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Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Rules and Regulations List of Subjects in 31 CFR Part 35
Executive compensation.
For the reasons set forth in the preamble, 31 CFR subtitle A is amended by adding part 35 to read as follows:
PART 35EMERGENCY CAPITAL
INVESTMENT PROGRAM
Subpart AReserved Subpart BCompensation and Capital Distributions Sec.
35.20 Purpose, applicability, and general provisions.
35.21 Definitions.
35.22 Restrictions on compensation.
35.23 Restrictions on dividends, share buybacks, and other capital distributions.
35.24 Annual certification.
35.25 Exemptive relief.
Appendix A to 31 CFR Part 35Emergency Capital Investment Program Model Excessive or Luxury Expenditures Policy Authority: Consolidated Appropriations Act, 2021 Pub. L. 116260, Division N, Title V, Subtitle B; Community Development Banking and Financial Institutions Act of 1994 enacted as part of the Riegle Community and Regulatory Improvement Act of 1994 Pub. L. 103325, as amended 12
U.S.C. 4701 et seq., Section 104A.

Subpart A Reserved Subpart BCompensation and Capital Distributions
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35.20 Purpose, applicability and general provisions.

a Purpose. Pursuant Section 104A of the Community Development Banking and Financial Institutions Act of 1994
Act, as added by the Consolidated Appropriations Act, 2021 Pub. L. 116
260, this subpart establishes restrictions on executive compensation, dividend payments, and share buybacks for recipients of capital investments under the Department of the Treasurys Emergency Capital Investment Program ECIP or Program, as well as additional criteria for participation in the Program that the Secretary has determined are appropriate in furtherance of the Program goals.
b Applicability. This subpart applies on a consolidated basis to any insured depository institution, bank holding company, savings and loan holding company, or federally insured credit union that issues preferred stock or a subordinated debt instrument to the Department of the Treasury under the Program an ECIP recipient, as defined in 35.21 of this subpart. An ECIP
recipient must comply with the requirements of this subpart during the ECIP period.

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c Limitation of authority. Nothing in this subpart shall be interpreted to limit the authority of the appropriate Federal banking agency to take action under other provisions of law, including action to address unsafe or unsound practices or conditions, deficient capital levels, or violations of law or regulation, under section 8 of the Federal Deposit Insurance Act, section 8 of the Bank Holding Company Act, or section 10 of the Home Owners Loan Act, or the Federal Credit Union Act, as may be applicable.
35.21

Definitions.

Except as modified in this regulation or unless the context otherwise requires, the terms used in this regulation have the same meaning as set forth in the relevant statutes. For purposes of this subpart:
Act means the Community Development Banking and Financial Institutions Act of 1994, as amended 12
U.S.C. 4701 et seq..
Appropriate Federal banking agency has the same meaning as in 12 U.S.C.
1813 and also includes the NCUA with respect to a federally insured credit union.
Capital distributions means:
1 Dividends, including discretionary dividends, on non-senior securities and any other payments on a share of stock or other equity or equivalent interest;
2 Payments, including interest payments, on non-senior securities, that the issuer has full discretion to permanently or temporarily suspend without triggering a default;
3 Redemptions or repurchases of non-senior securities; or 4 Any similar transaction that the Department of the Treasury determines to be in substance a capital distribution;
5 Provided, that a capital distribution does not include:
i Redemptions or repurchases of shares that are part of an employee stock ownership plan for an ECIP recipient that is not publicly traded, provided that the repurchase is required solely by virtue of the Employee Retirement Income Security Act of 1974, as amended;
ii In the case of federally insured credit unions:
A Payments of dividends and interest as defined by 12 CFR 707.2h and o on accounts held by their members; provided that this exclusion does not apply to any extraordinary or special dividend by a credit union; or B Redemptions of membership share interests upon voluntary or involuntary terminations of membership by a credit union or its members, as applicable; and iii Solely in the case of 35.23b Limit on amount of capital
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distributions, redemptions or repurchases of non-senior securities if the issuer of the non-senior securities being repurchased or redeemed fully funds the redemption or repurchase by issuing at least a corresponding amount of new non-senior securities that rank equally in liquidation with, receive the same capital treatment as and, if applicable, have a stated maturity date no earlier than the non-senior securities being redeemed or repurchased.
ECIP means the Emergency Capital Investment Program established under Section 104A of the Community Development Banking and Financial Institutions Act of 1994, as amended.
ECIP investment means any preferred stock, subordinated debt, or other instrument including any successor to any such instrument issued by an ECIP
recipient to the Department of the Treasury under the ECIP.
ECIP investment agreement means the agreement between an ECIP recipient and the Department of the Treasury with respect to the ECIP investment in that ECIP recipient.
ECIP investment date means the date on which an ECIP recipient first issued an ECIP investment.
ECIP period means the period from the ECIP investment date until the earliest of:
1 The date on which the ECIP
recipient has fully redeemed or repaid the ECIP investment received under ECIP;
2 The date on which the investment the ECIP recipient received under the ECIP is no longer held, in full or in part, by the Department of the Treasury or any affiliate thereof; and 3 Ten years after the ECIP
investment date.
ECIP recipient means any entity that has received a capital investment under the ECIP.
Excessive or luxury expenditures means:
1 Excessive expenditures on any of the following to the extent such expenditures are not reasonable expenditures for staff development, reasonable performance incentives, or other similar reasonable measures conducted in the normal course of the ECIP recipients business operations:
i Entertainment or events;
ii Office and facility renovations;
iii Aviation or other transportation services;
iv Tax gross-ups; and v Other similar items, activities, or events for which the ECIP recipient may reasonably anticipate incurring expenses, or reimbursing an employee for incurring expenses;
2 Provided, that reasonable capital investments in technology, equipment,
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