Bank Regulators Release List of OTS Regulations To Be Enforced by OCC and FDIC

in Comptroller of the Currency, Federal Deposit Insurance Corporation, Recent Posts, Recent Posts, Thrifts

By: Derrick D. Cephas and Alex Radetsky

Title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) mandates the wind-down of the Office of Thrift Supervision (“OTS”), the issuer of charters for federal savings associations (commonly called “thrifts”) and the primary regulator of federal and state thrifts and savings and loan holding companies, and the distribution of its authority to the other U.S. banking regulators.  Title III provides the Office of the Comptroller of the Currency (“OCC”) with regulatory authority over federally chartered savings associations and the Federal Deposit Insurance Corporation (“FDIC”) with regulatory authority over State-Chartered savings associations.  All functions, powers, authorities, rights and duties of the OTS with respect to federal and state chartered savings associations will be transferred to the OCC and FDIC, respectively, as part of the transfer process established by the Dodd-Frank Act.  In connection with this effort, on July 6, 2011, the OCC and the FDIC issued a joint notice (the “Joint Notice”) listing out those regulations previously promulgated by the OTS which shall survive under the authority of the OCC and FDIC, respectively.

Section 316(b) of the Dodd-Frank Act provides for the continuation of OTS regulations and enforcement of such regulations that have been issued in performance of the functions transferred by Title III of the Dodd-Frank Act.  The OTS regulations listed in the Joint Notice will be enforced by each respective agency on the date when the OTS will be officially wound down and its responsibilities transferred to other agencies, referred to in the Dodd-Frank Act as the “Transfer Date.”  The Joint Notice does not make any substantive changes to any of the regulations at this time, but rather only provides clarity for savings associations in this uncertain time of regulatory restructuring.  Separately, the OCC intends to republish those OTS regulations over which it will have rulemaking authority into Chapter I of Title 12 of the Code of Federal Regulations and will renumber such regulations accordingly as OCC rules, with nomenclature and other technical amendments to reflect OCC supervision.  The Joint Notice states that the OCC will consider more comprehensive substantive amendments to former OTS regulations after the Transfer Date to the extent appropriate.

Like the OCC, the FDIC also intends to issue an interim rule which will republish certain OTS rules for which the FDIC will gain rulemaking authority, and such rules will be added to Chapter III of Title 12 of the Code of Federal Regulations with commensurate nomenclature and other technical amendments to reflect FDIC supervision.  The Joint Notice points out that after the Transfer Date the FDIC will consider incorporating its new OTS rules into its existing rules or amending or rescinding them, as appropriate. In addition, on June 14, 2011, the FDIC’s Board of Directors approved an interim rule which would revise several existing FDIC administrative and procedural rules as a result of the FDIC’s new duties and authority with respect to the supervision of state savings associations.  This interim rule, which was published in the Federal Register on June 21, 2011, will become effective on the Transfer Date.

Below please find the tables printed in the Joint Notice indicating which OTS regulations will be enforced by the OCC and FDIC, respectively.

OTS Regulations That Will Be Enforced by the OCC—Title 12
Part or section Chapter V—Office of Thrift Supervision, Department of the Treasury
Part 508 Removals, Suspensions and Prohibitions where a Crime is Charged.
Part 509 (except 509.100(b) and Subparts C and D) Rules of Practice and Procedure in Adjudicatory Proceedings.
Part 512 Rules for Investigative Proceedings and Formal Examination Proceedings.
Part 516 Application Processing Procedure.
Part 528 Nondiscrimination Requirements.
Part 533 Disclosure and Reporting of CRA-related Agreements.
Part 536 Consumer Protection in Sales of Insurance.
Part 541 Definitions for Federal Savings Association Regulations.
Part 543 Federal Mutual Savings Associations—Incorporation, Organization and Conversion.
Part 544 Federal Mutual Savings Associations—Charter and Bylaws.
Part 545 (except 545.2) Federal Savings Associations—Operations.
Part 546 Federal Mutual Savings Associations—Merger, Dissolution, Reorganization, and Conversion.
Part 550 (except 550.10(b)) Fiduciary Powers of Savings Associations.
Part 551 Recordkeeping for Securities Transactions.
Part 552 Federal Stock Associations—Incorporation, Organization, and Conversion.
Part 555 (except 555.310(b)) Electronic Operations.
Part 557 (except 557.11, 12 and 13) Deposits.
Part 559 Subordinate Organizations.
Part 560[1] (except 560.2) Lending and Investment.
Part 561 Definitions for Regulations Affecting All Savings Associations.
Part 562 (except 562.4(b)(2)) Regulatory Reporting Standards.
Part 563[2] (except 563.171, and 563.172(b)(2)) Savings Associations—Operations.
Part 563b Conversions from Mutual to Stock Form.
Part 563c Accounting Requirements.
Part 563d Securities of Savings Associations.
Part 563e Community Reinvestment.
Part 563f Management Official Interlocks.
Part 563g Securities Offerings.
Part 564 Appraisals.
Part 565 Prompt Corrective Action.
Part 567 Capital.
Part 568 Security Procedures.
Part 569 Proxies.
Part 570 Safety and Soundness Guidelines Establishing Standards for Safety and Soundness.
Part 571[3] Fair Credit Reporting.
Part 572 Loans in Areas Having Special Flood Hazards.
Part 573[4] Privacy of Consumer Information.
Part 574 (except provisions only applicable to SLHCs) Acquisition of Control of Savings Associations.
Part 590 Preemption of State Usury Laws.
Part 591 Preemption of Due-on-Sale Laws.

OTS Regulations That Will Be Enforced by the FDIC—Title 12
Part or section Chapter V—Office of Thrift Supervision, Department of the Treasury
Part 507 (except 507.3(b)) Restrictions on Post-Employment Activities of Senior Examiners.
Part 508 Removals, Suspensions and Prohibitions where a Crime is Charged.
Part 509 (except 509.1(e)(3), 509.100(b), 509.103(b)(2), and Subparts C and D) Rules of Practice and Procedure in Adjudicatory Proceedings.
Part 512 Rules for Investigative Proceedings and Formal Examination Proceedings.
Part 513 Practice Before the Office.
Part 516 (except 516.45(a)(3), and 516.290(b)) Application Processing Procedure.
Part 528 Nondiscrimination Requirements.
Part 533 (except 533.1(b)(2) and 533.10) Disclosure and Reporting of CRA-related Agreements.
Part 536 Consumer Protection in Sales of Insurance.
Part 550 (only 550.10(b)) Fiduciary Powers of Savings Associations.
Part 551 Recordkeeping for Securities Transactions.
Part 555 (only Subpart B, except 555.310(b)) Electronic Operations.
Part 557 (only Subpart C) Deposits.
Part 558 Possession by Conservators and Receivers for Federal and State Savings Associations.
Part 559 (only Subpart B) Subordinate Organizations.
Part 560 (only 560.1, 560.3 and Subpart B) Lending and Investment.
Part 561 (except 561.18(b) and 561.34) Definitions for Regulations Affecting All Savings Associations.
Part 562 (except 562.4(b)(2)) Regulatory Reporting Standards.
Part 563[5] (except 563.161 as to service corporations, 563.172(b)(1), 563.180(d)(4), 563.555 (definition of “Troubled condition” (2)) Savings Associations—Operations.
Part 563b Conversions from Mutual to Stock Form.
Part 563c Accounting Requirements.
Part 563d (except 563d.2) Securities of Savings Associations.
Part 563e Community Reinvestment.
Part 563f (except 563f.2(o)(1)) Management Official Interlocks.
Part 563g Securities Offerings.
Part 564 Appraisals.
Part 565 (except 565.5(h)) Prompt Corrective Action.
Part 567 Capital.
Part 568 Security Procedures.
Part 569 Proxies.
Part 570 Safety and Soundness Guidelines Establishing Standards for Safety and Soundness.
Part 571[6] (except 571.30(a)(1)(iii), (iv), and (v)) Fair Credit Reporting.
Part 572 Loans in Areas Having Special Flood Hazards.
Part 573[7] Privacy of Consumer Information.
Part 574 (except provisions applicable to SLHCs) Acquisition of Control of Savings Associations.
Part 590 Preemption of State Usury Laws.
Part 591 Preemption of Due-on-Sale Laws.


[1] Pursuant to section 1025 of the Dodd-Frank Act, with respect to subpart C, the OCC will enforce this rule for Federal savings associations with assets of $10 billion or less. The Consumer Financial Protection Bureau will enforce subpart C of this rule for institutions with assets of more than $10 billion. [Author’s note: The FDIC will enforce this rule for State savings associations with assets of $10 billion or less.]

[2] Pursuant to section 1025 of the Dodd-Frank Act, with respect to subpart D, the OCC will enforce this rule for Federal savings associations with assets of $10 billion or less. The Consumer Financial Protection Bureau will enforce subpart D of this rule for institutions with assets of more than $10 billion. [Author’s note: The FDIC will enforce this rule for State savings associations with assets of $10 billion or less.]

[3] With respect to § 571.83 and subpart J, the OCC will enforce this rule for all Federal savings associations. Pursuant to section 1025 of the Dodd-Frank Act, with respect to the remaining provisions of part 571, the OCC will enforce this rule for Federal savings associations with assets of $10 billion or less and the Consumer Financial Protection Bureau will enforce this rule for institutions with assets of more than $10 billion. [Author’s note: The FDIC will enforce the remaining provisions of part 571 for State savings associations with assets of $10 billion or less.]

[4] Pursuant to section 1025 of the Dodd-Frank Act, the OCC will enforce this rule for Federal savings associations with assets of $10 billion or less. The Consumer Financial Protection Bureau will enforce this rule for institutions with assets of more than $10 billion. [Author’s note: The FDIC will enforce this rule for State savings associations with assets of $10 billion or less.]

[5] Pursuant to section 1025 of the Dodd-Frank Act, the FDIC will enforce subpart D of this rule for State savings associations with assets of $10 billion or less. The Consumer Financial Protection Bureau will enforce this rule for institutions with assets of more than $10 billion. [Author’s note: The OCC will enforce this rule for Federal savings associations with assets of $10 billion or less.]

[6] With respect to § 571.83 and subpart J, the FDIC will enforce this rule for all State savings associations. Pursuant to section 1025 of the Dodd-Frank Act, with respect to the remaining provisions of part 571, the FDIC will enforce this rule for State savings associations with assets of $10 billion or less, and the Consumer Financial Protection Bureau will enforce this rule for institutions with assets of more than $10 billion. [Author’s note: The OCC will enforce the remaining provisions of part 571 for Federal savings associations with assets of $10 billion or less.]

[7] Pursuant to section 1025 of the Dodd-Frank Act, the FDIC will enforce this rule for State savings associations with assets of $10 billion or less. The Consumer Financial Protection Bureau will enforce this rule for institutions with assets of more than $10 billion. [Author’s note: The OCC will enforce this rule for Federal savings associations with assets of $10 billion or less.]

The full text of the Joint Notice is available here.

The Working Group will continue to monitor any developments and provide timely coverage at Weil’s Financial Regulatory Reform Center.  If you are interested in discussing the Joint Notice, please contact Working Group members Derrick D. Cephas (212-310-8797 or derrick.cephas@weil.com) or Alex Radetsky (212-310-8905 or alex.radetsky@weil.com).

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