Transferred OTS Regulations and Regulations Regarding Disclosure and Reporting of CRA-Related Agreements

SUMMARY: The Federal Deposit Insurance Corporation ("FDIC") published a final rule in the Federal Register on July 21, 2014 (79 FR 42183), regarding Transferred OTS Regulations Regarding Disclosure and Reporting of CRA-Related Agreements. This publication corrects a typographical error which caused the unintended deletion of SUBSEC 346.2 through 346.10.

DATES: The correction is effective April 29, 2015.

FOR FURTHER INFORMATION CONTACT: Patience Singleton, Senior Policy Analyst, Division of Depositor and Consumer Protection, (202) 898-6859; Jennifer Maree, Counsel, Legal Division, (202) 898-6543; Richard M. Schwartz, Counsel, Legal Division, (202) 898-7424.

SUPPLEMENTARY INFORMATION: The Federal Deposit Insurance Corporation ("FDIC") is correcting a typographical error in the final rule that published in the Federal Register on July 21, 2014 (79 FR 42183), which caused the unintended deletion of SUBSEC 346.2 through 346.10.

List of Subjects in 12 CFR Part 346

Banks and banking, Disclosure and reporting of CRA-related agreements, Savings associations.

Authority and Issuance

For the reasons stated in the preamble, the Board of Directors of the Federal Deposit Insurance Corporation corrects 12 CFR chapter III by revising part 346 as set forth below:

PART 346--DISCLOSURE AND REPORTING OF CRA-RELATED AGREEMENTS

Sec.

346.1 Purpose and scope of this part.

346.2 Definition of covered agreement.

346.3 CRA communications.

346.4 Fulfillment of the CRA.

346.5 Related agreements considered a single agreement.

346.6 Disclosure of covered agreements.

346.7 Annual reports.

346.8 Release of information under FOIA.

346.9 Compliance provisions.

346.10 Transition provisions.

346.11 Other definitions and rules of construction used in this part.

Authority: 12 U.S.C. 1831y.

PART 346--DISCLOSURE AND REPORTING OF CRA-RELATED AGREEMENTS

SEC 346.1 Purpose and scope of this part.

(a) General. This part implements section 711 of the Gramm-Leach-Bliley Act (12 U.S.C. 1831y). That section requires any nongovernmental entity or person, insured depository institution, or affiliate of an insured depository institution that enters into a covered agreement to--

(1) Make the covered agreement available to the public and the appropriate Federal banking agency; and

(2) File an annual report with the appropriate Federal banking agency concerning the covered agreement.

(b) Scope of this part. The provisions of this part apply to--

(1) State nonmember insured banks;

(2) Subsidiaries of state nonmember insured banks;

(3) Nongovernmental entities or persons that enter into covered agreements with any company listed in paragraphs (b)(1), (2), (4) and (5) of this section.

(4) State savings associations; and

(5) Subsidiaries of State savings associations.

(c) Relation to Community Reinvestment Act. This part does not affect in any way the Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) or the FDIC's Community Reinvestment regulation found at 12 CFR part 345, or the FDIC's interpretations or administration of that Act or regulation.

(d) Examples. (1) The examples in this part are not exclusive. Compliance with an example, to the extent applicable, constitutes compliance with this part.

(2) Examples in a paragraph illustrate only the issue described in the paragraph and do not illustrate any other issues that may arise in this part.

SEC 346.2 Definition of covered agreement.

(a) General definition of covered agreement. A covered agreement is any contract, arrangement, or understanding that meets all of the following criteria--

(1) The agreement is in writing.

(2) The parties to the agreement include--

(i) One or more insured depository institutions or affiliates of an insured depository institution; and

(ii) One or more nongovernmental entities or persons (referred to hereafter as NGEPs).

(3) The agreement provides for the insured depository institution or any affiliate to--

(i) Provide to one or more individuals or entities (whether or not parties to the agreement) cash payments, grants, or other consideration (except loans) that have an aggregate value of more than $10,000 in any calendar year; or

(ii) Make to one or more individuals or entities (whether or not parties to the agreement) loans that have an aggregate principal amount of more than $50,000 in any calendar year.

(4) The agreement is made pursuant to, or in connection with, the fulfillment of the Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) (CRA), as defined in SEC 346.4.

(5) The agreement is with a NGEP that has had a CRA communication as described in SEC 346.3 prior to entering into the agreement.

(b) Examples concerning written arrangements or understandings --

(1) Example 1.

A NGEP meets with an insured depository institution and states that the institution needs to make more community development investments in the NGEP's community. The NGEP and insured depository institution do not reach an agreement concerning the community development investments the institution should make in the community, and the parties do not reach any mutual arrangement or understanding. Two weeks later, the institution unilaterally issues a press release announcing that it has established a general goal of making $100 million of community development grants in low- and moderate-income neighborhoods served by the insured depository institution over the next 5 years. The NGEP is not identified in the press release. The press release is not a written arrangement or understanding.

(2) Example 2.

A NGEP meets with an insured depository institution and states that the institution needs to offer new loan programs in the NGEP's community. The NGEP and the insured depository institution reach a mutual arrangement or understanding that the institution will provide additional loans in the NGEP's community. The institution tells the NGEP that it will issue a press release announcing the program. Later, the insured depository institution issues a press release announcing the loan program. The press release incorporates the key terms of the understanding reached between the NGEP and the insured depository institution. The written press release reflects the mutual arrangement or understanding of the NGEP and the insured depository institution and is, therefore, a written arrangement or understanding.

(3) Example 3.

An NGEP sends a letter to an insured depository institution requesting that the institution provide a $15,000 grant to the NGEP. The insured depository institution responds in writing and agrees to provide the grant in connection with its annual grant program. The exchange of letters constitutes a written arrangement or understanding.

(c) Loan agreements that are not covered agreements. A covered agreement does not include--

(1) Any individual loan that is secured by real estate; or

(2) Any specific contract or commitment for a loan or extension of credit to an individual, business, farm, or other entity, or group of such individuals or entities if--

(i) The funds are loaned at rates that are not substantially below market rates; and

(ii) The loan application or other loan documentation does not indicate that the borrower intends or is authorized to use the borrowed funds to make a loan or extension of credit to one or more third parties.

(d) Examples concerning loan agreements --

(1) Example 1.

An insured depository institution provides an organization with a $1 million loan that is documented in writing and is secured by real estate owned or to-be-acquired by the organization. The agreement is an individual mortgage loan and is exempt from coverage under paragraph (c)(1) of this section, regardless of the interest rate on the loan or whether the organization intends or is authorized to re-loan the funds to a third party.

(2) Example 2.

An insured depository institution commits to provide a $500,000 line of credit to a small business that is documented by a written agreement. The loan is made at rates that are within the range of rates offered by the institution to similarly situated small businesses in the market and the loan documentation does not indicate that the small business intends or is authorized to re-lend the borrowed funds. The agreement is exempt from coverage under paragraph (c)(2) of this section.

(3) Example 3.

An insured depository institution offers small business loans that are guaranteed by the Small Business Administration (SBA). A small business obtains a $75,000 loan, documented in writing, from the institution under the institution's SBA loan program. The loan documentation does not indicate that the borrower intends or is authorized to re-lend the funds. Although the rate charged on the loan is well below that charged by the institution on commercial loans, the rate is within the range of rates that the institution would charge a similarly situated small business for a similar loan under the SBA loan program. Accordingly, the loan is not made at substantially below market rates and is exempt from coverage under paragraph (c)(2) of this section.

(4) Example 4.

--This is a summary of a Federal Register article originally published on the page number listed below--

Final rule; correcting amendment.

CFR Part: "12 CFR Part 346"

RIN Number: "RIN 3064-AE09"

Citation: "80 FR 23692"

Federal Register Page Number: "23692"

"Rules and Regulations"