Banking and Finance Law Daily Wrap Up, BANKING OPERATIONS—FDIC proposes to consolidate transferred OTS regulations, (Apr 9, 2014)

By Colleen M. Svelnis, J.D.

The Federal Deposit Insurance Corporation has proposed to consolidate and incorporate transferred Office of Thrift Supervision (OTS) rules with an existing FDIC regulation on the same subject in order to provide a single set of regulations that apply to both state savings associations and state nonmember banks. FDIC staff has recommended that both of these proposed rules be approved and authorized for publication in the Federal Register.

Under the Dodd-Frank Act, the OTS was abolished and supervisory authority over state savings associations was moved to the FDIC. In the process, a number of regulations previously issued by the OTS and applicable to state savings associations were transferred to the FDIC. The powers, duties, and functions formerly performed by the OTS were divided among the FDIC for state savings associations, the Office of the Comptroller of the Currency for federal savings associations, and the Federal Reserve Board for savings and loan holding companies.

Securities of State Savings Associations. The first notice of proposed rulemaking would rescind and remove 12 C.F.R. Part 390 Subpart U, entitled Securities of State Savings Associations, which was included in the regulations transferred to the FDIC from OTS. The proposed rule would make conforming amendments to 12 C.F.R. Part 335, Securities of Nonmember Insured Banks, to insert the term “State savings association” where appropriate so that both insured state nonmember banks and state savings associations will be subject to the same FDIC rules governing the implementation of the securities registration and reporting requirements of the Securities Exchange Act of 1934.

Principal procedural rules. The other notice of proposed rulemaking would amend the FDIC's principal procedural rules, Part 308, by making five of its subparts expressly applicable to state savings associations, and making other minor changes to those subparts. The proposed rule would also remove four subparts of Part 390 which are the corresponding provisions transferred from OTS. These amendments to portions of 12 C.F.R. Part 308 would expressly make those provisions applicable to state savings associations and to modify these FDIC regulations in minor ways that will improve enforcement practices and procedures.

The FDIC asserts that these changes will ensure that all insured depository institutions for which the FDIC is the appropriate federal banking agency are subject to the same substantive and procedural rules governing administrative hearings.

The items affected by this proposed rule include:

• Subpart A-Uniform Rules of Practice and Procedure;

• Subpart B ­General Rules of Procedure;

• Subpart C-Rules of Practice and Procedure in Adjudicatory Proceedings;

• Subpart K-Procedures Applicable to Investigations Pursuant to 10(c) of the FDIA; and

• Subpart N-Rules and Procedures Applicable to Proceedings Relating to Suspension, Removal, and Prohibition Where a Felony Is Charged.

Additionally, the FDIC has proposed rescinding the portions of 12 C.F.R. Part 390 containing identical and repetitive regulations in order to streamline rules and regulations:

• Subpart B-Removals, Suspensions, and Prohibitions Where a Crime Is Charged or Proven;

• Subpart C -Rules of Practice and Procedure in Adjudicatory Proceedings;

• Subpart D -Rules for Investigative Proceedings and Formal Examination Proceedings; and

• Subpart E-Practice Before the FDIC.

There is a 60-day period for public comment on these proposed regulations.

RegulatoryActivity: BankingOperations DoddFrankAct FederalReserveSystem