Thus, a more appropriate
definition for ``subsidiary'' would include any company that is owned
or controlled directly or indirectly by one or more insured depository
institutions. The rule has been changed accordingly.
Section 362.4 Subsidiaries of Insured State Banks
Paragraphs (b)(5) (i) and (ii) of Sec. 362.4 formerly provided the
requirements for a state nonmember bank to engage in real estate
investment activities and general securities underwriting through a
majority-owned subsidiary. Under the G-L-B Act, a financial subsidiary
of a national bank is permitted to engage in general securities
underwriting activities. Thus, state nonmember banks may commence
conducting this activity pursuant to section 46(a) of the FDI Act
through a financial subsidiary as set forth in subpart E. Applications
to engage in general securities underwriting will no longer be
processed under section 24 and subpart A of part 362. However, the
regulatory language found in Sec. 362.4(b)(5)(ii) will continue to
govern those banks engaged in this activity as of the effective date of
the G-L-B Act. The restrictions contained in this section will continue
to apply only to existing state bank subsidiaries that are covered by
section 46(b) of the FDI Act.\4\
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\4\ 12 U.S.C. 1831w(b).
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In Sec. 362.4(c)(2)(vi), the word ``officers'' is more inclusive
than the FDIC had intended and has required the FDIC to provide
repeated informal interpretations that ``officers'' should be read as
``executive officers.'' To eliminate the need for repeated informal
interpretations and to utilize the definition for ``executive
officers'' already contained in part 362, this paragraph of the rule
has been changed to conform to the defined term.
Section 362.5 Approvals Previously Granted
Due to the passage of time, some of the transitional deadlines
contained in this section have expired and the provisions are no longer
of any effect. We removed and reserved Sec. 362.5(b) (1), (2), and (3),
which relate to securities underwriting activities, grandfathered
insurance underwriting activities, and the ownership of the stock of
certain corporations approved by the FDIC prior to January 1, 1999.
B. Subpart B--Safety and Soundness Rules Governing Insured State
Nonmember Banks
Section 362.6 Purpose and Scope
Section 362.8 Restrictions on Activities of Insured State Nonmember
Banks
We removed the safety and soundness standards governing real estate
investment activities formerly found in this section of the rule
because they are no longer necessary. As provided in the G-L-B Act,
national bank financial subsidiaries are not permitted to engage in
real estate development or real estate investment activities, unless
otherwise expressly authorized by law.\5\
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\5\ 12 U.S.C. 24a(a)(2)(B)(ii).
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Regarding the separation standards that any affiliate company that
engages in general securities underwriting and any state nonmember bank
must meet, we also revised the introductory paragraph to more clearly
cover the appropriate entities in the scope of the rule. Now, the
language provides that unless the affiliated company that engages in
general securities underwriting is a subsidiary of an entity that is
supervised by a federal banking agency, the affiliated company that
engages in general securities underwriting and the state nonmember bank
must meet the separation standards. To conform to the less burdensome
separation standards found in the sections implementing section 46, we
also streamlined the separation standards to lessen the burden of
compliance with this section.
On December 1, 1998 (63 FR 66339), the FDIC proposed and published
an amendment to part 362 that added safety and soundness standards to
govern insured state nonmember banks that engage in the public sale,
distribution or underwriting of stocks, bonds, debentures, notes or
other securities through a subsidiary if those activities are
permissible for a national bank subsidiary but are not permissible for
the national bank itself. In addition, the FDIC proposed and published
a proposal (63 FR 66339) to require that insured state nonmember banks
file a notice before commencing any activities permissible for
subsidiaries of a national bank that are not permissible for the parent
national bank itself. This proposal also contained language to remove
and reserve the provisions found in Sec. 337.4 entitled, ``Securities
Activities of Subsidiaries of Insured State Banks: Bank Transactions
with Affiliated Securities Companies.'' The effect of these amendments
was described as requiring banks to notify the FDIC prior to conducting
securities or other activities through subsidiaries that are not
permissible for the bank itself. The FDIC also stated that when the
FDIC adopts these amendments in final form, the FDIC's securities
activities regulation would be fully consolidated in part 362. Only two
comments were received on this proposal, both of which supported the
elimination of Sec. 337.4. One of the commenters stated that it agrees
with
[[Page 1022]]
the FDIC's assertion that the revised standards contain more flexible
physical separation requirements than those currently imposed on the
bank and its subsidiaries in Sec. 337.4. This most recent and still
outstanding proposal was limited in scope and followed the more
comprehensive revision of part 362 that was published in final form in
the Federal Register on the same day and became effective on January 1,
1999.
During this interim period, Sec. 337.4 has continued to be
operative to govern separation standards for affiliations among banks
and general securities underwriting companies when coverage is not
provided under Sec. 362.8(b). Thus, Sec. 337.4 currently provides
separation standards for any such affiliated entity that may not
otherwise be covered by the language in the currently effective version
of Sec. 362.8(b). As we indicated in the December 1, 1998 Proposed
Rule, we intended to reserve and remove Sec. 337.4. As a part of that
effort, we are moving the coverage of those entities into Sec. 362.8
and making the standards more flexible and reducing the regulatory
burden. By modifying the language of Sec. 362.8(b) in the manner
suggested, the coverage of separation standards also is made more
transparent to banks and their general securities underwriting
affiliates.
As set forth in this final rule, the separation standards under
Sec. 362.8, which will be imposed on these affiliates, are nearly
identical to the separation standards to be imposed on financial
subsidiaries of insured state nonmember banks engaged in underwriting
securities under new Sec. 362.18(a)(4)(B). Because of the G-L-B Act,
financial subsidiaries of insured state nonmember banks engaged in
general securities underwriting are subject to two additional
requirements, which are a CRA rating requirement applicable to the bank
and all insured depository institution affiliates and compliance with
the financial and operational safeguards applicable to a financial
subsidiary of a national bank. The FDIC believes it is appropriate to
have substantially the same requirements apply to securities
underwriting activities, whether they are conducted by an affiliate
engaging in general securities underwriting under subpart B or a
financial subsidiary engaging in general securities underwriting under
new subpart E. The FDIC believes that it makes no difference to the
safety and soundness of the insured state nonmember bank whether the
general securities underwriting activity is conducted by a securities
underwriting affiliate under subpart B or in a financial subsidiary
under new subpart E. To achieve that consistency, the FDIC is adopting
comparable standards for all of these entities in its final rule. In
addition, to provide flexibility to the regulated entities, the FDIC
will consider applications for relief from these separation safeguards
in appropriate circumstances.
Section 362.7 Definitions
In paragraph (a) of Sec. 362.7, ``affiliate'' is defined as any
company that directly or indirectly, through one or more
intermediaries, controls or is under common control with an insured
state nonmember bank but does not include a subsidiary of an insured
state nonmember bank. We have changed this definition to be consistent
with the definition in subpart E of part 362, which provides that an
``affiliate'' has the same meaning contained in section 3 of the FDI
Act (12 U.S.C. 1813). That section incorporates by reference the
definition in section 2 of the BHCA (12 U.S.C. 1841(k)), which provides
that an ``affiliate'' means any company that controls, is controlled
by, or is under common control with another company. For the purpose of
uniformity and to avoid confusion and inconsistency, we will now use a
definition for ``affiliate'' that is the same in all subparts of part
362 that use the term ``affiliate.'' Therefore, the rule has been
changed accordingly.
We also removed the definition for ``real estate investment
activity'' in paragraph (b) of Sec. 362.7 because of the changes to the
substantive Secs. 362.6 and 362.8.
C. Subpart C--Activities of Insured Savings Associations
Section 362.10 Definitions
Because of the substantive change to the definition for
``affiliate,'' and our decision to use a uniform definition for
``affiliate'' throughout part 362, we have removed the prior definition
for ``affiliate'' in paragraph (a) of Sec. 362.10 and replaced it with
a simple cross-reference to the newly defined term in subpart B of part
362.
Section 362.12 Service Corporations of Insured State Savings
Associations
In paragraph (b)(2)(i) of Sec. 362.12, an incorrect reference to
``bank'' has been changed to ``savings association'' since that
provision pertains to activities of service corporations of insured
state savings associations.
We removed the safety and soundness standards and the requirements
governing service corporations of insured state savings associations
conducting securities underwriting activities under paragraphs
(b)(2)(ii) and (b)(4) of Sec. 362.12 because no insured state savings
associations have asked the FDIC for permission to engage in this
activity. The FDIC's decision to remove these provisions from the rule
should not be construed as a prohibition to engage in securities
underwriting activity by service corporations of insured state savings
associations. Rather, the FDIC believes that any request to engage in
such activity could be better handled by a custom drafted order that
deals with the particular circumstances of the institution requesting
the authority, rather than through a general rule that also will
require interpretation. We removed the authority granting provisions
for insured state banks to commence securities underwriting activities
from subpart A because the authority to commence engaging in that
activity is now found in section 46 of the FDI Act and subpart E.
However, any subsidiaries lawfully in existence and engaging in these
activities under this authority on November 11, 1999 will continue to
be covered under the regulatory language found in subpart A. We also
removed the comparable authority granting provisions from subpart C of
part 362 governing savings associations. Hereafter, any service
corporation of an insured state savings association desiring to engage
in securities underwriting activities through a service corporation may
submit an application to the FDIC for consent to engage in the
activity. At such time, the FDIC will determine the appropriate safety
and soundness standards that should be applicable to the institution's
particular situation.
D. Subpart E--Financial Subsidiary Activities of Insured State
Nonmember Banks
Section 362.16 Purpose and Scope
As provided in the interim final rule, the FDIC will continue to
implement section 46(a) through subpart E of part 362. Section 362.16
sets out the purpose and scope of the subpart, including the scope of
the activities covered. Subpart E applies to any financial subsidiaries
of state nonmember banks.
Several commenters stated that Congress intended to preserve the
FDIC's authority to approve activities under section 24 given the
specific reference in section 46(d). Section 46(d) provides that
section 46 shall not be construed as superseding the authority of the
FDIC to review subsidiary activities under section 24. Some commented
that if section 46(a) is read
[[Page 1023]]
as the only method under which a state nonmember bank could engage in
financial subsidiary activities, then innovation in the state bank
system would be stifled and the dual banking system would be
undermined. In light of the comments received, the FDIC has
reconsidered some of its interpretation of section 46 and other
relevant provisions of the G-L-B Act. For example, the FDIC has adopted
the definition for ``financial subsidiary'' used by the FRB to exclude
activities that may be carried out directly by the bank. However, the
other comments have not dissuaded the FDIC as to the correctness of
much of its interpretation of section 46. The FDIC believes that the
statutory language in section 46 that preserves the authority of the
FDIC under section 24 and the grandfather provision for subsidiaries
lawfully in existence before enactment of the G-L-B Act would not be
necessary, if section 46 was intended to serve only as an alternative
mechanism for approving financial activities. This interpretation also
is consistent with the FDIC's historic practices in applying section 24
to activities: Once an activity becomes permissible for a national
bank, section 24 no longer applies to insured state nonmember banks
that want to commence engaging in the activity. The FDIC believes that
this construction of the statute will have little effect on innovation
in the state bank system because state nonmember banks are still free
to seek the FDIC's approval under section 24 to engage in innovative
activities that are not permissible to national banks directly or
through a financial subsidiary. The only constraint that this
interpretation imposes on state nonmember banks is that insured state
nonmember banks will have to conform to standards that are consistent
with those imposed on national banks and state member banks when
engaging in the same activities as principal through a financial
subsidiary. State banks under the authority of the States are free to
innovate with respect to all other activities with the FDIC's consent
under section 24, as Congress intended and expressed in section 46(d).
Some commenters expressed apprehension about the impact of the
FDIC's interpretation upon a state nonmember bank subsidiary that
obtains a section 24 approval to engage in an activity, if the Treasury
and FRB subsequently authorize the same activity for financial
subsidiaries of national banks. The statutory grandfather under section
46(b) covers subsidiary activities lawfully conducted as of the G-L-B
Act's enactment date. These commenters infer from this grandfather
provision that section 24 approvals issued by the FDIC after enactment
of the G-L-B Act are subject to being voided if the activity in
question later becomes subject to section 46(a).
The FDIC recognizes that this paradox exists under one possible
interpretation of section 46(a). However, the FDIC wishes to clarify
that, under the FDIC's interpretation of section 46, this is not the
case. As the FDIC stated in the preamble to the interim final rule,
activities will become subject to section 46(a) rather than section 24
only if the Treasury and FRB declare activities to be financial in
nature and permissible for financial subsidiaries of national banks.
However, this means only that state nonmember banks seeking to commence
such activities for the first time after a Treasury and FRB
determination will proceed under section 46(a). If a state nonmember
bank has obtained a section 24 approval to conduct the activity before
the Treasury and FRB determination, the state nonmember bank remains
subject to any section 24 approval obtained from the FDIC, and the
section 24 approval conditions remain in effect. Existing orders under
section 24 and part 362 continue to apply to the particular banks bound
by those orders until modified by the FDIC.
Because section 46 does not explicitly address what is to be done
in this situation the FDIC is exercising its administrative expertise
to determine the outcome. In resolving this issue, the FDIC must
determine how to best interpret section 46. Congress, in reserving the
FDIC's section 24 authority over activities not covered by section 46,
clearly intended to foster state innovation with respect to these
reserved activities. In order for state nonmember banks to be able to
venture into these innovative opportunities still open to them as a
result of Congress' action, a certain amount of predictability is
necessary. A state nonmember bank contemplating whether to engage in a
line of business subject to the FDIC's conditions under section 24 must
be reasonably comfortable that the ground rules will not change
suddenly at some uncertain future point. Therefore, the FDIC's
interpretation best effectuates Congress' intent to foster innovation
as a continuing dynamic within the dual banking system.
Section 362.17 Definitions
Section 362.17 of the final rule contains the definitions used in
this subpart. Rather than repeating terms defined in subpart A, certain
of the definitions contained in Sec. 362.2 are incorporated into
subpart E by reference. The definitions of ``activity'', ``company,''
``control,'' ``insured depository institution,'' ``insured state
bank,'' and ``subsidiary'' apply as they are described in subpart A. In
a similar way, we have incorporated into subpart E by reference the
definition of ``affiliate'' as it is described in subpart B. These
definitions remain consistent throughout part 362 to avoid confusion
among the various subparts of the rule.
This subpart E sets forth the requirements for financial
subsidiaries of insured state nonmember banks. In response to the
comments, the FDIC has changed the scope of the rule by defining
``financial subsidiary'' in the same way as the FRB did in its rule,
except that the definition is conformed to the circumstances of the
state nonmember bank. Thus, any activity that may lawfully be conducted
by the state nonmember bank directly is not required to be conducted
through a financial subsidiary whenever the bank employs a subsidiary
to conduct the activity.
This result was reached because of comments the FDIC received that
the interim rule was more restrictive than the FRB's rule governing
financial subsidiaries. This view is based on the fact that the FRB's
rule excludes from the definition of ``financial subsidiary'' those
activities that the state member bank is permitted to engage in
directly or through a subsidiary of a state member bank that is
otherwise authorized by federal law. The commenters say the FDIC's
interim rule competitively disadvantages insured state nonmember banks.
In response to the comments, the FDIC has adopted the FRB's
definition while conforming it to the circumstances of the state
nonmember bank. In the final rule, ``financial subsidiary'' is defined
as any company that is controlled by one or more insured depository
institutions other than a subsidiary that only engages in activities
that the state nonmember bank is permitted to engage in directly and
that are conducted on the same terms and conditions that govern the
conduct of the activities by the state nonmember bank; or the state
nonmember bank is specifically authorized to control by the express
terms of a federal statute (other than section 46(a) of the FDI Act),
and not by implication or interpretation, such as the Bank Service
Company Act (12 U.S.C. 1861 et seq.).
In the interim final rule, the FDIC implicitly carried the literal
statutory restriction from the definition of
[[Page 1024]]
financial subsidiary in section 5136A. In contrast, the FRB substituted
the state member bank for the national bank when reproducing this
definition in its regulation.
The FDIC has been persuaded by the comments and has revised its
rule to make it consistent with the FRB's rule by defining a financial
subsidiary to exclude subsidiaries that conduct only activities that
may be conducted by the state nonmember bank directly. The goals of
parity among the banking charters and making banking regulations as
uniform as possible among the banking agencies are enhanced by this
interpretation and are goals that the FDIC consistently pursues
whenever possible.
In the interim rule, the FDIC defined ``affiliate'' differently in
subpart E from subparts B and C. The subpart E definition incorporated
the definition from section 3 of the FDI Act (12 U.S.C. 1813). To make
the entire regulation more internally consistent, the definition of
``affiliate'' has been changed in subparts B and C to match the subpart
E definition. Subpart E now incorporates the definition from subpart B,
which incorporates the definition from section 3 of the FDI Act (12
U.S.C. 1813). Thus, the final rule has the same definition of
``affiliate'' in subpart E as is contained in the interim rule, but the
source is different.
Section 362.17 also includes definitions for ``tangible capital,''
``Tier 2 capital'' and ``well-managed.'' These were included because of
the comments we received in favor of making the FDIC's rule consistent
with the OCC's and FRB's rules. As discussed below with regard to
Sec. 362.18(a), the FDIC requires that any insured state nonmember bank
desiring to control or hold an interest in a financial subsidiary or
commence any new financial activity pursuant to section 46(a) must
certify, among other things, that it is well-managed. This is not
required by section 46(a), but as discussed below, the FDIC has decided
to revise the interim rule to allow for a self-certification process
similar to the OCC's, except that the FDIC's self-certification process
does not impose any waiting period on a state nonmember bank before the
state bank may engage in any activity pursuant to section 46(a). The
state nonmember bank only has to file a notice with the FDIC and
certify to certain facts. Compliance with the requirements will be
evaluated using the FDIC's usual supervisory powers. This process is
more streamlined than the 30-day processing that was included in the
FDIC's interim rule. However, for safety and soundness reasons, the
insured state nonmember bank must certify that it is well-managed in
order to qualify for this streamlined process. Although the G-L-B Act
imposes a well-managed requirement on national banks and state member
banks as well as their insured depository institution affiliates, the
FDIC's statute does not include such a requirement. In adopting the
streamlined notice process with no waiting period, the FDIC believes it
is necessary to impose the requirement that the state bank be well-
managed by this regulation. The FDIC will, however, consider
applications for relief from the ``well-managed'' requirement in
appropriate circumstances.
Section 362.18 Financial Subsidiaries of Insured State Nonmember Banks
Section 362.18(a) requires that an insured state nonmember bank
file a notice that contains the usual information required for a notice
or application under Sec. 303.121(b) prior to acquiring control of, or
holding an interest in a financial subsidiary under section 46(a). In
addition, the insured state nonmember bank must certify that it is
well-managed; that it and all of its insured depository institution
affiliates are well-capitalized; and that the insured state nonmember
bank will comply with the capital deduction requirement, which is found
in the statute and in the OCC's and FRB's rules. The insured state
nonmember bank must deduct the aggregate amount of its outstanding
equity investment, including retained earnings, in all financial
subsidiaries that engage in activities as principal pursuant to section
46(a), from the bank's total assets and tangible equity and deduct such
investment from its total risk-based capital (this deduction shall be
made equally from Tier 1 and Tier 2 capital). An insured state
nonmember bank may not commence any new activity under section 46(a) or
directly or indirectly acquire control of a company engaged in any such
activity pursuant to Sec. 362.18, if the bank or any of its insured
depository institution affiliates received a rating of less than
satisfactory in its most recent CRA examination.\6\ An insured state
nonmember bank controlling or holding an interest in a financial
subsidiary also must comply with sections 23A and 23B of the Federal
Reserve Act (12 U.S.C. 371c and 371c-1), as amended by the G-L-B Act
and meet the financial and operational safeguards required by section
5136A(d) of the Revised Statutes of the United States (12 U.S.C.
24a(d)), unless otherwise determined by the FDIC.
---------------------------------------------------------------------------
\6\ This prohibition is required by section 4(l)(2) of the BHCA
as enacted in section 103(a) of the G-L-B Act which is codified at
12 U.S.C. 1843(l)(2).
---------------------------------------------------------------------------
However, the FDIC continues to be concerned that adequate
separation standards exist between an insured state nonmember bank and
its financial subsidiary when the financial subsidiary engages in
certain types of securities underwriting activities. Thus, if the
financial subsidiary of the insured state nonmember bank will engage in
the public sale, distribution or underwriting of stocks, bonds,
debentures, notes, or other securities activity of a type permissible
for a national bank only through a financial subsidiary, then the state
nonmember bank and the financial subsidiary also must comply with the
same separation standards as are applicable to affiliates of insured
state nonmember banks that are not controlled by an entity regulated by
a federal banking agency under subpart B. These separation standards
require that the securities business of the financial subsidiary be
physically separate and distinct in its operations from the operations
of the bank; that the financial subsidiary conduct its securities
business pursuant to independent policies and procedures designed to
inform customers and prospective customers of the financial subsidiary
that the financial subsidiary is a separate organization from the
insured state nonmember bank and that the insured state nonmember bank
is not responsible for and does not guarantee the obligations of the
financial subsidiary. In addition, the bank must adopt policies and
procedures, including appropriate limits on exposure, to govern its
participation in financing transactions underwritten by its financial
subsidiary and may not express an opinion on the value or the
advisability of the purchase or sale of securities underwritten or
dealt in by its financial subsidiary, unless the bank notifies the
customer that the entity underwriting, making a market, distributing or
dealing in the securities is a financial subsidiary of the bank.
Notwithstanding the comments on the CRA requirement, the FDIC will
not revise its rule to allow for public comment with regard to the CRA
rating requirement or give the FDIC the authority to condition approval
of new activities on specific improvements in a bank's CRA performance
rating because the FDIC does not have the authority to impose such
additional CRA requirements on state nonmember banks.
The final rule provides that an insured state nonmember bank may
not acquire control or hold an interest in a financial subsidiary that
engages in
[[Page 1025]]
financial activities as principal or commence any such new activity
pursuant to section 46(a) of the FDI Act, unless the insured state
nonmember bank submits a notice under the procedures set forth in
Sec. 362.18(a). An insured state nonmember bank that submits such a
notice must comply with the requirements of Sec. 362.18(a),(b), (c) and
(d), as applicable. The bank must file the notice with the appropriate
regional office prior to acquiring control of, or holding an interest
in, a financial subsidiary that engages in financial activities as
principal that a national bank must conduct through a financial
subsidiary. Similarly, the bank must file such notice prior to
commencing any additional as principal financial activity under section
46(a). Before acquiring control of a financial subsidiary or commencing
any new as principal financial activity under section 46(a), the
insured state nonmember bank also must meet the CRA requirement and
certify that it is well-managed; that it and all of its insured
depository institution affiliates are well-capitalized; and that the
insured state nonmember bank will comply with the capital deduction
requirement.
The insured state nonmember bank is not required to certify that
the bank and its insured depository institution affiliates have
received a rating of at least a satisfactory record of meeting
community credit needs under the CRA. As specified in
Sec. 362.18(a)(2), an insured state nonmember bank is prohibited from
commencing a new activity under section 46(a) or directly or indirectly
acquiring control of a company as a financial subsidiary under section
46(a), if the state bank or any of the state bank's insured depository
institution affiliates has received at each one's most recent
examination a CRA rating of less than a satisfactory record of meeting
community credit needs. The FDIC will monitor compliance with this CRA
requirement at the time the new activity is commenced or control is
acquired. Should the FDIC find that the bank or any of its insured
depository institution affiliates is not in compliance with this CRA
requirement, the FDIC will take appropriate action, including requiring
divestiture.
As discussed above, one comment on the FDIC's interim final rule
was that the agencies' rules should be uniform. Since the FDIC favors
uniformity in rules as much as possible among the banking agencies, we
considered whether the interim final rule's approach that required a
30-day advance notice process was the best way to implement section
46(a) or whether the OCC's self-certification process with a five-day
advance notice or the FRB's approach, which requires a 15-day advance
notice, would be preferable. After serious consideration of the
comments and a careful evaluation of all of these approaches, the FDIC
determined that conduct of as principal financial activities under
section 46(a) can be adequately evaluated during the normal supervisory
process. Thus, the final rule requires only that the bank file a
certification prior to acquiring control of, or an interest in, a
financial subsidiary that engages in section 46(a) financial activities
as principal. A certification must also be filed prior to commencing a
new as principal financial activity under section 46(a). The FDIC
believes that this streamlined process will relieve regulatory burden
and increase the predictability of regulatory compliance for insured
state nonmember banks without sacrificing safety or soundness.
In the future, the FDIC will evaluate any section 46(a) activity by
an insured state nonmember bank through the normal supervisory process.
The FDIC was asked to clarify the financial and operational
safeguards requirement in Sec. 362.18. The insured state nonmember bank
and the financial subsidiary must comply with the financial and
operational safeguards required by section 5136A(d) of the Revised
Statutes. In the preamble to the interim rule, the FDIC stated that the
OCC had not released any guidance or interpretations of these financial
and operational safeguards, and there are still no guidelines from the
OCC for the FDIC to evaluate. The FDIC has the authority to interpret
this section as it is made applicable to state nonmember banks and
their financial subsidiaries. Thus, the FDIC may relieve such banks and
subsidiaries from any financial or operational safeguards that may be
imposed by the OCC on national banks. The FDIC derives this authority
from its independent interpretative and supervisory authority over
state nonmember banks including the safety and soundness standards that
govern state nonmember banks. The final rule now expressly provides a
process for a state nonmember bank to seek such relief. Such
determinations will be made by the FDIC on a case-by-case basis as it
becomes aware of appropriate circumstances where the financial and
operational safeguards applicable to national bank financial
subsidiaries are not appropriate for state nonmember banks collectively
or individually.
Section 362.18(c) provides that the bank must comply with the
requirements of Sec. 362.18(a) at the time of filing its certification
and continue to comply with these requirements as long as the bank's
subsidiary is engaged in financial activities. Section 362.18(f) also
provides that the insured state nonmember bank and its insured
depository institution affiliates must continue to comply with the
requirements of Sec. 362.18(d), unless the FDIC has granted an
exception as set forth in Sec. 362.18(e). If a bank or any of its
insured depository institution affiliates fails to continue to meet the
applicable requirements, then the FDIC may limit the bank's financial
activities.
The FDIC believes that it has some discretion in this area since
section 46 does not prescribe in detail what the FDIC must do should an
insured state nonmember bank not be in compliance with the
requirements. Section 5136A and new section 4(m) of the BHCA prescribe
what the OCC and the FRB must do. In contrast, the statutory provisions
do not prescribe how the FDIC should treat any such deficiencies. As a
result, the FDIC will determine what is appropriate on a case-by-case
basis.
Section 362.18(g) addresses subsidiaries covered under section
46(b), permitting insured nonmember state banks to retain their
interests in subsidiaries lawfully held before the date of enactment of
the G-L-B Act. The FDIC received one comment requesting that the final
rule clearly state that any authorizations issued by the FDIC under
section 24 prior to the adoption of subpart A of part 362 is covered by
the grandfather provision. This clarification was made. Section
362.18(g)(1) provides that any insured state nonmember bank that began
conducting an activity with the FDIC's approval under section 24 before
such activity became subject to section 46(a) may continue to conduct
the activity in compliance with the conditions and restrictions of the
applicable section 24 order or regulation. In addition, any such state
nonmember bank may submit an application to the FDIC for modification
of any conditions the FDIC previously imposed in connection with such
approval or imposed by regulation in association with notice-type
approval for the activity. The FDIC interprets section 46 to invest the
FDIC with retained section 24 jurisdiction over these activities. The
FDIC draws this conclusion from two items in the G-L-B Act. First, the
grandfather language in section 46(b) clearly authorizes state banks to
retain pre-G-L-B Act subsidiaries and conduct pre-G-L-B Act activities
through them, without also requiring the subsidiary to conduct the
activity subject to conditions or restrictions in place as of the
effective
[[Page 1026]]
date of the G-L-B Act. Second, the reservation of authority language in
section 46(d) clearly states that the FDIC's authority to review
subsidiary activities under section 24 is not superseded by anything in
section 46.
As a separate matter, the FDIC has determined that the banks that
are grandfathered to hold equity securities under section 24(f) may
form new subsidiaries to engage in the grandfathered investment
activity. Under the grandfathered authority provided by section 24(f),
this activity is lawful for these banks at the bank level. As a result,
subsidiaries established under this authority are exempt from the
definition of financial subsidiary, as interpreted by both the FDIC and
the FRB. Accordingly, banks that are grandfathered to hold equity
securities under section 24(f) may form new subsidiaries to engage in
the grandfathered investment activity.
The FDIC also has amended its notice processing rules to be
consistent with part 303, subpart G to add references to the new
certifications and applications required by the final rule.
Part 337
Section 337.4 Securities Activities of Insured State Nonmember Banks:
Bank Transactions With Affiliated Securities Companies
On December 1, 1998, the FDIC proposed an amendment to subpart B
that would have added safety and soundness guidelines to govern an
insured state nonmember bank subsidiary which engages in the public
sale, distribution or underwriting of stocks, bonds, debentures, notes
or other securities activity that would be permissible for a subsidiary
of a national bank but not permissible for a national bank directly.\7\
These securities provisions were intended to address pending or
approved applications under regulations issued by the OCC which
permitted national banks to engage in certain activities through
subsidiaries, even though the activities were not permissible for the
national bank itself. Part 5 of the OCC's regulations governs operating
subsidiaries. Former Sec. 5.34(f), which confirmed that there could be
activities not permissible for a national bank itself that could be
conducted by an operating subsidiary, has been superseded and removed
from the OCC's regulations. (65 FR 12905 (March 10, 2000)). Because of
this change in the OCC's regulations and the fact that the G-L-B Act,
through section 5136A of the Revised Statutes and section 46(a) of the
FDI Act, established a new analytical framework, the FDIC will not be
pursuing these amendments to subpart B.
---------------------------------------------------------------------------
\7\ 63 FR 66339 (December 1, 1998).
---------------------------------------------------------------------------
The FDIC's proposal to amend subpart B also included a proposal to
consolidate the remaining provisions of the FDIC's securities
activities regulation found in Sec. 337.4 into subpart B. The FDIC
received two comments on this proposal, both of which expressed
approval of eliminating Sec. 337.4, and imposing less restrictive
standards than those currently found in Sec. 337.4. The FDIC has
decided to finalize its proposal to eliminate Sec. 337.4. Therefore,
the FDIC is removing and reserving Sec. 337.4.
Part 303
Section 303.120 Scope
Subpart G of part 303 contains the procedures for complying with
the notice and application requirements of part 362 including the
procedures for filing notices and applications described in subpart E
of part 362. Subpart E of part 362 allows a state nonmember bank to
file a notice and follow the FDIC's self-certification process if the
bank chooses to engage in activities pursuant to section 46(a) of the
FDI Act. The notice filing content and procedures in Sec. 303.121(b)
are unchanged for section 46(a) notices, but these notices will no
longer be processed under Sec. 303.122. In addition, Sec. 303.120
provides the procedures for filing an application for relief from
certain of the requirements contained in subpart E of part 362. These
applications will continue to be processed under Sec. 303.122(b).
Section 303.122 Processing
In paragraphs (a) and (b) of Sec. 303.122, references to certain
sections in part 362 have to be corrected because they were either
inadvertently omitted or need to be deleted as a result of substantive
changes to part 362. In Sec. 303.122(a), a reference to
Sec. 362.3(a)(2)(iii)(A)(2) was inadvertently omitted. The substantive
section, Sec. 362.3(a)(2)(iii)(A)(2) references the expedited
processing section. Thus, Sec. 362.3(a)(2)(iii)(A)(2) is being added to
the list of sections listed under Sec. 303.122(a). Also, in
Sec. 303.122(a), because the substantive Sec. 362.8(a)(2) is listed as
one of those sections but is being removed from part 362, it is being
removed from the list of sections listed under Sec. 303.122(a).
In Sec. 303.122(b), because Secs. 362.5(b)(2) and 362.8(a)(2) are
being removed from part 362, they also are being removed from the list
of sections subject to the standard processing section under
Sec. 303.122(b). In addition, the reference to Sec. 362.18(a) also will
be removed because notices filed under that section would no longer be
processed under Sec. 303.122.
The delegations contained in Sec. 303.123(b) are unchanged. This
section continues to permit the review of notices and any additional
supervisory follow-up to be handled at the regional offices.
Section 303.141 Filing Procedures
In paragraph (b)(1)(ii) of Sec. 303.141, the language ``of part
362'' has been added to enhance the clarity of the reference to
subparts C and D in that sentence.
Section 303.142 Processing
In paragraph (a) of Sec. 303.142, because Secs. 362.12(b)(2)(i) and
362.12(b)(4) are being removed from part 362, they also are being
removed from the list of sections subject to the expedited processing
section under Sec. 303.142(a). In paragraphs (a) and (b) of
Sec. 303.142, references to certain sections in part 362 have to be
corrected because they were incorrectly referenced. In paragraph (a) of
Sec. 303.142, the reference to Sec. 362.11(b)(2)(i) was removed because
it was inadvertently added. This change is consistent with
Sec. 362.11(b)(2)(i). In paragraph (b), the reference to
Sec. 362.11(a)(2) was incomplete and has been modified to add the
paragraph (ii) to correspond to the substantive section, and the
reference to Sec. 362.11(b)(2) was incomplete and has been modified to
add the paragraph (i) to correspond to the substantive section.
In paragraph (c) of Sec. 303.142, ``insured state savings
association'' has been replaced with ``insured savings association''
because some filings required under this section are made by federal
savings associations. This change is consistent with the substantive
section.
IV. Administrative Procedure Act
The FDIC will make this final rule effective immediately to permit
state nonmember banks to immediately take advantage of the streamlined
procedures and benefit from the regulatory burden relief that is found
in this final rule. The interim final rule was effective as of March
11, 2000 because the FDIC found that it was impracticable to review
public comments prior to the effective date of the interim final rule,
and that there was good cause to make the interim rule effective on
March 11, 2000, due to the fact that the rule set forth procedures to
implement statutory changes that became effective on March 11, 2000.
While the FDIC invited interested parties to comment on the rule at
that time, the FDIC determined it would amend the rule as appropriate
[[Page 1027]]
after reviewing the comments. In addition in December 1998, the FDIC
published a proposed amendment to part 362 on which the FDIC received
and reviewed comments (63 FR 66339). This proposed amendment has not
been the subject of final Board action. Accordingly, the FDIC reviewed
the comments applicable to activities conducted under the new section
46 of the FDI Act and considered technical changes to subparts A and B
with respect to activities conducted under section 24 of the FDI Act
and subparts C and D with respect to activities conducted under section
28 and section 18(m) of the FDI Act that were necessitated by the new
section 46. The FDIC finds that it may adopt an effective date that is
less than 30 days after the date of publication in the Federal Register
pursuant to the Administrative Procedure Act (5 U.S.C. 553(d)), because
this rule removes restrictions and regulatory burden. Therefore, the
regulation is effective upon publication. In addition, section 302 of
the Riegle Community Development and Regulatory Improvement Act of 1994
\8\ states that a final rule imposing new requirements must take effect
on the first day of a calendar quarter following its publication. This
rule does not impose new requirements; rather, depository institutions
will be allowed to commence new activities immediately with no waiting
period under the final rule. The FDIC finds that the final rule does
not impose new reporting, disclosure or other requirements on insured
depository institutions. Instead, this rule relieves burden and permits
banks to engage in new activities in a more expedited fashion than was
permitted under the interim rule. Thus, this final rule is effective
immediately upon publication.
---------------------------------------------------------------------------
\8\ 12 U.S.C. 4802.
---------------------------------------------------------------------------
V. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (PRA) (44
U.S.C. 3501 et seq.), the FDIC may not conduct or sponsor, and a person
is not required to respond to, a collection of information unless it
displays a currently valid Office of Management and Budget (OMB)
control number. No comments were received explicitly about PRA issues
in response to the interim final rule. The collection of information
contained in this rule was submitted to OMB for review and approval in
accordance with the PRA and has been approved under OMB control number
3064-0111, which expires on May 31, 2003. The FDIC continues to welcome
comments about any of its collections of information. Please send
comments to: Steven F. Hanft, Assistant Executive Secretary, Office of
the Executive Secretary, Federal Deposit Insurance Corporation, 550
17th Street, N.W., Washington, DC.
VI. Regulatory Flexibility Act Analysis
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
FDIC certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. The
incidences in which insured state nonmember banks will be required to
file a certification under the rule with respect to activities under
the new section 46 of the FDI Act will be infrequent and will not
require significant time to complete. Furthermore, the final rule
streamlines requirements for insured state nonmember banks. It
simplifies the requirements that apply when insured state nonmember
banks conduct certain activities through subsidiaries. Whenever
possible, the final rule clarifies the expectations of the FDIC when it
requires filings to consent to activities by insured state banks. The
final rule also will make it easier for smaller insured state nonmember
banks to locate the rules that apply to their activities.
VII. Assessment of Impact of Federal Regulation on Families
The FDIC has determined that this regulation will not affect family
well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, enacted as part of the
Omnibus Consolidated and Emergency Supplemental Appropriations Act,
1999 (Pub. L. 105-277, 112 Stat. 2681).
VIII. Congressional Review Act
The OMB has determined that this final rule is not a ``major rule''
within the meaning of the Congressional Review Act (5 U.S.C. 801 et
seq.). The FDIC will file the appropriate reports with Congress and the
General Accounting Office so that this final rule can be reviewed.
List of Subjects
12 CFR Part 303
Administrative practice and procedure, Authority delegations
(Government agencies), Banks, banking, Bank deposit insurance,
Reporting and recordkeeping requirements, Savings associations.
12 CFR Part 337
Banks, banking, Reporting and recordkeeping requirements, Savings
associations, Securities.
12 CFR Part 362
Administrative practice and procedure, Authority delegations
(Government agencies), Bank deposit insurance, Banks, banking, Insured
depository institutions, Investments, Reporting and recordkeeping
requirements, Savings associations.
For the reasons set forth above and under the authority of 12
U.S.C. 1819(a)(Tenth), the interim final rule amending 12 CFR parts 303
and 362 which was published at 65 FR 15526 on March 23, 2000 is adopted
as a final rule with changes and 12 CFR parts 303, 362, and 337 are
amended to read as follows:
PART 303--FILING PROCEDURES AND DELEGATIONS OF AUTHORITY
1. The authority citation for part 303 continues to read as
follows:
Authority: 12 U.S.C. 378, 1813, 1815, 1816, 1817, 1818, 1819
(Seventh and Tenth), 1820, 1823, 1828, 1828a, 1831a, 1831e, 1831o,
1831p-1, 1831w, 1835a, 1843(l), 3104, 3105, 3108; 3207; 15 U.S.C.
1601-1607.
2. Section 303.120 is revised to read as follows:
Sec. 303.120 Scope.
This subpart sets forth procedures for complying with notice and
application requirements contained in subpart A of part 362 of this
chapter, governing insured state banks and their subsidiaries engaging
in activities which are not permissible for national banks and their
subsidiaries. This subpart sets forth procedures for complying with
notice and application requirements contained in subpart B of part 362
of this chapter, governing certain activities of insured state
nonmember banks, their subsidiaries, and certain affiliates. This
subpart also sets forth procedures for filing the notices and
applications described in subpart E of part 362 of this chapter,
governing subsidiaries of insured state nonmember banks engaging in
financial activities.
3. In Sec. 303.122, the first sentence of paragraph (a) and the
first sentence of paragraph (b) are revised to read as follows:
Sec. 303.122 Processing.
(a) Expedited processing. A notice filed by an insured state bank
seeking to commence or continue an activity under
Sec. 362.3(a)(2)(iii)(A)(2), Sec. 362.4(b)(3)(i), or Sec. 362.4(b)(5)
of this chapter will be acknowledged in writing by the FDIC
[[Page 1028]]
and will receive expedited processing, unless the applicant is notified
in writing to the contrary and provided a basis for that decision. * *
*
(b) Standard processing for applications and notices that have been
removed from expedited processing. For an application filed by an
insured state bank seeking to commence or continue an activity under
Sec. 362.3(a)(2)(iii)(A)(2), Sec. 362.3(b)(2)(i),
Sec. 362.3(b)(2)(ii)(A), Sec. 362.3(b)(2)(ii)(C), Sec. 362.4(b)(1),
Sec. 362.4(b)(2), Sec. 362.4(b)(4), Sec. 362.8(b), or seeking a waiver
or modification under Sec. 362.18(e) or Sec. 362.18(g)(3) of this
chapter, or for notices which are not processed pursuant to the
expedited processing procedures, the FDIC will provide the insured bank
with written notification of the final action as soon as the decision
is rendered. * * *
4. In Sec. 303.141, paragraph (b)(1)(ii) is revised to read as
follows:
Sec. 303.141 Filing procedures.
* * * * *
(b) * * *
(1) * * *
(ii) The amount of the association's existing or proposed direct or
indirect investment in the activity as well as calculations sufficient
to indicate compliance with any specific capital ratio or investment
percentage limitation detailed in subpart C or D of part 362 of this
chapter;
* * * * *
5. In Sec. 303.142, the first sentence of paragraph (a), the first
sentence of paragraph (b), and the first sentence of paragraph (c) are
revised to read as follows:
Sec. 303.142 Processing.
(a) Expedited processing. A notice filed by an insured state
savings association seeking to commence or continue an activity under
Sec. 362.11(b)(2)(ii) of this chapter will be acknowledged in writing
by the FDIC and will receive expedited processing, unless the applicant
is notified in writing to the contrary and provided a basis for that
decision. * * *
(b) Standard processing for applications and notices that have been
removed from expedited processing. For an application filed by an
insured state savings association seeking to commence or continue an
activity under Sec. 362.11(a)(2)(ii), Sec. 362.11(b)(2)(i), or
Sec. 362.12(b)(1) of this chapter or for notices which are not
processed pursuant to the expedited processing procedures, the FDIC
will provide the insured state savings association with written
notification of the final action as soon as the decision is rendered. *
* *
(c) Notices of activities in excess of an amount permissible for a
federal savings association; subsidiary notices. Receipt of a notice
filed by an insured savings association as required by
Sec. 362.11(b)(3) or Sec. 362.15 of this chapter will be acknowledged
in writing by the appropriate regional director (DOS). * * *
PART 337--UNSAFE AND UNSOUND BANKING PRACTICES
6. The authority citation for part 337 continues to read as
follows:
Authority: 12 U.S.C. 375a(4), 375b, 1816, 1818(a), 1818(b),
1819, 1820(d)(10), 1821(f), 1828(j)(2), 1831, 1831f-1.
Sec. 337.4 [Removed and Reserved]
7. Section 337.4 is removed and reserved.
PART 362--ACTIVITIES OF INSURED STATE BANKS AND INSURED SAVINGS
ASSOCIATIONS
8. The authority citation for part 362 is revised to read as
follows:
Authority: 12 U.S.C. 1816, 1818, 1819(a)(Tenth), 1828(j),
1828(m), 1828a, 1831a, 1831e, 1831w, 1843(l).
9. In Sec. 362.1, paragraph (c) is revised to read as follows:
Sec. 362.1 Purpose and scope.
* * * * *
(c) A subsidiary of an insured state bank may not engage in real
estate investment activities that are not permissible for a subsidiary
of a national bank unless the bank does so through a subsidiary of
which the bank is a majority owner, is in compliance with applicable
capital standards, and the FDIC has determined that the activity poses
no significant risk to the appropriate deposit insurance fund. This
subpart provides standards for majority-owned subsidiaries of insured
state banks engaging in real estate investment activities that are not
permissible for a subsidiary of a national bank.
* * * * *
10. In Sec. 362.2, paragraph (r) is revised to read as follows:
Sec. 362.2 Definitions.
* * * * *
(r) Subsidiary means any company that is owned or controlled
directly or indirectly by one or more insured depository institutions.
* * * * *
11. In Sec. 362.4, paragraphs (b)(5)(ii) introductory text and
(c)(2)(vi) are revised to read as follows:
Sec. 362.4 Subsidiaries of insured State banks.
* * * * *
(b) * * *
(5) * * *
(ii) Securities activities. Engage in the public sale, distribution
or underwriting of securities that are not permissible for a national
bank under section 16 of the Banking Act of 1933 (12 U.S.C. 24
Seventh), provided that the insured state nonmember bank lawfully
controlled or acquired the subsidiary and had an approved notice or
order from the FDIC prior to November 12, 1999 and provided that the
following additional conditions are, and continue to be, met:
* * * * *
(c) * * *
(2) * * *
(vi) Has a majority of its board of directors who are neither
directors nor executive officers of the state-chartered depository
institution;
* * * * *
Sec. 362.5 [Amended]
13. In Sec. 362.5, paragraphs (b)(1), (b)(2), and (b)(3) are
removed and reserved.
14. Section 362.6 is revised to read as follows:
Sec. 362.6 Purpose and scope.
This subpart, along with the notice and application procedures in
subpart G of part 303 of this chapter apply to certain banking
practices that may have adverse effects on the safety and soundness of
insured state nonmember banks. This subpart contains the required
prudential separations between certain securities underwriting
affiliates and insured state nonmember banks. The standards only will
apply to affiliates of insured state nonmember banks that are not
controlled by an entity that is supervised by a federal banking agency.
15. In Sec. 362.7, paragraphs (a) and (b) are revised to read as
follows:
Sec. 362.7 Definitions.
(a) Affiliate has the same meaning contained in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).
(b) Activity, company, control, equity security, insured state
nonmember bank, security and subsidiary have the same meaning as
provided in subpart A of this part.
16. Section 362.8 is revised to read as follows:
[[Page 1029]]
Sec. 362.8 Restrictions on activities of insured state nonmember banks
affiliated with certain securities companies.
(a) The FDIC has found that an unrestricted affiliation between an
insured state nonmember bank and certain companies may have adverse
effects on the safety and soundness of insured state nonmember banks.
(b) An insured state nonmember bank is prohibited from becoming or
remaining affiliated with any securities underwriting affiliate company
that directly engages in the public sale, distribution or underwriting
of stocks, bonds, debentures, notes, or other securities activity, of a
type not permissible for a national bank directly, unless the company
is controlled by an entity that is supervised by a federal banking
agency or the state nonmember bank submits an application in compliance
with Sec. 303.121 of this chapter and the FDIC grants its consent under
the procedure in Sec. 303.122(b) of this chapter, or the state
nonmember bank and the securities underwriting affiliate company comply
with the following requirements:
(1) The securities business of the affiliate is physically separate
and distinct in its operations from the operations of the bank,
provided that this requirement shall not be construed to prohibit the
bank and its affiliate from sharing the same facility if the area where
the affiliate conducts retail sales activity with the public is
physically distinct from the routine deposit taking area of the bank;
(2) The affiliate conducts business pursuant to independent
policies and procedures designed to inform customers and prospective
customers of the affiliate that the affiliate is a separate
organization from the bank and the state-chartered depository
institution is not responsible for and does not guarantee the
obligations of the affiliate;
(3) The bank adopts policies and procedures, including appropriate
limits on exposure, to govern its participation in financing
transactions underwritten by an underwriting affiliate;
(4) The bank does not express an opinion on the value or the
advisability of the purchase or sale of securities underwritten or
dealt in by an affiliate unless it notifies the customer that the
entity underwriting, making a market, distributing or dealing in the
securities is an affiliate of the bank; and
(5) The bank complies with the investment and transaction
limitations in sections 23A and 23B of the Federal Reserve Act (12
U.S.C. 371c and 371c-1) with respect to the affiliate.
17. In Sec. 362.10, paragraph (a) is revised to read as follows:
Sec. 362.10 Definitions.
* * * * *
(a) Affiliate has the same meaning as provided in subpart B of this
part.
* * * * *
18. In Sec. 362.12, paragraphs (b)(2)(i) and (b)(4) are removed and
reserved, the paragraph (c) heading ``Investments and transaction
limits.'' is italicized, and paragraph (b)(1) is amended by adding a
new sentence at the end to read as follows:
Sec. 362.12 Service corporations of insured State savings
associations.
* * * * *
(b) * * *
(1) * * * The activities covered by this paragraph may include, but
are not limited to, acquiring and retaining equity securities of a
company engaged in the public sale distribution or underwriting of
securities.
* * * * *
19. Subpart E is revised to read as follows:
Subpart E--Financial Subsidiaries of Insured State Nonmember Banks
Sec.
362.16 Purpose and scope.
362.17 Definitions.
362.18 Financial subsidiaries of insured state nonmember banks.
Subpart E--Financial Subsidiaries of Insured State Nonmember Banks
Sec. 362.16 Purpose and scope.
(a) This subpart, along with the notice and application procedures
in subpart G of part 303 of this chapter, implements section 46 of the
Federal Deposit Insurance Act (12 U.S.C. 1831w) and requires that an
insured state nonmember bank certify certain facts and file a notice
with the FDIC before the insured state nonmember bank may control or
hold an interest in a financial subsidiary under section 46(a) of the
Federal Deposit Insurance Act. This subpart also implements the
statutory Community Reinvestment Act (CRA) (12 U.S.C. 2901 et seq.)
requirement set forth in subsection (4)(l)(2) of the Bank Holding
Company Act (12 U.S.C. 1843(l)(2)), which is applicable to state
nonmember banks that commence new activities through a financial
subsidiary or directly or indirectly acquire control of a company
engaged in an activity under section 46(a).
(b) This subpart does not cover activities conducted other than
``as principal''. For purposes of this subpart, activities conducted
other than ``as principal'' are defined as activities conducted as
agent for a customer, conducted in a brokerage, custodial, advisory, or
administrative capacity, or conducted as trustee, or in any
substantially similar capacity. For example, this subpart does not
cover acting solely as agent for the sale of insurance, securities,
real estate, or travel services; nor does it cover acting as trustee,
providing personal financial planning advice, or safekeeping services.
Sec. 362.17 Definitions.
For the purposes of this subpart, the following definitions will
apply:
(a) Activity, company, control, insured depository institution,
insured state bank, insured state nonmember bank and subsidiary have
the same meaning as provided in subpart A of this part.
(b) Affiliate has the same meaning provided in subpart B of this
part.
(c) Financial subsidiary means any company that is controlled by
one or more insured depository institutions other than:
(1) A subsidiary that only engages in activities that the state
nonmember bank is permitted to engage in directly and that are
conducted on the same terms and conditions that govern the conduct of
the activities by the state nonmember bank; or
(2) A subsidiary that the state nonmember bank is specifically
authorized to control by the express terms of a federal statute (other
than section 46(a) of the Federal Deposit Insurance Act (12 U.S.C.
1831w)), and not by implication or interpretation, such as the Bank
Service Company Act (12 U.S.C. 1861 et seq.).
(d) Tangible equity and Tier 2 capital have the same meaning as set
forth in part 325 of this chapter.
(e) Well-managed means:
(1) Unless otherwise determined in writing by the appropriate
federal banking agency, the institution has received a composite rating
of 1 or 2 under the Uniform Financial Institutions Rating System (or an
equivalent rating under an equivalent rating system) in connection with
the most recent state or federal examination or subsequent review of
the depository institution and at least a rating of 2 for management,
if such a rating is given; or
(2) In the case of any depository institution that has not been
examined by its appropriate federal banking agency, the existence and
use of managerial resources that the appropriate federal banking agency
determines are satisfactory.
Sec. 362.18 Financial subsidiaries of insured state nonmember banks.
(a) ``As principal'' activities. An insured state nonmember bank
may not
[[Page 1030]]
obtain control of or hold an interest in a financial subsidiary that
engages in activities as principal or commence any such new activity
pursuant to section 46(a) of the Federal Deposit Insurance Act (12
U.S.C. 1831w) unless the insured state nonmember bank files a notice
containing the information required in Sec. 303.121(b) of this chapter
and certifies that:
(1) The insured state nonmember bank is well-managed;
(2) The insured state nonmember bank and all of its insured
depository institution affiliates are well-capitalized as defined in
the appropriate capital regulation and guidance of each institution's
primary federal regulator; and
(3) The insured state nonmember bank will deduct the aggregate
amount of its outstanding equity investment, including retained
earnings, in all financial subsidiaries that engage in activities as
principal pursuant to section 46(a) of the Federal Deposit Insurance
Act (12 U.S.C. 1831w), from the bank's total assets and tangible equity
and deduct such investment from its total risk-based capital (this
deduction shall be made equally from Tier 1 and Tier 2 capital).
(b) Community Reinvestment Act (CRA). An insured state nonmember
bank may not commence any new activity subject to section 46(a) of the
Federal Deposit Insurance Act (12 U.S.C. 1831w) or directly or
indirectly acquire control of a company engaged in any such activity
pursuant to Sec. 362.18(a)(1), if the bank or any of its insured
depository institution affiliates received a CRA rating of less than
``satisfactory record of meeting community credit needs'' in its most
recent CRA examination.
(c) Other requirements. An insured state nonmember bank controlling
or holding an interest in a financial subsidiary under section 46(a) of
the Federal Deposit Insurance Act (12 U.S.C. 1831w) must meet and
continue to meet the requirements set forth in paragraph (a) of this
section as long as the insured state nonmember bank holds the financial
subsidiary and:
(1) Disclose and continue to disclose the capital separation
required in paragraph (a)(3) in any published financial statements;
(2) Comply and continue to comply with sections 23A and 23B of the
Federal Reserve Act (12 U.S.C. 371c and 371c-1) as if the subsidiary
were a financial subsidiary of a national bank; and
(3) Comply and continue to comply with the financial and
operational standards provided by section 5136A(d) of the Revised
Statutes of the United States (12 U.S.C. 24A(d)), unless otherwise
determined by the FDIC.
(d) Securities underwriting. If the financial subsidiary of the
insured state nonmember bank will engage in the public sale,
distribution or underwriting of stocks, bonds, debentures, notes, or
other securities activity of a type permissible for a national bank
only through a financial subsidiary, then the state nonmember bank and
the financial subsidiary also must comply and continue to comply with
the following additional requirements:
(1) The securities business of the financial subsidiary must be
physically separate and distinct in its operations from the operations
of the bank, provided that this requirement shall not be construed to
prohibit the bank and its financial subsidiary from sharing the same
facility if the area where the financial subsidiary conducts securities
business with the public is physically distinct from the routine
deposit taking area of the bank;
(2) The financial subsidiary must conduct its securities business
pursuant to independent policies and procedures designed to inform
customers and prospective customers of the financial subsidiary that
the financial subsidiary is a separate organization from the insured
state nonmember bank and that the insured state nonmember bank is not
responsible for and does not guarantee the obligations of the financial
subsidiary;
(3) The bank must adopt policies and procedures, including
appropriate limits on exposure, to govern its participation in
financing transactions underwritten by its financial subsidiary; and
(4) The bank must not express an opinion on the value or the
advisability of the purchase or sale of securities underwritten or
dealt in by its financial subsidiary unless the bank notifies the
customer that the entity underwriting, making a market, distributing or
dealing in the securities is a financial subsidiary of the bank.
(e) Applications for exceptions to certain requirements. Any
insured state nonmember bank that is unable to comply with the well-
managed requirement of Sec. 362.18(a)(1) and (c)(1), any state
nonmember bank that has appropriate reasons for not meeting the
financial and operational standards applicable to a financial
subsidiary of a national bank conducting the same activities as
provided in Sec. 362.18(c)(3) or any state nonmember bank and its
financial subsidiary subject to the securities underwriting activities
requirements in Sec. 362.18(d) that is unable to meet such requirements
may submit an application in compliance with Sec. 303.121 of this
chapter to seek a waiver or modification of such requirements under the
procedure in Sec. 303.122(b) of this chapter. The FDIC may impose
additional prudential safeguards as are necessary as a condition of its
consent.
(f) Failure to meet requirements. (1) Notification by FDIC. The
FDIC will notify the insured state nonmember bank in writing and
identify the areas of noncompliance, if:
(i) The FDIC finds that an insured state nonmember bank or any of
its insured depository institution affiliates is not in compliance with
the CRA requirement of Sec. 362.18(b) at the time any new activity is
commenced or control of the financial subsidiary is acquired;
(ii) The FDIC finds that the facts to which an insured state
nonmember bank certified under Sec. 362.18(a) are not accurate in whole
or in part; or
(iii) The FDIC finds that the insured state nonmember bank or any
of its insured depository institution affiliates or the financial
subsidiary fails to meet or continue to comply with the requirements of
Sec. 362.18(c) and (d), if applicable, and the FDIC has not granted an
exception under the procedures set forth in Sec. 362.18(e) and in
Sec. 303.122(b) of this chapter.
(2) Notification by state nonmember bank. An insured state
nonmember bank that controls or holds an interest in a financial
subsidiary must promptly notify the FDIC if the bank becomes aware that
any depository institution affiliate of the bank has ceased to be well-
capitalized.
(3) Subsequent action by FDIC. The FDIC may take any appropriate
action or impose any limitations, including requiring that the insured
state nonmember bank to divest control of any such financial
subsidiary, on the conduct or activities of the insured state nonmember
bank or any financial subsidiary of the insured state bank that fails
to:
(i) Meet the requirements listed in Sec. 362.18(a) and (b) at the
time that any new section 46 activity is commenced or control of a
financial subsidiary is acquired by an insured state nonmember bank; or
(ii) Meet and continue to meet the requirements listed in
Sec. 362.18(c) and (d), as applicable.
(g) Coordination with section 24 of the Federal Deposit Insurance
Act. (1) Continuing authority under section 24. Notwithstanding
Sec. 362.18(a) through (f), an insured state bank may retain its
interest in any subsidiary:
[[Page 1031]]
(i) That was conducting a financial activity with authorization in
accordance with section 24 of the Federal Deposit Insurance Act (12
U.S.C. 1831a) and the applicable implementing regulation found in
subpart A of this part 362 before the date on which any such activity
became for the first time permissible for a financial subsidiary of a
national bank; and
(ii) Which insured state nonmember bank and its subsidiary continue
to meet the conditions and restrictions of the section 24 order or
regulation approving the activity as well as other applicable law.
(2) Continuing authority under section 24(f) of the Federal Deposit
Insurance Act. Notwithstanding Sec. 362.18(a) through (f), an insured
state bank with authority under section 24(f) of the Federal Deposit
Insurance Act (12 U.S.C. 1831a(f)) to hold equity securities may
continue to establish new subsidiaries to engage in that investment
activity.
(3) Relief from conditions. Any state nonmember bank that meets the
requirements of paragraph (g)(1) of this section or that is subject to
section 46(b) of the Federal Deposit Insurance Act (12 U.S.C. 1831w(b))
may submit an application in compliance with Sec. 303.121 of this
chapter and seek the consent of the FDIC under the procedure in
Sec. 303.122(b) of this chapter for modification of any conditions or
restrictions the FDIC previously imposed in connection with a section
24 order or regulation approving the activity.
(4) New financial subsidiaries. Notwithstanding subpart A of this
part 362, an insured state bank may not, on or after November 12, 1999,
acquire control of, or acquire an interest in, a financial subsidiary
that engages in activities as principal or commences any new activity
under section 46(a) of the Federal Deposit Insurance Act (12 U.S.C.
1831w) other than as provided in this section.
By order of the Board of Directors.
Dated at Washington, D.C. this 21st day of December, 2000.
Federal Deposit Insurance Corporation.
James D. LaPierre,
Deputy Executive Secretary.
[FR Doc. 01-175 Filed 1-4-01; 8:45 am]
BILLING CODE 6714-14-P