52884 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Notices
important determinants in considering
convenience and needs. These
population figures should include not
only the present population but also
data on population trends for the future.
Population characteristics such as
income, age distribution, educational
level, occupation, and stability should
be considered.
(c) Competition—Some consideration
will be given to the adequacy or
inadequacy of existing bank facilities in
the community and in nearby
communities. The growth rate and size
of banks and other financial institutions
in the community or trade area may
provide meaningful indications of the
economic condition of the area and the
potential business for a branch. Other
financial institutions such as savings
and loan associations, credit unions,
finance companies, mortgage companies
and insurance companies may be
considered competing institutions to the
extent their services parallel those of the
branch.
(d) Other Supporting Data—The
extent of new or proposed residential,
commercial and industrial development
and construction is a significant
secondary consideration in resolving the
convenience and needs factor. Evidence
of plans for development of shopping
centers, apartment complexes and other
residential subdivisions, factories, or
other major facilities near the proposed
site of the branch are also relevant.
6. Consistency of Corporate Powers
This factor will rarely be applicable to
branch proposals, except in those
instances where a bank may
contemplate some additional corporate
power, not normally exercised by banks,
in connection with its application.
D. Statutory Factors—Application or
Notification To Establish Remote
Service Facility
In view of the nature of the remote
service facility, including that it offers
limited service and is generally an
unmanned electronic unit, the six
statutory factors will not be applied to
the same degree and extent as in the
case of a traditional branch. For
instance, with respect to the earnings
factor, detailed projections of deposits,
income and expenses are not necessary.
A determination that operating expenses
of the facility will not burden the bank’s
future earnings will generally suffice.
Similarly, detailed or extensive
economic information and demographic
data are not required when considering
the convenience and needs factor.
By order of the Board of Directors.
Dated at Washington, DC, this 23rd day of
September, 1997.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 97–26232 Filed 10–8–97; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
Liability of Commonly Controlled
Depository Institutions
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Proposed statement of policy.
SUMMARY: The FDIC is revising the
Statement of Policy on Liability of
Commonly Controlled Depository
Institutions (Statement of Policy) which
sets forth the procedures and guidelines
the FDIC uses in assessing or waiving
liability against commonly controlled
depository institutions under section
5(e) of the Federal Deposit Insurance
Act. The revised Statement of Policy
removes the application procedures for
requesting a conditional waiver of the
cross-guaranty liability and incorporates
those same procedures into a proposed
section of the FDIC’s applications
regulation published for comment
elsewhere in today’s Federal Register.
DATES: Comments must be received by
January 7, 1998.
ADDRESSES: Send written comments to
Robert E. Feldman, Executive Secretary,
Attention: Comments/OES, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
Comments may be hand delivered to the
guard station located at the rear of the
17th Street building (located on F
Street), on business days between 7 a.m.
and 5 p.m. (FAX number (202) 898–
3838; Internet address:
comments@FDIC.gov). Comments may
be inspected and photocopied at the
FDIC Public Information Center, Room
100, 801 17th Street NW, Washington,
DC, between 9 a.m. and 4:30 p.m. on
business days.
FOR FURTHER INFORMATION CONTACT:
Jesse Snyder, Assistant Director of
Operations, Division of Supervision
(202) 898–6915, or Grovetta N.
Gardineer, Counsel, Legal Division,
(202) 736–0665, Federal Deposit
Insurance Corporation, 550 17th Street,
NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION: Effective
April 1, 1997, the Board of Directors of
the FDIC revised the Statement of Policy
Regarding Liability of Commonly
Controlled Depository Institutions, 62
FR 15480. Such liability is a
consequence of section 5(e) of the
Federal Deposit Insurance Act (Act), 12
U.S.C. 1815(e), which was added by the
passage of section 206(a)(7) of the
Financial Institutions Reform, Recovery,
and Enforcement Act of 1989. Section
5(e) created liability for commonly
controlled insured depository
institutions for losses incurred or
anticipated by the FDIC in connection
with (i) the default of a commonly
controlled insured depository
institution; or (ii) any assistance
provided by the FDIC to any commonly
controlled insured depository
institution in danger of default. The
purpose of section 5(e) is to ensure that
the assets of healthy depository
institution subsidiaries within the same
holding company structure, or of a
healthy institution which controls a
failing institution, will be available to
the FDIC to help offset the cost of
resolving the failed subsidiary. While
the FDIC seeks to recover its losses
associated with failing institutions, it
also seeks to encourage the acquisition
of troubled institutions by those capable
of rehabilitating them and to avoid
instances in which the assessment of
liability against an otherwise healthy
institution will cause its failure, thus
exposing the FDIC and the insurance
funds to greater loss.
The revised Statement of Policy
contained information regarding the
content of requests for conditional
waiver of cross guaranty liability. The
revised Statement of Policy also
indicated that any changes in part 303
of the FDIC’s rules may necessitate
further revisions to the policy statement.
The decision has been made by the
FDIC that all information regarding
applications be addressed in revised
part 303 of the FDIC Rules and
Regulations (Rules). Accordingly, the
application procedures for requesting a
conditional waiver of cross guaranty
liability are being moved to part 303.
The appropriate section of part 303 that
discusses conditional waiver
applications will be referenced in the
revised Statement of Policy.
The Statement of Policy provides for
the issuance of a Notice of Assessment
of Liability, Findings of Fact and
Conclusions of Law, an Order to Pay
and a Notice of Hearing, a good faith
estimate of the FDIC’s loss, and the
determination of the method and
schedule of repayment. The liability
under the statute attaches at the time of
default of a commonly controlled
depository institution. The FDIC, in its
discretion, may assess liability for the
losses incurred by the default or for any
assistance provided by the FDIC to a
commonly controlled institution in
danger of default. Generally, liability
important determinants in considering
convenience and needs. These
population figures should include not
only the present population but also
data on population trends for the future.
Population characteristics such as
income, age distribution, educational
level, occupation, and stability should
be considered.
(c) Competition—Some consideration
will be given to the adequacy or
inadequacy of existing bank facilities in
the community and in nearby
communities. The growth rate and size
of banks and other financial institutions
in the community or trade area may
provide meaningful indications of the
economic condition of the area and the
potential business for a branch. Other
financial institutions such as savings
and loan associations, credit unions,
finance companies, mortgage companies
and insurance companies may be
considered competing institutions to the
extent their services parallel those of the
branch.
(d) Other Supporting Data—The
extent of new or proposed residential,
commercial and industrial development
and construction is a significant
secondary consideration in resolving the
convenience and needs factor. Evidence
of plans for development of shopping
centers, apartment complexes and other
residential subdivisions, factories, or
other major facilities near the proposed
site of the branch are also relevant.
6. Consistency of Corporate Powers
This factor will rarely be applicable to
branch proposals, except in those
instances where a bank may
contemplate some additional corporate
power, not normally exercised by banks,
in connection with its application.
D. Statutory Factors—Application or
Notification To Establish Remote
Service Facility
In view of the nature of the remote
service facility, including that it offers
limited service and is generally an
unmanned electronic unit, the six
statutory factors will not be applied to
the same degree and extent as in the
case of a traditional branch. For
instance, with respect to the earnings
factor, detailed projections of deposits,
income and expenses are not necessary.
A determination that operating expenses
of the facility will not burden the bank’s
future earnings will generally suffice.
Similarly, detailed or extensive
economic information and demographic
data are not required when considering
the convenience and needs factor.
By order of the Board of Directors.
Dated at Washington, DC, this 23rd day of
September, 1997.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 97–26232 Filed 10–8–97; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
Liability of Commonly Controlled
Depository Institutions
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Proposed statement of policy.
SUMMARY: The FDIC is revising the
Statement of Policy on Liability of
Commonly Controlled Depository
Institutions (Statement of Policy) which
sets forth the procedures and guidelines
the FDIC uses in assessing or waiving
liability against commonly controlled
depository institutions under section
5(e) of the Federal Deposit Insurance
Act. The revised Statement of Policy
removes the application procedures for
requesting a conditional waiver of the
cross-guaranty liability and incorporates
those same procedures into a proposed
section of the FDIC’s applications
regulation published for comment
elsewhere in today’s Federal Register.
DATES: Comments must be received by
January 7, 1998.
ADDRESSES: Send written comments to
Robert E. Feldman, Executive Secretary,
Attention: Comments/OES, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
Comments may be hand delivered to the
guard station located at the rear of the
17th Street building (located on F
Street), on business days between 7 a.m.
and 5 p.m. (FAX number (202) 898–
3838; Internet address:
comments@FDIC.gov). Comments may
be inspected and photocopied at the
FDIC Public Information Center, Room
100, 801 17th Street NW, Washington,
DC, between 9 a.m. and 4:30 p.m. on
business days.
FOR FURTHER INFORMATION CONTACT:
Jesse Snyder, Assistant Director of
Operations, Division of Supervision
(202) 898–6915, or Grovetta N.
Gardineer, Counsel, Legal Division,
(202) 736–0665, Federal Deposit
Insurance Corporation, 550 17th Street,
NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION: Effective
April 1, 1997, the Board of Directors of
the FDIC revised the Statement of Policy
Regarding Liability of Commonly
Controlled Depository Institutions, 62
FR 15480. Such liability is a
consequence of section 5(e) of the
Federal Deposit Insurance Act (Act), 12
U.S.C. 1815(e), which was added by the
passage of section 206(a)(7) of the
Financial Institutions Reform, Recovery,
and Enforcement Act of 1989. Section
5(e) created liability for commonly
controlled insured depository
institutions for losses incurred or
anticipated by the FDIC in connection
with (i) the default of a commonly
controlled insured depository
institution; or (ii) any assistance
provided by the FDIC to any commonly
controlled insured depository
institution in danger of default. The
purpose of section 5(e) is to ensure that
the assets of healthy depository
institution subsidiaries within the same
holding company structure, or of a
healthy institution which controls a
failing institution, will be available to
the FDIC to help offset the cost of
resolving the failed subsidiary. While
the FDIC seeks to recover its losses
associated with failing institutions, it
also seeks to encourage the acquisition
of troubled institutions by those capable
of rehabilitating them and to avoid
instances in which the assessment of
liability against an otherwise healthy
institution will cause its failure, thus
exposing the FDIC and the insurance
funds to greater loss.
The revised Statement of Policy
contained information regarding the
content of requests for conditional
waiver of cross guaranty liability. The
revised Statement of Policy also
indicated that any changes in part 303
of the FDIC’s rules may necessitate
further revisions to the policy statement.
The decision has been made by the
FDIC that all information regarding
applications be addressed in revised
part 303 of the FDIC Rules and
Regulations (Rules). Accordingly, the
application procedures for requesting a
conditional waiver of cross guaranty
liability are being moved to part 303.
The appropriate section of part 303 that
discusses conditional waiver
applications will be referenced in the
revised Statement of Policy.
The Statement of Policy provides for
the issuance of a Notice of Assessment
of Liability, Findings of Fact and
Conclusions of Law, an Order to Pay
and a Notice of Hearing, a good faith
estimate of the FDIC’s loss, and the
determination of the method and
schedule of repayment. The liability
under the statute attaches at the time of
default of a commonly controlled
depository institution. The FDIC, in its
discretion, may assess liability for the
losses incurred by the default or for any
assistance provided by the FDIC to a
commonly controlled institution in
danger of default. Generally, liability
52885Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Notices
will be assessed against an institution
except in instances of the acquisition of
a distressed institution by an
unaffiliated entity prior to the default of
a commonly controlled institution. A
conditional waiver of the liability will
be considered when, as determined
within the sole discretion of the Board
of Directors of the FDIC, the exemption
is in the best interests of either of the
insurance funds administered by the
FDIC or where a waiver facilitates an
alternative that is in the best interests of
the FDIC. Institutions that believe that
an assessment of liability would be
inappropriate are required to submit
supporting documentation. The
contents of an application for requesting
a conditional waiver of liability will be
located in proposed § 303.245 of the
FDIC’s Rules, 12 CFR 303.245.
Commenters are invited to review the
proposed Statement of Policy in
conjunction with proposed § 303.245
published elsewhere in today’s Federal
Register.
For the above reasons, the FDIC
proposes the following Statement of
Policy:
Liability of Commonly Controlled
Depository Institutions
Introduction
Section 5(e) of the Federal Deposit
Insurance Act, as added by section
206(a)(7) of the Financial Institutions
Reform, Recovery, and Enforcement Act
of 1989, creates liability for commonly
controlled insured depository
institutions for losses incurred or
anticipated by the Federal Deposit
Insurance Corporation (FDIC) in
connection with: (i) The default of a
commonly controlled insured
depository institution; or (ii) any
assistance provided by the FDIC to any
commonly controlled insured
depository institution in danger of
default. In addition to certain statutory
exceptions and exclusions contained in
sections 5(e)(6), (7) and (8), the Act also
permits the FDIC, in its discretion, to
exempt any insured depository
institution from this liability if it
determines that such exemption is in
the ‘‘best interests of the Bank Insurance
Fund or the Savings Association
Insurance Fund’’.
The liability of an insured depository
institution attaches at the time of default
of a commonly controlled institution. It
is completely within the discretion of
the FDIC whether or not to issue a
notice of assessment to the liable
institution for the estimated amount of
the loss incurred by the FDIC.
Guidelines for Conditional Waiver of
Liability
The FDIC may, in its discretion,
choose not to assess liability based upon
analysis of a particular situation, and it
may entertain requests for waivers from
affiliated or unaffiliated parties of an
institution in default or in danger of
default. The determination of whether
an exemption is in the best interests of
either insurance fund rests solely with
the Board of Directors of the FDIC
(Board). Should the Board make such a
determination, a waiver will be issued
setting forth terms and conditions that
must be met in order to receive an
exemption from liability (conditional
waiver of liability). The following
guidelines apply to conditional waivers
of liability under the provisions of this
section:
(1) A conditional waiver of liability
will be considered in those cases where
the waiver facilitates an alternative that
would be in the best interests of the
FDIC; for example, the conditional
waiver may be granted when requisite
additional capital and managerial
resources are being provided which
substantially lessen exposure to the
affected insurance fund. When
conditional waivers are granted to an
otherwise unaffiliated acquire of a
failing or failed institution they will be
granted for a fixed period, generally not
to exceed a period of time reasonably
required for existing problems to be
identified and resolved.
(2) If one or more institutions in a
commonly controlled relationship is
otherwise solvent, well-managed and
viable, it may be in the best interest of
the FDIC to waive or reduce claims
against such entities. In determining
whether a conditional waiver is
appropriate, consideration will be given
to actions of a holding company which
contribute to or diminish the FDIC’s
losses, as well as proposals to
strengthen other weakened institutions,
if any.
(3) Procedures to request a
conditional waiver of liability are
contained in § 303.245 of the FDIC’s
Rules and Regulations, 12 CFR 303.245.
(4) In cases where an insured
depository institution is sold to an
acquire with no financial interest,
directly or indirectly, in the institution
prior to the acquisition, it is the general
policy of the FDIC to forego the issuance
of a notice of assessment to the acquire
and its affiliated institutions in the
event of a default of an insured
depository institution formerly affiliated
with the acquired institution. The FDIC
will review all such transactions prior to
making a final determination to forego
the issuance of the notice of assessment.
Guidelines for Assessment of Liability
Whenever the FDIC determines that
assessment of liability in connection
with a commonly controlled insured
depository institution(s) is appropriate,
a Notice of Assessment of Liability,
Findings of Fact and Conclusions of
Law, Order to Pay, and Notice of
Hearing (Notice of Assessment) will be
served upon the liable institution. In
assessing the amount of the FDIC’s loss
and the liable institution(s) method of
payment, the following guidelines shall
apply:
(1) A good faith estimate of the
amount of loss the FDIC will incur shall
be based upon (a) the actual sale or
calculation of loss from a review by the
FDIC of the assets and liabilities of the
institution prior to default or the
granting of assistance; or (b) any other
cost estimate bases as explained in the
Notice of Assessment.
(2) If there is more than one
commonly controlled depository
institution to be assessed, each such
institution is jointly and severally liable
for all losses; however, the FDIC shall
make a good faith estimate of the
liability of each institution as
determined by (a) first assessing an
initial amount on a pro rata capital basis
that brings about parity in the capital
ratios of the liable institutions and (b)
then apportioning any residual
assessment on a pro-rata size basis
utilizing the most recent Report of
Condition. Any final assessment can be
based on the estimated liability of each
institution by the FDIC and/or
negotiations with the liable institutions.
(3) In the event that any liable
institution is closed prior to paying an
assessment, the amount assessed or to
have been assessed against that
institution may be assessed against the
remaining liable institution(s).
(4) The FDIC, after consulting with
the appropriate Federal and State
financial institutions regulatory
agencies, shall establish in each case a
schedule for payment which may
include a lump sum reimbursement, as
well as procedures for receipt of such
payment.
(5) Once liability has attached, the
FDIC will consider information similar
to that provided with a request for a
conditional waiver of liability in
determining the amount of the
estimated loss to be assessed. Such
information may also include suggested
payment plans.
By order of the Board of Directors.
Dated at Washington, DC, this 23rd day of
September, 1997.
will be assessed against an institution
except in instances of the acquisition of
a distressed institution by an
unaffiliated entity prior to the default of
a commonly controlled institution. A
conditional waiver of the liability will
be considered when, as determined
within the sole discretion of the Board
of Directors of the FDIC, the exemption
is in the best interests of either of the
insurance funds administered by the
FDIC or where a waiver facilitates an
alternative that is in the best interests of
the FDIC. Institutions that believe that
an assessment of liability would be
inappropriate are required to submit
supporting documentation. The
contents of an application for requesting
a conditional waiver of liability will be
located in proposed § 303.245 of the
FDIC’s Rules, 12 CFR 303.245.
Commenters are invited to review the
proposed Statement of Policy in
conjunction with proposed § 303.245
published elsewhere in today’s Federal
Register.
For the above reasons, the FDIC
proposes the following Statement of
Policy:
Liability of Commonly Controlled
Depository Institutions
Introduction
Section 5(e) of the Federal Deposit
Insurance Act, as added by section
206(a)(7) of the Financial Institutions
Reform, Recovery, and Enforcement Act
of 1989, creates liability for commonly
controlled insured depository
institutions for losses incurred or
anticipated by the Federal Deposit
Insurance Corporation (FDIC) in
connection with: (i) The default of a
commonly controlled insured
depository institution; or (ii) any
assistance provided by the FDIC to any
commonly controlled insured
depository institution in danger of
default. In addition to certain statutory
exceptions and exclusions contained in
sections 5(e)(6), (7) and (8), the Act also
permits the FDIC, in its discretion, to
exempt any insured depository
institution from this liability if it
determines that such exemption is in
the ‘‘best interests of the Bank Insurance
Fund or the Savings Association
Insurance Fund’’.
The liability of an insured depository
institution attaches at the time of default
of a commonly controlled institution. It
is completely within the discretion of
the FDIC whether or not to issue a
notice of assessment to the liable
institution for the estimated amount of
the loss incurred by the FDIC.
Guidelines for Conditional Waiver of
Liability
The FDIC may, in its discretion,
choose not to assess liability based upon
analysis of a particular situation, and it
may entertain requests for waivers from
affiliated or unaffiliated parties of an
institution in default or in danger of
default. The determination of whether
an exemption is in the best interests of
either insurance fund rests solely with
the Board of Directors of the FDIC
(Board). Should the Board make such a
determination, a waiver will be issued
setting forth terms and conditions that
must be met in order to receive an
exemption from liability (conditional
waiver of liability). The following
guidelines apply to conditional waivers
of liability under the provisions of this
section:
(1) A conditional waiver of liability
will be considered in those cases where
the waiver facilitates an alternative that
would be in the best interests of the
FDIC; for example, the conditional
waiver may be granted when requisite
additional capital and managerial
resources are being provided which
substantially lessen exposure to the
affected insurance fund. When
conditional waivers are granted to an
otherwise unaffiliated acquire of a
failing or failed institution they will be
granted for a fixed period, generally not
to exceed a period of time reasonably
required for existing problems to be
identified and resolved.
(2) If one or more institutions in a
commonly controlled relationship is
otherwise solvent, well-managed and
viable, it may be in the best interest of
the FDIC to waive or reduce claims
against such entities. In determining
whether a conditional waiver is
appropriate, consideration will be given
to actions of a holding company which
contribute to or diminish the FDIC’s
losses, as well as proposals to
strengthen other weakened institutions,
if any.
(3) Procedures to request a
conditional waiver of liability are
contained in § 303.245 of the FDIC’s
Rules and Regulations, 12 CFR 303.245.
(4) In cases where an insured
depository institution is sold to an
acquire with no financial interest,
directly or indirectly, in the institution
prior to the acquisition, it is the general
policy of the FDIC to forego the issuance
of a notice of assessment to the acquire
and its affiliated institutions in the
event of a default of an insured
depository institution formerly affiliated
with the acquired institution. The FDIC
will review all such transactions prior to
making a final determination to forego
the issuance of the notice of assessment.
Guidelines for Assessment of Liability
Whenever the FDIC determines that
assessment of liability in connection
with a commonly controlled insured
depository institution(s) is appropriate,
a Notice of Assessment of Liability,
Findings of Fact and Conclusions of
Law, Order to Pay, and Notice of
Hearing (Notice of Assessment) will be
served upon the liable institution. In
assessing the amount of the FDIC’s loss
and the liable institution(s) method of
payment, the following guidelines shall
apply:
(1) A good faith estimate of the
amount of loss the FDIC will incur shall
be based upon (a) the actual sale or
calculation of loss from a review by the
FDIC of the assets and liabilities of the
institution prior to default or the
granting of assistance; or (b) any other
cost estimate bases as explained in the
Notice of Assessment.
(2) If there is more than one
commonly controlled depository
institution to be assessed, each such
institution is jointly and severally liable
for all losses; however, the FDIC shall
make a good faith estimate of the
liability of each institution as
determined by (a) first assessing an
initial amount on a pro rata capital basis
that brings about parity in the capital
ratios of the liable institutions and (b)
then apportioning any residual
assessment on a pro-rata size basis
utilizing the most recent Report of
Condition. Any final assessment can be
based on the estimated liability of each
institution by the FDIC and/or
negotiations with the liable institutions.
(3) In the event that any liable
institution is closed prior to paying an
assessment, the amount assessed or to
have been assessed against that
institution may be assessed against the
remaining liable institution(s).
(4) The FDIC, after consulting with
the appropriate Federal and State
financial institutions regulatory
agencies, shall establish in each case a
schedule for payment which may
include a lump sum reimbursement, as
well as procedures for receipt of such
payment.
(5) Once liability has attached, the
FDIC will consider information similar
to that provided with a request for a
conditional waiver of liability in
determining the amount of the
estimated loss to be assessed. Such
information may also include suggested
payment plans.
By order of the Board of Directors.
Dated at Washington, DC, this 23rd day of
September, 1997.