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Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Rules and Regulations
as the case may be, to less than 50
percent.
Maintain the industrial banks capital and liquidity at such levels as deemed appropriate and take such other action to provide the industrial bank with a resource for additional capital or liquidity.
Enter into a tax allocation agreement.
Depending on the facts and circumstances, provide, adopt, and implement a contingency plan that sets forth strategies for recovery actions and
the orderly disposition of the industrial bank without the need for a receiver or conservator.
The FDIC historically has imposed prudential conditions similar to the commitments listed above in connection with approving or not objecting to certain industrial bank filings. These conditions generally relate to the board and senior management, the business plan, operating policies, financial records, affiliate relationships, and other conditions on a case-by-case basis,
depending on the facts and circumstances identified during the review of the respective filings.134
The table below presents the FDICs analysis of the estimated costs to institutions that would be affected by the final rule of each required commitment. In each case, the FDIC
used a total hourly compensation estimate of $94.15 per hour.135 The FDIC received no comments regarding the estimated burden of the rule as proposed.
Estimated annual compliance hours
Proposed commitment
Estimated annual compliance costs
Lists of Subsidiaries
Consent to the FDIC Examination
Annual and Such Other Reports as the FDIC may Request
Maintain Such Records as the FDIC Deems Necessary
Independent Audit 1
Limit Membership on Board 2
Maintain Capital and Liquidity
Tax Allocation Agreement 3

4
100
10
10
100
0 12
0

$376.60
9,415.00
941.50
941.50
9,415.00
0.00
1,129.80
0.00

Total

236

22,219.40

1 The
disclosure requirement and time to fulfill it are due to satisfying regulatory inquiries about the audit, and do not include the cost of the audit itself because Covered Companies already conduct audits for other purposes.
2 Determinations regarding board membership are considered in the normal course of business.
3 Tax allocation agreements are normal and customary among affiliated corporate entities.

The final rule also authorizes the FDIC to require additional commitments, including a contingency plan that sets forth strategies for recovery actions and the orderly disposition of the industrial bank without the appointment of a receiver or conservator. The additional contingency plan commitment would be required only in certain circumstances, based on the facts and circumstances presented and taking into consideration the size, complexity, interdependencies, and other factors relevant to the industrial bank and Covered Company.
It is difficult to estimate the recordkeeping, reporting, and disclosure costs associated with the contingency plan aspect of the final rule because such an estimate would depend on the organizational structure and activities of potential future Covered Companies.

The FDIC currently lacks such detailed information on potential future Covered Companies. While the contingency plan commitment is meaningfully different from resolution plan requirements for large banks, and while industrial banks that might need to develop such contingency plans are meaningfully different from large banks subject to resolution planning requirements, the FDIC considered prior analyses regarding resolution planning requirements imposed on certain institutions to inform its analysis.
Based in part on the FDICs experience implementing and managing the resolution planning requirements of 360.10, the FDIC estimates that Covered Companies and their industrial banks subject to the contingency plan commitment could incur $326,000 in recordkeeping, reporting, and disclosure
compliance costs annually. To put the estimated cost of this commitment into context, the pre-tax net income of the median industrial bank in 2019 was $64,515,000.136 But, because the FDIC
would have the supervisory discretion to tailor the contents of any contingency plan to a given Covered Company and its industrial bank, and because of the unique circumstances of the respective Covered Companies and industrial banks, the compliance costs incurred by Covered Companies would vary on a case-by-case basis, and could be lower.
The final rule incorporates an additional element as part of the reporting commitment to address Covered Companies systems for protecting the security, confidentiality, and integrity of consumer and nonpublic personal information.
However, the rule is constructed to
134 See FDIC Deposit Insurance Application Procedures Manual Supplement, Applications from Non-Bank and Non-Community Bank Applicants, FIL82020 Feb. 10, 2020.
135 Subject matter experts in the FDICs Division of Risk Management Supervision estimated that time devoted to complying with the commitments is broken down as follows: 25 percent Executives and Managers, 15 percent Legal, 15 percent Compliance Officers, 15 percent Financial Analysts, 15 percent IT Specialists, and 15
percent Clerical. The Standard Occupational Classification System occupations and codes used by the FDIC are: Executives and Managers Management Occupations, 110000, Lawyers Lawyers, Judges, and Related Workers, 231000,
Compliance Officers Compliance Officers, 131041, Financial Analysts Financial Analysts, 132051, IT
Specialists Computer and Mathematical Occupations, 150000, and Clerical Office and Administrative Support Occupations, 430000. To estimate the weighted average hourly compensation cost of these employees, the 75th percentile hourly wages reported by the Bureau of Labor Statistics BLS National Industry-Specific Occupational Employment and Wage Estimates as used for the relevant occupations in the Depository Credit Intermediation sector, as of May 2018. The 75thpercentile wage for lawyers is not reported, as it exceeds $100 per hour, so $100 per hour is used.
The hourly wage rates reported do not include nonmonetary compensation. According to the
September 2019 Employer Cost of Employee Compensation data, compensation rates for health and other benefits are 33.8 percent of total compensation. To account for non-monetary compensation, the hourly wage rates reported by BLS are adjusted by that percentage. The hourly wage is adjusted by 2.28 percent based on changes in the Consumer Price Index for Urban Consumers from May 2018 to September 2019 to account for inflation and ensure that the wage information is contemporaneous with the non-monetary compensation statistic. Finally, the benefit-andinflation-adjusted wages for each occupation are weighted by the percentages listed above to arrive at a weighted hourly compensation rate of $94.15.
136 FDIC Call Report Data, December 31, 2019.

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