Comptroller of the Currency
Administrator of National Banks

The Office of the Comptroller of the Currency (OCC) has issued a final rule to reduce unnecessary regulatory burden, update certain rules, and make certain technical, clarifying, and conforming changes to its regulations¹. This rulemaking results from the OCC’s most recent review of its regulations to ensure that they effectively advance its mission to promote the safety and soundness of the national banking system, to ensure that national banks can compete effectively in the financial services marketplace, and to foster fairness and integrity in national banks’ dealings with their customers without imposing regulatory burden unnecessary to the achievement of those objectives. The OCC’s issuance of the final rule also is consistent with the most recent interagency review of regulations pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996².

The rule was published in the Federal Register on April 24, 2008³. The amendments made by this rule are effective July 1, 2008. However, national banks, and foreign banks taking actions with respect to federal branches and agencies, may comply voluntarily with any of these amendments prior to this date.

Specifically, these amendments: (1) provide additional flexibility with respect to certain aspects of national banks’ structure and activities; (2) streamline procedures required in connection with particular types of changes in structure and the conduct of certain activities; (3) incorporate into OCC rules interpretive opinions that the OCC has previously published; (4) harmonize the OCC’s rules with rules issued by other federal agencies that apply to national banks; (5) eliminate inconsistencies in certain OCC rules; (6) update OCC rules to reflect recent statutory changes; and (7) make technical and conforming amendments to OCC rules to improve their clarity and consistency.

The most significant of these amendments to OCC regulations include the following:

• Amendments to part 1, which pertains to investment securities, to provide the OCC with additional flexibility in administering part 1 as investment products evolve, codify existing precedent, and clarify applicable standards.

• Amendments to part 5, which governs national banks’ corporate activities, to:
  • Codify prior OCC interpretive opinions recognizing that national bank operating subsidiaries may take the form of limited partnerships;
  • Update the standards the OCC uses to determine when an entity qualifies as an operating subsidiary;
  • Clarify when a national bank may file an after-the-fact notice to establish or acquire an operating subsidiary and when the bank must file an application; and
  • Expand the list of operating subsidiary activities eligible for after-the-fact notice.

• Amendments to part 5 to eliminate multiple, repetitive applications when a national bank opens an intermittent branch to provide branch banking services for one or more limited periods of time each year at a specified site during a specified recurring event, such as during a college registration period or a state fair.

• Amendments to part 7, which pertains to national banks’ activities and operations, to provide national banks with greater flexibility to facilitate customers’ financial transactions by issuing financial guarantees, provided the financial guarantees are reasonably ascertainable in amount and consistent with applicable law.

• Amendments to part 7, to codify existing OCC electronic banking precedent and adapt the OCC’s rules to certain current developments.

• Amendments to part 16, the OCC’s securities offering disclosure rules, to eliminate unnecessary filing requirements and clarify the exemptions to the OCC’s registration requirements for certain transactions.

• Amendments to part 34, which pertains to real estate lending and appraisals, to provide national banks with additional flexibility in selecting indices from which adjustments to interest rates in adjustable rate mortgages (ARMs) are derived.

The final rule also includes certain technical and conforming amendments to our rules, including:

• Changes to part 4 (the OCC’s organizational rules) and part 5 to reflect the OCC’s most current organizational structure.

• Changes to conform the OCC’s regulations – at parts 5, 23 (leasing), 31 (extensions of credit to insiders and transactions with affiliates), and 32 (lending limits) – to Regulation W issued by the Federal Reserve Board,⁴ which governs transactions between Federal Reserve member banks and their affiliates and implements sections 23A and 23B of the Federal Reserve Act.⁵

• Amendments to part 9 (fiduciary activities of national banks) and part 12 (Securities Exchange Act disclosure rules) to reflect changes in certain regulations adopted by the Securities and Exchange Commission (SEC).

• Amendments to part 31 to remove an obsolete interpretation relating to loans to third parties secured by both affiliate-issued securities and nonaffiliate collateral.

• Amendments to parts 1, 2, 3, 5, 10, 11, 16, 19, 21, 22, 26, 27, 28, and 40 to implement the DC Bank Act, which removed the OCC as the appropriate federal banking agency for financial institutions established under the Code of Law for the District of Columbia (D.C. banks) and substituted the FDIC or the Federal Reserve Board, as appropriate to the bank’s charter type.

• Amendments to conform OCC regulations to the changes made by the Financial Services Regulatory Relief Act of 2006 (FSRRA),⁶ including:
  • Amendments to part 5 that simplify a national bank’s authority to pay a dividend and that remove the geographic limits with respect to bank service companies.
  • Amendments to the OCC’s Change in Bank Control Act (CBCA) regulation, section 5.50, that: (1) require a CBCA notice to include information on the future prospects of the national bank to be acquired, (2) permit the OCC to consider the future prospects of the bank as a basis to issue a notice of disapproval, and (3) permit the OCC to impose conditions on its action to not disapprove a CBCA notice.
  • Amendments to part 7 that permit national banks to choose whether to provide for cumulative voting in the election of their directors.
  • Amendments to part 19 that reflect changes to the OCC’s enforcement authority with respect to institution-affiliated parties.
  • Amendments to part 24 (community development investments) that implement section 305 of the FSRRA.

For further information, contact Stuart E. Feldstein, Assistant Director, or Heidi M. Thomas, Special Counsel, in the Legislative and Regulatory Activities Division at (202) 874-5090.

For information regarding specific amendments such as licensing/corporate applications-related amendments, you can contact Colleen Coughlin, Senior Licensing Analyst, at (202) 874-4465 or Jan Kalmus, NBE-Senior Licensing Analyst, at (202) 874-4608, in the Licensing Activities Division. For electronic banking-related amendments, contact Aida Plaza Carter, Director for Bank Information Technology, at (202) 874-4593.