[Federal Register: September 9, 2003 (Volume 68, Number 174)]
[Rules and Regulations]
[Page 53024-53026]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09se03-3]
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DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 545 and 550
[No. 2003-44]
RIN 1550-AB80
Federal Savings Associations--Operations, Agency Offices;
Fiduciary Powers of Savings Associations
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Final rule.
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SUMMARY: The Office of Thrift Supervision (OTS) is issuing a final rule
amending its regulation governing agency offices of federal savings
associations to conform that regulation to recent changes to OTS's
fiduciary activities regulations. OTS is also removing an incorrect
parenthetical in 12 CFR 550.136, OTS's regulation governing the extent
to which state law applies to the fiduciary activities of a federal
savings association.
EFFECTIVE DATE: September 9, 2003.
FOR FURTHER INFORMATION CONTACT: Timothy P. Leary, Counsel (Banking &
Finance), Regulations and Legislation Division, (202) 906-7170, Kevin
Corcoran, Special Counsel, Business Transactions Division, (202) 906-
6962, Office of the Chief Counsel; or Judith McCormick, Trust
Specialist, Examination Policy Division, (202) 906-5636, Office of
Supervision, Office of Thrift Supervision, 1700 G Street, NW.,
Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
I. Background and Discussion
On December 12, 2002, OTS amended its regulations governing the
fiduciary activities of federal savings associations, found at 12 CFR
part 550.\1\ One of those amendments was to 12 CFR 550.70, which sets
out when a federal savings association must obtain OTS approval or file
a notice before exercising fiduciary powers. Under that rule, if a
federal savings association wants to commence fiduciary activities in a
new state that are not materially different from those that OTS has
already approved for the association, it need not file a new fiduciary
powers application. Rather, the association needs to file, within ten
days after commencing the activities in the new state, a written notice
that identifies the new state, describes the fiduciary activities the
association is conducting in the new state, and provides sufficient
information supporting a conclusion that those activities are
permissible in the new state. If an association proposes to open an
agency office in any state to perform only activities ancillary to its
fiduciary business, or to open a new agency office in a state in which
the association is already conducting approved fiduciary activities, no
fiduciary application or notice is required.
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\1\ 67 FR 76293 (December 12, 2002).
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To minimize potential confusion about applicable procedures, OTS
today is conforming its agency office regulation, 12 CFR 545.96, to
reflect this change in the fiduciary activities regulations. Under
subparagraph (a) of Sec. 545.96, a federal savings association may,
without OTS's approval, establish and maintain agency offices that only
service and originate (but not approve) loans and contracts, or manage
or sell real estate owned by the federal savings association.
Subparagraph (b) of the regulation states that, except for payment on
savings accounts, a federal savings association may conduct activities
not listed in subparagraph (a) at an agency office with OTS approval.
The regulation does not currently address fiduciary activities, nor
does it indicate how it interacts with part 550.
In the preamble to the proposed amendments to Sec. 550.70, OTS
explained in detail why a new fiduciary powers application was not
necessary when a federal savings association wanted to conduct already
approved fiduciary activities in a new state:
[[Page 53025]]
When OTS reviews an initial application for fiduciary powers, it
analyzes a number of factors including, among others, the federal
savings association's financial and managerial resources, its
history of regulatory compliance, and level of fiduciary expertise
[citation omitted]. In light of this initial review, OTS believes
that a new application is not always necessary to ensure safe and
sound fiduciary operations when a federal savings association with
existing trust powers expands its operations. * * * Application and
notice requirements under the proposed rule would distinguish
between new activities that materially differ from previously
approved fiduciary activities and other types of activities. * * *
[T]he proposed rule would require a federal savings association with
previously approved trust powers to submit a complete trust
application and obtain prior OTS approval before it may conduct
fiduciary activities that are materially different from activities
approved in the initial trust application. * * * OTS does not
believe that a federal savings association engages in materially
different activities when it merely expands the geographic scope of
previously approved activities. Accordingly, the proposed rule would
not require a new application before the federal savings association
commences such activities.
The same reasoning applies even when the association creates a new
agency office to conduct previously approved fiduciary activities or
activities ancillary to its fiduciary business.
Accordingly, OTS believes that it does not need to approve an
agency office that a federal savings association creates to conduct
these activities. OTS therefore is amending 12 CFR 545.96 to add
fiduciary activities to subparagraph (a). Under the new rule, a federal
savings association may, without OTS approval, establish and maintain
an agency office that engages only in one or more of the following
activities: (1) Servicing or originating (but not approving) loans and
contracts; (2) managing or selling real estate owned by the federal
savings association; or (3) conducting fiduciary activities or
activities ancillary to the association's fiduciary business. Under 12
CFR 550.70, of course, when an association establishes an agency office
to conduct fiduciary activities in a new state, the association must
file, within ten days after commencing those activities, a written
notice containing the information required under 12 CFR 550.125.\2\
Moreover, for clarification purposes, we are amending Sec. 545.96 to
change all references in the regulation from ``agency'' and
``agencies'' to ``agency office'' and ``Agency offices,'' respectively.
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\2\ Section 550.125 requires that the notice identify the new
state, describe the fiduciary activities that the association will
conduct in that state, and provide sufficient information supporting
a conclusion that the activities are permissible in that state.
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OTS is also amending 12 CFR 550.136 to remove an incorrect
reference to state law. Section 550.136 did not appear in the proposed
rule, published on June 11, 2002, but was adopted in response to
comments on different language that had been proposed. It was published
for the first time on December 12, 2002 and became effective January 1,
2003. Since the effective date, it has come to OTS's attention that one
of the parenthetical descriptions in that section is incorrect.
Specifically, in the list of state laws that apply to the fiduciary
operations of federal savings associations by virtue of 12 U.S.C.
1464(n), OTS included a reference to ``State laws regarding * * *
investments in state trust companies.'' Section 1464(n), however,
contains no reference to state laws regarding thrift investments in
state trust companies. Accordingly, we are amending Sec. 550.136(a) to
remove the reference to state laws regarding investments in state trust
companies.
II. Need for an Immediately Effective Final Rule
OTS finds that there is good cause to dispense with prior notice
and comment on this final rule and with the 30-day delay of effective
date mandated by the Administrative Procedure Act.\3\ OTS believes that
following those procedures in today's rulemaking would be unnecessary
and contrary to public interest because the rule achieves regulatory
consistency, minimizes potential confusion, and reduces regulatory
burden. There is no reason to delay these results. Under the clarified
rule, a federal savings association that wants to establish an agency
office to conduct previously approved fiduciary activities, or
activities ancillary to the association's fiduciary business, must
follow only the procedures in 12 CFR part 550. The amendment to Sec.
550.136 merely conforms the regulatory provisions to the parallel
statutory provisions. These changes will not detrimentally affect
savings associations or others.
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\3\ 5 U.S.C. 553.
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Section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994 provides that regulations that impose
additional reporting, disclosure, or other new requirements may not
take effect before the first day of the quarter following
publication.\4\ This section does not apply because this final rule
imposes no additional requirements and results in consistency between
existing regulations.
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\4\ Pub. L. 103-325, 12 U.S.C. 4802.
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III. Regulatory Flexibility Act
An initial regulatory flexibility analysis under the Regulatory
Flexibility Act (RFA) is required only when an agency must publish a
notice of proposed rulemaking.\5\ As already noted, OTS has determined
that publication of a notice of proposed rulemaking is not necessary
for this final rule. Accordingly, the RFA does not require an initial
regulatory flexibility analysis. Nevertheless, OTS has considered the
likely impact of the rule on small entities and, pursuant to section
605(b) of the Regulatory Flexibility Act, the OTS Director certifies
that this regulation will not have a significant economic impact on a
substantial number of small entities.
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\5\ 5 U.S.C. 603.
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IV. Executive Order 12866
OTS has determined that this final rule does not constitute a
``significant regulatory action'' for purposes of Executive Order
12866.
V. Unfunded Mandates Act
OTS has determined that the final rule will not result in
expenditures by state, local, or tribal governments or by the private
sector of $100 million or more. Accordingly, this rulemaking is not
subject to section 202 of the Unfunded Mandates Act.
List of Subjects
12 CFR Part 545
Accounting, Consumer protection, Credit, Electronic funds
transfers, Investments, Reporting and recordkeeping requirements,
Savings associations.
12 CFR Part 550
Savings associations, Trusts and trustees.
0
Accordingly, OTS amends chapter V, title 12, Code of Federal
Regulations as set forth below.
PART 545--[AMENDED]
0
1. The authority citation for part 545 continues to read as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.
0
2. Amend Sec. 545.96, including the section heading, as follows:
0
a. Remove the words ``agency'' and ``agencies'' and add, in their
place, the words ``agency office'' and ``agency offices,''
respectively.
0
b. Revise paragraph (a) of Sec. 545.96 as follows:
[[Page 53026]]
Sec. 545.96 Agency office.
(a) General. A Federal savings association may establish or
maintain an agency office that engages only in one or more of the
following activities: (1) Servicing or originating (but not approving)
loans and contracts; (2) managing or selling real estate owned by the
Federal savings association; or (3) conducting fiduciary activities or
activities ancillary to the association's fiduciary business in
compliance with subpart A of part 550 of this chapter.
* * * * *
PART 550--[AMENDED]
0
3. Amend Sec. 550.136(a) by revising the third sentence to read as
follows:
Sec. 550.136 To what extent do State laws apply to my fiduciary
operations?
* * *Accordingly, Federal savings associations may exercise
fiduciary powers as authorized under Federal law, including this part,
without regard to State laws that purport to regulate or otherwise
affect their fiduciary activities, except to the extent provided in 12
U.S.C. 1464(n) (State laws regarding scope of fiduciary powers, access
to examination reports regarding trust activities, deposits of
securities, oaths and affidavits, and capital) or in paragraph (c) of
this section.
* * * * *
Dated: September 2, 2003.
By the Office of Thrift Supervision.
James E. Gilleran,
Director.
[FR Doc. 03-22778 Filed 9-8-03; 8:45 am]
BILLING CODE 6720-01-P