5926 Federal Register / Vol. 61, No. 32 / Thursday, February 15, 1996 / Rules and Regulations
that this final rule will tend to effectuate
the declared policy of the Act.
List of Subjects in 7 CFR Part 966
Marketing agreements, Reporting and
recordkeeping requirements, Tomatoes.
For the reasons set forth in the
preamble, 7 CFR part 966 is amended as
follows:
PART 966—TOMATOES GROWN IN
FLORIDA
Accordingly, the interim final rule
amending 7 CFR Part 966 which was
published at 60 FR 57906 on November
24, 1995, is adopted as a final rule
without change.
Dated: February 8, 1996.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 96–3349 Filed 2–14–96; 8:45 am]
BILLING CODE 3410–02–P
FEDERAL RESERVE SYSTEM
12 CFR Part 201
[Regulation A]
Extensions of Credit by Federal
Reserve Banks; Change in Discount
Rate
AGENCY: Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
SUMMARY: The Board of Governors has
amended its Regulation A on Extensions
of Credit by Federal Reserve Banks to
reflect its approval of a decrease in the
basic discount rate at each Federal
Reserve Bank. The Board acted on
requests submitted by the Boards of
Directors of the twelve Federal Reserve
Banks.
EFFECTIVE DATE: The amendments to part
201 (Regulation A) were effective
February 5, 1996. The rate changes for
adjustment credit were effective on the
dates specified in 12 CFR 201.51.
FOR FURTHER INFORMATION CONTACT:
William W. Wiles, Secretary of the
Board (202/452–3257); for users of
Telecommunications Device for the Deaf
(TDD), please contact Dorothea
Thompson, (202/452–3544), Board of
Governors of the Federal Reserve
System, 20th and C Streets NW.,
Washington, DC 20551.
SUPPLEMENTARY INFORMATION: Pursuant
to the authority of sections 10(b), 13, 14,
19, et.al., of the Federal Reserve Act, the
Board has amended its Regulation A (12
CFR part 201) to incorporate changes in
discount rates on Federal Reserve Bank
extensions of credit. The discount rates
are the interest rates charged to
depository institutions when they
borrow from their district Reserve
Banks.
The ‘‘basic discount rate’’ is a fixed
rate charged by Reserve Banks for
adjustment credit and, at the Reserve
Banks’ discretion, for extended credit.
In decreasing the basic discount rate,
the Board acted on requests submitted
by the Boards of Directors of the twelve
Federal Reserve Banks. The new rates
were effective on the dates specified
below. Moderating economic expansion
in recent months has reduced potential
inflationary pressures going forward. In
this environment, the decrease in rates
is consistent with continued inflation
and sustainable growth.
Regulatory Flexibility Act Certification
Pursuant to section 605(b) of the
Regulatory Flexibility Act (5 U.S.C.
605(b)), the Board certifies that the
change in the basic discount rate will
not have a significant adverse economic
impact on a substantial number of small
entities. The rule does not impose any
additional requirements on entities
affected by the regulation.
Paperwork Reduction Act
In accordance with section 3506 of
the Paperwork Reduction Act of 1995
(44 U.S.C. Ch. 35; 5 CFR 1320 Appendix
A.1), the Board reviewed the rule under
the authority delegated to the Board by
the Office of Management and Budget.
No collections of information pursuant
to the Paperwork Reduction Act are
contained in the rule.
Administrative Procedure Act
The provisions of 5 U.S.C. 553(b)
relating to notice and public
participation were not followed in
connection with the adoption of the
amendment because the Board for ‘‘good
cause’’ finds that delaying the change in
the basic discount rate in order to allow
notice and public comment on the
change is impracticable, unnecessary,
and contrary to the public interest in
fostering sustainable economic growth.
The provisions of 5 U.S.C. 553(d) that
prescribe 30 days prior notice of the
effective date of a rule have not been
followed because section 553(d)
provides that such prior notice is not
necessary whenever there is good cause
for finding that such notice is contrary
to the public interest. As previously
stated, the Board determined that
delaying the changes in the basic
discount rate is contrary to the public
interest.
List of Subjects in 12 CFR Part 201
Banks, banking, Credit, Federal
Reserve System.
For the reasons set out in the
preamble, 12 CFR Part 201 is amended
as set forth below:
PART 201—EXTENSIONS OF CREDIT
BY FEDERAL RESERVE BANKS
(REGULATION A)
1. The authority citation for 12 CFR
part 201 continues to read as follows:
Authority: 12 U.S.C. 343 et. seq., 347a,
347b, 347c, 347d, 348 et. seq., 357, 374, 374a
and 461.
2. Section 201.51 is revised to read as
follows:
§ 201.51 Adjustment credit for depository
institutions.
The rates for adjustment credit
provided to depository institutions
under § 201.3(a) are:
Federal Re-
serve Bank Rate Effective
Boston .......... 5.00 February 1, 1996.
New York ..... 5.00 January 31, 1996.
Philadelphia . 5.00 January 31, 1996.
Cleveland ..... 5.00 January 31, 1996.
Richmond ..... 5.00 February 1, 1996.
Atlanta .......... 5.00 January 31, 1996.
Chicago ........ 5.00 February 1, 1996.
St. Louis ....... 5.00 February 5, 1996.
Minneapolis .. 5.00 January 31, 1996.
Kansas City .. 5.00 February 1, 1996.
Dallas ........... 5.00 January 31, 1996.
San Fran-
cisco.
5.00 January 31, 1996.
By order of the Board of Governors of the
Federal Reserve System, February 9, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96–3389 Filed 2–14–96; 8:45 a.m.]
BILLING CODE 6210–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 303 and 359
RIN 3064–AB11
Regulation of Golden Parachutes and
Other Benefits Which May Be Subject
to Misuse
AGENCY: Federal Deposit Insurance
Corporation (FDIC or Corporation).
ACTION: Final rule.
SUMMARY: The FDIC is adopting a rule
limiting golden parachute and
indemnification payments to
institution-affiliated parties by insured
depository institutions and depository
institution holding companies. The
that this final rule will tend to effectuate
the declared policy of the Act.
List of Subjects in 7 CFR Part 966
Marketing agreements, Reporting and
recordkeeping requirements, Tomatoes.
For the reasons set forth in the
preamble, 7 CFR part 966 is amended as
follows:
PART 966—TOMATOES GROWN IN
FLORIDA
Accordingly, the interim final rule
amending 7 CFR Part 966 which was
published at 60 FR 57906 on November
24, 1995, is adopted as a final rule
without change.
Dated: February 8, 1996.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 96–3349 Filed 2–14–96; 8:45 am]
BILLING CODE 3410–02–P
FEDERAL RESERVE SYSTEM
12 CFR Part 201
[Regulation A]
Extensions of Credit by Federal
Reserve Banks; Change in Discount
Rate
AGENCY: Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
SUMMARY: The Board of Governors has
amended its Regulation A on Extensions
of Credit by Federal Reserve Banks to
reflect its approval of a decrease in the
basic discount rate at each Federal
Reserve Bank. The Board acted on
requests submitted by the Boards of
Directors of the twelve Federal Reserve
Banks.
EFFECTIVE DATE: The amendments to part
201 (Regulation A) were effective
February 5, 1996. The rate changes for
adjustment credit were effective on the
dates specified in 12 CFR 201.51.
FOR FURTHER INFORMATION CONTACT:
William W. Wiles, Secretary of the
Board (202/452–3257); for users of
Telecommunications Device for the Deaf
(TDD), please contact Dorothea
Thompson, (202/452–3544), Board of
Governors of the Federal Reserve
System, 20th and C Streets NW.,
Washington, DC 20551.
SUPPLEMENTARY INFORMATION: Pursuant
to the authority of sections 10(b), 13, 14,
19, et.al., of the Federal Reserve Act, the
Board has amended its Regulation A (12
CFR part 201) to incorporate changes in
discount rates on Federal Reserve Bank
extensions of credit. The discount rates
are the interest rates charged to
depository institutions when they
borrow from their district Reserve
Banks.
The ‘‘basic discount rate’’ is a fixed
rate charged by Reserve Banks for
adjustment credit and, at the Reserve
Banks’ discretion, for extended credit.
In decreasing the basic discount rate,
the Board acted on requests submitted
by the Boards of Directors of the twelve
Federal Reserve Banks. The new rates
were effective on the dates specified
below. Moderating economic expansion
in recent months has reduced potential
inflationary pressures going forward. In
this environment, the decrease in rates
is consistent with continued inflation
and sustainable growth.
Regulatory Flexibility Act Certification
Pursuant to section 605(b) of the
Regulatory Flexibility Act (5 U.S.C.
605(b)), the Board certifies that the
change in the basic discount rate will
not have a significant adverse economic
impact on a substantial number of small
entities. The rule does not impose any
additional requirements on entities
affected by the regulation.
Paperwork Reduction Act
In accordance with section 3506 of
the Paperwork Reduction Act of 1995
(44 U.S.C. Ch. 35; 5 CFR 1320 Appendix
A.1), the Board reviewed the rule under
the authority delegated to the Board by
the Office of Management and Budget.
No collections of information pursuant
to the Paperwork Reduction Act are
contained in the rule.
Administrative Procedure Act
The provisions of 5 U.S.C. 553(b)
relating to notice and public
participation were not followed in
connection with the adoption of the
amendment because the Board for ‘‘good
cause’’ finds that delaying the change in
the basic discount rate in order to allow
notice and public comment on the
change is impracticable, unnecessary,
and contrary to the public interest in
fostering sustainable economic growth.
The provisions of 5 U.S.C. 553(d) that
prescribe 30 days prior notice of the
effective date of a rule have not been
followed because section 553(d)
provides that such prior notice is not
necessary whenever there is good cause
for finding that such notice is contrary
to the public interest. As previously
stated, the Board determined that
delaying the changes in the basic
discount rate is contrary to the public
interest.
List of Subjects in 12 CFR Part 201
Banks, banking, Credit, Federal
Reserve System.
For the reasons set out in the
preamble, 12 CFR Part 201 is amended
as set forth below:
PART 201—EXTENSIONS OF CREDIT
BY FEDERAL RESERVE BANKS
(REGULATION A)
1. The authority citation for 12 CFR
part 201 continues to read as follows:
Authority: 12 U.S.C. 343 et. seq., 347a,
347b, 347c, 347d, 348 et. seq., 357, 374, 374a
and 461.
2. Section 201.51 is revised to read as
follows:
§ 201.51 Adjustment credit for depository
institutions.
The rates for adjustment credit
provided to depository institutions
under § 201.3(a) are:
Federal Re-
serve Bank Rate Effective
Boston .......... 5.00 February 1, 1996.
New York ..... 5.00 January 31, 1996.
Philadelphia . 5.00 January 31, 1996.
Cleveland ..... 5.00 January 31, 1996.
Richmond ..... 5.00 February 1, 1996.
Atlanta .......... 5.00 January 31, 1996.
Chicago ........ 5.00 February 1, 1996.
St. Louis ....... 5.00 February 5, 1996.
Minneapolis .. 5.00 January 31, 1996.
Kansas City .. 5.00 February 1, 1996.
Dallas ........... 5.00 January 31, 1996.
San Fran-
cisco.
5.00 January 31, 1996.
By order of the Board of Governors of the
Federal Reserve System, February 9, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96–3389 Filed 2–14–96; 8:45 a.m.]
BILLING CODE 6210–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 303 and 359
RIN 3064–AB11
Regulation of Golden Parachutes and
Other Benefits Which May Be Subject
to Misuse
AGENCY: Federal Deposit Insurance
Corporation (FDIC or Corporation).
ACTION: Final rule.
SUMMARY: The FDIC is adopting a rule
limiting golden parachute and
indemnification payments to
institution-affiliated parties by insured
depository institutions and depository
institution holding companies. The
5927Federal Register / Vol. 61, No. 32 / Thursday, February 15, 1996 / Rules and Regulations
purpose of this rule is to prevent the
improper disposition of institution
assets and to protect the financial
soundness of insured depository
institutions, depository institution
holding companies, and the federal
deposit insurance funds.
EFFECTIVE DATE: April 1, 1996.
FOR FURTHER INFORMATION CONTACT:
Robert F. Miailovich, Associate Director,
Division of Supervision, (202) 898–
6918, 550 17th Street, N.W.,
Washington, D.C.; Michael D. Jenkins,
Examination Specialist, Division of
Supervision, (202) 898–6896, 1776 F
Street, N.W., Washington, D.C. 20429;
Jeffrey M. Kopchik, Counsel, Legal
Division, (202) 898–3872; Federal
Deposit Insurance Corporation, 550 17th
Street, N.W., Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
No collection of information pursuant
to section 3504(h) of the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.)
is contained in this rule. Consequently,
no information was submitted to the
Office of Management and Budget for
review.
Regulatory Flexibility Act
Pursuant to section 605(b) of the
Regulatory Flexibility Act (Pub. L. 96–
354, 5 U.S.C. 601 et seq.), it is certified
that this rule will not have a significant
impact on a substantial number of small
entities.
Background
On March 29, 1995, the FDIC
published for public comment a notice
of proposed rulemaking entitled
‘‘Regulation of Golden Parachutes and
Other Benefits Which May Be Subject to
Misuse’’. 60 FR 16069 (1995). This
proposal (the Second Proposal) followed
an earlier notice of proposed rulemaking
concerning the same topic (the First
Proposal), which was published in the
Federal Register on October 7, 1991. 56
FR 50529 (1991). Both the First and
Second Proposals were efforts to
implement section 18(k) of the Federal
Deposit Insurance Act (12 U.S.C.
1828(k)) (FDI Act). Section 18(k)
provides that the FDIC may prohibit or
limit, by regulation or order, any golden
parachute or indemnification payment.
The FDIC received 23 comment letters
in response to the Second Proposal. The
comment letters were submitted by
major financial institution trade
associations, insured depository
institutions, insured depository
institution holding companies, a law
firm and a trade association
representing life insurance
underwriters. Virtually all of the
commenters expressed the view that the
Second Proposal represented a
significant improvement over the First
Proposal in terms of the burden that the
proposed regulation would place on the
industry. In fact, the majority of
commenters expressed support for the
Second Proposal, while submitting well
thought-out suggestions. These
suggestions encompassed technical
revisions to the regulation as well as
broader proposals aimed at making it
easier for insured depository
institutions and holding companies to
make golden parachute and
indemnification payments in certain
limited circumstances.
Issues Raised by the Commenters—
Golden Parachute Payments
The FDIC has carefully reviewed and
analyzed the comment letters it received
in response to the Second Proposal.
With respect to the golden parachute
portion of the Second Proposal, the
most significant issues raised by the
comment letters and the FDIC’s
responses are discussed below.
1. Bona Fide Deferred Compensation
Plans
The Second Proposal includes a
definition of ‘‘bona fide deferred
compensation plan or arrangement’’ that
was created specifically for this
regulation. This definition, which
appears in § 359.1(d) of the Second
Proposal, includes a provision that
allows plans to provide for the crediting
of a reasonable investment return on
elective deferrals of compensation,
wages or fees. Several commenters
suggested that the definition of ‘‘bona
fide deferred compensation plan or
arrangement’’ should be expanded to
further define the term ‘‘reasonable
investment return’’. One comment letter
included suggested language to be
incorporated into the regulation. The
FDIC is of the opinion that including an
additional definition of ‘‘reasonable
investment return’’ would not provide
any advantage to the industry and
would only serve to make the regulation
more complicated. This provision is
provided in the definition to permit
financial institutions to follow normal
business practices. It is not intended to
have the regulators make close
distinctions of what is a reasonable
investment return. It is intended merely
to prevent the inclusion of exorbitant
returns that would result in a
circumvention of the primary purpose
of this regulation. The suggested
definitions provided by the commenters
are considered to clearly fit the
requirements of this term; however, the
FDIC also recognizes that there are
several other definitions of ‘‘reasonable
investment return’’ that also fit these
requirements.
Several commenters asked whether a
finding by the FDIC that a bona fide
deferred compensation plan provided
for an unreasonable investment return
on elective deferrals would invalidate
the entire plan. The FDIC is of the view
that such a finding would not invalidate
such a plan which otherwise conforms
to § 359.1(d). However, that portion of
the investment return which is found to
be unreasonable would be a prohibited
golden parachute payment.
2. Nondiscriminatory Severance Pay
Plans
Section 359.1(f)(2) of the Second
Proposal contains certain exceptions to
the definition of ‘‘golden parachute
payment’’. One of those exceptions is
for nondiscriminatory severance pay
plans. Second Proposal § 359.1(f)(2)(v).
Several commenters suggested that the
FDIC delete the requirement that the
exception apply only in cases of a
reduction in force (RIF). This section of
the Second Proposal also would require
30 days prior written notice to the
appropriate federal banking agency and
the FDIC prior to making such a
severance payment to a senior executive
officer. Several commenters also urged
the deletion of the prior notice
requirement. After careful
consideration, the FDIC agrees with
these suggestions. If a
nondiscriminatory severance pay plan
conforms to the other requirements set
forth in § 359.1(f)(2)(v), it should not be
necessary that an employee’s
involuntary termination be part of a RIF
in order for that employee to collect
severance pay. This section’s other
requirements are more than adequate
protection that the exception will not be
used to circumvent the regulation’s
primary purpose, i.e., the prohibition of
golden parachute payments. Also, the
advantages of the prior notice provision
for severance payments to senior
executive officers do not outweigh the
burden such a requirement would place
on the industry, so this requirement has
been deleted.
3. Definition of Nondiscriminatory
Section 359.1(j) of the Second
Proposal contains the definition of
‘‘nondiscriminatory’’ as it relates to
severance pay plans or arrangements.
These are the only type of severance pay
plans or arrangements that may qualify
as an exception to the regulation’s
prohibition. In order to be considered
nondiscriminatory, a severance pay plan
must apply to all employees of an
purpose of this rule is to prevent the
improper disposition of institution
assets and to protect the financial
soundness of insured depository
institutions, depository institution
holding companies, and the federal
deposit insurance funds.
EFFECTIVE DATE: April 1, 1996.
FOR FURTHER INFORMATION CONTACT:
Robert F. Miailovich, Associate Director,
Division of Supervision, (202) 898–
6918, 550 17th Street, N.W.,
Washington, D.C.; Michael D. Jenkins,
Examination Specialist, Division of
Supervision, (202) 898–6896, 1776 F
Street, N.W., Washington, D.C. 20429;
Jeffrey M. Kopchik, Counsel, Legal
Division, (202) 898–3872; Federal
Deposit Insurance Corporation, 550 17th
Street, N.W., Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
No collection of information pursuant
to section 3504(h) of the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.)
is contained in this rule. Consequently,
no information was submitted to the
Office of Management and Budget for
review.
Regulatory Flexibility Act
Pursuant to section 605(b) of the
Regulatory Flexibility Act (Pub. L. 96–
354, 5 U.S.C. 601 et seq.), it is certified
that this rule will not have a significant
impact on a substantial number of small
entities.
Background
On March 29, 1995, the FDIC
published for public comment a notice
of proposed rulemaking entitled
‘‘Regulation of Golden Parachutes and
Other Benefits Which May Be Subject to
Misuse’’. 60 FR 16069 (1995). This
proposal (the Second Proposal) followed
an earlier notice of proposed rulemaking
concerning the same topic (the First
Proposal), which was published in the
Federal Register on October 7, 1991. 56
FR 50529 (1991). Both the First and
Second Proposals were efforts to
implement section 18(k) of the Federal
Deposit Insurance Act (12 U.S.C.
1828(k)) (FDI Act). Section 18(k)
provides that the FDIC may prohibit or
limit, by regulation or order, any golden
parachute or indemnification payment.
The FDIC received 23 comment letters
in response to the Second Proposal. The
comment letters were submitted by
major financial institution trade
associations, insured depository
institutions, insured depository
institution holding companies, a law
firm and a trade association
representing life insurance
underwriters. Virtually all of the
commenters expressed the view that the
Second Proposal represented a
significant improvement over the First
Proposal in terms of the burden that the
proposed regulation would place on the
industry. In fact, the majority of
commenters expressed support for the
Second Proposal, while submitting well
thought-out suggestions. These
suggestions encompassed technical
revisions to the regulation as well as
broader proposals aimed at making it
easier for insured depository
institutions and holding companies to
make golden parachute and
indemnification payments in certain
limited circumstances.
Issues Raised by the Commenters—
Golden Parachute Payments
The FDIC has carefully reviewed and
analyzed the comment letters it received
in response to the Second Proposal.
With respect to the golden parachute
portion of the Second Proposal, the
most significant issues raised by the
comment letters and the FDIC’s
responses are discussed below.
1. Bona Fide Deferred Compensation
Plans
The Second Proposal includes a
definition of ‘‘bona fide deferred
compensation plan or arrangement’’ that
was created specifically for this
regulation. This definition, which
appears in § 359.1(d) of the Second
Proposal, includes a provision that
allows plans to provide for the crediting
of a reasonable investment return on
elective deferrals of compensation,
wages or fees. Several commenters
suggested that the definition of ‘‘bona
fide deferred compensation plan or
arrangement’’ should be expanded to
further define the term ‘‘reasonable
investment return’’. One comment letter
included suggested language to be
incorporated into the regulation. The
FDIC is of the opinion that including an
additional definition of ‘‘reasonable
investment return’’ would not provide
any advantage to the industry and
would only serve to make the regulation
more complicated. This provision is
provided in the definition to permit
financial institutions to follow normal
business practices. It is not intended to
have the regulators make close
distinctions of what is a reasonable
investment return. It is intended merely
to prevent the inclusion of exorbitant
returns that would result in a
circumvention of the primary purpose
of this regulation. The suggested
definitions provided by the commenters
are considered to clearly fit the
requirements of this term; however, the
FDIC also recognizes that there are
several other definitions of ‘‘reasonable
investment return’’ that also fit these
requirements.
Several commenters asked whether a
finding by the FDIC that a bona fide
deferred compensation plan provided
for an unreasonable investment return
on elective deferrals would invalidate
the entire plan. The FDIC is of the view
that such a finding would not invalidate
such a plan which otherwise conforms
to § 359.1(d). However, that portion of
the investment return which is found to
be unreasonable would be a prohibited
golden parachute payment.
2. Nondiscriminatory Severance Pay
Plans
Section 359.1(f)(2) of the Second
Proposal contains certain exceptions to
the definition of ‘‘golden parachute
payment’’. One of those exceptions is
for nondiscriminatory severance pay
plans. Second Proposal § 359.1(f)(2)(v).
Several commenters suggested that the
FDIC delete the requirement that the
exception apply only in cases of a
reduction in force (RIF). This section of
the Second Proposal also would require
30 days prior written notice to the
appropriate federal banking agency and
the FDIC prior to making such a
severance payment to a senior executive
officer. Several commenters also urged
the deletion of the prior notice
requirement. After careful
consideration, the FDIC agrees with
these suggestions. If a
nondiscriminatory severance pay plan
conforms to the other requirements set
forth in § 359.1(f)(2)(v), it should not be
necessary that an employee’s
involuntary termination be part of a RIF
in order for that employee to collect
severance pay. This section’s other
requirements are more than adequate
protection that the exception will not be
used to circumvent the regulation’s
primary purpose, i.e., the prohibition of
golden parachute payments. Also, the
advantages of the prior notice provision
for severance payments to senior
executive officers do not outweigh the
burden such a requirement would place
on the industry, so this requirement has
been deleted.
3. Definition of Nondiscriminatory
Section 359.1(j) of the Second
Proposal contains the definition of
‘‘nondiscriminatory’’ as it relates to
severance pay plans or arrangements.
These are the only type of severance pay
plans or arrangements that may qualify
as an exception to the regulation’s
prohibition. In order to be considered
nondiscriminatory, a severance pay plan
must apply to all employees of an