80 FR 22886 - Restrictions on Sale of Assets of a Failed Institution by the Federal Deposit Insurance Corporation
FEDERAL DEPOSIT INSURANCE CORPORATION Federal Register Volume 80, Issue 79 (April 24, 2015)
Federal Register Volume 80, Issue 79 (April 24, 2015)
| Page Range | 22886-22891 | |
| FR Document | 2015-09572 |
[Federal Register Volume 80, Number 79 (Friday, April 24, 2015)] [Rules and Regulations] [Pages 22886-22891] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-09572] ======================================================================= ----------------------------------------------------------------------- FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 340 RIN 3064-AE26 Restrictions on Sale of Assets of a Failed Institution by the Federal Deposit Insurance Corporation AGENCY: Federal Deposit Insurance Corporation. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: With this final rule, the Federal Deposit Insurance Corporation (FDIC) is revising its rule concerning restrictions on the sale of assets of a failed institution under the Federal Deposit Insurance Act in order to clarify the purpose, scope and applicability of that rule and to make that rule more consistent with the FDIC's rule concerning restrictions on the sale of assets of a covered financial company under the Dodd-Frank Wall Street Reform and Consumer Protection Act. DATES: This final rule is effective July 1, 2015. FOR FURTHER INFORMATION CONTACT: James D. Sigler, Senior Franchise and Asset Marketing Specialist, 571-858-8284; Elizabeth Falloon, Supervisory Counsel, Legal Division, 703-562-6148; Shane Kiernan, Counsel, Legal Division, 703-562-2632; Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429. SUPPLEMENTARY INFORMATION: I. Background The FDIC promulgated part 340 in 2000 to implement section 11(p) of the Federal Deposit Insurance Act, (12 U.S.C. 1821(p) (section 11(p)). Under section 11(p), individuals or entities whose acts or omissions have, or may have, contributed to the failure of an insured depository institution (failed institution) cannot buy the assets of that failed institution from the FDIC. The FDIC expanded the purchaser eligibility restriction as permitted by statute when it promulgated part 340 by precluding such individuals or entities from purchasing the assets of any failed institution, not only the particular institution affected by the actions of the respective individuals or entities. As provided in section 11(p), part 340 also prohibits the sale of assets involving FDIC financing to certain persons who have defaulted on obligations of $1 million or more, in aggregate, owed to a failed insured depository institution or the FDIC and who have made fraudulent misrepresentations in connection with any of those obligations. Compliance with part 340 is established through a self-certification process in which a prospective purchaser certifies that it is eligible to purchase an asset from the FDIC and that the FDIC's sale of an asset to such prospective purchaser would not be restricted under section 11(p) or part 340. In March of 2014, the FDIC promulgated Sec. 380.13 to implement section 210(r) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, (12 U.S.C. 5390(r) (section 210(r)). Section 210(r) prohibits certain sales of assets held by the FDIC in the course of liquidating a covered financial company. Because section 210(r) and section 11(p) share substantially similar statutory language, part 340 served as a model for the development of Sec. 380.13. While many aspects of part 340 were included in Sec. 380.13, FDIC staff identified new or different concepts to include in Sec. 380.13 that were not already in part 340. The addition of these concepts into part 340 will improve part 340 and make it more consistent with Sec. 380.13. II. Notice of Proposed Rulemaking On October 21, 2014, the Board of Directors approved a notice of proposed rulemaking entitled ``Restrictions on Sale of Assets by the Federal Deposit Insurance Corporation'' (the proposed rule), which was published in the Federal Register on October 24, 2014 with a 60-day comment period that [[Page 22887]] ended on December 23, 2014.\1\ One comment letter addressing the proposed rule was received by the FDIC expressing general support for the proposed rule. The final rule is substantively the same as the proposed rule. --------------------------------------------------------------------------- \1\ 79 FR 63580. --------------------------------------------------------------------------- III. The Final Rule With this final rule, the FDIC is adopting the revisions to part 340 in substantially the same form as they were presented in the proposed rule. Part 340 is revised in a number of ways. Some revisions are significant, substantive changes and others are non-substantive, technical or conforming changes. This supplemental information section describes the substantive changes made by the final rule. The title of part 340 is revised to clarify that part 340 applies to sales of assets of a failed institution (specifically, a failed insured depository institution). This change is made to help distinguish part 340 from Sec. 380.13, which applies to sales of assets of a covered financial company by the FDIC. While the two rules will preclude sales to certain prospective purchasers in a very similar manner, each pertains to a separate set of asset sales by the FDIC. The final rule amends Sec. 340.1(b), which sets forth the purpose of part 340, to extend the restrictions on sales of assets of a failed institution to individuals or entities who are also prohibited from purchasing assets of a covered financial company from the FDIC under section 210(r) and Sec. 380.13. This ensures consistency between part 340 and Sec. 380.13. Under Sec. 380.13, individuals or entities prohibited from purchasing assets of a failed institution under part 340 are also prohibited from purchasing assets of a covered financial company under Sec. 380.13. Likewise, individuals or entities prohibited from purchasing assets of a covered financial company under Sec. 380.13 are prohibited from purchasing assets of a failed institution under part 340. The final rule makes three changes to clarify part 340's scope of coverage, set forth in Sec. 340.1(c). First, the final rule clarifies the applicability of part 340 to sales of assets by a subsidiary of a failed institution or by a bridge depository institution. Sales of assets of a failed institution's subsidiary or a bridge depository institution are not expressly subject to section 11(p). However, if the FDIC has the right to control the terms of a sale of assets of a failed institution's subsidiary or a bridge depository institution, or has the ability to control selection of the purchaser of those assets under an agency agreement or as shareholder, the restrictions set forth in section 11(p) and part 340 should apply. The FDIC has discretionary authority to expand the scope of coverage because section 11(p) sets the minimum requirements for restrictions on sales of assets, and the FDIC may prescribe further restrictions on its own accord. Under the final rule's revision of part 340, the restrictions apply to sales of assets of a failed institution's subsidiary or a bridge depository institution if the FDIC controls the terms of the sale by agreement or as shareholder. Second, the final rule amends Sec. 340.1 to explicitly state that part 340 does not apply to certain types of transactions involving marketable securities and other financial instruments. Under Sec. 340.1(c)(5), a sale of a security or a group or index of securities, a commodity, or any qualified financial contract that, in each case, customarily is traded through a financial intermediary where the seller cannot control selection of the purchaser would not be covered by part 340 if the sale is to be consummated through that customary practice. For example, if the FDIC were to sell publicly-traded stocks or bonds that the failed institution held, it might engage a broker or custodian to conduct or facilitate the sale. The broker or custodian would then tender the securities to the market and accept prevailing market terms offered by another broker, a specialist, a central counterparty or a similar financial intermediary who would then sell the security to another purchaser. In this scenario, it is not possible for the FDIC to control selection of the end purchaser at the time of sale. Therefore, the transaction cannot be a sale covered by section 11(p) because the FDIC would have no way to select the prospective purchaser or determine whether that purchaser would or would not be prohibited from purchasing the asset. Moreover, a prospective purchaser of such assets will not be able to select the FDIC as the seller and therefore could not determine whether section 11(p) and part 340 apply to the transaction. The final rule defines the term ``financial intermediary,'' as discussed below, for the purposes of part 340. This express limitation on the scope of part 340's coverage will provide greater certainty regarding the applicability of section 11(p) and part 340 to market participants and FDIC staff who conduct asset sales. Third, the final rule clarifies in Sec. 340.1(c)(6) that part 340 is not applicable to a judicial sale or a trustee's sale of property securing an obligation to the FDIC if the sale is not conducted or controlled by the FDIC. Although the FDIC could have a security interest in property serving as collateral and therefore the authority to initiate a foreclosure action, the selection of the purchaser and terms of the sale are not necessarily within the FDIC's control. Rather, a court or trustee would conduct the sale in accordance with applicable state law and would select the purchaser. In this situation, the sale is not a sale by the FDIC. While the plain language of part 340 does not suggest that such a sale would fall within its scope, the FDIC makes this change for the sake of clarity. This exception does not affect sales if the FDIC is in possession of the collateral property and conducts the sale itself, however. Where the FDIC has control over the manner and terms of the sale, it will require the prospective purchaser's certification that the prospective purchaser is not prohibited under section 11(p) or part 340 from purchasing the asset. Section 340.2 sets forth definitions for certain terms used in part 340 and several are revised by the final rule. The definition of ``associated person'' is revised to include limited liability companies of which an individual is a member (or was a member at the time of the occurrence of any event that would result in a restriction on sale as set forth in Sec. 340.4) if the prospective purchaser of assets is an individual and, if the prospective purchaser is a limited liability company, to include the manager of the limited liability company. The definition of ``failed institution'' is revised to remove reference to entities ``owned and controlled'' by the failed institution because the revision to Sec. 340.1(c), discussed above, explicitly states that sales of subsidiary assets are covered under part 340 if the FDIC controls the terms of the sale by agreement or in its role as shareholder. Additionally, references to the Resolution Trust Corporation and RTC are removed in favor of referencing the FDIC's ``predecessor'' agencies. The final rule also adds a new term for use in part 340, ``financial intermediary,'' which is defined to mean any broker, dealer, bank, underwriter, exchange, clearing agency registered with the SEC under section 17A of the Securities Exchange Act of 1934, transfer agent (as defined in section 3(a)(25) of the Securities Exchange Act of 1934), central counterparty or any other entity whose role is to facilitate a transaction by, as a riskless intermediary, purchasing a security or qualified financial contract from one counterparty and then selling it to another. This definition is used to [[Page 22888]] identify transactions of marketable financial instruments described in Sec. 340.1(c) that would not be covered by section 11(p) or part 340. Although not separately defined in the final rule, the term ``security'' is intended to apply broadly and include, without limitation, all instruments which constitute securities under Federal securities laws. Section 340.4 sets forth the conditions under which a person (whether an individual or entity) is prohibited from acquiring assets of a failed institution from the FDIC. Those conditions are that the person, or its associated person: (1) Participated as an officer or director of a failed institution or of an affiliate of a failed institution, ``in a material way in a transaction that caused a substantial loss to the failed institution'' (as defined in paragraph (b) of Sec. 340.4); (2) has been removed from a failed institution by order of a primary federal regulatory agency; (3) engaged in a ``pattern or practice of defalcation'' (as defined in paragraph (c) of Sec. 340.4) with respect to obligations owed to a failed institution; or (4) committed a certain criminal offense against a financial institution and is in default on an obligation owed by that person or its associated person. The final rule adds a fifth restriction: Prohibition from purchasing assets of a covered financial company from the FDIC. As explained above, the FDIC believes part 340 should also restrict the sale of assets of a failed institution to individuals or entities who are also prohibited from purchasing assets of a covered financial company from the FDIC under section 210(r) and Sec. 380.13. This ensures consistent treatment of prospective purchasers of assets from the FDIC, whether such assets are assets of a covered financial company or of a failed institution. The final rule amends paragraph (a) of Sec. 340.7, which sets forth the requirement that a prospective purchaser certify that none of the restrictions set forth in part 340 apply to the sale, by adding a sentence stating that the person must also certify that it is not using a straw purchaser or other subterfuge to allow it to purchase an asset of an insured depository institution from the FDIC or benefit from such transaction if such person would otherwise be ineligible to purchase assets from the FDIC under part 340. The FDIC's form certification (the Purchaser Eligibility Certification, FDIC Form 7300/06) already includes a statement under which a prospective purchaser certifies that neither the identity nor form of the prospective purchaser, nor any aspect of the contemplated transaction, has been created or altered to allow an individual or entity who otherwise would be ineligible to purchase assets of a failed institution from the FDIC to benefit from the sale. Explicitly stating this requirement in the regulatory text itself strengthens part 340. Paragraph (b) of Sec. 340.7, which excepts from the self- certification requirement certain federal agencies or instrumentalities and states or political subdivisions of states, is revised in the final rule to include bridge depository institutions as well. A bridge depository institution is expected to be in compliance with part 340 because such entity is newly chartered and subject to control or oversight by the FDIC. Finally, the final rule revises Sec. 340.8, which provides that part 340 does not apply if the sale resolves or settles a person's obligation to the FDIC, to also except a sale that resolves a claim that the FDIC has asserted against a person. This is not intended to be a substantive change but to more closely track section 11(p), which excepts sales that resolve or settle claims as well as obligations. This change ensures that the regulation cites both bases for exception set forth in the statute. It also ensures consistency with the equivalent provision in paragraph (a)(2)(vi) of Sec. 380.13. The final rule's changes to part 340 ensure consistency among part 340 and Sec. 380.13. This will facilitate efficient administration of the two rules and will help the public better understand how and when each applies. One comment submitted in response to the proposed rule noted that the revisions to part 340 will help to clarify the purpose, scope and applicability, and will make part 340 more consistent with the parallel provision in the FDIC's Orderly Liquidation Authority regulations that implements section 210(r) (Sec. 380.13). The comment goes on to state that the proposed revisions will improve regulatory consistency and understandability, align better with market practices, and promote the regulatory objectives and intentions under the Federal Deposit Insurance Act. The substantive amendments and technical and conforming changes to part 340 that are made in the final rule are extensive. Therefore, the FDIC is revising and restating the text of part 340 in full rather than through fragmentary amendments. III. Regulatory Analysis and Procedure A. Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act (PRA), the FDIC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.\2\ The FDIC has developed a purchaser eligibility certification form for use by prospective purchasers of assets of a failed institution to establish compliance with part 340. The certification is an OMB-approved collection of information under the PRA.\3\ The FDIC expects that the net PRA burden estimates of this collection will not be affected by the changes made in the final rule. Any subsequent changes to the form will be submitted by the FDIC to OMB for review and approval. --------------------------------------------------------------------------- \2\ 44 U.S.C. 3501, et seq. \3\ OMB Number: 3064-0135. --------------------------------------------------------------------------- Title of Information Collection: Purchaser Eligibility Certification. OMB Control Number: 3064-0135. Form Number: FDIC Form 7300/06. Affected Public: Prospective purchasers of failed insured depository institution assets. Frequency of Response: Event generated. Estimated Number of Respondents: 1,500. Time per Response: 30 minutes. Total Estimated Annual Burden: 750 hours. The FDIC has a continuing interest in comments on paperwork burden. Comments are invited on (a) whether the collection of information is necessary for the proper performance of the FDIC's functions, including whether the information has practical utility; (b) the accuracy of the estimates of the burden of the information collection, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology. B. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) requires that an agency either certify that a final rule will not have a significant economic impact on a substantial number of small entities or prepare an initial regulatory flexibility analysis of the rule and publish the analysis for comment.\4\ The RFA provides that an agency is not required to prepare and publish a regulatory flexibility analysis if the agency certifies that the final rule will not have a [[Page 22889]] significant economic impact on a substantial number of small entities. The FDIC hereby certifies pursuant to 5 U.S.C. 605(b) that the final rule would not have a significant economic impact on a substantial number of small entities within the meaning of the RFA. --------------------------------------------------------------------------- \4\ 5 U.S.C. 601, et seq. --------------------------------------------------------------------------- Under regulations issued by the Small Business Administration, a ``small entity'' includes those firms in the ``Finance and Insurance'' sector whose size varies from $7.5 million or less in assets (mortgage and nonmortgage loan brokers) to $550 million or less in assets (commercial banks, savings institutions, credit unions, and others).\5\ The final rule imposes no new burden on prospective purchasers of assets sold by the FDIC. The requirement that a prospective purchaser complete and submit the Purchaser Eligibility Certification described above is a precondition to sale that is already required. Completion of the Purchaser Eligibility Certification does not require the use of professional skills or the preparation of special reports or records and should continue to have minimal economic impact on those individuals and entities that seek to purchase assets from the FDIC. Thus, any impact on small entities will not be substantial. --------------------------------------------------------------------------- \5\ 13 CFR 121.201. --------------------------------------------------------------------------- C. Small Business Regulatory Enforcement Fairness Act The Office of Management and Budget has determined that the final rule is not a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), which provides for agencies to report rules to Congress and for Congress to review such rules.\6\ The reporting requirement is triggered in instances where the FDIC issues a final rule as defined by the Administrative Procedure Act (APA).\7\ Because the FDIC is issuing a final rule as defined by the APA, the FDIC will file the reports required by the SBREFA. --------------------------------------------------------------------------- \6\ Public Law 104-121, 110 Stat. 857. \7\ 5 U.S.C. 551 et seq. --------------------------------------------------------------------------- D. Plain Language Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000.\8\ The FDIC has sought to present the final rule in a simple and straightforward manner. --------------------------------------------------------------------------- \8\ Public Law 106-102, 113 Stat. 1338, 1471. --------------------------------------------------------------------------- Text of the Final Rule Federal Deposit Insurance Corporation 12 CFR Chapter III List of Subjects in 12 CFR Part 340 Asset disposition, Banks, banking. Authority and Issuance For the reasons stated in the SUPPLEMENTARY INFORMATION, the Federal Deposit Insurance Corporation revises part 340 of title 12 of the Code of Federal Regulations to read as follows: PART 340--RESTRICTIONS ON SALE OF ASSETS OF A FAILED INSTITUTION BY THE FEDERAL DEPOSIT INSURANCE CORPORATION Sec. 340.1 What is the statutory authority for the regulation, what are its purpose and scope, and can the FDIC have other policies on related topics? 340.2 Definitions. 340.3 What are the restrictions on the sale of assets by the FDIC if the buyer wants to finance the purchase with a loan from the FDIC? 340.4 What are the restrictions on the sale of assets by the FDIC regardless of the method of financing? 340.5 Can the FDIC deny a loan to a buyer who is not disqualified from purchasing assets using seller-financing under this regulation? 340.6 What is the effect of this part on transactions that were entered into before its effective date? 340.7 When is a certification required, and who does not have to provide a certification? 340.8 Does this part apply in the case of a workout, resolution, or settlement of obligations? Authority: 12 U.S.C. 1819 (Tenth), 1821(p). Sec. 340.1 What is the statutory authority for the regulation, what are its purpose and scope, and can the FDIC have other policies on related topics? (a) Authority. The statutory authority for adopting this part is section 11(p) of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 1821(p). Section 11(p) was added to the FDI Act by section 20 of the Resolution Trust Corporation Completion Act (Pub. L. 103-204, 107 Stat. 2369 (1993)). (b) Purpose. The purpose of this part is to prohibit individuals or entities that improperly profited or engaged in wrongdoing at the expense of a failed institution or covered financial company, or seriously mismanaged a failed institution, from buying assets of a failed institution from the Federal Deposit Insurance Corporation (FDIC). (c) Scope. (1) The restrictions of this part generally apply to sales of assets of failed institutions owned or controlled by the FDIC in any capacity. (2) The restrictions in this section apply to the sale of assets of a subsidiary of a failed institution or a bridge depository institution if the FDIC controls the terms of the sale by agreement or in its role as shareholder. (3) Unless we determine otherwise, this part does not apply to the sale of securities in connection with the investment of corporate and receivership funds pursuant to the Investment Policy for Liquidation Funds managed by the FDIC as it is in effect from time to time. (4) In the case of a sale of securities backed by a pool of assets that may include assets of failed institutions by a trust or other entity, this part applies only to the sale of assets by the FDIC to an underwriter in an initial offering, and not to any other purchaser of the securities. (5) The restrictions of this part do not apply to a sale of a security or a group or index of securities, a commodity, or any qualified financial contract that, in each case, customarily is traded through a financial intermediary, as defined in Sec. 340.2, where the seller cannot control selection of the purchaser and the sale is consummated through that customary practice. (6) The restrictions of this part do not apply to a judicial sale or a trustee's sale of property that secures an obligation to the FDIC where the sale is not conducted or controlled by the FDIC. (d) The FDIC retains the authority to establish other policies restricting asset sales. Neither 12 U.S.C. 1821(p) nor this part in any way limits the authority of the FDIC to establish policies prohibiting the sale of assets to prospective purchasers who have injured any failed institution, or to other prospective purchasers, such as certain employees or contractors of the FDIC, or individuals who are not in compliance with the terms of any debt or duty owed to the FDIC. Any such policies may be independent of, in conjunction with, or in addition to the restrictions set forth in this part. Sec. 340.2 Definitions. Many of the terms used in this part are defined in the Federal Deposit Insurance Act, 12 U.S.C. 1811, et seq. Additionally, for the purposes of this part, the following terms are defined: (a) Associated person of an individual or entity means: (1) With respect to an individual: (i) The individual's spouse or dependent child or any member of his or her immediate household; [[Page 22890]] (ii) A partnership of which the individual is or was a general or limited partner; (iii) A limited liability company of which the individual is or was a member; or (iv) A corporation of which the individual is or was an officer or director. (2) With respect to a partnership, a managing or general partner of the partnership or with respect to a limited liability company, a manager; or (3) With respect to any entity, an individual or entity who, acting individually or in concert with one or more individuals or entities, owns or controls 25 percent or more of the entity. (b) Default means any failure to comply with the terms of an obligation to such an extent that: (1) A judgment has been rendered in favor of the FDIC or a failed institution; or (2) In the case of a secured obligation, the property securing such obligation is foreclosed on. (c) FDIC means the Federal Deposit Insurance Corporation. (d) Failed institution means any insured depository institution (as defined in 12 U.S.C. 1813(c)) that has been under the conservatorship or receivership of the FDIC or any of its predecessors. (e) Financial intermediary means any broker, dealer, bank, underwriter, exchange, clearing agency registered with the Securities and Exchange Commission (SEC) under section 17A of the Securities Exchange Act of 1934, transfer agent (as defined in section 3(a)(25) of the Securities Exchange Act of 1934), central counterparty or any other entity whose role is to facilitate a transaction by, as a riskless intermediary, purchasing a security or qualified financial contract from one counterparty and then selling it to another. (f) Obligation means any debt or duty to pay money owed to the FDIC or a failed institution, including any guarantee of any such debt or duty. (g) Person means an individual, or an entity with a legally independent existence, including: A trustee; the beneficiary of at least a 25 percent share of the proceeds of a trust; a partnership; a corporation; an association; or other organization or society. (h) Substantial loss means: (1) An obligation that is delinquent for ninety (90) or more days and on which there remains an outstanding balance of more than $50,000; (2) An unpaid final judgment in excess of $50,000 regardless of whether it becomes forgiven in whole or in part in a bankruptcy proceeding; (3) A deficiency balance following a foreclosure of collateral in excess of $50,000, regardless of whether it becomes discharged in whole or in part in a bankruptcy proceeding; (4) Any loss in excess of $50,000 evidenced by an IRS Form 1099-C (Information Reporting for Cancellation of Debt). Sec. 340.3 What are the restrictions on the sale of assets by the FDIC if the buyer wants to finance the purchase with a loan from the FDIC? A person may not borrow money or accept credit from the FDIC in connection with the purchase of any assets of a failed institution from the FDIC if: (a) There has been a default with respect to one or more obligations totaling in excess of $1,000,000 owed by that person or its associated person; and (b) The person or its associated person made any fraudulent misrepresentations in connection with any such obligation(s). Sec. 340.4 What are the restrictions on the sale of assets by the FDIC regardless of the method of financing? (a) A person may not acquire any assets of a failed institution from the FDIC if the person or its associated person: (1) 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; (2) Has been removed from, or prohibited from participating in the affairs of, a failed institution pursuant to any final enforcement action by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the FDIC, or any of their predecessors or successors; (3) Has demonstrated a pattern or practice of defalcation regarding obligations to any failed institution; (4) Has been convicted of committing or conspiring to commit any offense under 18 U.S.C. 215, 656, 657, 1005, 1006, 1007, 1008, 1014, 1032, 1341, 1343 or 1344 affecting any failed institution and there has been a default with respect to one or more obligations owed by that person or its associated person; or (5) Would be prohibited from purchasing the assets of a covered financial company from the FDIC under 12 U.S.C. 5390(r) or its implementing regulation at 12 CFR part 380.13. (b) For purposes of paragraph (a) of this section, a person has participated ``in a material way in a transaction that caused a substantial loss to a failed institution'' if, in connection with a substantial loss to a failed institution, the person has been found in a final determination by a court or administrative tribunal, or is alleged in a judicial or administrative action brought by the FDIC or by any component of the government of the United States or of any state: (1) To have violated any law, regulation, or order issued by a federal or state banking agency, or breached or defaulted on a written agreement with a federal or state banking agency, or breached a written agreement with a failed institution; (2) To have engaged in an unsafe or unsound practice in conducting the affairs of a failed institution; or (3) To have breached a fiduciary duty owed to a failed institution. (c) For purposes of paragraph (a) of this section, a person or its associated person has demonstrated a ``pattern or practice of defalcation'' regarding obligations to a failed institution if the person or associated person has: (1) Engaged in more than one transaction that created an obligation on the part of such person or its associated person with intent to cause a loss to any insured depository institution or with reckless disregard for whether such transactions would cause a loss to any such insured depository institution; and (2) The transactions, in the aggregate, caused a substantial loss to one or more failed institution(s). Sec. 340.5 Can the FDIC deny a loan to a buyer who is not disqualified from purchasing assets using seller-financing under this regulation? The FDIC still has the right to make an independent determination, based upon all relevant facts of a person's financial condition and history, of that person's eligibility to receive any loan or extension of credit from the FDIC, even if the person is not in any way disqualified from purchasing assets from the FDIC under the restrictions set forth in this part. Sec. 340.6 What is the effect of this part on transactions that were entered into before its effective date? This part does not affect the enforceability of a contract of sale and/or agreement for seller financing in effect prior to July 1, 2000. Sec. 340.7 When is a certification required, and who does not have to provide a certification? (a) Before any person may purchase any asset from the FDIC that person must certify, under penalty of perjury, [[Page 22891]] that none of the restrictions contained in this part applies to the purchase. The person must also certify that neither the identity nor form of the person, nor any aspect of the contemplated transaction, has been created or altered with the intent, in whole or in part, to allow an individual or entity who otherwise would be ineligible to purchase assets from the FDIC to benefit directly or indirectly from the proposed transaction. The FDIC may establish the form of the certification and may change the form from time to time. (b) Notwithstanding paragraph (a) of this section, and unless the Director of the FDIC's Division of Resolutions and Receiverships or designee in his or her discretion so requires, a certification need not be provided by: (1) A state or political subdivision of a state; (2) A federal agency or instrumentality such as the Government National Mortgage Association; (3) A federally-regulated, government-sponsored enterprise such as the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation; or (4) A bridge depository institution. Sec. 340.8 Does this part apply in the case of a workout, resolution, or settlement of obligations? The restrictions of Sec. Sec. 340.3 and 340.4 do not apply if the sale or transfer of an asset resolves or settles, or is part of the resolution or settlement of, one or more obligations or claims that have been, or could have been, asserted by the FDIC against the person with whom the FDIC is settling regardless of the amount of such obligations or claims. Dated at Washington, DC, this 21st day of April 2015. By Order of the Board of Directors, Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. 2015-09572 Filed 4-23-15; 8:45 am] BILLING CODE 6714-01-P
![22886 Federal Register / Vol. 80, No. 79 / Friday, April 24, 2015 / Rules and Regulations
Executive Order 12988 § 319.56–25 [Amended] I. Background
■ 2. Section 319.56–25 is amended as
This final rule allows papayas to be The FDIC promulgated part 340 in
follows:
imported into the continental United 2000 to implement section 11(p) of the
■ a. In paragraph (b), by removing the
States from Peru. State and local laws Federal Deposit Insurance Act, (12
and regulations regarding papayas words ‘‘or Ecuador’’ and adding the
U.S.C. 1821(p) (section 11(p)). Under
imported under this rule will be words ‘‘, Ecuador, or Peru’’ in their
place. section 11(p), individuals or entities
preempted while the fruit is in foreign whose acts or omissions have, or may
commerce. Fresh fruits are generally ■ b. In paragraph (g)(2), by adding the
have, contributed to the failure of an
imported for immediate distribution and word ‘‘Peru,’’ after the word ‘‘Ecuador,’’.
insured depository institution (failed
sale to the consuming public, and ■ c. In paragraph (h), by removing the
institution) cannot buy the assets of that
remain in foreign commerce until sold citation ‘‘(h)’’ and adding the citation
failed institution from the FDIC. The
to the ultimate consumer. The question ‘‘(g)’’ in its place.
FDIC expanded the purchaser eligibility
of when foreign commerce ceases in ■ d. In the OMB citation at the end of
restriction as permitted by statute when
other cases must be addressed on a case- the section, by removing the words it promulgated part 340 by precluding
by-case basis. No retroactive effect will ‘‘0579–0128 and 0579–0358’’ and
such individuals or entities from
be given to this rule, and this rule will adding the words ‘‘0579–0128, 0579–
purchasing the assets of any failed
not require administrative proceedings 0358, and 0579–0410’’ in their place.
institution, not only the particular
before parties may file suit in court Done in Washington, DC, this 20th day of institution affected by the actions of the
challenging this rule. April 2015. respective individuals or entities. As
Paperwork Reduction Act Kevin Shea, provided in section 11(p), part 340 also
Administrator, Animal and Plant Health prohibits the sale of assets involving
In accordance with section 3507(d) of Inspection Service. FDIC financing to certain persons who
the Paperwork Reduction Act of 1995 [FR Doc. 2015–09576 Filed 4–23–15; 8:45 am] have defaulted on obligations of $1
(44 U.S.C. 3501 et seq.), the information BILLING CODE 3410–34–P million or more, in aggregate, owed to
collection or recordkeeping a failed insured depository institution or
requirements included in this final rule, the FDIC and who have made fraudulent
which were filed under 0579–0410, misrepresentations in connection with
have been submitted for approval to the FEDERAL DEPOSIT INSURANCE any of those obligations. Compliance
Office of Management and Budget CORPORATION with part 340 is established through a
(OMB). When OMB notifies us of its self-certification process in which a
decision, if approval is denied, we will 12 CFR Part 340 prospective purchaser certifies that it is
publish a document in the Federal eligible to purchase an asset from the
Register providing notice of what action RIN 3064–AE26 FDIC and that the FDIC’s sale of an asset
we plan to take. to such prospective purchaser would
Restrictions on Sale of Assets of a not be restricted under section 11(p) or
E-Government Act Compliance Failed Institution by the Federal part 340.
The Animal and Plant Health Deposit Insurance Corporation
In March of 2014, the FDIC
Inspection Service is committed to AGENCY: Federal Deposit Insurance promulgated § 380.13 to implement
compliance with the E-Government Act Corporation. section 210(r) of the Dodd-Frank Wall
to promote the use of the Internet and
other information technologies, to ACTION: Final rule. Street Reform and Consumer Protection
provide increased opportunities for Act, (12 U.S.C. 5390(r) (section 210(r)).
SUMMARY: With this final rule, the Section 210(r) prohibits certain sales of
citizen access to Government
Federal Deposit Insurance Corporation assets held by the FDIC in the course of
information and services, and for other
(FDIC) is revising its rule concerning liquidating a covered financial
purposes. For information pertinent to
restrictions on the sale of assets of a company. Because section 210(r) and
E-Government Act compliance related
failed institution under the Federal section 11(p) share substantially similar
to this rule, please contact Ms. Kimberly
Deposit Insurance Act in order to clarify statutory language, part 340 served as a
Hardy, APHIS’ Information Collection
the purpose, scope and applicability of model for the development of § 380.13.
Coordinator, at (301) 851–2727.
that rule and to make that rule more While many aspects of part 340 were
List of Subjects in 7 CFR Part 319 consistent with the FDIC’s rule included in § 380.13, FDIC staff
concerning restrictions on the sale of identified new or different concepts to
Coffee, Cotton, Fruits, Imports, Logs, assets of a covered financial company include in § 380.13 that were not
Nursery stock, Plant diseases and pests, under the Dodd-Frank Wall Street
Quarantine, Reporting and already in part 340. The addition of
Reform and Consumer Protection Act. these concepts into part 340 will
recordkeeping requirements, Rice,
Vegetables. DATES: This final rule is effective July 1, improve part 340 and make it more
2015. consistent with § 380.13.
Accordingly, we are amending 7 CFR
part 319 as follows: FOR FURTHER INFORMATION CONTACT: II. Notice of Proposed Rulemaking
James D. Sigler, Senior Franchise and
PART 319–FOREIGN QUARANTINE Asset Marketing Specialist, 571–858– On October 21, 2014, the Board of
NOTICES 8284; Elizabeth Falloon, Supervisory Directors approved a notice of proposed
tkelley on DSK3SPTVN1PROD with RULES
Counsel, Legal Division, 703–562–6148; rulemaking entitled ‘‘Restrictions on
■ 1. The authority citation for part 319 Shane Kiernan, Counsel, Legal Division, Sale of Assets by the Federal Deposit
continues to read as follows: 703–562–2632; Federal Deposit Insurance Corporation’’ (the proposed
Insurance Corporation, 550 17th Street rule), which was published in the
Authority: 7 U.S.C. 450 and 7701–7772
and 7781–7786; 21 U.S.C. 136 and 136a; 7 NW., Washington, DC 20429. Federal Register on October 24, 2014
CFR 2.22, 2.80, and 371.3. SUPPLEMENTARY INFORMATION: with a 60-day comment period that
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![Federal Register / Vol. 80, No. 79 / Friday, April 24, 2015 / Rules and Regulations 22891
that none of the restrictions contained SUMMARY: This action establishes Class part 71.1. The Class E airspace
in this part applies to the purchase. The E airspace at Cando, ND. Controlled designations listed in this document
person must also certify that neither the airspace is necessary to accommodate will be published subsequently in the
identity nor form of the person, nor any new Standard Instrument Approach Order.
aspect of the contemplated transaction, Procedures (SIAP) at Cando Municipal
Availability and Summary of
has been created or altered with the Airport. The FAA is taking this action
Documents for Incorporation by
intent, in whole or in part, to allow an to enhance the safety and management
Reference
individual or entity who otherwise of Instrument Flight Rules (IFR)
would be ineligible to purchase assets operations for SIAPs at the airport. This document amends FAA Order
from the FDIC to benefit directly or DATES: Effective date: 0901 UTC, June 7400.9Y, airspace Designations and
indirectly from the proposed 25, 2015. The Director of the Federal Reporting Points, dated August 6, 2014,
transaction. The FDIC may establish the Register approves this incorporation by and effective September 15, 2014. FAA
form of the certification and may change reference action under 1 Code of Federal Order 7400.9Y is publicly available as
the form from time to time. Regulations, Part 51, subject to the listed in the ADDRESSES section of this
(b) Notwithstanding paragraph (a) of annual revision of FAA Order 7400.9 final rule. FAA Order 7400.9Y lists
this section, and unless the Director of and publication of conforming Class A,B,C,D, and E airspace areas, air
the FDIC’s Division of Resolutions and amendments. traffic service routes, and reporting
Receiverships or designee in his or her points.
ADDRESSES: FAA Order 7400.9Y,
discretion so requires, a certification Airspace Designations and Reporting The Rule
need not be provided by: Points, and subsequent amendments can
(1) A state or political subdivision of This action amends Title 14 Code of
be viewed on line at http:// Federal Regulations (14 CFR) Part 71 by
a state; www.faa.gov/airtraffic/publications/.
(2) A federal agency or establishing Class E airspace designated
The Order is also available for as a surface area within a 6.5-mile
instrumentality such as the Government inspection at the National Archives and
National Mortgage Association; radius of Cando Municipal Airport,
Records Administration (NARA). For Cando, ND. Controlled airspace is
(3) A federally-regulated, government-
information on the availability of this necessary to accommodate new
sponsored enterprise such as the
material at NARA, call 202–741–6030, Standard Instrument Approach
Federal National Mortgage Association
or go to http://www.archives.gov/ Procedures at Cando Municipal Airport.
or Federal Home Loan Mortgage
federal_register/code_of_federal- The FAA is taking this action to
Corporation; or
regulations/ibr_locations.html. enhance the safety and management of
(4) A bridge depository institution.
FAA Order 7400.9, Airspace IFR operations for SIAPs at the airport.
§ 340.8 Does this part apply in the case of Designations and Reporting Points, is The FAA has determined that this
a workout, resolution, or settlement of published yearly and effective on regulation only involves an established
obligations? September 15. For further information, body of technical regulations for which
The restrictions of §§ 340.3 and 340.4 you can contact the Airspace Policy and frequent and routine amendments are
do not apply if the sale or transfer of an ATC Regulations Group, Federal necessary to keep them operationally
asset resolves or settles, or is part of the Aviation Administration, 800 current. Therefore, this regulation: (1) Is
resolution or settlement of, one or more Independence Avenue SW., not a ‘‘significant regulatory action’’
obligations or claims that have been, or Washington, DC, 29591; telephone: 202– under Executive Order 12866; (2) is not
could have been, asserted by the FDIC 267–8783. a ‘‘significant rule’’ under DOT
against the person with whom the FDIC FOR FURTHER INFORMATION CONTACT: Regulatory Policies and Procedures (44
is settling regardless of the amount of Rebecca Shelby, Central Service Center, FR 11034; February 26, 1979); and (3)
such obligations or claims. Operations Support Group, Federal does not warrant preparation of a
Dated at Washington, DC, this 21st day of Aviation Administration, Southwest regulatory evaluation as the anticipated
April 2015. Region, 2601 Meacham Blvd., Fort impact is so minimal. Since this is a
By Order of the Board of Directors, Federal Worth, TX 76137; telephone: 817–321– routine matter that only affects air traffic
Deposit Insurance Corporation. 7740. procedures and air navigation, it is
Robert E. Feldman, SUPPLEMENTARY INFORMATION: certified that this rule, when
promulgated, does not have a significant
Executive Secretary. History economic impact on a substantial
[FR Doc. 2015–09572 Filed 4–23–15; 8:45 am]
On October 28, 2014, the FAA number of small entities under the
BILLING CODE 6714–01–P published in the Federal Register a criteria of the Regulatory Flexibility Act.
notice of proposed rulemaking (NPRM) The FAA’s authority to issue rules
to establish Class E airspace for IFR regarding aviation safety is found in
DEPARTMENT OF TRANSPORTATION operations at Cando Municipal Airport, Title 49 of the U.S. Code. Subtitle 1,
Cando, ND, creating additional Section 106, describes the authority of
Federal Aviation Administration controlled airspace at Cando Municipal the FAA Administrator. Subtitle VII,
Airport (79 FR 64151) Docket No. FAA– Aviation Programs, describes in more
14 CFR Part 71 2014–0746. Interested parties were detail the scope of the agency’s
[Docket No. FAA–2014–0746; Airspace invited to participate in this rulemaking authority. This rulemaking is
Docket No. 14–AGL–2] effort by submitting written comments promulgated under the authority
on the proposal to the FAA. No described in Subtitle VII, Part A,
tkelley on DSK3SPTVN1PROD with RULES
Establishment of Class E Airspace; comments were received. Class E Subpart I, Section 40103. Under that
Cando, ND airspace designations are published in section, the FAA is charged with
AGENCY: Federal Aviation paragraph 6005 of FAA Order 7400.9Y prescribing regulations to assign the use
Administration (FAA), DOT. dated August 6, 2014, and effective of airspace necessary to ensure the
September 15, 2014, which is safety of aircraft and the efficient use of
ACTION: Final rule.
incorporated by reference in 14 CFR airspace. This regulation is within the
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Document Created: 2015-12-16 08:43:21
Document Modified: 2015-12-16 08:43:21
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | This final rule is effective July 1, 2015. | |
| Contact | James D. Sigler, Senior Franchise and Asset Marketing Specialist, 571-858-8284; Elizabeth Falloon, Supervisory Counsel, Legal Division, 703-562-6148; Shane Kiernan, Counsel, Legal Division, 703-562-2632; Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429. | |
| FR Citation | 80 FR 22886 | |
| RIN Number | 3064-AE26 | |
| CFR Associated | Asset Disposition; Banks and Banking |
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