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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations
making a technical amendment to 362.15 to remove references to Federal savings associations to streamline the FDICs regulations.
VIII. Regulatory Analysis and Procedure A. The Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act of 1995
PRA, the FDIC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget OMB control number. The final rule rescinds and removes from part 390, subpart O, and makes a technical amendment to 362.15 to remove references to Federal savings associations to streamline the FDICs regulations. The final rule will not create any new or revise any existing collections of information under the PRA. Therefore, no information collection request will be submitted to the OMB for review.
B. The Regulatory Flexibility Act The Regulatory Flexibility Act RFA, requires that, in connection with a final rule, an agency prepare a final regulatory flexibility analysis that describes the impact of a proposed rule on small entities.54 However, a regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities, and publishes its certification and a short explanatory statement in the Federal Register together with the rule. The Small Business Administration SBA has defined small entities to include banking organizations with total assets of less than or equal to $600 million.55
Generally, the FDIC considers a significant effect to be a quantified effect in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total non-interest expenses. The FDIC believes that effects in excess of these thresholds typically 54 5

U.S.C. 601, et seq.
SBA defines a small banking organization as one having $600 million or less in assets, where an organizations assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year. See 13 CFR 121.201 as amended, by 84 FR
34261, effective August 19, 2019. SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates. See 13 CFR
121.103. Following these regulations, the FDIC uses a covered entitys affiliated and acquired assets, averaged over the preceding four quarters, to determine whether the covered entity is small for the purposes of RFA.

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represent significant effects for FDICsupervised institutions. For the reasons provided below, the FDIC certifies that the rule will not have a significant economic impact on a substantial number of small banking organizations.
As of June 30, 2020, the FDIC
supervised 3,270 insured depository institutions, of which 2,548 are considered small banking organizations for the purposes of RFA. The rule primarily affects regulations that govern State savings associations.56 There are 33 State savings associations considered to be small banking organizations for the purposes of the RFA.57
As previously discussed, the rule rescinds part 390, subpart O, because most of its elements 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 rule would amend certain sections of part 362 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.58 The FDIC does not believe that the rule will have substantive effects on small State savings associations.
Section 390.250 sets forth the FDICs general rulemaking and supervisory authority under the FDI Act, its specific authority under section 18m of the FDI
Act 59 and subpart Os application to subordinate organizations of State savings associations. As previously discussed, State savings associations are subject to part 362, subparts C and D, which has the same statutory basis as 390.350. Therefore, the FDIC believes that the practical application of part 362, subparts C and D, generally achieves the same outcomes for State savings associations as does subpart O.
Therefore, the FDIC believes that the rescission of 390.250 is unlikely to have any substantive effects for small State savings associations or their subordinate organizations.
Section 390.251 is a definition section related to subordinate organizations. As previously discussed, the FDIC believes that the definitions of subsidiary and GAAP-consolidated subsidiary are 56 FDIC

Call Report, June 30, 2020.

substantially similar to and redundant to other statutory and regulatory requirements to which State savings associations are already subject. As previously discussed, State savings associations are already subject to a definition of control in 362.2e, a definition that is narrower, however, than the one in 390.251. Therefore, the rescission of 390.251 could benefit State savings associations by narrowing the scope of investments in subordinate organizations that may be subject to limitation for supervisory, legal, or safety and soundness reasons asserted by the FDIC. The rescission of the definition of control in 390.251 could further benefit State savings associations by creating parity with the control definition applicable to service companies of Federal savings associations which references the FRBs 12 CFR part 225, Regulation Y.60 As previously discussed, State savings associations are already subject to a definition of equity investment in 362.2g, a definition that is broader, however, than the one in 390.251.
Therefore, the rescission of 390.251 is unlikely to pose additional costs for State savings associations because they are already subject to regulations with a substantively similar and broader defined scope of investments in subordinate organizations. Finally, the rescission of 390.251 would remove definitions of lower-tier entity and second-tier service corporations or service corporation subsidiaries for which there is no corollary in FDIC
regulations. However, as previously discussed, the FDIC does not believe that the existence of these defined terms enhance the quality of State savings association supervision. Therefore, the FDIC believes that the rescission of these definitions is unlikely to have any substantive effects on small State savings associations.
Section 390.252 requires State savings associations and their subordinate organizations to operate in a manner that demonstrates to the public that they are separate corporate entities because of concerns that a failure to maintain separate corporate existences could potentially result in a court, for equitable reasons, holding the savings association liable for the obligations of the subordinate organization.61 As discussed previously, FDIC-supervised depository institutions, including State savings associations and their subsidiaries, are covered by 362.4c and 362.13, which are substantively similar to or broader than the
57 Id.
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U.S.C. 1828m.

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CFR 5.59d; 12 CFR part 225.
FR 66561, 66567 Dec. 18, 1996.

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