This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
48719
Vol. 64, No. 173
Wednesday, September 8, 1999
1 Institutions have 30 days (or 45 days for
institutions with foreign branches) from quarter-end
to file their call reports. Once the FDIC receives the
reports, they are checked for obvious errors (such
as omitted information) and then input into the
FDIC’s automated system. Only after this has been
done can the calculations be performed to
determine the appropriate capital group assignment
for each of the more than 10,000 insured
institutions. These functions must be performed in
time to prepare and mail notices to eachinstitution
before the beginning of the next semiannual
assessment period.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AC31
Assessments
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Notice of proposed rulemaking.
SUMMARY: The Board of Directors of the
FDIC (Board) is proposing several
changes to the FDIC’s regulation
governing assessments. The Board is
proposing to change the reporting date
used to determine the capital
component of the assessment risk
classifications assigned to FDIC-insured
depository institutions. The proposal is
to move that date closer by one calendar
quarter to the assessment period for
which the capital component is
assigned. This change would permit the
FDIC to use more up-to-date information
in determining institutions’ assessment
risk classifications. The proposed date
would coincide with the date currently
used to determine the supervisory
component of the assessment risk
classification.
To permit the use of more up-to-date
capital information, the Board is further
proposing to shorten from 30 days to 15
days the prior notice that the FDIC
sends to institutions advising them of
their assessment risk classifications for
the following semiannual assessment
period. The same reduction is proposed
for the invoice sent by the FDIC each
quarter showing the amount of the
assessment payment due for the next
quarterly collection. At the other end of
the process, the Board is proposing to
increase from 30 days to 90 days the
time within which an institution may
request review of its assessment risk
classification.
Additionally, to reflect a shift of
certain assessment functions within the
FDIC, the Board is proposing to revise
two of the references in the regulation
to FDIC offices or officials. Finally, the
proposal would correct a typographical
error in the form of a misstated cross-
reference to another FDIC regulation.
DATES: Written comments must be
received by the FDIC on or before
October 25, 1999.
ADDRESSES: All written comments
should be addressed 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 at the rear of the 550 17th
Street Building (located on F Street)
between 7:00 a.m. and 5:00 p.m. on
business days. Comments may also be
faxed to (202) 898–3838, or sent via the
Internet to comments@fdic.gov.
Comments will be available for
inspection and photocopying at the
FDIC Public Information Center, Room
100, 801 17th Street, NW, between 9:00
a.m. and 4:30 p.m. on business days.
FOR FURTHER INFORMATION CONTACT:
James W. Thornton, Senior Banking
Analyst, Division of Insurance, (202)
898–6707; or Claude A. Rollin, Senior
Counsel, Legal Division, (202) 898–
8741, Federal Deposit Insurance
Corporation, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
Capital Group Determination Date
At present, the FDIC’s risk-based
assessments regulation specifies that the
capital component of the assessment
risk classification assigned to each
FDIC-insured institution for each
semiannual assessment period will be
determined on the basis of data reported
by an institution in its Consolidated
Reports of Condition and Income, Thrift
Financial Report, or Report of Assets
and Liabilities of U.S. Branches and
Agencies of Foreign Banks (collectively,
call reports) for the quarter ending six
months earlier (12 CFR 327.4(a)(1)). As
a result, an institution’s capital group is
assigned on the basis of information that
is approximately six months old when
the assessment period begins. While the
FDIC has long preferred to use more
current information, it has been
constrained from doing so because of
the time needed to process the capital
data submitted by institutions in their
call reports.1 However, recent
developments, such as improvements in
the FDIC’s internal processing
procedures and an increase in the
number of institutions filing reports
electronically, now permit more rapid
processing of the data. Accordingly, the
Board is proposing to base capital group
determinations on data reported by
institutions in their call reports for the
quarter ending three months before the
beginning of the assessment period to
which the determination will apply.
For ease of reference, the dates for
capital group determinations would be
stated in terms of actual dates—that is,
March 31 for the semiannual period
beginning the following July 1, and
September 30 for the semiannual period
beginning the following January 1. At
present, the capital date is described by
reference to other dates rather than
specifically stated.
It is anticipated that this change
would be effective beginning with the
semiannual assessment period that
commences July 1, 2000. For that
period, the capital component of an
institution’s assessment risk
classification would be determined
based on data reported as of March 31,
2000, rather than as of December 31,
1999.
Change in Notice Dates for Assessment
Risk Classifications and Quarterly
Payment Invoices
The Board also is proposing to
shorten—from 30 days to 15 days—the
time between the date institutions are
notified of their assessment risk
classifications for the upcoming
semiannual assessment period and the
date the assessment is collected for the
first quarter of that upcoming period.
The same reduction is proposed, for
both the first and second quarters of
each semiannual assessment period, in
the time between the date of the
quarterly assessment invoice and the
date the invoiced amount is collected.
Currently, the FDIC’s assessments
regulation specifies that notice of the
assessment risk classification applicable
to a particular semiannual period is to
VerDate 18-JUN-99 10:00 Sep 07, 1999 Jkt 183247 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\A08SE2.001 pfrm04 PsN: 08SEP1
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
48719
Vol. 64, No. 173
Wednesday, September 8, 1999
1 Institutions have 30 days (or 45 days for
institutions with foreign branches) from quarter-end
to file their call reports. Once the FDIC receives the
reports, they are checked for obvious errors (such
as omitted information) and then input into the
FDIC’s automated system. Only after this has been
done can the calculations be performed to
determine the appropriate capital group assignment
for each of the more than 10,000 insured
institutions. These functions must be performed in
time to prepare and mail notices to eachinstitution
before the beginning of the next semiannual
assessment period.
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 327
RIN 3064–AC31
Assessments
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Notice of proposed rulemaking.
SUMMARY: The Board of Directors of the
FDIC (Board) is proposing several
changes to the FDIC’s regulation
governing assessments. The Board is
proposing to change the reporting date
used to determine the capital
component of the assessment risk
classifications assigned to FDIC-insured
depository institutions. The proposal is
to move that date closer by one calendar
quarter to the assessment period for
which the capital component is
assigned. This change would permit the
FDIC to use more up-to-date information
in determining institutions’ assessment
risk classifications. The proposed date
would coincide with the date currently
used to determine the supervisory
component of the assessment risk
classification.
To permit the use of more up-to-date
capital information, the Board is further
proposing to shorten from 30 days to 15
days the prior notice that the FDIC
sends to institutions advising them of
their assessment risk classifications for
the following semiannual assessment
period. The same reduction is proposed
for the invoice sent by the FDIC each
quarter showing the amount of the
assessment payment due for the next
quarterly collection. At the other end of
the process, the Board is proposing to
increase from 30 days to 90 days the
time within which an institution may
request review of its assessment risk
classification.
Additionally, to reflect a shift of
certain assessment functions within the
FDIC, the Board is proposing to revise
two of the references in the regulation
to FDIC offices or officials. Finally, the
proposal would correct a typographical
error in the form of a misstated cross-
reference to another FDIC regulation.
DATES: Written comments must be
received by the FDIC on or before
October 25, 1999.
ADDRESSES: All written comments
should be addressed 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 at the rear of the 550 17th
Street Building (located on F Street)
between 7:00 a.m. and 5:00 p.m. on
business days. Comments may also be
faxed to (202) 898–3838, or sent via the
Internet to comments@fdic.gov.
Comments will be available for
inspection and photocopying at the
FDIC Public Information Center, Room
100, 801 17th Street, NW, between 9:00
a.m. and 4:30 p.m. on business days.
FOR FURTHER INFORMATION CONTACT:
James W. Thornton, Senior Banking
Analyst, Division of Insurance, (202)
898–6707; or Claude A. Rollin, Senior
Counsel, Legal Division, (202) 898–
8741, Federal Deposit Insurance
Corporation, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
Capital Group Determination Date
At present, the FDIC’s risk-based
assessments regulation specifies that the
capital component of the assessment
risk classification assigned to each
FDIC-insured institution for each
semiannual assessment period will be
determined on the basis of data reported
by an institution in its Consolidated
Reports of Condition and Income, Thrift
Financial Report, or Report of Assets
and Liabilities of U.S. Branches and
Agencies of Foreign Banks (collectively,
call reports) for the quarter ending six
months earlier (12 CFR 327.4(a)(1)). As
a result, an institution’s capital group is
assigned on the basis of information that
is approximately six months old when
the assessment period begins. While the
FDIC has long preferred to use more
current information, it has been
constrained from doing so because of
the time needed to process the capital
data submitted by institutions in their
call reports.1 However, recent
developments, such as improvements in
the FDIC’s internal processing
procedures and an increase in the
number of institutions filing reports
electronically, now permit more rapid
processing of the data. Accordingly, the
Board is proposing to base capital group
determinations on data reported by
institutions in their call reports for the
quarter ending three months before the
beginning of the assessment period to
which the determination will apply.
For ease of reference, the dates for
capital group determinations would be
stated in terms of actual dates—that is,
March 31 for the semiannual period
beginning the following July 1, and
September 30 for the semiannual period
beginning the following January 1. At
present, the capital date is described by
reference to other dates rather than
specifically stated.
It is anticipated that this change
would be effective beginning with the
semiannual assessment period that
commences July 1, 2000. For that
period, the capital component of an
institution’s assessment risk
classification would be determined
based on data reported as of March 31,
2000, rather than as of December 31,
1999.
Change in Notice Dates for Assessment
Risk Classifications and Quarterly
Payment Invoices
The Board also is proposing to
shorten—from 30 days to 15 days—the
time between the date institutions are
notified of their assessment risk
classifications for the upcoming
semiannual assessment period and the
date the assessment is collected for the
first quarter of that upcoming period.
The same reduction is proposed, for
both the first and second quarters of
each semiannual assessment period, in
the time between the date of the
quarterly assessment invoice and the
date the invoiced amount is collected.
Currently, the FDIC’s assessments
regulation specifies that notice of the
assessment risk classification applicable
to a particular semiannual period is to
VerDate 18-JUN-99 10:00 Sep 07, 1999 Jkt 183247 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\A08SE2.001 pfrm04 PsN: 08SEP1
48720 Federal Register / Vol. 64, No. 173 / Wednesday, September 8, 1999 / Proposed Rules
2 In the event the Board makes a limited
adjustment to the assessment rate schedule
pursuant to the FDIC’s assessments regulation at 12
CFR 327.9(c), the adjustment is to be announced no
later than 15 days before the assessment notice date
(which under the existing regulations is, in turn, 30
days before the assessment payment date). Under
the proposal to move the assessment notice date
closer to the payment date, an adjustment
announcement would come at least 30 days before
the assessment payment date.
be provided to the institution at the
same time as the invoice showing the
amount of the assessment payment due
from the institution for the first quarter
of that semiannual period (12 CFR
327.4(a)). This invoice and notice are to
be provided no later than 30 days before
the first-quarter payment date (12 CFR
327.3(c)). The regulation further
requires that an invoice showing the
amount of the assessment payment due
for the second quarter of the semiannual
period is to be provided no later than 30
days before the second-quarter payment
date (12 CFR 327.3(d)).
The Board is proposing to reduce to
15 days each of these 30-day periods.
For the first-quarter notice and invoice,
the reduction is necessary to permit the
use of more current capital data in
determining an institution’s capital
group and, based on that determination,
to calculate the institution’s first-quarter
assessment payment.
For example, if the date of the data
used as a basis for capital group
assignments for the assessment period
beginning July 1 is changed from
December 31 to March 31, and the prior-
notice date remains May 30 (which is 30
days before the June 30 payment date),
the FDIC would have as little as 15 to
30 days to receive the data, scan the
reports, input the information into the
FDIC’s system, perform capital group
calculations for more than 10,000
institutions, and prepare and mail the
assessment notices. Although the call
report filing deadline for most
institutions is 30 days after the end of
the quarter (April 30 in this example),
the deadline for institutions with
foreign offices is 15 days later (here,
May 15). Although internal processing
improvements and increased electronic
filing allow the FDIC to perform these
functions more quickly, the FDIC cannot
perform them in 30 days.
For consistency, the same reduction
in the invoicing period is proposed for
both the first-and second-quarter
assessment payments.
It is not anticipated that reduction of
the notice and invoice periods would
have a significantly adverse impact on
insured institutions. The risk-based
assessment system has been in place
since 1993 and the industry is quite
familiar with it. Institutions typically
know (or can anticipate with substantial
certainty) the assessment risk
classification and corresponding
assessment rate 2 they will be assigned
for the next assessment period. For the
second quarter of a semiannual period,
institutions will have known their
capital category for three months. An
institution also knows the amount of its
assessment base for each quarter, since
that amount is calculated from data
reported by the institution. By
multiplying its rate by its assessment
base, an institution can very closely
estimate its payment well before it
receives a FDIC assessment notice.
The proposed change should have
little effect on the small number of
institutions that believe they have
received an incorrect assessment
classification. Even with the existing
notice and invoice dates, requests for
review of assessment ratings that result
in favorable changes for requesting
institutions can only rarely be decided
before the date on which the institution
is required to pay the invoiced amount.
Institutions are also able to anticipate
their Financing Corporation (FICO)
assessment, which the FDIC bills and
collects on FICO’s behalf. Although the
FICO assessment rate varies from one
quarter to the next, the variation is
typically small. Thus, under normal
circumstances, institutions can estimate
with reasonable accuracy the amount of
their assessment payments well in
advance of the payment date. However,
the Board recognizes that there might be
some instances in which significant
developments could reduce that
accuracy, such as significant changes in
the assessment base for one or both of
the deposit insurance funds that might
cause material changes in the FICO
assessment rates. In these cases, the
FDIC intends to provide notice as early
as possible through such means as
mailings to insured institutions.
An example of a development
expected to cause significant changes in
FICO assessments is the statutory
equalization of the FICO assessment rate
applicable to deposits insured by the
Bank Insurance Fund (BIF) with the rate
for deposits insured by the Savings
Association Insurance Fund (SAIF).
However, under existing law, that
change is to become effective on January
1, 2000, six months before the
anticipated implementation of the
changes proposed here. Thus, there
would be sufficient time to adjust to the
newer, equalized FICO rates before the
shorter notice period is implemented.
Extension of Period for Requesting
Reclassification
Another change proposed by the
Board is to lengthen the period during
which an institution may seek a change
in its assessment risk classification. At
present, the FDIC’s assessments
regulation requires that a request that
the FDIC review an institution’s
classification be submitted within 30
days of the date of the notice by which
the FDIC informs the institution of its
classification (12 CFR 327.4(d)). Based
on the FDIC’s experience with the
review process and the proposed
reduction of the existing prior-notice
period, the FDIC has concluded that a
longer period would be beneficial. Thus,
the Board is proposing to expand the
time for requesting review to 90 days.
Redesignations Resulting From Internal
FDIC Reorganization
In order to reflect reorganizations
within the FDIC, the Board is further
proposing to amend the assessments
regulation to provide that requests for
review of assessment risk classifications
be submitted to the Director of the
Division of Insurance, instead of the
Director of the Division of Supervision.
Similarly, the Board proposes to move
from the Director of the Division of
Supervision to the Director of the
Division of Insurance the existing
delegation of authority in 12 CFR
327.4(d) to act on most such requests.
However, the authority to act on
requests for changes in the supervisory
subgroup assignment would remain
with the Director of the Division of
Supervision if the request is based on
the appropriateness of that assignment
as of the date set for determining
supervisory subgroup assignments. This
delineation of the delegated authority is
represented by the phrase ‘‘as
appropriate’’ in the proposed revision,
which reads as follows: ‘‘Upon
completion of a review, the Director of
the Division of Insurance (or designee)
or the Director of the Division of
Supervision (or designee), as
appropriate, shall promptly notify the
institution in writing of his or her
determination of whether
reclassification is warranted.’’
Correction of Cross Reference
Section 327.5(f) of the FDIC’s
assessments regulation imposes
disclosure restrictions regarding the
supervisory subgroup assigned by the
FDIC. At present, this section gives an
erroneous cross-reference to another,
nonexistent, section of the FDIC’s
regulations to identify the category of
exempt information into which the
VerDate 18-JUN-99 10:00 Sep 07, 1999 Jkt 183247 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\A08SE2.002 pfrm04 PsN: 08SEP1
2 In the event the Board makes a limited
adjustment to the assessment rate schedule
pursuant to the FDIC’s assessments regulation at 12
CFR 327.9(c), the adjustment is to be announced no
later than 15 days before the assessment notice date
(which under the existing regulations is, in turn, 30
days before the assessment payment date). Under
the proposal to move the assessment notice date
closer to the payment date, an adjustment
announcement would come at least 30 days before
the assessment payment date.
be provided to the institution at the
same time as the invoice showing the
amount of the assessment payment due
from the institution for the first quarter
of that semiannual period (12 CFR
327.4(a)). This invoice and notice are to
be provided no later than 30 days before
the first-quarter payment date (12 CFR
327.3(c)). The regulation further
requires that an invoice showing the
amount of the assessment payment due
for the second quarter of the semiannual
period is to be provided no later than 30
days before the second-quarter payment
date (12 CFR 327.3(d)).
The Board is proposing to reduce to
15 days each of these 30-day periods.
For the first-quarter notice and invoice,
the reduction is necessary to permit the
use of more current capital data in
determining an institution’s capital
group and, based on that determination,
to calculate the institution’s first-quarter
assessment payment.
For example, if the date of the data
used as a basis for capital group
assignments for the assessment period
beginning July 1 is changed from
December 31 to March 31, and the prior-
notice date remains May 30 (which is 30
days before the June 30 payment date),
the FDIC would have as little as 15 to
30 days to receive the data, scan the
reports, input the information into the
FDIC’s system, perform capital group
calculations for more than 10,000
institutions, and prepare and mail the
assessment notices. Although the call
report filing deadline for most
institutions is 30 days after the end of
the quarter (April 30 in this example),
the deadline for institutions with
foreign offices is 15 days later (here,
May 15). Although internal processing
improvements and increased electronic
filing allow the FDIC to perform these
functions more quickly, the FDIC cannot
perform them in 30 days.
For consistency, the same reduction
in the invoicing period is proposed for
both the first-and second-quarter
assessment payments.
It is not anticipated that reduction of
the notice and invoice periods would
have a significantly adverse impact on
insured institutions. The risk-based
assessment system has been in place
since 1993 and the industry is quite
familiar with it. Institutions typically
know (or can anticipate with substantial
certainty) the assessment risk
classification and corresponding
assessment rate 2 they will be assigned
for the next assessment period. For the
second quarter of a semiannual period,
institutions will have known their
capital category for three months. An
institution also knows the amount of its
assessment base for each quarter, since
that amount is calculated from data
reported by the institution. By
multiplying its rate by its assessment
base, an institution can very closely
estimate its payment well before it
receives a FDIC assessment notice.
The proposed change should have
little effect on the small number of
institutions that believe they have
received an incorrect assessment
classification. Even with the existing
notice and invoice dates, requests for
review of assessment ratings that result
in favorable changes for requesting
institutions can only rarely be decided
before the date on which the institution
is required to pay the invoiced amount.
Institutions are also able to anticipate
their Financing Corporation (FICO)
assessment, which the FDIC bills and
collects on FICO’s behalf. Although the
FICO assessment rate varies from one
quarter to the next, the variation is
typically small. Thus, under normal
circumstances, institutions can estimate
with reasonable accuracy the amount of
their assessment payments well in
advance of the payment date. However,
the Board recognizes that there might be
some instances in which significant
developments could reduce that
accuracy, such as significant changes in
the assessment base for one or both of
the deposit insurance funds that might
cause material changes in the FICO
assessment rates. In these cases, the
FDIC intends to provide notice as early
as possible through such means as
mailings to insured institutions.
An example of a development
expected to cause significant changes in
FICO assessments is the statutory
equalization of the FICO assessment rate
applicable to deposits insured by the
Bank Insurance Fund (BIF) with the rate
for deposits insured by the Savings
Association Insurance Fund (SAIF).
However, under existing law, that
change is to become effective on January
1, 2000, six months before the
anticipated implementation of the
changes proposed here. Thus, there
would be sufficient time to adjust to the
newer, equalized FICO rates before the
shorter notice period is implemented.
Extension of Period for Requesting
Reclassification
Another change proposed by the
Board is to lengthen the period during
which an institution may seek a change
in its assessment risk classification. At
present, the FDIC’s assessments
regulation requires that a request that
the FDIC review an institution’s
classification be submitted within 30
days of the date of the notice by which
the FDIC informs the institution of its
classification (12 CFR 327.4(d)). Based
on the FDIC’s experience with the
review process and the proposed
reduction of the existing prior-notice
period, the FDIC has concluded that a
longer period would be beneficial. Thus,
the Board is proposing to expand the
time for requesting review to 90 days.
Redesignations Resulting From Internal
FDIC Reorganization
In order to reflect reorganizations
within the FDIC, the Board is further
proposing to amend the assessments
regulation to provide that requests for
review of assessment risk classifications
be submitted to the Director of the
Division of Insurance, instead of the
Director of the Division of Supervision.
Similarly, the Board proposes to move
from the Director of the Division of
Supervision to the Director of the
Division of Insurance the existing
delegation of authority in 12 CFR
327.4(d) to act on most such requests.
However, the authority to act on
requests for changes in the supervisory
subgroup assignment would remain
with the Director of the Division of
Supervision if the request is based on
the appropriateness of that assignment
as of the date set for determining
supervisory subgroup assignments. This
delineation of the delegated authority is
represented by the phrase ‘‘as
appropriate’’ in the proposed revision,
which reads as follows: ‘‘Upon
completion of a review, the Director of
the Division of Insurance (or designee)
or the Director of the Division of
Supervision (or designee), as
appropriate, shall promptly notify the
institution in writing of his or her
determination of whether
reclassification is warranted.’’
Correction of Cross Reference
Section 327.5(f) of the FDIC’s
assessments regulation imposes
disclosure restrictions regarding the
supervisory subgroup assigned by the
FDIC. At present, this section gives an
erroneous cross-reference to another,
nonexistent, section of the FDIC’s
regulations to identify the category of
exempt information into which the
VerDate 18-JUN-99 10:00 Sep 07, 1999 Jkt 183247 PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 E:\FR\FM\A08SE2.002 pfrm04 PsN: 08SEP1