Proposed Rule2025-14132
Adjusting and Indexing Certain Regulatory Thresholds
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 28, 2025
Issuing agencies
Federal Deposit Insurance Corporation
Abstract
The Federal Deposit Insurance Corporation (FDIC) is inviting comment on a proposed rule that would amend certain regulatory thresholds in the FDIC's regulations to reflect inflation. Specifically, the proposal would generally update such thresholds to reflect inflation from the date of initial implementation or the most recent adjustment, and provide for future adjustments pursuant to an indexing methodology. The changes set forth in this proposal would provide a more durable regulatory framework by helping to preserve, in real terms, the level of certain thresholds set forth in the FDIC's regulations, thereby avoiding the undesirable and unintended outcome where the scope of applicability for a regulatory requirement changes due solely to inflation rather than actual changes in an institution's size, risk profile or level of complexity.
Full Text
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<title>Federal Register, Volume 90 Issue 142 (Monday, July 28, 2025)</title>
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[Federal Register Volume 90, Number 142 (Monday, July 28, 2025)]
[Proposed Rules]
[Pages 35449-35475]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-14132]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 303, 314, 335, 340, 347, 363, and 380
RIN 3064-AG15
Adjusting and Indexing Certain Regulatory Thresholds
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is inviting
comment on a proposed rule that would amend certain regulatory
thresholds in the FDIC's regulations to reflect inflation.
Specifically, the proposal would generally update such thresholds to
reflect inflation from the date of initial implementation or the most
recent adjustment, and provide for future adjustments pursuant to an
indexing methodology. The changes set forth in this proposal would
provide a more durable regulatory framework by helping to preserve, in
real terms, the level of certain thresholds set forth in the FDIC's
regulations, thereby avoiding the undesirable and unintended outcome
where the scope of applicability for a regulatory requirement changes
due solely to inflation rather than actual changes in an institution's
size, risk profile or level of complexity.
DATES: Comments must be received on or before September 26, 2025.
ADDRESSES: You may submit comments, identified by RIN 3064-AG15, by any
of the following methods:
<bullet> FDIC Website: <a href="https://www.fdic.gov/federal-register-publications">https://www.fdic.gov/federal-register-publications</a>. Follow instructions for submitting comments on the agency
website.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#86c5e9ebebe3e8f2f5c6e0e2efe5a8e1e9f0"><span class="__cf_email__" data-cfemail="d093bfbdbdb5bea4a390b6b4b9b3feb7bfa6">[email protected]</span></a>. Include RIN 3064-AG15 in the
subject line of the message.
<bullet> Mail: Jennifer M. Jones, Deputy Executive Secretary,
Attention: Comments--RIN 3064-AG15, Federal Deposit Insurance
Corporation, 550 17th Street NW, Washington, DC 20429.
<bullet> Hand Delivery to FDIC: Comments may be hand-delivered to
the guard station at the rear of the 550 17th Street NW building
(located on F Street) on business days between 7 a.m. and 5 p.m.
<bullet> Public Inspection: Comments received, including any
personal information provided, may be posted without change to <a href="https://www.fdic.gov/federal-register-publications">https://www.fdic.gov/federal-register-publications</a>.
Commenters should submit only information that the commenter wishes
to make available publicly. The FDIC
[[Page 35450]]
may review, redact, or refrain from posting all or any portion of any
comment that it may deem to be inappropriate for publication, such as
irrelevant or obscene material. The FDIC may post only a single
representative example of identical or substantially identical
comments, and in such cases will generally identify the number of
identical or substantially identical comments represented by the posted
example. All comments that have been redacted, as well as those that
have not been posted, that contain comments on the merits of the
proposed rule will be retained in the public comment file and will be
considered as required under all applicable laws. All comments may be
accessible under the Freedom of Information Act.
FOR FURTHER INFORMATION CONTACT: Andrew Carayiannis, Chief, Policy &
Risk Analytics Section; Bryan Jonasson, Deputy Chief Accountant; Keith
Bergstresser, Senior Policy Analyst; Jim Yu, Senior Policy and
Disclosure Analyst; Rachel Romm-Nisson, Risk Analytics Specialist,
Capital Markets and Accounting Policy Branch, Division of Risk
Management Supervision; Christopher Blickley, Counsel, Legal Division;
Ryan Tetrick, Deputy Director, Division of Complex Institution
Supervision and Resolution; Alex Greenberg, Assistant Director, Brock
Walker, Assistant Director, Division of Resolutions and Receiverships;
<a href="/cdn-cgi/l/email-protection#bad9dbcad3cedbd6d7dbc8d1dfcec9fadcded3d994ddd5cc"><span class="__cf_email__" data-cfemail="dcbfbdacb5a8bdb0b1bdaeb7b9a8af9cbab8b5bff2bbb3aa">[email protected]</span></a>, (202) 898-6888; Federal Deposit Insurance
Corporation, 3701 Fairfax Drive, Arlington, VA 22203.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Background
B. Considerations for Updating and Indexing Thresholds
C. Overview of the Proposal and Policy Objectives
II. Initial Updates
A. 12 CFR Part 303 (Part 303)--Filing Procedures
B. 12 CFR Part 335 (Part 335)--Securities of State Nonmember
Banks and Savings Associations
C. 12 CFR Part 340 (Part 340)--Restrictions on Sale of Assets of
a Failed Institution by the Federal Deposit Insurance Corporation
D. 12 CFR Part 347 (Part 347)--International Banking
E. 12 CFR Part 363 (Part 363)--Annual Independent Audits and
Reporting Requirements
F. 12 CFR Part 380 (Part 380)--Orderly Liquidation Authority
G. Additional Thresholds
III. Indexing Methodology for Future Threshold Adjustments
A. Description of Methodology
B. Alternatives to the Proposed Indexing Methodology
1. Alternative Measures of Inflation
2. Adjustment Frequency Within the Indexing Methodology
3. Milestone Approach
4. Degree of Automation in Indexing
IV. Economic Analysis
A. Expected Effects
B. Estimates of the Number of Directly Affected Entities
1. Part 303
2. Part 335
3. Part 340
4. Part 347
5. Part 363
6. Part 380
C. Costs and Benefits of the Proposal
1. Part 303
2. Part 335
3. Part 340
4. Part 347
5. Part 363
6. Part 380
V. Administrative Matters
A. Paperwork Reduction Act
B. Regulatory Flexibility Act Analysis
C. Plain Language
D. Riegle Community Development and Regulatory Improvement Act
of 1994
E. Executive Orders 12866 and 13563
F. Providing Accountability Through Transparency Act of 2023
I. Introduction
A. Background
Thresholds are used to determine the scope of applicability for
certain regulations promulgated by the FDIC. The most common threshold
is the amount of total on-balance sheet assets of an institution
(measured in dollars), which has long served as a proxy for an
institution's size.\1\ In some cases, asset-based size thresholds are
combined with other thresholds to serve as proxies for an institution's
risk profile or level of complexity, such as the amount of nonbank
assets or cross-jurisdictional activities.\2\ Combining thresholds in
this manner helps to support a regulatory framework that is tailored to
the risks presented by an individual institution or categories of
institutions.\3\
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\1\ See e.g., 12 CFR 337.12(b) (classifying institutions with
less than $10 million in assets as small for examination cycle
purpose); 12 CFR 327.8(e) (classifying institutions with assets of
$10 billion or more as large for assessment purposes).
\2\ See e.g., 12 CFR 329.3.
\3\ For example, for large financial institutions with total
assets of $100 billion or more, capital and liquidity requirements
increase in stringency based on measures of size, cross-
jurisdictional activity, weighted short-term wholesale funding,
nonbank assets, and off-balance sheet exposure. See 84 FR 59230
(Nov. 1, 2019).
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While most thresholds set a general level of applicability for a
regulation, in some instances, thresholds are applied within a
regulation to establish exclusions, provide for optionality, or to
tailor individual requirements within a broad-based regulation to the
varying sizes and risk profiles of all in-scope institutions. For
example, as discussed further below, thresholds of $2,500 and $1,000
are used to define certain offenses that are exempt from the
application requirements of section 19 of the Federal Deposit Insurance
Act (FDI Act), as implemented by 12 CFR part 303.\4\
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\4\ Specifically, under 12 CFR 303.227, the requirements of
Section 19 do not apply to covered offenses where an individual
could have been sentenced to a term of confinement in a correctional
facility of three years or less and/or a fine of $2,500 or less, and
that meet the additional criteria set forth in that section. In
addition, the requirements of section 19 do not apply to ``small
dollar, simple theft,'' which includes, among other requirements,
the simple theft of goods, services, or currency (or other monetary
instrument) if the value of the currency, goods, or services
involved has a value of $1,000 or less.
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Under the FDIC's regulations, most thresholds are static, with no
mechanism for periodic adjustments over time. To adjust a static
threshold, the FDIC must, in general, provide notice and seek comment
on such adjustment before it can be implemented as final.\5\ However,
certain thresholds within the FDIC regulations are required by statute
and therefore cannot be adjusted without legislative changes.\6\
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\5\ 5 U.S.C. 553(b); see also 5 U.S.C. 553(B) (providing
exception where agency for good cause finds notice and comment is
``impracticable, unnecessary, or contrary to public interest'').
\6\ See e.g., 12 U.S.C. 1819(a) (Seventh and Tenth).
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The FDIC has occasionally revised discretionary regulatory
thresholds or established a mechanism within a regulation to allow for
adjustments on a periodic basis. For example, 12 CFR part 345, which
implements the Community Reinvestment Act,\7\ defines small and
intermediate-small banks by reference to asset-size criteria expressed
in dollar amounts, which are adjusted annually based on the year-to-
year change in inflation through a Federal Register notice.\8\ As an
additional example, the FDIC adjusted 12 CFR part 348, Management
Official Interlocks (Part 348), in 2019 to increase asset-based
thresholds that had been established in 1996.\9\ Part 348 further
provides that the
[[Page 35451]]
FDIC will adjust such asset thresholds, as necessary, based on
inflation.\10\
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\7\ 12 U.S.C. 2901 et seq.
\8\ Specifically, this adjustment corresponds to the average of
the Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W), not seasonally adjusted, for each 12-month period ending in
November, with rounding to the nearest million. See Community
Reinvestment Act Regulations Asset-Size Thresholds, 89 FR 106480,
106481 (Dec. 30, 2024).
\9\ Specifically, this threshold was adjusted to correspond to
the year-to-year change in the average of the CPI-W, not seasonally
adjusted, with rounding to the nearest $100 million. See 84 FR
54465, 54468 (Oct. 10, 2019).
\10\ Part 348 further indicates the FDIC will announce the
revised thresholds by publishing a final rule without notice and
comment in the Federal Register. 12 CFR 348.3(c).
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B. Considerations for Updating and Indexing Thresholds
As discussed above, the use of applicability thresholds allows the
FDIC to differentiate and tailor regulatory requirements based on an
institution's size, risk profile, and level of complexity. However,
static dollar-based thresholds without periodic adjustments to reflect
inflation do not preserve threshold levels in real terms, leading to
unintended policy consequences. For example, smaller and mid-size
institutions can become subject to requirements originally intended for
relatively larger institutions, thereby increasing burden for reasons
unrelated to changes in their inflation-adjusted size or risk profile.
Adjusting regulatory thresholds to reflect inflation would help
ensure that they preserve their intended application in real terms over
time and remain generally aligned with their intended policy
objectives. However, if not properly structured, inflation-based
adjustments also can lead to unintended and undesirable outcomes. For
example, adjusting regulatory thresholds too frequently and in the
absence of meaningful inflation can result in inefficiencies, as
institutions may incur cost to frequently realign their balance sheet
management practices to reflect adjusted thresholds. By contrast,
adjustments that are infrequent and do not sufficiently keep pace with
inflation result in thresholds that are continually decreasing in real
terms in the time period between adjustments. Infrequent adjustments
also result in larger, less gradual adjustments that can impair the
certainty and predictability of a regulatory framework and create
challenges for regulatory compliance and balance sheet management
practices.
Properly structured, appropriately sequenced and predictable
inflation-based threshold adjustments promote consistent application of
regulatory requirements over time and contribute to a more durable
regulatory framework. In addition, such adjustments can enhance
transparency and certainty by providing institutions with a pre-
determined schedule for future regulatory changes and therefore allow
for more enhanced balance sheet management practices.
C. Overview of the Proposal and Policy Objectives
The FDIC is proposing to update certain regulatory thresholds and
provide automatic adjustments to those thresholds over time using an
indexing methodology. Under the proposal, the FDIC would initially
update such thresholds to reflect historical inflation \11\ (measured
as the percentage change in the non-seasonally adjusted Consumer Price
Index for Urban Wage Earners and Clerical Workers (CPI-W)),\12\
generally based off the date of initial implementation or the most
recent quantitative adjustment. Additionally, the FDIC is proposing an
indexing methodology for subsequent, periodic threshold adjustments
that would be implemented automatically every two consecutive calendar
years, or during any intervening calendar year when the cumulative
change in CPI-W since the last adjustment increases by more than 8
percent.\13\
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\11\ Certain thresholds under the proposal would be updated
initially to reflect other considerations. For example, as discussed
in section II.E of this Supplementary Information, the proposal
would initially update thresholds in 12 CFR part 363 to help ensure
sound financial management of the institutions posing the greatest
potential risk to the Deposit Insurance Fund. See infra, n. 45.
\12\ The U.S. Bureau of Labor Statistics publishes the CPI-W on
a monthly basis. The CPI-W is used to annually adjust benefits paid
to Social Security beneficiaries and Supplemental Security Income
recipients. See, U.S. Social Security Administration, CPI for Urban
Wage Earners and Clerical Workers, available at <a href="http://www.ssa.gov/oact/STATS/cpiw.html">www.ssa.gov/oact/STATS/cpiw.html</a>.
\13\ Any references to inflation in this proposal refer to
inflation as measured under the CPI-W, unless specifically noted
otherwise.
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The adjustments provided for in this proposal are intended to help
preserve, in real terms, certain threshold levels in the FDIC's
regulations, thereby avoiding the undesirable and unintended outcome
where an institution becomes subject to additional or more stringent
regulatory requirements due solely to inflation rather than actual
changes in the institution's size, risk profile or level of complexity.
The proposal is the first of a multi-phase effort to reevaluate
thresholds within the FDIC's regulations. The thresholds selected for
this initial phase are thresholds that (1) appear within regulations
issued only by the FDIC, (2) are not set by statute, and (3) are
relatively straightforward to adjust. For example, the proposal would
initially update and provide for subsequent periodic adjustments
pursuant to an indexing methodology for a number of dollar-based
thresholds in 12 CFR part 363 related to audit, internal control, audit
committee composition, and reporting requirements. The FDIC expects to
solicit comment on one or more subsequent proposals to update and
adjust additional thresholds, and, as appropriate, will seek to
coordinate with other Federal agencies. Additionally, the FDIC,
together with the Federal Financial Institutions Examination Council,
Office of the Comptroller of the Currency, and Board of Governors of
the Federal Reserve System, commenced a review under the Economic
Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) in 2024
to solicit feedback from the public on potentially outdated or
otherwise unnecessary regulatory requirements.\14\ The FDIC expects to
review and consider any comments received pursuant to this EGRPRA
review that relate to the thresholds considered within this proposal as
part of any final rulemaking.
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\14\ The EGRPRA requires that regulations prescribed by the
Federal Financial Institutions Examination Council, Office of the
Comptroller of the Currency, Federal Deposit Insurance Corporation,
and Board of Governors of the Federal Reserve System be reviewed by
the agencies not less frequently than once every 10 years. The
purpose of the EGRPRA review is to identify outdated or unnecessary
regulations and consider how to reduce regulatory burden on insured
depository institutions while, at the same time, ensuring their
safety and soundness and the safety and soundness of the financial
system.
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As discussed in the sections that follow, the proposal would
initially update and thereafter periodically adjust certain thresholds
in the following FDIC regulations:
<bullet> 12 CFR Part 303--Filing Procedures
<bullet> 12 CFR Part 335--Securities of Nonmember Banks and State
Savings Associations
<bullet> 12 CFR Part 340--Restrictions on Sale of Assets of a Failed
Institution by the Federal Deposit Insurance Corporation
<bullet> 12 CFR Part 347--International Banking
<bullet> 12 CFR Part 363--Annual Independent Audits and Reporting
Requirements
<bullet> 12 CFR Part 380--Orderly Liquidation Authority
II. Initial Updates
Except as otherwise provided,\15\ the proposal would provide for an
initial increase in the thresholds described below to reflect
historical inflation and index these thresholds to account for
[[Page 35452]]
future inflation. Initial updates would become effective, consistent
with applicable law, at the beginning of the first calendar quarter
following adoption of the final rule.
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\15\ As discussed in section II.E of this Supplementary
Information, the initial updates to thresholds in part 363 would
support a key underlying objective of the regulation, while
maintaining consistency with the historical scope of applicability
and reducing burden for smaller institutions. In addition, one
threshold under part 363 that is intended to align to listing
standards of the national securities exchanges would not be subject
to the proposed indexing methodology.
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A. 12 CFR Part 303 (Part 303)--Filing Procedures
Section 19 of the FDI Act (section 19) prohibits, without the prior
written consent of the FDIC, a person convicted of any criminal offense
involving dishonesty, breach of trust, or money laundering, or who has
entered into a pretrial diversion or similar program in connection with
a prosecution for such an offense (collectively, covered offenses),
from becoming or continuing to serve as an institution-affiliated
party.\16\
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\16\ 12 U.S.C. 1829.
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Subpart L of part 303 of the FDIC's regulations implements section
19 and includes separate $2,500 and $1,000 de minimis thresholds for
certain offenses that are excluded from the scope of section 19 and for
which no section 19 application is required.\17\ Specifically, under 12
CFR 303.227, the requirements of section 19 do not apply to covered
offenses where the individual could have been sentenced to a term of
confinement in a correctional facility of three years or less and/or a
fine of $2,500 or less, and that meet the additional criteria set forth
in that section. In addition, the requirements of section 19 do not
apply to ``small dollar, simple theft,'' which includes, among other
requirements, the simple theft of goods, services, or currency (or
other monetary instrument) if the value of the currency, goods, or
services involved has a value of $1,000 or less.\18\
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\17\ Note that 12 CFR 303.227 contains 3 different dollar
thresholds setting forth different de minimis exceptions. The $2,000
or less threshold for bad checks set forth in 12 CFR
303.227(b)(2)(ii) is set by statute (see 12 U.S.C. 1829(c)(3)(C))
and is therefore not within the FDIC's discretion to adjust and not
included in this proposal.
\18\ Additional criteria that must be met include (1) the theft
was not committed against an insured depository institution (IDI) or
insured credit union; (2) the individual has no more than one other
offense that is considered exempt under this section; and (3) if
there are two offenses--each of which, by itself, is considered
exempt under this section--each conviction or program entry was
entered at least three years prior to the date an application would
otherwise be required, or at least 18 months prior to the date an
application would otherwise be required if the actions that resulted
in the conviction or program entry all occurred when the individual
was 21 years of age or younger. Simple theft excludes burglary,
forgery, robbery, identity theft, and fraud. See 12 CFR
303.227(b)(3).
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For purposes of implementing section 19, an ongoing, significant
objective of the FDIC has been to establish criteria for the de minimis
exception framework such that it applies to offenses that are
relatively minor in nature and help to ensure that prior conduct of the
covered party would pose low risk to an insured institution. Over time,
the FDIC has expanded the scope of the de minimis framework based on
historical analysis that showed the FDIC routinely approved section 19
applications involving minor offenses.\19\ Every expansion of the de
minimis framework ultimately provided additional relief to potential
applicants without undermining the purpose of section 19 or causing
undue risk to an institution or the Deposit Insurance Fund.\20\
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\19\ For example, in 2018, the FDIC broadened the application of
the de minimis exception to filing an application due to the minor
nature of the offenses and the low risk that the covered party would
pose to an insured institution based on the conviction or program
entry. By modifying these provisions, the FDIC stated it believed
that there would be a reduction in the submission of applications
where approval has been granted by virtue of the de minimis offenses
exceptions to filing in the policy statement. See 83 FR 38143 (Aug.
3, 2018).
\20\ For example, changes to the de minimis exception in the
final rule published in 2020 would have reduced past applications by
approximately 20 percent. See Fact Sheet: FDIC Issues Rule on
Section 19 of the Federal Deposit Insurance Act (July 2020).
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The non-seasonally adjusted CPI-W has increased by approximately 38
percent since the $2,500 de minimis threshold was set in 2012; the
proposal would increase this threshold to $3,500. Similarly, the non-
seasonally adjusted CPI-W has increased by approximately 23 percent
since the $1,000 de minimis threshold was set in 2020; the proposal
would increase this threshold to $1,225. These proposed updates would
help preserve, in real terms, the level of such thresholds while
providing meaningful relief from barriers to employment opportunities,
consistent with the purpose of section 19 and prior amendments to the
de minimis exception framework.
Question 1: What are the advantages and disadvantages of increasing
the de minimis offense thresholds for purposes of section 19? Would the
proposal appropriately support objectives of the de minimis exceptions
framework in a manner consistent with safety and soundness?
B. 12 CFR Part 335 (Part 335)--Securities of State Nonmember Banks and
Savings Associations
Part 335 of the FDIC's regulations provides securities
recordkeeping and requirements for State nonmember banks and State
savings associations, and generally applies only to such institutions
with one or more classes of securities required to be registered under
section 12 of the Securities Exchange Act of 1934 (Exchange Act), as
amended.\21\ Part 335 is substantially similar to Securities and
Exchange Commission (SEC) regulations that implement the securities
registration, disclosure, proxies and proxy solicitation, information
statements, tender offer, election of directors, and beneficial
ownership and reporting requirements of the Exchange Act.
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\21\ 12 CFR part 335.
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The SEC and FDIC regulations both contain disclosure requirements
for loans to insiders. The SEC regulations require disclosure of
certain insider indebtedness in excess of $120,000, which have
preferential terms, were not made in the ordinary course of business,
or which involve more than the normal risk of collectability or involve
other unfavorable features.\22\ By contrast, part 335 requires
disclosure of extensions of credit to insiders in excess of 10 percent
of the capital account of an institution or $5 million, whichever is
less.\23\ The FDIC set the $5 million threshold in 1979, stating that
the prior threshold of $10 million was too high to allow for meaningful
disclosure.\24\ The FDIC revisited this amount in 1997 and determined
at the time that the overall benefit to the banking industry resulting
from continuation of the FDIC's historical disclosure requirements
under part 335, including the $5 million threshold, was in the public
interest and appropriate for protection of investors.\25\
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\22\ 17 CFR 229.404.
\23\ 12 CFR 335.801(d).
\24\ See 44 FR 33077, 33079 (Jun. 8, 1979).
\25\ See 62 FR 6852, 6855 (Feb. 14, 1997).
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If indexed to inflation since the FDIC's most recent consideration
of the indebtedness of management disclosure provisions in 1997, the $5
million threshold would be $9.9 million. The proposal would update the
dollar threshold in 12 CFR 335.801(d) to $10 million to reflect
inflation since that time. The proposed revision would help to
preserve, in real terms, the level of this threshold.\26\
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\26\ For example, growth in the dollar amount of capital as a
result of inflation would impact the permitted amount extensions of
credit under 12 CFR 337.3(b) if an FDIC-supervised institution
provides an extension of credit less than 5 percent of its
unimpaired capital and unimpaired surplus.
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Question 2: What are the advantages and disadvantages of raising
the threshold for the management indebtedness disclosure provisions
under part 335 to $10 million?
Question 3: Are there any unintended consequences that the FDIC
should consider in increasing the threshold for disclosure of
extensions of credit to insiders?
[[Page 35453]]
C. 12 CFR Part 340 (Part 340)--Restrictions on Sale of Assets of a
Failed Institution by the FDIC
Part 340 of the FDIC's regulations addresses restrictions on the
FDIC's sale of failed IDI assets to individuals or entities that
improperly profited from or engaged in wrongdoing at the expense of a
failed IDI or that seriously mismanaged a failed IDI.\27\ Among other
restrictions, part 340 prohibits a person from acquiring any assets of
a failed IDI if the person or its associated person has caused a
substantial loss to that failed institution \28\ or has demonstrated a
pattern or practice causing a substantial loss to one or more failed
institution(s).\29\ Part 340 defines ``substantial loss'' to include
multiple types of loss that all use a threshold of $50,000 for purposes
of determining whether the losses are ``substantial.'' \30\
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\27\ See 12 CFR 340.1(b).
\28\ 12 CFR 340.4(a)(1).
\29\ See 12 CFR 340.4(c).
\30\ See 12 CFR 340.2(h).
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The FDIC added part 340 to the FDIC's regulations in 2000.\31\
Subsequent updates \32\ to part 340 have not substantively modified the
``substantial loss'' definition or the $50,000 threshold.\33\ The
substantial loss provisions and the $50,000 threshold are also included
in the FDIC's Purchaser Eligibility Certification form, which is
required under part 340 for all prospective purchasers of failed IDI
assets.\34\
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\31\ See 65 FR 14816, 14819 (Mar. 20, 2000).
\32\ As discussed in more detail below, part 340, including the
``substantial loss'' provisions and the $50,000 threshold, was the
model for and is intended to match the substantially similar
provisions applicable to FDIC covered financial company asset sales
under 12 CFR 380.13. See 80 FR 22886 (Apr. 24, 2015) (explaining
that, because of the substantially similar language in the statutes
authorizing the respective rules, part 340 served as a model for the
development of the rules at 12 CFR 380.13.). See also, id., at 80 FR
22887 (describing the updates to part 340 made to ensure consistency
between part 340 and 12 CFR 380.13).
\33\ See generally, id.
\34\ The Purchaser Eligibility Certification form, available at
<a href="https://www.fdic.gov/asset-sales/purchaser-eligibility-certification-pec.pdf">https://www.fdic.gov/asset-sales/purchaser-eligibility-certification-pec.pdf</a>.
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The FDIC is proposing to revise the ``substantial loss'' threshold
in part 340 by raising the existing threshold from $50,000 to $100,000.
If indexed to inflation since the FDIC established the ``substantial
loss'' threshold in 2000, the $50,000 threshold would be $92,666. This
proposed updated threshold of $100,000 approximates inflation
adjustments.
Updating the threshold for ``substantial loss'' would preserve, in
real terms, the level of the threshold, while allowing more prospective
purchasers to make offers to buy failed IDI assets. The FDIC does not
expect this proposed adjustment to adversely affect competition or the
prices paid for failed IDI assets.
More generally, the FDIC has experienced challenges with
implementation of part 340 and is considering future amendments to the
regulation, but, in the interim, is proposing to revise the threshold
for ``substantial loss'' as part of this rulemaking.
Question 4: What are the advantages and disadvantages of increasing
the $50,000 substantial loss threshold that is used to determine
whether individuals or entities are eligible to purchase assets of a
failed institution? Does the proposal appropriately balance the
potential benefit of increasing competition for failed institution
assets with any public interest concerns that may be associated with
increasing this threshold?
D. 12 CFR Part 347 (Part 347)--International Banking
Part 347 of the FDIC's regulations governs international banking.
Subpart A to part 347, which implements section 18(d) and 18(l) of the
FDI Act, sets forth the requirements for insured State nonmember bank
investments in foreign organizations, permissible foreign financial
activities, loans or extensions of credit to or for the account of
foreign organizations, and the FDIC's recordkeeping, supervision, and
approval requirements. Subpart A also addresses permissible activities
for foreign branches of insured State nonmember banks.
The FDIC issued a final rule in 1998 amending its international
banking regulations and consolidating them into part 347.\35\ Under
subpart A of part 347, a State nonmember bank may hold an equity
interest in one or more foreign organizations that underwrite, deal, or
distribute equity securities outside of the United States, subject to
certain limitations. Two of those limitations include dollar-based
thresholds. First, 12 CFR 347.111(a) provides that the aggregate
underwriting commitments by the foreign organizations for the
securities of a single entity, taken together with underwriting
commitments by any affiliate of the State nonmember bank under the
authority of 12 CFR 211.10(b), may not exceed the lesser of $60 million
or 25 percent of the State nonmember bank's Tier 1 capital. Second, 12
CFR 347.111(b) provides that the equity securities of any single entity
held for distribution or dealing by the foreign organizations, taken
together with equity securities held for distribution or dealing by any
affiliate of the insured State nonmember bank under the authority of 12
CFR 211.10, must not exceed the lesser of $30 million or 5 percent of
the insured State nonmember bank's Tier 1 capital, subject to certain
other requirements.
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\35\ 63 FR 17056 (Apr. 8, 1998).
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The dollar-based thresholds under subpart A of part 347 were
established in 1998 and have not since been updated. At the time, the
FDIC stated that it intended to maintain parity between the
restrictions governing the international activities of State nonmember
banks regulated by the FDIC and member banks subject to the Federal
Reserve Board's (FRB) Regulation K. In 2001, the FRB issued a final
rule to adjust certain limitations on activities of bank holding
companies, State member banks, Edge corporations, and agreement
corporations (FRB-supervised institutions). For example, the final rule
expanded underwriting limits for well-capitalized, well-managed FRB-
supervised institutions by tying the limit for underwriting shares to a
single organization to a percentage of the institution's Tier 1
capital, and eliminating the limitation based on a dollar amount.\36\
FRB-supervised institutions that are not well-capitalized and well-
managed remained subject to the $60 million underwriting commitment
threshold for shares of individual organizations.\37\ The final rule
also revised the dealing limit on shares in which an FRB-supervised
institution can hold in its trading or dealing accounts for a single
issuer from the lesser of $40 million or 10 percent of Tier 1 capital,
increased from $30 million. The FRB justified this increase by noting
that 10 years had passed since the $30 million limit was first
established.\38\
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\36\ 66 FR 54346, 54354 (Oct. 26, 2001); see 12 CFR
211.10(a)(14).
\37\ 66 FR 54346, 54354 (Oct. 26, 2001); see 12 CFR
211.10(a)(15).
\38\ Id.
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Following the FRB's revisions to Regulation K, the FDIC issued a
rule on April 6, 2005,\39\ transferring these limits to its current
location at 12 CFR 347.111; the dollar-based thresholds remained
unchanged. Since these limits were established in 1998, the CPI-W has
increased by approximately 95 percent. If indexed to inflation, the
limits on aggregate underwriting commitments and on the equity
securities of any entity held for distribution or dealing would be $118
million and $59 million, respectively.
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\39\ 70 FR 17550 (Apr. 5, 2005).
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[[Page 35454]]
To preserve the level of these thresholds in real terms, the FDIC
is proposing to revise the dollar limits in subpart A of part 347 on
aggregate underwriting commitments and on equity securities held for
distribution or dealing to $120 million and $60 million, respectively.
The proposed increases in these limits approximate inflation
adjustments since 1998. The limits on aggregate underwriting
commitments and the dollar limit on equity securities held for
distribution and dealing, as percentages of Tier 1 capital, would
remain unchanged. The proposal would not align these thresholds with
those used in parallel regulations of the FRB.
Question 5: What are the advantages and disadvantages of updating
the dollar limits in subpart A of 12 CFR part 347 on aggregate
underwriting commitments and on equity securities held for distribution
or dealing to $120 million and $60 million, respectively?
Question 6: Should the FDIC consider eliminating the limit based on
a dollar amount for underwriting shares to a single organization for
institutions that are well-capitalized and well-managed and only
include a limit for a percentage of an institution's Tier 1 capital,
consistent with FRB Regulation K? What would be the advantages and
disadvantages of such an approach?
Question 7: What are the potential unintended consequences, if any,
of establishing a higher limit on equity securities held for dealing or
distribution under part 347 relative to the limit that applies under
Regulation K?
E. 12 CFR Part 363 (Part 363)--Annual Independent Audits and Reporting
Requirements
Section 112 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA) added section 36, ``Early
Identification of Needed Improvements in Financial Management,'' to the
FDI Act.\40\ Section 36 generally subjects IDIs above a certain asset
size threshold to annual independent audits, assessments of the
effectiveness of internal control over financial reporting (ICFR), and
compliance with designated laws and regulations, as well as related
reporting requirements. Section 36 also includes requirements for audit
committees of these IDIs. Section 36 grants the FDIC discretion to set
the asset size threshold for compliance with these requirements, but it
also provides that the threshold shall not be less than $150
million.\41\
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\40\ 12 U.S.C. 1831m.
\41\ Consistent with the statute, the FDIC is consulting with
the other Federal banking agencies in adjusting these thresholds.
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Part 363 of the FDIC's regulations implements section 36 and
requires any IDI with total consolidated assets of $500 million or more
at the beginning of its fiscal year to submit to the FDIC and other
appropriate Federal and State supervisory agencies an annual report
(part 363 Annual Report) comprised of audited financial statements, the
independent public accountant's report thereon, and a management report
containing a statement of management's responsibilities and an
assessment by management of compliance with applicable laws and
regulations.\42\ The management report component of the part 363 Annual
Report for an institution with $1 billion or more in total assets must
also include an assessment by management of the effectiveness of ICFR
and an independent public accountant's attestation report on ICFR.\43\
The FDIC has not adjusted the $500 million mandatory compliance
threshold for part 363 since its initial implementation; however, the
$1 billion threshold was increased from $500 million in 2005.\44\
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\42\ See 12 CFR 363.2.
\43\ See 12 CFR 363.2(b)(3) and 363.3(b).
\44\ 70 FR 71226, 71227 (Nov. 28, 2005).
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When the FDIC initially implemented part 363, use of a $500 million
threshold captured approximately 1,000 IDIs (out of 14,000) holding 75
percent of U.S. banking assets, while exempting approximately two-
thirds of institutions that would have been subject to section 36 under
a $150 million threshold.\45\ In addition, at the time of initial
implementation, more than 96 percent of these covered institutions
reported that they were subject to an annual audit by an independent
public accountant at the depository institution or parent company
level. The initial scope of application for part 363 was intended to
help ensure sound financial management of the institutions posing the
greatest potential risk to the Deposit Insurance Fund.\46\
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\45\ 58 FR 31332, 31333 (June 2, 1993).
\46\ Id.
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The 2005 amendment to the ICFR threshold in part 363 reflected a
recognition that compliance with the audit and reporting requirements
had become more burdensome and costly, particularly for smaller
nonpublic institutions.\47\ In addition, due to consolidation in the
banking and thrift industry and the effects of inflation, the scope of
applicability for part 363 had increased to cover more than 1,150 (out
of 8,900) insured institutions, representing approximately 90 percent
of industry assets.\48\ Following the 2005 amendment, about 600 of the
largest insured institutions with approximately 86 percent of industry
assets continued to be covered by the ICFR requirements of part 363.
This change was intended to achieve meaningful burden reduction in a
manner consistent with safety and soundness.\49\ Subsequent amendments
to part 363 in 2009 \50\ and 2020 \51\ did not result in permanent
changes to the regulatory asset thresholds.
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\47\ Supra n. 44.
\48\ Id.
\49\ Id.
\50\ 74 FR 35726 (July 20, 2009). The most significant
amendments to part 363 in 2009 included: (1) extending the time
period for a non-public institution to file its Part 363 Annual
Report by 30 days and replace the 30-day extension of the filing
deadline that may be granted if an institution (public or non-
public) is confronted with extraordinary circumstances beyond its
reasonable control with a late filing notification requirement that
would have general applicability; (2) providing relief from the
annual reporting requirements for institutions that are merged out
of existence before the filing deadline; (3) providing relief from
reporting on internal control over financial reporting for
businesses acquired during the fiscal year; (4) requiring
management's assessment of compliance with the laws and regulations
pertaining to insider loans and dividend restrictions to State
management's conclusion regarding compliance and disclose any
noncompliance with such laws and regulations; (5) requiring an
institution's management and the independent public accountant to
identify the internal control framework used to evaluate internal
control over financial reporting and disclose all identified
material weaknesses that have not been remediated prior to the
institution's most recent fiscal year-end; (6) clarifying the
independence standards with which independent public accountants
must comply and enhance the enforceability of compliance with these
standards; (7) specifying that the duties of the audit committee
include the appointment, compensation, and oversight of the
independent public accountant, including ensuring that audit
engagement letters do not contain unsafe and unsound limitation of
liability provisions; (8) requiring certain communications by
independent public accountants to audit committees; (9) establishing
retention requirements for audit working papers; (10) requiring
boards of directors to adopt written criteria for evaluating an
audit committee member's independence and provide expanded guidance
for boards of directors to use in determining independence; (11)
providing that ownership of 10 percent or more of any class of
voting securities of an institution is not an automatic bar for
considering an outside director to be independent of management;
(12) requiring the total assets of a holding company's insured
depository institution subsidiaries to comprise 75 percent or more
of the holding company's consolidated total assets in order for an
institution to be eligible to comply with part 363 at the holding
company level; and (13) providing illustrative management reports to
assist institutions in complying with the annual reporting
requirements.
\51\ 85 FR 67427 (Oct. 23, 2020). In 2020, the FDIC adopted an
interim final rule allowing IDIs to use total consolidated assets as
of December 31, 2019, for purposes of the asset thresholds in part
363 for fiscal years ending in 2021.
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[[Page 35455]]
Most of the dollar-based thresholds in part 363 have been in place
for more than 30 years. The proposal would raise the general
applicability thresholds from $500 million to $1 billion, the ICFR
asset threshold from $1 billion to $5 billion, and thresholds related
to audit committee composition generally from $500 million to $1
billion, and from $1 billion and $3 billion to $5 billion.\52\ Use of
these thresholds would help support a key underlying objective of part
363--that is, achieving sound financial management at insured
institutions posing the greatest risk to the Deposit Insurance Fund
\53\--and maintain consistency with the historical scope of
applicability according to several metrics. The $1 billion and $5
billion thresholds would cover institutions holding approximately 95
and 89 percent of industry assets, respectively. In addition, the
proposed increase in the applicability threshold from $500 million to
$1 billion would result in approximately the same number of
institutions being subject to part 363 (approximately 1,000
institutions) in 2025 as were subject to the regulation in 1993 (at its
inception) and in 2005 (when the threshold for the ICFR requirements
was amended), while removing nearly 800 institutions from the general
scope of applicability for part 363. Similarly, the proposed increase
in the ICFR threshold from $1 billion to $5 billion would be generally
consistent with the historical application of such requirements (to
approximately 75 percent of institutions) at the time of initial
implementation and under the 2005 amendment.
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\52\ In total, the FDIC is proposing increases to 24 regulatory
asset thresholds in part 363. Several of these asset thresholds are
similar and are repeated throughout part 363 pertaining to the
general requirements of part 363, as well as to the holding company
requirements of part 363 (for insured depository institutions that
are subsidiaries of holding companies), and audit committee
composition requirements.
\53\ Supra n. 45 at 58 FR 31333.
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The thresholds set forth in the proposal also would achieve
meaningful burden reduction for the smallest institutions, which would
be removed from the scope of applicability for reporting requirements
and internal control assessments. Furthermore, experience has
demonstrated that smaller community institutions, particularly those in
rural areas, have had difficulty complying with the audit committee
composition requirements. Specifically, these institutions frequently
report that it is increasingly difficult to attract and retain
individuals who are willing and capable of serving as a member of an
audit committee, thereby making compliance with the audit committee
composition requirements of part 363 challenging.
Irrespective of the proposed changes to part 363 thresholds, IDIs
may still be required to have an audit and assess internal controls
over financial reporting by their respective states if the institution
is state chartered.\54\ Additionally, insured depository institutions
that are public companies or subsidiaries of public companies that file
annual and other periodic reports as required by the Sarbanes-Oxley Act
of 2002 are required to have an audit and assess internal controls over
financial reporting.\55\ As of March 31, 2025, approximately 52 percent
of institutions not subject to part 363 still obtained an audit.\56\
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\54\ See e.g., AL Code 5-2A-22 (2024); CA Fin Code 502 (2024);
Conn. Gen. Stat 36a-86; and Ga. Comp. R. & Regs. R. 80-1-14-.01.
\55\ Sarbanes-Oxley Act of 2002, Public Law 107-204, 116 Stat.
745 (2002), and its implementing regulations, 15 U.S.C. 7262.
\56\ Call Report data, March 31, 2025. The level of audit work
performed on an institution is reported in the March Call Report
each year and can be found on line M.1 in the Memorandum to Schedule
RC.
---------------------------------------------------------------------------
The FDIC is also proposing to increase the $100,000 compensation
threshold under part 363 \57\ related to the determination of whether a
director is considered ``independent of management.'' Paragraph 28 in
appendix A to part 363, ``Independent of Management'' Considerations,
sets forth the criteria a board of directors should consider when
determining the independence of an outside director for audit committee
purposes. The independence criteria under part 363, including the
$100,000 compensation threshold, are intended to be consistent with
those provided under the listing standards of national securities
exchanges while providing some flexibility for smaller nonpublic
institutions.
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\57\ The threshold describes situations where the director has
received, or has an immediate family member who has received, during
any twelve-month period within the last three years, more than
$100,000 in direct and indirect compensation from the institution,
its subsidiaries, and its affiliates for consulting, advisory, or
other services other than director and committee fees and pension or
other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued
service).
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The FDIC implemented the $100,000 threshold under part 363 in 2009.
Since that time, the parallel threshold under the listing standards of
national securities exchanges has been raised to $120,000.\58\
Accordingly, the proposal would increase the $100,000 compensation
threshold under part 363 to $120,00 to realign it with the parallel
threshold set forth in listing standards. This revision also would
address the potential unintended outcome where a director could be
considered ``independent of management'' for purposes of listing
standards while at the same time being considered ``not independent of
management'' for purposes of part 363.
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\58\ Nasdaq Stock Market Rules, Rule 5605(a)(2); New York Stock
Exchange Listed Company Manual, section 303A.02(b)(ii).
---------------------------------------------------------------------------
In contrast to the other thresholds in part 363 that are subject to
this proposal, the $120,000 compensation threshold would not be subject
to the proposed indexing methodology described in section III of this
Supplementary Information as it is intended to align with parallel
thresholds under listing standards, which are not subject to an
indexing methodology. The FDIC expects to adjust this threshold in the
future to maintain continued alignment with parallel thresholds in the
listing standards of the national securities exchanges.
The table below details the proposed changes to part 363
thresholds.
Part 363 Thresholds Proposed To Be Revised
----------------------------------------------------------------------------------------------------------------
Citation Current threshold Proposal threshold
----------------------------------------------------------------------------------------------------------------
363.1(a)................................. $500 million................ $1 billion.
363.2(b)(3).............................. $1 billion.................. $5 billion.
363.3(b)................................. $1 billion.................. $5 billion.
363.4(a)(2).............................. $1 billion.................. $5 billion.
363.4(c)(3).............................. $1 billion.................. $5 billion.
363.5(a)(1).............................. $1 billion.................. $5 billion.
363.5(a)(2).............................. $500 million................ $1 billion.
[[Page 35456]]
363.5(a)(2).............................. $1 billion.................. $5 billion.
363.5(b)................................. $3 billion.................. $5 billion.
Guideline 8A............................. $1 billion.................. $5 billion.
Guideline 8A............................. $1 billion.................. $5 billion.
Guideline 10............................. $1 billion.................. $5 billion.
Guideline 18A............................ $1 billion.................. $5 billion.
Guideline 27............................. $1 billion.................. $5 billion.
Guideline 27............................. $500 million................ $1 billion.
Guideline 27............................. $1 billion.................. $5 billion.
Guideline 28(b)(4)....................... $100 thousand............... $120 thousand.\59\
Guideline 30(b).......................... $1 billion.................. $5 billion.
Guideline 30(c).......................... $500 million................ $1 billion.
Guideline 30(c).......................... $1 billion.................. $5 billion.
Guideline 35(a).......................... $500 million................ $1 billion.
Guideline 35(b).......................... $1 billion.................. $5 billion.
Guideline 35(c).......................... $3 billion.................. $5 billion.
Appendix B item 2(b)..................... $1 billion.................. $5 billion.
----------------------------------------------------------------------------------------------------------------
Question 8: What are the advantages and disadvantages of increasing
the thresholds within part 363, as described above?
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\59\ As discussed above, the proposal also would raise the
threshold set forth in Guideline 28(b)(4) from $100,000 to $120,000.
This threshold was intended to align with the listing standards of
national securities exchanges for purposes of making director
independence determinations.
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Question 9: Does the proposal appropriately balance the objectives
preserving the levels of part 363 thresholds on an inflation-adjusted
basis and reducing burden for smaller institutions with the safety and
soundness benefits of audit and financial controls requirements? If
not, how could the proposal improve the balance of these objectives?
Question 10: Would the proposed thresholds under part 363 help to
address challenges for smaller institutions in rural areas or other
geographies? Please describe any elevated challenges associated with
current provisions of part 363 and whether the proposal would help to
address them. Please provide supporting data where available.
Question 11: To what extent do the requirements of part 363 help
ensure that institutions establish and maintain appropriate lines of
defense for compliance and safety and soundness purposes? How
burdensome are the requirements for small institutions?
F. 12 CFR Part 380 (Part 380)--Orderly Liquidation Authority
Part 380 of the FDIC's regulations implements the FDIC's orderly
liquidation authority,\60\ which applies once the FDIC has been
appointed receiver for a covered financial company.\61\ Similar to the
provisions regarding the sale and purchase of failed IDI asset sales
under part 340, 12 CFR 380.13 of the FDIC's regulations sets forth
restrictions on the FDIC's sale of failed covered financial company
assets to individuals or entities that improperly profited from or
engaged in wrongdoing at the expense of a covered financial company or
seriously mismanaged a covered financial company.\62\ The restrictions
under 12 CFR 380.13 apply to the sale and purchase of covered financial
company assets in the FDIC's capacity as receiver for a covered
financial company or in its corporate capacity.\63\
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\60\ See Title II of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (``Dodd-Frank Act'') section 201, et. seq.,
12 U.S.C. 5381, et. seq.
\61\ See Dodd-Frank Act section 202(a), 12 U.S.C. 5382(a)
(describing the process for the Secretary of the Treasury to appoint
the FDIC as receiver for a covered financial company and commence
orderly liquidation of the covered financial company); see also 12
CFR 380.1.
\62\ See 12 CFR 380.13(a)(1).
\63\ See 12 CFR 380.13(a)(2)(i).
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Among other restrictions, 12 CFR 380.13 prohibits a person from
acquiring assets of a covered financial company from the FDIC if the
person or its associated person has caused a substantial loss to a
covered financial company \64\ or has demonstrated a pattern or
practice causing a substantial loss to one or more covered financial
companies.\65\ As in part 340, 12 CFR 380.13 defines ``substantial
loss'' to include multiple types of loss that all use a threshold of
$50,000 to establish the losses as ``substantial.'' \66\
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\64\ 12 CFR 380.13(c)(1)(i). Section 380.13 defines material
participation in a transaction that caused substantial loss to a
covered financial company in 12 CFR 380.13(c)(2).
\65\ See 12 CFR 380.13(c)(3).
\66\ See 12 CFR 380.13(b)(6).
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The FDIC added 12 CFR 380.13 to the FDIC's regulations in 2014.\67\
From inception, the FDIC has explicitly implemented the requirements in
12 CFR 380.13, including the ``substantial loss'' provisions and
threshold, in a manner consistent with the restrictions related to
failed IDIs asset sales under part 340.\68\ Previous revisions to part
340 were also specifically intended to align the requirements in part
340 and 12 CFR 380.13.\69\
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\67\ See 79 FR 20762, 20766-20767 (Apr. 14, 2014).
\68\ See id. at 79 FR 20762 (explaining that the 12 CFR 380.13
final rule is modeled after the FDIC's regulation at 12 CFR part 340
because the relevant statutory provisions share substantially
similar statutory language.).
\69\ See ``Restrictions on Sale of Assets of a Financial
Institution by the Federal Deposit Insurance Corporations,'' 80 FR
22886 (Apr. 24, 2015) at 80 FR 22286, 80 FR 22887 and 12 CFR 380.13.
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The FDIC is proposing to revise the ``substantial loss'' threshold
in 12 CFR 380.13 by raising the existing threshold from $50,000 to
$100,000. This proposed revised threshold approximates inflation
adjustments since the FDIC created the ``substantial loss'' threshold
under part 340 in 2000, which was included in 12 CFR 380.13 in 2014,
and will maintain consistency between the ``substantial loss''
provisions in part 340 and 12 CFR 380.13.
In addition to maintaining consistency between these related
requirements, as with part 340, updating the threshold for
``substantial loss'' will preserve, in real terms, the level of the
threshold. The FDIC also does not expect this proposed adjustment to
adversely affect competition for sales of covered financial company
assets or the prices paid for those assets.
Question 12: What are the advantages and disadvantages of the FDIC
updating the $50,000 ``substantial loss'' threshold under 12 CFR 380.13
to $100,000?
[[Page 35457]]
G. Additional Thresholds
As discussed above, the proposal is intended to be the first of a
multi-phase effort to reevaluate thresholds within the FDIC's
regulations. The FDIC also seeks comment on which additional regulatory
thresholds, if any, the FDIC should update and index. Please identify
any such thresholds and explain which, if any, should be prioritized
and why.
III. Indexing Methodology for Future Threshold Adjustments
The FDIC is proposing to implement an indexing methodology to make
future automatic adjustments to most thresholds discussed above
according to a pre-determined methodology that reflects inflation. Use
of the indexing methodology would result in a more consistent and
predictable application of thresholds over time, in further support of
the objectives of this proposal.
A. Description of Methodology
Under the proposal, the FDIC would generally adjust the dollar
thresholds described in section II of this document at the end of every
consecutive two-year period based on the cumulative percent change of
the non-seasonally adjusted CPI-W since the effective date of any final
rulemaking. This two-year period is intended to provide an appropriate
cadence for capturing meaningful changes in inflation on a timely basis
while balancing the frequency in which thresholds would be amended.
If, however, the cumulative percentage change in the non-seasonally
adjusted CPI-W during any intervening calendar year since the most
recent adjustment exceeds 8 percent, then the thresholds subject to the
indexing methodology would be adjusted during the first quarter of the
following calendar year. This feature of the indexing methodology is
intended to address the possibility that periods of significant
inflation could cause thresholds to decrease substantially in real
terms before adjustments would occur under the two-year cadence. By
providing for the thresholds to be revised on an interim basis during
any year since the prior adjustment in which the cumulative percent
change increases by more than 8 percent, the proposal would help ensure
threshold amounts reflect inflation in a timely manner and avoid the
undesirable and unintended consequences of excessive inflation between
adjustments.
Under the proposal, the FDIC generally would announce threshold
adjustments pursuant to the indexing methodology by publishing a final
rule in the Federal Register. The final rule would not be subject to a
notice and comment period, and would amend the Code of Federal
Regulations to reflect the adjusted numerical threshold.\70\ While the
FDIC would fully expect to publish a final rule in the Federal Register
as required by the proposal, the proposal also notes that the
adjustment would occur even in the absence of a publication in the
Federal Register. The adjusted thresholds would be effective on April 1
of the year during which the adjustment occurs.\71\ For example, an
adjusted threshold that is calculated based on inflation through the
end of 2027 would be published during the first quarter of 2028 and
would become effective on April 1, 2028.
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\70\ This process to adjust numerical thresholds in the Code of
Federal Regulations would be similar to the process utilized in the
Community Reinvestment Act in which the FDIC and FRB publish a final
rule without notice and comment.
\71\ The period in which new thresholds would apply may differ
depending on considerations specific to each individual regulation.
For example, thresholds within part 363 of FDIC regulations apply on
a fiscal year basis rather than a calendar year basis and would be
made applicable for fiscal years beginning after the threshold
update.
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Under the proposed indexing methodology, the FDIC would not lower
thresholds in any given year to reflect periods of deflation. In modern
times, deflation has been rare and limited. However, as further
described below, a period of deflation would be reflected in future
threshold increases, as in such a scenario, thresholds would not
increase until the net cumulative change in CPI-W turns positive. In
the event the economy experiences a period of sustained deflation, the
FDIC may consider revisiting the proposed indexing methodology.
Additionally, thresholds adjusted under the indexing methodology
would be rounded, as appropriate, based on the size of the threshold
(e.g., thousands, millions, billions), generally, to the nearest number
with two significant digits. For example, the numbers $9.8 billion;
$510 million; $1.1 million; $520,000; and $2,700 each have two
significant digits. As an additional example, a threshold that would
otherwise be calculated as $5.964 million would be rounded to $6.0
million. In this case, both the `6' and `0' are significant digits
because $6.0 million is the value of the adjusted threshold rounded to
the nearest $0.1 million.
Prior to rounding, all adjusted thresholds would be calculated
based on the cumulative percent change of the non-seasonally adjusted
CPI-W since the effective date of any final rulemaking to implement the
proposal. Referring back to a discrete starting point would ensure that
any distortions due to rounding or non-adjustments for deflation do not
carry forward to future adjustments. For example, if a final rule to
implement this proposal becomes effective on December 31, 2025, then
this date would serve as the starting point for future threshold
adjustment calculations. In addition, to illustrate the effects of
deflation, suppose that inflation is 0 percent in calendar year 2026
and -5 percent (5 percent deflation) in calendar year 2027. No
adjustment would be made at the end of calendar year 2026 because
inflation did not exceed 8 percent, and no adjustment would be made at
the end of calendar year 2027 because, as stated above, the FDIC would
not adjust thresholds lower in any given year. Suppose also that
inflation is 0 percent in calendar year 2028 and 5 percent in calendar
year 2029. The adjusted threshold calculation for 2029 would consider
cumulative inflation since December 31, 2025, meaning the -5 percent
inflation in 2027 would roughly offset the 5 percent inflation in 2029,
and no adjustment would be made.
As an example of how the proposal would avoid rounding distortions,
consider a $1 million threshold and consistent 3 percent inflation in
each year from 2026 through 2029. Cumulative inflation at the end of
2027 would be roughly 6 percent, resulting in an unrounded adjusted
threshold of $1.06 million ($1 million * 1.06 = $1.06 million), which
would then be rounded to $1.1 million. Cumulative inflation in the
years 2028 and 2029 would also be roughly 6 percent. If the indexing
methodology were to be based on the previous adjustment, the new
unrounded adjusted threshold would be $1.166 ($1.1 million * 1.06 =
$1.166 million) and would round to $1.2 million. Thus, the $0.04
million in rounding at the end of 2027 would carry forward and add to
the $0.034 million in rounding applied at the end of 2029. Conversely,
under the proposed methodology, the 2029 adjustment would be calculated
based on the roughly 12 percent cumulative inflation in the years 2026-
2029.\72\ The $1 million threshold from December 31, 2025, would be
adjusted to an unrounded threshold of $1.12 million ($1 million * 1.12
= $1.12 million). The unrounded adjusted threshold would be rounded to
$1.1 million, which would be equivalent to the current adjusted
[[Page 35458]]
threshold (established at year-end 2027), so no adjustment would be
made.
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\72\ For simple illustration, this example ignores compounding
of prior years' inflation.
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Question 13: Would increasing thresholds pursuant to the proposed
indexing methodology have any unintended policy consequences? Are there
other factors that should be considered as part of any update to
thresholds?
Question 14: Under the proposal, the FDIC would generally not
expect to adjust thresholds lower in any given year, for example,
following periods of deflation. Is it appropriate to only adjust
thresholds higher to reflect inflation? What would be the advantages
and disadvantages of adjusting thresholds to reflect both inflationary
and deflationary periods?
Question 15: Does the proposal appropriately address potential
distortions that could result from rounding? If not, please explain.
What would be the advantages and disadvantages of not applying
rounding?
Question 16: Under the proposal, adjusted thresholds would be
rounded to the nearest value with two significant digits. What would be
the advantages and disadvantages of adjusting thresholds under the
indexing methodology to reflect the exact numerical threshold amount
produced as a result of changes in inflation (instead of rounding)?
Question 17: Should the FDIC apply the proposed methodology
consistently across all regulations or should the FDIC tailor
alternative methodologies to consider factors specific to each
individual threshold and/or regulation, or groups of thresholds and/or
regulations? Would the benefits of a more tailored approach justify the
cost of inconsistent indexing methods?
B. Alternatives to the Proposed Indexing Methodology
In developing this proposal, the FDIC considered other factors that
could be used to adjust regulatory thresholds to preserve the levels of
thresholds in real terms over time. For example, the approach to adjust
thresholds could rely on an alternative index or measure of inflation
(e.g., core versus non-core measures). Additionally, rather than using
changes in inflation as a basis for updating thresholds, the FDIC
considered using changes in economic growth or banking industry assets
since thresholds were originally implemented. Another alternative
considered was a methodology for updating each threshold individually,
based on the factors most relevant to that threshold. The FDIC also
considered not updating the thresholds included in section II of this
document from their current levels and instead relying solely on the
proposed methodology to index thresholds. Additionally, the mechanics
of the indexing methodology could involve a less or more frequent
cadence, or use of a process that is less automated. The FDIC requests
feedback on all alternative approaches discussed below and any other
alternative approaches that should be considered.
1. Alternative Measures of Inflation
The non-seasonally adjusted CPI-W is a measure of prices paid by
urban wage earners and clerical workers published by the U.S. Bureau of
Labor Statistics.\73\ Among other uses, the CPI-W is used by the U.S.
Social Security Administration to make ``cost-of-living adjustments''
to benefit payments.\74\ There are other consumer price indices that
could be considered for updating and indexing thresholds within FDIC
regulations. The CPI-W is calculated based on the consumption patterns
of urban wage earners and clerical workers whereas the Consumer Price
Index for All Urban Consumers (CPI-U) is calculated based on the
consumption patterns of a broader set of urban consumers. The Chained
CPI-U (C-CPI-U) reflects the consumption patterns of the broader set of
urban consumers and is designed to account for consumer substitution
between item categories. The Producer Price Index (PPI), also published
by the U.S. Bureau of Labor Statistics, tracks the selling prices
received by domestic producers.\75\ The Personal Consumption
Expenditures Price Index (PCEPI) is published by the U.S. Bureau of
Economic Analysis and tracks the prices of goods and services purchased
by consumers in the United States.\76\ The U.S. Bureau of Economic
Analysis also publishes a broader domestic price index, the Gross
Domestic Purchases Price Index (GDPPI), which tracks prices of goods
and services purchased by U.S. residents.\77\
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\73\ See U.S. Bureau of Labor Statistics, CPI-Urban Wage Earners
and Clerical Workers (Current Series)), available at <a href="https://datawww.bls.gov/PDQWebhelp/one_screen/cw.htm">https://datawww.bls.gov/PDQWebhelp/one_screen/cw.htm</a>.
\74\ See Social Security Administration, Latest Cost of Living
Adjustments, available at <a href="https://www.ssa.gov/OACT/COLA/latestCOLA.html">https://www.ssa.gov/OACT/COLA/latestCOLA.html</a>.
\75\ See U.S. Bureau of Labor Statistics, Producer Price Index,
available at <a href="https://www.bls.gov/ppi/">https://www.bls.gov/ppi/</a>.
\76\ See Bureau of Economic Analysis, Personal Expenditures
Price Index, available at <a href="https://www.bea.gov/data/personal-consumption-expenditures-price-index">https://www.bea.gov/data/personal-consumption-expenditures-price-index</a>.
\77\ See Bureau of Economic Analysis, Gross Domestic Purchases
Price Index, available at <a href="https://www.bea.gov/data/prices-inflation/gross-domestic-purchases-price-index">https://www.bea.gov/data/prices-inflation/gross-domestic-purchases-price-index</a>.
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In aggregate, there is not a significant difference in changes over
time between these various consumer price indices. Each of the consumer
price indices discussed above has increased between 55 percent and 67
percent over the last two decades and has increased between 87 percent
and 111 percent over the last three decades.\78\
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\78\ C-CPI-U has been published since 2000 and is not included
in the three-decade comparison.
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One advantage of using the CPI-W for updating and indexing
thresholds within FDIC regulations is that the CPI-W is already
commonly used for this purpose, including by the FDIC and other Federal
agencies.\79\ One advantage of using other price indices, such as the
CPI-U, C-CPI-U, PPI, PCEPI, and GDPPI, may be that they are based on
consumption patterns of a broader set of consumers, and, in some cases,
may adjust for substitutions in consumption patterns. Use of price
indices that are based on consumption patterns of a broader set of
consumers could be more responsive to both household and business
credit expansion relative to the CPI-W, which may be more reflective of
the types of activities typically financed through the banking industry
and therefore a potentially more relevant measure for revising
thresholds. However, these alternatives are less frequently used by the
FDIC and other Federal agencies and may be less familiar to the public.
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\79\ See Sec. 345.12(u)(2) of appendix G to 12 CFR part 345;
see also 12 CFR 1003.2(g)(1)(i).
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Question 18: What would be the advantages and disadvantages of
using the CPI-W as the reference index under the proposed indexing
methodology? What would be the advantages and disadvantages of using
other potential indices for updating and indexing thresholds within
FDIC regulations? Are there other consumer price indices that should be
considered for updating and indexing thresholds within FDIC
regulations? If so, please explain the advantages and disadvantages of
those indices relative to the CPI-W and the alternatives described
above.
In addition to the consumer price indices discussed above, the U.S.
Bureau of Labor Statistics and U.S. Bureau of Economic Analysis also
publish ``core'' versions of their respective consumer price indices,
which exclude prices for food and energy, as prices in those categories
tend to be more volatile. Core price indices are often used by monetary
policy authorities, such as the Board of Governors of the Federal
Reserve System in seeking to understand underlying, longer-term
inflation dynamics. However, core price indices, by their nature as
price indices focusing on a subset of consumer prices, do not
[[Page 35459]]
provide as complete of a picture of inflation as compared to broader
indices and may miss changing trends such as food and energy prices.
One advantage of using the CPI-W for updating and indexing thresholds
within FDIC regulations, as opposed to the core CPI-W or other core
price indices, is that the CPI-W is already commonly referenced,
including by FDIC regulations. Another advantage of the CPI-W relative
to the core CPI-W or other core price indices is that the CPI-W
provides a broader representation of consumer price inflation, making
its use as an index more appropriate for thresholds that are updated to
reflect inflation at a cadence of once-per-year or once-every-two-years
pace, as under the proposal. Using a core index for purposes of
updating thresholds would not provide a full reflection of price
changes over these time periods, since core indexes are designed to
reduce the amount of volatility in the price levels they measure. Using
a core index over a one- and two-year cadence may therefore not
maintain thresholds in real terms over time.
Question 19: What would be the advantages and disadvantages of
using core consumer price indices for purposes of updating and indexing
thresholds within FDIC regulations relative to using indices that are
not limited to core prices?
The U.S. Bureau of Labor Statistics provides a non-seasonally
adjusted and seasonally adjusted version of the CPI-W series. The
seasonally adjusted data adjust for recurring seasonal price trends,
due to weather, holidays, etc., and are the preferred measure for
examining short-term (less than a year) price trends in the
economy.\80\ By comparison, the non-adjusted data do not include
adjustments for recurring seasonal price trends and reflect all prices
that consumers pay, including as a result of seasonal patterns. The
proposal would adjust thresholds in FDIC regulations at the end of
every two-year period with the potential for an interim adjustment in
the intervening year if non-seasonally adjusted inflation exceeds 8
percent. The FDIC believes use of the non-seasonally adjusted CPI-W
series would serve as a more appropriate reference than the seasonally
adjusted CPI-W series for the purpose of updating and indexing
thresholds within FDIC regulations because such adjustments are
intended to reflect longer-term changes in inflation.
---------------------------------------------------------------------------
\80\ See U.S. Bureau of Labor Statistics, Consumer Price Index
Seasonally Adjusted Data, available at <a href="https://www.bls.gov/cpi/seasonal-adjustment/using-seasonally-adjusted-data.htm">https://www.bls.gov/cpi/seasonal-adjustment/using-seasonally-adjusted-data.htm</a>.
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Question 20: What would be the advantages and disadvantages of
using seasonally adjusted price indices for updating and indexing
thresholds within FDIC regulations? What would be the advantages and
disadvantages of using non-seasonally adjusted price indices?
In addition to consumer price indices, the FDIC considered the use
of other types of indices to update and index the regulatory thresholds
subject to this proposal. The U.S. Bureau of Economic Analysis
publishes a Gross Domestic Product (GDP) data series on a quarterly
basis, which measures U.S. economic activity.\81\ Historically, the
U.S. economy has expanded in real terms (outside of recessions), which
means the (nominal) GDP index has typically increased at a faster rate
than the consumer price indices discussed above.\82\ For example, U.S.
nominal GDP has increased by 299 percent over the past three decades,
compared to a 111 percent increase in the CPI-W over the same period.
Therefore, if GDP were used as the basis for updating and indexing
thresholds within FDIC regulations, such thresholds would be initially
updated to a higher amount and, going forward, would likely increase at
a faster rate than under the proposal.
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\81\ U.S. Bureau of Labor Statistics, Table 1.1.5. Gross
Domestic Product, line 1, available at <a href="https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categories=survey">https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categories=survey</a>.
\82\ Changes in GDP (sometimes referred to as changes in nominal
GDP) can be broken down into changes in prices inflation plus
changes in real economic output (real GDP).
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Using changes in inflation as a basis for updating and indexing
thresholds within FDIC regulations would have the advantage of
specifically targeting price levels to ensure dollar thresholds remain
relatively consistent, in real terms, over time. However, financial
activity is closely related to broader macroeconomic activity and tends
to grow together with the economy. Using GDP as a basis for updating
and indexing thresholds may provide for thresholds that more closely
reflect the banking industry's proportional role in the economy.
However, a disadvantage of using GDP within an indexing methodology is
that it is subject to business cycle fluctuations which may not always
correspond with price level changes, such as in a ``stagflationary''
environment where stagnant economic growth occurs simultaneously with
inflation. Using GDP as a basis for threshold adjustments during such a
scenario may result in thresholds that are not revised as price levels
increase, potentially limiting the ability to maintain dollar-based
threshold levels in real terms over time. Another disadvantage of using
GDP within an indexing methodology is that it is a lagging indicator
that is frequently revised. As such, depending on the frequency of
revisions, thresholds could be revised according to a percentage change
in GDP that is subsequently revised, thereby limiting the indexing
methodology's accuracy as well as the durability of revised threshold
amounts in maintaining their levels in real terms. Additionally, the
U.S. economy is complex and measures of GDP can consider a wider range
of factors than changes in price level alone. As such, GDP may be an
inappropriate measure to revise thresholds relative to inflation.
Question 21: What would be the advantages and disadvantages of
using GDP for updating and indexing thresholds within FDIC regulations?
The FDIC also considered updating and indexing thresholds within
FDIC regulations using measures of growth in banking or financial
sector activity. The banking sector and the broader financial sector
have grown faster than GDP over the last several decades. For example,
total U.S. household financial assets have grown by approximately 502
percent over the last three decades.\83\ Total bank assets for all
FDIC-insured institutions have similarly grown by approximately 380
percent over the last three decades, while total bank deposits at those
institutions have grown by approximately 432 percent over the same
period.\84\ If thresholds within FDIC regulations were updated based on
growth in banking or financial sector activity, the proposed thresholds
would be several times larger than those suggested by the growth in
consumer prices. Although it is difficult to predict future growth in
the banking industry over the long-term, if recent growth rates
continue, indexing thresholds within FDIC regulations using measures of
banking activity and financial sector activity would result in
thresholds growing faster relative to indexing based on consumer
prices. Using a measure of banking or financial sector activity as a
basis for which thresholds are revised
[[Page 35460]]
would have the advantage of more closely aligning threshold levels with
changes in the banking industry and the relevance of banks in
supporting broader economic activity. For example, the FDIC could use
changes in total assets of all IDIs as a measure to revise thresholds
within FDIC regulations, which would ensure such thresholds remain
relevant to banking industry dynamics. Using growth in the size of the
banking industry to adjust thresholds in FDIC regulations would account
for growth trends that are specific to the banking industry and may be
better correlated with the characteristics of banks that affect the
costs and benefits of particular regulations.
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\83\ See Financial Accounts of the United States (Z.1) published
by the Board of Governors of the Federal Reserve System at <a href="https://www.federalreserve.gov/releases/z1/">https://www.federalreserve.gov/releases/z1/</a>.
\84\ See FDIC Quarterly Banking Profile ending December 31, 1994
(indicating total assets of $5.02 trillion and total deposits of
$3.6 trillion) relative to FDIC Quarterly Banking Profile ending
December 31, 2024 (indicating total assets of $24.1 trillion and
total deposits of $19.2 trillion), available at <a href="https://www.fdic.gov/quarterly-banking-profile/past-quarterly-banking-profiles">https://www.fdic.gov/quarterly-banking-profile/past-quarterly-banking-profiles</a>.
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Overall, using growth in the size of the banking industry to adjust
thresholds in FDIC regulations would keep the proportion of impacted
banks relatively constant since the threshold would increase with
industry size. However, a disadvantage of this approach is that many
thresholds are intended to apply to banks of a certain size, not
necessarily a fixed proportion of the industry. As the banking industry
grows, the increase in thresholds may outpace actual changes in size
and risk profile for an individual institution. Further, aggregate
changes in industry growth may not always be representative of, or
broadly consistent with, changes occurring across banks of different
size ranges. For example, total banking industry assets grew roughly
$5.45 trillion, or 29 percent, from year-end 2019 to year-end 2024.\85\
By comparison, total assets of banks with assets between $1 billion to
$100 billion increased by $963 billion, or 19 percent, over the same
time period, while total assets of banks with assets less than $1
billion decreased by $33 billion, or 3 percent.
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\85\ See FDIC Quarterly Banking Profile for December 31, 2024,
and December 31, 2019, available at <a href="https://www.fdic.gov/quarterly-banking-profile/past-quarterly-banking-profiles">https://www.fdic.gov/quarterly-banking-profile/past-quarterly-banking-profiles</a>.
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Another disadvantage of this approach is that banking or financial
sector activity reflects both real growth and changes in inflation.
Accordingly, the measure of growth used to adjust and index regulatory
thresholds would have to be discounted for inflation in order to
capture actual, activity-driven trends within the banking industry. One
method of discounting banking sector growth for inflation would be to
inflation-adjust total assets prior to measuring total asset growth.
Under this approach, total real growth in banking industry assets for
all FDIC-insured institutions that accounts for inflation from 1995-
2005 would be 128 percent compared to 380 percent from nominal
growth.\86\ Compared to the use of inflation alone, such an approach
would be relatively more complex and less transparent to banks and
market participants.
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\86\ See total assets reported for all FDIC-insured institutions
in FDIC Quarterly Banking Profile ending December 31, 2024, and
December 31, 1994, both inflation-adjusted using the non-seasonally
adjusted CPI-W available at <a href="https://fred.stlouisfed.org/series/CWUR0000SA0L1E">https://fred.stlouisfed.org/series/CWUR0000SA0L1E</a>.
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Another disadvantage of this approach is that certain thresholds,
including several as part of this proposal, are set at levels that are
unrelated to asset size. Using total assets as a basis for revising
thresholds may therefore result in threshold revisions that are
inappropriate and disadvantageous for certain banks. By contrast, using
inflation as a basis for revising thresholds would allow for a more
simple, transparent, and consistent approach across varying thresholds
and banks of varying sizes.
Question 22: What would be the advantages and disadvantages of
using measures of banking or financial sector activity for updating and
indexing thresholds within FDIC regulations?
The table below presents a comparison of growth in the various
indices described above across a period of three decades. Growth in
total assets across the banking industry exhibited the largest
percentage change, followed by GDP growth. Seasonal adjustments, for
those indices that applied them as an alternative measurement, only
increased or decreased percentage changes slightly compared to their
counterparts without seasonal adjustments.
----------------------------------------------------------------------------------------------------------------
Percentage change
---------------------------------------------------
1995-2005 2005-2015 2015-2025 1995-2025
----------------------------------------------------------------------------------------------------------------
CPI-W:
Non-seasonally adjusted................................. 26.0 22.5 36.3 110.5
Seasonally adjusted..................................... 26.5 22.6 36.3 111.3
Core CPI-W:
Non-seasonally adjusted................................. 23.5 20.5 35.8 102.1
Seasonally adjusted..................................... 23.7 20.5 35.8 102.4
CPI-U:
Non-seasonally adjusted................................. 26.9 22.6 35.9 111.4
Seasonally adjusted..................................... 27.3 22.5 35.9 112.0
C-CPI-U: *
Non-seasonally adjusted \1\............................. N/A 19.9 32.1 N/A
Core CPI-U:
Non-seasonally adjusted................................. 25.0 20.6 35.4 104.1
Seasonally adjusted..................................... 25.2 20.5 35.4 104.2
PCEPI:
Non-seasonally adjusted \2\............................. 21.2 18.5 N/A N/A
Seasonally adjusted..................................... 20.5 19.5 29.6 86.5
Core PCEPI:
Non-seasonally adjusted \2\............................. 18.9 19.1 N/A N/A
Seasonally adjusted..................................... 18.9 18.2 29.3 81.6
PPI, all commodities: *
Non-seasonally adjusted................................. 22.8 27.2 34.0 109.4
GDPPI....................................................... 20.2 22.4 27.1 87.0
GDP:
Non-seasonally adjusted................................. 69.5 41.8 66.0 299.0
Seasonally adjusted..................................... 69.7 41.5 66.0 298.5
Banking Industry Assets:
Nominal growth.......................................... 101.2 53.9 55.0 379.9
[[Page 35461]]
Real growth \3\......................................... 59.7 25.6 13.7 127.9
----------------------------------------------------------------------------------------------------------------
Percentage changes are based on beginning-of-year measurements. For example, the percentage changes for 1995-
2005 are based on January 1, 1995, through January 1, 2005. Some measurements use end-of-year balances from
the preceding year (e.g., December 31, 1994, was used for 1995) to compute the percentage changes.
Source data for the indices vary in intervals (monthly, quarterly, annual) but should not affect the change per
10-year span presented above.
Percent change 1995-2025 does not equal the arithmetic sum of the 10-year percent change columns due to
compounding.
* Data for these indices was only available without seasonal adjustments.
\1\ Data for non-seasonally adjusted C-CPI-U prior to 1999 is not available.
\2\ Data for PCEPI and Core PCEPI, non-seasonally adjusted, after January 1, 2024, is not available.
\3\ Inflation adjusted using CPI-W, non-seasonally adjusted.
2. Adjustment Frequency Within the Indexing Methodology
Under the proposal, thresholds would generally be adjusted every
two years. In addition, thresholds would be adjusted if the cumulative
change in non-seasonally adjusted CPI-W since the last adjustment
exceeds 8 percent.
Certain other FDIC and other Federal regulations that reference the
CPI-W require threshold adjustments on a more frequent basis. For
example, the regulations implementing the Community Reinvestment Act
and the Home Mortgage Disclosure Act require adjustments to thresholds
based on the year-to-year change in the average CPI-W for each 12-month
period.\87\
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\87\ See Sec. 345.12(u)(2) of appendix G to 12 CFR part 345;
see also 12 CFR 1003.2(g)(1)(i).
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The FDIC considered various other adjustment frequencies including
quarterly, semi-annually, annually, every 3 years, and every 5 years.
Thresholds updated based on a shorter adjustment frequency (e.g.,
quarterly) would have the advantage of consistently reflecting changes
in inflation and not becoming outdated during the periods between
adjustments. For institution-level thresholds, a shorter adjustment
frequency would reduce the number of institutions that cross a
threshold between adjustments solely based on growth consistent in
consumer prices. For most of the index options, including for the CPI-
W, an adjustment frequency as short as monthly would be feasible based
on data availability. A disadvantage of shorter update frequencies is
that it can lead to confusion for institutions and uncertainty
regarding the applicability of various rules. Institutions also would
have to more routinely update systems and compliance programs to
reflect more frequently adjusted thresholds.
Longer adjustment frequencies (e.g., every 3 years, every 5 years)
generally have the opposite advantages and disadvantages as compared to
the shorter adjustment frequencies. Longer adjustment frequencies would
lessen the burden involved with tracking threshold changes. However,
prolonged adjustments heighten the potential for banking organizations
to cross thresholds between adjustments due to inflation.
The proposal would use a two-year period for measuring inflation,
which is intended to provide an appropriate cadence for capturing
meaningful changes in inflation on a timely basis while balancing the
frequency in which thresholds revisions would be amended. Additionally,
by providing for adjustments in intervening years where inflation
exceeds 8 percent, the proposal would help mitigate the potential for
institutions to cross one or more thresholds when inflation increases
significantly during a two-year period. In the event thresholds were
increased in two consecutive years due to inflation exceeding 8
percent, the adjustment period would reset and the next increase would
occur after two years, unless inflation exceeded 8 percent again the
following year.
Question 23: What would be the advantages and disadvantages of
revising thresholds through ad-hoc review versus regular, periodic
adjustments through a pre-determined indexing methodology as provided
under the proposal?
Question 24: What would be the advantages and disadvantages of
using shorter or longer adjustment frequencies within the indexing
methodology for thresholds in FDIC regulations? For example, the FDIC
could adjust thresholds at the end of every one-year period, or it
could adjust thresholds at the end of every three-year, five-year or
ten-year period. Would there be unintended consequences of using a
longer period, such as impacting the ability of the indexing
methodology to preserve thresholds in real terms on an inflation-
adjusted basis? Alternatively, would there be unintended consequences
of using a shorter period, such as adding undue complexity or burden?
Question 25: What would be the advantages and disadvantages of
providing for a potential adjustment in intervening year(s) if the
cumulative change in the non-seasonally adjusted CPI-W since the last
adjustment exceeds 8 percent? Is there a level other than 8 percent
that should be considered to require an adjustment in the intervening
year(s)? If so, what would be the advantages and disadvantages of such
a level relative to the 8 percent level under the proposal? How should
the FDIC balance the objective of reflecting periods of significant
inflation with the complexity of allowing for interim adjustments
during the two-year cadence?
3. Milestone Approach
The FDIC considered an alternative approach that would adjust
thresholds annually based on the change in inflation only if an
inflation-adjusted threshold reaches a pre-determined level. Under this
alternative, for each regulatory threshold, the FDIC would calculate a
potential adjusted threshold based on inflation measured at the end of
each year relative to when a threshold was last adjusted. However, a
threshold would only be adjusted higher if the potential adjusted
threshold exceeded a certain milestone amount.
Under this alternative, milestone amounts could be tailored for
each threshold to reflect a material change as a result of inflation.
For example, for thresholds between $100 million and $1 billion,
milestone amounts could occur every $10 million. Under this approach,
if a regulatory threshold is $500 million today, it could be adjusted
higher only if the cumulative change in inflation, as measured at the
end of a year relative to when a threshold was implemented or last
revised, would result in an adjusted threshold of $510 million or
higher. Milestone amounts could similarly be set at higher levels for
larger thresholds. For example, for thresholds between $1 billion and
$10 billion, milestone amounts could occur every $100 million; between
$10 billion and $100
[[Page 35462]]
billion, milestone amounts could occur every $1 billion; and between
$100 billion and $1 trillion, milestone amounts could occur every $10
billion.
The milestone approach would be similar to a rounding methodology
where adjusted thresholds are rounded to the nearest number with two
significant digits that is also less than the unrounded adjusted
threshold. Relative to an alternative without rounding, the milestone
approach would have the advantage of limiting threshold changes to a
degree of materiality, eliminating potential smaller, immaterial
changes. Additionally, the approach would support transparency and
predictability as potential future to threshold amounts would be known
in advance, subject to changes in inflation. However, the approach may
lead to confusion and uncertainty, as it may be challenging for the
public to track when increases in various thresholds will be triggered.
Question 26: What would be the advantages and disadvantages to
using a milestone approach compared to the proposed indexing
methodology?
Question 27: If the FDIC were to implement a milestone approach to
adjust thresholds in future periods for purposes of any final rule to
implement the proposal, should the milestone approach be combined with
a minimum cumulative change in inflation level (e.g., 8 percent) to
help ensure that thresholds adjustments keep pace with significant
periods of inflation? What would be the advantages and disadvantages of
this approach relative to both the milestone approach described above
and the indexing methodology set forth in the proposal?
4. Degree of Automation in Indexing
The proposal provides that the FDIC would, every two years, publish
a Federal Register notice announcing thresholds adjustments based on a
pre-determined methodology. The FDIC has considered an alternative that
would enhance the degree of automation by directly incorporating the
indexing calculation into each regulatory threshold. Under this
approach a threshold would be defined within regulation as a starting
value multiplied by an index value. For example, part 347 currently
contains a $60 million threshold for aggregate underwriting commitment
limits applicable to foreign organizations held by insured State
nonmember banks. This threshold was established in 1998. In January
1998, the CPI-W had an index level of 158.4. The direct reference
approach would redefine the threshold to be equal to the most recent
index level of the CPI-W multiplied by a starting value of $380,000,
which would correspond to the dollar value needed to arrive at a
threshold of approximately $60 million when multiplied by the CPI-
W.\88\ The CPI-W value as of May 2025 was 314.839.\89\ Therefore, under
the direct reference approach, the current dollar value of the
threshold would be $119.64 million.\90\ Under this approach, the
threshold would automatically update again once the June 2025 CPI-W
value was released. The FDIC could also use this same approach to mimic
the proposal, in which the actual threshold would rise every two years
and would be rounded. The FDIC could also post the thresholds on its
website and notify institutions and the public when they are increased.
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\88\ Specifically: $950,000 * 158.4 = $150.48 million.
\89\ As of June 12, 2025.
\90\ $950,000 * 314.839 = $299.10 million.
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The direct reference approach has the advantage of enhancing the
automation provided under the proposal, which could help contribute to
a relatively more streamlined adjustment process. However, a
disadvantage of the direct reference approach is it may be slightly
less clear for members of the public or regulated entities. While the
FDIC could post the thresholds on its website, the revised threshold
amounts would not be in the Code of Federal Regulations.
Question 28: What would be the advantages and disadvantages of
using the direct reference approach to index thresholds in FDIC
regulations?
Question 29: Are there other automated approaches (e.g., fixed
dollar amounts or percentages) that may be appropriate?
IV. Economic Analysis
A. Expected Effects
As discussed above, the proposal would update certain dollar
thresholds within the FDIC's regulations generally to incorporate
changes in inflation since the thresholds were initially implemented or
most recently adjusted. Further, the proposed rule would implement an
indexing methodology to adjust thresholds in future periods.
If promulgated, the proposed rule would affect institutions with a
wide range of sizes and risk profiles. To estimate the expected effects
of the proposal, this analysis considers all relevant regulations and
guidance applicable to these institutions, as well as information on
the financial condition of all IDIs as of the quarter ending March 31,
2025.
Based on the FDIC's analysis, the FDIC expects the proposal could
affect IDIs, individuals and other entities as follows:
<bullet> Part 303: The requirements in part 303 generally apply to
all IDIs and any other person or entity submitting an application or
filing to the FDIC, as provided for under part 303. As of March 31,
2025, the latest period for which data is available, there were 4,471
IDIs. However, the FDIC does not have the data necessary to estimate
the number non-IDIs that may be subject to the requirements of part
303.
<bullet> Part 335: The requirements of part 335 apply generally to
all securities issued by FDIC-supervised depository institutions that
are subject to the registration requirements of section 12(b) or 12(g)
of the Securities Exchange Act of 1934.\91\ As of March 31, 2025, the
FDIC was the primary federal supervisor for 2,835 IDIs.
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\91\ 15 U.S.C. 78 et seq.
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<bullet> Part 340: The requirements in part 340 generally apply to
persons (both individuals and entities) seeking to purchase the assets
of failed IDIs in FDIC conservatorship or receivership. Using data from
the period 2019-23, as well as internal estimates and analysis, of part
340 Purchaser Eligibility Certification (PEC340) submissions, the FDIC
estimates approximately 140 PEC340 submissions annually from covered
individuals and other entities.
<bullet> Part 347: The requirements in part 347 generally apply to
FDIC-supervised IDIs and foreign banks with uninsured U.S. bank branch
subsidiaries or any foreign bank seeking to establish an uninsured U.S.
bank branch subsidiary. As of March 31, 2025, 124 FDIC-supervised IDIs
reported having one or more uninsured U.S. bank branches, for a total
of 180 uninsured U.S. bank branches.
<bullet> Part 363: The requirements of part 363 generally apply to
all IDIs. Part 363 generally provides annual independent audit and
reporting requirements for such institutions. As noted above, as of
March 31, 2025, there were 4,471 IDIs.
<bullet> Part 380: The requirements in part 380 generally apply to
persons (individuals and entities) interested in buying assets of
failed financial companies in FDIC conservatorship or receivership
under Orderly Liquidation Authority. Using internal estimates and
analysis, the FDIC estimates approximately 66 part 380 Purchaser
Eligibility Certification (PEC380) submissions annually from covered
persons.\92\
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\92\ Both parts 340 and 380 require potential participants in
asset sales by the FDIC to certify their eligibility with the FDIC
prior to participation. Potential participants interested in bidding
on assets of a failed IDI must file a PEC340 associated with part
340, while those interested in bidding on covered financial company
assets must file a PEC380 under part 380.
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[[Page 35463]]
B. Estimates of the Number of Directly Affected Entities
This section discusses the expected effects of the proposal
separately under each part of the FDIC's regulations that includes a
threshold that would be subject to an inflation-based adjustment.
1. Part 303
Section 303.227 discusses the criteria for de minimis exceptions
for purposes of section 19 of the FDI Act. These criteria include
$2,500 and $1,000 thresholds for certain offenses that are exempt from
the requirements to submit a section 19 application to the FDIC. The
proposed rule would update these thresholds from $2,500 and $1,000 to
$3,500 and $1,225, respectively.
The FDIC used the historical annual number of institutions that
have submitted a section 19 application as a conservative estimate of
the number of entities that would be affected by this amendment. Over
the six-year period ending on March 31, 2025, the FDIC received 328
applications under section 19, or approximately 55 applications
annually. Section 19 applications can be submitted by individuals as
well as IDIs. The FDIC does not have the information necessary to
attribute each application submitted by an individual under section 19
made over this period to a particular IDI. Accordingly, for the
purposes of this analysis, the FDIC conservatively estimates that each
section 19 application is submitted by a unique IDI.
An increase in the thresholds under the de minimis exception
framework would increase the number of persons subject to the
exceptions in 12 CFR 303.227. Given the 40-percent increase in the
general de minimis threshold of $2,500 to $3,500 and the 22.5-percent
increase in the de minimis threshold for small-dollar theft of $1,000
to $1,225, the FDIC assumes a corresponding decrease of between 22.5
percent and 40 percent in the estimated number of section 19
applications. Therefore, the FDIC estimates that the proposed rule
could reduce the annual number of IDIs submitting section 19
applications from 55 to between 43 and 33 IDIs (rounded to the nearest
IDI).\93\
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\93\ 55 IDIs estimated under the current rule. A 22.5-percent
reduction, corresponding to an increase in the de minimis small-
dollar theft threshold from $1,000 to $1,225, would result in 43
IDIs estimated under the proposal. A 40-percent reduction,
corresponding to an increase in the general de minimis exceptions
threshold from $2,500 to $3,500, would result in 33 IDIs estimated
under the proposal.
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The proposed rule would also establish requirements to amend
certain dollar thresholds in part 303 described above in future
periods. The FDIC does not have the information necessary to precisely
estimate the number of entities and the number of applications under
part 303 that would be affected by the periodic adjustments to these
dollar thresholds in the proposed rule as a result of future changes in
inflation. However, since the proposed rule would more closely align
these dollar thresholds with their real values over time, the FDIC
believes that it would mitigate unintended changes in the volume of
covered entities in future periods.
2. Part 335
Section 335.801 provides a materiality threshold for disclosures
related to extensions of credit to insiders. Under this section,
extensions of credit to such individuals that are in excess of 10
percent of the equity capital accounts of the bank or State savings
association or $5 million, whichever is less, shall be deemed material
and shall be disclosed in addition to any other required disclosure.
The proposed rule would update the $5 million threshold to $10 million.
To estimate the number of institutions that would be directly
affected by this change, the FDIC identified nine IDIs \94\ that are
subject to the requirements under the 1934 Securities Exchange Act and
are required to make additional disclosures related to loans to
insiders (by virtue of being traded on a national exchange or having
more than 2,000 shareholders of record and $10 million in assets). The
FDIC does not have the data necessary to quantify the indebtedness of
insiders at these institutions such that it would be able to identify
which disclosures would no longer be required by virtue of the
increased materiality threshold under the proposal. Therefore, the FDIC
conservatively estimates that nine IDIs may be affected by the
threshold adjustments in part 335 under the proposed rule.
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\94\ See List of FDIC-Supervised Banks Filing under the
Securities Exchange Act, available at <a href="https://www.fdic.gov/analysis/list-fdic-supervised-banks-filing-under-securities-exchange-act">https://www.fdic.gov/analysis/list-fdic-supervised-banks-filing-under-securities-exchange-act</a>.
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The proposed rule would also establish requirements to amend the
dollar thresholds in part 335 described above in future periods. The
FDIC does not have the information necessary to precisely estimate the
number of entities that would be affected by the ongoing adjustments to
these dollar thresholds as a result of future changes in inflation.
However, since the proposed rule would more closely align these dollar
thresholds with their real values over time, the FDIC believes that it
would mitigate unintended changes in the volume of covered entities in
future periods.
3. Part 340
Section 340.4 relates to the definition of ``substantial loss'' in
the context of restrictions on the sale of failed bank assets. A person
may not acquire any assets of a failed institution from the FDIC if the
person or associated person has participated, as an officer or director
of a failed institution or of an affiliate of a failed institution, in
a material way in one or more transaction(s) that caused a substantial
loss to that failed institution.\95\ Section 340.2 defines
``substantial loss'' using a threshold of greater than $50,000 in
losses, unpaid final judgments, delinquent obligations, or deficiency
balance following a foreclosure. The proposed rule would revise the
greater than $50,000 threshold to greater than $100,000.
---------------------------------------------------------------------------
\95\ Additional qualitative criteria are available in the
regulation.
---------------------------------------------------------------------------
The FDIC does not have the data necessary to estimate the number of
persons who would submit PECs if the proposed thresholds defining
substantial losses were increased to greater than $100,000. To estimate
the number of persons who would be affected by the proposal, the FDIC
analyzed historical trends for annual part 340 Purchaser Eligibility
Certification (PEC340) submissions, based on information from 2019
through 2023. This analysis found the FDIC receives approximately 140
PEC340 submissions annually from individuals or entities. The FDIC does
not have the data to estimate the number of unique entities that would
submit a PEC; therefore, the FDIC conservatively estimates that each
PEC is submitted by a unique entity.
An increase in the threshold would reduce the number of persons
subject to the restrictions of part 340 by removing persons involved in
transactions resulting in losses of greater than $50,000 to greater
than $100,000. Given the 100 percent increase in the threshold, the
FDIC assumes a corresponding 100 percent increase (rounded to the
nearest whole number of persons) \96\ in the estimated number of
persons that would be expected to submit PECs under 12 CFR 340.7. This
results in an estimated 280 entities that
[[Page 35464]]
would submit under the proposed rule, an increase of 140 from the
current rule.
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\96\ ($100,000-$50,000)/$50,000 = 100 percent.
---------------------------------------------------------------------------
The proposed rule would also adjust the dollar thresholds in part
340 in future periods using an indexing methodology. The FDIC does not
have the information necessary to precisely estimate the number of
entities that would be affected by future adjustments to these dollar
thresholds as a result of future changes in inflation. However, since
the proposed rule would more closely align these dollar thresholds with
their real values over time, the FDIC believes that it would mitigate
unintended changes in the volume of covered entities in future periods.
4. Part 347
Section 347.111 contains two thresholds that would be adjusted
under the proposal. The first is for aggregate underwriting commitment
limits applicable to foreign organizations held by insured State
nonmember banks, which currently may not exceed the lesser of $60
million or 25 percent of the bank's Tier 1 capital. The proposal would
increase the current $60 million threshold to $120 million. The second
threshold in 12 CFR 347.111 is for distribution and dealing limits
applicable to foreign organizations held by insured State nonmember
banks, which currently may not exceed the lesser of $30 million or 5
percent of the bank's Tier 1 capital. The proposal would increase the
current $30 million threshold to $60 million.
To estimate the number of institutions potentially affected by
these changes, the FDIC used data from the Federal Reserve's National
Information Center (NIC) to identify the number of foreign entities
with a parent company that is an IDI. From this data, the FDIC was able
to identify 31 IDIs with foreign subsidiaries. Of these, five are State
nonmember banks and would be subject to part 347. The FDIC does not
have the data necessary to (1) estimate the number of IDIs that would
be subject to these restrictions, and (2) understand the business
models of these IDIs and their propensity to find and make business
deals that would be subject to these restrictions under the current and
proposed rule. Therefore, the FDIC conservatively estimates that all
five State nonmember banks would be affected by these changes.
The proposed rule would also adjust the dollar thresholds in part
347 in future periods using an indexing methodology. The FDIC does not
have the information necessary to precisely estimate the number of
entities that would be affected by future adjustments to these dollar
thresholds as a result of future changes in inflation. However, since
the proposed rule would more closely align these dollar thresholds with
their real values over time, the FDIC believes that it would mitigate
unintended changes in the volume of covered entities in future periods.
5. Part 363
Part 363 contains 24 different thresholds that would be updated by
the proposed rule, the applicability of which are based on an IDI's
total consolidated assets at the beginning of its fiscal year.
For brevity, this analysis groups provisions with the same amended
dollar threshold level together to address estimated changes in covered
institutions. Under the proposed rule, the total assets thresholds for
the following requirements in part 363 would be raised from $500
million to $1 billion:
<bullet> 12 CFR 363.1(a), which provides the general applicability
criteria for part 363.
<bullet> 12 CFR 363. 5(a)(2), which establishes minimum audit
committee requirements for IDIs with assets of greater than $500
million but less than $1 billion. This threshold is referenced in part
363, appendix A, paragraphs 27, 30(c), and 35(a).
As of March 31, 2025, there were 774 IDIs that report total assets
of at least $500 million and less than $1 billion. These 774 IDIs would
no longer be subject to the requirements described above as a result of
the proposal.
Under the proposed rule, the total assets thresholds for the
following requirements in part 363 would be raised from $1 billion to
$5 billion:
<bullet> 12 CFR 363.2(b)(3), which requires management to provide
an assessment of the effectiveness of ICFR as part of the part 363
annual report submission. This threshold is referenced in part 363,
appendix A, paragraphs 8A and 10, as well as part 363, appendix B,
paragraph 2(b).
<bullet> 12 CFR 363.3(b), which requires the independent public
accountant to examine, attest to, and report separately on management's
assessment of ICFR. This threshold is referenced in part 363, appendix
A, paragraph 18A, as well as part 363, appendix B, paragraph 2(b).
<bullet> 12 CFR 363.4(a)(2), which requires publicly traded IDIs to
submit copies of management's assessment of the effectiveness of ICFR
in addition to its part 363 Annual Report.
<bullet> 12 CFR 363.4(c)(3), which requires publicly traded IDIs to
submit copies of independent accountant's letters and reports.
<bullet> 12 CFR 363.5(a)(1), which establishes additional minimum
audit committee requirements for IDIs with assets of greater than $1
billion. This threshold is referenced in part 363, appendix A,
paragraphs 27, 30(b), and 35(b).
<bullet> 12 CFR 363.5(a)(2), which establishes minimum audit
committee requirements for IDIs with assets of greater than $500
million but less than $1 billion. This threshold is referenced in part
363, appendix A, paragraphs 27, 30(c), and 35(a).
As of March 31, 2025, there were 752 IDIs that report between total
assets of at least $1 billion and less than $5 billion in assets. These
752 IDIs would no longer be subject to the requirements under 12 CFR
363.2 and 363.3, as well as the audit committee requirements under 12
CFR 363.5(a)(1) as a result of the proposal.
The provisions in 12 CFR 363.4 only apply to publicly traded IDIs.
For purposes of this analysis, the FDIC conservatively estimates that
all 752 IDIs will be affected by the changes to the thresholds for
these provisions while acknowledging that fewer IDIs will be affected
by these changes.
With respect to the general audit committee requirements under 12
CFR 363.5(a)(2) of the proposed rule, the 774 IDIs currently subject to
12 CFR 363.5(a)(2)--that is, those with between $500 million and $1
billion in assets--would no longer be subject to these requirements. In
addition, the 752 IDIs with total assets of greater than $1 billion and
less than $5 billion--which are no longer subject to the requirements
under 12 CFR 363.5(a)(1), would now be subject to the requirements
under 12 CFR 363.5(a)(2). Therefore, the FDIC estimates 1,526 IDIs
would be affected by this change.\97\
---------------------------------------------------------------------------
\97\ The net change in the number of IDIs that would be subject
to these requirements from the current rule is 22, as 774 IDIs (with
total assets of at least $500 million and less than $1 billion) are
subject under the current rule, and 752 (with total assets of at
least $1 billion and less than $5 billion) would be subject under
the proposed rule. 774-752 = 22 IDIs.
---------------------------------------------------------------------------
In addition, the proposal would raise the following other asset
size thresholds in part 363:
<bullet> 12 CFR 363.5(b), which establishes additional minimum
audit committee composition requirements for IDIs with assets of
greater than $3 billion. This threshold is referenced in part 363,
appendix A, paragraph 35(c) and would be increased to $5 billion under
the proposal.
As of March 31, 2025, there are 133 IDIs that report total assets
greater than $3 billion and less than $5 billion.
[[Page 35465]]
These IDIs would no longer be subject to the requirements of 12 CFR
363.5(b) under the proposed rule. The remaining 293 IDIs--all with
total assets greater than $5 billion--would continue to be subject to
this requirement under the proposed rule.
<bullet> 12 CFR part 363, appendix A, paragraph 28(b)(4), which
discusses criteria to determine if an outside director is ``independent
of management'', including a $100,000 maximum direct and indirect
compensation threshold. The proposal would increase this compensation
threshold to $120,000.
The FDIC does not have the data necessary to estimate the number of
potential directors of IDI audit committees that this update would
affect.
The proposal would also adjust most dollar thresholds in part 363
under the indexing methodology.\98\ The FDIC does not have the
information necessary to precisely estimate the number of IDIs that
would be affected by the ongoing adjustments to these dollar thresholds
as a result of future changes in inflation. However, since the proposed
rule would more closely align these dollar thresholds with their real
values over time, the FDIC believes that it would mitigate unintended
changes in the volume of covered IDIs in future periods.
---------------------------------------------------------------------------
\98\ As discussed above, the dollar value threshold under 12 CFR
part 363, appendix A, paragraph 28(b)(4), pertaining to independence
of management would not be periodically adjusted for inflation under
the proposal. This threshold was initially adopted to follow the
parallel threshold under the listing standards of national
securities exchanges. Therefore, the revision under the proposal to
increase this threshold from $100,000 to $120,000 would bring it
into alignment with these parallel thresholds. See Nasdaq Stock
Market Rules, Rule 5605(a)(2), ``Definition of Independence;'' New
York Stock Exchange Listed Company Manual, section 303A.02(b)(ii),
``Independence Tests.''
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6. Part 380
As discussed above, 12 CFR 380.13 provides a definition of
``substantial loss'' in the context of restrictions on the sale of
failed financial company assets. A person may not acquire any assets of
a covered financial company from the FDIC if the person or associated
person has participated, as an officer or director of a covered
financial company or of an affiliate of a covered financial company, in
a material way in one or more transaction(s) that caused a substantial
loss to that covered financial company.\99\ Section 380.13(b)(6)
defines ``substantial loss'' using a threshold of greater than $50,000
in losses, unpaid final judgments, delinquent obligations, or
deficiency balance following a foreclosure. The proposed rule would
update the greater than $50,000 threshold to greater than $100,000.
---------------------------------------------------------------------------
\99\ Additional qualitative criteria are available in the
regulation.
---------------------------------------------------------------------------
The FDIC lacks data on the number of persons who would submit PECs
if the proposed thresholds defining substantial losses were increased
to greater than $100,000. To estimate the number of persons who would
be affected by the proposed rule, the FDIC uses internal information
and analysis of the expected annual number of PEC submissions for these
persons.\100\ From this analysis, the FDIC estimates approximately 66
PEC submissions annually from covered persons. The FDIC does not have
the data to estimate the number of unique entities that would submit
PECs from this analysis. Therefore, the FDIC conservatively estimates
that each PEC is submitted by a unique entity.
---------------------------------------------------------------------------
\100\ See Office of Management and Budget, Information
Collection List, Covered Financial Company Asset Sales Prospective
Purchaser Eligibility Certification, available at <a href="https://www.reginfo.gov/public/do/PRAICList?ref_nbr=202311-3064-003">https://www.reginfo.gov/public/do/PRAICList?ref_nbr=202311-3064-003</a>.
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The 100-percent proposed increase in the thresholds would likely
decrease the number of persons subject to the restrictions in part 380.
Given the 100-percent increase in the threshold the FDIC assumes a
corresponding 100-percent increase (rounded to the nearest whole number
of persons) \101\ in the estimated number of persons that would be
expected to submit PECs under 12 CFR 380.13(f). This results in an
estimated 132 entities that would need to submit under the proposed
rule, an increase of 66 from the current rule.
---------------------------------------------------------------------------
\101\ ($100,000-$50,000)/$50,000 = 100 percent.
---------------------------------------------------------------------------
The proposed rule would also adjust the dollar thresholds in part
380 in future periods using an indexing methodology. The FDIC does not
have the information necessary to precisely estimate the number of
entities that would be affected by future adjustments to these dollar
thresholds as a result of future changes in inflation. However, since
the proposed rule would more closely align these dollar thresholds with
their real values over time, the FDIC believes that it would mitigate
unintended changes in the volume of covered entities in future periods.
Summary of the Scope of Affected Entities
The following table summarizes the FDIC's preliminary estimates of
the scope of entities affected by the proposed changes in this
document.
Table 2--Summary of Estimated Changes in the Number of Covered Entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Estimated
current Preliminary preliminary Change in number
FDIC regulation Section Current threshold number of recommended number of of covered
covered threshold covered entities (proposed
entities entities minus current) **
--------------------------------------------------------------------------------------------------------------------------------------------------------
Part 303--Filing Procedures.... 303.227...................... $2,500/$1,000..... 55 $3,500/$1,225..... 43 to 33....... -12 to -22.*
Part 335--Securities of 335.801...................... >10% of the equity 9 >10% of the equity 9.............. 0.*
Nonmember Banks and State capital accounts capital accounts
Savings Associations. or $5 million. or $10 million.
Part 340--Restrictions on Sale 340.2........................ >$50,000 losses, 140 >$100,000 losses, 280............ 140.*
of Assets of a Failed delinquent delinquent
Institution by the FDIC. obligations, obligations,
unpaid balances unpaid balances
or judgments. or judgments.
Part 347--International Banking 347.111...................... $60 million; 25% 5 $120 million...... 5.............. 0.*
of bank's Tier 1
capital.
347.111...................... $30 million; 5% of 5 $60 million....... 5.............. 0.*
bank's Tier 1
capital.
Part 363--Annual Independent 363.1........................ $500 million or 1,819 $1 billion........ 1,045.......... -774.
Audits and Reporting 363.2(b)(3).................. more. 1,045 $5 billion........ 293............ -752.
Requirements. 363.3........................ $1 billion or more 1,045 $5 billion........ 293............ -752.
$1 billion or more
363.4(a)(2) and (c)(3)....... Less than $1 3,426 Less than $5 4,178.......... 752.*
billion. billion.
[[Page 35466]]
363.5........................ $500 million or 774 $1 billion but 752............ -22.
more but less less than $5
than $1 billion. billion.
363.5........................ $1 billion or more 1,045 $5 billion........ 293............ -752.
363.5........................ More than $3 426 More than $5 293............ -133.
billion. billion.
Guideline 28(b)(4)........... $100,000.......... 1,819 $120,000.......... 1,819.......... 0.*
Part 380--Restrictions on Sale 380.13....................... >$50,000 losses, 66 >$100,000 losses, 132............ 66.*
of Assets of a Failed delinquent delinquent
Financial Company by the FDIC. obligations, obligations,
unpaid balances unpaid balances
or judgments. or judgments.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The FDIC does not have the data necessary to identify the exact number of entities affected by this threshold adjustment.
** In the final column (Change in number of covered entities), positive values represent an increase in the number of covered entities attributable to
the proposed thresholds and negative values represent a decrease in the number of covered entities.
Source: FDIC calculations.
C. Costs and Benefits of the Proposal
The amendments in this proposal would be expected to improve the
alignment between the risks intended to be addressed by a regulation
and the covered institutions to which it applies. This enhanced
alignment would likely generate positive net benefits overall by
ensuring that smaller institutions would not be unduly burdened by
regulations meant to apply to larger institutions.
If the set of institutions posing elevated risks has evolved since
the regulation's enactment, then preservation of the real value of the
thresholds through an inflation-based or other amendment may or may not
be beneficial. For example, if risk profiles of institutions evolved
since a regulation's enactment such that a broader set of institutions
belonged in a higher risk category, then inflation-induced scoping in
of these institutions may be inappropriately capturing the relevant
risk. However, in that case, it would likely be appropriate for the
FDIC to reevaluate the threshold and regulation more broadly, rather
than continuing to rely on unadjusted threshold levels.
More generally, the proposal's benefits for institutions that were
covered under one or more of the regulations' current thresholds but
not covered under the proposed thresholds may be approximately equal to
the cost-savings from reduced compliance costs under the current
thresholds, along with increased lending and economic activity
resulting from lower compliance costs. The proposal's costs to these
institutions, and to the banking industry and broader financial system,
may be a reduction in safety and soundness. However, since the proposed
rule would more closely align dollar thresholds with their real values
over time, the impact on safety and soundness of realigning these
thresholds is expected to be negligible and outweighed by the broader
benefits of this proposal.
Institutions that move from out-of-scope to within scope (or vice
versa) of a particular regulation due to the proposed threshold
adjustments may incur some short-term additional costs associated with
transitioning or adjusting their internal systems, policies, and
procedures to comply with the associated regulation. The FDIC does not
have the information necessary to be able to estimate these costs, but
expects them to be relatively minor.
The FDIC has identified certain costs and benefits associated with
specific threshold adjustments, as described below.
Question 30: Do the benefits of amending the thresholds as proposed
outweigh any costs associated with how they will be updated or adjusted
in the future to reflect inflation? To what extent do longstanding
thresholds contribute to predictability of their application? Would
altering thresholds contribute to confusion or burden associated with
understanding their revised application? Would considering only one
approach, to either update thresholds or adjust them according to the
proposed indexing methodology, alleviate any of these costs?
1. Part 303
For IDIs submitting applications under section 19 of the FDI Act,
the threshold adjustments for the de minimis exceptions under 12 CFR
303.227 likely would result in a reduction of section 19 applications.
To the extent that IDIs who would have had to file section 19
applications for certain individuals as part of their hiring processes
under the current rule no longer have to do so, they may realize some
cost savings. As previously discussed, the FDIC estimates that the
update to the dollar threshold for the de minimis exceptions under 12
CFR 303.227 would reduce annual section 19 applications by 12 to 22.
Therefore, the FDIC believes that the aggregate costs savings would be
relatively minor. Additionally, the proposed threshold adjustments for
section 19 may allow IDIs a greater degree of flexibility in hiring new
employees. The FDIC does not have the data necessary to determine the
effect of the proposed rule on this potential increase in flexibility,
but expects that such increases also would be relatively minor.
2. Part 335
For IDIs that are subject to the requirements under the 1934
Securities Exchange Act and need to make additional disclosures related
to loans to insiders under 12 CFR 335.801, the proposed threshold
update for ``material'' disclosures of indebtedness of management from
$5 million in the current rule to $10 million would likely benefit
affected IDIs by reducing the number of ``material'' disclosures of
indebtedness of management that these IDIs need to make. The FDIC does
not have the data necessary to estimate the exact number of disclosures
that may be affected from this change. However, as discussed above, the
FDIC estimates that nine IDIs could be directly affected by this aspect
of the proposed rule. Therefore, the FDIC believes that any associated
cost savings would be relatively minor.
3. Part 340
As discussed above, the units of analysis for part 340 are persons
(individuals and entities) interested in acquiring assets of failed
institutions under FDIC receivership or conservatorship. The FDIC does
not
[[Page 35467]]
have data on the direct effects of the proposed changes in thresholds
for substantial losses on the precise number of persons that would
engage in bidding to purchase assets of failed institutions, although,
as stated above, the FDIC estimates an approximately 100 percent
increase in PEC340 submissions under the proposed rule.\102\ The FDIC
anticipates two potential effects. First, the increased thresholds
would likely reduce the number of persons that are subject to
restrictions, resulting in more potential bidders for the assets of
failed institutions. This expected effect could increase the prices of
the assets sold, relative to a market with fewer bidders (under current
thresholds). Second, any increase in the prices of assets sold would
benefit the health of the Deposit Insurance Fund by allowing the FDIC
to more quickly recover any losses attributable to the failure of an
institution.
---------------------------------------------------------------------------
\102\ The PECs associated with part 340 do not include
information on the amounts of financial losses incurred by an
applicant or associated financial institution.
---------------------------------------------------------------------------
4. Part 347
For IDIs that own or have an equity interest in foreign
organizations that underwrite, deal, or distribute equity securities
outside the U.S., the threshold adjustments to increase (1) the
aggregate underwriting commitments from $60 million in the current rule
to $120 million in the proposed rule and (2) equity securities held for
distribution and dealing from $30 million in the current rule to $60
million in the proposed rule may increase the volume and/or amount of
such transactions. To the extent that an IDI engages in such
transactions, it may realize benefits from the threshold amendments
under the proposal, including potentially being more competitive with
foreign banks and other entities. The FDIC does not have the data
necessary to estimate the extent to which these IDI engage in such
transactions. However, IDIs that increase their participation in these
transactions may experience costs associated with complying with new or
additional requirements under foreign financial regulatory frameworks.
The FDIC does not have the data necessary to estimate such costs, but
expects that they would be modest relative to the potential benefits.
5. Part 363
The proposal would update the thresholds in part 363 pertaining to
external audits and other requirements. For IDIs that are subject to
the external audit requirements found in part 363, the broad threshold
amendments described above would reduce the number of IDIs that would
be subject to the general external audit requirements in part 363, as
well as the number of IDIs that would be subject to the additional
requirements for larger institutions. These institutions would realize
some degree of cost savings associated with some of these reduced
requirements, though these savings would vary based on the
characteristics of the institution.
The proposal would also revise a dollar threshold in guidelines
found in part 363, appendix A, paragraph 28(b)(4), which describe
criteria to determine if an outside director is ``independent of
management.'' Because the proposal would increase the threshold for
general applicability of part 363 from $500 million in assets to $1
billion, fewer IDIs would correspondingly need to comply with these
guidelines because fewer IDIs are subject to requirements to create
audit committees. Thus, IDIs scoped out of part 363 under the proposed
rule may see some cost savings associated with not having to determine
if members of audit committees are independent of management.
The FDIC is also proposing to increase the $100,000 compensation
threshold under part 363 related to the determination of whether a
director is considered ``independent of management.'' For the IDIs that
still comply with this guideline, the revision of this threshold from
$100,000 to a proposed $120,000 might allow IDIs to find directors for
their audit committees sooner and could reduce costs and burdens
associated with the audit committee formation process. The FDIC does
not have the data necessary to estimate the extent of these potential
cost savings, but expects them to be relatively modest.
The FDIC does not expect these cost savings to be outweighed by any
significant increase in the risk profile of IDIs generally or the
expected losses to the Deposit Insurance Fund. As discussed above, the
largest IDIs would see no change in requirements. Preserving the level
of these thresholds in real terms would reduce compliance burden at
smaller institutions related to extensive data gathering,
documentation, and review. Further, smaller institutions typically
operate with fewer personnel than larger institutions, which can divert
resources and add to the burden borne by smaller community institutions
in complying with part 363. Additionally, burdens associated with
complying with audit committee composition requirements can be
challenging for smaller community institutions, especially in rural
areas, whereby it can be difficult to recruit qualified, independent
board members who meet the criteria described in part 363. For covered
institutions that are required to comply with ICFR requirements, these
compliance costs and resource constraints can be regressive, falling
more heavily on smaller institutions. Accordingly, for smaller IDIs,
the shift in requirements is intended to address significant reporting
and recordkeeping compliance burdens--such as those associated with
complying with the audit committee requirements--and to improve
regulatory tailoring based on institutions' sizes and risk profiles.
Due to the tailored and measured approach taken to the adjustment of
thresholds contained in part 363, the FDIC does not believe these
changes would significantly increase risk to the Deposit Insurance
Fund.
6. Part 380
As discussed above, the units of analysis for part 380 are persons
(individuals and entities) interested in acquiring assets of covered
financial companies under FDIC receivership. The FDIC does not have
data on the direct effects of the proposed changes in thresholds for
substantial losses on the number of persons that would engage in
bidding to purchase assets of covered financial companies, although, as
stated above, the FDIC estimates an approximately 100 percent increase
in PEC380 submissions under the proposed rule. However, the FDIC
anticipates the increased thresholds would likely reduce the number of
persons that are subject to restrictions, resulting in more potential
bidders for covered financial companies' assets liquidated by the FDIC.
This expected effect could benefit the health of the Deposit Insurance
Fund by increasing the prices of the assets sold, relative to a market
with fewer bidders (under current thresholds).
V. Administrative Law Matters
A. The Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) \103\ states that no
agency may conduct or sponsor, nor is the respondent required to
respond to, an information collection unless it displays a currently
valid Office of Budget and Management (OMB) control number. The FDIC
reviewed the proposed rule and determined that it would revise certain
information collection requests
[[Page 35468]]
previously cleared by OMB under the following OMB Control Nos.:
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\103\ 44 U.S.C 3501 through 3521.
1. 3064-0018: Application Pursuant to Section 19 of the Federal Deposit
Insurance Act
2. 3064-0030: Securities of State Nonmember Banks and State Savings
Associations
3. 3064-0113: External Audits
4. 3064-0194: Covered Financial Company Asset Purchaser Eligibility
Certification
The FDIC will submit the proposed revisions to these information
collections to OMB for review under section 3507(d) of the PRA \104\
and 5 CFR 1320.11 of the OMB's implementing regulations.\105\ Comments
are invited on:
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\104\ 44 U.S.C. 3507(d).
\105\ 5 CFR 1320.11.
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(a) Whether the revisions to existing collections of information
are necessary for the proper performance of the FDIC's functions,
including whether the information has practical utility;
(b) The accuracy of the estimate of the burden of the information
collections, including the validity of the methodology and assumptions
used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on the
collection of information should be sent to the address listed in the
ADDRESSES section of this document. A copy of the comments may also be
submitted to the OMB desk officer by mail to U.S. Office of Management
and Budget, 725 17th Street NW, #10235, Washington, DC 20503.
Proposed Revisions to Existing Information Collections
Title of Information Collection: Application Pursuant to Section 19
of the Federal Deposit Insurance Act.
OMB Number: 3064-0018.
Affected Public: Insured depository institutions and individuals.
Current Actions: The proposed rule would revise the currently-
approved information collection as follows:
The proposed rule would raise the threshold for certain offenses
under which no application to the FDIC under section 19 of the FDI Act
is required. By raising the dollar threshold for the de minimis
exception, the proposed rule would decrease the number of respondents
submitting applications to the FDIC. Based on the proposed rule as well
as historical data, the FDIC estimates a decrease from 43 respondents
to 21 respondents, resulting in a total annual burden for OMB No. 3064-
0018 of 336 hours, a decrease of 352 hours.\106\
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\106\ FDIC Application Pursuant to Section 19 of the Federal
Deposit Insurance Act, OMB No. 3064-0018, available at <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202407-3064-005">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202407-3064-005</a>.
Title of Information Collection: Securities of State Nonmember
Banks and State Savings Associations.
OMB Number: 3064-0030.
Affected Public: Insured State nonmember banks and State savings
associations.
Current Actions: The proposed rule would revise the currently-
approved information collection as follows:
The proposed rule would raise the thresholds for disclosure
requirements for extensions of credit to insiders from in excess of 10
percent of the capital account of an institution or $5 million,
whichever is less, to 10 percent of the capital account of an
institution or $10 million. Raising this threshold would decrease the
total information the FDIC requests from the affected respondents;
therefore, it would be a substantive modification to the previously
approved information collection titled ``14A Proxy Statements.'' As
such, the FDIC is required to submit the information collection for
review and approval by OMB.\107\ However, based on available historical
data, similar reporting requirements imposed by the SEC, and the FDIC's
supervisory experience and expertise, the FDIC does not anticipate a
change in the burden estimates for this information collection.
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\107\ 5 CFR 1320.5(g).
Title of Information Collection: External Audits.
OMB Number: 3064-0113.
Affected Public: All insured financial institutions with total
assets of $1 billion or more and other insured financial institutions
with total assets of less than $1 billion that voluntarily choose to
comply.
Current Actions: The proposed rule would revise the currently-
approved information collection as follows:
The proposed rule would raise several thresholds in part 363. It
would raise the general applicability thresholds from $500 million to
$1 billion, the ICFR asset threshold from $1 billion to $5 billion, and
thresholds related to audit committee composition generally from $500
million to $1 billion, and from $1 billion and $3 billion to $5
billion. By raising the thresholds in part 363, the proposed rule would
change several existing information collections under OMB Control No.
3064-0113 by changing the number of respondents or changing the
reporting requirements. Accordingly, the FDIC would revise the
categories of the existing information collections to better align with
proposed rule's updated thresholds. The updated burden estimates and
the information collection categories are as follows:
Table 1--Summary of Estimated Annual Burden
[OMB No. 3064-0113]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Average time Annual
Information collection (IC) (obligation to Type of burden (frequency of response) Number of responses per per response burden
respond) respondents respondent (HH:MM) (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Institutions with $10 billion or More in Total Consolidated Assets
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Annual Report, 12 CFR part 363 (Mandatory).. Recordkeeping (Annual)......................... 160 1 150:00 24,000
2. Annual Report, 12 CFR part 363 (Mandatory).. Reporting (Annual)............................. 160 1 150:00 24,000
3. Audit Committee Composition, 12 CFR part 363 Recordkeeping (Annual)......................... 160 1 03:00 480
(Mandatory).
4. Audit Committee Composition, 12 CFR part 363 Reporting (Annual)............................. 160 1 03:00 480
(Mandatory).
5. Filing of Other Reports, 12 CFR part 363 Recordkeeping (Annual)......................... 160 1 00:08 21
(Mandatory).
6. Filing of Other Reports, 12 CFR part 363 Reporting (Annual)............................. 160 1 00:08 21
(Mandatory).
7. Notice of Change in Accountants, 12 CFR part Recordkeeping (Annual)......................... 40 1 00:15 2
363 (Mandatory).
8. Notice of Change in Accountants, 12 CFR part Reporting (Annual)............................. 40 1 00:15 2
363 (Mandatory).
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 35469]]
Institutions with $5 billion to less than $10 billion in Total Consolidated Assets
--------------------------------------------------------------------------------------------------------------------------------------------------------
9. Annual Report, 12 CFR part 363 (Mandatory).. Recordkeeping (Annual)......................... 133 1 125:00 16,625
10. Annual Report, 12 CFR part 363 (Mandatory). Reporting (Annual)............................. 133 1 125:00 16,625
11. Audit Committee Composition, 12 CFR part Recordkeeping (Annual)......................... 133 1 03:00 399
363 (Mandatory).
12. Audit Committee Composition, 12 CFR part Reporting (Annual)............................. 133 1 03:00 399
363 (Mandatory).
13. Filing of Other Reports, 12 CFR part 363 Recordkeeping (Annual)......................... 133 1 00:08 18
(Mandatory).
14. Filing of Other Reports, 12 CFR part 363 Reporting (Annual)............................. 133 1 00:08 18
(Mandatory).
15. Notice of Change in Accountants, 12 CFR Recordkeeping (Annual)......................... 33 1 00:15 8
part 363 (Mandatory).
16. Notice of Change in Accountants, 12 CFR Reporting (Annual)............................. 33 1 00:15 8
part 363 (Mandatory).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Institutions with $1 billion to less than $5 billion in Total Consolidated Assets
--------------------------------------------------------------------------------------------------------------------------------------------------------
17. Annual Report, 12 CFR part 363 (Mandatory). Recordkeeping (Annual)......................... 752 1 12:30 9,400
18. Annual Report, 12 CFR part 363 (Mandatory). Reporting (Annual)............................. 752 1 12:30 9,400
19. Audit Committee Composition, 12 CFR part Recordkeeping (Annual)......................... 752 1 01:00 752
363 (Mandatory).
20. Audit Committee Composition, 12 CFR part Reporting (Annual)............................. 752 1 01:00 752
363 (Mandatory).
21. Filing of Other Reports, 12 CFR part 363 Recordkeeping (Annual)......................... 752 1 00:08 100
(Mandatory).
22. Filing of Other Reports, 12 CFR part 363 Reporting (Annual)............................. 752 1 00:08 100
(Mandatory).
23. Notice of Change in Accountants, 12 CFR Recordkeeping (Annual)......................... 188 1 00:15 47
part 363 (Mandatory).
24. Notice of Change in Accountants, 12 CFR Reporting (Annual)............................. 188 1 00:15 47
part 363 (Mandatory).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Institutions with less than $1 billion of Total Consolidated Assets
--------------------------------------------------------------------------------------------------------------------------------------------------------
25. Filing of Other Reports, 12 CFR part 363 Recordkeeping (Annual)......................... 3,426 1 00:15 857
(Voluntary).
26. Filing of Other Reports, 12 CFR part 363 Reporting (Annual)............................. 3,426 2 00:15 1,713
(Voluntary).
-------------------------------------------------------
Total Annual Burden (Hours)................ ............................................... ............ .............. .............. 106,290
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: FDIC.
Note: The estimated annual IC time burden is the product, rounded to the nearest hour, of the estimated annual number of responses and the estimated
time per response for a given IC. The estimated annual number of responses is the product, rounded to the nearest whole number, of the estimated
annual number of respondents and the estimated annual number of responses per respondent. This methodology ensures the estimated annual burdens in the
table are consistent with the values recorded in OMB's consolidated information system.
Based on the proposed rule, the FDIC estimates a total annual
burden for OMB Control No. 3064-0113 of 106,290 hours, resulting in a
burden decrease of 31,924 hours from the most recent PRA renewal.\108\
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\108\ FDIC External Audits, OMB No. 3064-0113, available at
<a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202207-3064-004">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202207-3064-004</a>.
Title of Information Collection: Covered Financial Company Asset
Sales Purchaser Eligibility Certification.
OMB Number: 3064-0194.
Affected Public: Any individual or entity that is a potential
purchaser of assets from (1) the FDIC as receiver for a Covered
Financial Company (CFC); or (2) a bridge financial company (BFC) that
requires the approval of the FDIC, as receiver for the predecessor CFC
and as the sole shareholder of the BFC (e.g., the BFC's sale of a
significant business line).
Current Actions: The proposed rule would revise the currently-
approved information collection as follows:
The proposed rule would revise the ``substantial loss'' threshold
in 12 CFR 380.13 by raising the existing threshold from $50,000 to
$100,000. Raising this threshold would decrease the total information
the FDIC requests from the affected respondents; therefore, it would be
a substantive modification to the previously approved information
collection titled ``Covered Financial Company Asset Sales Purchaser
Eligibility Certification.'' \109\ As such, the FDIC is required to
submit the information collection for review and approval by OMB.\110\
The FDIC does not anticipate a change in the burden estimates for this
information collection. This determination is based on the FDIC
supervisory experience and analysis of prospective respondents.
---------------------------------------------------------------------------
\109\ FDIC Covered Financial Company Asset Purchaser Eligibility
Certification, OMB No. 3064-0194, available at <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202311-3064-003">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202311-3064-003</a>.
\110\ See supra fn. 104.
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B. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (RFA) generally requires an agency,
in connection with a proposed rule, to prepare and make available for
public comment an initial regulatory flexibility analysis that
describes the impact of the proposed rule on small entities.\111\
However, an initial regulatory flexibility analysis is not required if
the agency certifies that the proposed rule will not, if promulgated,
have a significant economic impact on a substantial number of small
entities. The Small Business Administration (SBA) has defined ``small
entities'' to include banking organizations with total assets of less
than or equal to $850 million.\112\ Generally, the FDIC considers a
significant economic impact to be a quantified effect in excess of 5
percent of total annual salaries and benefits or 2.5 percent of total
noninterest expenses. The FDIC believes that effects in excess of one
or more of these thresholds typically represent significant economic
impacts for FDIC-insured institutions.
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\111\ 5 U.S.C. 601 et seq.
\112\ The SBA defines a small banking organization as having
$850 million or less in assets and determines an organization's
assets by averaging the assets reported on its four quarterly
financial statements for the preceding year. See 13 CFR 121.201 (as
amended by 87 FR 69118, effective December 19, 2022). Following
these regulations, the FDIC uses an insured depository institution's
affiliated and acquired assets, averaged over the preceding four
quarters, to determine whether the insured depository institution is
``small'' for the purposes of the RFA.
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To estimate the expected effects of the proposed rule, this
analysis considers all relevant regulations and guidance applicable to
these institutions, as well as information on the financial condition
of all IDIs as of the quarter ending March 31, 2025.
[[Page 35470]]
Part 303
As previously discussed, 12 CFR 303.227 discusses the criteria for
de minimis exemptions for purposes of section 19 of the FDI Act. These
criteria include $2,500 and $1,000 thresholds for certain offenses that
are exempt from the requirements to submit a section 19 application to
the FDIC. The proposed rule would adjust these thresholds from $2,500
and $1,000 to $3,500 and $1,225, respectively.
To estimate the number of small, FDIC-insured institutions that
could be affected by this change in the proposed rule, the FDIC used
the historical annual number of institutions that have submitted a
section 19 application. Over the six-year period ending on March 31,
2025, the FDIC received 328 applications under section 19, or
approximately 55 applications annually. Section 19 applications can be
submitted by individuals as well as IDIs. The FDIC does not have the
information necessary to attribute each application submitted by an
individual under section 19 made over this period to a particular IDI.
Accordingly, for the purposes of this analysis the FDIC conservatively
estimates that each section 19 application is submitted by a unique
IDI.
An increase in these de minimis thresholds would increase the
number of persons subject to the exemptions in 12 CFR 303.227. Given
the 40 percent increase in the general de minimis threshold of $2,500
to $3,500 and the 22.5 percent increase in the de minimis threshold for
small-dollar theft of $1,000 to $1,225, the FDIC assumes a
corresponding decrease of between 22.5 percent and 40 percent in the
estimated number of submissions under section 19. Therefore, the FDIC
estimates that the proposed rule could reduce the annual number of IDIs
submitting section 19 applications from 55 to between 43 and 33 IDIs
(rounded to the nearest IDI).\113\
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\113\ 55 IDIs estimated under the current rule. A 22.5-percent
reduction, corresponding to an increase in the de minimis small-
dollar theft threshold from $1,000 to $1,225, would result in 43
IDIs estimated under the proposal. A 40-percent reduction,
corresponding to an increase in the general de minimis exemption
threshold from $2,500 to $3,500, would result in 33 IDIs estimated
under the proposal.
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Using Call Report data from March 31, 2025, the FDIC estimates that
approximately 70 percent of all IDIs are classified as ``small.'' \114\
Therefore, the FDIC estimates that the change in this threshold could
reduce the number of small IDIs submitting section 19 applications from
39 to between 30 and 23 IDIs (rounded to the nearest IDI), a decrease
of between 9 and 16 IDIs.\115\ The FDIC estimates that each section 19
application takes approximately 16 hours to complete.\116\ Using a wage
rate of $104.43/hour,\117\ the FDIC estimates that the proposed rule
would result in between $15,037.92 and $26,734.08 in total annual cost
savings for these 9 to 16 affected small IDIs, or approximately
$1,670.88 in annual cost savings to each small IDI that would no longer
need to file a section 19 application as a result of the proposed rule.
As discussed above, the FDIC estimates between 9 and 16 small IDIs
would be affected by this change. Given the small number of affected
small entities and the relatively minor amount of cost savings, the
FDIC believes that the changes in thresholds for these provisions would
be likely to have small effects on small IDIs.
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\114\ FDIC Call Report Data, March 31, 2025.
\115\ 55 Section 19 applications from unique IDIs * 70 percent
of all IDIs classified as ``small'' [ap] 39 small IDIs. A 22.5-
percent reduction, corresponding to an increase in the de minimis
small-dollar theft threshold from $1,000 to $1,225, would result in
30 ``small'' IDIs estimated under the proposal. A 40-percent
reduction, corresponding to an increase in the general de minimis
exemption threshold from $2,500 to $3,500, would result in 23
``small'' IDIs estimated under the proposal.
\116\ Information collection request ICR 3064-0018 at <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202407-3064-005">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202407-3064-005</a>.
\117\ Bureau of Labor Statistics: `National Industry-Specific
Occupational Employment and Wage Estimates: Industry: Credit
Intermediation and Related Activities (5221 and 5223 only)' (May
2024), Employer Cost of Employee Compensation (March 2024), and
Employment Cost Index (March 2024 and March 2025). For this ICR, the
FDIC estimated the following labor allocation for entities complying
with these requirements: Executives and Managers (11-0000): 10
percent; Lawyers (23-0000): 20 percent; Compliance Officers (13-
1040): 60 percent; and Clerical Workers (43-0000): 10 percent.
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Part 335
Section 335.801 provides a materiality threshold for disclosures
related to extensions of credit to insiders. Under this section,
extensions of credit to such individuals that are in excess of 10
percent of the equity capital accounts of the bank or State savings
association or $5 million, whichever is less, shall be deemed material
and shall be disclosed in addition to any other required disclosure.
The proposed rule would revise the $5 million threshold to $10 million.
To estimate the number of small FDIC-supervised institutions that
could be affected by this change in the proposed rule, the FDIC
identified nine IDIs \118\ that are subject to the requirements under
the 1934 Securities Exchange Act and are required to make additional
disclosures related to loans to insiders (by virtue of being traded on
a national exchange or having more than 2,000 shareholders of record
and $10 million in assets). For the purposes of this analysis, the FDIC
conservatively estimates that nine FDIC-supervised IDIs may be affected
by the threshold adjustments in part 335 under the proposed rule. Of
these nine IDIs, one is classified as ``small.'' Given the small number
of affected small entities, the fact that the requirement to issue
these disclosures would still exist under the proposed rule, and that
these disclosures would still be issued via proxy statements under the
proposed rule, the FDIC does not believe that the change in this
threshold would have a significant effect on small entities.
---------------------------------------------------------------------------
\118\ See <a href="https://www.fdic.gov/analysis/list-fdic-supervised-banks-filing-under-securities-exchange-act">https://www.fdic.gov/analysis/list-fdic-supervised-banks-filing-under-securities-exchange-act</a> for the list of IDIs.
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Part 340
Section 340.4 relates to the definition of ``substantial loss'' in
the context of restrictions on the sale of failed bank assets. A person
may not acquire any assets of a failed institution from the FDIC if the
person or associated person has participated, as an officer or director
of a failed institution or of an affiliate of a failed institution, in
a material way in one or more transaction(s) that caused a substantial
loss to that failed institution.\119\ Section 340.2 defines
``substantial loss'' using a threshold of greater than $50,000 in
losses, unpaid final judgments, delinquent obligations, or deficiency
balance following a foreclosure. The proposed rule would revise the
greater than $50,000 threshold to greater than $100,000.
---------------------------------------------------------------------------
\119\ Additional qualitative criteria are available in the
regulation.
---------------------------------------------------------------------------
To estimate the number of small institutions that could be affected
by this change in the proposed rule, the FDIC analyzed historical
trends for annual part 340 Purchaser Eligibility Certification (PEC340)
submissions, based on information from 2019 through 2023. From this
analysis, the FDIC estimates approximately 140 PEC340 submissions
annually from individuals or entities. The FDIC does not have the data
to estimate the number of unique entities that would submit a PEC;
therefore, the FDIC conservatively estimates that each PEC340 is
submitted by a unique entity.
An increase in the thresholds would decrease the number of persons
subject to the restrictions of part 340 by removing persons involved in
transactions resulting in losses of greater than $50,000 to greater
than $100,000. Given the 100 percent increase in the threshold, the
FDIC assumes a corresponding 100 percent increase
[[Page 35471]]
(rounded to the nearest whole number of persons) \120\ in the estimated
number of persons that would be expected to submit PECs under 12 CFR
340.7. This results in an estimated 280 entities that would submit
under the proposed rule, an increase of 140 from the current rule.
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\120\ ($100,000 - $50,000)/$50,000 = 100 percent.
---------------------------------------------------------------------------
As discussed above, the FDIC estimates that approximately 70
percent of all IDIs are classified as ``small.'' Therefore, the FDIC
estimates that, of the estimated increase of 140 PECs submitted under
part 340 due to the proposed rule, approximately 98 will be submitted
by ``small'' entities. Using internal estimates and analysis of PEC340
submissions from 2019 through 2023, the FDIC estimates that each PEC
under part 340 takes approximately 30 minutes to complete.\121\ Using a
wage rate of $164.65/hour,\122\ the FDIC estimates that the 98 small
entities would incur approximately $8,067.85 in additional annual
costs, or approximately $82.33 each, associated with submitting PECs
due to the proposed rule. Given the small number of affected small
entities and the relatively minor amount of costs incurred, the FDIC
believes that the changes in thresholds for these provisions would be
likely to have small effects on small, FDIC-supervised IDIs.
---------------------------------------------------------------------------
\121\ Information collection request ICR 3064-0135 at <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202111-3064-002">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202111-3064-002</a>.
\122\ Bureau of Labor Statistics: `National Industry-Specific
Occupational Employment and Wage Estimates: Industry: Credit
Intermediation and Related Activities (5221 and 5223 only)' (May
2024), Employer Cost of Employee Compensation (March 2024), and
Employment Cost Index (March 2024 and March 2025). For this ICR, the
FDIC estimated the following labor allocation for entities complying
with these requirements: Executives and Managers (11-0000): 10
percent; and Purchasing Managers (11-3060): 90 percent.
---------------------------------------------------------------------------
Part 347
Section 347.111 contains two thresholds that would be adjusted
under the proposal. The first is for aggregate underwriting commitment
limits applicable to foreign organizations held by insured State
nonmember banks, which currently may not exceed the lesser of $60
million or 25 percent of the bank's Tier 1 capital. The proposal would
increase the current $60 million threshold to $120 million. The second
threshold in 12 CFR 347.111 is for distribution and dealing limits
applicable to foreign organizations held by insured State nonmember
banks, which currently may not exceed the lesser of $30 million or 5
percent of the bank's Tier 1 capital. The proposal would increase the
current $30 million threshold to $60 million.
To estimate the number of small FDIC-supervised institutions that
could be affected by this change in the proposed rule, the FDIC used
NIC data to identify the number of foreign entities with a parent
company that is an IDI. From this data, the FDIC was able to identify
31 IDIs with foreign subsidiaries. Of these, five are State nonmember
banks and would be subject to part 347. The FDIC does not have the data
necessary to: (1) estimate the number of IDIs that would be subject to
these restrictions, and (2) understand the business models of these
IDIs and their propensity to find and make business deals that would be
subject to these restrictions under the current and proposed rules.
Therefore, the FDIC conservatively estimates that all five State
nonmember banks would be affected by these changes. Of these five, none
are classified as ``small.'' Therefore, the FDIC does not believe that
the change in this threshold would have any effect on small entities.
Part 363
The proposed rule would make several changes to the thresholds in
part 363. Most of these--such as those pertaining to management and the
independent accountant's assessment of the effectiveness of ICFR, as
well as certain independence and experience requirements for members of
audit committees--do not affect small entities because they are imposed
on IDIs with over $1 billion in total consolidated assets. However,
certain requirements are having their asset size thresholds adjusted
from $500 million to $1 billion. Specifically, the proposed rule would
amend the following thresholds that may affect small entities:
(1) Section 363.1 imposes requirements to conduct annual audits of
financial statements, submission of communications, and other reports
on any IDI with respect to any fiscal year in which its consolidated
total assets as of the beginning of such fiscal year are $500 million
or more. The proposed rule would increase the current threshold from
$500 million to a proposed $1 billion.
(2) Section 363.5(a)(2) requires that each IDI with consolidated
total assets of $500 million or more but less than $1 billion must
establish an independent audit committee of its board of directors, the
members of which must be outside directors, a majority of whom must be
independent of management of the IDI. The proposed rule would increase
the current threshold from $500 million to a proposed $1 billion.
These changes would, if adopted, scope out ``small'' entities with
between $500 million and $1 billion in assets. Using Call Report data
as of March 31, 2025, there are 579 ``small'' IDIs with between $500
million and $1 billion in assets. These IDIs would all be scoped out of
part 363 under the proposal. The FDIC estimates that, under the current
rule, IDIs with between $500 million and $1 billion in assets would
receive approximately 28 hours in annual cost savings per small IDI
associated with the requirements in part 363.\123\ Using a wage rate of
$100.18/hour,\124\ the FDIC estimates that the proposed rule would
result in approximately $1.62 million in cost savings for these 579
small entities, or $2,800 for each small IDI.\125\ Therefore, the FDIC
believes that the changes in thresholds for these provisions would be
likely to have small effects on small IDIs.
---------------------------------------------------------------------------
\123\ Information collection request ICR 3064-0113 at <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202207-3064-004">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202207-3064-004</a>.
\124\ Bureau of Labor Statistics: `National Industry-Specific
Occupational Employment and Wage Estimates: Industry: Credit
Intermediation and Related Activities (5221 and 5223 only)' (May
2024), Employer Cost of Employee Compensation (March 2024), and
Employment Cost Index (March 2024 and March 2025). See Table 2 of
the FDIC's Supporting Statement at <a href="https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202207-3064-004">https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202207-3064-004</a> for information on the
labor allocations for this ICR.
\125\ (579 small IDIs * 28 hours in cost savings) = 16,212 hours
in annual compliance cost savings.
16,212 hours * $100.18 per hour = $1,624,118.16.
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Part 380
As discussed above, 12 CFR 380.13 provides a definition of
``substantial loss'' in the context of restrictions on the sale of
failed financial company assets. A person may not acquire any assets of
a covered financial company from the FDIC if the person or associated
person has participated, as an officer or director of a covered
financial company or of an affiliate of a covered financial company, in
a material way in one or more transaction(s) that caused a substantial
loss to that covered financial company.\126\ Section 380.13(b)(6)
defines ``substantial loss'' using a threshold of greater than $50,000
in losses, unpaid final judgments, delinquent obligations, or
deficiency balance following a foreclosure. The proposed rule would
revise the greater than $50,000 threshold to greater than $100,000.
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\126\ Additional qualitative criteria are available in the
regulation.
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The FDIC lacks data on the number of entities who would submit PECs
if the proposed thresholds defining substantial losses were increased
to greater than $100,000. To estimate the number of small institutions
that could be affected by this change in the
[[Page 35472]]
proposed rule, the FDIC uses internal information and analysis of the
expected annual number of PEC submissions for these persons.\127\ From
this analysis, the FDIC estimates approximately 66 PEC submissions
annually from covered entities. The FDIC does not have the data to
estimate the number of unique entities that would submit PECs from this
analysis. Therefore, the FDIC conservatively estimates that each PEC is
submitted by a unique entity.
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\127\ Information collection request ICR 3064-0194 at <a href="https://www.reginfo.gov/public/do/PRAICList?ref_nbr=202311-3064-003">https://www.reginfo.gov/public/do/PRAICList?ref_nbr=202311-3064-003</a>.
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The 100 percent proposed increase in the thresholds would decrease
the number of persons subject to the restrictions in part 380. Given
the 100 percent increase in the threshold the FDIC assumes a
corresponding 100 percent increase (rounded to the nearest whole number
of persons) \128\ in the estimated number of persons that would be
expected to submit PECs under 12 CFR 380.13(f). This results in an
estimated 132 entities that would submit under the proposed rule, an
increase of 66 from the current rule.
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\128\ ($100,000 - $50,000)/$50,000 = 100 percent.
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As discussed above, the FDIC estimates that approximately 70
percent of all IDIs are classified as ``small.'' Therefore, the FDIC
estimates that, of the estimated increase of 66 PECs submitted under
part 380 due to the proposed rule, approximately 46 would be submitted
by ``small'' entities. Using internal information and analysis of the
expected annual number of PEC submissions, the FDIC estimates that each
PEC under part 380 takes approximately 2.5 hours to complete.\129\
Using a wage rate of $112.73/hour,\130\ the FDIC estimates that the 46
small entities would incur approximately $12,963.95 in additional
annual costs, or approximately $281.83 each, associated with submitting
PECs due to the proposed rule. Given the small number of affected small
entities and the relatively minor amount of costs incurred, the FDIC
believes that the changes in thresholds for these provisions would be
likely to have small effects on small, FDIC-supervised IDIs.
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\129\ Information collection request ICR 3064-0194 at <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202311-3064-003">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202311-3064-003</a>.
\130\ Bureau of Labor Statistics: 'National Industry-Specific
Occupational Employment and Wage Estimates: Industry: Credit
Intermediation and Related Activities (5221 and 5223 only)' (May
2024), Employer Cost of Employee Compensation (March 2024), and
Employment Cost Index (March 2024 and March 2025). For this ICR, the
FDIC estimated the following labor allocation for entities complying
with these requirements: Executives and Managers (11-0000): 10
percent; Lawyers (23-0000): 10 percent; Compliance Officers (13-
1040): 10 percent; and Financial Analysts (13-2051): 70 percent.
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Summary of Effects on Small Entities
As of the quarter ending March 31, 2025, the FDIC insured 4,471
institutions, of which 3,130 are considered ``small'' for the purposes
of the RFA. As of the same time period the FDIC supervised 2,835
institutions, of which 2,109 are considered ``small'' for the purposes
of the RFA. As previously discussed, the threshold changes in parts
303, 340, 363, and 380 were estimated to directly affect between 9 and
16, 98, 579, and 46 small entities, respectively. Further, the FDIC
estimates that the threshold changes in parts 303, 340, 363, and 380
would result in certain changes in compliance costs for directly
affected entities of $1,670.88, $82.33, $2,800, and $281.83 per entity,
per year, respectively. The FDIC does not have the information
necessary to calculate cumulative quantified effects of all of the
threshold changes in parts 303, 340, 363, and 380 for each directly
affected small IDI. However, conservatively assuming that a small FDIC-
supervised or FDIC-insured IDI is affected by all of the proposed
changes described above, it would receive cost savings of approximately
$4,106.72 annually.\131\ This amount exceeds 5 percent of total annual
salaries and benefits or 2.5 percent of total noninterest expenses at
just three small IDIs.\132\ Therefore, the FDIC does not believe that
the changes in these thresholds would have a significant economic
effect on small IDIs.
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\131\ Approximately $4,470.88 in estimated annual cost savings-
$364.16 in estimated annual costs = $4,106.72.
\132\ FDIC Call Report data for the four-quarter period from
June 30, 2024, through March 31, 2025.
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Finally, certain aspects of the proposed rule--such as those
pertaining to section 19 and PEC applications under parts 303, 340, and
380--may affect individuals. The RFA applies to a small entity, which
is defined in 5 U.S.C. 601(6) as having ``the same meaning as the terms
`small business', `small organization' and `small governmental
jurisdiction' defined in paragraphs (3), (4) and (5) of'' 5 U.S.C. 601.
As such, a rule or information collection that affects only natural
persons does not affect any small entities.
In light of the foregoing, the FDIC certifies that the proposed
rule would not have a significant economic impact on a substantial
number of small entities. Accordingly, an initial regulatory
flexibility analysis is not required.
The FDIC invites comments on all aspects of the supporting
information provided in this RFA section. The FDIC is particularly
interested in comments on any significant effects on small entities
that the agency has not identified.
C. Plain Language
Section 722 of the Gramm-Leach-Bliley Act requires Federal banking
agencies to use plain language in all proposed and final rules
published after January 1, 2000. The FDIC invites your comments on how
to make the proposed rule easier to understand. For example:
<bullet> Has the FDIC organized the material to suit your needs? If
not, how could the proposed rule be more clearly stated?
<bullet> Are the requirements in the proposed rule clearly stated?
If not, how could the proposed rule be more clearly stated?
<bullet> Does the proposed rule contain language or jargon that is
not clear? If so, which language requires clarification?
<bullet> Would a different format (groupings and order of sections,
use of headings, paragraphing) make the proposed rule easier to
understand? If so, what changes to the format would make the proposed
rule easier to understand?
<bullet> What else could the FDIC do to make the proposed rule
easier to understand?
D. Riegle Community Development and Regulatory Improvement Act of 1994
Section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994 (RCDRIA) requires that the Federal banking
agencies, including the FDIC, in determining the effective date and
administrative compliance requirements of new regulations that impose
additional reporting, disclosure, or other requirements on IDIs,
consider, consistent with principles of safety and soundness and the
public interest, any administrative burdens that such regulations would
place on depository institutions, including small depository
institutions, and customers of depository institutions, as well as the
benefit of such regulations.\133\ Subject to certain exceptions, new
regulations and amendments to regulations prescribed by a Federal
banking agency that impose additional reporting, disclosure, or other
new requirements on IDI shall take effect on the first day of a
calendar quarter that begins on or after the date on which the
regulations are published in final form.\134\ The requirements of
[[Page 35473]]
RCDRIA will be considered as part of the overall rulemaking process,
and the FDIC invites comments that will further inform its
consideration of RCDRIA.
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\133\ 12 U.S.C. 4802(a).
\134\ 12 U.S.C. 4802(b).
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E. Executive Order 12866 and 13563
Under Executive Order 12866, as affirmed and supplemented by
Executive Order 13563, ``significant regulatory actions'' are subject
to review by the Office of Management and Budget (OMB).
The FDIC has submitted this proposed regulatory action to OMB for
review. OMB has determined this proposed regulatory action is not a
significant regulatory action subject to further review under section
3(f) of Executive Order 12866.
F. The Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 \135\
requires that a notice of proposed rulemaking includes the internet
address of a summary of not more than 100 words in length of a proposed
rule, in plain language, that shall be posted on the internet website
under section 206(d) of the E-Government Act of 2002.\136\ The proposal
and the required summary can be found at <a href="https://www.fdic.gov/resources/regulations/federal-register-publications/index.html">https://www.fdic.gov/resources/regulations/federal-register-publications/index.html</a>.
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\135\ 12 U.S.C. 553(b)(4).
\136\ 44 U.S.C 3501 note.
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List of Subjects
12 CFR Part 303
Administrative practice and procedure, Bank deposit insurance,
Banks, Banking, Reporting and recordkeeping requirements, Savings
associations.
12 CFR Part 314
Accounting, Administrative practice and procedure, Authority
delegations (Government agencies), Bank deposit insurance, Banks,
Banking, Brokers, Confidential business information, Credit, Foreign
banking, Holding companies, Insurance, Investments, Reporting and
recordkeeping requirements, Savings associations, Securities, Trusts
and trustees.
12 CFR Part 335
Accounting, Banks, Banking, Confidential business information,
Reporting and recordkeeping requirements, Securities.
12 CFR Part 340
Banks, Banking, Reporting and recordkeeping requirements.
12 CFR Part 347
Authority delegations (Government agencies), Bank deposit
insurance, Banks, Banking, Credit, Foreign banking, Investments,
Reporting and recordkeeping requirements, U.S. investments abroad.
12 CFR Part 363
Accounting, Administrative practice and procedure, Banks, Banking,
Reporting and recordkeeping requirements.
12 CFR Part 380
Brokers, Holding companies, Insurance, Investments, Trusts and
trustees.
Authority and Issuance
For the reasons set forth in the preamble, the Board of Directors
of the Federal Deposit Insurance Corporation proposes to add part 314
and amend parts 303, 335, 340, 347, 363, and 380 as follows:
PART 303--FILING PROCEDURES
0
1. The authority citation for part 303 continues to read as follows:
Authority: 12 U.S.C. 378, 1464, 1813, 1815, 1817, 1818, 1819(a)
(Seventh and Tenth), 1820, 1823, 1828, 1829, 1831a, 1831e, 1831o,
1831p-1, 1831w, 1835a, 1843(l), 3104, 3105, 3108, 3207, 5414, 5415,
and 15 U.S.C. 1601-1607.
Sec. 303.227 [Amended]
0
2. In Sec. 303.227(a)(2), remove ``$2,500'' and add in its place
``$3,500, as adjusted from time to time in accordance with 12 CFR
314.1,''.
0
3. In Sec. 303.227(b)(3)(i), remove ``$1,000'' and add in its place
``$1,225, as adjusted from time to time in accordance with 12 CFR
314.1,''.
0
4. Add part 314, consisting of Sec. 314.1, to read as follows:
PART 314--INDEXING OF SPECIFIED REGULATORY THRESHOLDS
Sec.
314 .1 Threshold indexing.
Authority: 12 U.S.C. 378, 1464, 1813, 1815, 1817, 1818, 1819,
1819(a) (Seventh and Tenth), 1820, 1821(p), 1823, 1828, 1829, 1831a,
1831e, 1831m, 1831o, 1831p-1, 1831w, 1835a, 1843(l), 3103, 3104,
3105, 3108, 3109, 3207, 5385(h), 5389, 5390(s)(3), 5390(b)(1)(C),
5390(a)(7)(D), 5381(b), 5390(r), 5390(a)(16)(D), 5414, 5415,
[…truncated; see source link]Indexed from Federal Register on July 28, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.