This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
Rules and Regulations Federal Register
67033
Vol. 83, No. 248
Friday, December 28, 2018
1 Public Law 115–174, 132 Stat. 1296 (2018).
2 12 U.S.C. 1820(d).
3 See section 83001 of the Fixing America’s
Surface Transportation Act (the FAST) Act, enacted
on December 4, 2015. Public Law 114–94, 129 Stat.
1312 (permitting the agencies to examine qualifying
IDIs with under $1 billion in total assets not less
than once during each 18-month period). The
agencies published interim final rules
implementing the FAST Act amendments in
February 2016, and final rules in December 2016.
See 81 FR 10069 (Feb. 29, 2016) and 81 FR 90949
(Dec. 16. 2016), respectively, codified at 12 CFR 4.6
and 4.7 (OCC), 12 CFR 208.64 and 211.26 (Board),
12 CFR 337.12 and 347.211 (FDIC).
4 12 U.S.C. 1820(d)(4) and 1820(d)(10).
5 12 U.S.C. 3105(c)(1)(C).
6 12 U.S.C. 1820(d)(1).
7 The Board, FDIC, or OCC. See 12 U.S.C. 1813(q).
8 IDIs are evaluated under the Uniform Financial
Institutions Rating System (commonly referred to as
CAMELS). CAMELS is an acronym that is drawn
from the first letters of the individual components
of the rating system: Capital adequacy, Asset
quality, Management, Earnings, Liquidity, and
Sensitivity to market risk. CAMELS ratings of ‘‘1’’
and ‘‘2’’ correspond with ratings of ‘‘outstanding’’
and ‘‘good,’’ respectively. In addition to having a
CAMELS composite rating of ‘‘1’’ or ‘‘2,’’ an IDI is
Continued
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 4
[Docket ID OCC–2018–0014]
RIN 1557–AE37
FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 211
[Docket No. R–1615]
RIN 7100–AF09
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 337 and 347
RIN 3064–AE76
Expanded Examination Cycle for
Certain Small Insured Depository
Institutions and U.S. Branches and
Agencies of Foreign Banks
AGENCY: Office of the Comptroller of the
Currency (OCC), Treasury; Board of
Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Final rules.
SUMMARY: On August 29, 2018, the OCC,
Board, and FDIC (collectively, the
agencies) issued interim final rules that
were effective immediately to
implement section 210 of the Economic
Growth, Regulatory Relief, and
Consumer Protection Act (Economic
Growth Act), which was enacted on
May 24, 2018. The agencies are now
adopting the interim final rules as final
without change. The interim final rules
and final rules implement section 210 of
the Economic Growth Act, which
amended section 10(d) of the Federal
Deposit Insurance Act (FDI Act) to
permit the agencies to examine
qualifying insured depository
institutions (IDIs) with under $3 billion
in total assets not less than once during
each 18-month period. In addition,
these final rules adopt as final the
parallel changes to the agencies’
regulations governing the on-site
examination cycle for U.S. branches and
agencies of foreign banks, consistent
with the International Banking Act of
1978 (IBA).
DATES: These final rules are effective on
January 28, 2019.
FOR FURTHER INFORMATION CONTACT:
OCC: Enice Thomas, Senior Advisor
to Senior Deputy Comptroller, Midsize
and Community Bank Supervision,
(202) 649–5420; and Deborah Katz,
Assistant Director, Melissa J. Lisenbee,
Senior Attorney, or Christopher
Rafferty, Attorney, Chief Counsel’s
Office, (202) 649–5490; for persons who
are deaf or hearing impaired, TTY, (202)
649–5597.
Board: Division of Supervision and
Regulation—Richard Naylor, Associate
Director, (202) 728–5854; Jonathan
Rono, Manager, (202) 721–4568;
Assetou Traore, Supervisory Financial
Analyst, (202) 974–7066; Virginia Gibbs,
Manager, (202) 452–2521; or Alexander
Kobulsky, Supervisory Financial
Analyst, (202) 452–2031; and Legal
Division—Laurie Schaffer, Associate
General Counsel, (202) 452–2277;
Victoria Szybillo, Senior Counsel, (202)
475–6325; or Mary Watkins, Senior
Attorney, (202) 452–3722.
FDIC: Policy Branch Division of Risk
Management and Supervision—Thomas
F. Lyons, Chief, Policy and Program
Development, (202) 898–6850, tlyons@
FDIC.gov; Karen J. Currie, Senior
Examination Specialist, (202) 898–3981,
Policy and Program Development,
Division of Risk Management
Supervision; Legal Division—Suzanne J.
Dawley, Counsel, (202) 898–6509; or
Gregory S. Feder, Counsel, (202) 898–
8724.
SUPPLEMENTARY INFORMATION:
I. Background
Section 210 of the Economic Growth
Act 1 amended section 10(d) of the FDI
Act 2 to permit the agencies to examine
qualifying IDIs (generally, those IDIs
that are well capitalized and well
managed) with under $3 billion in total
assets not less than once during each 18-
month period, rather than not less than
once during each 12-month period.
Prior to the enactment of the Economic
Growth Act, only qualifying IDIs with
under $1 billion in total assets were
eligible for an 18-month on-site
examination cycle.3
On August 29, 2018, the agencies
issued interim final rules to implement
the Economic Growth Act’s
amendments to sections 10(d)(4) and
10(d)(10) of the FDI Act 4 that allow
qualifying IDIs with under $3 billion in
total assets to benefit from the extended
18-month examination cycle. In
addition, the interim final rules made
parallel changes to the agencies’
regulations governing the on-site
examination cycle for U.S. branches and
agencies of foreign banks, consistent
with the IBA.5
Section 10(d)(1) of the FDI Act 6
generally requires the appropriate
Federal banking agency for an IDI 7 to
conduct a full-scope, on-site
examination of an IDI at least once
during each 12-month period. With the
enactment of section 210 of the
Economic Growth Act, section 10(d)(4)
of the FDI Act authorizes the
appropriate Federal banking agency to
extend the on-site examination cycle for
an IDI to at least once during an 18-
month period if the IDI (1) has total
assets of less than $3 billion; (2) is well
capitalized (as defined in 12 U.S.C.
1831o (prompt corrective action)); (3)
was found, at its most recent
examination, to be well managed 8 and
VerDate Sep<11>2014 16:02 Dec 27, 2018 Jkt 247001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\28DER1.SGM 28DER1
amozie on DSK3GDR082PROD with RULES
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
Rules and Regulations Federal Register
67033
Vol. 83, No. 248
Friday, December 28, 2018
1 Public Law 115–174, 132 Stat. 1296 (2018).
2 12 U.S.C. 1820(d).
3 See section 83001 of the Fixing America’s
Surface Transportation Act (the FAST) Act, enacted
on December 4, 2015. Public Law 114–94, 129 Stat.
1312 (permitting the agencies to examine qualifying
IDIs with under $1 billion in total assets not less
than once during each 18-month period). The
agencies published interim final rules
implementing the FAST Act amendments in
February 2016, and final rules in December 2016.
See 81 FR 10069 (Feb. 29, 2016) and 81 FR 90949
(Dec. 16. 2016), respectively, codified at 12 CFR 4.6
and 4.7 (OCC), 12 CFR 208.64 and 211.26 (Board),
12 CFR 337.12 and 347.211 (FDIC).
4 12 U.S.C. 1820(d)(4) and 1820(d)(10).
5 12 U.S.C. 3105(c)(1)(C).
6 12 U.S.C. 1820(d)(1).
7 The Board, FDIC, or OCC. See 12 U.S.C. 1813(q).
8 IDIs are evaluated under the Uniform Financial
Institutions Rating System (commonly referred to as
CAMELS). CAMELS is an acronym that is drawn
from the first letters of the individual components
of the rating system: Capital adequacy, Asset
quality, Management, Earnings, Liquidity, and
Sensitivity to market risk. CAMELS ratings of ‘‘1’’
and ‘‘2’’ correspond with ratings of ‘‘outstanding’’
and ‘‘good,’’ respectively. In addition to having a
CAMELS composite rating of ‘‘1’’ or ‘‘2,’’ an IDI is
Continued
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 4
[Docket ID OCC–2018–0014]
RIN 1557–AE37
FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 211
[Docket No. R–1615]
RIN 7100–AF09
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 337 and 347
RIN 3064–AE76
Expanded Examination Cycle for
Certain Small Insured Depository
Institutions and U.S. Branches and
Agencies of Foreign Banks
AGENCY: Office of the Comptroller of the
Currency (OCC), Treasury; Board of
Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Final rules.
SUMMARY: On August 29, 2018, the OCC,
Board, and FDIC (collectively, the
agencies) issued interim final rules that
were effective immediately to
implement section 210 of the Economic
Growth, Regulatory Relief, and
Consumer Protection Act (Economic
Growth Act), which was enacted on
May 24, 2018. The agencies are now
adopting the interim final rules as final
without change. The interim final rules
and final rules implement section 210 of
the Economic Growth Act, which
amended section 10(d) of the Federal
Deposit Insurance Act (FDI Act) to
permit the agencies to examine
qualifying insured depository
institutions (IDIs) with under $3 billion
in total assets not less than once during
each 18-month period. In addition,
these final rules adopt as final the
parallel changes to the agencies’
regulations governing the on-site
examination cycle for U.S. branches and
agencies of foreign banks, consistent
with the International Banking Act of
1978 (IBA).
DATES: These final rules are effective on
January 28, 2019.
FOR FURTHER INFORMATION CONTACT:
OCC: Enice Thomas, Senior Advisor
to Senior Deputy Comptroller, Midsize
and Community Bank Supervision,
(202) 649–5420; and Deborah Katz,
Assistant Director, Melissa J. Lisenbee,
Senior Attorney, or Christopher
Rafferty, Attorney, Chief Counsel’s
Office, (202) 649–5490; for persons who
are deaf or hearing impaired, TTY, (202)
649–5597.
Board: Division of Supervision and
Regulation—Richard Naylor, Associate
Director, (202) 728–5854; Jonathan
Rono, Manager, (202) 721–4568;
Assetou Traore, Supervisory Financial
Analyst, (202) 974–7066; Virginia Gibbs,
Manager, (202) 452–2521; or Alexander
Kobulsky, Supervisory Financial
Analyst, (202) 452–2031; and Legal
Division—Laurie Schaffer, Associate
General Counsel, (202) 452–2277;
Victoria Szybillo, Senior Counsel, (202)
475–6325; or Mary Watkins, Senior
Attorney, (202) 452–3722.
FDIC: Policy Branch Division of Risk
Management and Supervision—Thomas
F. Lyons, Chief, Policy and Program
Development, (202) 898–6850, tlyons@
FDIC.gov; Karen J. Currie, Senior
Examination Specialist, (202) 898–3981,
Policy and Program Development,
Division of Risk Management
Supervision; Legal Division—Suzanne J.
Dawley, Counsel, (202) 898–6509; or
Gregory S. Feder, Counsel, (202) 898–
8724.
SUPPLEMENTARY INFORMATION:
I. Background
Section 210 of the Economic Growth
Act 1 amended section 10(d) of the FDI
Act 2 to permit the agencies to examine
qualifying IDIs (generally, those IDIs
that are well capitalized and well
managed) with under $3 billion in total
assets not less than once during each 18-
month period, rather than not less than
once during each 12-month period.
Prior to the enactment of the Economic
Growth Act, only qualifying IDIs with
under $1 billion in total assets were
eligible for an 18-month on-site
examination cycle.3
On August 29, 2018, the agencies
issued interim final rules to implement
the Economic Growth Act’s
amendments to sections 10(d)(4) and
10(d)(10) of the FDI Act 4 that allow
qualifying IDIs with under $3 billion in
total assets to benefit from the extended
18-month examination cycle. In
addition, the interim final rules made
parallel changes to the agencies’
regulations governing the on-site
examination cycle for U.S. branches and
agencies of foreign banks, consistent
with the IBA.5
Section 10(d)(1) of the FDI Act 6
generally requires the appropriate
Federal banking agency for an IDI 7 to
conduct a full-scope, on-site
examination of an IDI at least once
during each 12-month period. With the
enactment of section 210 of the
Economic Growth Act, section 10(d)(4)
of the FDI Act authorizes the
appropriate Federal banking agency to
extend the on-site examination cycle for
an IDI to at least once during an 18-
month period if the IDI (1) has total
assets of less than $3 billion; (2) is well
capitalized (as defined in 12 U.S.C.
1831o (prompt corrective action)); (3)
was found, at its most recent
examination, to be well managed 8 and
VerDate Sep<11>2014 16:02 Dec 27, 2018 Jkt 247001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\28DER1.SGM 28DER1
amozie on DSK3GDR082PROD with RULES
67034 Federal Register / Vol. 83, No. 248 / Friday, December 28, 2018 / Rules and Regulations
considered to be ‘‘well managed’’ for the purposes
of section 10(d) of the FDI Act only if the IDI also
received a rating of ‘‘1’’ or ‘‘2’’ for the management
component of the CAMELS rating at its most recent
examination. See 72 FR 17798 (Apr. 10, 2007).
9 The Board and the FDIC, as the appropriate
Federal banking agencies for State-chartered
insured banks and savings associations, are
permitted to conduct on-site examinations of such
IDIs on alternating 12-month or 18-month periods
with an IDI’s State supervisor, if the Board or FDIC,
as appropriate, determines that the alternating
examination conducted by the State carries out the
purposes of section 10(d) of the FDI Act. 12 U.S.C.
1820(d)(3).
10 Call Report data, Sept. 30, 2018.
11 Id.
12 5 U.S.C. 553(d).
13 12 U.S.C. 4802(a).
14 12 U.S.C. 4802(b).
to have a composite condition of
‘‘outstanding’’ or, in the case of an IDI
with total assets of not more than $200
million, ‘‘outstanding’’ or ‘‘good;’’ (4) is
not subject to a formal enforcement
proceeding or order by the FDIC or its
appropriate Federal banking agency;
and (5) has not undergone a change in
control during the previous 12-month
period in which a full-scope, on-site
examination otherwise would have been
required. The Economic Growth Act
also amended section 10(d)(10) of the
FDI Act to give each appropriate Federal
banking agency discretionary authority
to extend eligibility for an 18-month
examination cycle, by regulation, to
qualifying IDIs with an ‘‘outstanding’’ or
‘‘good’’ composite condition and total
assets not greater than $3 billion, if the
agency determines that this amount
would be consistent with the principles
of safety and soundness for IDIs.9
In addition, section 7(c)(1)(C) of the
IBA provides that a Federal or a State
branch or agency of a foreign bank shall
be subject to on-site examination by its
appropriate Federal banking agency or
State bank supervisor as frequently as a
national or State bank would be subject
to such an examination by the agency.
II. Description of the Final Rules
The agencies received three comment
letters addressing the interim final rules,
two from trade associations and one
from a multi-bank financial holding
company. All three letters were
supportive of the interim final rules.
After considering the comments on
the interim final rules, the agencies are
adopting the interim final rules as final
without change. The final rules, like the
interim final rules implement section
10(d)(4) of the FDI Act to increase, from
$1 billion to $3 billion, the total asset
threshold under which an agency may
apply an 18-month on-site examination
cycle for qualified IDIs that have an
‘‘outstanding’’ composite rating.
The agencies also are exercising their
discretionary authority under section
10(d)(10) of the FDI Act to extend
eligibility for an 18-month examination
cycle, by regulation, to qualifying IDIs
with an ‘‘outstanding’’ or ‘‘good’’
composite rating with total assets under
$3 billion. The agencies have
determined that increasing the
maximum asset amount limitation for
qualifying IDIs with less than $3 billion
in total assets is consistent with the
principles of safety and soundness.
In determining whether the reduction
in examination frequency is consistent
with the principles of safety and
soundness for such IDIs, the agencies
considered several factors. The agencies
acknowledge that extending the
examination cycle could make it more
likely that there will be a delay in an
agency’s ability to detect deterioration
in an IDI’s performance. However, the
agencies believe that extending the
examination cycle from 12 months to 18
months for these small IDIs with
relatively simple risk profiles should
not appreciably increase their risk of
financial deterioration or failure. In
addition, the agencies will continue
their off-site monitoring activities and
have the ability to examine IDIs more
frequently as necessary or appropriate.
The agencies also note that, in order to
qualify for an 18-month examination
cycle, any IDI with total assets under $3
billion—including one with a composite
rating of ‘‘good’’—must meet the other
capital, managerial, and supervisory
criteria set forth in section 10(d) of the
FDI Act and the agencies’ implementing
regulations.
Considering the agencies’ off-site
monitoring activities; their discretion to
examine IDIs more frequently as
necessary; and the capital, managerial,
and supervisory criteria in section 10(d)
of the FDI Act, the agencies believe that
increasing the maximum asset amount
limitation for IDIs from less than $1
billion to less than $3 billion is
consistent with the principles of safety
and soundness. Additionally, the
agencies expect that this increase will
allow the agencies to better focus their
supervisory resources on the IDIs and
U.S. branches and agencies of foreign
banks (collectively, financial
institutions) that may present capital,
managerial, or other issues of
supervisory concern, and therefore, the
final rules have the potential to enhance
safety and soundness collectively for all
financial institutions. The agencies will
continue to monitor financial
institutions in this asset range between
examinations and the impact of the
extended examination cycle.
In accordance with section 7(c)(1)(C)
of the IBA, the agencies also are
finalizing conforming changes to their
regulations governing the on-site
examination cycle for the U.S. branches
and agencies of foreign banks. For the
same reasons as discussed above with
respect to qualifying IDIs, the agencies
believe that extending similar treatment
to qualifying U.S. branches and agencies
of foreign banks is consistent with the
principles of safety and soundness.
Based on data available at
publication, the agencies estimate that
the number of banks and savings
associations that may qualify for an
extended 18-month examination cycle
increased by approximately 430 (241 of
which are supervised by the FDIC, 99 by
the OCC, and 90 by the Board), bringing
the total number to 4,706 banks and
savings associations since the interim
rules took effect.10 Approximately 30
U.S. branches and agencies of foreign
banks would be eligible for the extended
examination cycle based on the final
rules (2 of which are supervised by the
FDIC, 8 by the OCC, and 20 by the
Board).11
For all the reasons described above,
the agencies are adopting the interim
final rules as final without change.
Effective Date
The Administrative Procedure Act
(APA) generally requires that a final rule
be published in the Federal Register no
less than 30 days before its effective
date.12 Therefore, the final rules will
become effective on January 28, 2019.
The interim final rules will continue to
be in effect until the final rules become
effective.
Section 302 of the Riegle Community
Development and Regulatory
Improvement Act of 1994 (RCDRIA)
requires that each Federal banking
agency, in determining the effective date
and administrative compliance
requirements for new regulations that
impose additional reporting,
disclosures, or other requirements on
IDIs, consider, consistent with the
principles of safety and soundness and
the public interest, any administrative
burdens that such regulations would
place on depository institutions,
including small depository institutions,
and customers of depository
institutions, as well as the benefits of
such regulations.13 Further, new
regulations that impose additional
reporting, disclosures, or other new
requirements on IDIs generally must
take effect on the first day of a calendar
quarter that begins on or after the date
on which the regulations are published
in final form.14 The RCDRIA does not
apply to the final rules because the rules
do not impose any additional reporting,
VerDate Sep<11>2014 16:02 Dec 27, 2018 Jkt 247001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\28DER1.SGM 28DER1
amozie on DSK3GDR082PROD with RULES
considered to be ‘‘well managed’’ for the purposes
of section 10(d) of the FDI Act only if the IDI also
received a rating of ‘‘1’’ or ‘‘2’’ for the management
component of the CAMELS rating at its most recent
examination. See 72 FR 17798 (Apr. 10, 2007).
9 The Board and the FDIC, as the appropriate
Federal banking agencies for State-chartered
insured banks and savings associations, are
permitted to conduct on-site examinations of such
IDIs on alternating 12-month or 18-month periods
with an IDI’s State supervisor, if the Board or FDIC,
as appropriate, determines that the alternating
examination conducted by the State carries out the
purposes of section 10(d) of the FDI Act. 12 U.S.C.
1820(d)(3).
10 Call Report data, Sept. 30, 2018.
11 Id.
12 5 U.S.C. 553(d).
13 12 U.S.C. 4802(a).
14 12 U.S.C. 4802(b).
to have a composite condition of
‘‘outstanding’’ or, in the case of an IDI
with total assets of not more than $200
million, ‘‘outstanding’’ or ‘‘good;’’ (4) is
not subject to a formal enforcement
proceeding or order by the FDIC or its
appropriate Federal banking agency;
and (5) has not undergone a change in
control during the previous 12-month
period in which a full-scope, on-site
examination otherwise would have been
required. The Economic Growth Act
also amended section 10(d)(10) of the
FDI Act to give each appropriate Federal
banking agency discretionary authority
to extend eligibility for an 18-month
examination cycle, by regulation, to
qualifying IDIs with an ‘‘outstanding’’ or
‘‘good’’ composite condition and total
assets not greater than $3 billion, if the
agency determines that this amount
would be consistent with the principles
of safety and soundness for IDIs.9
In addition, section 7(c)(1)(C) of the
IBA provides that a Federal or a State
branch or agency of a foreign bank shall
be subject to on-site examination by its
appropriate Federal banking agency or
State bank supervisor as frequently as a
national or State bank would be subject
to such an examination by the agency.
II. Description of the Final Rules
The agencies received three comment
letters addressing the interim final rules,
two from trade associations and one
from a multi-bank financial holding
company. All three letters were
supportive of the interim final rules.
After considering the comments on
the interim final rules, the agencies are
adopting the interim final rules as final
without change. The final rules, like the
interim final rules implement section
10(d)(4) of the FDI Act to increase, from
$1 billion to $3 billion, the total asset
threshold under which an agency may
apply an 18-month on-site examination
cycle for qualified IDIs that have an
‘‘outstanding’’ composite rating.
The agencies also are exercising their
discretionary authority under section
10(d)(10) of the FDI Act to extend
eligibility for an 18-month examination
cycle, by regulation, to qualifying IDIs
with an ‘‘outstanding’’ or ‘‘good’’
composite rating with total assets under
$3 billion. The agencies have
determined that increasing the
maximum asset amount limitation for
qualifying IDIs with less than $3 billion
in total assets is consistent with the
principles of safety and soundness.
In determining whether the reduction
in examination frequency is consistent
with the principles of safety and
soundness for such IDIs, the agencies
considered several factors. The agencies
acknowledge that extending the
examination cycle could make it more
likely that there will be a delay in an
agency’s ability to detect deterioration
in an IDI’s performance. However, the
agencies believe that extending the
examination cycle from 12 months to 18
months for these small IDIs with
relatively simple risk profiles should
not appreciably increase their risk of
financial deterioration or failure. In
addition, the agencies will continue
their off-site monitoring activities and
have the ability to examine IDIs more
frequently as necessary or appropriate.
The agencies also note that, in order to
qualify for an 18-month examination
cycle, any IDI with total assets under $3
billion—including one with a composite
rating of ‘‘good’’—must meet the other
capital, managerial, and supervisory
criteria set forth in section 10(d) of the
FDI Act and the agencies’ implementing
regulations.
Considering the agencies’ off-site
monitoring activities; their discretion to
examine IDIs more frequently as
necessary; and the capital, managerial,
and supervisory criteria in section 10(d)
of the FDI Act, the agencies believe that
increasing the maximum asset amount
limitation for IDIs from less than $1
billion to less than $3 billion is
consistent with the principles of safety
and soundness. Additionally, the
agencies expect that this increase will
allow the agencies to better focus their
supervisory resources on the IDIs and
U.S. branches and agencies of foreign
banks (collectively, financial
institutions) that may present capital,
managerial, or other issues of
supervisory concern, and therefore, the
final rules have the potential to enhance
safety and soundness collectively for all
financial institutions. The agencies will
continue to monitor financial
institutions in this asset range between
examinations and the impact of the
extended examination cycle.
In accordance with section 7(c)(1)(C)
of the IBA, the agencies also are
finalizing conforming changes to their
regulations governing the on-site
examination cycle for the U.S. branches
and agencies of foreign banks. For the
same reasons as discussed above with
respect to qualifying IDIs, the agencies
believe that extending similar treatment
to qualifying U.S. branches and agencies
of foreign banks is consistent with the
principles of safety and soundness.
Based on data available at
publication, the agencies estimate that
the number of banks and savings
associations that may qualify for an
extended 18-month examination cycle
increased by approximately 430 (241 of
which are supervised by the FDIC, 99 by
the OCC, and 90 by the Board), bringing
the total number to 4,706 banks and
savings associations since the interim
rules took effect.10 Approximately 30
U.S. branches and agencies of foreign
banks would be eligible for the extended
examination cycle based on the final
rules (2 of which are supervised by the
FDIC, 8 by the OCC, and 20 by the
Board).11
For all the reasons described above,
the agencies are adopting the interim
final rules as final without change.
Effective Date
The Administrative Procedure Act
(APA) generally requires that a final rule
be published in the Federal Register no
less than 30 days before its effective
date.12 Therefore, the final rules will
become effective on January 28, 2019.
The interim final rules will continue to
be in effect until the final rules become
effective.
Section 302 of the Riegle Community
Development and Regulatory
Improvement Act of 1994 (RCDRIA)
requires that each Federal banking
agency, in determining the effective date
and administrative compliance
requirements for new regulations that
impose additional reporting,
disclosures, or other requirements on
IDIs, consider, consistent with the
principles of safety and soundness and
the public interest, any administrative
burdens that such regulations would
place on depository institutions,
including small depository institutions,
and customers of depository
institutions, as well as the benefits of
such regulations.13 Further, new
regulations that impose additional
reporting, disclosures, or other new
requirements on IDIs generally must
take effect on the first day of a calendar
quarter that begins on or after the date
on which the regulations are published
in final form.14 The RCDRIA does not
apply to the final rules because the rules
do not impose any additional reporting,
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