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Document Sample
Friday,
May 19, 2000
Part II
Department of the
Treasury
Office of the Comptroller of the
Currency
Office of the Thrift Supervision
Federal Reserve System
Federal Deposit
Insurance Corporation
12 CFR Parts 35, 207, 346, 533
Disclosure and Reporting of CRA-Related
Agreements; Proposed Rule
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31962 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
DEPARTMENT OF THE TREASURY The rule also describes how the parties concerning this option may be found
to a covered agreement must make the below at the ‘‘FDIC’s Electronic Public
Office of the Comptroller of the agreement available to the public and Comment Site.’’ Comments also may be
Currency the appropriate agencies and explains mailed electronically to
the type of information that must be comments@fdic.gov.
12 CFR Part 35 included in the annual report filed by a OTS: Send comments to Manager,
party to a covered agreement. Dissemination Branch, Information
[Docket No. 00–11]
The agencies solicit comments on all Management & Services Division, Office
RIN 1557–AB85 aspects of the proposed rule, including of Thrift Supervision, 1700 G Street,
the specific areas discussed below. The NW, Washington, DC 20552, Attention
FEDERAL RESERVE SYSTEM agencies will issue a final rule after Docket No. 2000–44. Hand deliver
considering comments received. comments to Public Reference Room,
12 CFR Part 207 DATES: Comments must be received on 1700 G Street, NW, lower level, from 9
or before July 21, 2000. a.m. to 5 p.m. on business days. Send
[Regulation G; Docket No. R–1069]
ADDRESSES: facsimile transmissions to FAX number
FEDERAL DEPOSIT INSURANCE OCC: Comments should be addressed (202) 906–7755 or (202) 906–6959 (if the
CORPORATION to Communications Division, Office of comment is over 25 pages). Send e-mails
the Comptroller of the Currency, 250 E to public.info@ots.treas.gov and include
12 CFR Part 346 Street, SW, Third floor, Washington, DC your name and telephone number.
20219, Attention: Docket No. 00–11. In Interested persons may inspect
RIN 3064–AC33
addition, comments may be sent by comments at 1700 G Street, NW, from
facsimile transmission to fax number 10 a.m. until 4 p.m. on Tuesdays and
DEPARTMENT OF THE TREASURY Thursdays.
(202) 874–5274 or by Internet mail to
Office of Thrift Supervision regs.comments@occ.treas.gov. FOR FURTHER INFORMATION CONTACT:
Comments will be available for public OCC: Michael S. Bylsma, Director,
12 CFR Part 533 inspection and photocopying at the Community and Consumer Law (202)
same location. 874–5750; or Karen O. Solomon,
[Docket No. 2000–44] Board: Comments directed to the Director, Legislative and Regulatory
Board should refer to Docket No. R– Activities (202) 874–5090.
RIN 1550–AB32 1069 and may be mailed to Ms. Jennifer Board: Scott G. Alvarez, Associate
Disclosure and Reporting of CRA- J. Johnson, Secretary, Board of General Counsel (202) 452–3583, Kieran
Related Agreements Governors of the Federal Reserve J. Fallon, Senior Counsel (202) 452–
System, 20th and C Streets, NW, 5270, or Andrew Miller, Senior
AGENCIES: Office of the Comptroller of Washington, DC 20551 or mailed Attorney (202) 452–3428, Legal
the Currency (OCC); Board of Governors electronically to Division; Glenn E. Loney, Deputy
of the Federal Reserve System (Board); regs.comments@federalreserve.gov. Director (202) 452–3585, or James H.
Federal Deposit Insurance Corporation Comments addressed to Ms. Johnson Mann, Attorney (202) 452–3667,
(FDIC); Office of Thrift Supervision also may be delivered to the Board’s Division of Consumer and Community
(OTS). mailroom between 8:45 a.m. and 5:15 Affairs; Board of Governors of the
ACTION: Joint notice of proposed p.m. and, outside those hours, to the Federal Reserve System, 20th Street and
rulemaking. security control room. Both the Constitution Avenue, NW, Washington,
mailroom and the security control room DC 20551. For users of
SUMMARY: The OCC, Board, FDIC, and are accessible from the Eccles Building Telecommunications Device for the Deaf
OTS (collectively, the agencies) are courtyard entrance, located on 20th (‘‘TDD’’) only, contact Janice Simms at
requesting comment on a proposed rule Street between Constitution Avenue and (202) 452–4984.
that implements provisions of the C Street, NW. Members of the public FDIC: Deanna S. Caldwell,
recently enacted Gramm-Leach-Bliley may inspect comments in room MP–500 Community Affairs Officer (202) 736–
Act (the GLB Act or the Act). These of the Martin Building between 9:00 0141; A. Ann Johnson, Counsel,
provisions require nongovernmental a.m. and 5 p.m. on weekdays. Regulation and Legislation Section (202)
entities or persons, insured depository FDIC: Written comments should be 898–3573; or Joan M. Bateman, Review
institutions, and affiliates of insured addressed to Robert E. Feldman, Examiner (202) 736–0187.
depository institutions that are parties Executive Secretary, Attention: OTS: Richard Bennett, Counsel
to certain agreements that are in Comments/OES, Federal Deposit (Banking and Finance), (202) 906–7409;
fulfillment of the Community Insurance Corporation, 550 17th Street, Karen Osterloh, Assistant Chief
Reinvestment Act of 1977 to make the NW, Washington, DC 20429. Comments Counsel, (202) 906–6639; or Richard R.
agreements available to the public and may be hand delivered to the guard Riese, Director, Compliance Policy,
the appropriate agency and file annual station at the rear of the 550 17th Street (202) 906–6134, Office of Thrift
reports concerning the agreements with Building (located on F Street) on Supervision, 1700 G Street, NW,
the appropriate agency. These business days between 7 a.m. and 5 p.m. Washington, DC 20552.
provisions are contained in section 711 (Fax number: (202) 898–3838). SUPPLEMENTARY INFORMATION:
of the Act and are codified as section 48 Comments may be inspected and
of the Federal Deposit Insurance Act photocopied in the FDIC Public I. Executive Summary of Proposed Rule
(FDI Act). Information Center, Room 100, 801 17th Section 711 of the GLB Act (Pub. L.
The rule identifies the types of Street, NW, Washington, DC, between 9 106–102, 113 Stat. 1338 (1999)) added a
written agreements that are covered by a.m. and 4:30 p.m. on business days. new section 48 to the FDI Act (12 U.S.C.
section 711 of the GLB Act (referred to Comments may be submitted 1831y) entitled ‘‘CRA Sunshine
as covered agreements) and defines electronically over the Internet at Requirements.’’ Section 711 applies to
many of the terms used in the statute. www.fdic.gov. Further information written agreements that (1) are made in
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31963
fulfillment of the Community performance, providing community agreements entered into after November
Reinvestment Act of 1977 (CRA),1 (2) development services, making CRA 12, 1999. Section 711 also requires that
involve funds or other resources of an qualified investments, fulfilling a CRA the agencies’ rules for ensuring
insured depository institution or strategic plan, providing retail banking compliance with the Act’s requirements
affiliate with an aggregate value of more services as described in the CRA not impose undue burden on the
than $10,000 in a year, or loans with an Regulations, and providing or refraining parties. Accordingly, the rule proposes
aggregate principal value of more than from providing comments or testimony to require disclosure of covered
$50,000 in a year, and (3) are entered to an agency concerning the CRA agreements and to define the scope of
into by an insured depository institution performance of an insured depository annual reports in a manner that fulfills
or affiliate of an insured depository institution. the requirements of section 711 while at
institution and a nongovernmental The GLB Act exempts specific types the same time adopting simple
entity or person. Section 711 does not, of agreements from coverage, even if procedures that reduce duplicative
however, cover any agreement with a these agreements would otherwise meet reporting and rely on existing reports
nongovernmental entity or person that the definition of a covered agreement. In prepared by the parties for their own
has not had a CRA contact with the particular, the Act and the proposed use or to fulfill other requirements.
insured depository institution or rule do not apply to any individual The rule proposes that each party to
affiliate or a banking agency, such as mortgage loan. The Act and proposed a covered agreement be allowed to
agreements entered into by entities or rule also do not apply to any specific fulfill the public disclosure requirement
persons that solicit charitable contract or commitment for any type of of section 711 by making the agreement
contributions or other funds without loan or extension of credit to available to any member of the public
regard to the CRA. Under section 711, individuals, businesses, farms or other on request, and allows each party to
the parties to a covered agreement must entities if the funds are loaned at rates recover reasonable copying and mailing
make the agreement available to the that are not substantially below market costs in responding to these requests.
public and the appropriate agency. The rates and the purpose of the loan or An insured depository institution may
parties also must file a report annually extension of credit does not include any fulfill its public disclosure obligation by
with the appropriate agency concerning re-lending of the borrowed funds to placing a copy of the agreement in the
the disbursement, receipt and use of third parties. institution’s CRA public file and making
funds or other resources under the In addition, as noted above, the Act it available in the same manner as other
agreement. exempts from coverage any agreement information in the CRA public file.
The proposed rule defines various with a nongovernmental entity or The proposed rule also requires that
terms necessary for determining which person that has not commented on, each insured depository institution or
agreements are covered agreements and testified about, or discussed with the affiliate that enters into a covered
provides guidance for determining insured depository institution, or agreement file a complete copy of the
when a CRA contact has been made for otherwise contacted the institution, agreement with the appropriate agency
purposes of identifying the parties concerning the CRA. The proposed rule within 30 days of entering into the
whose agreements are covered by the adopts the exemption as written in the agreement. To avoid duplication of
rule. The proposed rule also describes statute and includes several examples of efforts and reduce burden, the rule
the manner and scope of the Act’s contacts that would be exempt under would allow a nongovernmental entity
disclosure and annual reporting this provision as well as contacts that or person to fulfill its obligation to make
requirements. would not qualify for this exemption. a covered agreement available to the
Section 711 and the proposed rule An example of a contact that would appropriate agency by providing a copy
apply only to agreements that are in qualify for this exemption is the to the agency upon the agency’s request.
dissemination of a similar fundraising In addition to making covered
writing. To be covered, a written
letter to insured depository institutions agreements available, the GLB Act
agreement may be an understanding or
and other businesses in the community requires that annual reports be filed
agreement and need not be a legally
encouraging all businesses in the regarding resources provided and used
binding contract.
Importantly, section 711 applies only community to meet their obligation to under the agreement. These annual
to written agreements that are ‘‘made assist in making the community a better reporting obligations apply only to
pursuant to, or in connection with, the place to live and work. A CRA contact covered agreements entered into on or
fulfillment of the Community would be made, and a related agreement after May 12, 2000. For
would not be exempt under this nongovernmental entities or persons,
Reinvestment Act.’’ Section 711 defines
provision, if the entity or person had, the type of information required to be
‘‘fulfillment’’ of the CRA as a ‘‘list of
for example, submitted comments to an included in an annual report depends
factors’’ that the appropriate agency
agency concerning the CRA on how the entity or person used the
determines have a material impact on
performance of the insured depository funds or resources received under the
the agency’s decision to approve or
institution, contacted the institution or covered agreement. If a
disapprove an application for a deposit
any affiliate about providing (or nongovernmental entity or person
facility under the CRA or to assign a
refraining from providing) CRA-related allocates and uses the funds or
CRA examination rating. The agencies
comments to an agency concerning the resources received under a covered
propose to adopt for this purpose the
institution, or contacted the institution agreement for a specific purpose, the
list of factors identified by the agencies
or any affiliate about the CRA person’s annual report would have to
in the CRA regulations jointly issued by
performance of the institution. provide a description of the specific
the agencies (CRA Regulations).2 These
The GLB Act requires those purpose and state the amount used for
factors include providing the types of agreements that are covered by section the specific purpose. If the entity or
loans considered in evaluating CRA 711, and that are not exempt, to be made person uses the funds or resources
1 12
available to the public and the received under the covered agreement
U.S.C. 2901 et seq.
2 See12 CFR 25.21–25.29 (OCC); 12 CFR 228.21–
appropriate agency. Section 711 for other or general purposes (e.g.,
228.29 (Board); 12 CFR 345.21–345.29 (FDIC); 12 provides that these disclosure general operating expenses), the rule
CFR 563e.21–563e.29 (OTS). obligations apply only to covered proposes that the annual report provide
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31964 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
the detailed, itemized list described in depository institution and affiliate are an annual report for any covered
section 711 of how such funds were parties to the same covered agreement, agreement entered into on or after May
used during the year. This list involves the institution and affiliate may file a 12, 2000, in accordance with the
disclosure of the total amount of consolidated annual report for the requirements of the final rule. The
resources used by the person or entity agreement. agencies request comment on how the
for compensation of officers, directors, Section 711 does not authorize any parties to covered agreements entered
and employees; administrative agency to enforce the provisions of any into after these dates, but before
expenses; travel expenses; covered agreement, and the proposed issuance of the final rule, should be
entertainment expenses; consulting and rule adopts this provision. The GLB Act, required to comply with the
professional fees; and other expenses or however, provides that a covered requirements of the final rule.
uses. agreement may become unenforceable if
In keeping with section 711, the the appropriate agency determines that II. Detailed Explanation of Proposed
proposed rule includes a number of a nongovernmental entity or person that Rule
provisions designed to reduce the is a party to the agreement has willfully This section provides a more detailed
potential reporting burden of failed to comply in a material way with discussion of the proposed rule and
nongovernmental entities or persons. the Act’s disclosure and reporting includes examples that are designed to
For example, the rule requires a requirements and the entity or person, assist users in understanding the scope
nongovernmental entity or person to file after receiving notice, fails to comply and application of the proposed rule.
an annual report only for a year in with the Act after a reasonable period of The examples included in the preamble
which the entity or person has received time. The proposed rule includes this are not exclusive. The agencies request
funds under a covered agreement. In provision and clarifies that, in these comment on whether the examples
addition, the annual report filed by a circumstances, the covered agreement included in the preamble are useful and
nongovernmental entity or person may becomes unenforceable only by the whether additional examples would
consist of, or incorporate, a report that nongovernmental entity or person that prove helpful. The proposed rule
the entity or person has prepared for has willfully and materially failed to includes examples only of situations
other purposes—such as a Federal or comply with section 711. that would and would not constitute a
state tax return or annual financial The Act requires the agencies to CRA contact by a nongovernmental
statements—if the report provides the consult and coordinate with each other entity or person. These examples
information required by the rule. To in drafting the proposed rule to assure, relating to CRA contact are part of the
facilitate the use of reports that are to the extent possible, that the rule. The agencies request comment on
prepared for other purposes, the rule regulations of each agency are whether examples illustrating other
would allow parties to file their annual consistent and comparable. The parts of the rule should be incorporated
reports on either a fiscal year or agencies have gone beyond these into the text of the regulation.
calendar year basis. If a requirements and have developed the In keeping with the goal of
nongovernmental entity or person is a proposed rule on an interagency basis. consistency among the agencies’ rules
party to five or more covered The agencies believe the adoption of a and to facilitate compliance, the
agreements, the entity or person may uniform rule should assist the public in proposed rule uses the term ‘‘insured
file a single, consolidated annual report complying with the requirements of the depository institution’’ rather than
relating to all of the agreements. Act. Furthermore, as required by the ‘‘bank’’ or ‘‘savings association.’’ As
Furthermore, a nongovernmental entity Act, the agencies have sought to ensure discussed below, the rule identifies the
or person may fulfill its annual that the proposed rule does not place an specific agency or agencies with whom
reporting requirements by sending its undue burden on the parties to covered a covered agreement and its related
annual reports to the insured depository agreements and protects proprietary and annual reports should be filed, and the
institution or affiliate that is a party to confidential information to the agency or agencies that would be
the agreement with a request that the maximum extent consistent with the considered a relevant supervisory
institution or affiliate file the reports language and purpose of the Act. agency for a covered agreement.
with the appropriate agency. The agencies request comment on all For ease of reference, the rule and the
Under the GLB Act, the annual report aspects of the proposed rule, including remaining portions of this preamble
filed by an insured depository the specific provisions and issues refer to a ‘‘nongovernmental entity or
institution or affiliate generally must highlighted in this preamble, and will person’’ as a ‘‘person.’’ 3 The terms
include information on the amount, incorporate comments received into the ‘‘nongovernmental entity or person’’
terms and conditions of any payments, final rule as appropriate. The agencies and ‘‘person,’’ as well as several other
fees, or loans provided by the institution recognize that insured depository terms used in the rule, are defined in
or affiliate under the covered agreement, institutions, affiliates, and section .8 of the proposed rule. The
as well as payments, fees or loans nongovernmental entities and persons rule generally defines a
received by the institution or affiliate can not identify agreements that are nongovernmental entity or person to
under the agreement. The annual report covered by section 711 until, in mean any company or individual other
of an insured depository institution or particular, the agencies adopt the list of than the Federal government, a state,
affiliate also must provide aggregate factors that are considered to be in local or tribal government, or an insured
data on any loans, investments, or ‘‘fulfillment’’ of the CRA. Accordingly, depository institution or affiliate. The
services provided under the covered the agencies propose to act agencies request comment on whether
agreement by each party to the expeditiously to adopt a rule in final users would find it more helpful to have
agreement. The rule includes these form following conclusion of the this section of definitions at the
requirements. The rule would allow an comment period. Once a final rule is beginning of the rule.
insured depository institution or adopted, the parties to covered The following description applies to
affiliate that is a party to 5 or more agreements will be expected promptly each agency’s proposed rule. Since the
covered agreements to file a single, to disclose any agreement that is
consolidated annual report for all of the covered by section 711 and was entered 3 The OTS rule, however, refers to a
agreements. In addition, if an insured into after November 12, 1999, and file ‘‘nongovernmental entity or person’’ as a ‘‘NGEP.’’
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31965
rule of each agency will be codified at The exchange of letters constitutes a written securing the loan, or the rate charged on
a different part of the Code of Federal understanding. This written understanding the loan.
Regulations, the following description would be a covered agreement under the
proposed rule if the agreement is made The statute also exempts from
references the proposed rule using only coverage ‘‘any specific contract or
pursuant to, or in connection with, the
the proposed rule’s section numbers. fulfillment of the CRA and the agreement is commitment for a loan or extension of
A. Definition of Covered Agreement not otherwise exempt under section credit to individuals, businesses, farms,
.2(b). or other entities if the funds are loaned
Section .2 of the proposed rule Example 2: An organization issues a at rates [that are] not substantially below
defines which agreements are covered general, written solicitation for charitable
market rates and if the purpose of the
by the rule and the term ‘‘fulfillment of contributions to businesses in its local
community. An insured depository loan or extension of credit does not
the CRA.’’ The Act’s exemptions from
institution makes a $20,000 charitable include any re-lending of the borrowed
the definition of a covered agreement
also are set forth in section .2. contribution by check to the organization in funds to other parties.’’ 4 Under the
response to the solicitation. The insured statute, this exemption is available for
1. Covered Agreements depository institution does not have any any type of loan to any individual or
written contract, arrangement or entity if the loan meets the market rate
The proposed rule defines a covered understanding with the organization
agreement as any contract, arrangement, and re-lending restrictions of the statute.
concerning the donation. The general request
or understanding that meets all of the for funds and the check are not themselves The agencies request comment on the
following four criteria: a contract, arrangement or understanding. application of this exemption to
• The agreement is in writing; Since there is no other written agreement agreements that involve a commitment
• The agreement is made pursuant to, between the insured depository institution to make one or more loans or extensions
or in connection with, the fulfillment of and the organization, there is no covered
of credit that meet the market rate and
the CRA, as defined in section .2(c) agreement between the entities.
Example 3: A bank holding company re-lending restrictions of the statute. In
of the proposed rule; unilaterally issues a press release announcing particular, comment is requested on
• The parties to the agreement that its subsidiary banks have established a whether this exemption provides an
include (1) an insured depository goal of making $100 million of community exemption only for a specific
institution or an affiliate of an insured development grants in low-and moderate- commitment to make a loan or
depository institution, and (2) a person; income (LMI) neighborhoods over the next 5 extension or credit. Under this
and years. The unilateral pledge is not a contract, interpretation, the exemption would be
• The agreement provides for the arrangement or understanding entered into available for a commitment by an
insured depository institution or with a person and, therefore, is not a covered
insured depository institution or
affiliate to provide cash payments, agreement.
Example 4: An association of community affiliate to provide a specific loan or
grants, or other consideration (other extension of credit to one or more
groups and an affiliate of an insured
than loans) having an aggregate value of depository institution orally agree that the individuals or entities that is on market
more than $10,000 in any calendar year, affiliate will seek to make $100,000 in grants terms and not for purposes of re-
or to make loans in an aggregate available to the organization’s constituent lending, such as a loan commitment
principal amount of more than $50,000 members over the next year. The oral typically made in the course of
in any calendar year. agreement is not reduced to writing. Oral providing a line of credit to a small
The proposed rule clarifies that an agreements are not within the scope of the business. The agencies also request
agreement may be a covered agreement statute and, accordingly, the agreement is not
comment on whether this exemption
even if the agreement is not legally a covered agreement.
includes an exemption for a
binding on the parties. Under the The agencies invite comment on commitment to make multiple loans
proposed rule, an exchange of written whether the rule should define the that meet the Act’s restrictions. Under
correspondence reflecting a mutual terms ‘‘contract,’’ ‘‘arrangement’’ and this interpretation, a commitment to
agreement or a written agreement that ‘‘understanding’’ and, if so, what those make any number or amount of loans
lacks the consideration necessary for it definitions should be. The agencies also that meet the Act’s restrictions over a
to be a legally binding contract would request comment on whether any of the period of time would be exempt from
constitute a covered agreement if the examples provided above should be coverage. The agencies request comment
agreement meets the four criteria modified or amended, and whether on which interpretation of the
discussed above. Moreover, to be additional examples would be useful. exemption is more consistent with the
covered, an agreement may be with an language and purposes of the Act.
2. Exemptions for Certain Agreements
insured depository institution or any
affiliate of an insured depository Section 711 specifically exempts To be entirely exempt under the
institution, including a bank holding certain types of agreements from proposed rule, an agreement must be
company or a nonbank affiliate. coverage even if they otherwise meet the exclusively a loan, extension of credit or
The following examples illustrate definition of a covered agreement. loan commitment that meets the
when a written contract, arrangement or Section .2(b) of the proposed rule requirements of the exemption.
understanding may exist under the rule. implements these exemptions. However, as discussed further below, if
The proposed rule does not attempt to an agreement includes a loan, extension
a. Qualifying Loans of credit or loan commitment that meets
specifically define what constitutes a
‘‘contract,’’ ‘‘arrangement,’’ or The first statutory exemption is for the rule’s requirements to be exempt
‘‘understanding.’’ any individual mortgage loan. Under and also provides for the insured
this exemption, any mortgage loan made depository institution or affiliate to
Example 1: An organization sends a letter by an insured depository institution or provide other funds or resources, the
to an insured depository institution value of the exempt loan, extension of
requesting that the institution provide a
affiliate to any individual or entity is
$15,000 grant to the organization. The exempt from the requirements of section credit or loan commitment may be
insured depository institution responds in 711. This exemption is available for any excluded in determining whether the
writing and agrees to provide the grant in mortgage loan, regardless of the identity
connection with its annual grant program. of the borrower, the type of real estate 4 12 U.S.C. 1831y(e)(1)(B)(ii).
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31966 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
agreement is in fulfillment of the CRA should the agencies provide that the of the statutory exemption. These
and meets the Act’s dollar thresholds.5 relevant market rate for a loan is the rate examples are not exclusive. For ease of
The following examples illustrate that would be charged on a comparable reference, the proposed rule divides the
these provisions of the proposed rule: transaction (e.g., a construction loan, examples of actions that constitute a
Example 1: An insured depository permanent financing, a small business CRA contact into two categories:
institution provides a $1 million mortgage loan, or an unsecured consumer loan) contacts with an agency and contacts
loan to an organization pursuant to a written with a comparable person (e.g., a person with an insured depository institution
agreement. The agreement is an individual with similar financial resources and or affiliate.
mortgage loan and is exempt from coverage credit history) that is not a party to the As discussed below, the agencies
under the rule, regardless of the interest rate agreement? In addition, should the request comment on various aspects of
on the loan or whether the purpose of the agencies provide a formula for this exemption. In particular, the
loan was for re-lending. agencies invite comment on whether the
Example 2: An affiliate of an insured
determining whether a loan bears a rate
depository institution provides a $500,000 that is substantially below the market rule should provide a more detailed
working capital loan to a small business rate? Such a formula could provide, for definition of the exemption. The
pursuant to a written agreement. The loan is example, that a rate is substantially agencies also request comment on
made on market terms and the purposes of below the market rate if it is more than whether the examples provided are
the loan do not include re-lending. The a specified percentage (e.g., 10 percent) appropriate and useful and, if so,
agreement is exempt from coverage under the or number of basis points (e.g., 200 basis whether other examples should be
rule. points) below the rate that would be included or areas addressed with
Example 3: An insured depository charged in a comparable transaction. examples.
institution enters into a written agreement The agencies also request comment on CRA Contact with an Agency. As a
with a community development organization
whether the rule should provide general matter, a person has made a
to make $250 million in small business loans
in the community over the next five years. guidance on when a loan is made ‘‘for CRA contact if the person submits
The loans would be made on market terms purposes of re-lending’’ and what written or oral comments or testimony
and not for purposes of re-lending. Each constitutes ‘‘re-lending’’ under the rule. to an agency concerning the record of
small business loan made by the insured For example, should the rule provide performance or future performance
depository institution pursuant to the that the purposes of a loan are under the CRA of an insured depository
agreement is exempt from coverage. The determined by reference to the institution or CRA affiliate.7 If a person
agreement by the insured depository underlying loan documents or by whom had this type of contact with an agency
institution with the association, however, is the documents refer to as the lender? and subsequently enters into an
not a commitment to make a specific loan or
agreement with the insured depository
extension of credit and would not be exempt b. Agreements With Persons Who Have
under one interpretation of the exemption. institution or any affiliate of the insured
Not Made a CRA Contact depository institution that meets the
This commitment to make loans would be
exempt under the other interpretation of the Section 711 also exempts from requirements of section 711, the
exemption. coverage any agreement entered into by agreement is not exempt.
Example 4: A business organization an insured depository institution or ‘‘Comments’’ and ‘‘testimony’’ refer to
receives a mortgage loan from an affiliate of affiliate with a person who has not any type of written submission or oral
an insured depository institution pursuant to commented on, testified about, or statement by a person to an agency. The
a written agreement. The agreement also discussed with the institution, or terms include the submission of written
provides that the affiliate will make a otherwise contacted the institution, materials to an agency in connection
$12,000 investment in a local community
concerning the CRA. This provision with an application by an insured
development corporation the following
month. The agreement is not an exempt broadly exempts from all of the depository institution or company for a
agreement under the rule because it is not provisions of section 711 any agreement deposit facility or an examination of an
exclusively a mortgage loan. Although the by an insured depository institution or insured depository institution under the
mortgage loan may be excluded when affiliate with a person that has not had CRA, and oral statements made by a
considering if the agreement meets the Act’s a contact concerning the CRA (CRA person to an agency during a public or
dollar thresholds, the agreement would meet contact). The Conference Report for the private meeting held concerning a
these thresholds because it provides for the Act indicates that a wide range of transaction or CRA examination.
affiliate to make other payments in excess of organizations that solicit funds without The rule provides two examples of
$10,000 in a calendar year. regard to the CRA may benefit from this contacts with an agency that would not
The agencies request comment on exemption, including civil rights constitute a CRA contact. The first
these exemptions. In particular, groups, community groups providing example involves a person that provides
comment is invited on whether a housing or other services in low-income written or oral comments or testimony
mortgage loan includes any loan neighborhoods, the American Legion, to an agency in response to a direct
secured by real estate, or only a loan and community theater groups.6 request by the agency for comments or
that is secured by real estate and made The proposed rule adopts the testimony from that person. In such
for the purchase or improvement of the exemptive language contained in circumstances, the contact would result
real estate or for the refinancing of such section 711. In addition, the proposed due to an action by the agency and
a loan. Comment also is invited on rule provides examples of actions by a imposing the rule’s requirements on the
whether the agencies should define person that would constitute a CRA person might impede the agency’s
when loans are made at ‘‘substantially contact under the rule and examples of ability to obtain necessary or useful
below market rates’’ and, if so, what that actions that would not constitute a CRA information. This example of a direct
definition should be. For example, contact under the rule. These examples request for comments or testimony does
are intended to illustrate different types not apply, however, to comments or
5 The agencies note, however, that if the other
of actions that are or are not CRA
consideration is provided to reduce the effective contacts based on the wording and 7 As discussed further below, a contact
interest rate paid on the loan or extension of credit concerning the performance of a ‘‘CRA affiliate’’ of
to a rate that is substantially below the market rate, purpose of the exemption and the scope an insured depository institution is considered to
the loan or extension of credit would not itself be be a contact concerning the CRA performance of the
exempt from coverage. 6 See H.R. Conf. Rep. No. 106–434 at 179 (1999). insured depository institution.
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31967
testimony that are provided in response or affiliate concerning the CRA rating of attended conference or seminar on a
to a general invitation by an agency for the insured depository institution, or general topic, even if representatives of
public comments (e.g., a Federal the CRA record of performance of the the institution or affiliate were in
Register notification) in connection with insured depository institution. attendance at the conference or seminar
a CRA performance evaluation or an The fourth example involves a contact when the statement was made.
application for a deposit facility. with an insured depository institution The agencies request comment on
The second example provides that a or affiliate concerning actions that whether the rule should more
person does not make a CRA contact should be taken to improve the CRA specifically define the terms of the
with an agency by making a statement performance of the insured depository exemption for persons that have not
concerning an insured depository institution. made a CRA contact or more specifically
institution at a widely attended The fifth example involves a contact define when a CRA contact has occurred
conference or seminar on a general with an insured depository institution and, if so, how a CRA contact should be
topic, even if representatives of an or affiliate concerning any obligation or defined. The agencies also request
agency were in attendance at the responsibility that the insured comment on the examples of a CRA
conference or seminar when the depository institution may have to meet contact included in the rule, including
statement was made. A public or private the banking needs of its community. In whether any of the examples should be
meeting or hearing relating to one or this example, the contact occurs while amended or deleted or whether
more insured depository institutions or the insured depository institution or an additional examples should be
a transaction to acquire a deposit facility affiliate of the institution has an provided. For example, the agencies
is not considered a widely attended application for a deposit facility request comment on whether a CRA
conference or seminar on a general pending before an agency or is contact under the Act includes a general
topic. undergoing a publicly announced CRA discussion about the CRA that does not
CRA Contact with Insured Depository performance examination. involve any discussion of the
Institution or Affiliate. Contacts by a If a person has one of the contacts performance of an insured depository
person with an insured depository described above and subsequently institution under the CRA or obligation
institution or affiliate will not cause an enters into a covered agreement with the of the institution to serve the banking
agreement to become subject to the insured depository institution or any needs of its community.
requirements of section 711 unless the affiliate of the insured depository In addition, the agencies request
contact is a CRA contact. The rule institution, the agreement is not exempt comment on whether the rule can and
provides several examples of the types under the rule. The rule and the should be limited to exclude from the
of contacts with an insured depository examples do not contemplate that a scope of CRA contacts discussions with
institution or affiliate that are CRA discussion or contact must include any an insured depository institution or
contacts and that would make the particular words or phrases, such as affiliate concerning whether particular
exemption unavailable. ‘‘Community Reinvestment Act,’’ loans, services, investments or
The first example involves a contact ‘‘CRA’’ or ‘‘CRA rating’’ in order to be community development activities are
with an insured depository institution a CRA contact. Instead, the substance generally eligible for consideration by
or affiliate about providing (or refraining and context of the discussion or contact an agency under the CRA Regulations.
from providing) written or oral are the controlling factors. The marketing of products and services
comments or testimony to an agency Under the examples included in the to insured depository institutions
rule, a person would not have a CRA frequently may include a general
concerning the record of performance or
contact by sending a similar fundraising statement of whether the product or
future performance under the CRA of
letter to an insured depository service is eligible for credit under the
the insured depository institution.
The second example involves a institution or affiliate and other CRA. If the rule were limited in this
contact with an insured depository businesses in the community manner, then the situation described in
institution or affiliate about providing encouraging all businesses in the section .2(b)(2)(iii)(D) of the rule
(or refraining from providing) written community to meet their obligation to would not be a CRA contact even if the
assist in making the local community a offering circular included a statement
comments to the institution that would
better place to live and work. In that the loans included in the loan pool
have to be included in the institution’s
addition, a person would not make a were of the type that could be
CRA public file. Under the agencies’
CRA contact by sending a general considered by an agency under the CRA
CRA Regulations, a written comment
offering circular to financial institutions Regulations. A discussion of whether or
generally must be placed in an
offering to sell a portfolio of loans and how loans, services, investments or
institution’s CRA public file if it
having discussions with a particular activities would impact a particular
specifically relates to the institution’s
insured depository institution institution’s CRA rating or performance
performance in helping to meet
concerning the loan portfolio if no would, however, continue to be
community credit needs.8 Because this
reference to the CRA or the institution’s considered a CRA contact.
information is intended for
CRA performance is made in the The agencies also request comment on
consideration by the agencies in the
offering circular or in the parties’ whether the rule can and should be
course of a CRA examination or
discussions.9 A person also would not limited to cover only contacts that
evaluation of an application for a
make a CRA contact with an insured involve providing CRA-related
deposit facility, the submission of
depository institution or affiliate by comments or testimony to an agency or
comments for inclusion in an
making a statement concerning the discussions with an insured depository
institution’s CRA public file is
institution or affiliate before a widely institution or affiliate about providing
considered a CRA contact.
The third example involves a contact (or refraining from providing) such
with an insured depository institution
9 A CRA contact would occur under the proposed comments or testimony to an agency. If
rule, however, if the offering materials indicated the rule was limited in this fashion, the
that the loans in the mortgage pool would receive
8 See 12 CFR 25.43(a)(1) (OCC); 12 CFR favorable consideration by the agencies under the
actions described in section
228.43(a)(1) (Board); 12 CFR 345.43(a)(1) (FDIC); 12 CRA, or if the parties discussed how the transaction .2(b)(2)(ii)(B)(3), (4) and (5) would
CFR 563e.43(a)(1) (OTS). would improve the institution’s CRA performance. not constitute a CRA contact because
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31968 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
the person did not submit CRA-related where a nongovernmental entity or where the negotiation of the agreement
comments or testimony to an agency or person has a CRA contact concerning included a general discussion of the
discuss with or contact the insured one insured depository institution and effect of the transaction on the CRA
depository institution or any affiliate subsequently enters into a covered performance of the insured depository
about providing (or refraining from agreement jointly with the institution institution? Are there other types of
providing) CRA-related comments or and several other unaffiliated insured contacts that occur in connection with
testimony to an agency. depository institutions? In addition, the ordinary day-to-day business of an
Additionally, the agencies request how should the rule and exemption insured depository institution or
comment on whether there should be a apply where a person has a CRA contact affiliate that should be exempted from
temporal relationship between a CRA with an agency but the relevant insured coverage because, for example, the CRA
contact and when an agreement is made. depository institution or affiliate does contact does not involve any coercive
In this regard, under the proposed rule, not know the contact occurred? aspect or was initiated by the insured
a covered agreement entered into in depository institution? If so, how could
2001 between an insured depository c. Request for Comment on Additional
such an exemption or exemptions be
institution and a person would not be Exemptions
framed narrowly to exclude only those
exempt if the person had submitted a The agencies recognize that the types of contacts (and related
comment to an agency concerning the language of section 711 and, agreements) that are not within the
CRA performance of the institution accordingly, the types of agreements intended scope of the Act?
several years earlier. Section 711, captured under the proposed rule are
however, appears to have been intended broad. The agencies are concerned that, 3. Fulfillment of the CRA
to apply to agreements that result from, in light of this breadth, certain Under the GLB Act, a written
or were influenced by, a CRA contact. agreements that were not intended to be agreement is a covered agreement only
Where a CRA contact occurs a covered by the Act may be considered if it is ‘‘made pursuant to, or in
significant period of time before the covered agreements under the proposed connection with the fulfillment of the
negotiation of an agreement, however, rule. For example, supervisory Community Reinvestment Act of
there may be no link or influence experience suggests that insured 1977.’’ 10 The Act defines ‘‘fulfillment’’
between the CRA contact and the depository institutions enter into a wide of the CRA to mean ‘‘a list of factors that
agreement. Furthermore, the passage of variety of contracts in their normal day- the appropriate Federal banking agency
time may make it difficult for the parties to-day operations that, directly or determines have a material impact on
to a covered agreement to determine or indirectly, relate to activities considered the agency’s decision to (A) approve or
effectively track whether a CRA contact by the agencies in connection with a disapprove an application for a deposit
occurred at all. CRA evaluation. During the negotiation facility [under the CRA]; or (B) to assign
For these reasons, the agencies of these contracts and as an incident to a rating to an insured depository
specifically request comment on the underlying business transaction, the institution [under the CRA].’’ 11
whether the rule should require that a parties may discuss whether the The Conference Report for the GLB
CRA contact occur within a specified activities contemplated by the contract Act indicates that the list of factors
period, such as two years (or a shorter are viewed favorably under the should include ‘‘a full enumeration of
or longer period), before the parties agencies’ CRA Regulations, involve the relevant factors that [an] agency
entered into the agreement. Similarly, loans within the institution’s CRA reviews and considers in examining the
the agencies request comment on assessment area, or would otherwise performance of an insured financial
whether a CRA contact should include improve the institution’s CRA institution in connection with the CRA,
a contact that occurs after the parties performance. These types of contacts including any and all items a regulator
enter into an agreement, such as within would be CRA contacts under the would attach importance to in
90 days after the beginning of the term proposed rule and a related business determining the evaluation under the
of the agreement, at any time during the agreement would be covered if the [CRA] of the performance of a financial
term of the agreement, or some other agreement was in fulfillment of the CRA institution.’’ 12 The agencies’ CRA
period of time. For example, if a person and met the other criteria to be a Regulations set forth the criteria that the
provides comments or testimony to an covered agreement. agencies consider in evaluating the CRA
agency concerning the CRA The Act grants the Board the ability performance of an insured depository
performance of an insured depository to determine, by regulation, that specific institution for purposes of assigning a
institution after entering into an types of contacts are exempt and, CRA rating to an institution and
agreement with the institution, would consequently, that a related agreement evaluating an application by an
the person’s actions suggest that the is not covered by section 711. The institution or company for a deposit
agreement and the comments or agencies specifically invite comment on facility under the CRA.13 These
testimony were linked? whether and how the Board should regulations permit the agencies to
The agencies also request comment on exercise its exemptive authority in this consider broadly the lending,
how the rule and the exemption area, including whether there are investment and service activities of an
discussed above should apply in particular types of CRA contacts that insured depository institution in
circumstances where a covered occur and that, given their context and evaluating the institution’s performance
agreement involves several parties and a purpose, do not implicate the concerns under the CRA.
CRA contact has been made by or of the Act. For example, if the proposed For these reasons, the proposed rule
concerning only one of the parties. For definition of CRA contact is retained in would define the list of factors for
example, how should the rule apply the final rule, should the Board exercise purposes of section 711 generally by
where several nongovernmental entities its discretion in this area to provide an
10 12 U.S.C. 1831y(e)(1)(A).
or persons enter into a covered exemption for CRA contacts that occur
11 Id.at 1831y(e)(2).
agreement with an insured depository in connection with the purchase of 12 H.R. Conf. Rep. No. 106–434 at 179 (1999).
institution and only one of the entities loans by an insured depository 13 See 12 CFR 25.21–25.29 (OCC); 12 CFR 228.21–
or persons has made a CRA contact? institution or affiliate on an arm’s length 228.29 (Board); 12 CFR 345.21–345.29 (FDIC); 12
Similarly, how should the rule apply basis in the secondary market even CFR 563e.21–563e.29 (OTS).
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31969
reference to the criteria enumerated in record of performance or future deposit facility.18 Accordingly, such
Subpart B of the CRA Regulations performance under the CRA of an comments and testimony are among the
jointly issued by the agencies. These insured depository institution that is a factors that may have a material impact
criteria reflect the factors that the party to the agreement or an affiliate of on an agency’s decision to assign a CRA
agencies previously have determined a party to the agreement; and rating or evaluation under the CRA of an
have a material impact on an agency’s (9) Providing or refraining from application for a deposit facility.
assignment of a CRA rating and providing written comments to an While the level of activity that will
assessment of the CRA factor in insured depository institution that is a have a material effect on a CRA rating
decisions to approve or disapprove an party to the agreement or an affiliate of or an application decision varies with
application for a deposit facility. These a party to the agreement that would the circumstances involving the
factors are summarized in the proposed have to be included in the institution’s particular insured depository
rule as follows: CRA public file. institution, the GLB Act by its terms
(1) Home purchase, home An activity is within the factors requires that the agencies identify the
improvement, small business, small enumerated in paragraphs (1) through list of factors that have a material
farm, community development, and (7) if it would be considered by the impact on an agency’s decision to assign
consumer lending as described in the agencies under the relevant performance a CRA rating or to approve an
lending test portion of the CRA test or standard in the CRA application for a deposit facility under
Regulations, including loan purchases, Regulations.15 These activities may be the CRA. The Act does not appear to
loan commitments, and letters of credit; conducted by an insured depository incorporate a quantitative threshold for
(2) Making investments, deposits, or institution that is a party to the the agencies to use in defining the list
grants, or acquiring membership shares agreement or an affiliate of a party to the of factors that are material to such a
that have as their primary purpose agreement.16 In addition, an agreement decision. Instead, the GLB Act explicitly
community development, as described would be considered in fulfillment of sets a threshold dollar level for the
in the investment test portion of the the CRA if any of these activities is minimum amount of activities that must
CRA Regulations; performed by a nongovernmental entity be performed in order for an agreement
(3) Delivering retail banking services, or person that is a party to the to be covered by section 711. As
as described in the service test portion agreement and an insured depository discussed below, these value thresholds
of the CRA Regulations; institution receives favorable are $10,000 in cash payments, grants or
(4) Providing community consideration for the activities under other consideration and $50,000 in
development services, as described in the CRA. loans. For these reasons, the proposed
the service test portion of the CRA The proposed rule’s list of factors also rule provides that an agreement is in
Regulations; includes providing (or refraining from fulfillment of the CRA if it pertains to
(5) For a wholesale or limited-purpose providing) CRA-related comments or a ‘‘factor’’ that the agencies determine is
insured depository institution, testimony to an agency or written ‘‘material’’ to an institution’s rating or
community development lending, comments to an insured depository application—such as the institution’s
qualified investments, and community institution that must be included in the lending—rather than to a level of
development services, as described in institution’s CRA public file. The performance that the agencies determine
the community development test agencies’ CRA Regulations generally is material to the CRA evaluation of that
portion of the CRA Regulations for require the agencies to consider insured depository institution.
wholesale or limited-purpose insured comments received from the public or The agencies request comment on this
depository institutions; included in an insured depository reading of section 711 and on whether
(6) For small insured depository institution’s CRA public file when the list of factors properly identifies the
institutions, the lending and other evaluating the CRA performance of the ‘‘factors’’ that are material to a CRA
activities described in the small insured institution.17 The CRA Regulations also evaluation. The agencies also request
depository institution performance require an agency to consider written or comment on whether the agencies have
standard of the CRA Regulations; 14 oral comments submitted to the agency interpreted the statutory mandate to
(7) For an insured depository when acting on applications for a identify the ‘‘list of factors that * * *
institution whose CRA performance is have a material impact’’ on an agency’s
evaluated on the basis of a strategic 15 Thus, for example, an agreement that relates to
decision to assign a CRA rating and to
plan, any element of that plan as the consumer lending activities of an insured
depository institution would be considered to be in approve or disapprove an application
described in the strategic plan portion of fulfillment of the CRA if the institution’s consumer under the CRA in a manner consistent
the CRA Regulations; lending activities were considered by the with the language and purposes of
(8) Providing or refraining from appropriate agency at the institution’s most recent
section 711. In particular, comment is
providing written or oral comments or CRA examination. Under the CRA Regulations, an
institution’s consumer lending activities are invited on whether the proposed list of
testimony to any agency concerning the considered in certain circumstances by an agency factors that are considered to be in
if such lending constitutes a substantial majority of fulfillment of the CRA can and should
14 The terms wholesale insured depository the institution’s business or the institution has
institution, limited-purpose insured depository elected to have its consumer lending activities be expanded, restricted, or altered
institution, and small insured depository institution considered by the appropriate agency. See 12 CFR consistent with the language and
refer to a wholesale, limited-purpose or small bank 25.22(a) (OCC); 12 CFR 228.22(d) (Board); 12 CFR purpose of the Act. For example,
or savings association as defined in Subpart A of 345.22(a) (FDIC); 12 CFR 563.22(a) (OTS). although the agencies consider an
the relevant agency’s CRA Regulations. See 12 CFR 16 As discussed further below, a ‘‘CRA affiliate’’
25.12(o), (t) and (w) (OCC); 12 CFR 228.12(o), (t), of an insured depository institution is viewed as insured depository institution’s lending
and (w) (Board); 12 CFR 345.12(o), (t), and (w) part of the insured depository institution. in all geographic areas and to borrowers
(FDIC); and 12 CFR 563e.12(n), (s), and (v) (OTS). Accordingly, activities performed by a CRA affiliate of all income ranges for certain purposes
An agreement that involves the performance of of an insured depository institution are considered in evaluating the institution’s CRA
activities by a wholesale, limited-purpose or small to be performed by the insured depository
insured depository institution is in fulfillment of institution. performance, can and should the rule’s
the CRA only if the agreement involves the 17 See 12 CFR 25.21(b)(6) and 25.43(a)(1) (OCC);
performance of one of the activities within the 12 CFR 228.21(b)(6) and 228.43(a)(1) (Board); 12 18 See 12 CFR 25.29(c) (OCC); 12 CFR 228.29(b)
scope of the relevant performance test or standard CFR 345.21(b)(6) and 345.43(a)(1) (FDIC); 12 CFR (Board); 12 CFR 345.29(c) (FDIC); 12 CFR 563e.29(c)
for the particular type of institution. 563e.21(b)(6) and 563e.43(a)(1) (OTS). (OTS).
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31970 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
list of factors focus on those types of because the investment is a qualified compliance and enforcement of the fair
lending (and other activities) that are investment under the CRA Regulations and lending laws.19 The agencies
reasonably likely to receive favorable would be considered as part of the specifically request comment on
investment test under the CRA Regulations.
consideration under the CRA whether this view is correct, or whether
Example 3: An insured depository
Regulations, such as certain types of institution enters into an agreement with a the list of factors should be expanded to
lending in LMI areas or to LMI supermarket chain that provides for the include activities designed to ensure
borrowers? institution to open a branch in certain of the compliance with the fair lending laws.
The terms of a written agreement chain’s stores. The agreement is in Comment also is solicited on whether
generally determine whether the fulfillment of the CRA because an the list of factors should be expanded to
contract, arrangement or understanding institution’s record of opening and closing include other activities. For example,
is in fulfillment of the CRA. However, branches is evaluated in the context of the the proposed rule’s list of factors does
the parties to a written agreement may distribution of its branches as part of the not specifically include the provision of
service test under the CRA Regulations. advisory or consulting services
not evade coverage under the Act by Example 4: An insured depository
reaching an oral understanding that a institution enters into a written agreement
concerning CRA-related activities.
party will submit (or refrain from with an organization to provide the Should the rule include a reference to
submitting) oral or written CRA-related organization with a $25,000 donation to these or other activities?
comments or testimony to an agency or assist in covering the organization’s general 4. Value
written comments to an insured operating expenses. A representative of the
depository institution that would have organization orally agrees that, in return for A written agreement is a covered
to be included in the institution’s CRA the contribution, the organization will submit agreement only if it calls for an insured
a comment to or testify before the appropriate depository institution or affiliate to
public file and excluding this agency in support of the institution’s recently
understanding from the terms of the provide to one or more persons cash
announced proposal to merge with another payments, grants, or other consideration
written agreement. In addition, if an insured depository institution. The written
agreement includes a loan, extension of of more than $10,000 in any calendar
agreement is in fulfillment of the CRA
credit or loan commitment that, if done because the organization orally agreed in year, or to make loans that have an
separately, would be exempt from connection with the agreement to provide aggregate principal amount of more than
coverage and also provides for the comments or testimony to an agency $50,000 in any calendar year. The
insured depository institution or concerning the CRA record of performance of statutory threshold is based on the total
affiliate to provide other funds or the institution. value of payments and loans provided
resources, the parties may exclude the The following are examples of under the agreement and does not
agreements that would not be in require that these payments or loans be
exempt loan, extension of credit or loan
fulfillment of the CRA under the made to a party to the agreement.20
commitment when determining if the
proposed rule: Accordingly, under the proposed rule,
agreement is in fulfillment of the CRA.
The following are examples of all cash payments, grants, consideration
Example 5: An insured depository or loans provided by an insured
agreements that would be in fulfillment institution enters into an agreement with a
of the CRA under the proposed rule. local theater company for the institution to
depository institution or affiliate under
Unlike the examples of CRA contacts, make a $20,000 charitable donation to the the agreement, including amounts
these examples are not included in the company for each of the next five years. The provided to individuals or entities that
proposed rule. Each example illustrates agreement is not in fulfillment of the CRA are not parties to the agreement, would
only the fulfillment criteria of the rule because the donation does not have be considered in determining whether
community development as its primary an agreement meets the rule’s dollar
and assumes that the agreement meets purpose and, thus, would not be considered
the other requirements necessary to be thresholds. However, if an agreement
a qualified investment under the CRA includes a loan, extension of credit or
considered a covered agreement. In this Regulations.
regard, even if an agreement is in Example 6: An insured depository
loan commitment that, if done
fulfillment of the CRA, it may still be institution enters into an agreement with a separately, would be exempt from
exempt from coverage under the rule if neighborhood association to donate 100 coverage and also provides for the
it is an exempt loan or loan hours of employee time to the organization’s institution or affiliate to provide other
commitment, or if the person that is a annual effort to clean up the neighborhood. funds or resources, the parties may
The agreement is not in fulfillment of the exclude the exempt loan, extension of
party to the agreement has not had a CRA because the services are not considered
CRA contact. credit or loan commitment when
community development services or other determining if the agreement meets the
Example 1: An insured depository qualifying services under the CRA
dollar thresholds of the rule. See
institution enters into an agreement with a Regulations.
discussion under II.A.2.a. above
local business organization that provides for The agencies note that the proposed
the institution to make $500,000 in small concerning qualifying loans.
rule’s list of factors does not include Under the proposal, an agreement that
business loans to third parties in the
institution’s assessment area in the next two
performance of activities designed to provides for payments to be made in
years. The agreement is in fulfillment of the ensure compliance with Federal laws any calendar year in excess of the dollar
CRA because an institution’s small business that prohibit discriminatory or other thresholds established by the statute is
lending activity is considered as part of the illegal credit practices, such as the a covered agreement for its entire term.
lending test under the CRA Regulations. The Equal Credit Opportunity Act (15 U.S.C. The agencies believe that using a
agreement might still be exempt from 1691 et seq.) and the Fair Housing Act calendar year period for these
coverage depending on the scope of the (42 U.S.C. 3601 et seq.). Although the calculations should facilitate
exemption for loan commitments. agencies consider evidence of these
Example 2: An insured depository practices in evaluating an insured 19 For example, a requirement that an insured
institution enters into an agreement with a
development corporation to invest $1 million
depository institution’s performance depository institution publicly disclose an
under the CRA, the agencies are agreement to use ‘‘mystery shoppers’’ to test the
in a project the purpose of which is the institution’s compliance with the fair lending laws
revitalization of an LMI neighborhood within concerned that including such activities or to settle a fair lending complaint could deter the
the institution’s assessment area. The in the list of factors could have an institution from entering into such agreements.
agreement is in fulfillment of the CRA unintended and detrimental impact on 20 See 12 U.S.C. 1831y(e)(1)(A)(i).
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31971
compliance with the rule by providing the disbursement of funds or resources on the one hand, and any part of the
all parties to a covered agreement a under the agreement. For example, if an same organization, including an insured
uniform basis for determining whether agreement provides that an insured depository institution and any of its
the agreement is covered by the rule and depository institution will make affiliates, on the other hand.
because the terms of an agreement may $40,000 in grants over a 5-year period, Example 1: In April, an insured depository
not coincide with the parties’ fiscal but does not specify the years in which institution enters into a written agreement
years. The agencies invite comment on the grants will be made, should the rule with Community Development Organization,
whether another 12-month period create a presumption that the entire sum Inc. pursuant to which the institution makes
would provide a more appropriate basis ($40,000) is provided in the first year of an $8,000 investment in the organization. In
for these calculations. the agreement or assume that the value November of the same year, an affiliate of the
The following are examples of the is paid in equal yearly installments of insured depository institution and
value provisions of the proposed rule. $8,000? An alternative approach would Community Development Organization, Inc.
rely on how the payments are actually enter into a written agreement under which
These examples illustrate only the
the affiliate makes an additional $8,000
application of the dollar thresholds of made under the agreement. Under this investment in the organization. For purposes
the proposed rule. alternative approach, if the payments of this example, both investments are
Example 1: An insured depository under the agreement actually exceeded assumed to be qualified investments under
institution enters into an agreement with a $10,000 in a calendar year, the the CRA Regulations and considered in the
small business investment company pursuant agreement would then become a evaluation of the institution’s CRA
to which the institution will invest $25,000 covered agreement. performance. The separate agreements must
in the company. The agreement meets the The agencies also invite comment on be aggregated under the rule and the
dollar threshold criterion to be a covered whether the rule should provide combined agreement meets the $10,000
agreement because the institution will guidance on how to determine the value dollar threshold of the rule. Accordingly, the
provide more than $10,000 in funds (other of an agreement that does not specify agreements are jointly considered a covered
than loans) under the agreement. the amount of payments, grants, loans or agreement.
Example 2: An insured depository Example 2: In September, an insured
institution and a community organization
other consideration to be provided depository institution orally agrees to donate
enter into a written agreement pursuant to under the agreement, such as an $15,000 of computer equipment to a local
which the institution will invest $1 million agreement for an insured depository housing organization. In December, the
in a state-sponsored investment fund that institution to open a branch or to begin institution and organization enter into a
supports affordable housing initiatives for offering a new loan product. written agreement for the institution to make
LMI individuals. The community a $5,000 CRA qualified investment in local
organization will not receive any funds or 5. Related Agreements Considered a housing project that is eligible for low-
other resources from the insured depository Single Agreement income housing tax credits. The agreements
institution or its affiliates under the In two circumstances, section 711 of do not need to be aggregated under the rule
agreement. The agreement meets the dollar the GLB Act requires that separate because the September agreement was not in
threshold criterion for a covered agreement agreements or contracts be aggregated writing.
under the proposed rule. Example 3: In February, an insured
Example 3: An affiliate of an insured
for purposes of determining whether the
depository institution enters into a written
depository institution provides a $100,000 agreements—taken as a whole—meet agreement with Partnership A for the
loan to an association of small businesses the definition of a covered agreement.21 institution to make a $9,000 grant to
pursuant to a written agreement. The loan is Section .3 of the rule implements Partnership A for the purpose of
on market terms and not for purposes of re- these requirements. If separate rehabilitating affordable-housing units. In
lending. The agreement also provides for the agreements are considered a single August of the same year, an affiliate of the
affiliate to make a $5,000 grant to the local agreement under section .3, the insured depository institution enters into a
chamber of commerce’s small business combined agreement must still meet the written agreement with Partnership A under
incubator. Because the loan is made on criteria to be a covered agreement to be which the affiliate makes a payment of
market terms and not for purposes of re- $9,000 so that its employees may have access
lending, the loan would be an exempt
covered by the rule. Loans, extensions
to the child care center operated by
agreement under the proposed rule if it were of credit and loan commitments that are Partnership A. The August agreement is not
a separate agreement. Accordingly, the value specifically excluded from the in fulfillment of the CRA. Accordingly, the
of the loan may be excluded in determining definition of covered agreement under two agreements would not be aggregated
the value of the agreement. After excluding .2(b) of the rule are not required to under the rule.
the loan, the agreement would not meet the be aggregated with other agreements.
dollar criterion of the rule. b. Substantively Related Contracts
Example 4: An insured depository a. Agreements Entered Into by the Same Section 711 requires the aggregation
institution and a community development Parties of separate but ‘‘substantively related
corporation enter into a written agreement Section .3(a) provides that all contracts’’ even where the contracts are
that requires an affiliate of the insured written contracts, arrangements, or entered into with different persons. 22
depository institution to provide the
organization with a grant of $5,000 in 2000,
understandings that are entered into by Unlike the aggregation rule discussed
$8,000 in 2001, and $11,000 in 2002. The an insured depository institution or above, the rule aggregating
agreement exceeds the dollar threshold affiliate of an insured depository ‘‘substantively related contracts’’
criterion of the rule because the agreement institution will be considered to be part applies only to separate, written
provides for payments in excess of $10,000 of a single agreement if the contracts, contracts and does not apply to other
during 2002. Assuming the agreement meets arrangements, or understandings are types of written arrangements or
the other requirements of the rule and is not entered into with the same person understandings.
otherwise exempt, the agreement is a covered within a 12-month period and each The rule defines written contracts
agreement for its entire term. agreement is in fulfillment of the CRA. entered into by an insured depository
The agencies request comment on This aggregation rule applies to all institution or any of its affiliates as
how the dollar thresholds in the statute written agreements entered into during ‘‘substantively related’’ if the contracts
should be applied in situations where the 12-month period by the same person were negotiated in a coordinated
an agreement does not have a specific
term or does not specify a timetable for 21 See 12 U.S.C.1831y(e)(1) and (2). 22 See 12 U.S.C. 1831y(e)(1)(A)(ii).
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31972 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
fashion. The rule does not require that under the rule only if each person had contacts concerning an insured depository
the separate contracts each be in engaged in a CRA contact? institution.
fulfillment of the CRA or that the parties Example 2: An affiliate of an insured
6. CRA Affiliate Treated as Insured depository institution engages in mortgage
to the contracts (other than the banking
Depository Institution lending and provides credit counseling
organization) be the same. Thus, the services. The insured depository institution
rule prevents parties from evading the The CRA Regulations provide that an elected to have only the mortgage lending
disclosure and reporting obligations of insured depository institution, at its activities of the affiliate considered in its
the statute by separating out from an election, may request that an agency most recent CRA performance evaluation.
agreement payments or grants that may consider certain activities conducted by The affiliate and a community group enter
not themselves be in fulfillment of the an affiliate in evaluating the CRA into an agreement that provides for the
performance of the insured depository affiliate to provide credit counseling services
CRA.
institution.23 In these circumstances, the in the local community. The agreement is not
Example 1: Two housing organizations in fulfillment of the CRA because the affiliate
jointly approach an insured depository selected activities of the affiliate are is not considered a CRA affiliate with respect
institution to obtain funding. A viewed as activities of the insured to its credit counseling activities.
representative of the insured depository depository institution.
institution meets with both organizations at The proposed rule generally considers To assist persons in complying with
the same time to discuss their funding needs. a contact concerning this type of the rule, section .2(e) of the
The institution enters into a written contract affiliate, referred to as a ‘‘CRA affiliate,’’ proposed rule requires that an insured
with one organization to provide it with of an insured depository institution to depository institution or affiliate inform
$9,000 for the purpose of rehabilitating be the equivalent of a contact the other parties to a covered agreement
affordable housing units. The institution concerning an insured depository if the agreement concerns the activities
enters into a separate written contract with of a CRA affiliate. The institution or
institution (see section .2(b)(2)).
the other organization to provide the affiliate must provide this notification
organization with an unrestricted grant of Similarly, an agreement is considered to
be in fulfillment of the CRA if it not later than the time the agreement is
$9,000. Because the contracts were
negotiated in a coordinated fashion, the concerns the performance of any of the entered into if the affiliate is a CRA
contracts must be aggregated under the rule. activities listed in section .2(c) by a affiliate at that time.
When aggregated, the contracts would meet ‘‘CRA affiliate’’ of an insured depository Because the status of an affiliate of an
the statute’s $10,000 dollar threshold and institution (see section .2(c)). insured depository institution may
each contract would be a covered agreement. The proposed rule defines a ‘‘CRA change, an agreement that concerns the
Example 2: A bank holding company affiliate’’ as any company that is an activities of an affiliate may become a
announces its intention to acquire an insured affiliate of an insured depository covered agreement after the date the
depository institution. A Florida-based group parties enter into the agreement. For
and a California-based group independently
institution and whose activities were
considered by an agency in assessing example, a person may enter into an
approach the bank holding company to seek agreement that concerns the lending
funding for specific projects and separately the CRA performance of the institution
negotiate written contracts with the bank at the institution’s most recent CRA activities of a newly formed affiliate. If
holding company. The contracts would not examination.24 Under the rule, a an insured depository institution
be aggregated under the rule, and each company is considered a CRA affiliate subsequently elects to have the lending
contract would be a covered agreement only only to the extent its activities were activities of the new affiliate considered
if that contract on its own met the taken into account in the CRA during its next CRA performance
requirements of the rule. evaluation of an affiliated insured examination, the affiliate would become
The agencies request comment on the depository institution. a CRA affiliate. In such circumstances,
aggregation rules included in section the proposed rule requires the insured
.3, including the proposed Example 1: A person submits a written
depository institution or affiliate to
definition of ‘‘substantively related comment to an agency concerning the
lending performance under the CRA of a inform the other parties to the
contracts’’ and whether there are agreement that the affiliate has become
mortgage company that is affiliated with an
alternative definitions that would insured depository institution. The insured a CRA affiliate within a reasonable
achieve the purposes of the statute. The depository institution elected, in accordance period of time after the change of status
agencies also request comment on how with the agencies’ CRA Regulations, to have occurs.
these aggregation rules should apply the lending activities of the mortgage Where an agreement concerns the
when a CRA contact has not occurred company considered in the institution’s most activities of an affiliate that becomes a
prior to one of the agreements or was recent CRA performance evaluation. The CRA affiliate, the agreement would be in
made by only one of the persons that is mortgage affiliate, therefore, is considered a fulfillment of the CRA only once the
a party to the agreements. For example, CRA affiliate with respect to its lending
affiliate becomes a CRA affiliate. If the
activities. Accordingly, the agreement is in
when a single person enters into two agreement met the other requirements of
fulfillment of the CRA for purposes of section
agreements with an insured depository 711 and the person has engaged in a CRA the rule, the agreement would become a
institution during a 12-month period, contact under section .2(b)(2) because covered agreement at that time. Section
but engages in a CRA contact between the selected activities of a CRA affiliate and .2(e) clarifies that in these
the first and second agreement, should contacts with an agency regarding a CRA circumstances the parties to the
the first agreement be excluded from affiliate are considered activities of and agreement have no disclosure or
aggregation because a CRA contact had reporting obligations under the rule
not occurred at the time it was entered 23 See CRA lending test (12 CFR 25.22(c),
until the agreement becomes a covered
into? Alternatively, should the 228.22(c), 345.22(c) and 563e.22(c)); CRA
investment test (12 CFR 25.23(c), 228.23(c),
agreement. In applying the disclosure
agreements be aggregated because a CRA 345.23(c) and 563e.23(c)); CRA service test (12 CFR and reporting requirements of the rule,
contact occurred prior to the second 25.24(c), 228.24(c), 345.24(c) and 563e.24(c)); CRA the agreement would be considered to
agreement and the agreements otherwise community development test for wholesale and have been entered into on the date it
meet the requirements for aggregation limited-purpose institutions (12 CFR 25.25(d),
228.25(d), 345.25(d) and 5632.25(d)); and CRA
became a covered agreement.
under the rule? Similarly, should strategic plans (12 CFR 25.27(c), 228.27(c), The agencies request comment on the
substantively related contracts entered 245.27(c) and 563e.27(c)). proposed rule’s treatment of CRA
into by separate persons be aggregated 24 See Proposed Rule, section .8(c). affiliates, including whether the
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31973
requirement that an insured depository agreement available to the public 3. Persons Must Make Covered
institution or affiliate inform the other terminates 12 months after the end of Agreements Available to Agency
parties when an agreement concerns a the term of the covered agreement. The Section 711 requires each party to a
CRA affiliate is useful and practicable. agencies believe that this time period covered agreement to make the
The agencies also request comment on would permit interested members of the agreement available to the appropriate
whether the rule should provide a public adequate time to obtain a covered agency. Because the relevant
similar notice procedure for agreements agreement from the parties, while not supervisory agencies would receive a
that involve an activity of an insured placing an undue recordkeeping burden copy of any covered agreement from the
depository institution, such as on the parties to covered agreements. insured depository institution or
consumer lending, that the institution Members of the public would continue affiliate that is a party to the agreement,
elects for the first time to be considered to be able to obtain copies of a covered the rule provides that a
under the CRA during the term of the agreement from the relevant supervisory nongovernmental entity or person may
agreement. 25 In addition, the agencies fulfill its statutory obligation in this area
agency under the Freedom of
request comment on whether there is an by providing, upon request from the
Information Act (5 U.S.C. 552 et seq.)
appropriate and less burdensome way relevant supervisory agency, a complete
for the rule to determine whether an after this 12-month period.
copy of the agreement to the agency.
affiliate is a CRA affiliate at the time the The agencies request comment on all
The copy must be provided to the
parties enter into an agreement. aspects of the proposed rule’s public
agency within 30 days of the agency’s
disclosure requirements. Comment is request. As with disclosure to the
B. Disclosure of Covered Agreements
sought on whether the rule should public, the rule provides that a person’s
Section 711 requires that each party to include illustrative examples of how a obligation to make an agreement
a covered agreement fully disclose the party may make an agreement available available to an agency terminates 12
agreement in its entirety and make the to a member of the public and, if so, months after the end of the term of the
full text of the agreement available to whether there are additional methods agreement.
the public and the appropriate agency (other than those discussed above) that The agencies believe this procedure
with supervisory responsibility over the should be allowed for making an will reduce regulatory burden and avoid
relevant insured depository institution. agreement available to the public. For duplicative filings. At the same time,
1. Disclosure to the Public example, should the rule explicitly this procedure requires persons to make
The proposed rule requires that each allow a person to arrange for another copies of covered agreements available
party to a covered agreement make a entity or individual to make the to the agencies consistent with the
complete copy of the agreement person’s covered agreements available statute.
available to any member of the public to the public, or allow a party to recover 4. Relevant Supervisory Agency
upon request. The rule would permit an reasonable fees for searching its records
for a covered agreement? Comment also The Act requires that parties to a
insured depository institution to fulfill
is requested on whether affiliates of covered agreement make the agreement
its public disclosure obligation by
insured depository institutions should available to, and file annual reports
placing a copy of a covered agreement
be permitted to disclose an agreement to with, the appropriate Federal banking
in the institution’s CRA public file and
agency with supervisory responsibility
making it available in accordance with the public by placing the agreement in
over the relevant insured depository
the procedures set forth in the CRA the CRA public file of an affiliated
institution. The proposed rule uses the
Regulations relating to public files. 26 insured depository institution. In
term ‘‘relevant supervisory agency’’ to
A party may make a covered addition, comment is invited on identify the appropriate agency for a
agreement available to any individual or whether it is reasonable, appropriate particular covered agreement. Under the
entity that requests the agreement by and consistent with the statute to rely rule, the ‘‘relevant supervisory agency’’
mailing it to the requestor, and the on access to covered agreements is—
proposal would specifically permit the through the agencies for public • The OCC in the case where—
party to charge the requestor for the disclosure requests made more than 12 * The parties to the agreement
costs of copying and mailing the months after the term of the agreement include a national bank or
agreement, so long as the fees are and whether this period should be subsidiary of a national bank; or
reasonable. The proposal does not longer or shorter. * A national bank or subsidiary or
otherwise specify or require a party to CRA affiliate of a national bank
employ any particular method in 2. Filing of Covered Agreement by
provides funds or resources under
responding to requests from the public Insured Depository Institutions With
the agreement;
for a covered agreement. For example, a Agencies • The Board in the case where—
party also could make an agreement * The parties to the agreement
available to an individual or entity with The rule requires each insured
depository institution and affiliate that include a state member bank,
access to the Internet by posting the subsidiary of a state member bank,
agreement on a publicly accessible is a party to a covered agreement to
provide a complete copy of the bank holding company, or
website or to members of the public subsidiary of a bank holding
within a local geographic area by agreement to each relevant supervisory
company (other than an insured
making the agreement available for agency (as defined below) within 30
depository institution or subsidiary
inspection at an office within that area. days after the parties enter into the thereof); or
The proposed rule provides that a agreement. If two or more insured * A state member bank or subsidiary
party’s obligation to make a covered depository institutions or affiliates are or CRA affiliate of a state member
parties to the same agreement, the bank provides funds or resources
25 See footnote 15 above. institutions and affiliates may jointly under the agreement;
26 See 12 CFR 25.43 (OCC); 12 CFR 228.43
(Board); 12 CFR 345.43 (FDIC); 12 CFR 563e.43
file a copy of the agreement with the • The FDIC in the case where—
(OTS). relevant supervisory agencies. * The parties to the agreement
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31974 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
include a state nonmember bank or 711 require the reporting of the terms comment on whether, and if so to what
subsidiary of a state nonmember and value of covered agreements, the degree, such information may be
bank; or identity of the parties to the agreement, withheld from public disclosure under
* A state nonmember bank or and the uses of funds and resources section 711. If covered agreements
subsidiary or CRA affiliate of a state provided under covered agreements. typically contain particular types of
nonmember bank provides funds or In light of these provisions, and in information that may properly be
resources under the agreement; or order to ensure the uniform disclosure withheld from public disclosure under
• The OTS in the case where— of covered agreements under the Act by section 711, should the rule specify
* The parties to the agreement the parties and the agencies, the these types of information and allow the
include a savings association, proposed rule would allow a party to a parties to withhold this information
subsidiary of a savings association, covered agreement to request a without seeking prior agency review or
savings and loan holding company determination from the relevant in lieu of the agency review process?
or subsidiary of a savings and loan supervisory agency whether the agency The agencies also invite comment on
holding company; or could withhold specific portions of the whether the proposed agency review
* A savings association or subsidiary agreement from public disclosure. In process is useful and practicable and
or CRA affiliate of a savings considering these requests, the agencies whether there are alternative or
association provides funds or will apply the procedures and standards additional procedures that the agencies
resources under the agreement. of the Freedom of Information Act (5 can and should implement under
The agencies believe this definition will U.S.C. 552 et seq.) (FOIA), which section 711 to protect confidential and
ensure that a covered agreement and its governs public access to all records of proprietary information. The agencies
related annual reports are filed with the an agency, including documents filed also invite comment on whether the rule
agency or agencies that have with the agency by third parties. If the should specifically permit a party that
supervisory authority over the insured relevant supervisory agency determines has requested agency review of a
depository institution or affiliate that is that it could withhold specific portions covered agreement to delay disclosing
involved with the agreement, either as of the covered agreement from public the agreement to the public until the
a party or as a source of funds or disclosure under FOIA, the proposed agency rules on the request.
resources paid under the agreement. rule would permit the parties to the
More than one agency may be the agreement to also withhold those 6. Disclosure Limited to Covered
relevant supervisory agency with specific portions of the agreement from Agreements Entered Into After
respect to a single covered agreement. any copies of the agreement directly November 12, 1999
For example, if a national bank, state made available to the public. A party The proposed rule’s disclosure
nonmember bank, and a savings could withhold from public disclosure obligations apply only to covered
association provide funds pursuant to a only those limited portions of a covered agreements entered into after November
covered agreement entered into by their agreement determined to be exempt 12, 1999, the effective date of section
parent bank holding company, the OCC, from public disclosure under FOIA by 711 of the GLB Act. Under the rule, a
FDIC, OTS, and Board would each be a the relevant supervisory agency. written modification, amendment,
relevant supervisory agency for the In applying the standards under renewal, or extension of an agreement
agreement. The agencies solicit FOIA, the agencies note that section 711 creates a new agreement. Thus, if an
comment on the proposed rule’s may require disclosure of some types of agreement entered into before November
definition of ‘‘relevant supervisory information that an agency might 12, 1999, is modified, amended,
agency,’’ including whether there are normally be able to withhold from renewed or extended after that date, the
alternative definitions that might reduce disclosure under FOIA. In light of the parties must disclose the entire new
the filing burdens of parties while directive of section 711, the agencies agreement if it otherwise meets the
ensuring the appropriate agencies may not be able to withhold under criteria to be a covered agreement.
receive the filings contemplated by the FOIA—or permit a party to withhold Disclosure is not required if the pre-
Act. from public disclosure—many of the November 12, 1999, agreement
provisions contained in a covered expressly provided for the renewal or
5. Treatment of Confidential or
agreement. For example, the agencies extension and established the terms of
Proprietary Information
might not be able to permit a party to the agreement during the renewal or
Covered agreements may contain withhold the amount of payments or extension period.
confidential or proprietary information loans to be made under the agreement,
Example: An insured depository
the disclosure of which may cause the persons receiving such payments or institution and a community organization
competitive or other harm to one or loans, and the terms of any such enter into a written agreement in January
more of the parties to the agreement. payments or loans. It may be possible 1999 that calls for the institution to place an
Section 711 of the Act directs the that only limited types of information ATM in the local community by December
agencies to ensure that the could be withheld from public 2000. In September 2000, the parties enter
implementing regulations ‘‘do not disclosure under the proposed rule. into a written modification of the agreement
impose an undue burden on the parties Such information might include, for that calls for the institution to establish a
[to a covered agreement] and that example, individual account numbers or full-service branch rather than an ATM. If the
modified agreement meets the criteria to be
proprietary and confidential information detailing a particular a covered agreement, the modified agreement
information is protected.’’ 27 This institution’s proprietary underwriting must be disclosed in accordance with the
provision must be read in harmony with criteria. rule.
other provisions of section 711 that The agencies welcome comment on
require that a covered agreement ‘‘shall whether covered agreements are likely C. Annual Reports
be in its entirety fully disclosed, and the to contain confidential or proprietary The Act requires each person, insured
full text thereof made available * * * to information the disclosure of which depository institution, or affiliate of an
the public.’’ Other provisions of section would harm the parties to the agreement insured depository institution that is a
given the definition of covered party to a covered agreement to file a
27 12 U.S.C. 1831y(h)(2)(A). agreements. The agencies also request report relating to the covered agreement.
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31975
These annual reporting obligations written agreement pursuant to which the expenses, to support the organization’s
apply only to covered agreements institution commits to make $10 million in general activities in the community, or
entered into on or after May 12, 2000.28 small business loans in the local community to cover general compensation,
over the next three years. The loans would administrative, travel, entertainment,
1. No Report Required by Person That be made at market rates and would not be for
purposes of re-lending. The organization
consulting or professional expenses.
Does Not Receive Funds or Resources Under the proposed rule, funds or
would not receive any funds or resources
The proposed rule requires that each under the agreement, including under the resources allocated and used for a
party to a covered agreement file an loans as they are made. Even if a specific purpose must be segregated in
annual report for the fiscal years during commitment by an insured depository the annual report from funds used for
the term of the agreement. The rule does institution to make multiple loans on market general purposes. For funds received
not, however, require a terms and not for purposes of re-lending is under a covered agreement and
nongovernmental entity or person to file a covered agreement (see Part I.A.2 above), allocated and used for a specific
an annual report with respect to a the organization would not have to file any purpose, a person’s annual report must
particular covered agreement for any annual report concerning the agreement provide the following information: (1) A
fiscal year during which the person did because it would receive no funds or
resources under the agreement. Under the
description of each specific purpose for
not receive any funds under the covered proposed rule, the institution would have to which the funds or resources were used
agreement. The agencies believe that file an annual report during the term of the during the fiscal year; and (2) the
requiring an annual report in such agreement indicating the aggregate amount amount of funds or resources used for
circumstances would not further the and number of loans made during the year each specific purpose during the fiscal
purpose of the statute because the under the agreement. Each individual loan year.
person would not have received any made pursuant to the commitment would be Example 1: An organization receives
funds or resources under the agreement exempt from coverage and, accordingly, each $15,000 from an insured depository
during the fiscal year. Under the borrower would have no reporting obligation institution under a covered agreement. The
proposed rule, however, each insured under the rule. organization allocates and uses the $15,000
to sponsor a seminar on affordable housing
depository institution and affiliate that 2. Contents of Annual Report Filed by initiatives. The organization’s annual report
is a party to a covered agreement must Persons for the fiscal year would report that it
file an annual report each year during received $15,000, that it used the $15,000 to
Section 711 requires that the annual
the term of the agreement. The agencies sponsor the seminar, and provide a brief
report filed by a nongovernmental entity description of the seminar.
request comment on whether this
or person provide a detailed, itemized Example 2: A community group receives
reporting exemption for persons is
accounting of how the person used any $50,000 from an insured depository
appropriate.
funds or resources received under the institution under a covered agreement.
Example 1: A savings association and a covered agreement during the previous During its fiscal year, the community group
community development organization that year. The proposed rule would allow specifically allocates and uses $45,000 of the
rehabilitates affordable housing in the funds to purchase computer equipment and
association’s assessment area enter into a
this detailed accounting to be provided
the remaining $5,000 is used for general
covered agreement pursuant to which the in two ways: a description of the operating expenses. The group’s annual
association will invest $100,000 in the specific purpose or purposes for which report for the fiscal year must state that the
organization over three years. The investment the funds were used, or a segmentation group received $50,000 under the agreement
will be used to support a rehabilitation of funds used for general purposes in a during the fiscal year and that $45,000 was
project that is expected to take three years to pre-defined list of expense categories. used to purchase computer equipment. In
complete. If the savings association provides addition, the annual report must provide the
the full $100,000 in the first year of the a. Specific Purpose Funds and detailed, itemized list of expenses described
agreement, the organization must file an Resources below because some funds were used for
annual report with the OTS for the fiscal year general purposes.
in which it received the $100,000. The The first reporting method applies to
organization is not required to file an annual funds or other resources that a person b. All Other Funds and Resources
report with the OTS for its subsequent fiscal receives under a covered agreement and Funds or other resources received
years during the term of the agreement. allocates and uses for a specific under a covered agreement may be used
Example 2: A state non-member bank purpose. Specific purpose funds or
enters into a covered agreement with a for general purposes or unspecified
resources are those that a person targets purposes. The second reporting method
community organization to make $1 million and uses for a distinct program, the
in community development grants in the addresses funds or resources that are
community over the next two years. The purchase of a distinct asset, or the received under a covered agreement and
community organization will not receive any payment of a distinct expense. For that are not allocated and used for a
funds or other resources under the agreement example, a person would use this specific purpose. Under this method,
(including under the grants as they are reporting method if, pursuant to the the reporting person must provide a
made). The agreement is a covered agreement terms of the covered agreement or
and must be made available to the public and
detailed, itemized list of how the
otherwise, the person specifically reporting person has used its funds
the FDIC. In addition, the state non-member allocated and used the funds received
bank must file annual reports concerning during the fiscal year. This list must
grants made and actions taken under the
under a covered agreement for a include, at a minimum, the amount of
agreement. The community organization is particular loan program, to purchase funds used during the fiscal year for—
not required, however, to file any annual computers, to sponsor a particular • Compensation of officers, directors,
reports concerning the agreement because the seminar, or to pay the salary of a and employees;
organization receives no funds or resources particular person. A specific purpose • Administrative expenses;
under the agreement. must be a purpose that is more limited • Travel expenses;
Example 3: An insured depository than the categories of expenses • Entertainment expenses;
institution and an organization enter into a enumerated below for the reporting of • Payment of consulting and
general purpose funds. In other words, professional fees; and
• Other expenses and uses.
28 See the discussion above concerning the
treatment of agreements entered into prior to May
funds or resources are not allocated or
12, 2000, that are modified, amended, renewed, or used for a specific purpose if they are The annual report may reflect the total
extended after that date. allocated or used for general operational amount of funds from all sources that
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31976 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
the person used during the fiscal year organization to separately state the e. Specific Request for Comments
for the types of expenses listed above. amount that the organization spent The agencies invite comment on all
The annual report must, however, during the tax year on compensation of aspects of the proposed rule’s annual
specify the total amount of funds that officers, directors, trustees and key reporting requirements for
the person received under the covered employees; salaries and wages of other nongovernmental entities and persons.
agreement and that were used for employees; professional fundraising The agencies also specifically request
general or unspecified purposes. The fees; accounting fees; legal fees; comment on the following:
agencies may determine from this supplies; telephone; postage and • Are the rule’s reporting
information the proportion of general shipping; occupancy; printing and requirements for specific purpose funds
purpose funds received under the publications; travel; conferences, and resources reasonable and
covered agreement that were used for conventions and meetings; and an appropriate? Would the proposed rule
each category of expenses listed above. itemized list of other uses. Since these limit the burden associated with
Example: In March, a person receives an categories of expenses include and are reporting funds or resources received for
unrestricted grant of $15,000 under a covered more specific than the list of expenses a specific purpose? Should the
agreement. The person includes the funds in required to be provided for general regulation provide additional guidance
its general operating budget and does not purpose funds, a person may use a as to when a person has allocated and
allocate and use the funds for a specific used funds or resources for a specific
properly completed Form 990 to fulfill
purpose. The person’s annual report for the
fiscal year must state that the person received the rule’s reporting requirements for purpose or allow, rather than require, a
$15,000 of general purpose funds. The general purpose funds. Other forms or person to use this reporting method
annual report also must indicate the total reports also may be used, separately or when it allocates and uses funds for a
amount of funds and resources that the in combination, to fulfill the rule’s specific purpose?
person used during the fiscal year for reporting requirements so long as they • Should the detailed, itemized list of
compensation, administrative expenses, contain, in total, the information uses contained in the proposed rule be
travel expenses, entertainment expenses, required by the rule. expanded to include other categories of
consulting and professional fees, and other uses or expenses, such as grants or loans
expenses and uses. d. Consolidated Annual Reports made, or services provided, to others?
c. Use of Other Reports Permitted • Are there additional information
items that should be included in annual
As noted above, section 711 directs The GLB Act requires the agencies to reports? For example, should a person
the agencies to ensure that regulations permit persons that are parties to a large be required to state in each annual
implementing that section ‘‘do not number of covered agreements to file a report the aggregate amount of funds or
impose an undue burden on the consolidated annual report relating to resources that the person has received to
parties.’’ The legislative history also all of the covered agreements.30 date under the covered agreement?
indicates that the agencies should allow Accordingly, section .5 of the • Should the agencies permit a
reporting parties to use reports prepared proposed rule permits a person that is person to file a consolidated annual
for other purposes to fulfill the annual a party to 5 or more covered agreements report if the person is a party to 2 or
reporting requirements.29 Accordingly, to file a single consolidated report more covered agreements?
the proposed rule does not require that covering all of the person’s covered • Where a covered agreement
a person’s annual report be prepared on agreements. A person’s consolidated provides for an institution or affiliate to
a special form or in a particular format. report must identify the person filing take several actions including making a
Instead, the rule provides that a person’s the report and each agreement covered specific loan that, if agreed to
annual report may consist of or by the report. All other information separately, would be exempt from
incorporate reports or documents that required by the rule may be provided on coverage under the rule, can and should
the person has prepared for public, an aggregate basis for all agreements the agencies allow the person’s annual
internal or other purposes so long as the covered by the annual report. Any report to exclude information
documents filed with the relevant consolidated report must be filed with concerning the loan that would
supervisory agency contain all of the all of the relevant supervisory agencies otherwise be exempt under the rule?
information required by the rule. For for the covered agreements included in • Are there additional ways that the
example, a person’s annual report may the report. agencies could reduce the reporting
consist of a Federal or state tax return, Example: A community development burden on persons consistent with the
a report prepared for the person’s organization is a party to six separate covered language and purposes of the Act? For
members or shareholders, or the agreements with six unaffiliated insured example, should the agencies issue
person’s financial statements if such depository institutions. Under each optional sample reporting forms that
documents provide the information agreement, the organization receives $15,000 might be used by a person, insured
required by the rule. to fund the rehabilitation of a specific low- depository institution or affiliate?
In this regard, the agencies have income housing project identified in the
reviewed several tax forms commonly 3. Contents of Annual Report of Insured
agreement. The organization allocates and
filed by tax-exempt nonprofit uses all of the funds for the specified
Depository Institutions and Affiliates
organizations. Internal Revenue Form purpose. If the organization elects to file a The annual reporting requirements for
990, which is the Federal tax return consolidated annual report, the consolidated insured depository institutions and
form for certain tax-exempt nonprofit report must (1) identify the organization and affiliates are largely specified in section
organizations, requires the filing the six covered agreements, (2) state that the 711. The annual report for an insured
organization to provide information that organization received $90,000 under the depository institution or affiliate must
is at least as detailed, and in some cases agreements, and (3) state that the person identify the entity filing the report and
more detailed, than the list of expenses allocated and used the $90,000 to fund the identify the covered agreement to which
contained in section 711. In particular, rehabilitation project and provide a the annual report relates. In addition,
Form 990 requires a tax-exempt description of the project. the annual report must provide—
• The aggregate amount of payments,
29 See H.R. Conf. Rep. No. 106–434 at 179 (1999). 30 See 12 U.S.C. 1831y(h)(2)(B). fees and loans (listed separately)
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31977
provided by the insured depository 4. When and Where Must Annual reports will be filed with the wrong
institution or affiliate under the Reports Be Filed agency because the insured depository
agreement to any other party during the The proposed rule provides that each institution or affiliate will know its
fiscal year; party to a covered agreement must relevant supervisory agency while the
• The aggregate amount of payments, prepare and file an annual report with nongovernmental entity or person may
fees and loans (listed separately) the relevant supervisory agency for the not.
received by the insured depository fiscal year in which the party enters into The agencies invite comment on the
institution or affiliate under the the agreement and each subsequent filing requirements of the rule. In
agreement from any other party during fiscal year during the term of the particular, the agencies request
the fiscal year; covered agreement. 31 The agencies have comment on whether the 5- and 6-
• A description of the terms and adopted a fiscal year reporting period to month filing windows will provide the
conditions of any payments, fees, or allow the parties to coordinate parties sufficient time to prepare their
preparation of their annual reports with annual reports and whether there are
loans provided to, or received from,
other documents or reports that additional ways that the agencies might
another party under the agreement; and
reduce the filing burdens of parties
• The aggregate amount and number typically are prepared on a fiscal year
consistent with the Act.
of loans, amount and number of basis, such as income tax returns and
investments, and amount of services financial statements. However, to D. Compliance Provisions
provided under the covered agreement provide parties with maximum Section 711 specifically provides that
to any person that is not a party to the flexibility, the rule also permits a party nothing in that section authorizes the
agreement— to elect to use the calendar year as their agencies to enforce the provisions of any
* By the insured depository fiscal year for purposes of the rule. 32 covered agreement. The proposed rule
institution or affiliate; and The agencies request comment on incorporates this provision. (See section
whether providing the option of fiscal .7(e)) This is consistent with the
* By any other party to the
year or calendar year reporting would long-standing policy of the agencies that
agreement, unless such information is
reduce regulatory burden or whether the CRA-related agreements entered into
not known to the insured depository
rule should require reporting on a between insured depository institutions
institution or affiliate or will be
calendar year basis. In addition, the (or their affiliates) and persons are
contained in an annual report filed by
agencies request comment on whether a private matters between the parties and
a person.
person should be required to file an are not enforced by the agencies.
These informational requirements track annual report after the end of a covered The agencies may enforce compliance
those established by the statute. agreement’s term if, by that time, the by insured depository institutions and
The rule would allow an insured person has not completely used all the affiliates with the disclosure and
depository institution and an affiliate funds or resources received under the reporting requirements of section 711
that are parties to the same covered agreement. using the cease and desist and other
agreement to file a single, consolidated Each party to a covered agreement enforcement powers granted in section
report for the agreement. In addition, to must file its annual report for a fiscal 8 of the FDI Act. 33 Section 8 of the FDI
reduce burden, the proposed rule would year with each relevant supervisory Act, however, applies only to insured
allow an insured depository institution agency within 6 months of the end of depository institutions, affiliates and
or affiliate that is a party to 5 or more the party’s fiscal year. Under section institution-affiliated parties, as defined
covered agreements to file a single 711 and the rule, a person may fulfill in the FDI Act. The provisions of section
consolidated report relating to all of the this filing requirement by providing its 8 of the FDI Act, therefore, generally do
agreements. annual report to the insured depository not apply to nongovernmental entities
The agencies request comment on institution or affiliate that is a party to or persons that are parties to a covered
whether an insured depository the agreement within 5 months of the agreement. Section 711 instead includes
institution or affiliate should be end of the person’s fiscal year with special compliance provisions
permitted to file a consolidated report if instructions for the institution or applicable to nongovernmental entities
it is a party to 2 or more covered affiliate to file the report with all of the or persons that are party to a covered
agreements, and whether the rule can relevant supervisory agencies on behalf agreement. 34
and should allow an insured depository of the person. An insured depository Under these provisions, the material
institution or affiliate to not file an institution or affiliate that receives an and willful failure of a person to comply
annual report for any fiscal year in annual report from a person in this with section 711 may cause the related
which the institution or affiliate did not manner must forward it to the relevant covered agreement to be unenforceable.
provide or receive any payments, fees or supervisory agencies within 30 days. In particular, under the Act, if the
loans under the agreement. The agencies This method of filing allows the appropriate agency determines that a
invite comment on whether the rule annual reports of a person and an person has willfully failed to comply
should provide additional guidance insured depository institution or with section 711 in a material way, and
concerning the level of detail required affiliate that relate to the same covered the person does not comply with the
to be provided in the annual report of agreement to be filed together. It also law after receiving notice and a
an insured depository institution or reduces the likelihood that annual reasonable period of time, the agreement
affiliate, and whether there are thereafter is unenforceable by operation
31 As discussed in II.C.1. above, the proposed rule
additional ways the agencies could of section 711. The Act specifically
would not require a nongovernmental entity or
reduce the reporting burden of insured person to file an annual report during the term of provides that inadvertent or de minimis
depository institutions and affiliates a covered agreement if the entity or person did not
consistent with the Act. For example, receive any funds or resources under the agreement 33 See12 U.S.C. 1818.
are there ways the agencies could in that fiscal year. 34 OtherFederal statutes outside the banking laws
32 See Proposed Rule section .8(f). The rule also also may provide for penalties if an insured
reduce the reporting burden for provides that the ‘‘fiscal year’’ for an individual or depository institution, affiliate, or person fails to
agreements that involve loans that are entity that does not have a fiscal year is the comply with the disclosure and reporting
themselves exempt from coverage? calendar year. requirements of the Act. See 18 U.S.C. 1001.
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31978 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
reporting errors will not subject the agency’’ have the same meaning as in it owns or controls 25 percent or more
filing party to any penalty. The rule the FDI Act.35 of any class of the other entity’s voting
requires the agencies to provide a securities.
1. ‘‘Person’’ and ‘‘Nongovernmental
person written notice and an The proposed rule creates a special
Entity or Person’’
opportunity to respond before rule of construction that would apply in
determining the person has not Section 711 of the GLB Act applies situations where an insured depository
complied with the rule, and allows the only to agreements entered into by a institution has filed an application with
person at least 90 days to correct a ‘‘nongovernmental entity or person’’ an agency to become affiliated or merge
willful and material violation. The with an insured depository institution with another entity. In such
agencies request comment on whether or affiliate. For ease of reference, the circumstances, a person may have a
this written notice should be sent to all rule uses the term ‘‘person’’ instead of CRA contact and enter into an
the parties to the agreement. the phrase ‘‘nongovernmental entity or agreement with the acquiring insured
The rule also clarifies that, in these person.’’ (The OTS rule, however, refers depository institution (or holding
circumstances, the agreement becomes to a ‘‘nongovernmental entity or person’’ company thereof) concerning the CRA
unenforceable only by the party that has as a ‘‘NGEP.’’) As a general matter, the performance of the target institution.
willfully and materially failed to rule defines a ‘‘person’’ to mean any The agencies believe these types of
comply with the rule. Any other party individual or entity other than the U.S. contacts constitute a CRA contact under
to the agreement may continue to government, a state government, a unit section 711 and that any agreement
enforce the agreement against the of local government, an Indian tribe, or resulting from such contact is a covered
noncomplying party. The agencies any department, agency, or agreement if it otherwise meets the
believe this construction is the most instrumentality of such a governmental requirements of section 711.
consistent reading of the language and entity. A ‘‘person’’ does not include a Accordingly, the rule provides that an
purpose of the Act. The agencies note federally chartered public corporation insured depository institution is
that an alternative construction could that receives federal funds appropriated deemed to be an affiliate of any
encourage persons to violate the statute specifically for that corporation. A company that would be under common
nongovernmental entity that is affiliated control or merged with the institution
in an attempt to avoid performance
with, or receives funding from, such a pursuant to a transaction that is pending
under a legally binding contract, thereby
federally chartered public corporation, before an agency. This rule of
frustrating the purpose of the statute. If
however, would be considered a construction applies only where the
the insured depository institution or
‘‘person’’ under the rule, unless the
affiliate elects not to enforce the covered agency application is pending at both
entity independently qualified for an
agreement against the noncomplying the time an agreement is entered into
exclusion.
person, the appropriate agency may The proposal also would not treat and the time when a triggering CRA
assist the institution or affiliate in insured depository institutions and their contact occurs.
identifying a successor person to affiliates as persons. Section 711 Example: A bank holding company files an
assume the responsibilities of the appears to draw a distinction between application with the Board to acquire control
person under a covered agreement that insured depository institutions (and of an additional insured depository
has become unenforceable. their affiliates) and nongovernmental institution. While the application is pending,
Section 711 also provides that, if an an organization contacts the bank holding
entities and persons and imposes company to discuss perceived deficiencies in
individual diverts funds or resources separate obligations on insured
received under a covered agreement for the CRA performance record of the insured
depository institutions (and their depository institution to be acquired. The
his or her personal financial gain and affiliates) and nongovernmental entities bank holding company and the organization
contrary to the purposes of the or persons. enter into a written agreement that provides
agreement, the appropriate agency may The agencies request comment on the for the target institution to increase its level
order the individual to disgorge the proposed definition of of community development grants by $1
funds and/or prohibit the individual ‘‘nongovernmental entity or person,’’ million per year for the next three years. The
from being a party to any covered including whether specific types of target institution would be considered an
agreement for up to 10 years. As noted entities should be added or removed ‘‘affiliate’’ of the bank holding company
above, the Act specifically provides that under the proposed rule. Accordingly, the
from the list of entities and individuals
it does not authorize the agencies to agreement would be a covered agreement
excluded from the definition of the because the organization had a CRA contact
enforce any provision of a covered term. with the holding company concerning the
agreement. If, however, a court or other CRA record of performance of an affiliated
body of competent jurisdiction 2. Affiliate and Control
insured depository institution.
determines that an individual has The term ‘‘affiliate’’ is defined in the
diverted funds or resources for personal FDI Act by reference to the Bank 3. Term of agreement
financial gain and contrary to the Holding Company Act. Under the Bank Under the rule, the duration of a
purposes of the agreement, the agencies Holding Company Act, an affiliate is party’s obligation to make a covered
may take one of the actions specified in any company that controls, is controlled agreement publicly available and to file
the statute. by, or is under common control with annual reports concerning the
another company. A company generally agreement is based on the term of the
E. Other Definitions and Rule of is considered to control another entity if
Construction covered agreement. As a general matter,
the term of an agreement ends on the
Section .8 of the proposed rule 35 The agencies note that the definition of
agreement’s termination date
defines other terms used in the rule. ‘‘insured depository institution’’ in the FDI Act
includes special-purpose insured depository established by the parties. Agreements
Because section 711 amended the FDI institutions that are not subject to the CRA. See, that do not establish a termination date
Act, the rule provides that the terms e.g., 12 CFR 228.11(c)(3). An agreement that relates are deemed for purposes of the
‘‘insured depository institution,’’ to the activities of a special-purpose insured
depository institution, however, would not be in
proposed rule to terminate on the last
‘‘control,’’ ‘‘Federal banking agency’’ fulfillment of the CRA and, thus, would not be a date on which any party makes any
and ‘‘appropriate Federal banking covered agreement under the rule. payments or provides any loan or other
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31979
resources under the agreement. The rule public and to the appropriate agency, to it and on persons who enter into
gives the agencies discretion, in and to file an annual report with the covered agreements with those entities.
appropriate circumstances, to determine appropriate agency concerning the Board: In accordance with section 3(a)
that the term of such an agreement is a disbursement and use of funds under of the Regulatory Flexibility Act (5
shorter or longer period. The the agreement. U.S.C. 603(a)), the Board must publish
appropriate agency could exercise this These reporting provisions are an initial regulatory flexibility analysis
discretion, for example, where a one- required by section 711 of the GLB Act with this proposed rulemaking. The
time grant is made to a person late in and apply regardless of the size of the proposed rule would implement
a year with the clear expectation that insured depository institution, affiliate, provisions of section 711 of the GLB
the funds would be used in the next or person. Section 711 does not Act. A description of the reasons why
year. In such circumstances, the agency authorize the OCC to provide an action by the Board is being considered
could require the person to file an exemption for covered agreements based and a statement of the objectives of, and
annual report for the next year. on the size of any entity within the legal basis for, the proposed rule are
scope of its provisions. The Act, contained in the supplementary
III. Placement of Proposed Rule material provided above.
however, directs the OCC and the other
The agencies propose to implement agencies to ensure that the proposed The proposed rule includes reporting
section 711 by adding a new part to rule does not impose an undue burden requirements that would apply to all
their regulations.36 These new parts on the parties to covered agreements. insured depository institutions,
would be separate from the agencies’ The proposed rule includes several affiliates of insured depository
CRA Regulations. The agencies believe provisions, described in detail in the institutions, and persons that enter into
this placement is appropriate because SUPPLEMENTARY INFORMATION that are
covered agreements (as defined by the
section 711 of the GLB Act amended the designed to limit the potential impact of proposed rule). The proposed rule
FDI Act, and not the CRA, and is the proposed rule on insured depository requires insured depository institutions,
independent of the CRA and the CRA institutions, affiliates and persons or affiliates, and persons that enter into a
Regulations. The agencies note, covered agreement to make the
entities of any size. For example, the
however, that because section 711 agreement available to members of the
rule gives entities and persons
concerns CRA-related agreements, the public and to the appropriate agency,
flexibility in determining how to make
proposed rule includes several cross- and to file an annual report with the
a covered agreement available to the
references to the CRA Regulations. The appropriate agency concerning the
public. In addition, the proposed rule
agencies request comment on whether disbursement and use of funds under
would allow persons to use reports that
users would find it more convenient if the agreement.
have been prepared for other purposes, These reporting provisions are
the proposed rule was incorporated into such as tax returns and financial
the agencies’ existing CRA Regulations required by section 711 of the GLB Act
statements, to fulfill the annual and would apply regardless of the size
and, if so, how the agencies could make reporting requirement. The rule also
clear that the rule does not in any way of the insured depository institution,
allows an insured depository affiliate, or person. The Act does not
affect the CRA. institution, affiliate, or person that is a authorize the Board to provide an
IV. Regulatory Flexibility Act Analysis party to 5 or more covered agreements exemption for covered agreements based
to prepare a single, consolidated annual on the size of the insured depository
OCC: In accordance with section 3(a) report relating to all of the agreements.
of the Regulatory Flexibility Act (5 institution, affiliate or person that enters
As noted above, the proposed rule into the agreement.
U.S.C. 603(a)), the OCC is publishing applies to insured depository
the following initial regulatory The Act, however, directs the Board
institutions, affiliates, and persons that and the other agencies to ensure that the
flexibility analysis with this proposed enter into covered agreements. These
rulemaking. proposed rule does not impose an
agreements are entered into by private undue burden on the parties to covered
The proposed rule would implement
parties, are not enforced by the OCC agreements and the proposed rule
provisions of section 711 of the GLB
and, to date, have not been required to includes several provisions that are
Act. A description of the reasons why
be disclosed to the OCC. In addition, the designed to limit the potential impact of
action by the OCC is being considered
OCC and the other agencies have the proposed rule on insured depository
and a statement of the objectives of, and
specifically requested comment on the institutions, affiliates and persons,
legal basis for, the proposed rule are
scope of the proposed rule and will including small institutions, affiliates
contained in the SUPPLEMENTARY
issue a final rule after review of public and persons. For example, the rule gives
INFORMATION.
comments. Accordingly, the OCC entities and persons flexibility in
The proposed rule includes reporting
cannot estimate at this time the total determining how to make a covered
requirements that would apply to all
number of national banks or their agreement available to the public. In
insured depository institutions,
subsidiaries that would be subject to the addition, the proposed rule would allow
including national banks, affiliates of
requirements of the rule and the number persons to use reports that have been
insured depository institutions,
of such entities that would be prepared for other purposes, such as tax
including national bank subsidiaries,
considered small entities. Similarly, the returns and financial statements, to
and persons that enter into covered
OCC cannot estimate at this time the fulfill the annual reporting requirement.
agreements (as defined by the proposed
total number of persons that may enter The rule also allows insured depository
rule). The proposed rule requires
into a covered agreement with these institutions, affiliates, and persons that
insured depository institutions,
entities, and therefore be subject to the are a party to 5 or more covered
affiliates, and persons that enter into a
requirements of the rule. agreements to prepare a single,
covered agreement to make the
The OCC specifically seeks comment consolidated annual report relating to
agreement available to members of the
on the likely burden that the proposed all of the agreements.
36 See 12 CFR Part 35 (OCC); 12 CFR Part 207 rule would impose on national banks As noted above, the proposed rule
(Board); 12 CFR Part 346 (FDIC); and 12 CFR Part and other entities within the OCC’s applies only to insured depository
533 (OTS). supervisory jurisdiction that are subject institutions, affiliates, and persons that
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31980 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
enter into covered agreements. These the GLB Act does not authorize the agreements may be classified as small
agreements are entered into by private FDIC to provide for exemptions. businesses or entities. Although the
parties, are not enforced by the Board Because the GLB Act requires the FDIC and the other agencies have
and, to date, have not been required to agencies to ensure that the proposed requested comment on the scope of the
be disclosed to the Board. In addition, rule does not impose an undue burden proposed rules, presently, the FDIC
the Board and the other agencies have on the parties to a covered agreement, cannot determine whether the proposed
specifically requested comment on the the proposed rule contains provisions rule would have a significant economic
scope of the proposed rule and will that limit the potential impact on impact on a substantial number of small
issue a final rule after review of public insured depository institutions, entities. The FDIC requests comment on
comments. Accordingly, the Board affiliates, and persons. For example, the the likely significance of the economic
cannot estimate at this time the total proposed rule provides flexibility to impact the proposed rule would impose
number of state member banks, bank entities and persons regarding the way on FDIC-supervised banks and affiliates
holding companies, and nonbank a covered agreement is made available and on persons who enter into a covered
subsidiaries of a bank holding company to the public. Insured depository agreement.
that would be subject to the institutions are permitted to disclose OTS: The Regulatory Flexibility Act
requirements of the rule and the number covered agreements to the public by requires federal agencies to either
of such entities that would be placing it in their CRA public files, and prepare an initial regulatory flexibility
considered small entities. Similarly, the parties may satisfy their obligation to analysis (IRFA) with a proposed rule or
Board cannot estimate at this time the make covered agreements available to certify that the proposed rule would not
total number of persons that may enter the public, in part, by posting the have a significant economic impact on
into a covered agreement with the types agreement on a publicly available a substantial number of small entities.
of entities listed above and, thereby, be Internet website. Although the GLB Act OTS cannot, at this time, determine
subject to the requirements of the rule states that parties to a covered whether this proposed rule would have
or the number of such persons that agreement must make the agreement a significant economic impact on a
would be considered small entities. available to an agency, the proposed substantial number of small entities.
The Board specifically seeks comment rule requires a person that is a party to Therefore, OTS includes the following
on the likely burden that the proposed an agreement to disclose the covered IRFA.
rule would impose on insured agreement to an agency upon the A description of the reasons why OTS
depository institutions and affiliates agency’s request for a copy of the is considering this action and a
within the Board’s supervisory agreement. In addition, the proposed statement of the objectives of, and legal
jurisdiction and on persons who enter rule would allow persons to use reports basis for, this proposed rule, are
into covered agreements with such that have been prepared for other contained in the supplementary
entities. purposes, such as tax returns and materials provided above.
FDIC: Consistent with the Regulatory financial statements, to fulfill the A. Small Entities to Which the Proposed
Flexibility Act (5 U.S.C. 601–612) annual reporting requirement. Rule Would Apply
(RFA), the FDIC is required to publish Recognizing that many tax returns and
an initial regulatory flexibility analysis financial statements are based on fiscal The proposed rule would apply to the
relating to the proposed rule. The year reporting periods, the proposed following types of entities if they are a
proposed rule would implement regulation permits either a fiscal or party to a covered agreement: (1)
provisions of section 711 of the GLB Act calendar year reporting period so that Savings associations; (2) certain
and would apply to all insured parties may coordinate their required affiliates of savings associations; 37 and
depository institutions, affiliates of annual report with other reports or (3) nongovernmental entities or persons
insured depository institutions, and filings. The rule also would permit that enter into covered agreements with
persons that enter into the types of insured depository institutions, savings associations or affiliates of
covered agreements described in section affiliates, and persons that are parties to savings associations. The proposed rule
711 and in the proposed rule. 5 or more covered agreements to file a would apply regardless of the size of the
Material contained in the single, consolidated report relating to all savings association, affiliate, or persons.
Supplementary Information section of of the agreements and would allow OTS is unable to estimate how many
this document contains statements insured depository institutions and covered agreements exist, how many
about the legal basis for and objectives affiliates that are parties to the same savings associations, affiliates of savings
of the FDIC in proposing this rule. The covered agreement to file a single associations, or persons are parties to
GLB Act incorporates disclosure and consolidated report. Finally, the such covered agreements, or how many
reporting requirements applicable to all proposed rule does not require annual parties to covered agreements are ‘‘small
insured depository institutions, reports to be prepared on a special form businesses’’ or ‘‘small organizations’’
affiliates, and persons that enter into or in a particular format. All of these under the Regulatory Flexibility Act. To
covered agreements. Insured depository provisions were developed to minimize date, parties to such agreements have
institutions, affiliates, and persons must the impact and burden the proposed not had to disclose or report the
make the covered agreements available rule would have on parties to a covered agreements to OTS. Generally, neither
to the general public and to the agreement. OTS nor any other Federal agency is a
appropriate supervisory agency. They Before passage of the GLB Act, parties party to covered agreements. Finally,
must also file an annual report with the to covered agreements were not required OTS does not enforce such agreements.
appropriate supervisory agency to disclose the agreements to the FDIC; Thus, OTS does not have information
describing the disbursement, receipt, therefore, at this time, the FDIC cannot about these agreements.
and use of the funds under the estimate the total number of insured OTS has very limited information that
agreement. The GLB Act does not state non-member banks, affiliates of would assist in an estimate. According
provide exemptions for the reporting or state non-member banks, or persons that
37 OTS’s rule applies to the following affiliates:
disclosure requirements based on the would be subject to the requirements of savings and loan holding companies and companies
size of the insured depository the proposed rule. Similarly, the FDIC that are controlled by savings associations or
institution, affiliate, or person; similarly cannot predict which parties to covered savings and loan holding companies.
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31981
to December 31, 1999 data, OTS provide a copy to each relevant It is possible that savings associations,
calculates that of the approximately supervisory agency upon request. affiliates, and persons have already
1,100 savings associations, a maximum To minimize the disclosure burden, established recordkeeping and other
of 486 are small savings associations. the proposal would: policies and practices that would
Small savings associations are generally • Terminate the public disclosure already enable them to partly or fully
defined, for Regulatory Flexibility Act requirement and the requirement for a meet the requirements of this proposed
purposes, as those with assets under person to provide a copy to the relevant rule. To the extent that existing
$100 million. 13 CFR 121.201, Division supervisory agencies upon request 12 practices and available resources are
H (1999). OTS also calculates that these months after the end of the term of the insufficient, parties to covered
486 savings associations hold covered agreement; agreements would need professional
approximately 100 subordinate • Not mandate any particular method skills to comply with this proposed rule.
organizations that could possibly for disclosing the agreement to the To disclose covered agreements, parties
qualify as small entities. OTS further public; may need clerical and computer
calculates that a maximum of 205 • Allow each party to charge personnel. To prepare required reports,
savings and loan holding companies reasonable copying and mailing fees parties may need personnel with these
could possibly qualify as small entities. when it discloses an agreement to the skills, as well as personnel skilled in
OTS does not have data on how many public; financial and legal matters. Some degree
• Allow a savings association to
of these subordinate organizations or of personnel training may be necessary,
publicly disclose by placing a copy of
holding companies may actually qualify such as to enable employees to
the covered agreement in its CRA public
as small entities. Nor does OTS have file and making it available under the
determine when they enter into covered
data on how many other affiliates of public file procedures; agreements, and how to retain, record,
savings associations exist (e.g., • Require a person to provide a copy and compile information about
companies that are under common to the relevant supervisory agencies agreements to disclose and report them.
control with a savings association), how only if the agency requests a copy; and OTS does not have a practicable or
many of these affiliates are affiliates of • Allow two or more insured reliable basis for quantifying the costs of
small savings associations, or how many depository institutions or affiliates that this proposed rule, or of any alternatives
of these affiliates are themselves small are parties to a covered agreement to to the rule. The requirements are too
entities. OTS does not know how many jointly file with each relevant new for those subject to the law to have
persons have entered into covered supervisory agency. learned what the law requires and
agreements with savings associations or The proposal would require each decide how to proceed. OTS cannot
affiliates of savings associations or how party to a covered agreement to file an predict how savings associations,
many of these persons are small entities. annual report with each relevant affiliates, and persons would comply
OTS specifically seeks comment on supervisory agency concerning the with the proposed rule. For example,
the number and size of savings disbursement, receipt, and uses of funds OTS cannot assess the extent to which
associations, affiliates of savings or other resources under the covered savings associations, affiliates, and
associations, and persons that are agreement. To minimize the reporting persons would avoid entering into
parties to covered agreements. OTS also burden, the proposal would: covered agreements as a result of a final
seeks comment on how many covered • Not mandate any particular form for rule.
agreements may currently exist and the annual report; Rather than merely guess at the
approximately how many will be • Allow each party to report on its regulatory burden of this proposed rule,
entered into each year in the future. own fiscal year basis; OTS solicits comment on these burdens
• Exempt a person from filing a report and on ways to minimize the burdens,
B. Requirements of the Proposed Rule for a fiscal year if the person does not consistent with the GLB Act.
As described more fully in the receive any funds or resources during
that year; C. Significant Alternatives
supplementary material provided above,
the proposed rule contains new • Provide simplified reporting The requirements in the proposed
disclosure and reporting requirements. procedures for persons that allocate and rule parallel those in the GLB Act. The
Most of the requirements are mandated use funds or other resources under a proposed rule would clarify the
by section 711 of the GLB Act. The GLB covered agreement for a specific statutory requirements in some areas
Act, however, directs the Federal purpose; and restate the requirements in a more
• Allow a person’s report to consist
banking agencies to ensure that the understandable manner in other areas. It
of, or incorporate, reports prepared for
regulations prescribed by the agency do would not impose any substantially
other purposes, such as tax forms and
not impose an undue burden on the different requirements.
financial statements;
parties. • Permit a savings association, Congress has decided that ‘‘each’’
The primary requirements under the affiliate, or person that is a party to five insured depository institution, affiliate,
proposed rule involve disclosure and or more covered agreements to file a or person that is a party to a covered
reporting of covered agreements. The single consolidated annual report agreement must disclose and report the
proposal would require each party to a covering all of the covered agreements, agreement. The GLB Act does not
covered agreement to disclose the aggregating certain information; expressly authorize OTS to exempt
agreement to the public by making a • Allow a savings association and its small savings associations, affiliates, or
complete copy available to any affiliates that are parties to the same persons from these requirements. OTS
individual or entity upon request. It covered agreement to file a single does not interpret the statute to permit
would also require each savings consolidated report; and such an exemption.
association or affiliate that is a party to • Allow a person to file its report The supplementary material provided
the covered agreement to provide a copy with the insured depository institution above describes and solicits comment
to each relevant supervisory agency (as or affiliate that is a party to the on a number of alternatives that would
defined in the proposal) and would agreement (rather than with the relevant reduce the regulatory burden. These
require each person that is a party to supervisory agency). include:
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31982 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
• Limiting the types of agreements any Federal rules that may duplicate, and affiliate of an insured depository
that are covered by the rule (e.g., overlap, or conflict with the proposal. institution that is a party to a covered
defining ‘‘CRA contacts,’’ ‘‘fulfillment of agreement to make a complete copy of
V. Executive Order 12866
CRA,’’ and the calculation of value more the agreement available to the public on
Determination
narrowly, or defining the statutory request at any time during the term of
exemptions for certain types of loans, OCC: The Comptroller of the Currency the agreement and 12 months after the
extensions of credit and commitments has determined that this proposed rule term of the agreement (proposed
more broadly); does not constitute a significant .4(b)). Accordingly, each party must
• Simplifying the procedures for regulatory action for the purpose of retain a copy of the agreement for that
parties to delete proprietary and Executive Order 12866. Reporting and period. Any party to a covered
confidential information; disclosure are mandated by section 711 agreement may request that the relevant
• Limiting which parties to an of the GLB Act. The proposed rule supervisory agency determine whether
agreement must comply with the closely follows the requirements of that certain portions of the agreement may
disclosure and reporting requirements statute. As described in the be exempt from disclosure under the
in multi-party agreements (e.g., not SUPPLEMENTARY INFORMATION, however, Freedom of Information Act (5 U.S.C.
applying the requirements to parties the proposal also contains regulatory 552 et seq.) prior to making the
that have not made CRA contacts, have options designed to minimize costs and agreement available to the public
not been the subject of CRA contacts, or burdens, where feasible and consistent (proposed .4(b)(1)(ii)).
do not know that CRA contacts have with the statute. The OCC invites An insured depository institution or
occurred); and national banks and the public to provide
affiliate of an insured depository
• Providing more flexible reporting specific cost estimates and related data
institution that enters into a covered
requirements (e.g., allowing parties to that would contribute to the accuracy of
agreement must file a copy of the
two or more agreements to use the OCC’s evaluations of the costs of the
agreement with the supervisory agency
consolidated reporting procedures, requirements in the rule.
OTS: OTS has determined that this within 30 days of entering into the
permitting affiliated persons that are
proposed rule does not constitute a agreement (proposed .4(c)(2)(i)). A
parties to the same covered agreement to
significant regulatory action for the person must make the agreement
file a consolidated report, allowing
purpose of Executive Order 12866. available to the relevant supervisory
persons to elect to report on specific
Reporting and disclosure are mandated agency upon request (proposed
purpose funds or resources under the
by section 711 of the GLB Act. Many of .4(c)(1)).
itemized reporting procedures, and
exempting savings associations and the proposed provisions closely follow The proposed rule also requires each
affiliates from filing a report for a fiscal the requirements of this section. OTS person, insured depository institution,
year if the savings association or affiliate has exercised its discretion, to the or affiliate of an insured depository
has not had transactions to report). extent possible, to propose regulatory institution that is a party to a covered
OTS requests comment on whether options to minimize costs and burdens. agreement to file an annual report that
these or other alternatives would reduce Nevertheless, OTS acknowledges that relates to the agreement for each fiscal
the burdens and whether any exceptions the rule would impose costs on insured year during the term of the agreement
for small institutions would be depository institutions, affiliates, and with the relevant supervisory agency of
appropriate. nongovernmental entities or persons by the insured depository institution or
requiring these entities to disclose and affiliate that is a party to the agreement
D. Other Matters (proposed .5(b)). The annual report
report on agreements. Therefore, OTS
These proposed requirements do not invites the thrift industry and the public of a person must include (1) the name
appear to duplicate or overlap with any to provide any cost estimates and and address of the person filing the
other Federal rules. To the extent that related data that they think would be report, (2) the names of the parties to the
required information is already useful to the agency in evaluating the agreement, and (3) the amount of funds
contained in reports prepared for other overall costs of the rule. or resources received during the fiscal
purposes, the proposed rule allows a year (proposed .5(d)). The annual
person’s report to consist of, or VI. Paperwork Reduction Act report of an insured depository
incorporate, these existing reports. The information collection and institution or affiliate must include (1)
OTS lacks sufficient information reporting requirements of the proposed the name and principal place of
about the contents of covered rule are described in II. above. In business of the institution or affiliate,
agreements, however, to conclude summary, the proposed rule requires (2) sufficient information to identify the
whether the proposed requirements persons, insured depository institutions, covered agreement for which the annual
conflict with other Federal rules. One and affiliates of insured depository report is being filed, and (3) information
area of potential conflict is the rule’s institutions that are parties to covered on payments and other resources
requirement to make a ‘‘complete copy’’ agreements (as defined by the proposed provided or received under the
of a covered agreement available to the rule) to make the agreements available agreement (proposed .5(e)). The
public and to the relevant supervisory to the public and the relevant proposed rule allows a person to send
agencies. OTS solicits specific comment supervisory agencies and to file annual its annual report either to the relevant
on whether covered agreements contain reports relating to the agreements with supervisory agency of each insured
information that savings associations, the relevant supervisory agencies. These depository institution or affiliate that is
affiliates, or persons may be barred from reporting and disclosure requirements a party to the agreement or to an insured
disclosing under other Federal rules are required under Title VII of the GLB depository institution or affiliate that is
(e.g., private customer information), or Act (Pub. L. 106–102, 113 Stat. 1465 a party to the agreement. The insured
may be permitted to refrain from (1999)), which adds new section 48 to depository institution or affiliate must
disclosing to the public or a Federal the Federal Deposit Insurance Act (12 send the annual report of a person to the
banking agency under other Federal U.S.C. 1831y). relevant supervisory agency within 30
rules (e.g., proprietary information). The proposed rule requires each days of receiving the report (proposed
OTS also generally seeks comment on person, insured depository institution, .5(f)(2)(ii)).
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31983
Finally, an insured depository (3) Ways to enhance the quality, delegated to the Board by the OMB.
institution or affiliate that is a party to utility, and clarity of the information to Comments on the collections of
a covered agreement that concerns the be collected; information should be sent to Mary M.
performance of any activity of a CRA (4) Ways to minimize the burden of West, Federal Reserve Board Clearance
affiliate (as defined in ——.8(c)) is the information collections on Officer, Division of Research and
required to notify each person that is a respondents, including the use of Statistics, Mail Stop 97, Board of
party to the agreement that the automated collection techniques or Governors of the Federal Reserve
agreement concerns a CRA affiliate other forms of information technology; System, Washington, DC 20551, with a
(proposed .2(d)). and copy to the Office of Management and
The agencies request public comment (5) Estimates of capital or start-up Budget, Paperwork Reduction Project
on all aspects of the collections of costs and costs of operation, (7100–to be assigned), Washington, DC
information contained in this proposed maintenance, and purchases of services 20503.
rule, including how burdensome it to provide information. The potential respondents are state
would be for persons, insured The agencies will revisit these member banks, bank holding
depository institutions, and affiliates to estimates when they have more companies, affiliates of bank holding
comply with each of the reporting and information on the scope of the rule and companies other than savings
disclosure requirements of the proposed the number of potential respondents associations, national banks, insured
rule. and covered agreements. The revised nonmember banks, and subsidiaries of
The estimated total annual reporting estimates will also reflect all comments such associations and banks, and
and disclosure burden of the proposed received concerning the burden nongovernmental entities or persons.
rule will depend on the number of estimates. Respondents/recordkeepers Estimated number of financial
covered agreements. The agreements are not required to respond to these institution respondents: 507.
that trigger the disclosure and reporting collections of information unless the Estimated number of
requirements of the proposed rule, agencies display a currently valid Office nongovernmental entity or person
however, are entered into by private of Management and Budget (OMB) respondents: 507.
parties on a voluntary basis, are not control number. The agencies are Estimated average annual burden
enforced by the agencies and, to date, currently requesting their respective hours for all disclosure and reporting
have not been required to be disclosed control numbers for these information requirements of the proposed rule per
to the agencies. As a result, the agencies collections from OMB. financial institution respondent per
cannot accurately estimate at this time OCC: The collection of information agreement: 6 hours.
the total number of insured depository requirements contained in the Estimated burden hours for all
institutions, affiliates or persons that are Regulation will be submitted to the disclosure and reporting requirements
parties to covered agreements or the OMB in accordance with the Paperwork of the proposed rule per
total number of covered agreements that Reduction Act of 1995 (44 U.S.C. 3507). nongovernmental entity or person per
may be subject to the disclosure and Comments on the collections of agreement: 4 hours.
reporting requirements of the rule. The information should be sent to the Estimated total annual reporting and
agencies also are unable to identify a Communications Division, Office of the disclosure burden: 5,070 hours.
reasonable proxy for estimating the Comptroller of the Currency, 250 E
FDIC: The collections of information
number of covered agreements. Solely Street, SW, Third Floor, Attention:
contained in the Regulation will be
for purposes of complying with the 1557–to be assigned, Washington, DC
submitted to the OMB in accordance
requirements of the Paperwork 20219, with a copy to the Office of
with the Paperwork Reduction Act of
Reduction Act, each agency has Management and Budget, Paperwork
1995 (44 U.S.C. 3507). The FDIC will
computed the estimate of annual Reduction Project (1557–to be assigned),
use any comments received to develop
paperwork burden assuming that 50 Washington, DC 20503.
its new burden estimates. Comments on
The potential respondents include
percent of the insured depository the collections of information should be
national banks, subsidiaries of national
institutions it regulates are parties to sent to Steven F. Hanft, Assistant
banks, and nongovernmental entities or
one covered agreement. In addition, the Executive Secretary (Regulatory
persons.
agencies have assumed that one person Estimated number of financial Analysis), Federal Deposit Insurance
is a party to each of these agreements. institution respondents: 1,200. Corporation, F–4080, 550 17th Street,
The agencies specifically request Estimated number of nongovernmental NW, Washington, DC 20429, with a
comment on these assumptions, the entity or person respondents: 1,200. copy to the Office of Management and
total number of persons, insured Estimated average annual burden Budget, Paperwork Reduction Project
depository institutions, and affiliates hours for all disclosure and reporting (3064–to be assigned), Washington, DC
that may be parties to covered requirements of the proposed rule per 20503.
agreements, and the total number of financial institution respondent per The potential respondents are insured
covered agreements that may be subject agreement: 6 hours. nonmember banks, subsidiaries of
to the disclosure and reporting Estimated burden hours for all insured nonmember banks, and
requirements of the rule. disclosure and reporting requirements nongovernmental entities or persons.
The agencies also invite comment on: of the proposed rule per Estimated number of financial
(1) Whether the collections of nongovernmental entity or person per institution respondents: 2,850.
information contained in the notice of agreement: 4 hours. Estimated number of
proposed rulemaking are necessary for Estimated total annual reporting and nongovernmental entity or person
the proper performance of each agency’s disclosure burden: 12,000 hours. respondents: 2,850.
functions, including whether the Board: In accordance with section Estimated average annual burden
information has practical utility; 3506 of the Paperwork Reduction Act of hours for all disclosure and reporting
(2) The accuracy of each agency’s 1995 (44 U.S.C. Ch. 35; 5 CFR 1320, requirements of the proposed rule per
estimate of the burden of the proposed appendix A.1), the Board reviewed the financial institution respondent per
information collections; Regulation under the authority agreement: 6 hours.
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31984 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
Estimated burden hours for all sections and use of headings) make the to provide written comments in the
disclosure and reporting requirements rule easier to understand? If so, what spaces provided. Written comments
of the proposed rule per changes to the format would make the enable the FDIC to thoughtfully
nongovernmental entity or person per rule easier to understand? consider possible changes to the
agreement: 4 hours. (5) Would increasing the number of proposed regulation.
Estimated total annual reporting and sections (and making each section The FDIC is also interested in your
disclosure burden: 28,500 hours. shorter) clarify the rule? If so, which feedback on the EPC site. We have
OTS: The collection of information portions of the rule should be changed provided a space for you to comment on
requirements contained in the in this respect? the site itself. Answers to this question
Regulation will be submitted to the (6) What additional changes would will help the FDIC evaluate the EPC site
OMB in accordance with the Paperwork make the rule easier to understand? for use in future rulemaking.
Reduction Act of 1995 (44 U.S.C. 3507). The agencies also solicit comment
At the conclusion of the EPC site you
The OTS will use any comments about whether it would be appropriate
will have an opportunity to provide us
received to develop its new burden and useful to include in the rule the
with your name, indicate whether you
estimates. Comments on the collection examples discussed in this preamble.
are an individual, insured depository
of information should be sent to the The agencies note that creating safe
institution, financial holding company,
Dissemination Branch (1550-to be harbors in the rule may generate certain
community-based organization, trade
assigned), Office of Thrift Supervision, problems over time due to changes in
association, government agency, or
1700 G Street, NW, Washington, DC technology or business practices. Are
there alternatives that the agencies other, and provide the name of the
20552, with a copy to the Office of organization you represent, if
Management and Budget, Paperwork should consider to illustrate the terms
in the rule? applicable. Whether you choose to
Reduction Project (1550-to be assigned), respond to these questions is entirely up
Washington, DC 20503. VIII. FDIC’s Electronic Public Comment to you. Any responses received may
The potential respondents are savings Site help the FDIC to better understand the
and loan holding companies, savings public comments it receives.
The FDIC has included a page on its
associations, companies controlled by
web site to facilitate the submission of IX. Unfunded Mandates Act of 1995
savings and loan holding companies
electronic comments in response to this
and savings associations, and OCC: Section 202 of the Unfunded
general solicitation (the EPC site). The
nongovernmental entities or persons. Mandates Reform Act of 1995, 2 U.S.C.
Estimated number of financial EPC site provides an alternative to the
written letter and may be a more 1532 (Unfunded Mandates Act),
institution respondents: 552. requires that an agency prepare a
Estimated number of convenient way for you to submit your
comments. Commenting through the budgetary impact statement before
nongovernmental entity or person promulgating a rule that includes a
respondents: 552. EPC site will assist the FDIC to more
accurately and efficiently analyze Federal mandate that may result in
Estimated average annual burden
comments submitted electronically. If expenditures by state, local, and tribal
hours for all disclosure and reporting
you submit your comments through the governments, in the aggregate, or by the
requirements of the proposed rule per
EPC site your comments will receive the private sector, of $100 million or more
financial institution respondent per
same consideration that they would in any one year. If a budgetary impact
agreement: 6 hours.
receive if submitted in hard copy to the statement is required, section 205 of the
Estimated burden hours for all
FDIC’s street address. Information Unfunded Mandates Act also requires
disclosure and reporting requirements
provided through the EPC site will be an agency to identify and consider a
of the proposed rule per
used by the FDIC only to assist in its reasonable number of regulatory
nongovernmental entity or person per
analysis of the proposed regulation. The alternatives before promulgating a rule.
agreement: 4 hours.
Estimated total annual reporting and FDIC will not use an individual’s name The proposed rule would not apply to
disclosure burden: 5,520 hours. or any other personal identifier of an state, local or tribal governments.
individual to retrieve records or Although the proposed rule would
VII. Solicitation of Comments information submitted through the EPC apply to insured depository institutions,
Regarding the Use of ‘‘Plain Language’’ site. Like comments submitted in hard affiliates, and nongovernmental entities
Section 722 of the GLB Act requires copy to the FDIC’s street address, EPC and persons, OCC is not required to
the agencies to use ‘‘plain language’’ in site comments will be made available in assess the effects of its regulatory
all proposed and final rules published their entirety (including the actions on the private sector to the
after January 1, 2000. The agencies commenter’s name and address if the extent such regulations incorporate
invite comments about how to make the commenter chooses to provide them) for requirements specifically set forth in
proposed rule easier to understand, public inspection. law. 2 U.S.C. 1531. Many of the
including answers to the following The EPC site will be available on the proposed provisions closely follow the
questions: FDIC’s home page at http:// requirements of Section 711 of the
(1) Have the agencies organized the www.fdic.gov. You will be able to GLBA. Moreover, the proposal contains
material in an effective manner? If not, provide comments directly on any of the regulatory options designed to minimize
how could the material be better sections of the proposed regulation as costs and burdens. Therefore, the OCC
organized? well as the specific questions that have has determined that this proposed rule
(2) Are the terms of the rule clearly been asked in the preceding will not result in expenditures by State,
stated? If not, how could the terms be Supplementary Information section. local, and tribal governments, in the
more clearly stated? You will also be able to view the aggregate, or by the private sector, of
(3) Does the rule contain technical regulation and Supplementary $100 million or more in any one year.
language or jargon that is unclear? If so, Information sections that related to your Accordingly, the OCC has not prepared
which language requires clarification? comments directly on the site. Because a budgetary impact statement or
(4) Would a different format (with the GLB Act requires promulgation of specifically addressed the regulatory
respect to the grouping and order of this regulation, the FDIC encourages you alternatives considered.
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31985
OTS: Section 202 of the Unfunded recordkeeping requirements, Savings agreement) cash payments, grants, or
Mandates Reform Act of 1995, 2 U.S.C. association. other consideration (except loans) that
1532 (Unfunded Mandates Act), have an aggregate value of more than
Office of the Comptroller of the
requires that an agency prepare a $10,000 in any calendar year; or
Currency (ii) Make to one or more individuals
budgetary impact statement before
promulgating a rule that includes a 12 CFR Chapter I or entities (whether or not parties to the
Federal mandate that may result in agreement) loans that have an aggregate
Authority and Issuance
expenditures by state, local, and tribal principal amount of more than $50,000
governments, in the aggregate, or by the For the reasons set out in the joint in any calendar year.
private sector, of $100 million or more preamble, the OCC proposes to amend (4) The agreement is made pursuant
in any one year. If a budgetary impact title 12, chapter I, of the Code of Federal to, or in connection with, the fulfillment
statement is required, section 205 of the Regulations by adding a new part 35 to of the Community Reinvestment Act of
Unfunded Mandates Act also requires read as follows: 1977 (12 U.S.C. 2901 et seq.) (CRA), as
an agency to identify and consider a defined in paragraph (c) of this section.
reasonable number of regulatory PART 35—DISCLOSURE AND (b) Agreements that are not covered
alternatives before promulgating a rule. REPORTING OF CRA RELATED agreements— (1) Certain loans. A
The proposed rule would not apply to AGREEMENTS covered agreement does not include:
state, local or tribal governments. Sec.
(i) Any individual mortgage loan; or
Although the proposed rule would 35.1 Purpose and scope. (ii) Any specific contract or
apply to insured depository institutions, 35.2 Definition of covered agreement. commitment for a loan or extension of
affiliates, and nongovernmental entities 35.3 Related agreements considered a single credit to individuals, businesses, farms,
and persons, OTS is not required to agreement. or other entities if:
assess the effects of its regulatory 35.4 Disclosure of covered agreements. (A) The funds are loaned at rates not
actions on the private sector to the 35.5 Annual reports. substantially below market rates; and
extent such regulations incorporate 35.6 Release of information under FOIA. (B) The purpose of the loan or
requirements specifically set forth in 35.7 Compliance provisions. extension of credit does not include any
35.8 Other definitions and rules of re-lending of the borrowed funds to
law. 2 U.S.C. 1531. Many of the
construction. third parties.
proposed provisions closely follow the
requirements of section 711 of the GLB Authority: 12 U.S.C. 1831y. (2) Agreements where there has not
Act. Moreover, OTS has exercised its been a CRA contact—(i)General. A
§ 35.1 Purpose and scope.
discretion, to the extent possible, to covered agreement does not include any
(a) General. This part implements agreement entered into by an insured
propose regulatory options to minimize
section 711 of the Gramm-Leach-Bliley depository institution or affiliate of an
costs and burdens. Therefore, the OTS
Act (12 U.S.C. 1831y). That section insured depository institution with a
has determined that this proposed rule
requires any nongovernmental entity or person who has not commented on,
will not result in expenditures by State,
local, and tribal governments, in the person, insured depository institution, testified about, or discussed with the
aggregate, or by the private sector, of and affiliate of an insured depository institution, or otherwise contacted the
$100 million or more in any one year. institution that enters into a covered institution, concerning the CRA.
Accordingly, the OTS has not prepared agreement to: (ii) Examples of CRA contact. The
(1) Make the covered agreement following are examples of CRA contacts.
a budgetary impact statement or
available to the public and the These examples are not exclusive and
specifically addressed the regulatory
appropriate Federal banking agency; other actions by a person may also make
alternatives considered.
and the exemption in paragraph (b)(2)(i) of
List of Subjects (2) File an annual report with the this section unavailable. If a person
appropriate Federal banking agency engages in any of the following actions
12 CFR Part 35
concerning the covered agreement. and subsequently enters into an
Community development, Credit, (b) The provisions of this part are
Freedom of information, Investments, agreement with the insured depository
enforced by the OCC with respect to
National banks, Reporting and institution or any affiliate of the
national banks and their subsidiaries.
recordkeeping requirements. institution, the agreement is not exempt
§ 35.2 Definition of covered agreement. under paragraph (b)(2)(i) of this section.
12 CFR Part 207 (a) General definition. A covered (A) CRA contact with a Federal
Banks, banking, Community agreement is any contract, arrangement, banking agency. (1) The person submits
development, Federal Reserve System, or understanding (whether or not legally a written comment to a Federal banking
Holding companies, Reporting and binding) that meets all of the following agency that discusses the record of
recordkeeping requirements. criteria: performance or future performance
(1) The agreement is in writing. under the CRA of an insured depository
12 CFR Part 346 (2) The parties to the agreement institution or any CRA affiliate of the
Banks, banking, Community include: institution.
development, and Reporting and (i) An insured depository institution (2) The person provides oral
recordkeeping. or an affiliate of an insured depository testimony or comments to a Federal
institution; and banking agency concerning the record of
12 CFR Part 533 performance or future performance
(ii) A nongovernmental entity or
Administrative practice and person (referred to hereafter as a under the CRA of an insured depository
procedure, Business and industry, person). institution or any CRA affiliate of the
Community development, Confidential (3) The agreement provides for the institution.
business information, Credit, Freedom insured depository institution or any (B) CRA contact with insured
of information, Holding companies, affiliate to: depository institution or affiliate. (1)
Investments, Mortgages, Nonprofit (i) Provide to one or more individuals The person has a discussion with, or
organizations, Penalties, Reporting and or entities (whether or not parties to the otherwise contacts, an insured
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31986 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
depository institution or any affiliate of (B) A person makes a statement § 25.22, including loan purchases, loan
the institution about providing (or concerning an insured depository commitments, and letters of credit;
refraining from providing) written or institution or affiliate at a widely (iii) Making investments, deposits, or
oral comments or testimony to any attended conference or seminar grants, or acquiring membership shares,
Federal banking agency concerning the regarding a general topic. A public or that have as their primary purpose
record of performance or future private meeting, public hearing, or other community development, as described
performance under the CRA of the meeting regarding one or more specific in § 25.23;
institution or any CRA affiliate of the institutions or affiliates or transactions (iv) Delivering retail banking services,
institution. involving an application for a deposit as described in § 25.24(d);
(2) The person has a discussion with, facility is not considered a widely (v) Providing community
or otherwise contacts, an insured attended conference or seminar. development services, as described in
depository institution or any affiliate of (C) A person sends a similar § 25.24(e);
the institution about providing (or fundraising letter to insured depository (vi) In the case of a wholesale or
refraining from providing) written institutions and to other businesses in limited-purpose insured depository
comments to the institution that must be its community. The letter encourages all institution, community development
included in the institution’s CRA public businesses in the community to meet lending, including originating and
file. their obligation to assist in making the purchasing loans and making loan
(3) The person has a discussion with, local community a better place to live commitments and letters of credit,
or otherwise contacts, an insured and work. making qualified investments, or
depository institution or any affiliate of (D) A person sends a general offering providing community development
the institution concerning the CRA circular to financial institutions offering services, as described in § 25.25(c);
rating of the institution, or the CRA to sell a portfolio of loans. An insured (vii) In the case of a small insured
record of performance of the institution depository institution that receives the depository institution, any lending or
or any CRA affiliate of the institution. offering circular discusses with the other activity described in § 25.26(a); or
(4) The person has a discussion with, (viii) In the case of an insured
person whether the loans are in the
or otherwise contacts, an insured depository institution that is evaluated
institution’s local community. No
depository institution or any affiliate of on the basis of a strategic plan, any
reference to the CRA or the institution’s
the institution concerning actions that element of the strategic plan, as
CRA performance is made in the
should be taken to improve the CRA described in § 25.27(f).
performance of the institution or any offering circular or in the discussions of
the parties. (d) Agreements relating to activities of
CRA affiliate of the institution. CRA affiliates. An insured depository
(5) The person has a discussion with, (c) Fulfillment of the CRA—(1)
General. Fulfillment of the CRA means institution or affiliate that is a party to
or otherwise contacts, an insured a covered agreement that concerns the
depository institution or any affiliate of the list of factors that the Federal
banking agencies have determined have performance of any activity of a CRA
the institution concerning any affiliate described in paragraph (c) of
obligation or responsibility that the a material impact on an agency’s
decision: this section must notify each person that
institution or any CRA affiliate of the is a party to the agreement that the
institution may have to meet the (i) To approve or disapprove an
agreement concerns a CRA affiliate. The
banking needs of its community and the application for a deposit facility (as
insured depository institution or
discussion or contact occurs while the defined in section 803 of the CRA (12
affiliate must provide this notice prior
institution or any affiliate has an U.S.C. 2902)); or
to the time the agreement is entered into
application for a deposit facility (ii) To assign a rating to an insured
if the affiliate is a CRA affiliate at that
pending at a Federal banking agency or depository institution under section 807
time, or within a reasonable time after
is undergoing a publicly announced of the CRA (12 U.S.C. 2906).
the affiliate becomes a CRA affiliate if
CRA performance examination. (2) List of factors. The list of factors
the affiliate is not a CRA affiliate at the
(iii) Examples of actions that are not referred to in paragraph (c)(1) of this
time the agreement is entered into.
CRA contacts. The following are section means the performance of any of (e) Disclosure and reporting of certain
examples of actions that are not CRA the following activities by an insured existing agreements that become
contacts. The actions described in these depository institution or CRA affiliate covered agreements. An agreement that
examples would not, by themselves, that is a party to the agreement or that concerns the performance of any
cause the exemption in paragraph is an affiliate of a party to the agreement activity described in paragraph (c) of
(b)(2)(i) of this section to be unavailable. or by any person that is a party to the this section by an affiliate may become
These examples are not exclusive. agreement: a covered agreement after it is entered
(A) A person provides comments or (i) Providing or refraining from into if the affiliate subsequently
testimony concerning an insured providing written or oral comments or becomes a CRA affiliate. In that event,
depository institution or affiliate to a testimony to any Federal banking the disclosure and reporting obligations
Federal banking agency in response to a agency concerning the record of under §§ 35.4 and 35.5 begin on the date
direct request by the agency for performance or future performance that the agreement becomes a covered
comments or testimony from that under the CRA of an insured depository agreement and do not apply to the
person. Direct requests for comments or institution or CRA affiliate that is a period prior to that date.
testimony do not include a general party to the agreement or an affiliate of
invitation by a Federal banking agency a party to the agreement or written § 35.3 Related agreements considered a
for comments or testimony from the comments that are required to be single agreement.
public in connection with a CRA included in the CRA public file of any The following rules must be applied
performance evaluation of, or such insured depository institution; in determining whether a written
application for a deposit facility by, an (ii) Home-purchase, home- contract, arrangement, or understanding
insured depository institution or an improvement, small business, small is a covered agreement under § 35.2.
application by a company to acquire an farm, community development, and (a) Contracts, arrangements, or
insured depository institution. consumer lending, as described in understandings entered into by same
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31987
parties. All written contracts, Disclosure by person. Each person that (ii) Each fiscal year during the term of
arrangements, or understandings to is a party to a covered agreement must the covered agreement.
which an insured depository institution provide a complete copy of the (2) Exception for person that has not
or an affiliate of the insured depository agreement to the relevant supervisory received any funds or resources. A
institution is a party shall be considered agency within 30 days of receiving a person is not required to file an annual
to be a single agreement if the contracts, request from the agency for the report for a covered agreement for any
arrangements, or understandings: agreement. This obligation terminates fiscal year during the term of the
(1) Are entered into with the same 12 months after the end of the term of agreement in which the person did not
person; the covered agreement. receive any funds or other resources
(2) Were entered into within the same (2) Disclosure by insured depository under the agreement.
12-month period; and institution or affiliate—(i) Filing with (d) Annual reports filed by person—
(3) Are each in fulfillment of the CRA. the relevant supervisory agency. Each (1) General. The annual report filed by
(b) Substantively related contracts. insured depository institution or a person under this section must
All written contracts to which an affiliate that is a party to a covered include the following:
insured depository institution or an agreement must provide a copy of the (i) The name and mailing address of
affiliate of the insured depository agreement to each relevant supervisory the person filing the report;
institution is a party shall be considered agency within 30 days after the date the (ii) Information sufficient to identify
to be a single agreement, without regard insured depository institution or the covered agreement for which the
to whether the other parties to the affiliate enters into the agreement. annual report is being filed, such as by
contracts are the same or whether each (ii) Joint filings. In the event that two providing the names of the parties to the
such contract is in fulfillment of the or more insured depository institutions agreement and the date the agreement
CRA, if the contracts were negotiated in or affiliates are parties to a covered was entered into or by providing a copy
a coordinated fashion and a person is a agreement, the insured depository of the agreement;
party to each contract. institution(s) and affiliate(s) may jointly (iii) The amount of funds or resources
file a copy of the covered agreement received under the covered agreement
§ 35.4 Disclosure of covered agreements. during the fiscal year; and
(a) Effective date. This section applies with each relevant supervisory agency.
Any joint filing must identify the (iv) The information required by
only to covered agreements entered into paragraphs (d)(2) and (d)(3) of this
after November 12, 1999. insured depository institution(s) and
affiliate(s) for whom the covered section concerning the use of funds
(b) Disclosure of covered agreements received under the covered agreement.
to the public—(1) Disclosure required. agreement is being filed.
(2) Reporting for funds or resources
(i) Each person and each insured (d) Relevant supervisory agency. For
allocated and used for a specific
depository institution or affiliate that purposes of this section and § 35.5, the
purpose. For funds or other resources
enters into a covered agreement must ‘‘relevant supervisory agency’’ for a
that the person received during the
make a complete copy of the covered covered agreement means the
fiscal year under the covered agreement
agreement available to any individual or appropriate Federal banking agency
and allocated and used for a specific
entity upon request. for—
purpose during the fiscal year, the
(ii) In disclosing a covered agreement (1) Each insured depository
annual report must:
to the public under paragraph (b)(1)(i) of institution (or subsidiary thereof) that is (i) Describe each specific purpose for
this section, a person, insured a party to the covered agreement; which the funds or resources were used
depository institution, or affiliate may (2) Each insured depository during the fiscal year; and (ii) State the
withhold from disclosure only those institution (or subsidiary thereof) or amount of funds or resources used
portions of an agreement that the CRA affiliate that makes payments or during the fiscal year for each specific
relevant supervisory agency determines loans or provides services that are purpose.
are exempt from disclosure under the subject to the covered agreement; and (3) Funds or resources used for other
Freedom of Information Act (5 U.S.C. (3) Any company (other than an purposes. For all funds or resources that
552 et seq.). insured depository institution or the person received during the fiscal
(2) Duration of obligation. The subsidiary thereof) that is a party to the year under the covered agreement and
obligation to disclose a covered covered agreement. did not use for a specific purpose, the
agreement terminates 12 months after annual report must:
§ 35.5 Annual reports.
the end of the term of the agreement. (i) State the amount received during
(3) Reasonable copy and mailing fees. (a) Effective date. This section applies the fiscal year; and
Each person and each insured only to covered agreements entered into (ii) Provide a detailed, itemized list of
depository institution or affiliate may on or after May 12, 2000. how the funds or resources were used
charge an individual or entity that (b) Annual report required. Each during the fiscal year, including the
requests a copy of a covered agreement person and each insured depository total amount used for:
a reasonable fee not to exceed the cost institution or affiliate that is a party to (A) Compensation of officers,
of copying and mailing the agreement. a covered agreement must file an annual directors, and employees;
(4) Use of CRA public file by insured report with each relevant supervisory (B) Administrative expenses;
depository institution. An insured agency concerning the disbursement, (C) Travel expenses;
depository institution may fulfill its receipt, and uses of funds or other (D) Entertainment expenses;
obligation under this paragraph (b) by resources under the covered agreement. (E) Payment of consulting and
placing a copy of the covered agreement (c) Duration of reporting professional fees; and
in the insured depository institution’s requirement—(1) General. An annual (F) Other expenses or uses.
CRA public file and making the report under this section must be filed (4) Use of other reports. The annual
agreement available in accordance with with each relevant supervisory agency report filed by a person may consist of,
the procedures set forth in § 35.43. for: or incorporate, a report prepared for any
(c) Disclosure of covered agreements (i) The fiscal year in which the parties other purpose, such as an Internal
to the relevant supervisory agency—(1) enter into the covered agreement; and Revenue Service form, a state tax form,
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31988 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
a report to members or shareholders, (A) By the insured depository to the public in accordance with the
financial statements, or other report, so institution or affiliate during its fiscal Freedom of Information Act (5 U.S.C.
long as the annual report contains all of year; and 552 et seq.) and the OCC’s Rules
the information required by this (B) By any other party to the Regarding the Availability of
paragraph (d). agreement, unless such information is Information (12 CFR part 4). A party to
(5) Consolidated reports permitted. A not known to the insured depository a covered agreement may request
person that is a party to five or more institution or affiliate filing the report or confidential treatment of proprietary
covered agreements may file with each such information is or will be contained and confidential information in a
relevant supervisory agency a single in the annual report filed by a person covered agreement or an annual report
consolidated annual report covering all under paragraph (d) of this section. under those procedures.
the covered agreements. Any (2) Consolidated reports permitted—
consolidated report must contain all the (i) Party to large number of agreements. § 35.7 Compliance provisions.
information required by this paragraph An insured depository institution or (a) Willful failure to comply with
(d). The information required to be affiliate that is a party to five or more disclosure and reporting obligations. (1)
reported under paragraph (d)(1)(iii), covered agreements may file a single If the OCC determines that a person has
(d)(2), and (d)(3) of this section may be consolidated annual report with each willfully failed to comply in a material
reported on an aggregate basis for all relevant supervisory agency covering all way with §§ 35.4 or 35.5, the OCC will
covered agreements. the covered agreements. notify the person in writing of that
(e) Annual report filed by insured (ii) Affiliated entities party to the determination and provide the person a
depository institution or affiliate—(1) same agreement. An insured depository period of 90 days (or such longer period
General. The annual report filed by an institution and its affiliates that are as the OCC finds to be reasonable under
insured depository institution or parties to the same covered agreement the circumstances) to comply.
affiliate must include the following: may file a single consolidated annual (2) If the person does not comply
(i) The name and principal place of report relating to the agreement with within the time period established by
business of the insured depository each relevant supervisory agency for the the OCC, the agreement shall thereafter
institution or affiliate filing the report; covered agreement. be unenforceable by that person by
(ii) Information sufficient to identify (iii) Content of report. Any operation of section 48 of the Federal
the covered agreement for which the consolidated annual report must contain Deposit Insurance Act (12 U.S.C.
annual report is being filed, such as by all the information required by this 1831y).
providing the names of the parties to the paragraph (e). The amounts and data (3) The OCC may assist any insured
agreement and the date the agreement required to be reported under paragraph depository institution or affiliate that is
was entered into or by providing a copy (e)(1)(iii), (iv), and (vi) of this section a party to a covered agreement that is
of the agreement; may be reported on an aggregate basis unenforceable by a person by operation
(iii) The aggregate amount of for all covered agreements. of section 48 of the Federal Deposit
payments, aggregate amount of fees, and (f) Time and place of filing—(1) Insurance Act (12 U.S.C. 1831y) in
aggregate amount of loans provided by General. Each party must file its annual identifying a successor to assume the
the insured depository institution or report with each relevant supervisory person’s responsibilities under the
affiliate under the covered agreement to agency for the covered agreement no agreement.
any other party to the agreement during later than six months following the end (b) Diversion of funds. If a court or
the fiscal year; of the fiscal year covered by the report. other body of competent jurisdiction
(iv) The aggregate amount of (2) Alternative method of fulfilling determines that funds or resources
payments, aggregate amount of fees, and annual reporting requirement for a received under a covered agreement
aggregate amount of loans received by person. (i) A person may fulfill the filing have been diverted contrary to the
the insured depository institution or requirements of this section by purposes of the covered agreement for
affiliate under the covered agreement providing the following materials to an an individual’s personal financial gain,
from any other party to the agreement insured depository institution or the OCC may take either or both of the
during the fiscal year; affiliate that is a party to the agreement
(v) A general description of the terms following actions:
no later than five months following the (1) Order the individual to disgorge
and conditions of any payments, fees, or end of the person’s fiscal year:
loans reported under paragraphs the diverted funds or resources received
(A) A copy of the person’s annual
(e)(1)(iii) and (iv) of this section, or, in under the agreement;
report required under paragraph (d) of
the event such terms and conditions are (2) Prohibit the individual from being
this section for the fiscal year; and
set forth: (B) Written instructions that the a party to any covered agreement for a
(A) In the covered agreement, a insured depository institution or period not to exceed 10 years.
statement identifying the covered affiliate promptly forward the annual (c) Notice and opportunity to respond.
agreement and the date the agreement report to the relevant supervisory Before making a determination under
was filed with the relevant supervisory agency or agencies on behalf of the paragraph (a)(1) of this section, or taking
agency; or person. any action under paragraph (b) of this
(B) In a previous annual report filed (ii) An insured depository institution section, the OCC will provide written
by the insured depository institution or or affiliate that receives an annual report notice and an opportunity to present
affiliate, a statement identifying the date from a person pursuant to paragraph information to the OCC concerning any
the report was filed with the relevant (f)(2)(i) of this section must file the relevant facts or circumstances relating
supervisory agency; and report with the relevant supervisory to the matter.
(vi) The aggregate amount and agency or agencies on behalf of the (d) Inadvertent or de minimis errors.
number of loans, aggregate amount and person within 30 days. Inadvertent or de minimis errors in
number of investments, and aggregate annual reports or other documents filed
amount of services provided under the § 35.6 Release of information under FOIA. with the OCC under §§ 35.4 or 35.5 will
covered agreement to any individual or The OCC will make covered not subject the reporting party to any
entity not a party to the agreement: agreements and annual reports available penalty.
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31989
(e) Enforcement of provisions in society, other organization, or 207.5 Annual reports.
covered agreements. No provision of individual. 207.6 Release of information under FOIA.
this part shall be construed as (2) Exclusions. A nongovernmental 207.7 Compliance provisions.
authorizing the OCC to enforce the entity or person does not include: 207.8 Other definitions and rules of
construction used in this part.
provisions of any covered agreement. (i) The United States government, a
state government, a unit of local Authority: 12 U.S.C. 1831y.
§ 35.8 Other definitions and rules of government (including a county, city,
construction. § 207.1 Purpose and scope of this part.
town, township, parish, village, or other
(a) Affiliate. ‘‘Affiliate’’ means: general-purpose subdivision of a state) (a) General. This part implements
(1) Any company that controls, is or an Indian tribe or tribal organization section 711 of the Gramm-Leach-Bliley
controlled by, or is under common established under Federal, state or Act (12 U.S.C. 1831y). That section
control with another company; and Indian tribal law (including the requires any nongovernmental entity or
(2) For the purpose of determining Department of Hawaiian Home Lands), person, insured depository institution,
whether an agreement is a covered or a department, agency, or and affiliate of an insured depository
agreement under § 35.2, an ‘‘affiliate’’ instrumentality of any such entity; institution that enters into a covered
includes any company that would be (ii) A federally-chartered public agreement to—
under common control or merged with corporation that receives federal funds
another company on consummation of (1) Make the covered agreement
appropriated specifically for that available to the public and the
any transaction pending before a corporation;
Federal banking agency at the time: appropriate Federal banking agency;
(iii) An insured depository institution and
(i) The parties enter into the
or affiliate of an insured depository
agreement; and (2) File an annual report with the
institution; or
(ii) The person that is a party to the appropriate Federal banking agency
(iv) An officer, director, employee, or
agreement makes a CRA contact, as concerning the covered agreement.
representative (acting in his or her
described in § 35.2(b)(2). (b) The provisions of this part are
capacity as an officer, director,
(b) Control. ‘‘Control’’ is defined in enforced by the Board with respect to
employee, or representative) of an entity
section 2(a) of the Bank Holding state member banks, bank holding
listed in paragraphs (h)(2)(i) through
Company Act (12 U.S.C. 1841(a)). companies, and affiliates of bank
(c) CRA affiliate. A ‘‘CRA affiliate’’ of (iii) of this section.
(i) Party. The term ‘‘party’’ with holding companies, other than banks,
an insured depository institution is any savings associations and subsidiaries of
company that is an affiliate of an respect to a covered agreement means
each person and each insured banks and savings associations.
insured depository institution to the
extent, and only to the extent, that the depository institution or affiliate that § 207.2 Definition of covered agreement.
activities of the affiliate were considered entered into the agreement.
(j) Person. For purposes of this part, (a) General definition. A covered
by the appropriate Federal banking
a ‘‘person’’ is any nongovernmental agreement is any contract, arrangement,
agency when evaluating the CRA
entity or person. or understanding (whether or not legally
performance of the institution at its
(k) Term of agreement. An agreement binding) that meets all of the following
most recent CRA examination.
that does not by its terms establish a criteria—
(d) CRA public file. For purposes of
this part, ‘‘CRA public file’’ means the termination date is considered to (1) The agreement is in writing.
public file maintained by an insured terminate on the last date on which any
(2) The parties to the agreement
depository institution and described in party to the agreement makes any
include—
§ 25.43. payment or provides any loan or other
resources under the agreement, unless (i) An insured depository institution
(e) Federal banking agency; or an affiliate of an insured depository
appropriate Federal banking agency. the appropriate Federal banking agency
otherwise notifies each party in writing. institution; and
The terms ‘‘Federal banking agency’’
and ‘‘appropriate Federal banking Dated: May 10, 2000. (ii) A nongovernmental entity or
agency’’ have the same meanings as in John D. Hawke, Jr., person (referred to hereafter as a
section 3 of the Federal Deposit person).
Comptroller of the Currency.
Insurance Act (12 U.S.C. 1813). (3) The agreement provides for the
(f) Fiscal year. (1) The fiscal year for Federal Reserve System insured depository institution or any
a person that does not have a fiscal year 12 CFR Chapter II affiliate to—
shall be the calendar year; (i) Provide to one or more individuals
(2) Any person, insured depository Authority and Issuance
or entities (whether or not parties to the
institution, or affiliate that has a fiscal For the reasons set out in the joint agreement) cash payments, grants, or
year may elect to have the calendar year preamble, Title 12, Chapter II, of the other consideration (except loans) that
be its fiscal year for purposes of this Code of Federal Regulations is proposed have an aggregate value of more than
part. to be amended by adding a new part 207 $10,000 in any calendar year; or
(g) Insured depository institution. to read as follows:
‘‘Insured depository institution’’ has the (ii) Make to one or more individuals
same meaning as in section 3 of the PART 207—DISCLOSURE AND or entities (whether or not parties to the
Federal Deposit Insurance Act (12 REPORTING OF CRA-RELATED agreement) loans that have an aggregate
U.S.C. 1813). AGREEMENTS (REGULATION G) principal amount of more than $50,000
(h) Nongovernmental entity or person. in any calendar year.
Sec.
(1) General. A ‘‘nongovernmental entity 207.1 Purpose and scope of this part.
(4) The agreement is made pursuant
or person’’ is any partnership, 207.2 Definition of covered agreement. to, or in connection with, the fulfillment
association, trust, joint venture, joint 207.3 Related agreements considered a of the Community Reinvestment Act of
stock company, corporation, limited single agreement. 1977 (12 U.S.C. 2901 et seq.) (CRA), as
liability corporation, company, firm, 207.4 Disclosure of covered agreements. defined in paragraph (c) of this section.
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(b) Agreements that are not covered comments to the institution that must be its community. The letter encourages all
agreements—(1) Certain loans. A included in the institution’s CRA public businesses in the community to meet
covered agreement does not include— file. their obligation to assist in making the
(i) Any individual mortgage loan; or (3) The person has a discussion with, local community a better place to live
(ii) Any specific contract or or otherwise contacts, an insured and work.
commitment for a loan or extension of depository institution or any affiliate of (D) A person sends a general offering
credit to individuals, businesses, farms, the institution concerning the CRA circular to financial institutions offering
or other entities if— rating of the institution, or the CRA to sell a portfolio of loans. An insured
(A) The funds are loaned at rates not record of performance of the institution depository institution that receives the
substantially below market rates; and or any CRA affiliate of the institution. offering circular discusses with the
(B) The purpose of the loan or (4) The person has a discussion with, person whether the loans are in the
extension of credit does not include any or otherwise contacts, an insured institution’s local community. No
re-lending of the borrowed funds to depository institution or any affiliate of reference to the CRA or the institution’s
third parties. the institution concerning actions that CRA performance is made in the
(2) Agreements where there has not should be taken to improve the CRA offering circular or in the discussions of
been a CRA contact. (i) General. A performance of the institution or any the parties.
covered agreement does not include any CRA affiliate of the institution. (c) Fulfillment of the CRA—(1)
agreement entered into by an insured (5) The person has a discussion with, General. Fulfillment of the CRA means
depository institution or affiliate of an or otherwise contacts, an insured the list of factors that the Federal
insured depository institution with a depository institution or any affiliate of banking agencies have determined have
person who has not commented on, the institution concerning any a material impact on an agency’s
testified about, or discussed with the obligation or responsibility that the
decision—
institution, or otherwise contacted the institution or any CRA affiliate of the
(i) To approve or disapprove an
institution, concerning the CRA. institution may have to meet the
application for a deposit facility (as
(ii) Examples of CRA contact. The banking needs of its community and the
defined in section 803 of the CRA (12
following are examples of CRA contacts. discussion or contact occurs while the
U.S.C. 2902)); or
These examples are not exclusive and institution or any affiliate has an
other actions by a person may also make application for a deposit facility (ii) To assign a rating to an insured
the exemption in paragraph (b)(2)(i) of pending at a Federal banking agency or depository institution under section 807
this section unavailable. If a person is undergoing a publicly announced of the CRA (12 U.S.C. 2906).
engages in any of the following actions CRA performance examination. (2) List of factors. The list of factors
and subsequently enters into an (iii) Examples of actions that are not referred to in paragraph (c)(1) of this
agreement with the insured depository CRA contacts. The following are section means the performance of any of
institution or any affiliate of the examples of actions that are not CRA the following activities by an insured
institution, the agreement is not exempt contacts. The actions described in these depository institution or CRA affiliate
under paragraph (b)(2)(i) of this section. examples would not, by themselves, that is a party to the agreement or that
(A) CRA contact with a Federal cause the exemption in paragraph is an affiliate of a party to the agreement
banking agency. (1) The person submits (b)(2)(i) of this section to be unavailable. or by any person that is a party to the
a written comment to a Federal banking These examples are not exclusive. agreement—
agency that discusses the record of (A) A person provides comments or (i) Providing or refraining from
performance or future performance testimony concerning an insured providing written or oral comments or
under the CRA of an insured depository depository institution or affiliate to a testimony to any Federal banking
institution or any CRA affiliate of the Federal banking agency in response to a agency concerning the record of
institution. direct request by the agency for performance or future performance
(2) The person provides oral comments or testimony from that under the CRA of an insured depository
testimony or comments to a Federal person. Direct requests for comments or institution or CRA affiliate that is a
banking agency concerning the record of testimony do not include a general party to the agreement or an affiliate of
performance or future performance invitation by a Federal banking agency a party to the agreement or written
under the CRA of an insured depository for comments or testimony from the comments that are required to be
institution or any CRA affiliate of the public in connection with a CRA included in the CRA public file of any
institution. performance evaluation of, or such insured depository institution;
(B) CRA contact with insured application for a deposit facility by, an (ii) Home-purchase, home-
depository institution or affiliate. (1) insured depository institution or an improvement, small business, small
The person has a discussion with, or application by a company to acquire an farm, community development, and
otherwise contacts, an insured insured depository institution. consumer lending, as described in
depository institution or any affiliate of (B) A person makes a statement § 228.22 of Regulation BB (12 CFR
the institution about providing (or concerning an insured depository 228.22), including loan purchases, loan
refraining from providing) written or institution or affiliate at a widely commitments, and letters of credit;
oral comments or testimony to any attended conference or seminar (iii) Making investments, deposits, or
Federal banking agency concerning the regarding a general topic. A public or grants, or acquiring membership shares,
record of performance or future private meeting, public hearing, or other that have as their primary purpose
performance under the CRA of the meeting regarding one or more specific community development, as described
institution or any CRA affiliate of the institutions or affiliates or transactions in § 228.23 of Regulation BB (12 CFR
institution. involving an application for a deposit 228.23);
(2) The person has a discussion with, facility is not considered a widely (iv) Delivering retail banking services,
or otherwise contacts, an insured attended conference or seminar. as described in § 228.24(d) of Regulation
depository institution or any affiliate of (C) A person sends a similar BB (12 CFR 228.24(d));
the institution about providing (or fundraising letter to insured depository (v) Providing community
refraining from providing) written institutions and to other businesses in development services, as described in
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31991
§ 228.24(e) of Regulation BB (12 CFR (1) Are entered into with the same request from the agency for the
228.24(e)); person; agreement. This obligation terminates
(vi) In the case of a wholesale or (2) Were entered into within the same 12 months after the end of the term of
limited-purpose insured depository 12-month period; and the covered agreement.
institution, community development (3) Are each in fulfillment of the CRA. (2) Disclosure by insured depository
lending, including originating and (b) Substantively related contracts. institution or affiliate. (i) Filing with the
purchasing loans and making loan All written contracts to which an relevant supervisory agency. Each
commitments and letters of credit, insured depository institution or an insured depository institution or
making qualified investments, or affiliate of the insured depository affiliate that is a party to a covered
providing community development institution is a party shall be considered agreement must provide a copy of the
services, as described in § 228.25(c) of to be a single agreement, without regard agreement to each relevant supervisory
Regulation BB (12 CFR 228.25(c)); to whether the other parties to the agency within 30 days after the date the
(vii) In the case of a small insured contracts are the same or whether each insured depository institution or
depository institution, any lending or such contract is in fulfillment of the affiliate enters into the agreement.
other activity described in § 228.26(a) of CRA, if the contracts were negotiated in (ii) Joint filings. In the event that two
Regulation BB (12 CFR 228.26(a)); or a coordinated fashion and a person is a or more insured depository institutions
(viii) In the case of an insured party to each contract. or affiliates are parties to a covered
depository institution that is evaluated agreement, the insured depository
on the basis of a strategic plan, any § 207.4 Disclosure of covered agreements.
institution(s) and affiliate(s) may jointly
element of the strategic plan, as (a) Effective date. This section applies file a copy of the covered agreement
described in § 228.27(f) of Regulation only to covered agreements entered into with each relevant supervisory agency.
BB (12 CFR 228.27(f)). after November 12, 1999. Any joint filing must identify the
(d) Agreements relating to activities of (b) Disclosure of covered agreements insured depository institution(s) and
CRA affiliates. An insured depository to the public—(1) Disclosure required. affiliate(s) for whom the covered
institution or affiliate that is a party to (i) Each person and each insured agreement is being filed.
a covered agreement that concerns the depository institution or affiliate that (d) Relevant supervisory agency. For
performance of any activity of a CRA enters into a covered agreement must purposes of this section and § 207.5, the
affiliate described in paragraph (c) of make a complete copy of the covered ‘‘relevant supervisory agency’’ for a
this section must notify each person that agreement available to any individual or covered agreement means the
is a party to the agreement that the entity upon request. appropriate Federal banking agency
agreement concerns a CRA affiliate. The (ii) In disclosing a covered agreement for—
insured depository institution or to the public under paragraph (b)(1)(i) of (1) Each insured depository
affiliate must provide this notice prior this section, a person, insured institution (or subsidiary thereof) that is
to the time the agreement is entered into depository institution, or affiliate may a party to the covered agreement;
if the affiliate is a CRA affiliate at that withhold from disclosure only those (2) Each insured depository
time, or within a reasonable time after portions of an agreement that the institution (or subsidiary thereof) or
the affiliate becomes a CRA affiliate if relevant supervisory agency determines CRA affiliate that makes payments or
the affiliate is not a CRA affiliate at the are exempt from disclosure under the loans or provides services that are
time the agreement is entered into. Freedom of Information Act (5 U.S.C. subject to the covered agreement; and
(e) Disclosure and reporting of certain 552 et seq.). (3) Any company (other than an
existing agreements that become (2) Duration of obligation. The insured depository institution or
covered agreements. An agreement that obligation to disclose a covered subsidiary thereof) that is a party to the
concerns the performance of any agreement terminates 12 months after covered agreement.
activity described in paragraph (c) of the end of the term of the agreement.
this section by an affiliate may become (3) Reasonable copy and mailing fees. § 207.5 Annual reports.
a covered agreement after it is entered Each person and each insured (a) Effective date. This section applies
into if the affiliate subsequently depository institution or affiliate may only to covered agreements entered into
becomes a CRA affiliate. In that event, charge an individual or entity that on or after May 12, 2000.
the disclosure and reporting obligations requests a copy of a covered agreement (b) Annual report required. Each
under §§ 207.4 and 207.5 begin on the a reasonable fee not to exceed the cost person and each insured depository
date that the agreement becomes a of copying and mailing the agreement. institution or affiliate that is a party to
covered agreement and do not apply to (4) Use of CRA public file by insured a covered agreement must file an annual
the period prior to that date. depository institution. An insured report with each relevant supervisory
depository institution may fulfill its agency concerning the disbursement,
§ 207.3 Related agreements considered a obligation under this paragraph (b) by receipt, and uses of funds or other
single agreement. placing a copy of the covered agreement resources under the covered agreement.
The following rules must be applied in the insured depository institution’s (c) Duration of reporting
in determining whether a written CRA public file and making the requirement—(1) General. An annual
contract, arrangement, or understanding agreement available in accordance with report under this section must be filed
is a covered agreement under § 207.2. the procedures set forth in section with each relevant supervisory agency
(a) Contracts, arrangements, or § 228.43 of Regulation BB (12 CFR for—
understandings entered into by same 228.43). (i) The fiscal year in which the parties
parties. All written contracts, (c) Disclosure of covered agreements enter into the covered agreement; and
arrangements, or understandings to to the relevant supervisory agency—(1) (ii) Each fiscal year during the term of
which an insured depository institution Disclosure by person. Each person that the covered agreement.
or an affiliate of the insured depository is a party to a covered agreement must (2) Exception for person that has not
institution is a party shall be considered provide a complete copy of the received any funds or resources. A
to be a single agreement if the contracts, agreement to the relevant supervisory person is not required to file an annual
arrangements, or understandings— agency within 30 days of receiving a report for a covered agreement for any
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31992 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
fiscal year during the term of the covered agreements may file with each such information is or will be contained
agreement in which the person did not relevant supervisory agency a single in the annual report filed by a person
receive any funds or other resources consolidated annual report covering all under paragraph (d) of this section.
under the agreement. the covered agreements. Any (2) Consolidated reports permitted. (i)
(d) Annual reports filed by person— consolidated report must contain all the Party to large number of agreements. An
(1) General. The annual report filed by information required by this paragraph insured depository institution or
a person under this section must (d). The information required to be affiliate that is a party to five or more
include the following— reported under paragraph (d)(1)(iii), covered agreements may file a single
(i) The name and mailing address of (d)(2), and (d)(3) of this section may be consolidated annual report with each
the person filing the report; reported on an aggregate basis for all relevant supervisory agency covering all
(ii) Information sufficient to identify covered agreements. the covered agreements.
the covered agreement for which the (e) Annual report filed by insured (ii) Affiliated entities party to the
annual report is being filed, such as by depository institution or affiliate—(1) same agreement. An insured depository
providing the names of the parties to the General. The annual report filed by an institution and its affiliates that are
agreement and the date the agreement insured depository institution or parties to the same covered agreement
was entered into or by providing a copy affiliate must include the following— may file a single consolidated annual
of the agreement; (i) The name and principal place of report relating to the agreement with
(iii) The amount of funds or resources business of the insured depository each relevant supervisory agency for the
received under the covered agreement institution or affiliate filing the report; covered agreement.
during the fiscal year; and (ii) Information sufficient to identify (iii) Content of report. Any
(iv) The information required by the covered agreement for which the consolidated annual report must contain
paragraphs (d)(2) and (d)(3) of this annual report is being filed, such as by all the information required by this
section concerning the use of funds providing the names of the parties to the paragraph (e). The amounts and data
received under the covered agreement. agreement and the date the agreement required to be reported under
(2) Reporting for funds or resources was entered into or by providing a copy paragraphs (e)(1)(iii), (iv), and (vi) of
allocated and used for a specific of the agreement; this section may be reported on an
purpose. For funds or other resources (iii) The aggregate amount of aggregate basis for all covered
that the person received during the payments, aggregate amount of fees, and agreements.
fiscal year under the covered agreement aggregate amount of loans provided by (f) Time and place of filing—(1)
and allocated and used for a specific the insured depository institution or General. Each party must file its annual
purpose during the fiscal year, the affiliate under the covered agreement to report with each relevant supervisory
annual report must— any other party to the agreement during agency for the covered agreement no
(i) Describe each specific purpose for
the fiscal year; later than six months following the end
which the funds or resources were used (iv) The aggregate amount of of the fiscal year covered by the report.
during the fiscal year; and payments, aggregate amount of fees, and
(ii) State the amount of funds or (2) Alternative method of fulfilling
aggregate amount of loans received by annual reporting requirement for a
resources used during the fiscal year for
the insured depository institution or person. (i) A person may fulfill the filing
each specific purpose.
(3) Funds or resources used for other affiliate under the covered agreement requirements of this section by
purposes. For all funds or resources that from any other party to the agreement providing the following materials to an
the person received during the fiscal during the fiscal year; insured depository institution or
(v) A general description of the terms affiliate that is a party to the agreement
year under the covered agreement and
and conditions of any payments, fees, or no later than five months following the
did not use for a specific purpose, the
loans reported under paragraphs end of the person’s fiscal year—
annual report must—
(i) State the amount received during (e)(1)(iii) and (iv) of this section, or, in (A) A copy of the person’s annual
the fiscal year; and the event such terms and conditions are report required under paragraph (d) of
(ii) Provide a detailed, itemized list of set forth— this section for the fiscal year; and
how the funds or resources were used (A) In the covered agreement, a (B) Written instructions that the
during the fiscal year, including the statement identifying the covered insured depository institution or
total amount used for— agreement and the date the agreement affiliate promptly forward the annual
(A) Compensation of officers, was filed with the relevant supervisory report to the relevant supervisory
directors, and employees; agency; or agency or agencies on behalf of the
(B) Administrative expenses; (B) In a previous annual report filed person.
(C) Travel expenses; by the insured depository institution or (ii) An insured depository institution
(D) Entertainment expenses; affiliate, a statement identifying the date or affiliate that receives an annual report
(E) Payment of consulting and the report was filed with the relevant from a person pursuant to paragraph
professional fees; and supervisory agency; and (f)(2)(i) of this section must file the
(F) Other expenses or uses. (vi) The aggregate amount and report with the relevant supervisory
(4) Use of other reports. The annual number of loans, aggregate amount and agency or agencies on behalf of the
report filed by a person may consist of, number of investments, and aggregate person within 30 days.
or incorporate, a report prepared for any amount of services provided under the
other purpose, such as an Internal covered agreement to any individual or § 207.6 Release of information under FOIA.
Revenue Service form, a state tax form, entity not a party to the agreement— The Board will make covered
a report to members or shareholders, (A) By the insured depository agreements and annual reports available
financial statements, or other report, so institution or affiliate during its fiscal to the public in accordance with the
long as the annual report contains all of year; and Freedom of Information Act (5 U.S.C.
the information required by this (B) By any other party to the 552 et seq.) and the Board’s Rules
paragraph (d). agreement, unless such information is Regarding the Availability of
(5) Consolidated reports permitted. A not known to the insured depository Information (12 CFR part 261). A party
person that is a party to five or more institution or affiliate filing the report or to a covered agreement may request
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 31993
confidential treatment of proprietary § 207.8 Other definitions and rules of (i) The United States government, a
and confidential information in a construction used in this part. state government, a unit of local
covered agreement or an annual report (a) Affiliate. ‘‘Affiliate’’ means— government (including a county, city,
under those procedures. (1) Any company that controls, is town, township, parish, village, or other
controlled by, or is under common general-purpose subdivision of a state)
§ 207.7 Compliance provisions. or an Indian tribe or tribal organization
control with another company; and
(a) Willful failure to comply with (2) For the purpose of determining established under Federal, state or
disclosure and reporting obligations. (1) whether an agreement is a covered Indian tribal law (including the
If the Board determines that a person agreement under § 207.2, an ‘‘affiliate’’ Department of Hawaiian Home Lands),
has willfully failed to comply in a includes any company that would be or a department, agency, or
material way with §§ 207.4 or 207.5, the under common control or merged with instrumentality of any such entity;
Board will notify the person in writing another company on consummation of (ii) A federally-chartered public
of that determination and provide the any transaction pending before a corporation that receives federal funds
person a period of 90 days (or such Federal banking agency at the time— appropriated specifically for that
longer period as the Board finds to be (i) The parties enter into the corporation;
reasonable under the circumstances) to agreement; and (iii) An insured depository institution
comply. (ii) The person that is a party to the or affiliate of an insured depository
(2) If the person does not comply agreement makes a CRA contact, as institution; or
within the time period established by described in § 207.2(b)(2). (iv) An officer, director, employee, or
the Board, the agreement shall thereafter (b) Control. ‘‘Control’’ is defined in representative (acting in his or her
be unenforceable by that person by section 2(a) of the Bank Holding capacity as an officer, director,
operation of section 48 of the Federal Company Act (12 U.S.C. 1841(a)). employee, or representative) of an entity
Deposit Insurance Act (12 U.S.C. (c) CRA affiliate. A ‘‘CRA affiliate’’ of listed in paragraphs (h)(2)(i) through
1831y). an insured depository institution is any (iii) of this section.
(3) The Board may assist any insured company that is an affiliate of an (i) Party. The term ‘‘party’’ with
depository institution or affiliate that is insured depository institution to the respect to a covered agreement means
a party to a covered agreement that is extent, and only to the extent, that the each person and each insured
unenforceable by a person by operation activities of the affiliate were considered depository institution or affiliate that
of section 48 of the Federal Deposit by the appropriate Federal banking entered into the agreement.
Insurance Act (12 U.S.C. 1831y) in agency when evaluating the CRA (j) Person. For purposes of this part,
identifying a successor to assume the performance of the institution at its a ‘‘person’’ is any nongovernmental
person’s responsibilities under the most recent CRA examination. entity or person.
agreement. (d) CRA public file. For purposes of (k) Term of agreement. An agreement
(b) Diversion of funds. If a court or this part, ‘‘CRA public file’’ means the that does not by its terms establish a
other body of competent jurisdiction public file maintained by an insured termination date is considered to
determines that funds or resources depository institution and described in terminate on the last date on which any
received under a covered agreement § 228.43 of Regulation BB (12 CFR party to the agreement makes any
have been diverted contrary to the 228.43). payment or provides any loan or other
purposes of the covered agreement for (e) Federal banking agency; resources under the agreement, unless
an individual’s personal financial gain, appropriate Federal banking agency. the appropriate Federal banking agency
the Board may take either or both of the The terms ‘‘Federal banking agency’’ otherwise notifies each party in writing.
following actions— and ‘‘appropriate Federal banking By order of the Board of Governors of the
(1) Order the individual to disgorge agency’’ have the same meanings as in Federal Reserve System, May 10, 2000.
the diverted funds or resources received section 3 of the Federal Deposit Jennifer J. Johnson,
under the agreement; Insurance Act (12 U.S.C. 1813). Secretary of the Board
(2) Prohibit the individual from being (f) Fiscal year. (1) The fiscal year for
a party to any covered agreement for a a person that does not have a fiscal year Federal Deposit Insurance Corporation
period not to exceed 10 years. shall be the calendar year; 12 CFR Chapter III
(c) Notice and opportunity to respond. (2) Any person, insured depository
Before making a determination under institution, or affiliate that has a fiscal Authority and Issuance
paragraph (a)(1) of this section, or taking year may elect to have the calendar year For the reasons set out in the joint
any action under paragraph (b) of this be its fiscal year for purposes of this preamble, Title 12, Chapter III, of the
section, the Board will provide written part. Code of Federal Regulations is proposed
notice and an opportunity to present (g) Insured depository institution. to be amended by adding a new part 346
information to the Board concerning any ‘‘Insured depository institution’’ has the to read as follows:
relevant facts or circumstances relating same meaning as in section 3 of the
to the matter. Federal Deposit Insurance Act (12 PART 346—DISCLOSURE AND
(d) Inadvertent or de minimis errors. U.S.C. 1813). REPORTING OF CRA–RELATED
Inadvertent or de minimis errors in (h) Nongovernmental entity or AGREEMENTS
annual reports or other documents filed person—(1) General. A
with the Board under §§ 207.4 or 207.5 ‘‘nongovernmental entity or person’’ is Sec.
will not subject the reporting party to any partnership, association, trust, joint 346.1 Purpose and scope of this part.
any penalty. venture, joint stock company, 346.2 Definition of covered agreement.
346.3 Related agreements considered a
(e) Enforcement of provisions in corporation, limited liability single agreement.
covered agreements. No provision of corporation, company, firm, society, 346.4 Disclosure of covered agreements.
this part shall be construed as other organization, or individual. 346.5 Annual reports.
authorizing the Board to enforce the (2) Exclusions. A nongovernmental 346.6 Release of information under FOIA.
provisions of any covered agreement. entity or person does not include— 346.7 Compliance provisions.
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31994 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
346.8 Other definitions and rules of (B) The purpose of the loan or (4) The person has a discussion with,
construction used in this part. extension of credit does not include any or otherwise contacts, an insured
Authority: 12 U.S.C. 1831y. re-lending of the borrowed funds to depository institution or any affiliate of
third parties. the institution concerning actions that
§ 346.1 Purpose and scope of this part. (2) Agreements where there has not should be taken to improve the CRA
(a) General. This part implements been a CRA contact. (i) General. A performance of the institution or any
section 711 of the Gramm-Leach-Bliley covered agreement does not include any CRA affiliate of the institution.
Act, Pub. L. 106–102, section 711, 113 agreement entered into by an insured (5) The person has a discussion with,
Stat. 1465 (1999) (12 U.S.C. 1831y). That depository institution or affiliate of an or otherwise contacts, an insured
section requires any nongovernmental insured depository institution with a depository institution or any affiliate of
entity or person, insured depository person who has not commented on, the institution concerning any
institution, and affiliate of an insured testified about, or discussed with the obligation or responsibility that the
depository institution that enters into a institution, or otherwise contacted the institution or any CRA affiliate of the
covered agreement to: institution, concerning the CRA. institution may have to meet the
(1) Make the covered agreement (ii) Examples of CRA contact. The banking needs of its community and the
available to the public and the following are examples of CRA contacts. discussion or contact occurs while the
appropriate federal banking agency; and These examples are not exclusive and institution or any affiliate has an
(2) File an annual report with the other actions by a person may also make application for a deposit facility
appropriate federal banking agency the exemption in paragraph (b)(2)(i) of pending at a federal banking agency or
concerning the covered agreement. this section unavailable. If a person is undergoing a publicly announced
(b) The provisions of this part are engages in any of the following actions CRA performance examination.
enforced by the FDIC with respect to a and subsequently enters into an (iii) Examples of actions that are not
state nonmember insured bank or a agreement with the insured depository CRA contacts. The following are
foreign bank having an insured branch. institution or any affiliate of the examples of actions that are not CRA
institution, the agreement is not exempt contacts. The actions described in these
§ 346.2 Definition of covered agreement. under paragraph (b)(2)(i) of this section. examples would not, by themselves,
(a) General definition. A covered (A) CRA contact with a federal cause the exemption in paragraph
agreement is any contract, arrangement, banking agency. (1) The person submits (b)(2)(i) of this section to be unavailable.
or understanding (whether or not legally a written comment to a federal banking These examples are not exclusive.
binding) that meets all of the following agency that discusses the record of (A) A person provides comments or
criteria: performance or future performance testimony concerning an insured
(1) The agreement is in writing. under the CRA of an insured depository depository institution or affiliate to a
(2) The parties to the agreement institution or any CRA affiliate of the federal banking agency in response to a
include: institution. direct request by the agency for
(i) An insured depository institution (2) The person provides oral comments or testimony from that
or an affiliate of an insured depository testimony or comments to a federal person. Direct requests for comments or
institution; and banking agency concerning the record of testimony do not include a general
(ii) A nongovernmental entity or performance or future performance invitation by a federal banking agency
person (referred to hereafter as a under the CRA of an insured depository for comments or testimony from the
person). institution or any CRA affiliate of the public in connection with a CRA
(3) The agreement provides for the institution. performance evaluation of, or
insured depository institution or any (B) CRA contact with insured application for a deposit facility by, an
affiliate to: depository institution or affiliate. (1) insured depository institution or an
(i) Provide to one or more individuals The person has a discussion with, or application by a company to acquire an
or entities (whether or not parties to the otherwise contacts, an insured insured depository institution.
agreement) cash payments, grants, or depository institution or any affiliate of (B) A person makes a statement
other consideration (except loans) that the institution about providing (or concerning an insured depository
have an aggregate value of more than refraining from providing) written or institution or affiliate at a widely
$10,000 in any calendar year; or oral comments or testimony to any attended conference or seminar
(ii) Make to one or more individuals federal banking agency concerning the regarding a general topic. A public or
or entities (whether or not parties to the record of performance or future private meeting, public hearing, or other
agreement) loans that have an aggregate performance under the CRA of the meeting regarding one or more specific
principal amount of more than $50,000 institution or any CRA affiliate of the institutions or affiliates or transactions
in any calendar year. institution. involving an application for a deposit
(4) The agreement is made pursuant (2) The person has a discussion with, facility is not considered a widely
to, or in connection with, the fulfillment or otherwise contacts, an insured attended conference or seminar.
of the Community Reinvestment Act of depository institution or any affiliate of (C) A person sends a similar
1977 (12 U.S.C. 2901 et seq.) (CRA), as the institution about providing (or fundraising letter to insured depository
defined in paragraph (c) of this section. refraining from providing) written institutions and to other businesses in
(b) Agreements that are not covered comments to the institution that must be its community. The letter encourages all
agreements—(1) Certain loans. A included in the institution’s CRA public businesses in the community to meet
covered agreement does not include: file. their obligation to assist in making the
(i) Any individual mortgage loan; or (3) The person has a discussion with, local community a better place to live
(ii) Any specific contract or or otherwise contacts, an insured and work.
commitment for a loan or extension of depository institution or any affiliate of (D) A person sends a general offering
credit to individuals, businesses, farms, the institution concerning the CRA circular to financial institutions offering
or other entities if: rating of the institution, or the CRA to sell a portfolio of loans. An insured
(A) The funds are loaned at rates not record of performance of the institution depository institution that receives the
substantially below market rates; and or any CRA affiliate of the institution. offering circular discusses with the
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person whether the loans are in the (viii) In the case of an insured § 346.4 Disclosure of covered agreements.
institution’s local community. No depository institution that is evaluated (a) Effective date. This section applies
reference to the CRA or the institution’s on the basis of a strategic plan, any only to covered agreements entered into
CRA performance is made in the element of the strategic plan, as after November 12, 1999.
offering circular or in the discussions of described in 12 CFR 345.27(f). (b) Disclosure of covered agreements
the parties. (d) Agreements relating to activities of to the public—(1) Disclosure required.
(c) Fulfillment of the CRA—(1) CRA affiliates. An insured depository (i) Each person and each insured
General. Fulfillment of the CRA means institution or affiliate that is a party to depository institution or affiliate that
the list of factors that the federal a covered agreement that concerns the enters into a covered agreement must
banking agencies have determined have performance of any activity of a CRA make a complete copy of the covered
a material impact on an agency’s affiliate described in paragraph (c) of agreement available to any individual or
decision: this section must notify each person that entity upon request.
(i) To approve or disapprove an is a party to the agreement that the (ii) In disclosing a covered agreement
application for a deposit facility (as agreement concerns a CRA affiliate. The to the public under paragraph (b)(1)(i) of
defined in section 803 of the CRA (12 insured depository institution or this section, a person, insured
U.S.C. 2902)); or affiliate must provide this notice prior depository institution, or affiliate may
(ii) To assign a rating to an insured to the time the agreement is entered into withhold from disclosure only those
depository institution under section 807 if the affiliate is a CRA affiliate at that portions of an agreement that the
of the CRA (12 U.S.C. 2906). time, or within a reasonable time after relevant supervisory agency determines
(2) List of factors. The list of factors the affiliate becomes a CRA affiliate if are exempt from disclosure under the
referred to in paragraph (c)(1) of this the affiliate is not a CRA affiliate at the Freedom of Information Act (5 U.S.C.
section means the performance of any of time the agreement is entered into. 552 et seq.).
the following activities by an insured (e) Disclosure and reporting of certain (2) Duration of obligation. The
depository institution or CRA affiliate existing agreements that become obligation to disclose a covered
that is a party to the agreement or that covered agreements. An agreement that agreement terminates 12 months after
is an affiliate of a party to the agreement concerns the performance of any the end of the term of the agreement.
or by any person that is a party to the activity described in paragraph (c) of (3) Reasonable copy and mailing fees.
agreement: this section by an affiliate may become Each person and each insured
(i) Providing or refraining from a covered agreement after it is entered depository institution or affiliate may
providing written or oral comments or into if the affiliate subsequently charge an individual or entity that
testimony to any federal banking agency becomes a CRA affiliate. In that event, requests a copy of a covered agreement
concerning the record of performance or the disclosure and reporting obligations a reasonable fee not to exceed the cost
future performance under the CRA of an under §§ 346.4 and 346.5 begin on the of copying and mailing the agreement.
insured depository institution or CRA date that the agreement becomes a (4) Use of CRA public file by insured
affiliate that is a party to the agreement covered agreement and do not apply to depository institution. An insured
or an affiliate of a party to the agreement the period prior to that date. depository institution may fulfill its
or written comments that are required to obligation under this paragraph (b) by
be included in the CRA public file of § 346.3 Related agreements considered a placing a copy of the covered agreement
any such insured depository institution; single agreement. in the insured depository institution’s
(ii) Home-purchase, home- The following rules must be applied CRA public file and making the
improvement, small business, small in determining whether a written agreement available in accordance with
farm, community development, and contract, arrangement, or understanding the procedures set forth in 12 CFR
consumer lending, as described in 12 is a covered agreement under § 346.2. 345.43.
CFR 345.22, including loan purchases, (a) Contracts, arrangements, or (c) Disclosure of covered agreements
loan commitments, and letters of credit; understandings entered into by same to the relevant supervisory agency—(1)
(iii) Making investments, deposits, or parties. All written contracts, Disclosure by person. Each person that
grants, or acquiring membership shares, arrangements, or understandings to is a party to a covered agreement must
that have as their primary purpose which an insured depository institution provide a complete copy of the
community development, as described or an affiliate of the insured depository agreement to the relevant supervisory
in 12 CFR 345.23; institution is a party shall be considered agency within 30 days of receiving a
(iv) Delivering retail banking services, to be a single agreement if the contracts, request from the agency for the
as described in 12 CFR 345.24(d); arrangements, or understandings: agreement. This obligation terminates
(v) Providing community (1) Are entered into with the same 12 months after the end of the term of
development services, as described in person; the covered agreement.
12 CFR 345.24(e); (2) Were entered into within the same (2) Disclosure by insured depository
(vi) In the case of a wholesale or 12-month period; and institution or affiliate. (i) Filing with the
limited-purpose insured depository (3) Are each in fulfillment of the CRA. relevant supervisory agency. Each
institution, community development (b) Substantively related contracts. insured depository institution or
lending, including originating and All written contracts to which an affiliate that is a party to a covered
purchasing loans and making loan insured depository institution or an agreement must provide a copy of the
commitments and letters of credit, affiliate of the insured depository agreement to each relevant supervisory
making qualified investments, or institution is a party shall be considered agency within 30 days after the date the
providing community development to be a single agreement, without regard insured depository institution or
services, as described in 12 CFR to whether the other parties to the affiliate enters into the agreement.
345.25(c); contracts are the same or whether each (ii) Joint filings. In the event that two
(vii) In the case of a small insured such contract is in fulfillment of the or more insured depository institutions
depository institution, any lending or CRA, if the contracts were negotiated in or affiliates are parties to a covered
other activity described in 12 CFR a coordinated fashion and a person is a agreement, the insured depository
345.26(a); or party to each contract. institution(s) and affiliate(s) may jointly
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file a copy of the covered agreement (iv) The information required by (ii) Information sufficient to identify
with each relevant supervisory agency. paragraphs (d)(2) and (d)(3) of this the covered agreement for which the
Any joint filing must identify the section concerning the use of funds annual report is being filed, such as by
insured depository institution(s) and received under the covered agreement. providing the names of the parties to the
affiliate(s) for whom the covered (2) Reporting for funds or resources agreement and the date the agreement
agreement is being filed. allocated and used for a specific was entered into or by providing a copy
(d) Relevant supervisory agency. For purpose. For funds or other resources of the agreement;
purposes of this section and § 346.5, the that the person received during the (iii) The aggregate amount of
‘‘relevant supervisory agency’’ for a fiscal year under the covered agreement payments, aggregate amount of fees, and
covered agreement means the and allocated and used for a specific aggregate amount of loans provided by
appropriate federal banking agency for: purpose during the fiscal year, the the insured depository institution or
(1) Each insured depository annual report must: affiliate under the covered agreement to
institution (or subsidiary thereof) that is (i) Describe each specific purpose for any other party to the agreement during
a party to the covered agreement; which the funds or resources were used the fiscal year;
(2) Each insured depository during the fiscal year; and (iv) The aggregate amount of
institution (or subsidiary thereof) or (ii) State the amount of funds or payments, aggregate amount of fees, and
CRA affiliate that makes payments or resources used during the fiscal year for aggregate amount of loans received by
loans or provides services that are each specific purpose. the insured depository institution or
subject to the covered agreement; and (3) Funds or resources used for other affiliate under the covered agreement
(3) Any company (other than an purposes. For all funds or resources that from any other party to the agreement
insured depository institution or the person received during the fiscal during the fiscal year;
subsidiary thereof) that is a party to the year under the covered agreement and (v) A general description of the terms
covered agreement. did not use for a specific purpose, the and conditions of any payments, fees, or
annual report must: loans reported under paragraphs
§ 346.5 Annual reports. (i) State the amount received during (e)(1)(iii) and (iv) of this section, or, in
(a) Effective date. This section applies the fiscal year; and the event such terms and conditions are
only to covered agreements entered into (ii) Provide a detailed, itemized list of set forth:
on or after May 12, 2000. how the funds or resources were used (A) In the covered agreement, a
(b) Annual report required. Each during the fiscal year, including the statement identifying the covered
person and each insured depository total amount used for: agreement and the date the agreement
institution or affiliate that is a party to (A) Compensation of officers, was filed with the relevant supervisory
a covered agreement must file an annual directors, and employees; agency; or
report with each relevant supervisory (B) Administrative expenses; (B) In a previous annual report filed
agency concerning the disbursement, (C) Travel expenses; by the insured depository institution or
receipt, and uses of funds or other (D) Entertainment expenses; affiliate, a statement identifying the date
resources under the covered agreement. (E) Payment of consulting and the report was filed with the relevant
(c) Duration of reporting professional fees; and supervisory agency; and
requirement—(1) General. An annual (F) Other expenses or uses. (vi) The aggregate amount and
report under this section must be filed (4) Use of other reports. The annual number of loans, aggregate amount and
with each relevant supervisory agency report filed by a person may consist of, number of investments, and aggregate
for: or incorporate, a report prepared for any amount of services provided under the
(i) The fiscal year in which the parties other purpose, such as an Internal covered agreement to any individual or
enter into the covered agreement; and Revenue Service form, a state tax form, entity not a party to the agreement:
(ii) Each fiscal year during the term of a report to members or shareholders, (A) By the insured depository
the covered agreement. financial statements, or other report, so institution or affiliate during its fiscal
(2) Exception for person that has not long as the annual report contains all of year; and
received any funds or resources. A the information required by this (B) By any other party to the
person is not required to file an annual paragraph (d). agreement, unless such information is
report for a covered agreement for any (5) Consolidated reports permitted. A not known to the insured depository
fiscal year during the term of the person that is a party to five or more institution or affiliate filing the report or
agreement in which the person did not covered agreements may file with each such information is or will be contained
receive any funds or other resources relevant supervisory agency a single in the annual report filed by a person
under the agreement. consolidated annual report covering all under paragraph (d) of this section.
(d) Annual reports filed by person— the covered agreements. Any (2) Consolidated reports permitted. (i)
(1) General. The annual report filed by consolidated report must contain all the Party to large number of agreements. An
a person under this section must information required by this paragraph insured depository institution or
include the following: (d). The information required to be affiliate that is a party to five or more
(i) The name and mailing address of reported under paragraphs (d)(1)(iii), covered agreements may file a single
the person filing the report; (d)(2), and (d)(3) of this section may be consolidated annual report with each
(ii) Information sufficient to identify reported on an aggregate basis for all relevant supervisory agency covering all
the covered agreement for which the covered agreements. the covered agreements.
annual report is being filed, such as by (e) Annual report filed by insured (ii) Affiliated entities party to the
providing the names of the parties to the depository institution or affiliate—(1) same agreement. An insured depository
agreement and the date the agreement General. The annual report filed by an institution and its affiliates that are
was entered into or by providing a copy insured depository institution or parties to the same covered agreement
of the agreement; affiliate must include the following: may file a single consolidated annual
(iii) The amount of funds or resources (i) The name and principal place of report relating to the agreement with
received under the covered agreement business of the insured depository each relevant supervisory agency for the
during the fiscal year; and institution or affiliate filing the report; covered agreement.
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(iii) Content of report. Any be unenforceable by that person by (b) Control. ‘‘Control’’ is defined in
consolidated annual report must contain operation of section 48 of the Federal section 2(a) of the Bank Holding
all the information required by this Deposit Insurance Act (12 U.S.C. Company Act (12 U.S.C. 1841(a)).
paragraph (e). The amounts and data 1831y). (c) CRA affiliate. A ‘‘CRA affiliate’’ of
required to be reported under (3) The FDIC may assist any insured an insured depository institution is any
paragraphs (e)(1)(iii), (iv), and (vi) of depository institution or affiliate that is company that is an affiliate of an
this section may be reported on an a party to a covered agreement that is insured depository institution to the
aggregate basis for all covered unenforceable by a person by operation extent, and only to the extent, that the
agreements. of section 48 of the Federal Deposit activities of the affiliate were considered
(f) Time and place of filing—(1) Insurance Act (12 U.S.C. 1831y) in by the appropriate Federal banking
General. Each party must file its annual identifying a successor to assume the agency when evaluating the CRA
report with each relevant supervisory person’s responsibilities under the performance of the institution at its
agency for the covered agreement no agreement. most recent CRA examination.
later than six months following the end (b) Diversion of funds. If a court or (d) CRA public file. For purposes of
of the fiscal year covered by the report. other body of competent jurisdiction this part, ‘‘CRA public file’’ means the
(2) Alternative method of fulfilling determines that funds or resources public file maintained by an insured
annual reporting requirement for a received under a covered agreement depository institution and described in
person. (i) A person may fulfill the filing have been diverted contrary to the 12 CFR 345.43.
requirements of this section by purposes of the covered agreement for (e) Federal banking agency;
providing the following materials to an an individual’s personal financial gain, appropriate federal banking agency. The
insured depository institution or the FDIC may take either or both of the terms ‘‘federal banking agency’’ and
affiliate that is a party to the agreement following actions: ‘‘appropriate federal banking agency’’
no later than five months following the (1) Order the individual to disgorge have the same meanings as in section 3
end of the person’s fiscal year: the diverted funds or resources received of the Federal Deposit Insurance Act (12
(A) A copy of the person’s annual under the agreement; U.S.C. 1813).
report required under paragraph (d) of (f) Fiscal year. (1) The fiscal year for
(2) Prohibit the individual from being
this section for the fiscal year; and a person that does not have a fiscal year
a party to any covered agreement for a
(B) Written instructions that the shall be the calendar year;
period not to exceed 10 years.
insured depository institution or (2) Any person, insured depository
(c) Notice and opportunity to respond. institution, or affiliate that has a fiscal
affiliate promptly forward the annual Before making a determination under
report to the relevant supervisory year may elect to have the calendar year
paragraph (a)(1) of this section, or taking be its fiscal year for purposes of this
agency or agencies on behalf of the any action under paragraph (b) of this
person. part.
section, the FDIC will provide written (g) Insured depository institution.
(ii) An insured depository institution
notice and an opportunity to present ‘‘Insured depository institution’’ has the
or affiliate that receives an annual report
information to the FDIC concerning any same meaning as in section 3 of the
from a person pursuant to paragraph
relevant facts or circumstances relating Federal Deposit Insurance Act (12
(f)(2)(i) of this section must file the
to the matter. U.S.C. 1813).
report with the relevant supervisory
(d) Inadvertent or de minimis errors. (h) Nongovernmental entity or
agency or agencies on behalf of the
Inadvertent or de minimis errors in person—(1) General. A
person within 30 days.
annual reports or other documents filed ‘‘nongovernmental entity or person’’ is
§ 346.6 Release of information under FOIA. with the FDIC under §§ 346.4 or 346.5 any partnership, association, trust, joint
The FDIC will make covered will not subject the reporting party to venture, joint stock company,
agreements and annual reports available any penalty. corporation, limited liability
to the public in accordance with the (e) Enforcement of provisions in corporation, company, firm, society,
Freedom of Information Act (5 U.S.C. covered agreements. No provision of other organization, or individual.
552 et seq.) and the FDIC’s rules this part shall be construed as (2) Exclusions. A nongovernmental
regarding Disclosure of Information (12 authorizing the FDIC to enforce the entity or person does not include:
CFR part 309). A party to a covered provisions of any covered agreement. (i) The United States government, a
agreement may request confidential state government, a unit of local
§ 346.8 Other definitions and rules of
treatment of proprietary and construction used in this part.
government (including a county, city,
confidential information in a covered town, township, parish, village, or other
(a) Affiliate. ‘‘Affiliate’’ means: general-purpose subdivision of a state)
agreement or an annual report under
those procedures. (1) Any company that controls, is or an Indian tribe or tribal organization
controlled by, or is under common established under federal, state or
§ 346.7 Compliance provisions. control with another company; and Indian tribal law (including the
(a) Willful failure to comply with (2) For the purpose of determining Department of Hawaiian Home Lands),
disclosure and reporting obligations. (1) whether an agreement is a covered or a department, agency, or
If the FDIC determines that a person has agreement under § 346.2, an ‘‘affiliate’’ instrumentality of any such entity;
willfully failed to comply in a material includes any company that would be (ii) A federally-chartered public
way with §§ 346.4 or 346.5, the FDIC under common control or merged with corporation that receives federal funds
will notify the person in writing of that another company on consummation of appropriated specifically for that
determination and provide the person a any transaction pending before a federal corporation;
period of 90 days (or such longer period banking agency at the time: (iii) An insured depository institution
as the FDIC finds to be reasonable under (i) The parties enter into the or affiliate of an insured depository
the circumstances) to comply. agreement; and institution; or
(2) If the person does not comply (ii) The person that is a party to the (iv) An officer, director, employee, or
within the time period established by agreement makes a CRA contact, as representative (acting in his or her
the FDIC, the agreement shall thereafter described in § 346.2(b)(2). capacity as an officer, director,
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employee, or representative) of an entity (2) File an annual report with the These examples are not exclusive and
listed in paragraphs (h)(2)(i) through appropriate Federal banking agency other actions by a NGEP may also make
(iii) of this section. concerning the covered agreement. the exemption in paragraph (b)(2)(i) of
(i) Party. The term ‘‘party’’ with (b) The provisions of this part are this section unavailable. If a NGEP
respect to a covered agreement means enforced by OTS with respect to savings engages in any of the following actions
each person and each insured associations, savings and loan holding and subsequently enters into an
depository institution or affiliate that companies, and companies that are agreement with the insured depository
entered into the agreement. controlled by savings associations or institution or any affiliate of the
(j) Person. For purposes of this part, savings and loan holding companies. institution, the agreement is not exempt
a ‘‘person’’ is any nongovernmental under paragraph (b)(2)(i) of this section.
§ 533.2 Definition of covered agreement. (A) CRA contact with a Federal
entity or person.
(k) Term of agreement. An agreement (a) General definition. A covered banking agency. (1) The NGEP submits
that does not by its terms establish a agreement is any contract, arrangement, a written comment to a Federal banking
termination date is considered to or understanding (whether or not legally agency that discusses the record of
terminate on the last date on which any binding) that meets all of the following performance or future performance
party to the agreement makes any criteria— under the CRA of an insured depository
payment or provides any loan or other (1) The agreement is in writing. institution or any CRA affiliate of the
(2) The parties to the agreement institution.
resources under the agreement, unless
include— (2) The NGEP provides oral testimony
the appropriate federal banking agency
(i) An insured depository institution or comments to a Federal banking
otherwise notifies each party in writing.
or an affiliate of an insured depository agency concerning the record of
By order of the Board of Directors. institution; and performance or future performance
Federal Deposit Insurance Corporation. (ii) A nongovernmental entity or under the CRA of an insured depository
Dated at Washington, DC, this 10th day of person (referred to as a NGEP). institution or any CRA affiliate of the
May, 2000. (3) The agreement provides for the institution.
Robert E. Feldman, insured depository institution or any (B) CRA contact with insured
Executive Secretary. affiliate to— depository institution or affiliate. (1)
(i) Provide to one or more individuals The NGEP has a discussion with, or
Department of the Treasury
or entities (whether or not parties to the otherwise contacts, an insured
Office of Thrift Supervision agreement) cash payments, grants, or depository institution or any affiliate of
12 CFR Chapter V other consideration (except loans) that the institution about providing (or
have an aggregate value of more than refraining from providing) written or
Authority and Issuance $10,000 in any calendar year; or oral comments or testimony to any
For the reasons set out in the joint (ii) Make to one or more individuals Federal banking agency concerning the
preamble, OTS proposes to amend Title or entities (whether or not parties to the record of performance or future
12, Chapter V, of the Code of Federal agreement) loans that have an aggregate performance under the CRA of the
Regulations by adding a new part 533 to principal amount of more than $50,000 institution or any CRA affiliate of the
read as follows: in any calendar year. institution.
(4) The agreement is made pursuant (2) The NGEP has a discussion with,
PART 533—DISCLOSURE AND to, or in connection with, the fulfillment or otherwise contacts, an insured
REPORTING OF CRA-RELATED of the Community Reinvestment Act of depository institution or any affiliate of
AGREEMENTS 1977 (12 U.S.C. 2901 et seq.) (CRA), as the institution about providing (or
defined in paragraph (c) of this section. refraining from providing) written
Sec. (b) Agreements that are not covered comments to the institution that must be
533.1 Purpose and scope of this part. agreements. (1) Certain loans. A covered included in the institution’s CRA public
533.2 Definition of covered agreement.
agreement does not include— file.
533.3 Related agreements considered a
single agreement. (i) Any individual mortgage loan; or (3) The NGEP has a discussion with,
533.4 Disclosure of covered agreements. (ii) Any specific contract or or otherwise contacts, an insured
533.5 Annual reports. commitment for a loan or extension of depository institution or any affiliate of
533.6 Release of information under FOIA. credit to individuals, businesses, farms, the institution concerning the CRA
533.7 Compliance provisions. or other entities if— rating of the institution, or the CRA
533.8 Other definitions and rules of (A) The funds are loaned at rates not record of performance of the institution
construction used in this part. substantially below market rates; and or any CRA affiliate of the institution.
Authority: 12 U.S.C. 1462a, 1463, 1464, (B) The purpose of the loan or (4) The NGEP has a discussion with,
1467a, and 1831y. extension of credit does not include any or otherwise contacts, an insured
re-lending of the borrowed funds to depository institution or any affiliate of
§ 533.1 Purpose and scope of this part. third parties. the institution concerning actions that
(a) General. This part implements (2) Agreements where there has not should be taken to improve the CRA
section 711 of the Gramm-Leach-Bliley been a CRA contact. (i) General. A performance of the institution or any
Act (12 U.S.C. 1831y). That section covered agreement does not include any CRA affiliate of the institution.
requires any nongovernmental entity or agreement entered into by an insured (5) The NGEP has a discussion with,
person, insured depository institution, depository institution or affiliate of an or otherwise contacts, an insured
and affiliate of an insured depository insured depository institution with a depository institution or any affiliate of
institution that enters into a covered NGEP who has not commented on, the institution concerning any
agreement to— testified about, or discussed with the obligation or responsibility that the
(1) Make the covered agreement institution, or otherwise contacted the institution or any CRA affiliate of the
available to the public and the institution, concerning the CRA. institution may have to meet the
appropriate Federal banking agency; (ii) Examples of CRA contact. The banking needs of its community and the
and following are examples of CRA contacts. discussion or contact occurs while the
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institution or any affiliate has an to an insured depository institution agreement concerns a CRA affiliate. The
application for a deposit facility under section 807 of the CRA (12 U.S.C. insured depository institution or
pending at a Federal banking agency or 2906). affiliate must provide this notice prior
is undergoing a publicly announced (2) List of factors. The list of factors to the time the agreement is entered into
CRA performance examination. referred to in paragraph (c)(1) of this if the affiliate is a CRA affiliate at that
(iii) Examples of actions that are not section means the performance of any of time, or within a reasonable time after
CRA contacts. The following are the following activities by an insured the affiliate becomes a CRA affiliate if
examples of actions that are not CRA depository institution or CRA affiliate the affiliate is not a CRA affiliate at the
contacts. The actions described in these that is a party to the agreement or that time the agreement is entered into.
examples would not, by themselves, is an affiliate of a party to the agreement (e) Disclosure and reporting of certain
cause the exemption in paragraph or by any NGEP that is a party to the existing agreements that become
(b)(2)(i) of this section to be unavailable. agreement— covered agreements. An agreement that
These examples are not exclusive. (i) Providing or refraining from concerns the performance of any
(A) A NGEP provides comments or providing written or oral comments or activity described in paragraph (c) of
testimony concerning an insured testimony to any Federal banking this section by an affiliate may become
depository institution or affiliate to a agency concerning the record of a covered agreement after it is entered
Federal banking agency in response to a performance or future performance into if the affiliate subsequently
direct request by the agency for under the CRA of an insured depository becomes a CRA affiliate. In that event,
comments or testimony from that NGEP. institution or CRA affiliate that is a the disclosure and reporting obligations
Direct requests for comments or party to the agreement or an affiliate of under §§ 533.4 and 533.5 begin on the
testimony do not include a general a party to the agreement or written date that the agreement becomes a
invitation by a Federal banking agency comments that are required to be covered agreement and do not apply to
for comments or testimony from the included in the CRA public file of any the period prior to that date.
public in connection with a CRA such insured depository institution;
performance evaluation of, or (ii) Home-purchase, home- § 533.3 Related agreements considered a
application for a deposit facility by, an improvement, small business, small single agreement.
insured depository institution or an farm, community development, and The following rules must be applied
application by a company to acquire an consumer lending, as described in in determining whether a written
insured depository institution. § 563e.22 of this chapter, including loan contract, arrangement, or understanding
(B) A NGEP makes a statement purchases, loan commitments, and is a covered agreement under § 533.2.
concerning an insured depository letters of credit; (a) Contracts, arrangements, or
institution or affiliate at a widely (iii) Making investments, deposits, or understandings entered into by same
attended conference or seminar grants, or acquiring membership shares, parties. All written contracts,
regarding a general topic. A public or that have as their primary purpose arrangements, or understandings to
private meeting, public hearing, or other community development, as described which an insured depository institution
meeting regarding one or more specific in § 563e.23 of this chapter; or an affiliate of the insured depository
institutions or affiliates or transactions (iv) Delivering retail banking services, institution is a party shall be considered
involving an application for a deposit as described in § 563e.24(d) of this to be a single agreement if the contracts,
facility is not considered a widely chapter; arrangements, or understandings—
attended conference or seminar. (v) Providing community (1) Are entered into with the same
(C) A NGEP sends a similar development services, as described in NGEP;
fundraising letter to insured depository § 563e.24(e) of this chapter; (2) Were entered into within the same
institutions and to other businesses in (vi) In the case of a wholesale or 12-month period; and
its community. The letter encourages all limited-purpose insured depository (3) Are each in fulfillment of the CRA.
businesses in the community to meet institution, community development (b) Substantively related contracts.
their obligation to assist in making the lending, including originating and All written contracts to which an
local community a better place to live purchasing loans and making loan insured depository institution or an
and work. commitments and letters of credit, affiliate of the insured depository
(D) A NGEP sends a general offering making qualified investments, or institution is a party shall be considered
circular to financial institutions offering providing community development to be a single agreement, without regard
to sell a portfolio of loans. An insured services, as described in § 563e.25(c) of to whether the other parties to the
depository institution that receives the this chapter; contracts are the same or whether each
offering circular discusses with the (vii) In the case of a small insured such contract is in fulfillment of the
NGEP whether the loans are in the depository institution, any lending or CRA, if the contracts were negotiated in
institution’s local community. No other activity described in § 563e.26(a) a coordinated fashion and a NGEP is a
reference to the CRA or the institution’s of this chapter; or party to each contract.
CRA performance is made in the (viii) In the case of an insured
offering circular or in the discussions of depository institution that is evaluated § 533.4 Disclosure of covered agreements.
the parties. on the basis of a strategic plan, any (a) Effective date. This section applies
(c) Fulfillment of the CRA. (1) element of the strategic plan, as only to covered agreements entered into
General. Fulfillment of the CRA means described in § 563e.27(f) of this chapter. after November 12, 1999.
the list of factors that the Federal (d) Agreements relating to activities of (b) Disclosure of covered agreements
banking agencies have determined have CRA affiliates. An insured depository to the public. (1) Disclosure required. (i)
a material impact on an agency’s institution or affiliate that is a party to Each NGEP and each insured depository
decision— a covered agreement that concerns the institution or affiliate that enters into a
(i) To approve or disapprove an performance of any activity of a CRA covered agreement must make a
application for a deposit facility (as affiliate described in paragraph (c) of complete copy of the covered agreement
defined in section 803 of the CRA (12 this section must notify each NGEP that available to any individual or entity
U.S.C. 2902)); or (ii) To assign a rating is a party to the agreement that the upon request.
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32000 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
(ii) In disclosing a covered agreement (1) Each insured depository (i) Describe each specific purpose for
to the public under paragraph (b)(1)(i) of institution (or subsidiary thereof) that is which the funds or resources were used
this section, a NGEP, insured depository a party to the covered agreement; during the fiscal year; and
institution, or affiliate may withhold (2) Each insured depository (ii) State the amount of funds or
from disclosure only those portions of institution (or subsidiary thereof) or resources used during the fiscal year for
an agreement that the relevant CRA affiliate that makes payments or each specific purpose.
supervisory agency determines are loans or provides services that are (3) Reporting for funds or resources
exempt from disclosure under the subject to the covered agreement; and used for other purposes. For all funds or
Freedom of Information Act (5 U.S.C. (3) Any company (other than an resources that the NGEP received during
552 et seq.). insured depository institution or the fiscal year under the covered
(2) Duration of obligation. The subsidiary thereof) that is a party to the agreement and did not use for a specific
obligation to disclose a covered covered agreement. purpose, the annual report must—
agreement terminates 12 months after (i) State the amount received during
the end of the term of the agreement. § 533.5 Annual reports. the fiscal year; and
(3) Reasonable copy and mailing fees. (a) Effective date. This section applies (ii) Provide a detailed, itemized list of
Each NGEP and each insured depository only to covered agreements entered into how the funds or resources were used
institution or affiliate may charge an on or after May 12, 2000. during the fiscal year, including the
individual or entity that requests a copy (b) Annual report required. Each total amount used for—
of a covered agreement a reasonable fee NGEP and each insured depository (A) Compensation of officers,
not to exceed the cost of copying and institution or affiliate that is a party to directors, and employees;
mailing the agreement. a covered agreement must file an annual (B) Administrative expenses;
(4) Use of CRA public file by insured report with each relevant supervisory (C) Travel expenses;
depository institution. An insured agency concerning the disbursement, (D) Entertainment expenses;
depository institution may fulfill its receipt, and uses of funds or other (E) Payment of consulting and
obligation under this paragraph (b) by resources under the covered agreement. professional fees; and
placing a copy of the covered agreement (c) Duration of reporting requirement. (F) Other expenses or uses.
in the insured depository institution’s (1) General. An annual report under this (4) Use of other reports. The annual
CRA public file and making the section must be filed with each relevant report filed by a NGEP may consist of,
agreement available in accordance with supervisory agency for— or incorporate, a report prepared for any
the procedures set forth in § 563e.43 of (i) The fiscal year in which the parties other purpose, such as an Internal
this chapter. enter into the covered agreement; and Revenue Service form, a state tax form,
(c) Disclosure of covered agreements (ii) Each fiscal year during the term of a report to members or shareholders,
to the relevant supervisory agency. (1) the covered agreement. financial statements, or other report, so
Disclosure by NGEP. Each NGEP that is (2) Exception for NGEP that has not long as the annual report contains all of
a party to a covered agreement must received any funds or resources. A the information required by this
provide a complete copy of the NGEP is not required to file an annual paragraph (d).
agreement to the relevant supervisory report for a covered agreement for any (5) Consolidated reports permitted. A
agency within 30 days of receiving a fiscal year during the term of the NGEP that is a party to five or more
request from the agency for the agreement in which the NGEP did not covered agreements may file with each
agreement. This obligation terminates receive any funds or other resources relevant supervisory agency a single
12 months after the end of the term of under the agreement. consolidated annual report covering all
the covered agreement. (d) Annual reports filed by NGEP. (1) the covered agreements. Any
(2) Disclosure by insured depository General. The annual report filed by a consolidated report must contain all the
institution or affiliate. (i) Filing with the NGEP under this section must include information required by this paragraph
relevant supervisory agency. Each the following— (d). The information required to be
insured depository institution or (i) The name and mailing address of reported under paragraphs (d)(1)(iii),
affiliate that is a party to a covered the NGEP filing the report; (d)(2), and (d)(3) of this section may be
agreement must provide a copy of the (ii) Information sufficient to identify reported on an aggregate basis for all
agreement to each relevant supervisory the covered agreement for which the covered agreements.
agency within 30 days after the date the annual report is being filed, such as by (e) Annual report filed by insured
insured depository institution or providing the names of the parties to the depository institution or affiliate. (1)
affiliate enters into the agreement. agreement and the date the agreement General. The annual report filed by an
(ii) Joint filings. In the event that two was entered into or by providing a copy insured depository institution or
or more insured depository institutions of the agreement; affiliate must include the following—
or affiliates are parties to a covered (iii) The amount of funds or resources (i) The name and principal place of
agreement, the insured depository received under the covered agreement business of the insured depository
institution(s) and affiliate(s) may jointly during the fiscal year; and institution or affiliate filing the report;
file a copy of the covered agreement (iv) The information required by (ii) Information sufficient to identify
with each relevant supervisory agency. paragraphs (d)(2) and (d)(3) of this the covered agreement for which the
Any joint filing must identify the section concerning the use of funds annual report is being filed, such as by
insured depository institution(s) and received under the covered agreement. providing the names of the parties to the
affiliate(s) for whom the covered (2) Reporting for funds or resources agreement and the date the agreement
agreement is being filed. allocated and used for a specific was entered into or by providing a copy
(d) Relevant supervisory agency. For purpose. For funds or other resources of the agreement;
purposes of this section and § 533.5, the that the NGEP received during the fiscal (iii) The aggregate amount of
relevant supervisory agency for a year under the covered agreement and payments, aggregate amount of fees, and
covered agreement means the allocated and used for a specific aggregate amount of loans provided by
appropriate Federal banking agency purpose during the fiscal year, the the insured depository institution or
for— annual report must— affiliate under the covered agreement to
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules 32001
any other party to the agreement during agency for the covered agreement no NGEP’s responsibilities under the
the fiscal year; later than six months following the end agreement.
(iv) The aggregate amount of of the fiscal year covered by the report. (b) Diversion of funds. If a court or
payments, aggregate amount of fees, and (2) Alternative method of fulfilling other body of competent jurisdiction
aggregate amount of loans received by annual reporting requirement for a determines that funds or resources
the insured depository institution or NGEP. (i) A NGEP may fulfill the filing received under a covered agreement
affiliate under the covered agreement requirements of this section by have been diverted contrary to the
from any other party to the agreement providing the following materials to an purposes of the covered agreement for
during the fiscal year; insured depository institution or an individual’s personal financial gain,
(v) A general description of the terms affiliate that is a party to the agreement OTS may take either or both of the
and conditions of any payments, fees, or no later than five months following the following actions—
loans reported under paragraphs end of the NGEP’s fiscal year— (1) Order the individual to disgorge
(e)(1)(iii) and (e)(1)(iv) of this section, (A) A copy of the NGEP’s annual the diverted funds or resources received
or, in the event such terms and report required under paragraph (d) of under the agreement;
conditions are set forth— (2) Prohibit the individual from being
this section for the fiscal year; and
(A) In the covered agreement, a a party to any covered agreement for a
(B) Written instructions that the period not to exceed 10 years.
statement identifying the covered
insured depository institution or (c) Notice and opportunity to respond.
agreement and the date the agreement
affiliate promptly forward the annual Before making a determination under
was filed with the relevant supervisory
report to the relevant supervisory paragraph (a)(1) of this section, or taking
agency; or
agency or agencies on behalf of the any action under paragraph (b) of this
(B) In a previous annual report filed
NGEP. section, OTS will provide written notice
by the insured depository institution or
affiliate, a statement identifying the date (ii) An insured depository institution and an opportunity to present
the report was filed with the relevant or affiliate that receives an annual report information to OTS concerning any
supervisory agency; and from a NGEP pursuant to paragraph relevant facts or circumstances relating
(vi) The aggregate amount and (f)(2)(i) of this section must file the to the matter.
number of loans, aggregate amount and report with the relevant supervisory (d) Inadvertent or de minimis errors.
number of investments, and aggregate agency or agencies on behalf of the Inadvertent or de minimis errors in
amount of services provided under the NGEP within 30 days. annual reports or other documents filed
covered agreement to any individual or with OTS under §§ 533.4 or 533.5 will
§ 533.6 Release of information under FOIA.
entity not a party to the agreement— not subject the reporting party to any
(A) By the insured depository OTS will make covered agreements penalty.
institution or affiliate during its fiscal and annual reports available to the (e) Enforcement of provisions in
year; and public in accordance with the Freedom covered agreements. No provision of
(B) By any other party to the of Information Act (5 U.S.C. 552 et seq.), this part shall be construed as
agreement, unless such information is OTS’s rules (part 505 of this chapter), authorizing OTS to enforce the
not known to the insured depository and the Department of Treasury’s rules provisions of any covered agreement.
institution or affiliate filing the report or (31 CFR part 1). A party to a covered
agreement may request confidential § 533.8 Other definitions and rules of
such information is or will be contained construction used in this part.
in the annual report filed by a NGEP treatment of proprietary and
confidential information in a covered (a) Affiliate. Affiliate means—
under paragraph (d) of this section. (1) Any company that controls, is
(2) Consolidated reports permitted. (i) agreement or an annual report under
controlled by, or is under common
Party to large number of agreements. An those procedures.
control with another company; and
insured depository institution or § 533.7 Compliance provisions. (2) For the purpose of determining
affiliate that is a party to five or more whether an agreement is a covered
covered agreements may file a single (a) Willful failure to comply with
agreement under § 533.2, an affiliate
consolidated annual report with each disclosure and reporting obligations. (1)
includes any company that would be
relevant supervisory agency covering all If OTS determines that a NGEP has
under common control or merged with
the covered agreements. willfully failed to comply in a material
another company on consummation of
(ii) Affiliated entities party to the way with §§ 533.4 or 533.5, OTS will
any transaction pending before a
same agreement. An insured depository notify the NGEP in writing of that
Federal banking agency at the time—
institution and its affiliates that are determination and provide the NGEP a (i) The parties enter into the
parties to the same covered agreement period of 90 days (or such longer period agreement; and
may file a single consolidated annual as OTS finds to be reasonable under the (ii) The NGEP that is a party to the
report relating to the agreement with circumstances) to comply. agreement makes a CRA contact, as
each relevant supervisory agency for the (2) If the NGEP does not comply described in § 533.2(b)(2).
covered agreement. within the time period established by (b) Control. Control is defined in
(iii) Content of report. Any OTS, the agreement shall thereafter be section 2(a) of the Bank Holding
consolidated annual report must contain unenforceable by that NGEP by Company Act (12 U.S.C. 1841(a)).
all the information required by this operation of section 48 of the Federal (c) CRA affiliate. A CRA affiliate of an
paragraph (e). The amounts and data Deposit Insurance Act (12 U.S.C. insured depository institution is any
required to be reported under 1831y). company that is an affiliate of an
paragraphs (e)(1)(iii), (e)(1)(iv), and (3) OTS may assist any insured insured depository institution to the
(e)(1)(vi) of this section may be reported depository institution or affiliate that is extent, and only to the extent, that the
on an aggregate basis for all covered a party to a covered agreement that is activities of the affiliate were considered
agreements. unenforceable by a NGEP by operation by the appropriate Federal banking
(f) Time and place of filing. (1) of section 48 of the Federal Deposit agency when evaluating the CRA
General. Each party must file its annual Insurance Act (12 U.S.C. 1831y) in performance of the institution at its
report with each relevant supervisory identifying a successor to assume the most recent CRA examination.
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32002 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules
(d) CRA public file. For purposes of association, trust, joint venture, joint employee, or representative) of an entity
this part, CRA public file means the stock company, corporation, limited listed in paragraphs (h)(2)(i), (h)(2)(ii),
public file maintained by an insured liability corporation, company, firm, or (h)(2)(iii) of this section.
depository institution and described in society, other organization, or (i) Party. The term party with respect
§ 563e.43 of this chapter. individual.
(e) Federal banking agency; (2) Exclusions. A nongovernmental to a covered agreement means each
appropriate Federal banking agency. entity or person does not include— NGEP and each insured depository
The terms Federal banking agency and (i) The United States government, a institution or affiliate that entered into
appropriate Federal banking agency state government, a unit of local the agreement.
have the same meanings as in section 3 government (including a county, city, (j) Term of agreement. An agreement
of the Federal Deposit Insurance Act (12 town, township, parish, village, or other that does not by its terms establish a
U.S.C. 1813). general-purpose subdivision of a state) termination date is considered to
(f) Fiscal year. (1) The fiscal year for or an Indian tribe or tribal organization terminate on the last date on which any
a NGEP that does not have a fiscal year established under Federal, state or party to the agreement makes any
shall be the calendar year; Indian tribal law (including the payment or provides any loan or other
(2) Any NGEP, insured depository Department of Hawaiian Home Lands), resources under the agreement, unless
institution, or affiliate that has a fiscal or a department, agency, or
the appropriate Federal banking agency
year may elect to have the calendar year instrumentality of any such entity;
be its fiscal year for purposes of this (ii) A federally-chartered public otherwise notifies each party in writing.
part. corporation that receives federal funds Dated: May 10, 2000.
(g) Insured depository institution. appropriated specifically for that By the Office of Thrift Supervision.
Insured depository institution has the corporation; Ellen Seidman,
same meaning as in section 3 of the (iii) An insured depository institution
Director.
Federal Deposit Insurance Act (12 or affiliate of an insured depository
U.S.C. 1813). institution; or [FR Doc. 00–12337 Filed 5–18–00; 8:45 am]
(h) Nongovernmental entity or person. (iv) An officer, director, employee, or BILLING CODE 4810–33–U; 6210–01–U; 6714–01–U;
6720–01–U
(1) General. A nongovernmental entity representative (acting in his or her
or person or NGEP is any partnership, capacity as an officer, director,
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