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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations the controlling State savings association is insolvent or has been placed into receivership, and for as long as any securities are outstanding, the controlling State savings association must maintain all records generated through each securities issuance in the ordinary course of business, including but not limited to a copy of the prospectus, offering circular, or similar document concerning such issuance, and make such records available for examination by the FDIC.43
E. Section 390.255How may a State savings association exercise its salvage power in connection with a service corporation or lower-tier entities?
In the NPR, staff proposed that State savings associations apply to the FDIC
for prior approval pursuant to 362.11
before making a contribution or a loan to a lower-tier entity salvage investment that exceeds the maximum amount otherwise permitted under law or regulation to exercise its power to salvage the underlying asset to be consistent with State law. The applicant would be required to provide evidence that the State approved any exception over the loans to one borrower LTOB
limit.44
As discussed in the NPR, these FDIC
statutory and regulatory provisions provide a substantially similar process for an insured State savings association, or its subsidiary, to apply for prior consent from the FDIC to engage in certain activities, that are not otherwise prohibited by Federal or State law, while reaching substantially the same result as provided in subpart O without the burden of referring to a duplicative set of regulations.45 The NPR concluded the application of these FDIC statutory and regulatory provisions provide substantially similar results for the FDIC
to achieve substantially similar supervisory results for State savings associations and subsidiaries as would be obtained through subpart O.46
IV. Comments The FDIC issued the NPR with a 30day comment period, which closed on November 25, 2020.47 The FDIC
received no comments on the NPR.
43 Id.

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44 LTOB

limits are established by state law of each chartering authority, and LTOB Limits are not consistent from state to state. Some states allow waivers or modifications, while others do not. Part 362 does not authorize any insured State savings association to make investments or conduct activities that are not authorized or that are prohibited by either Federal or State law. 12 CFR
362.9c.
45 85 FR 67684, 67686 Oct. 26, 2020.
46 Id.
47 85 FR 67684 Oct. 26, 2020.

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Consequently, the proposed rule is adopted as final without change, and part 390, subpart O, will be rescinded in its entirety.
V. The Final Rule The final rule rescinds and removes subpart O and amends 362.15 to remove references to Federal savings associations made unnecessary because of the amendment of Section 18m of the FDI Act, as amended by section 3637 of the Dodd-Frank Act which no longer requires Federal savings associations to provide notice to the FDIC prior to the establishment, or acquisition, of a subsidiary, or prior to commencement of a new activity in a subsidiary controlled by a Federal savings association.48
As discussed in the NPR, the FDIC
statutory and regulatory provisions applicable to State savings associations and their subsidiaries provide a substantially similar process for an insured State savings association, or its subsidiary, to apply for prior consent from the FDIC to engage in certain activities, that are not otherwise prohibited by Federal or State law, while reaching substantially the same result as provided in subpart O without the burden of referring to a duplicative set of regulations.49 Under the final rule, the application of part 362, which implements section 28 and section 18m of the FDI Act, provides State savings associations with substantially similar procedures for notices and applications related to State savings association subsidiaries and investments. Further, section 37 of the FDI Act and section 4b of HOLA
already require that State savings association reports and financial statements are uniform and consistent with U.S. generally accepted accounting principles GAAP.50 By applying these FDIC statutory and regulatory provisions to State savings associations and subsidiaries, the FDIC will achieve substantially similar supervisory results for State savings associations and subsidiaries under the final rule as would be obtained through subpart O.51
VI. Expected Effects As of June 30, 2020, the FDIC
supervised 3,270 depository 48 Public Law 111203, 124 Stat. 1376 2010; 12
U.S.C. 1828m.
49 Section 28 12 U.S.C. 1831ea, section 18m 12 U.S.C. 1828m, and section 37 12 U.S.C.
1831na of the FDI Act, and section 4b of the Home Owners Loan Act 12 U.S.C. 1463b, govern the activities of State savings associations and subsidiaries.
50 12 U.S.C. 1831na2; 12 U.S.C. 1463b2.
51 85 FR 67684 Oct. 26, 2020.

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institutions, of which 35 1.1 percent are State savings associations.52 The final rule would affect regulations that govern State savings associations. As explained in the NPR, the final rule would remove 390.250, 390.251, 390.252, 390.253, 390.254, and 390.255
of part 390, subpart O, because most of its provisions are duplicative of, or substantially similar to the requirements of section 28 of the FDI Act and its implementing regulations, 12 CFR part 362 of the FDICs Rules and Regulations;
and section 37 of the FDI Act.
Additionally, the final rule amends 362.15 to remove the references to Federal savings association notice requirements because Federal savings associations are no longer required to provide notice to the FDIC prior to the establishment, or acquisition, of a subsidiary, or prior to commencement of a new activity in a subsidiary controlled by a Federal savings association.53 The FDIC does not believe that the final rule will have substantive effects on State savings associations. By removing duplicative or unnecessary regulations the FDIC believes that the final rule will benefit State savings associations by clarifying regulations and improving the ease of references.
VII. Alternatives The FDIC considered alternatives to the final rule but believes that the amendments represent the most appropriate option for covered institutions. As discussed previously, the Dodd-Frank Act transferred certain powers, duties, and functions formerly performed by the OTS to the FDIC. The FDICs Board reissued and redesignated certain transferred regulations from the OTS, but noted that it would evaluate them and might later incorporate them into other FDIC regulations, amend them, or rescind them, as appropriate.
The FDIC has evaluated the existing regulations relating to certain subordinate organizations of State savings associations. The FDIC
considered the alternative of retaining the current regulations, but did not choose to do so because it would be needlessly complex and confusing for its supervised institutions to continue to have substantively similar regulations regarding subordinate organizations of State savings associations located in different locations within the CFR. The FDIC believes it would be unnecessarily burdensome for FDIC-supervised institutions to refer to these separate sets of regulations, and, therefore, is rescinding and removing subpart O and 52 Call 53 12

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Report data, September 30, 2020.
U.S.C. 1828m.

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