81_FR_92838 81 FR 92594 - Receiverships for Uninsured National Banks

81 FR 92594 - Receiverships for Uninsured National Banks

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency

Federal Register Volume 81, Issue 244 (December 20, 2016)

Page Range92594-92603
FR Document2016-30666

The Office of the Comptroller of the Currency (OCC) is adopting a final rule addressing the conduct of receiverships for national banks that are not insured by the Federal Deposit Insurance Corporation (FDIC) (uninsured banks) and for which the FDIC would not be appointed as receiver. The final rule implements the provisions of the National Bank Act (NBA) that provide the legal framework for receiverships of such institutions. The final rule adopts the rule as proposed without change.

Federal Register, Volume 81 Issue 244 (Tuesday, December 20, 2016)
[Federal Register Volume 81, Number 244 (Tuesday, December 20, 2016)]
[Rules and Regulations]
[Pages 92594-92603]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-30666]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 51

[Docket ID OCC-2016-0017]
RIN 1557-AE07


Receiverships for Uninsured National Banks

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
adopting a final rule addressing the conduct of receiverships for 
national banks that are not insured by the Federal Deposit Insurance 
Corporation (FDIC) (uninsured banks) and for which the FDIC would not 
be appointed as receiver. The final rule implements the provisions of 
the National Bank Act (NBA) that provide the legal framework for 
receiverships of such institutions. The final rule adopts the rule as 
proposed without change.

DATES: This final rule is effective on January 19, 2017.

FOR FURTHER INFORMATION CONTACT: Mitchell Plave, Special Counsel, 
Legislative and Regulatory Activities Division, (202) 649-5490, or for 
persons who are deaf or hard of hearing, TTY, (202) 649-5597, or 
Richard Cleva, Senior Counsel, Bank Activities and Structure Division, 
(202) 649-5500, Office of the Comptroller of the Currency, 400 7th 
Street SW., Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Introduction

    On September 13, 2016, the OCC published a proposed rule to 
implement the provisions of the NBA that provide the legal framework 
for receiverships for uninsured banks,\1\ 12 U.S.C. 191--200,

[[Page 92595]]

with comments due by November 14, 2016.\2\ The OCC received 11 comments 
concerning the proposal. For the reasons discussed in section III of 
the SUPPLEMENTARY INFORMATION, the OCC is adopting the rule as 
proposed, without change.
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    \1\ All Federal savings associations (FSAs), including trust-
only FSAs, are required to be insured. For this reason, this final 
rule does not apply to FSAs, given that receiverships for FSAs would 
be conducted by the FDIC.
    \2\ Receiverships for Uninsured National Banks, 81 FR 62835 
(September 13, 2016) (Proposed Rule).
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II. Background

    As of December 2, 2016, the OCC supervised 52 uninsured banks, all 
of which are national trust banks.\3\ Uninsured national trust banks 
have fundamentally different business models compared to commercial and 
consumer banks and savings associations and therefore face very 
different types of risks. National trust banks typically have few 
assets on the balance sheet, usually composed of cash on deposit with 
an insured depository institution, investment securities, premises and 
equipment, and intangible assets. These banks exercise fiduciary and 
custody powers, do not make loans, do not rely on deposit funding, and 
consequently have simple liquidity management programs. In view of 
these differences, the OCC typically requires these banks to hold 
capital in a specific minimum amount; as a result they hold capital in 
amounts that exceed substantially the ``well capitalized'' standard 
that applies when national banks calculate their capital pursuant to 
the OCC's rules in 12 CFR part 3.
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    \3\ The OCC may charter national banks whose operations are 
limited to those of a trust company and related activities (national 
trust bank). See, e.g., 12 U.S.C. 27(a); 12 CFR 5.20(l).
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    The business model of national trust banks is to generate income in 
the form of fees by offering fiduciary and custodial services that 
generally fall into one or more of a few broad categories. Some 
national trust banks focus on institutional asset management, providing 
trust and custodial services for investment portfolios of pension 
plans, foundations and endowments, and other entities, often with an 
investment management component. A few other national trust banks serve 
primarily as a fiduciary and custodian to facilitate the establishment 
of Individual Retirement Accounts by customers of an affiliated mutual 
fund complex or broker-dealer firm. Some national trust banks provide 
custodial services, such as corporate trust accounts, under which the 
bank performs services for others in connection with their issuance, 
transfer, and registration of debt or equity securities. Other custody 
accounts may be a holding facility for customer securities, where the 
bank assists institutional customers with global settlement and 
safekeeping of the customer's securities.
    Many of the uninsured national trust banks are subsidiaries or 
affiliates of a full-service insured national bank or are affiliates of 
an insured state bank. Other uninsured national trust banks are not 
affiliated with an insured depository institution, but are affiliated 
with an investment management firm or other financial services firm. 
Still other uninsured national trust banks have no affiliation with a 
larger parent company.\4\
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    \4\ For additional discussion of the business model of uninsured 
national trust banks, see Proposed Rule, 81 FR at 62836-62837.
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    The OCC appoints and oversees receivers for uninsured banks under 
the provisions of the NBA \5\ and the substantial body of case law 
applying the statutory provisions and common law receivership 
principles to national bank receiverships.\6\ The FDIC is the required 
receiver only for an insured national (or state) bank.\7\ Based on the 
statutory history of the NBA and FIRREA, it is likely that the Federal 
Deposit Insurance Act (FDIA) would not apply to an OCC receivership of 
an uninsured bank conducted by the OCC, and that such a receivership 
would be governed exclusively by the NBA, the common law of receivers, 
and cases applying the statutes and common law to national bank 
receiverships. While FIRREA and the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (FDICIA) greatly expanded the 
FDIC's powers in resolving failed insured depository institutions, the 
OCC believes that those additional powers are not available to the OCC 
as receiver of uninsured banks under the NBA.
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    \5\ 12 U.S.C. 191-200.
    \6\ For a discussion of the statutory history relating to 
receiverships of national banks conducted by the OCC, under the NBA, 
and by the FDIC, pursuant to the Financial Institutions Reform, 
Recovery and Enforcement Act of 1989 (FIRREA), see Proposed Rule, 81 
FR at 62836.
    \7\ Section 11(c)(2)(A)(ii) of the FDIA provides that the FDIC 
``shall'' be appointed receiver, and ``shall'' accept such 
appointment, whenever a receiver is appointed for the purpose of 
liquidation or winding up the affairs of an insured Federal 
depository institution by the appropriate Federal banking agency, 
notwithstanding any other provision of Federal law. 12 U.S.C. 
1821(c)(2)(A)(ii). The term ``Federal depository institution'' 
includes national banks. 12 U.S.C. 1813(c)(4).
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    The OCC has not appointed a receiver for an uninsured bank since 
shortly after the Congress established the FDIC in response to the 
banking panics of 1930-1933. National trust banks face very different 
types of risks because of the fundamentally different business model of 
national trust banks compared to commercial and consumer banks and 
savings associations. These risks include operational, compliance, 
strategic, and reputational risks without the credit and liquidity 
risks that additionally affect the solvency of commercial and consumer 
banks. While any of these risks can result in the precipitous failure 
of a bank or savings association, from a historical perspective, trust 
banks have been more likely to decline into a weakened condition, 
allowing the OCC and the institution the time needed to find other 
solutions for rehabilitating the institution or to successfully resolve 
the institution without the need to appoint a receiver.
    The OCC believes it would nevertheless be beneficial to financial 
market participants and the broader community of regulators for the OCC 
to clarify the receivership framework for uninsured banks. Although the 
OCC conducted 2,762 receiverships pursuant to this framework in the 
years prior to the creation of the FDIC,\8\ and the associated legal 
issues are the subject of a robust body of published judicial 
precedents, the details have not been widely articulated in recent 
jurisprudence or legal commentary. This final rule may also facilitate 
synergies with the ongoing efforts of U.S. and international financial 
regulators since the financial crisis to enhance our readiness to 
respond effectively to the different critical financial distresses that 
could manifest themselves unexpectedly in the diverse types of 
financial firms presently operating in the market.
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    \8\ Annual Report of the Comptroller of the Currency for the 
Year Ended October 31, 1934 at 33 (discussing the status of active 
and closed receiverships under the jurisdiction of the Comptroller 
between 1865 and 1934).
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III. Public Comments on the Proposed Rule

    The OCC received 11 comments from the public in response to the 
OCC's notice of proposed rulemaking and the alternatives the OCC 
discussed therein. The commenters included individuals, a state trust 
company, and a think tank, as well as representatives of consumer 
groups, financial reform advocacy groups, state banking regulators, 
banking institutions, and bitcoin firms. These submissions offered 
issues and viewpoints about selected portions of the proposed rule's 
regulatory provisions for the OCC's consideration; these are discussed 
in connection with the discussion of the OCC's rationale for issuing 
the associated portions of the final rule, in Section III of this 
SUPPLEMENTARY INFORMATION.

[[Page 92596]]

    As part of the notice of proposed rulemaking, the OCC also asked 
for the public's input on a number of specific questions and received 
comments on two of these questions. One question was whether any unique 
considerations would be raised by applying the proposed rule's 
framework for receivership of uninsured national banks, which are all 
national trust banks at present, to other uninsured banks that would be 
organized to engage in the delivery of banking services in new and 
innovative ways, such as special purpose national banks engaged in 
financial technology (fintech) activities.\9\
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    \9\ See Proposed Rule, 81 FR at 62837 (discussing the OCC's 
initiative on responsible innovation in the Federal banking system, 
and the OCC's authority to charter special purpose banks that engage 
in selected core non-depository services within the business of 
banking).
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    On this receivership framework question, two commenters expressed 
concerns that the earlier-established legal regime for receiverships 
under the NBA and associated judicial precedent does not include select 
elements subsequently created for insured depository institutions under 
FIRREA and FDICIA, and thus might not be as effective outside the trust 
bank sphere in application to the receivership of special purpose 
national banks engaged in fintech activities. These commenters said the 
OCC should refrain from chartering these special purpose national banks 
until the law changes to address this difference. One commenter 
expressed concern that the rule's incorporation of the NBA's priority 
requirements for payment of receivership claims, which include no 
preference for consumer claims over other general creditors, might have 
the effect of distorting incentives among debt investors across special 
purpose national banks, and more broadly contribute to moral hazard.
    The OCC understands these comments to be urging, in effect, changes 
in the statutory receivership provisions underlying the rule. Absent 
Congressional action to do so, however, the current provisions of the 
NBA are the ones that would govern should it become necessary to 
appoint a receiver for an uninsured national bank. The OCC believes it 
is best to be clear, through a regulation implementing those NBA 
provisions, about the framework that would apply in order to avoid 
clouding the ongoing discussion about the chartering of special purpose 
national banks engaged in fintech activities with uncertainty about how 
uninsured institutions are resolved.
    More broadly, some commenters said the OCC should consider 
receivership and cost issues in deciding whether to charter special 
purpose national banks engaged in fintech activities, or the terms on 
which they could be chartered. Two commenters said the nature of a 
fintech firm's business diverges widely from banks, and that creditor 
loss rates in a receivership for an uninsured special purpose national 
bank engaged in fintech activities may exceed levels that are tolerable 
in the resolution of a chartered bank. These commenters said this was a 
contra-indication for chartering such banks, but one of the commenters 
further elaborated that the OCC can and should exercise particularly 
close supervision of these firms and thereby reduce the risk of 
receiverships ever taking place. Another commenter said that fintech 
firms do not have national trust banks' track record for remaining 
solvent and avoiding receivership, and the OCC should mitigate 
potential concerns about receivership costs by imposing capital support 
agreements and similar obligations in chartering special purpose 
national banks that engage in fintech activities.
    In contrast to these views about the uniqueness of special purpose 
national banks engaged in fintech activities, one commenter said that a 
fintech firm, such as a digital currency exchange, performs a function 
comparable to a national trust bank that obtains payments on behalf of 
customers and provides security for those funds, and therefore such 
institutions do not pose unique considerations for the receivership 
framework. Another commenter said the functions of special purpose 
national banks that engage in fintech activities could be even simpler 
than a national trust bank, such as a special purpose national bank 
that provides fintech payment services where each customer transaction 
is brief and segregated. For special purpose national banks engaged in 
fintech activities involving lending, this commenter stated the 
customer relationships are somewhat longer but still discrete, and that 
the OCC could adequately eliminate concerns about the impact of a 
receivership by ensuring the bank's plans for back-up servicing and 
orderly wind-up were robust.
    Some commenters discussed additional topics not touching on the 
receivership issues covered by the notice of proposed rulemaking, but 
more germane to the desired framework for creating, regulating, and 
supervising special purpose national banks that engage in fintech 
activities or uninsured national trust banks. These broader comments do 
not pertain to the OCC's adoption of the final rule for uninsured banks 
and many of them implicate issues that the OCC would need to evaluate 
on a case-by-case basis in connection with a decision on whether to 
charter a particular special purpose national bank that engages in 
fintech activities. The OCC has recently published and invited comment 
on a paper discussing these issues.\10\ We will consider the broader 
comments on fintech chartering submitted as part of this rulemaking 
together with those we receive in response to the paper.
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    \10\ See Exploring Special Purpose National Bank Charters for 
Fintech Companies (Dec. 2016), available at https://www.occ.gov/topics/bank-operations/innovation/special-purpose-national-bank-charters-for-fintech.pdf.
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    In the second question asked in the preamble to the Proposed Rule, 
the OCC asked for alternatives that would take into account the cost 
considerations that could arise for the OCC if the administrative 
expenses of an uninsured national bank receivership exceeded the assets 
in the receivership.\11\ In response to this question, one commenter 
urged the OCC not to impose assessment costs for special purpose 
national banks that engage in fintech activities on insured national 
banks, and another commenter further urged the OCC not to impose 
assessment costs for such banks on uninsured national trust banks. The 
OCC continues to consider what approach to assessments would be 
appropriate should it approve charters for special purpose national 
banks engaged in fintech activities. Any resulting modification to the 
OCC's assessment structure would be proposed for public comment in a 
separate rulemaking.
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    \11\ See Proposed Rule, 81 FR at 62838 (discussing the 
receiver's priority claim to liquidation proceeds for administrative 
expenses, the OCC's potential direct expenses for its receivership 
functions, and funding alternatives, such as building resources to 
defray these costs through the OCC's regulations governing the OCC's 
collection of assessments from uninsured national banks).
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IV. The Final Rule

Overview
    The final rule incorporates the framework set forth in the NBA for 
the Comptroller to appoint a receiver for an uninsured bank, generally 
under the same grounds for appointment of the FDIC as receiver for 
insured national banks. The uninsured bank may challenge the 
appointment in court, and the NBA affords jurisdiction to the 
appropriate United States district court for this purpose. The OCC will 
provide the public with notice of the appointment, as well as 
instructions for submitting claims against the uninsured bank in 
receivership. The Comptroller

[[Page 92597]]

may appoint any person as receiver, including the OCC or another 
government agency. The receiver carries out its duties under the 
direction of the Comptroller.
    The final rule also follows the statutory framework under the NBA 
with respect to claims, under which persons with claims against an 
uninsured bank in receivership will file their claims with the receiver 
for the failed uninsured bank, for review by the OCC. In the event the 
OCC denies the claim, the only remedy available to the claimant is to 
bring a judicial action against the uninsured bank's receivership 
estate and assert the claim de novo. A person is also free to initiate 
a claim by bringing an action against the receivership estate in court 
for adjudication and then submit the judgment to the OCC to participate 
in ratable dividends of liquidation proceeds along with other approved 
and adjudicated claims.\12\
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    \12\ See First Nat'l Bank of Bethel v. Nat'l Pahquioque Bank, 81 
U.S. 383, 401 (1871).
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    Approved or adjudicated claims are paid solely out of the assets of 
the uninsured national bank in receivership. This reflects the legal 
distinction between the OCC as regulatory agency and the OCC acting in 
a receivership capacity. In the former, the OCC oversees national 
banks, FSAs, and Federal branches and Federal agencies, supervising 
them under the charge of assuring the safety and soundness of, and 
compliance with laws and regulations, fair access to financial 
services, and fair treatment of customers by, the institutions and 
other persons subject to its jurisdiction. As receiver, the OCC 
appoints and oversees receivers for uninsured national banks, thereby 
facilitating the winding down of bank operations, assets, and accounts 
while minimizing disruptions to customers and creditors of the 
institution. Under the ``separate capacities'' doctrine, which has long 
been recognized in litigation involving the FDIC, it is well 
established that the agency, when acting in one capacity, is not liable 
for claims against the agency acting in its other capacity.\13\
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    \13\ For a discussion of the separate capacities doctrine and 
related case law, see Proposed Rule, 81 FR at 62838.
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    As provided in the final rule, the receiver liquidates the assets 
of the uninsured bank, with court approval, and pays the proceeds into 
an account as directed by the OCC. The categories of claims and the 
priority thereof for payment are set out in the final rule. The final 
rule also clarifies certain powers held by the receiver.
Section-by-Section Analysis
    Section 51.1 of the final rule identifies the purpose and scope of 
the final rule and clarifies that the rule applies to receiverships 
conducted by the OCC under the NBA for national banks that are not 
insured by the FDIC.\14\ The final rule does not extend to 
receiverships for uninsured Federal branches, although elements of the 
framework may be similar for uninsured Federal branch receiverships, 
which would also be resolved under provisions of the NBA.
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    \14\ A nationwide organization of state regulators requested 
clarity on how the NBA receivership framework for uninsured national 
banks and the OCC's proposed rule thereunder would interact with the 
processes established for debtors and creditors pursuant to the U.S. 
Bankruptcy Code. The OCC is not aware of any opinion of a U.S. 
Bankruptcy Court, or any other U.S. court, finding that an uninsured 
national bank is eligible to be a debtor subject to a petition under 
the Code.
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    Section 51.2 of the final rule is based on 12 U.S.C. 191 and 192 
and concerns appointment of a receiver. The final rule sets out the 
Comptroller's authority to appoint any person, including the OCC or 
another government agency, as receiver for an uninsured bank and 
provides that the receiver performs its duties subject to the approval 
and direction of the Comptroller.\15\ If the Comptroller were to 
appoint the OCC as receiver, the OCC would act in a receivership 
capacity with respect to the uninsured bank in receivership, rather 
than in the OCC's supervisory capacity.
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    \15\ But see 12 U.S.C. 1821(c)(6) (Comptroller may appoint the 
FDIC as conservator or receiver and the FDIC has discretion to 
accept such appointment); id. section 1821(c)(2)(C) (FDIC ``not 
subject to any other agency'' when acting as conservator or 
receiver''). Read together, these provisions likely mean that the 
provision in Sec.  51.2 concerning oversight of the receiver by the 
Comptroller would not apply to the FDIC acting as conservator or 
receiver for an uninsured institution, should the Comptroller 
appoint the FDIC and the FDIC accept such an appointment.
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    As discussed earlier, this dual capacity (OCC as supervisor versus 
OCC as receivership sponsor for an uninsured bank) recognizes that, 
while the NBA makes the receivership oversight and claims review 
functions of the Comptroller part of the OCC's responsibilities, the 
receivership oversight role is unique and distinct from the OCC's role 
as a Federal regulatory agency and supervisor of national banks and 
FSAs. This is comparable to the dual capacity of the FDIC's 
receivership function for insured depository institutions pursuant to 
the FDIA.
    Section 51.2 of the final rule also provides that the Comptroller 
may require the receiver to post a bond or other security and the 
receiver may hire staff and professional advisors, with the approval of 
the Comptroller, if needed to carry out the receivership. This section 
also identifies the grounds for appointment of a receiver for an 
uninsured bank and notes that uninsured banks may seek judicial review 
of the appointment pursuant to 12 U.S.C. 191.
    Section 51.3 of the final rule provides that the OCC will provide 
notice to the public of the appointment of a receiver for the uninsured 
bank. The final rule specifies that one component of this notice will 
include publication in a newspaper of general circulation selected by 
the OCC for three consecutive months, as required by 12 U.S.C. 193. As 
a component of the OCC's notice to the public about the receivership, 
the OCC will also provide instructions for creditors and other 
claimants seeking to submit claims with the receiver for the uninsured 
bank.
    As noted in the proposed rule, the OCC believes that the purpose of 
section 193 may be better served by publication through means in 
addition to the statutorily required publication in a newspaper. For 
example, the OCC could provide direct notice to customers and creditors 
of the uninsured bank to the extent the uninsured bank's records 
included current contact information. The OCC could also arrange to 
provide notice through electronic channels that customers would 
typically use to contact the uninsured bank, such as the uninsured 
bank's Web site. The OCC believes that an effective set of notice 
protocols would best be established on a case-by-case basis, in light 
of a specific uninsured bank's fiduciary and custodial activities, the 
types of customers served by the bank, coordination with other notice 
protocols under way for any related entity that is also undergoing 
resolution activity, and similar factors. The OCC requested comment on 
alternative means of communicating with customers of uninsured banks.
    One commenter, a trade association for banks, suggested that the 
OCC employ notice mechanisms that are consistent with the way in which 
the failed bank typically communicates with its clients and 
counterparties. The commenter suggested, for example, that a receiver 
for an institution with clients in other countries should communicate 
with those clients in the language typically used by the institution in 
its communications with those clients. The OCC agrees that this 
approach would be appropriate in such cases and reiterates that 
effective forms of notice, beyond the statutorily required notice in a 
newspaper, will be evaluated on a case-by-case basis.

[[Page 92598]]

    Section 51.4 of the final rule addresses the submission of claims 
to the receiver for an uninsured bank. Under Sec.  51.4(a), a person 
with a claim against the receivership may submit a claim to the OCC, 
which will consider the claim and make a determination concerning its 
validity and approved amount. This process reflects the provisions in 
12 U.S.C. 193 and 194 regarding presentation of claims and payment of 
dividends on claims that are proved to the satisfaction of the 
Comptroller. Section 51.4 also provides that the Comptroller will 
establish a deadline for filing claims with the receiver, which could 
not be earlier than 30 days after the three-month publication of notice 
required by Sec.  51.3. This provision reflects NBA case law that 
permits the Comptroller to establish a date for filing claims against 
the receiver for a failed bank.\16\
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    \16\ See Queenan v. Mays, 90 F.2d 525, 531 (10th Cir. 1937).
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    Section 51.4(b) of the final rule clarifies that persons with 
claims against an uninsured bank in receivership may present their 
claims to a court of competent jurisdiction for adjudication in 
addition to, or as an alternative to, filing a claim with the OCC. If 
successful in court, such persons will be required to submit a copy of 
the final judgment to the OCC to participate in ratable dividends of 
liquidation proceeds along with claims against the bank in receivership 
submitted to, and approved by, the OCC. The final rule requires 
submission of a copy of the court's final judgment to the OCC. This 
provision is based on 12 U.S.C. 193 and 194.
    In this regard, the receivership regime established by the NBA 
differs somewhat from the approach set out in other resolution regimes, 
such as the bankruptcy provisions of the United States Code and the 
receivership provisions of the FDIA. Under those resolution regimes, 
creditors and claimants must generally submit their claims to the 
receivership estate for centralized administration and disposition, and 
claims that are not submitted by the claims deadline are barred from 
any participation in liquidation payments. The NBA provisions are 
different in that claimants are provided the opportunity to submit 
claims to the OCC for evaluation, but are not foreclosed from pursuing 
judicial resolution by filing litigation (or continuing a pre-existing 
lawsuit) in a court of competent jurisdiction against the uninsured 
bank in receivership.
    The claims filing deadline established by the Comptroller pursuant 
to Sec.  51.4(a) of the final rule is the date by which claimants 
seeking review under the OCC's claims process must make their 
submission. Nevertheless, a claimant that has not made a submission to 
the OCC by the deadline is not barred from initiating judicial claims 
against the uninsured bank in receivership solely by virtue of missing 
the claims deadline.\17\
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    \17\ See First Nat'l Bank of Bethel v. Nat'l Pahquioque Bank, 81 
U.S. 383, 401 (1871); Queenan v. Mays, 90 F.2d 525, 531 (10th Cir. 
1937). As noted earlier, it is incumbent on a claimant that pursues 
the judicial route and ultimately obtains judicial relief to submit 
the final judicial determination and award to the OCC, in order to 
participate in the OCC's periodic ratable dividends of liquidation 
proceeds of the receivership estate. Except with respect to a valid 
and enforceable security interest in specific property of the 
uninsured bank established as part of a final judicial 
determination, there are no assets or funds available to a 
successful judicial claimant other than the ratable dividend process 
set out in 12 U.S.C. 194 and described in Sec.  51.8 of the final 
rule.
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    The NBA's receivership provisions are like the receivership regime 
established by the FDIC under the FDIA, however, in that the avenue 
available to a party whose claim has been denied by the FDIC or OCC, 
when performing the agencies' receivership claims functions, is to file 
(or continue) a de novo judicial action asserting the facts and legal 
theory of the claim against the receivership of the bank. The NBA does 
not contemplate or support further action by the claimant in an 
administrative or judicial forum against the OCC seeking review of the 
claim determination.
    Section 51.4(c) of the final rule provides that if a person with a 
claim against an uninsured bank in receivership also has an obligation 
owed to the bank, the claim and obligation will be set off against each 
other and only the net balance remaining after set-off will be 
considered as a claim. To this end, Sec.  51.4(a) also includes 
language referring to claims for set-off. The right of set-off where 
parties have mutual obligations has long been recognized as an 
equitable principle.\18\ Well-settled case law has held that a 
receivership creditor's or other claimant's equitable right to a set-
off is not precluded by the ratable distribution requirement of the 
NBA, provided such set-off is otherwise legally valid.\19\ If, after 
set-off, an amount is owed to the creditor, the creditor may file a 
claim for the net amount remaining as any other general creditor. 
Conversely, if, after set-off, an amount is owed to the bank, the 
creditor does not have a claim and the net amount remaining is an asset 
of the uninsured bank, which the receiver may obtain in connection with 
marshalling the assets (as described further in Sec.  51.7(a) of the 
final rule).
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    \18\ See, e.g., Scammon v. Kimball, 92 U.S. 362 (1876); Blount 
v. Windley, 95 U.S. 173, 177 (1877); Carr v. Hamilton, 129 U.S. 252 
(1889).
    \19\ See Scott v. Armstrong, 146 U.S. 499, 510 (1892); 
InterFirst Bank of Abilene, N.A. v. FDIC, 777 F.2d 1092, 1095-1096 
(5th Cir. 1985); FDIC v. Mademoiselle of California, 379 F.2d 660, 
663 (9th Cir. 1967).
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    The OCC requested comment on whether there are additional 
characteristics of set-offs or other situations in which set-off may 
arise that should be included in the rule. One commenter, a trade 
association for banks, said that the administration of set-offs may be 
complex, given that the trust and fiduciary business is a fee-based 
industry. The commenter offered the example of instances in which fees 
have been accrued or are otherwise in the process of payment to one or 
more service providers at the time of receivership. The commenter 
suggested that the final rule acknowledge that a given resolution may 
involve bespoke, fact-specific set-off situations that would need to be 
carefully considered, while also serving the need for the receiver or a 
successor fiduciary to be in a position to continue providing fiduciary 
services during the receivership.
    The OCC believes that, on balance, it is not necessary to make this 
kind of an addition to the language of the final rule. Section 51.4 as 
a whole is designed to make the basic framework of claim submission 
transparent to creditors of the uninsured bank, and set-off is included 
as an element of this framework. As the commenter states, the OCC's 
determination of particular claims will require consideration of fact-
specific situations prior to reaching a disposition, and this extends 
to considerations of set-offs. The final rule is designed to 
accommodate with flexibility the consideration of such factors in the 
context in which each claim is postured.
    Section 51.5 of the final rule sets out the order of priorities for 
payment of administrative expenses of the receiver and claims against 
the uninsured bank in receivership. Under this section, the OCC will 
pay these expenses and claims in the following order: (1) 
administrative expenses of the receiver; (2) unsecured creditors, 
including secured creditors to the extent their claim exceeds their 
valid and enforceable security interest; (3) creditors of the uninsured 
bank, if any, whose claims are subordinated to general creditor claims; 
and (4) shareholders of the uninsured bank. The order is based on case 
law and, in the

[[Page 92599]]

case of the first priority for administrative expenses, on 12 U.S.C. 
196.\20\
---------------------------------------------------------------------------

    \20\ See Ticonic Nat'l Bank v. Sprague, 303 U.S. 406, 410-411 
(1938); Merrill v. Nat'l Bank of Jacksonville, 173 U.S. 131, 146 
(1899); Scott v. Armstrong, 146 U.S. 499, 510 (1892); Bell v. 
Hanover Nat'l Bank, 57 F. 821, 822 (C.C.S.D.N.Y. 1893).
---------------------------------------------------------------------------

    A creditor or other claimant with a security interest that was 
valid and enforceable as to its terms prior to the appointment of the 
receiver is entitled to exercise that security interest, outside the 
priority of distributions set out in the final rule.\21\ If the 
collateral value exceeds the amount of the claim as it was immediately 
prior to the receiver's appointment, the surplus remains an asset of 
the uninsured bank, and the receiver may obtain it in connection with 
marshalling the assets (as further described in Sec.  51.7(a) of the 
final rule).\22\
---------------------------------------------------------------------------

    \21\ Ticonic Nat'l Bank v. Sprague, 303 U.S. 406, 410-411 
(1938); Bell v. Hanover Nat'l Bank, 57 F. 821, 822 (C.C.S.D.N.Y. 
1893).
    \22\ Bell v. Hanover Nat'l Bank, 57 F. 821, 822 (C.C.S.D.N.Y. 
1893).
---------------------------------------------------------------------------

    Liens arising from judicial determinations after the initiation of 
the receivership, as well as contractual liens that are triggered due 
to the appointment of a receiver or other post-appointment events, are 
not enforceable. This is because recognition of these liens would 
afford these claimants a priority that is not recognized under the 
established legal priorities described in Sec.  51.5 of the final rule. 
Similarly, a secured creditor is not entitled to a priority 
distribution of any portion of the claim that is not covered by the 
value of the collateral because the creditor is in the position of a 
general unsecured creditor for that portion of the claim and must 
participate in ratable liquidation distributions on par with other 
unsecured creditors.\23\
---------------------------------------------------------------------------

    \23\ Merrill v. Nat'l Bank of Jacksonville, 173 U.S. 131, 146 
(1899).
---------------------------------------------------------------------------

    Assets held by the uninsured bank at the time of the receiver's 
appointment in a fiduciary or custodial capacity, as identified on the 
bank's books and records, are not general assets of the bank. Section 
51.8(b) of the final rule reiterates this point. In the same vein, the 
claim of the customer for the return of the customer's fiduciary or 
custodial assets is separate from, and not subject to, the priority set 
out in Sec.  51.5. Fiduciary and custodial customers of the bank have 
direct claims on those assets pursuant to their fiduciary or custodial 
account contracts. However, the priority of a fiduciary or custodial 
customer's other claims against the bank, if any, would remain subject 
to the priority described in Sec.  51.5. For example, a fiduciary 
customer's claim for a refund of prepaid investment management fees 
that were attributable to periods after the receiver returned the 
fiduciary assets to the customer generally would be a general unsecured 
claim covered by Sec.  51.5(b). The claims process described in Sec.  
51.4(b) is available to a fiduciary customer, for both a direct claim 
for the return of fiduciary assets, as well as a receivership claim for 
amounts the customer believes it is owed by the bank.
    The OCC requested comment on whether there are other Federal 
statutes regarding specific types of claims that may be applicable to a 
receivership of an uninsured bank under the NBA and that would give 
certain claims a different priority, such as claims owed to the Federal 
government. One commenter, a coalition that advocates for reform in the 
financial services industry, agreed that customer assets held by a bank 
in a fiduciary capacity should not be considered assets of the bank, 
but questioned why other claims of the customer, such as a claim for a 
refund of prepaid investment management fees that were attributable to 
periods after the receiver returned the fiduciary assets to the 
customer, would be treated as a unsecured general creditor claim. The 
commenter suggested that such customer funds would have less protection 
in a receivership for an uninsured bank than they would under certain 
modern receivership and bankruptcy statutes that set forth claim 
priorities which include preference to customer claims over other 
general creditor claims.
    The OCC is required, by statute, to pay claims on a ratable basis. 
As discussed in connection with the description of Sec.  51.8 of the 
final rule, this requirement has been interpreted by the courts as 
requiring the OCC to make distributions on OCC-approved claims and 
judicial awards on an equal footing, determining the amount of each 
creditor's claim as it stands at the point of insolvency. As a result, 
the controlling ratable payment statute does not support a rule that 
makes distinctions in distribution priority between customer and 
general creditor claimants.
    Section 51.6 of the final rule provides that all administrative 
expenses of the receiver for an uninsured bank will be paid out of the 
assets of the receivership before payment of claims against the 
receivership. This reflects the requirements in 12 U.S.C. 196. The 
final rule also states that receivership expenses will include pre-
receivership and post-receivership obligations that the receiver 
determines are necessary and appropriate to facilitate the orderly 
liquidation or other resolution of the uninsured bank in receivership. 
To further illustrate the kinds of expenses that Sec.  196 affords a 
first priority claim on the uninsured bank's receivership assets, Sec.  
51.6 enumerates examples of such administrative expenses, such as wages 
and salaries of employees, expenses for professional services, 
contractual rent pursuant to an existing lease or rental agreement, and 
payments to third-party or affiliated service providers, when the 
receiver determines these expenses are of benefit to the receivership.
    Section 51.7 of the final rule contains provisions describing the 
powers and duties of the receiver and the disposition of fiduciary and 
custodial accounts. As described in Sec.  51.7, the receiver will take 
over the assets and operation of the uninsured bank, take action to 
realize on debts owed to the uninsured bank, sell the property of the 
bank, and liquidate the assets of the uninsured bank for payment of 
claims against the receivership. Section 51.7(a)(1)-(5) lists some of 
the major powers and duties for the receiver set out in 12 U.S.C. 192 
and clarified by the courts, including taking possession of the books 
and records of the bank, collecting on debts and claims owed to the 
bank, selling or compromising bad or doubtful debts (with court 
approval), and selling the bank's real and personal property (also with 
court approval).
    Section 51.7(b) of the final rule provides for the receiver to 
close the uninsured bank's fiduciary and custodial appointments, or 
transfer such accounts to a successor fiduciary or custodian under 12 
CFR 9.16 or other applicable Federal law. The uninsured banks currently 
in existence focus on fiduciary and custodial services, so this 
function of the receiver will be of primary importance. This provision 
recognizes that the receiver's power to wind up the affairs of the 
uninsured bank in receivership, acting with court approval to make 
disposition of bank assets, should properly encompass the power to 
transfer fiduciary or custodial appointments and any associated assets 
in appropriate circumstances.
    Transfer of fiduciary appointments may occur under the terms of the 
instrument creating the relationship, if it provides for transfer, or 
under a fiduciary transfer statute, if one is applicable. The OCC 
believes there are strong public policy interests in endeavoring to 
replace fiduciaries and custodians expeditiously, without an 
interruption in service to their customers, if transfer can be arranged 
to a qualified successor, maintaining the

[[Page 92600]]

same duties and standards of care with respect to the customers that 
previously pertained to their accounts at the uninsured bank in 
receivership. The alternative, given that the uninsured bank must be 
wound down and cannot provide services in the future, is to stop 
managing and reinvesting the customer's assets, stop responding to 
directions to transfer or receive assets in custody, close the 
accounts, and seek instructions from the account holders or the courts 
regarding return of associated assets. For institutional customers, 
this is likely to cause significant interruption of the intricate 
machinery of their financial operations. For individuals, it can 
potentially result in loss of asset value in adverse markets, or loss 
of income due to foregone reinvestments.
    Across the United States, there are disparate and often conflicting 
legal rules restricting or conditioning transfers of an appointment of 
a fiduciary for a beneficiary residing within the state. Depending on 
the geographic area across which the uninsured bank has established 
fiduciary relationships with its customers, and the standardization of 
its fiduciary account agreements or appointing instruments, it may be 
practicable for the receiver to transition an uninsured bank's 
fiduciary and custody accounts to a qualified successor through the 
mechanisms provided by applicable local law. On the other hand, if 
faced with dispersed customers, diverse account agreements or 
appointments of different vintage, or even the absence of an applicable 
law of transfer for customers in certain states, reliance on these 
methods may be so cumbersome as to effectively prevent accomplishment 
of the transfers in a timely way.
    In order to address these potential problems, the OCC, relying on 
the support of existing case law, is including language in the final 
rule to make it clear that the uninsured bank receiver's power under 12 
U.S.C. 192 to sell, with court approval, the real and personal property 
of the bank includes the power to transfer the bank's fiduciary 
accounts and related assets, subject to the approval of the court 
exercising jurisdiction over the receiver's efforts to transfer the 
bank's assets. The final rule is consistent with case law recognizing 
that a receiver for a national bank may properly arrange asset purchase 
and liability assumption transactions to move the business of a failed 
bank to a successor on an integrated basis, as part of the power to 
transfer assets, as well as analogous case law concerning the transfer 
of fiduciary and custodial assets by the FDIC, acting as receiver of 
failed insured depository institutions.\24\
---------------------------------------------------------------------------

    \24\ See NCNB Texas National Bank v. Cowden, 895 F.2d 1488 (5th 
Cir. 1990) (holding that the FDIC, as receiver of insolvent bank, 
had authority to transfer fiduciary appointments to a bridge bank 
prior to the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989).
---------------------------------------------------------------------------

    Section 51.7(c) of the final rule incorporates, in general terms, 
the powers, duties, and responsibilities of receivers for national 
banks under the NBA and under judicial precedents determining the 
authorities and responsibilities of receivers for national banks. 
Examples of these powers include: (1) the authority to repudiate 
certain contracts, including: (a) purely executory contracts, upon 
determining that the contracts would be unduly burdensome or 
unprofitable for the receivership estate,\25\ (b) contracts that 
involve fraud or misrepresentation,\26\ and (c) in limited cases, non-
executory contracts that are contrary to public policy; \27\ (2) the 
authority to recover fraudulent transfers; \28\ and (3) the authority 
to enforce collection of notes from debtors and collateral, regardless 
of the existence of side arrangements that would otherwise defeat the 
collectability of such notes.\29\
---------------------------------------------------------------------------

    \25\ Bank One Texas v. Prudential Life Ins. Co., 878 F. Supp. 
943, 964-66 (N.D. Tex. 1995).
    \26\ A. Corbin, Corbin on Contracts Sec.  228 at 320 (1952) 
(addressing contracts voidable for fraud, duress, or mistake).
    \27\ Cf. Fidelity Deposit Co. of Md. v. Conner, 973 F.2d 1236, 
1241 (5th Cir. 1992).
    \28\ See Peters v. Bain, 133 U.S. 670 (1890) (applying state 
substantive law to determine whether to void a transfer); Rogers v. 
Marchant, 91 F.2d 660, 663 (4th Cir. 1937).
    \29\ D'Oench, Duhme & Co., Inc. v. FDIC, 315 U.S. 447, 458 
(1942). A. Corbin, Corbin on Contracts, Sec.  228 at 320 (1952) 
(addressing contracts voidable for fraud, duress or mistake).
---------------------------------------------------------------------------

    Section 51.7(d) of the final rule requires the receiver to make 
periodic reports to the OCC concerning the status and proceedings of 
the receivership.
    Section 51.8 of the final rule contains provisions regarding the 
payment of dividends on claims against the uninsured bank and the 
distribution of any remaining proceeds to shareholders. This section 
provides that, after administrative expenses of the receivership have 
been paid, the OCC will make ratable dividends from available 
receivership funds based on the priority of claims in proposed Sec.  
51.5 for claims that have been proved to the OCC's satisfaction or 
adjudicated in a court of competent jurisdiction, as provided in 12 
U.S.C. 194. The OCC will make payment of dividends, if any, 
periodically, at the discretion of the OCC, as the receiver liquidates 
the assets of the uninsured bank.
    The final rule's inclusion of the ``ratable dividend'' requirement 
is designed to incorporate the associated standards about the proper 
application of this statutory directive, which the judiciary has 
articulated over the years. The ratable dividend requirement directs 
the OCC to make distributions on OCC-approved claims and judicial 
awards on an equal footing, determining the amount of each creditor's 
claim as it stands at the point of insolvency. As one example, a 
court's award of interest on an unpaid debt to the date of a judgment 
rendered in the plaintiff's favor after the receiver was appointed does 
not increase the amount of the plaintiff's claim for purposes of making 
ratable dividends. As another example, the ratable dividend requirement 
generally restricts claims against the bank receivership for debts that 
were not due and owing at the appointment of the receiver and arose for 
the first time as a consequence of the appointment or a post-
appointment event.
    The OCC requested comment on alternatives to the proposed rule's 
approach to paying dividends on claims, under which the OCC would 
exercise its discretion under section 194 to determine the timing of 
the distributions on established claims. Under one alternative 
presented in the proposed rule, the OCC would refrain from paying any 
dividends until all claims have been submitted and validated, with 
final allowed claim amounts established. As we noted in the proposal, 
this approach presents the possibility that proven claims may be 
delayed for a significant amount of time pending more protracted 
resolution of other claims. Under a second option presented in the 
proposed rule, the OCC would make ongoing dividends on proven claims, 
subject to the receiver's retaining a percentage of the funds on hand 
at the time of the distribution as a pool of dividends for catch-up 
distributions to a successful plaintiff later.
    The OCC did not receive comments on these alternative approaches 
for making ratable distributions on claims against a receivership. For 
this reason, and because the proposed rule's approach to payment of 
dividends provides the OCC with the discretion to tailor the dividend 
process to facts and circumstances of a particular receivership, the 
final rule adopts Sec.  51.8 as proposed.
    Section 51.8(a)(2) of the final rule recognizes the basic legal 
premise under the NBA receivership provisions and judicial 
interpretations thereof that any dividend payments to creditors and 
other claimants of an uninsured bank will be made solely from 
receivership

[[Page 92601]]

funds, if any, paid to the OCC by the receiver after payment of the 
expenses of the receiver. This provision is also consistent with the 
established dichotomy of the OCC's supervisory and receivership 
capacities in the NBA, as discussed earlier.
    Section 51.8(b) of the final rule similarly recognizes that assets 
held by an uninsured national bank at the time of the receiver's 
appointment in a fiduciary or custodial capacity, as designated on the 
bank's books and records, are not part of the bank's general assets and 
liabilities held in connection with its other business and will not be 
considered a source for payment for unrelated claims of creditors and 
other claimants. This provision is intended to make clear that the 
receiver will segregate identified fiduciary and custodial assets and 
either transfer those assets to other fiduciaries or custodians as 
described in connection with Sec.  51.7(b), or close the accounts and 
endeavor to make the associated assets available to the account holders 
or their representatives through other means.
    One commenter, a trade association for banks, agreed with the 
treatment of fiduciary assets in the proposed rule, but questioned 
whether Sec.  51.8(b) indicates with sufficient clarity that fiduciary 
assets will not be treated as assets of the bank in receivership. As 
stated in the final rule, fiduciary and custodial assets ``will not be 
considered as part of the bank's general assets. . .''. The OCC 
reiterates that, under this section, assets held by an uninsured bank 
in a fiduciary or custodial capacity, as designated on the bank's books 
and records, are not part of the bank's general assets and liabilities 
held in connection with its other business and will not be a source for 
payment for unrelated claims of creditors and other claimants.
    Section 51.8(d) of the final rule provides that, after all 
administrative expenses and claims have been paid in full, any 
remaining proceeds will be paid to shareholders in proportion to their 
stock ownership, also as provided in 12 U.S.C. 194.
    Section 51.9 of the final rule contains provisions for termination 
of receiverships in which there are assets remaining after all 
administrative expenses and all claims had been paid. This is the 
scenario addressed by 12 U.S.C. 197. In such a case, section 197 
requires the Comptroller to call a meeting of the shareholders of the 
bank at which the shareholders would decide whether to continue 
oversight by the Comptroller, or whether to end the receivership and 
appoint a liquidating agent to continue the liquidation of the 
remaining assets, under the direction of the board of directors and 
shareholders, as in a liquidation that had commenced under 12 U.S.C. 
181.
    There may be other circumstances under which termination would take 
place, such as when there are no receivership assets remaining after 
completion of receivership activities. Under this scenario, the 
receiver for an uninsured bank has liquidated all of the bank's assets, 
closed or transferred all fiduciary accounts to a successor fiduciary, 
paid all administrative expenses, and either paid creditor claims in 
full and distributed the remaining proceeds to shareholders, as 
provided in Sec.  51.8(c) of the final rule, or made ratable dividends 
of all remaining proceeds to creditors as provided in Sec.  51.8(a), 
but no additional assets remain in the estate. Under these 
circumstances, the provisions in 12 U.S.C. 197 for termination would 
not apply.

V. Regulatory Analysis

A. Paperwork Reduction Act

    Under the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501 et 
seq.), the OCC may not conduct or sponsor, and, notwithstanding any 
other provision of law, a person is not required to respond to, an 
information collection unless the information collection displays a 
valid Office of Management and Budget (OMB) control number. The final 
rule contains no information collection requirements under the PRA.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., 
generally requires that, in connection with a rulemaking, an agency 
prepare and make available for public comment a regulatory flexibility 
analysis that describes the impact of the rule on small entities. 
However, the regulatory flexibility analysis otherwise required under 
the RFA is not required if an agency certifies that the rule will not 
have a significant economic impact on a substantial number of small 
entities (defined in regulations promulgated by the Small Business 
Administration (SBA) to include commercial banks and savings 
institutions, and trust companies, with assets of $550 million or less 
and $38.5 million or less, respectively) and publishes its 
certification and a brief explanatory statement in the Federal Register 
together with the rule.
    The OCC currently supervises approximately 1,032 small entities. 
The scope of the final rule extends to uninsured banks. The maximum 
number of OCC-supervised small uninsured banks that could be subject to 
the receivership framework described in the final rule is approximately 
18.\30\ Accordingly, the OCC certifies that the final rule will not 
have a significant economic impact on a substantial number of small 
entities.
---------------------------------------------------------------------------

    \30\ Consistent with the General Principles of Affiliation 13 
CFR 121.103(a), the OCC counts the assets of affiliated financial 
institutions when determining if we should classify an institution 
we supervise as a small entity. We used December 31, 2015, to 
determine size because a financial institution's assets are 
determined by averaging the assets reported on its four quarterly 
financial statements for the preceding year. See footnote 8 of the 
U.S. SBA's Table of Size Standards.
---------------------------------------------------------------------------

OCC Unfunded Mandates Reform Act of 1995 Determination
    The OCC has analyzed the final rule under the factors in the 
Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this 
analysis, the OCC considered whether the final rule includes a Federal 
mandate that may result in the expenditure by state, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year (adjusted annually for inflation). As 
detailed in the SUPPLEMENTARY INFORMATION, the OCC currently supervises 
52 uninsured banks, all of which are uninsured trust banks, and has not 
appointed a receiver for an uninsured bank since 1933. Unlike 
commercial and consumer banks and savings associations, which generally 
face credit and liquidity risks, national trust banks primarily face 
operational, reputational, and strategic risks. While any of these 
risks could result in the precipitous failure of a bank or savings 
association, from a historical perspective, trust banks have been more 
likely to decline into a weakened condition, allowing the OCC and the 
institution the time needed to find other solutions for rehabilitating 
the institution or to successfully resolve the institution without the 
need to appoint a receiver. As such, we believe the OCC is unlikely to 
place an uninsured trust bank into receivership. For this reason, and 
because the final rule does not impose any implementation requirements, 
the OCC concludes that the final rule will not result in an expenditure 
of $100 million or more by state, local, and tribal governments, or by 
the private sector, in any one year.

List of Subjects in 12 CFR Part 51

    Administrative practice and procedure, Banks, Banking, National 
banks, Procedural rules, Receiverships.

[[Page 92602]]

Authority and Issuance

    For the reasons set forth in the preamble and under the authority 
of 12 U.S.C. 16, 93a, 191-200, 481, 482, 1831c, and 1867 the Office of 
the Comptroller of the Currency adds part 51 to chapter I of title 12, 
Code of Federal Regulations to read as follows:

PART 51--RECEIVERSHIPS FOR UNINSURED NATIONAL BANKS

Sec.
51.1 Purpose and scope.
51.2 Appointment of receiver.
51.3 Notice of appointment of receiver.
51.4 Claims.
51.5 Order of priorities.
51.6 Administrative expenses of receiver.
51.7 Powers and duties of receiver; disposition of fiduciary and 
custodial accounts.
51.8 Payment of claims and dividends to shareholders.
51.9 Termination of receivership.

    Authority:  12 U.S.C. 16, 93a, 191-200, 481, 482, 1831c, and 
1867.


Sec.  51.1   Purpose and scope.

    (a) Purpose. This part sets out procedures for receiverships of 
national banks conducted by the Office of the Comptroller of the 
Currency (OCC) under the receivership provisions of the National Bank 
Act (NBA). These receivership provisions apply to national banks that 
are not insured by the Federal Deposit Insurance Corporation (FDIC).
    (b) Scope. This part applies to the appointment of a receiver for 
uninsured national banks (uninsured banks) and the operation of a 
receivership after appointment of a receiver for an uninsured bank 
under 12 U.S.C. 191.\31\
---------------------------------------------------------------------------

    \31\ This part does not apply to receiverships for uninsured 
Federal branches or uninsured Federal agencies.
---------------------------------------------------------------------------


Sec.  51.2   Appointment of receiver.

    (a) In general. The Comptroller of the Currency (Comptroller) may 
appoint any person, including the OCC or another government agency, as 
receiver for an uninsured bank. The receiver performs its duties under 
the direction of the Comptroller and serves at the will of the 
Comptroller. The Comptroller may require the receiver to post a bond or 
other security. The receiver, with the approval of the Comptroller, may 
employ such staff and enter into contracts for professional services as 
are necessary to carry out the receivership.
    (b) Grounds for appointment. The Comptroller may appoint a receiver 
for an uninsured bank based on any of the grounds specified in 12 
U.S.C. 191(a).
    (c) Judicial review. If the Comptroller appoints a receiver for an 
uninsured bank, the bank may seek judicial review of the appointment as 
provided in 12 U.S.C. 191(b).


Sec.  51.3   Notice of appointment of receiver.

    Upon appointment of a receiver for an uninsured bank, the OCC will 
provide notice to the public of the receivership, including by 
publication in a newspaper of general circulation for three consecutive 
months. The notice of the receivership will provide instructions for 
creditors and other claimants seeking to submit claims with the 
receiver for the uninsured bank.


Sec.  51.4   Claims.

    (a) Submission of claims for consideration by the OCC. (1) Persons 
who have claims against the receivership for an uninsured bank may 
present such claims, along with supporting documentation, for 
consideration by the OCC. The OCC will determine the validity and 
approve the amounts of such claims.
    (2) The OCC will establish a date by which any person seeking to 
present a claim against the uninsured bank for consideration by the OCC 
must present their claim for determination. The deadline for filing 
such claims will not be less than 30 days after the end of the three-
month notice period in Sec.  51.3.
    (3) The OCC will allow any claim against the uninsured bank 
received on or before the deadline for presenting claims if such claim 
is established to the OCC's satisfaction by the information on the 
uninsured bank's books and records or otherwise submitted. The OCC may 
disallow any portion of any claim by a creditor or claim of a security, 
preference, set-off, or priority which is not established to the 
satisfaction of the OCC.
    (b) Submission of claims to a court. Persons with claims against an 
uninsured bank in receivership may present their claims to a court of 
competent jurisdiction for adjudication. Such persons must submit a 
copy of any final judgment received from the court to the OCC, to 
participate in ratable dividends along with other proved claims.
    (c) Right of set-off. If a person with a claim against an uninsured 
bank in receivership also has an obligation owed to the bank, the claim 
and obligation will be set off against each other and only the net 
balance remaining after set-off shall be considered as a claim, 
provided such set-off is otherwise legally valid.


Sec.  51.5   Order of priorities.

    The OCC will pay receivership expenses and proved claims against 
the uninsured bank in receivership in the following order of priority:
    (a) Administrative expenses of the receiver;
    (b) Unsecured creditors of the uninsured bank, including secured 
creditors to the extent their claim exceeds their valid and enforceable 
security interest;
    (c) Creditors of the uninsured bank, if any, whose claims are 
subordinated to general creditor claims; and
    (d) Shareholders of the uninsured bank.


Sec.  51.6   Administrative expenses of receiver.

    (a) Priority of administrative expenses. All administrative 
expenses of the receiver for an uninsured bank shall be paid out of the 
assets of the bank in receivership before payment of claims against the 
receivership.
    (b) Scope of administrative expenses. Administrative expenses of 
the receiver for an uninsured bank include those expenses incurred by 
the receiver in maintaining banking operations during the receivership, 
to preserve assets of the uninsured bank, while liquidating or 
otherwise resolving the affairs of the uninsured bank. Such expenses 
include pre-receivership and post-receivership obligations that the 
receiver determines are necessary and appropriate to facilitate the 
orderly liquidation or other resolution of the uninsured bank in 
receivership.
    (c) Types of administrative expenses. Administrative expenses for 
the receiver of an uninsured bank include:
    (1) Salaries, costs, and other expenses of the receiver and its 
staff, and costs of contracts entered into by the receiver for 
professional services relating to performing receivership duties; and
    (2) Expenses necessary for the operation of the uninsured bank, 
including wages and salaries of employees, expenses for professional 
services, contractual rent pursuant to an existing lease or rental 
agreement, and payments to third-party or affiliated service providers, 
that in the opinion of the receiver are of benefit to the receivership, 
until the date the receiver repudiates, terminates, cancels, or 
otherwise discontinues the applicable contract.


Sec.  51.7   Powers and duties of receiver; disposition of fiduciary 
and custodial accounts.

    (a) Marshalling of assets. In resolving the affairs of an uninsured 
bank in receivership, the receiver:
    (1) Takes possession of the books, records and other property and 
assets of the uninsured bank, including the value

[[Page 92603]]

of collateral pledged by the uninsured bank to the extent it exceeds 
valid and enforceable security interests of a claimant;
    (2) Collects all debts, dues and claims belonging to the uninsured 
bank, including claims remaining after set-off;
    (3) Sells or compromises all bad or doubtful debts, subject to 
approval by a court of competent jurisdiction;
    (4) Sells the real and personal property of the uninsured bank, 
subject to approval by a court of competent jurisdiction, on such terms 
as the court shall direct; and
    (5) Deposits all receivership funds collected from the liquidation 
of the uninsured bank in an account designated by the OCC.
    (b) Disposition of fiduciary and custodial accounts. The receiver 
for an uninsured bank closes the bank's fiduciary and custodial 
appointments and accounts or transfers some or all of such accounts to 
successor fiduciaries and custodians, in accordance with 12 CFR 9.16, 
and other applicable Federal law.
    (c) Other powers. The receiver for an uninsured bank may exercise 
other rights, privileges, and powers authorized for receivers of 
national banks under the NBA and the common law of receiverships as 
applied by the courts to receiverships of national banks conducted 
under the NBA.
    (d) Reports to OCC. The receiver for an uninsured bank shall make 
periodic reports to the OCC on the status and proceedings of the 
receivership.
    (e) Receiver subject to removal; modification of fees. (1) The 
Comptroller may remove and replace the receiver for an uninsured bank 
if, in the Comptroller's discretion, the receiver is not conducting the 
receivership in accordance with applicable Federal laws or regulations 
or fails to comply with decisions of the Comptroller with respect to 
the conduct of the receivership or claims against the receivership.
    (2) The Comptroller may reduce the fees of the receiver for an 
uninsured bank if, in the Comptroller's discretion, the Comptroller 
finds the performance of the receiver to be deficient, or the fees of 
the receiver to be excessive, unreasonable, or beyond the scope of the 
work assigned to the receiver.


Sec.  51.8   Payment of claims and dividends to shareholders.

    (a) Claims. (1) After the administrative expenses of the 
receivership have been paid, the OCC shall make ratable dividends from 
time to time of available receivership funds according to the priority 
described in Sec.  51.5, based on the claims that have been proved to 
the OCC's satisfaction or adjudicated in a court of competent 
jurisdiction.
    (2) Dividend payments to creditors and other claimants of an 
uninsured bank will be made solely from receivership funds, if any, 
paid to the OCC by the receiver after payment of the expenses of the 
receiver.
    (b) Fiduciary and custodial assets. Assets held by an uninsured 
bank in a fiduciary or custodial capacity, as designated on the bank's 
books and records, will not be considered as part of the bank's general 
assets and liabilities held in connection with its other business, and 
will not be considered a source for payment of unrelated claims of 
creditors and other claimants.
    (c) Timing of dividends. The payment of dividends, if any, under 
paragraph (a) of this section, on proved or adjudicated claims will be 
made periodically, at the discretion of the OCC, as the receiver 
liquidates the assets of the uninsured bank.
    (d) Distribution to shareholders. After all administrative expenses 
of the receiver and proved claims of creditors of the uninsured bank 
have been paid in full, to the extent there are receivership assets to 
make such payments, any remaining proceeds shall be paid to the 
shareholders, or their legal representatives, in proportion to their 
stock ownership.


Sec.  51.9   Termination of receivership.

    If there are assets remaining after full payment of the expenses of 
the receiver and all claims of creditors for an uninsured bank and all 
fiduciary accounts of the bank have been closed or transferred to a 
successor fiduciary and fiduciary powers surrendered, the Comptroller 
shall call a meeting of the shareholders of the uninsured bank, as 
provided in 12 U.S.C. 197, for the shareholders to decide the manner in 
which the liquidation will continue. The liquidation may continue by:
    (a) Continuing the receivership of the uninsured bank under the 
direction of the Comptroller; or
    (b) Ending the receivership and oversight by the Comptroller and 
replacing the receiver with a liquidating agent to proceed to liquidate 
the remaining assets of the uninsured bank for the benefit of the 
shareholders, as set out in 12 U.S.C. 197.

    Dated: December 15, 2016.
Thomas J. Curry,
Comptroller of the Currency.
[FR Doc. 2016-30666 Filed 12-19-16; 8:45 am]
 BILLING CODE 4810-33-P



                                                92594            Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations

                                                of § 201.3(a) should be captured by all                 November 22, 2010) with specific                      found to violate sections 202(a) and/or
                                                livestock producers, swine production                   opportunities in Rapid City, South                    (b) of the Act without a finding of harm
                                                contract growers, and poultry growers.                  Dakota, on October 28, 2010, and                      or likely harm to competition.
                                                   Based on the above analyses regarding                Oklahoma City, Oklahoma on November                     (b) Effective dates. * * *
                                                § 201.3(a), GIPSA certifies that this rule              3, 2010. All tribal headquarters were
                                                                                                                                                              Larry Mitchell,
                                                is not expected to have a significant                   invited to participate in these venues for
                                                economic impact on a substantial                                                                              Administrator, Grain Inspection, Packers and
                                                                                                        consultation. GIPSA has received no
                                                number of small business entities as                                                                          Stockyards Administration.
                                                                                                        specific indication that the rule will
                                                defined in the Regulatory Flexibility Act                                                                     [FR Doc. 2016–30424 Filed 12–19–16; 8:45 am]
                                                                                                        have tribal implications and has
                                                (5 U.S.C. 601 et seq.). While confident                 received no further requests for                      BILLING CODE 3410–KD–P
                                                in this certification, GIPSA                            consultation as of the date of this
                                                acknowledges that individual                            publication. If a Tribe requests
                                                businesses may have relevant data to                    consultation, GIPSA will work with the                DEPARTMENT OF THE TREASURY
                                                supplement our analysis. We would                       Office of Tribal Relations to ensure
                                                encourage small stakeholders to submit                  meaningful consultation is provided                   Office of the Comptroller of the
                                                any relevant data during the comment                    where changes, additions, and                         Currency
                                                period.                                                 modifications herein are not expressly
                                                                                                        mandated by Congress.                                 12 CFR Part 51
                                                B. Executive Order 12988
                                                                                                                                                              [Docket ID OCC–2016–0017]
                                                   This interim final rule has been                     D. Paperwork Reduction Act
                                                reviewed under Executive Order 12988,                     This interim final rule does not                    RIN 1557–AE07
                                                Civil Justice Reform. These actions are                 contain new or amended information
                                                not intended to have retroactive effect,                                                                      Receiverships for Uninsured National
                                                                                                        collection requirements subject to the
                                                although in some instances they merely                                                                        Banks
                                                                                                        Paperwork Reduction Act of 1995 (44
                                                reiterate GIPSA’s previous                              U.S.C. 3501 et seq.). It does not involve             AGENCY:  Office of the Comptroller of the
                                                interpretation of the P&S Act. This                     collection of new or additional                       Currency, Treasury.
                                                interim final rule will not pre-empt state              information by the federal government.                ACTION: Final rule.
                                                or local laws, regulations, or policies,
                                                unless they present an irreconcilable                   E. E-Government Act Compliance                        SUMMARY:   The Office of the Comptroller
                                                conflict with this rule. There are no                     GIPSA is committed to compliance                    of the Currency (OCC) is adopting a
                                                administrative procedures that must be                  with the E-Government Act, to promote                 final rule addressing the conduct of
                                                exhausted prior to any judicial                         the use of the Internet and other                     receiverships for national banks that are
                                                challenge to the provisions of this rule.               information technologies to provide                   not insured by the Federal Deposit
                                                Nothing in this interim final rule is                   increased opportunities for citizen                   Insurance Corporation (FDIC)
                                                intended to interfere with a person’s                   access to Government information and                  (uninsured banks) and for which the
                                                right to enforce liability against any                  services, and for other purposes.                     FDIC would not be appointed as
                                                person subject to the P&S Act under                                                                           receiver. The final rule implements the
                                                authority granted in section 308 of the                 List of Subjects in 9 CFR Part 201
                                                                                                                                                              provisions of the National Bank Act
                                                P&S Act.                                                  Contracts, Livestock, Poultry, Trade                (NBA) that provide the legal framework
                                                                                                        practices.                                            for receiverships of such institutions.
                                                C. Executive Order 13175
                                                                                                          For the reasons set forth in the                    The final rule adopts the rule as
                                                  This rule has been reviewed in                        preamble, we amend 9 CFR part 201 as                  proposed without change.
                                                accordance with the requirements of                     follows:                                              DATES: This final rule is effective on
                                                Executive Order 13175, ‘‘Consultation
                                                and Coordination with Indian Tribal                     PART 201—REGULATIONS UNDER                            January 19, 2017.
                                                Governments.’’ Executive Order 13175                    THE PACKERS AND STOCKYARDS                            FOR FURTHER INFORMATION CONTACT:
                                                requires Federal agencies to consult and                ACT                                                   Mitchell Plave, Special Counsel,
                                                coordinate with tribes on a government-                                                                       Legislative and Regulatory Activities
                                                to-government basis on policies that                    ■ 1. The authority citation for part 201              Division, (202) 649–5490, or for persons
                                                have tribal implications, including                     continues to read as follows:                         who are deaf or hard of hearing, TTY,
                                                regulations, legislative comments or                        Authority: 7 U.S.C. 181–229c.                     (202) 649–5597, or Richard Cleva,
                                                proposed legislation, and other policy                                                                        Senior Counsel, Bank Activities and
                                                                                                        ■ 2. Section 201.3 is amended by                      Structure Division, (202) 649–5500,
                                                statements or actions that have                         redesignating the existing text as
                                                substantial direct effects on one or more                                                                     Office of the Comptroller of the
                                                                                                        paragraph (b), adding new paragraph (a),              Currency, 400 7th Street SW.,
                                                Indian tribes, on the relationship                      and adding a heading to paragraph (b)
                                                between the Federal Government and                                                                            Washington, DC 20219.
                                                                                                        to read as follows:
                                                Indian tribes or the distribution of                                                                          SUPPLEMENTARY INFORMATION:
                                                power and responsibilities between the                  § 201.3   Applicability of regulations in this
                                                                                                                                                              I. Introduction
                                                Federal Government and Indian tribes.                   part.
                                                  Although GIPSA has assessed the                          (a) Scope of sections 202(a) and (b) of              On September 13, 2016, the OCC
                                                impact of this rule on Indian tribes and                the Act. The appropriate application of               published a proposed rule to implement
                                                determined that this rule does not, to                  sections 202(a) and (b) of the Act                    the provisions of the NBA that provide
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                                                our knowledge, have tribal implications                 depends on the nature and                             the legal framework for receiverships for
                                                that require tribal consultation under                  circumstances of the challenged                       uninsured banks,1 12 U.S.C. 191—200,
                                                Executive Order 13175, GIPSA offered                    conduct or action. A finding that the
                                                                                                                                                                1 All Federal savings associations (FSAs),
                                                opportunities to meet with                              challenged conduct or action adversely
                                                                                                                                                              including trust-only FSAs, are required to be
                                                representatives from Tribal                             affects or is likely to adversely affect              insured. For this reason, this final rule does not
                                                Governments during the comment                          competition is not necessary in all                   apply to FSAs, given that receiverships for FSAs
                                                period for the proposed rule (June 22 to                cases. Certain conduct or action can be               would be conducted by the FDIC.



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                                                                 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations                                                     92595

                                                with comments due by November 14,                          institutional customers with global                       savings associations. These risks
                                                2016.2 The OCC received 11 comments                        settlement and safekeeping of the                         include operational, compliance,
                                                concerning the proposal. For the reasons                   customer’s securities.                                    strategic, and reputational risks without
                                                discussed in section III of the                               Many of the uninsured national trust                   the credit and liquidity risks that
                                                SUPPLEMENTARY INFORMATION, the OCC is                      banks are subsidiaries or affiliates of a                 additionally affect the solvency of
                                                adopting the rule as proposed, without                     full-service insured national bank or are                 commercial and consumer banks. While
                                                change.                                                    affiliates of an insured state bank. Other                any of these risks can result in the
                                                                                                           uninsured national trust banks are not                    precipitous failure of a bank or savings
                                                II. Background
                                                                                                           affiliated with an insured depository                     association, from a historical
                                                   As of December 2, 2016, the OCC                         institution, but are affiliated with an                   perspective, trust banks have been more
                                                supervised 52 uninsured banks, all of                      investment management firm or other                       likely to decline into a weakened
                                                which are national trust banks.3                           financial services firm. Still other                      condition, allowing the OCC and the
                                                Uninsured national trust banks have                        uninsured national trust banks have no                    institution the time needed to find other
                                                fundamentally different business                           affiliation with a larger parent                          solutions for rehabilitating the
                                                models compared to commercial and                          company.4                                                 institution or to successfully resolve the
                                                consumer banks and savings                                    The OCC appoints and oversees                          institution without the need to appoint
                                                associations and therefore face very                       receivers for uninsured banks under the                   a receiver.
                                                different types of risks. National trust                   provisions of the NBA 5 and the                              The OCC believes it would
                                                banks typically have few assets on the                     substantial body of case law applying                     nevertheless be beneficial to financial
                                                balance sheet, usually composed of cash                    the statutory provisions and common                       market participants and the broader
                                                on deposit with an insured depository                      law receivership principles to national                   community of regulators for the OCC to
                                                institution, investment securities,                        bank receiverships.6 The FDIC is the                      clarify the receivership framework for
                                                premises and equipment, and intangible                     required receiver only for an insured                     uninsured banks. Although the OCC
                                                assets. These banks exercise fiduciary                     national (or state) bank.7 Based on the                   conducted 2,762 receiverships pursuant
                                                and custody powers, do not make loans,                     statutory history of the NBA and                          to this framework in the years prior to
                                                do not rely on deposit funding, and                        FIRREA, it is likely that the Federal                     the creation of the FDIC,8 and the
                                                consequently have simple liquidity                         Deposit Insurance Act (FDIA) would not                    associated legal issues are the subject of
                                                management programs. In view of these                      apply to an OCC receivership of an                        a robust body of published judicial
                                                differences, the OCC typically requires                    uninsured bank conducted by the OCC,                      precedents, the details have not been
                                                these banks to hold capital in a specific                  and that such a receivership would be                     widely articulated in recent
                                                minimum amount; as a result they hold                      governed exclusively by the NBA, the                      jurisprudence or legal commentary. This
                                                capital in amounts that exceed                             common law of receivers, and cases                        final rule may also facilitate synergies
                                                substantially the ‘‘well capitalized’’                     applying the statutes and common law                      with the ongoing efforts of U.S. and
                                                standard that applies when national                        to national bank receiverships. While                     international financial regulators since
                                                banks calculate their capital pursuant to                  FIRREA and the Federal Deposit                            the financial crisis to enhance our
                                                the OCC’s rules in 12 CFR part 3.                          Insurance Corporation Improvement Act
                                                   The business model of national trust                                                                              readiness to respond effectively to the
                                                                                                           of 1991 (FDICIA) greatly expanded the                     different critical financial distresses that
                                                banks is to generate income in the form                    FDIC’s powers in resolving failed
                                                of fees by offering fiduciary and                                                                                    could manifest themselves
                                                                                                           insured depository institutions, the OCC                  unexpectedly in the diverse types of
                                                custodial services that generally fall into
                                                                                                           believes that those additional powers                     financial firms presently operating in
                                                one or more of a few broad categories.
                                                                                                           are not available to the OCC as receiver                  the market.
                                                Some national trust banks focus on
                                                                                                           of uninsured banks under the NBA.
                                                institutional asset management,                               The OCC has not appointed a receiver                   III. Public Comments on the Proposed
                                                providing trust and custodial services                     for an uninsured bank since shortly after                 Rule
                                                for investment portfolios of pension                       the Congress established the FDIC in
                                                plans, foundations and endowments,                                                                                      The OCC received 11 comments from
                                                                                                           response to the banking panics of 1930–                   the public in response to the OCC’s
                                                and other entities, often with an                          1933. National trust banks face very
                                                investment management component. A                                                                                   notice of proposed rulemaking and the
                                                                                                           different types of risks because of the                   alternatives the OCC discussed therein.
                                                few other national trust banks serve
                                                                                                           fundamentally different business model                    The commenters included individuals, a
                                                primarily as a fiduciary and custodian
                                                                                                           of national trust banks compared to                       state trust company, and a think tank, as
                                                to facilitate the establishment of
                                                                                                           commercial and consumer banks and                         well as representatives of consumer
                                                Individual Retirement Accounts by
                                                customers of an affiliated mutual fund                                                                               groups, financial reform advocacy
                                                                                                              4 For additional discussion of the business model
                                                complex or broker-dealer firm. Some                                                                                  groups, state banking regulators,
                                                                                                           of uninsured national trust banks, see Proposed
                                                national trust banks provide custodial                     Rule, 81 FR at 62836–62837.
                                                                                                                                                                     banking institutions, and bitcoin firms.
                                                services, such as corporate trust                             5 12 U.S.C. 191–200.                                   These submissions offered issues and
                                                accounts, under which the bank                                6 For a discussion of the statutory history relating   viewpoints about selected portions of
                                                performs services for others in                            to receiverships of national banks conducted by the       the proposed rule’s regulatory
                                                                                                           OCC, under the NBA, and by the FDIC, pursuant to          provisions for the OCC’s consideration;
                                                connection with their issuance, transfer,                  the Financial Institutions Reform, Recovery and
                                                and registration of debt or equity                         Enforcement Act of 1989 (FIRREA), see Proposed
                                                                                                                                                                     these are discussed in connection with
                                                securities. Other custody accounts may                     Rule, 81 FR at 62836.                                     the discussion of the OCC’s rationale for
                                                be a holding facility for customer                            7 Section 11(c)(2)(A)(ii) of the FDIA provides that    issuing the associated portions of the
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                                                securities, where the bank assists                         the FDIC ‘‘shall’’ be appointed receiver, and ‘‘shall’’   final rule, in Section III of this
                                                                                                           accept such appointment, whenever a receiver is           SUPPLEMENTARY INFORMATION.
                                                                                                           appointed for the purpose of liquidation or winding
                                                  2 Receiverships for Uninsured National Banks, 81
                                                                                                           up the affairs of an insured Federal depository
                                                FR 62835 (September 13, 2016) (Proposed Rule).             institution by the appropriate Federal banking              8 Annual Report of the Comptroller of the
                                                  3 The OCC may charter national banks whose               agency, notwithstanding any other provision of            Currency for the Year Ended October 31, 1934 at
                                                operations are limited to those of a trust company         Federal law. 12 U.S.C. 1821(c)(2)(A)(ii). The term        33 (discussing the status of active and closed
                                                and related activities (national trust bank). See, e.g.,   ‘‘Federal depository institution’’ includes national      receiverships under the jurisdiction of the
                                                12 U.S.C. 27(a); 12 CFR 5.20(l).                           banks. 12 U.S.C. 1813(c)(4).                              Comptroller between 1865 and 1934).



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                                                92596            Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations

                                                   As part of the notice of proposed                       More broadly, some commenters said                 adoption of the final rule for uninsured
                                                rulemaking, the OCC also asked for the                  the OCC should consider receivership                  banks and many of them implicate
                                                public’s input on a number of specific                  and cost issues in deciding whether to                issues that the OCC would need to
                                                questions and received comments on                      charter special purpose national banks                evaluate on a case-by-case basis in
                                                two of these questions. One question                    engaged in fintech activities, or the                 connection with a decision on whether
                                                was whether any unique considerations                   terms on which they could be chartered.               to charter a particular special purpose
                                                would be raised by applying the                         Two commenters said the nature of a                   national bank that engages in fintech
                                                proposed rule’s framework for                           fintech firm’s business diverges widely               activities. The OCC has recently
                                                receivership of uninsured national                      from banks, and that creditor loss rates              published and invited comment on a
                                                banks, which are all national trust banks               in a receivership for an uninsured                    paper discussing these issues.10 We will
                                                at present, to other uninsured banks that               special purpose national bank engaged                 consider the broader comments on
                                                would be organized to engage in the                     in fintech activities may exceed levels               fintech chartering submitted as part of
                                                delivery of banking services in new and                 that are tolerable in the resolution of a             this rulemaking together with those we
                                                innovative ways, such as special                        chartered bank. These commenters said                 receive in response to the paper.
                                                purpose national banks engaged in                       this was a contra-indication for                         In the second question asked in the
                                                financial technology (fintech)                          chartering such banks, but one of the                 preamble to the Proposed Rule, the OCC
                                                activities.9                                            commenters further elaborated that the                asked for alternatives that would take
                                                   On this receivership framework                       OCC can and should exercise                           into account the cost considerations that
                                                question, two commenters expressed                      particularly close supervision of these               could arise for the OCC if the
                                                concerns that the earlier-established                   firms and thereby reduce the risk of                  administrative expenses of an uninsured
                                                legal regime for receiverships under the                receiverships ever taking place. Another              national bank receivership exceeded the
                                                NBA and associated judicial precedent                   commenter said that fintech firms do                  assets in the receivership.11 In response
                                                does not include select elements                        not have national trust banks’ track                  to this question, one commenter urged
                                                subsequently created for insured                        record for remaining solvent and                      the OCC not to impose assessment costs
                                                depository institutions under FIRREA                    avoiding receivership, and the OCC                    for special purpose national banks that
                                                and FDICIA, and thus might not be as                    should mitigate potential concerns                    engage in fintech activities on insured
                                                effective outside the trust bank sphere                 about receivership costs by imposing                  national banks, and another commenter
                                                in application to the receivership of                   capital support agreements and similar                further urged the OCC not to impose
                                                special purpose national banks engaged                  obligations in chartering special                     assessment costs for such banks on
                                                in fintech activities. These commenters                 purpose national banks that engage in                 uninsured national trust banks. The
                                                said the OCC should refrain from                        fintech activities.                                   OCC continues to consider what
                                                chartering these special purpose                           In contrast to these views about the               approach to assessments would be
                                                national banks until the law changes to                 uniqueness of special purpose national                appropriate should it approve charters
                                                                                                        banks engaged in fintech activities, one              for special purpose national banks
                                                address this difference. One commenter
                                                                                                        commenter said that a fintech firm, such              engaged in fintech activities. Any
                                                expressed concern that the rule’s
                                                                                                        as a digital currency exchange, performs              resulting modification to the OCC’s
                                                incorporation of the NBA’s priority
                                                                                                        a function comparable to a national trust             assessment structure would be proposed
                                                requirements for payment of
                                                                                                        bank that obtains payments on behalf of               for public comment in a separate
                                                receivership claims, which include no
                                                                                                        customers and provides security for                   rulemaking.
                                                preference for consumer claims over
                                                                                                        those funds, and therefore such
                                                other general creditors, might have the                                                                       IV. The Final Rule
                                                                                                        institutions do not pose unique
                                                effect of distorting incentives among
                                                                                                        considerations for the receivership                   Overview
                                                debt investors across special purpose
                                                                                                        framework. Another commenter said the                    The final rule incorporates the
                                                national banks, and more broadly                        functions of special purpose national
                                                contribute to moral hazard.                                                                                   framework set forth in the NBA for the
                                                                                                        banks that engage in fintech activities               Comptroller to appoint a receiver for an
                                                   The OCC understands these                            could be even simpler than a national
                                                comments to be urging, in effect,                                                                             uninsured bank, generally under the
                                                                                                        trust bank, such as a special purpose                 same grounds for appointment of the
                                                changes in the statutory receivership                   national bank that provides fintech
                                                provisions underlying the rule. Absent                                                                        FDIC as receiver for insured national
                                                                                                        payment services where each customer                  banks. The uninsured bank may
                                                Congressional action to do so, however,                 transaction is brief and segregated. For
                                                the current provisions of the NBA are                                                                         challenge the appointment in court, and
                                                                                                        special purpose national banks engaged                the NBA affords jurisdiction to the
                                                the ones that would govern should it                    in fintech activities involving lending,
                                                become necessary to appoint a receiver                                                                        appropriate United States district court
                                                                                                        this commenter stated the customer                    for this purpose. The OCC will provide
                                                for an uninsured national bank. The                     relationships are somewhat longer but
                                                OCC believes it is best to be clear,                                                                          the public with notice of the
                                                                                                        still discrete, and that the OCC could                appointment, as well as instructions for
                                                through a regulation implementing                       adequately eliminate concerns about the
                                                those NBA provisions, about the                                                                               submitting claims against the uninsured
                                                                                                        impact of a receivership by ensuring the              bank in receivership. The Comptroller
                                                framework that would apply in order to                  bank’s plans for back-up servicing and
                                                avoid clouding the ongoing discussion                   orderly wind-up were robust.                            10 See Exploring Special Purpose National Bank
                                                about the chartering of special purpose                    Some commenters discussed                          Charters for Fintech Companies (Dec. 2016),
                                                national banks engaged in fintech                       additional topics not touching on the                 available at https://www.occ.gov/topics/bank-
                                                activities with uncertainty about how                   receivership issues covered by the                    operations/innovation/special-purpose-national-
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                                                uninsured institutions are resolved.                                                                          bank-charters-for-fintech.pdf.
                                                                                                        notice of proposed rulemaking, but                      11 See Proposed Rule, 81 FR at 62838 (discussing
                                                                                                        more germane to the desired framework                 the receiver’s priority claim to liquidation proceeds
                                                  9 See Proposed Rule, 81 FR at 62837 (discussing       for creating, regulating, and supervising             for administrative expenses, the OCC’s potential
                                                the OCC’s initiative on responsible innovation in       special purpose national banks that                   direct expenses for its receivership functions, and
                                                the Federal banking system, and the OCC’s                                                                     funding alternatives, such as building resources to
                                                authority to charter special purpose banks that
                                                                                                        engage in fintech activities or uninsured             defray these costs through the OCC’s regulations
                                                engage in selected core non-depository services         national trust banks. These broader                   governing the OCC’s collection of assessments from
                                                within the business of banking).                        comments do not pertain to the OCC’s                  uninsured national banks).



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                                                                 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations                                          92597

                                                may appoint any person as receiver,                     Section-by-Section Analysis                            approval of the Comptroller, if needed
                                                including the OCC or another                               Section 51.1 of the final rule identifies           to carry out the receivership. This
                                                government agency. The receiver carries                 the purpose and scope of the final rule                section also identifies the grounds for
                                                out its duties under the direction of the               and clarifies that the rule applies to                 appointment of a receiver for an
                                                Comptroller.                                            receiverships conducted by the OCC                     uninsured bank and notes that
                                                   The final rule also follows the                                                                             uninsured banks may seek judicial
                                                                                                        under the NBA for national banks that
                                                statutory framework under the NBA                                                                              review of the appointment pursuant to
                                                                                                        are not insured by the FDIC.14 The final
                                                with respect to claims, under which                                                                            12 U.S.C. 191.
                                                                                                        rule does not extend to receiverships for                 Section 51.3 of the final rule provides
                                                persons with claims against an                          uninsured Federal branches, although
                                                uninsured bank in receivership will file                                                                       that the OCC will provide notice to the
                                                                                                        elements of the framework may be                       public of the appointment of a receiver
                                                their claims with the receiver for the                  similar for uninsured Federal branch
                                                failed uninsured bank, for review by the                                                                       for the uninsured bank. The final rule
                                                                                                        receiverships, which would also be                     specifies that one component of this
                                                OCC. In the event the OCC denies the                    resolved under provisions of the NBA.
                                                claim, the only remedy available to the                                                                        notice will include publication in a
                                                                                                           Section 51.2 of the final rule is based             newspaper of general circulation
                                                claimant is to bring a judicial action                  on 12 U.S.C. 191 and 192 and concerns
                                                against the uninsured bank’s                                                                                   selected by the OCC for three
                                                                                                        appointment of a receiver. The final rule              consecutive months, as required by 12
                                                receivership estate and assert the claim                sets out the Comptroller’s authority to
                                                de novo. A person is also free to initiate                                                                     U.S.C. 193. As a component of the
                                                                                                        appoint any person, including the OCC                  OCC’s notice to the public about the
                                                a claim by bringing an action against the               or another government agency, as
                                                receivership estate in court for                                                                               receivership, the OCC will also provide
                                                                                                        receiver for an uninsured bank and                     instructions for creditors and other
                                                adjudication and then submit the                        provides that the receiver performs its
                                                judgment to the OCC to participate in                                                                          claimants seeking to submit claims with
                                                                                                        duties subject to the approval and                     the receiver for the uninsured bank.
                                                ratable dividends of liquidation                        direction of the Comptroller.15 If the
                                                proceeds along with other approved and                                                                            As noted in the proposed rule, the
                                                                                                        Comptroller were to appoint the OCC as                 OCC believes that the purpose of section
                                                adjudicated claims.12                                   receiver, the OCC would act in a
                                                   Approved or adjudicated claims are                                                                          193 may be better served by publication
                                                                                                        receivership capacity with respect to the              through means in addition to the
                                                paid solely out of the assets of the                    uninsured bank in receivership, rather
                                                uninsured national bank in                                                                                     statutorily required publication in a
                                                                                                        than in the OCC’s supervisory capacity.                newspaper. For example, the OCC could
                                                receivership. This reflects the legal                      As discussed earlier, this dual
                                                distinction between the OCC as                                                                                 provide direct notice to customers and
                                                                                                        capacity (OCC as supervisor versus OCC                 creditors of the uninsured bank to the
                                                regulatory agency and the OCC acting in                 as receivership sponsor for an                         extent the uninsured bank’s records
                                                a receivership capacity. In the former,                 uninsured bank) recognizes that, while                 included current contact information.
                                                the OCC oversees national banks, FSAs,                  the NBA makes the receivership                         The OCC could also arrange to provide
                                                and Federal branches and Federal                        oversight and claims review functions of               notice through electronic channels that
                                                agencies, supervising them under the                    the Comptroller part of the OCC’s                      customers would typically use to
                                                charge of assuring the safety and                       responsibilities, the receivership                     contact the uninsured bank, such as the
                                                soundness of, and compliance with laws                  oversight role is unique and distinct                  uninsured bank’s Web site. The OCC
                                                and regulations, fair access to financial               from the OCC’s role as a Federal                       believes that an effective set of notice
                                                services, and fair treatment of customers               regulatory agency and supervisor of                    protocols would best be established on
                                                by, the institutions and other persons                  national banks and FSAs. This is                       a case-by-case basis, in light of a specific
                                                subject to its jurisdiction. As receiver,               comparable to the dual capacity of the                 uninsured bank’s fiduciary and
                                                the OCC appoints and oversees receivers                 FDIC’s receivership function for insured               custodial activities, the types of
                                                for uninsured national banks, thereby                   depository institutions pursuant to the                customers served by the bank,
                                                facilitating the winding down of bank                   FDIA.                                                  coordination with other notice protocols
                                                operations, assets, and accounts while                     Section 51.2 of the final rule also                 under way for any related entity that is
                                                minimizing disruptions to customers                     provides that the Comptroller may                      also undergoing resolution activity, and
                                                and creditors of the institution. Under                 require the receiver to post a bond or                 similar factors. The OCC requested
                                                the ‘‘separate capacities’’ doctrine,                   other security and the receiver may hire               comment on alternative means of
                                                which has long been recognized in                       staff and professional advisors, with the              communicating with customers of
                                                litigation involving the FDIC, it is well                                                                      uninsured banks.
                                                established that the agency, when acting                   14 A nationwide organization of state regulators       One commenter, a trade association
                                                in one capacity, is not liable for claims               requested clarity on how the NBA receivership          for banks, suggested that the OCC
                                                against the agency acting in its other                  framework for uninsured national banks and the
                                                                                                                                                               employ notice mechanisms that are
                                                capacity.13                                             OCC’s proposed rule thereunder would interact
                                                                                                        with the processes established for debtors and         consistent with the way in which the
                                                   As provided in the final rule, the                   creditors pursuant to the U.S. Bankruptcy Code.        failed bank typically communicates
                                                receiver liquidates the assets of the                   The OCC is not aware of any opinion of a U.S.          with its clients and counterparties. The
                                                uninsured bank, with court approval,                    Bankruptcy Court, or any other U.S. court, finding     commenter suggested, for example, that
                                                and pays the proceeds into an account                   that an uninsured national bank is eligible to be a
                                                                                                        debtor subject to a petition under the Code.           a receiver for an institution with clients
                                                as directed by the OCC. The categories                     15 But see 12 U.S.C. 1821(c)(6) (Comptroller may    in other countries should communicate
                                                of claims and the priority thereof for                  appoint the FDIC as conservator or receiver and the    with those clients in the language
                                                payment are set out in the final rule.                  FDIC has discretion to accept such appointment);       typically used by the institution in its
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                                                The final rule also clarifies certain                   id. section 1821(c)(2)(C) (FDIC ‘‘not subject to any
                                                                                                        other agency’’ when acting as conservator or
                                                                                                                                                               communications with those clients. The
                                                powers held by the receiver.                            receiver’’). Read together, these provisions likely    OCC agrees that this approach would be
                                                                                                        mean that the provision in § 51.2 concerning           appropriate in such cases and reiterates
                                                  12 See First Nat’l Bank of Bethel v. Nat’l
                                                                                                        oversight of the receiver by the Comptroller would     that effective forms of notice, beyond
                                                Pahquioque Bank, 81 U.S. 383, 401 (1871).               not apply to the FDIC acting as conservator or
                                                  13 For a discussion of the separate capacities        receiver for an uninsured institution, should the
                                                                                                                                                               the statutorily required notice in a
                                                doctrine and related case law, see Proposed Rule,       Comptroller appoint the FDIC and the FDIC accept       newspaper, will be evaluated on a case-
                                                81 FR at 62838.                                         such an appointment.                                   by-case basis.


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                                                92598            Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations

                                                   Section 51.4 of the final rule                          The claims filing deadline established               creditor may file a claim for the net
                                                addresses the submission of claims to                   by the Comptroller pursuant to § 51.4(a)                amount remaining as any other general
                                                the receiver for an uninsured bank.                     of the final rule is the date by which                  creditor. Conversely, if, after set-off, an
                                                Under § 51.4(a), a person with a claim                  claimants seeking review under the                      amount is owed to the bank, the creditor
                                                against the receivership may submit a                   OCC’s claims process must make their                    does not have a claim and the net
                                                claim to the OCC, which will consider                   submission. Nevertheless, a claimant                    amount remaining is an asset of the
                                                the claim and make a determination                      that has not made a submission to the                   uninsured bank, which the receiver may
                                                concerning its validity and approved                    OCC by the deadline is not barred from                  obtain in connection with marshalling
                                                amount. This process reflects the                       initiating judicial claims against the                  the assets (as described further in
                                                provisions in 12 U.S.C. 193 and 194                     uninsured bank in receivership solely                   § 51.7(a) of the final rule).
                                                regarding presentation of claims and                    by virtue of missing the claims                            The OCC requested comment on
                                                payment of dividends on claims that are                 deadline.17                                             whether there are additional
                                                proved to the satisfaction of the                          The NBA’s receivership provisions                    characteristics of set-offs or other
                                                Comptroller. Section 51.4 also provides                 are like the receivership regime                        situations in which set-off may arise
                                                that the Comptroller will establish a                   established by the FDIC under the FDIA,                 that should be included in the rule. One
                                                deadline for filing claims with the                     however, in that the avenue available to                commenter, a trade association for
                                                receiver, which could not be earlier than               a party whose claim has been denied by                  banks, said that the administration of
                                                30 days after the three-month                           the FDIC or OCC, when performing the                    set-offs may be complex, given that the
                                                publication of notice required by § 51.3.               agencies’ receivership claims functions,                trust and fiduciary business is a fee-
                                                This provision reflects NBA case law                    is to file (or continue) a de novo judicial             based industry. The commenter offered
                                                that permits the Comptroller to establish               action asserting the facts and legal                    the example of instances in which fees
                                                a date for filing claims against the                    theory of the claim against the                         have been accrued or are otherwise in
                                                receiver for a failed bank.16                           receivership of the bank. The NBA does                  the process of payment to one or more
                                                                                                        not contemplate or support further                      service providers at the time of
                                                   Section 51.4(b) of the final rule
                                                                                                        action by the claimant in an                            receivership. The commenter suggested
                                                clarifies that persons with claims
                                                                                                        administrative or judicial forum against                that the final rule acknowledge that a
                                                against an uninsured bank in
                                                                                                        the OCC seeking review of the claim                     given resolution may involve bespoke,
                                                receivership may present their claims to
                                                                                                        determination.                                          fact-specific set-off situations that
                                                a court of competent jurisdiction for
                                                                                                           Section 51.4(c) of the final rule                    would need to be carefully considered,
                                                adjudication in addition to, or as an
                                                                                                        provides that if a person with a claim                  while also serving the need for the
                                                alternative to, filing a claim with the
                                                                                                        against an uninsured bank in                            receiver or a successor fiduciary to be in
                                                OCC. If successful in court, such
                                                                                                        receivership also has an obligation owed                a position to continue providing
                                                persons will be required to submit a
                                                                                                        to the bank, the claim and obligation                   fiduciary services during the
                                                copy of the final judgment to the OCC
                                                                                                        will be set off against each other and                  receivership.
                                                to participate in ratable dividends of                                                                             The OCC believes that, on balance, it
                                                                                                        only the net balance remaining after set-
                                                liquidation proceeds along with claims                                                                          is not necessary to make this kind of an
                                                                                                        off will be considered as a claim. To this
                                                against the bank in receivership                                                                                addition to the language of the final
                                                                                                        end, § 51.4(a) also includes language
                                                submitted to, and approved by, the                                                                              rule. Section 51.4 as a whole is designed
                                                                                                        referring to claims for set-off. The right
                                                OCC. The final rule requires submission                                                                         to make the basic framework of claim
                                                                                                        of set-off where parties have mutual
                                                of a copy of the court’s final judgment                                                                         submission transparent to creditors of
                                                                                                        obligations has long been recognized as
                                                to the OCC. This provision is based on                                                                          the uninsured bank, and set-off is
                                                                                                        an equitable principle.18 Well-settled
                                                12 U.S.C. 193 and 194.                                                                                          included as an element of this
                                                                                                        case law has held that a receivership
                                                   In this regard, the receivership regime              creditor’s or other claimant’s equitable                framework. As the commenter states,
                                                established by the NBA differs                          right to a set-off is not precluded by the              the OCC’s determination of particular
                                                somewhat from the approach set out in                   ratable distribution requirement of the                 claims will require consideration of fact-
                                                other resolution regimes, such as the                   NBA, provided such set-off is otherwise                 specific situations prior to reaching a
                                                bankruptcy provisions of the United                     legally valid.19 If, after set-off, an                  disposition, and this extends to
                                                States Code and the receivership                        amount is owed to the creditor, the                     considerations of set-offs. The final rule
                                                provisions of the FDIA. Under those                                                                             is designed to accommodate with
                                                resolution regimes, creditors and                         17 See First Nat’l Bank of Bethel v. Nat’l            flexibility the consideration of such
                                                claimants must generally submit their                   Pahquioque Bank, 81 U.S. 383, 401 (1871);               factors in the context in which each
                                                claims to the receivership estate for                   Queenan v. Mays, 90 F.2d 525, 531 (10th Cir. 1937).     claim is postured.
                                                centralized administration and                          As noted earlier, it is incumbent on a claimant that       Section 51.5 of the final rule sets out
                                                                                                        pursues the judicial route and ultimately obtains
                                                disposition, and claims that are not                    judicial relief to submit the final judicial            the order of priorities for payment of
                                                submitted by the claims deadline are                    determination and award to the OCC, in order to         administrative expenses of the receiver
                                                barred from any participation in                        participate in the OCC’s periodic ratable dividends     and claims against the uninsured bank
                                                liquidation payments. The NBA                           of liquidation proceeds of the receivership estate.     in receivership. Under this section, the
                                                                                                        Except with respect to a valid and enforceable
                                                provisions are different in that                        security interest in specific property of the
                                                                                                                                                                OCC will pay these expenses and claims
                                                claimants are provided the opportunity                  uninsured bank established as part of a final           in the following order: (1)
                                                to submit claims to the OCC for                         judicial determination, there are no assets or funds    administrative expenses of the receiver;
                                                evaluation, but are not foreclosed from                 available to a successful judicial claimant other       (2) unsecured creditors, including
                                                                                                        than the ratable dividend process set out in 12
                                                pursuing judicial resolution by filing                  U.S.C. 194 and described in § 51.8 of the final rule.
                                                                                                                                                                secured creditors to the extent their
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                                                litigation (or continuing a pre-existing                  18 See, e.g., Scammon v. Kimball, 92 U.S. 362         claim exceeds their valid and
                                                lawsuit) in a court of competent                        (1876); Blount v. Windley, 95 U.S. 173, 177 (1877);     enforceable security interest; (3)
                                                jurisdiction against the uninsured bank                 Carr v. Hamilton, 129 U.S. 252 (1889).                  creditors of the uninsured bank, if any,
                                                                                                          19 See Scott v. Armstrong, 146 U.S. 499, 510
                                                in receivership.                                                                                                whose claims are subordinated to
                                                                                                        (1892); InterFirst Bank of Abilene, N.A. v. FDIC, 777
                                                                                                        F.2d 1092, 1095–1096 (5th Cir. 1985); FDIC v.
                                                                                                                                                                general creditor claims; and (4)
                                                  16 See Queenan v. Mays, 90 F.2d 525, 531 (10th        Mademoiselle of California, 379 F.2d 660, 663 (9th      shareholders of the uninsured bank. The
                                                Cir. 1937).                                             Cir. 1967).                                             order is based on case law and, in the


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                                                                 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations                                       92599

                                                case of the first priority for                          for a refund of prepaid investment                    and appropriate to facilitate the orderly
                                                administrative expenses, on 12 U.S.C.                   management fees that were attributable                liquidation or other resolution of the
                                                196.20                                                  to periods after the receiver returned the            uninsured bank in receivership. To
                                                   A creditor or other claimant with a                  fiduciary assets to the customer                      further illustrate the kinds of expenses
                                                security interest that was valid and                    generally would be a general unsecured                that § 196 affords a first priority claim
                                                enforceable as to its terms prior to the                claim covered by § 51.5(b). The claims                on the uninsured bank’s receivership
                                                appointment of the receiver is entitled                 process described in § 51.4(b) is                     assets, § 51.6 enumerates examples of
                                                to exercise that security interest, outside             available to a fiduciary customer, for                such administrative expenses, such as
                                                the priority of distributions set out in                both a direct claim for the return of                 wages and salaries of employees,
                                                the final rule.21 If the collateral value               fiduciary assets, as well as a                        expenses for professional services,
                                                exceeds the amount of the claim as it                   receivership claim for amounts the                    contractual rent pursuant to an existing
                                                was immediately prior to the receiver’s                 customer believes it is owed by the                   lease or rental agreement, and payments
                                                appointment, the surplus remains an                     bank.                                                 to third-party or affiliated service
                                                asset of the uninsured bank, and the                       The OCC requested comment on                       providers, when the receiver determines
                                                receiver may obtain it in connection                    whether there are other Federal statutes              these expenses are of benefit to the
                                                with marshalling the assets (as further                 regarding specific types of claims that               receivership.
                                                described in § 51.7(a) of the final rule).22            may be applicable to a receivership of                   Section 51.7 of the final rule contains
                                                   Liens arising from judicial                          an uninsured bank under the NBA and                   provisions describing the powers and
                                                determinations after the initiation of the              that would give certain claims a                      duties of the receiver and the
                                                receivership, as well as contractual liens              different priority, such as claims owed               disposition of fiduciary and custodial
                                                that are triggered due to the                           to the Federal government. One                        accounts. As described in § 51.7, the
                                                appointment of a receiver or other post-                commenter, a coalition that advocates                 receiver will take over the assets and
                                                appointment events, are not enforceable.                for reform in the financial services                  operation of the uninsured bank, take
                                                This is because recognition of these                    industry, agreed that customer assets                 action to realize on debts owed to the
                                                liens would afford these claimants a                    held by a bank in a fiduciary capacity                uninsured bank, sell the property of the
                                                priority that is not recognized under the               should not be considered assets of the                bank, and liquidate the assets of the
                                                established legal priorities described in               bank, but questioned why other claims                 uninsured bank for payment of claims
                                                § 51.5 of the final rule. Similarly, a                  of the customer, such as a claim for a                against the receivership. Section
                                                secured creditor is not entitled to a                   refund of prepaid investment                          51.7(a)(1)–(5) lists some of the major
                                                priority distribution of any portion of                 management fees that were attributable                powers and duties for the receiver set
                                                the claim that is not covered by the                    to periods after the receiver returned the            out in 12 U.S.C. 192 and clarified by the
                                                value of the collateral because the                     fiduciary assets to the customer, would               courts, including taking possession of
                                                creditor is in the position of a general                be treated as a unsecured general                     the books and records of the bank,
                                                unsecured creditor for that portion of                  creditor claim. The commenter                         collecting on debts and claims owed to
                                                the claim and must participate in ratable               suggested that such customer funds                    the bank, selling or compromising bad
                                                liquidation distributions on par with                   would have less protection in a                       or doubtful debts (with court approval),
                                                other unsecured creditors.23                            receivership for an uninsured bank than               and selling the bank’s real and personal
                                                   Assets held by the uninsured bank at                 they would under certain modern                       property (also with court approval).
                                                the time of the receiver’s appointment                  receivership and bankruptcy statutes                     Section 51.7(b) of the final rule
                                                in a fiduciary or custodial capacity, as                that set forth claim priorities which                 provides for the receiver to close the
                                                identified on the bank’s books and                      include preference to customer claims                 uninsured bank’s fiduciary and
                                                records, are not general assets of the                  over other general creditor claims.                   custodial appointments, or transfer such
                                                bank. Section 51.8(b) of the final rule                    The OCC is required, by statute, to                accounts to a successor fiduciary or
                                                reiterates this point. In the same vein,                pay claims on a ratable basis. As                     custodian under 12 CFR 9.16 or other
                                                the claim of the customer for the return                discussed in connection with the                      applicable Federal law. The uninsured
                                                of the customer’s fiduciary or custodial                description of § 51.8 of the final rule,              banks currently in existence focus on
                                                assets is separate from, and not subject                this requirement has been interpreted by              fiduciary and custodial services, so this
                                                to, the priority set out in § 51.5.                     the courts as requiring the OCC to make               function of the receiver will be of
                                                Fiduciary and custodial customers of                    distributions on OCC-approved claims                  primary importance. This provision
                                                the bank have direct claims on those                    and judicial awards on an equal footing,              recognizes that the receiver’s power to
                                                assets pursuant to their fiduciary or                   determining the amount of each                        wind up the affairs of the uninsured
                                                custodial account contracts. However,                   creditor’s claim as it stands at the point            bank in receivership, acting with court
                                                the priority of a fiduciary or custodial                of insolvency. As a result, the                       approval to make disposition of bank
                                                customer’s other claims against the                     controlling ratable payment statute does              assets, should properly encompass the
                                                bank, if any, would remain subject to                   not support a rule that makes                         power to transfer fiduciary or custodial
                                                the priority described in § 51.5. For                   distinctions in distribution priority                 appointments and any associated assets
                                                example, a fiduciary customer’s claim                   between customer and general creditor                 in appropriate circumstances.
                                                                                                        claimants.                                               Transfer of fiduciary appointments
                                                  20 See Ticonic Nat’l Bank v. Sprague, 303 U.S.           Section 51.6 of the final rule provides            may occur under the terms of the
                                                406, 410–411 (1938); Merrill v. Nat’l Bank of           that all administrative expenses of the               instrument creating the relationship, if
                                                Jacksonville, 173 U.S. 131, 146 (1899); Scott v.        receiver for an uninsured bank will be                it provides for transfer, or under a
                                                Armstrong, 146 U.S. 499, 510 (1892); Bell v.
                                                Hanover Nat’l Bank, 57 F. 821, 822 (C.C.S.D.N.Y.        paid out of the assets of the receivership            fiduciary transfer statute, if one is
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                                                1893).                                                  before payment of claims against the                  applicable. The OCC believes there are
                                                  21 Ticonic Nat’l Bank v. Sprague, 303 U.S. 406,       receivership. This reflects the                       strong public policy interests in
                                                410–411 (1938); Bell v. Hanover Nat’l Bank, 57 F.       requirements in 12 U.S.C. 196. The final              endeavoring to replace fiduciaries and
                                                821, 822 (C.C.S.D.N.Y. 1893).
                                                  22 Bell v. Hanover Nat’l Bank, 57 F. 821, 822
                                                                                                        rule also states that receivership                    custodians expeditiously, without an
                                                (C.C.S.D.N.Y. 1893).                                    expenses will include pre-receivership                interruption in service to their
                                                  23 Merrill v. Nat’l Bank of Jacksonville, 173 U.S.    and post-receivership obligations that                customers, if transfer can be arranged to
                                                131, 146 (1899).                                        the receiver determines are necessary                 a qualified successor, maintaining the


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                                                92600            Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations

                                                same duties and standards of care with                  as receiver of failed insured depository                designed to incorporate the associated
                                                respect to the customers that previously                institutions.24                                         standards about the proper application
                                                pertained to their accounts at the                         Section 51.7(c) of the final rule                    of this statutory directive, which the
                                                uninsured bank in receivership. The                     incorporates, in general terms, the                     judiciary has articulated over the years.
                                                alternative, given that the uninsured                   powers, duties, and responsibilities of                 The ratable dividend requirement
                                                bank must be wound down and cannot                      receivers for national banks under the                  directs the OCC to make distributions
                                                provide services in the future, is to stop              NBA and under judicial precedents                       on OCC-approved claims and judicial
                                                managing and reinvesting the                            determining the authorities and                         awards on an equal footing, determining
                                                customer’s assets, stop responding to                   responsibilities of receivers for national              the amount of each creditor’s claim as
                                                directions to transfer or receive assets in             banks. Examples of these powers                         it stands at the point of insolvency. As
                                                custody, close the accounts, and seek                   include: (1) the authority to repudiate                 one example, a court’s award of interest
                                                instructions from the account holders or                certain contracts, including: (a) purely                on an unpaid debt to the date of a
                                                the courts regarding return of associated               executory contracts, upon determining                   judgment rendered in the plaintiff’s
                                                assets. For institutional customers, this               that the contracts would be unduly                      favor after the receiver was appointed
                                                is likely to cause significant interruption             burdensome or unprofitable for the                      does not increase the amount of the
                                                of the intricate machinery of their                     receivership estate,25 (b) contracts that               plaintiff’s claim for purposes of making
                                                financial operations. For individuals, it               involve fraud or misrepresentation,26                   ratable dividends. As another example,
                                                can potentially result in loss of asset                 and (c) in limited cases, non-executory                 the ratable dividend requirement
                                                value in adverse markets, or loss of                    contracts that are contrary to public                   generally restricts claims against the
                                                income due to foregone reinvestments.                   policy; 27 (2) the authority to recover                 bank receivership for debts that were
                                                   Across the United States, there are                  fraudulent transfers; 28 and (3) the                    not due and owing at the appointment
                                                disparate and often conflicting legal                   authority to enforce collection of notes                of the receiver and arose for the first
                                                rules restricting or conditioning                       from debtors and collateral, regardless                 time as a consequence of the
                                                transfers of an appointment of a                        of the existence of side arrangements                   appointment or a post-appointment
                                                fiduciary for a beneficiary residing                    that would otherwise defeat the                         event.
                                                within the state. Depending on the                      collectability of such notes.29                            The OCC requested comment on
                                                geographic area across which the                           Section 51.7(d) of the final rule                    alternatives to the proposed rule’s
                                                uninsured bank has established                          requires the receiver to make periodic                  approach to paying dividends on
                                                fiduciary relationships with its                        reports to the OCC concerning the status                claims, under which the OCC would
                                                customers, and the standardization of its               and proceedings of the receivership.                    exercise its discretion under section 194
                                                fiduciary account agreements or                            Section 51.8 of the final rule contains              to determine the timing of the
                                                appointing instruments, it may be                       provisions regarding the payment of                     distributions on established claims.
                                                practicable for the receiver to transition              dividends on claims against the                         Under one alternative presented in the
                                                an uninsured bank’s fiduciary and                       uninsured bank and the distribution of                  proposed rule, the OCC would refrain
                                                custody accounts to a qualified                         any remaining proceeds to shareholders.                 from paying any dividends until all
                                                successor through the mechanisms                        This section provides that, after                       claims have been submitted and
                                                provided by applicable local law. On                    administrative expenses of the                          validated, with final allowed claim
                                                the other hand, if faced with dispersed                 receivership have been paid, the OCC                    amounts established. As we noted in the
                                                customers, diverse account agreements                   will make ratable dividends from                        proposal, this approach presents the
                                                or appointments of different vintage, or                available receivership funds based on                   possibility that proven claims may be
                                                even the absence of an applicable law of                the priority of claims in proposed § 51.5               delayed for a significant amount of time
                                                transfer for customers in certain states,               for claims that have been proved to the                 pending more protracted resolution of
                                                reliance on these methods may be so                     OCC’s satisfaction or adjudicated in a                  other claims. Under a second option
                                                cumbersome as to effectively prevent                    court of competent jurisdiction, as                     presented in the proposed rule, the OCC
                                                accomplishment of the transfers in a                    provided in 12 U.S.C. 194. The OCC                      would make ongoing dividends on
                                                timely way.                                             will make payment of dividends, if any,                 proven claims, subject to the receiver’s
                                                   In order to address these potential                  periodically, at the discretion of the                  retaining a percentage of the funds on
                                                problems, the OCC, relying on the                       OCC, as the receiver liquidates the                     hand at the time of the distribution as
                                                support of existing case law, is                        assets of the uninsured bank.                           a pool of dividends for catch-up
                                                including language in the final rule to                    The final rule’s inclusion of the                    distributions to a successful plaintiff
                                                make it clear that the uninsured bank                   ‘‘ratable dividend’’ requirement is                     later.
                                                receiver’s power under 12 U.S.C. 192 to                                                                            The OCC did not receive comments
                                                                                                           24 See NCNB Texas National Bank v. Cowden,
                                                sell, with court approval, the real and                                                                         on these alternative approaches for
                                                                                                        895 F.2d 1488 (5th Cir. 1990) (holding that the
                                                personal property of the bank includes                  FDIC, as receiver of insolvent bank, had authority      making ratable distributions on claims
                                                the power to transfer the bank’s                        to transfer fiduciary appointments to a bridge bank     against a receivership. For this reason,
                                                fiduciary accounts and related assets,                  prior to the Financial Institutions Reform, Recovery,   and because the proposed rule’s
                                                subject to the approval of the court                    and Enforcement Act of 1989).                           approach to payment of dividends
                                                                                                           25 Bank One Texas v. Prudential Life Ins. Co., 878
                                                exercising jurisdiction over the                        F. Supp. 943, 964–66 (N.D. Tex. 1995).
                                                                                                                                                                provides the OCC with the discretion to
                                                receiver’s efforts to transfer the bank’s                  26 A. Corbin, Corbin on Contracts § 228 at 320       tailor the dividend process to facts and
                                                assets. The final rule is consistent with               (1952) (addressing contracts voidable for fraud,        circumstances of a particular
                                                case law recognizing that a receiver for                duress, or mistake).                                    receivership, the final rule adopts § 51.8
                                                                                                           27 Cf. Fidelity Deposit Co. of Md. v. Conner, 973
                                                a national bank may properly arrange                                                                            as proposed.
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                                                                                                        F.2d 1236, 1241 (5th Cir. 1992).
                                                asset purchase and liability assumption                    28 See Peters v. Bain, 133 U.S. 670 (1890)
                                                                                                                                                                   Section 51.8(a)(2) of the final rule
                                                transactions to move the business of a                  (applying state substantive law to determine            recognizes the basic legal premise under
                                                failed bank to a successor on an                        whether to void a transfer); Rogers v. Marchant, 91     the NBA receivership provisions and
                                                integrated basis, as part of the power to               F.2d 660, 663 (4th Cir. 1937).                          judicial interpretations thereof that any
                                                                                                           29 D’Oench, Duhme & Co., Inc. v. FDIC, 315 U.S.
                                                transfer assets, as well as analogous case              447, 458 (1942). A. Corbin, Corbin on Contracts,
                                                                                                                                                                dividend payments to creditors and
                                                law concerning the transfer of fiduciary                § 228 at 320 (1952) (addressing contracts voidable      other claimants of an uninsured bank
                                                and custodial assets by the FDIC, acting                for fraud, duress or mistake).                          will be made solely from receivership


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                                                                 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations                                                92601

                                                funds, if any, paid to the OCC by the                   agent to continue the liquidation of the              scope of the final rule extends to
                                                receiver after payment of the expenses                  remaining assets, under the direction of              uninsured banks. The maximum
                                                of the receiver. This provision is also                 the board of directors and shareholders,              number of OCC-supervised small
                                                consistent with the established                         as in a liquidation that had commenced                uninsured banks that could be subject to
                                                dichotomy of the OCC’s supervisory and                  under 12 U.S.C. 181.                                  the receivership framework described in
                                                receivership capacities in the NBA, as                     There may be other circumstances                   the final rule is approximately 18.30
                                                discussed earlier.                                      under which termination would take                    Accordingly, the OCC certifies that the
                                                   Section 51.8(b) of the final rule                    place, such as when there are no                      final rule will not have a significant
                                                similarly recognizes that assets held by                receivership assets remaining after                   economic impact on a substantial
                                                an uninsured national bank at the time                  completion of receivership activities.                number of small entities.
                                                of the receiver’s appointment in a                      Under this scenario, the receiver for an
                                                fiduciary or custodial capacity, as                                                                           OCC Unfunded Mandates Reform Act of
                                                                                                        uninsured bank has liquidated all of the              1995 Determination
                                                designated on the bank’s books and                      bank’s assets, closed or transferred all
                                                records, are not part of the bank’s                     fiduciary accounts to a successor                        The OCC has analyzed the final rule
                                                general assets and liabilities held in                  fiduciary, paid all administrative                    under the factors in the Unfunded
                                                connection with its other business and                  expenses, and either paid creditor                    Mandates Reform Act of 1995 (UMRA)
                                                will not be considered a source for                     claims in full and distributed the                    (2 U.S.C. 1532). Under this analysis, the
                                                payment for unrelated claims of                         remaining proceeds to shareholders, as                OCC considered whether the final rule
                                                creditors and other claimants. This                     provided in § 51.8(c) of the final rule, or           includes a Federal mandate that may
                                                provision is intended to make clear that                made ratable dividends of all remaining               result in the expenditure by state, local,
                                                the receiver will segregate identified                  proceeds to creditors as provided in                  and tribal governments, in the aggregate,
                                                fiduciary and custodial assets and either               § 51.8(a), but no additional assets                   or by the private sector, of $100 million
                                                transfer those assets to other fiduciaries              remain in the estate. Under these                     or more in any one year (adjusted
                                                or custodians as described in                           circumstances, the provisions in 12                   annually for inflation). As detailed in
                                                connection with § 51.7(b), or close the                 U.S.C. 197 for termination would not                  the SUPPLEMENTARY INFORMATION, the
                                                accounts and endeavor to make the                       apply.                                                OCC currently supervises 52 uninsured
                                                associated assets available to the                                                                            banks, all of which are uninsured trust
                                                account holders or their representatives                V. Regulatory Analysis                                banks, and has not appointed a receiver
                                                through other means.                                    A. Paperwork Reduction Act                            for an uninsured bank since 1933.
                                                   One commenter, a trade association                                                                         Unlike commercial and consumer banks
                                                for banks, agreed with the treatment of                   Under the Paperwork Reduction Act                   and savings associations, which
                                                fiduciary assets in the proposed rule,                  (PRA) of 1995 (44 U.S.C. 3501 et seq.),               generally face credit and liquidity risks,
                                                but questioned whether § 51.8(b)                        the OCC may not conduct or sponsor,                   national trust banks primarily face
                                                indicates with sufficient clarity that                  and, notwithstanding any other                        operational, reputational, and strategic
                                                fiduciary assets will not be treated as                 provision of law, a person is not                     risks. While any of these risks could
                                                assets of the bank in receivership. As                  required to respond to, an information                result in the precipitous failure of a
                                                stated in the final rule, fiduciary and                 collection unless the information                     bank or savings association, from a
                                                custodial assets ‘‘will not be considered               collection displays a valid Office of                 historical perspective, trust banks have
                                                as part of the bank’s general assets. . .’’.            Management and Budget (OMB) control                   been more likely to decline into a
                                                The OCC reiterates that, under this                     number. The final rule contains no                    weakened condition, allowing the OCC
                                                section, assets held by an uninsured                    information collection requirements                   and the institution the time needed to
                                                bank in a fiduciary or custodial                        under the PRA.                                        find other solutions for rehabilitating
                                                capacity, as designated on the bank’s                   B. Regulatory Flexibility Act                         the institution or to successfully resolve
                                                books and records, are not part of the                                                                        the institution without the need to
                                                bank’s general assets and liabilities held                 The Regulatory Flexibility Act (RFA),              appoint a receiver. As such, we believe
                                                in connection with its other business                   5 U.S.C. 601 et seq., generally requires              the OCC is unlikely to place an
                                                and will not be a source for payment for                that, in connection with a rulemaking,                uninsured trust bank into receivership.
                                                unrelated claims of creditors and other                 an agency prepare and make available                  For this reason, and because the final
                                                claimants.                                              for public comment a regulatory                       rule does not impose any
                                                   Section 51.8(d) of the final rule                    flexibility analysis that describes the               implementation requirements, the OCC
                                                provides that, after all administrative                 impact of the rule on small entities.                 concludes that the final rule will not
                                                expenses and claims have been paid in                   However, the regulatory flexibility                   result in an expenditure of $100 million
                                                full, any remaining proceeds will be                    analysis otherwise required under the                 or more by state, local, and tribal
                                                paid to shareholders in proportion to                   RFA is not required if an agency                      governments, or by the private sector, in
                                                their stock ownership, also as provided                 certifies that the rule will not have a               any one year.
                                                in 12 U.S.C. 194.                                       significant economic impact on a
                                                   Section 51.9 of the final rule contains              substantial number of small entities                  List of Subjects in 12 CFR Part 51
                                                provisions for termination of                           (defined in regulations promulgated by                  Administrative practice and
                                                receiverships in which there are assets                 the Small Business Administration                     procedure, Banks, Banking, National
                                                remaining after all administrative                      (SBA) to include commercial banks and                 banks, Procedural rules, Receiverships.
                                                expenses and all claims had been paid.                  savings institutions, and trust
                                                                                                                                                                30 Consistent with the General Principles of
                                                This is the scenario addressed by 12                    companies, with assets of $550 million
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                                                                                                                                                              Affiliation 13 CFR 121.103(a), the OCC counts the
                                                U.S.C. 197. In such a case, section 197                 or less and $38.5 million or less,                    assets of affiliated financial institutions when
                                                requires the Comptroller to call a                      respectively) and publishes its                       determining if we should classify an institution we
                                                meeting of the shareholders of the bank                 certification and a brief explanatory                 supervise as a small entity. We used December 31,
                                                at which the shareholders would decide                  statement in the Federal Register                     2015, to determine size because a financial
                                                                                                                                                              institution’s assets are determined by averaging the
                                                whether to continue oversight by the                    together with the rule.                               assets reported on its four quarterly financial
                                                Comptroller, or whether to end the                         The OCC currently supervises                       statements for the preceding year. See footnote 8 of
                                                receivership and appoint a liquidating                  approximately 1,032 small entities. The               the U.S. SBA’s Table of Size Standards.



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                                                92602            Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations

                                                Authority and Issuance                                  bank, the bank may seek judicial review               uninsured bank in receivership in the
                                                  For the reasons set forth in the                      of the appointment as provided in 12                  following order of priority:
                                                preamble and under the authority of 12                  U.S.C. 191(b).                                          (a) Administrative expenses of the
                                                U.S.C. 16, 93a, 191–200, 481, 482,                                                                            receiver;
                                                                                                        § 51.3   Notice of appointment of receiver.             (b) Unsecured creditors of the
                                                1831c, and 1867 the Office of the                         Upon appointment of a receiver for an               uninsured bank, including secured
                                                Comptroller of the Currency adds part
                                                                                                        uninsured bank, the OCC will provide                  creditors to the extent their claim
                                                51 to chapter I of title 12, Code of
                                                                                                        notice to the public of the receivership,             exceeds their valid and enforceable
                                                Federal Regulations to read as follows:                 including by publication in a newspaper               security interest;
                                                PART 51—RECEIVERSHIPS FOR                               of general circulation for three                        (c) Creditors of the uninsured bank, if
                                                UNINSURED NATIONAL BANKS                                consecutive months. The notice of the                 any, whose claims are subordinated to
                                                                                                        receivership will provide instructions                general creditor claims; and
                                                Sec.                                                    for creditors and other claimants                       (d) Shareholders of the uninsured
                                                51.1  Purpose and scope.                                seeking to submit claims with the                     bank.
                                                51.2  Appointment of receiver.                          receiver for the uninsured bank.
                                                51.3  Notice of appointment of receiver.                                                                      § 51.6 Administrative expenses of
                                                51.4  Claims.                                           § 51.4   Claims.                                      receiver.
                                                51.5  Order of priorities.
                                                51.6  Administrative expenses of receiver.
                                                                                                           (a) Submission of claims for                         (a) Priority of administrative
                                                51.7  Powers and duties of receiver;                    consideration by the OCC. (1) Persons                 expenses. All administrative expenses
                                                    disposition of fiduciary and custodial              who have claims against the                           of the receiver for an uninsured bank
                                                    accounts.                                           receivership for an uninsured bank may                shall be paid out of the assets of the
                                                51.8 Payment of claims and dividends to                 present such claims, along with                       bank in receivership before payment of
                                                    shareholders.                                       supporting documentation, for                         claims against the receivership.
                                                51.9 Termination of receivership.                       consideration by the OCC. The OCC will                  (b) Scope of administrative expenses.
                                                  Authority: 12 U.S.C. 16, 93a, 191–200,                determine the validity and approve the                Administrative expenses of the receiver
                                                481, 482, 1831c, and 1867.                              amounts of such claims.                               for an uninsured bank include those
                                                                                                           (2) The OCC will establish a date by               expenses incurred by the receiver in
                                                § 51.1   Purpose and scope.
                                                                                                        which any person seeking to present a                 maintaining banking operations during
                                                  (a) Purpose. This part sets out                       claim against the uninsured bank for                  the receivership, to preserve assets of
                                                procedures for receiverships of national                consideration by the OCC must present                 the uninsured bank, while liquidating or
                                                banks conducted by the Office of the                    their claim for determination. The                    otherwise resolving the affairs of the
                                                Comptroller of the Currency (OCC)                       deadline for filing such claims will not              uninsured bank. Such expenses include
                                                under the receivership provisions of the                be less than 30 days after the end of the             pre-receivership and post-receivership
                                                National Bank Act (NBA). These                          three-month notice period in § 51.3.                  obligations that the receiver determines
                                                receivership provisions apply to                           (3) The OCC will allow any claim                   are necessary and appropriate to
                                                national banks that are not insured by                  against the uninsured bank received on                facilitate the orderly liquidation or other
                                                the Federal Deposit Insurance                           or before the deadline for presenting                 resolution of the uninsured bank in
                                                Corporation (FDIC).                                     claims if such claim is established to the            receivership.
                                                  (b) Scope. This part applies to the                   OCC’s satisfaction by the information on                (c) Types of administrative expenses.
                                                appointment of a receiver for uninsured                 the uninsured bank’s books and records                Administrative expenses for the receiver
                                                national banks (uninsured banks) and                    or otherwise submitted. The OCC may                   of an uninsured bank include:
                                                the operation of a receivership after                   disallow any portion of any claim by a                  (1) Salaries, costs, and other expenses
                                                appointment of a receiver for an                        creditor or claim of a security,                      of the receiver and its staff, and costs of
                                                uninsured bank under 12 U.S.C. 191.31                   preference, set-off, or priority which is             contracts entered into by the receiver for
                                                § 51.2   Appointment of receiver.                       not established to the satisfaction of the            professional services relating to
                                                  (a) In general. The Comptroller of the                OCC.                                                  performing receivership duties; and
                                                Currency (Comptroller) may appoint                         (b) Submission of claims to a court.                 (2) Expenses necessary for the
                                                any person, including the OCC or                        Persons with claims against an                        operation of the uninsured bank,
                                                another government agency, as receiver                  uninsured bank in receivership may                    including wages and salaries of
                                                for an uninsured bank. The receiver                     present their claims to a court of                    employees, expenses for professional
                                                performs its duties under the direction                 competent jurisdiction for adjudication.              services, contractual rent pursuant to an
                                                of the Comptroller and serves at the will               Such persons must submit a copy of any                existing lease or rental agreement, and
                                                of the Comptroller. The Comptroller                     final judgment received from the court                payments to third-party or affiliated
                                                may require the receiver to post a bond                 to the OCC, to participate in ratable                 service providers, that in the opinion of
                                                or other security. The receiver, with the               dividends along with other proved                     the receiver are of benefit to the
                                                approval of the Comptroller, may                        claims.                                               receivership, until the date the receiver
                                                employ such staff and enter into                           (c) Right of set-off. If a person with a           repudiates, terminates, cancels, or
                                                contracts for professional services as are              claim against an uninsured bank in                    otherwise discontinues the applicable
                                                necessary to carry out the receivership.                receivership also has an obligation owed              contract.
                                                  (b) Grounds for appointment. The                      to the bank, the claim and obligation
                                                                                                        will be set off against each other and                § 51.7 Powers and duties of receiver;
                                                Comptroller may appoint a receiver for                                                                        disposition of fiduciary and custodial
                                                an uninsured bank based on any of the                   only the net balance remaining after set-
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                                                                                                                                                              accounts.
                                                grounds specified in 12 U.S.C. 191(a).                  off shall be considered as a claim,
                                                  (c) Judicial review. If the Comptroller               provided such set-off is otherwise                      (a) Marshalling of assets. In resolving
                                                appoints a receiver for an uninsured                    legally valid.                                        the affairs of an uninsured bank in
                                                                                                                                                              receivership, the receiver:
                                                  31 This part does not apply to receiverships for
                                                                                                        § 51.5   Order of priorities.                           (1) Takes possession of the books,
                                                uninsured Federal branches or uninsured Federal           The OCC will pay receivership                       records and other property and assets of
                                                agencies.                                               expenses and proved claims against the                the uninsured bank, including the value


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                                                                 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations                                          92603

                                                of collateral pledged by the uninsured                  the claims that have been proved to the               DEPARTMENT OF HEALTH AND
                                                bank to the extent it exceeds valid and                 OCC’s satisfaction or adjudicated in a                HUMAN SERVICES
                                                enforceable security interests of a                     court of competent jurisdiction.
                                                claimant;                                                  (2) Dividend payments to creditors                 Food and Drug Administration
                                                   (2) Collects all debts, dues and claims              and other claimants of an uninsured
                                                belonging to the uninsured bank,                        bank will be made solely from                         21 CFR Part 4
                                                including claims remaining after set-off;               receivership funds, if any, paid to the               [Docket No. FDA–2008–N–0424]
                                                   (3) Sells or compromises all bad or                  OCC by the receiver after payment of the
                                                doubtful debts, subject to approval by a                expenses of the receiver.                             RIN 0910–AF82
                                                court of competent jurisdiction;                           (b) Fiduciary and custodial assets.
                                                   (4) Sells the real and personal                                                                            Postmarketing Safety Reporting for
                                                                                                        Assets held by an uninsured bank in a                 Combination Products
                                                property of the uninsured bank, subject                 fiduciary or custodial capacity, as
                                                to approval by a court of competent                     designated on the bank’s books and                    AGENCY:    Food and Drug Administration,
                                                jurisdiction, on such terms as the court                records, will not be considered as part               HHS.
                                                shall direct; and                                       of the bank’s general assets and                      ACTION:   Final rule.
                                                   (5) Deposits all receivership funds                  liabilities held in connection with its
                                                collected from the liquidation of the                   other business, and will not be                       SUMMARY:   The Food and Drug
                                                uninsured bank in an account                            considered a source for payment of                    Administration (FDA or Agency) is
                                                designated by the OCC.                                                                                        issuing regulations to set forth
                                                                                                        unrelated claims of creditors and other
                                                   (b) Disposition of fiduciary and                                                                           postmarketing safety reporting
                                                                                                        claimants.
                                                custodial accounts. The receiver for an                                                                       requirements for combination products.
                                                                                                           (c) Timing of dividends. The payment               Specifically, this final rule describes the
                                                uninsured bank closes the bank’s
                                                                                                        of dividends, if any, under paragraph (a)             postmarketing safety reporting
                                                fiduciary and custodial appointments
                                                                                                        of this section, on proved or adjudicated             requirements that apply when two or
                                                and accounts or transfers some or all of
                                                                                                        claims will be made periodically, at the              more different types of regulated
                                                such accounts to successor fiduciaries
                                                                                                        discretion of the OCC, as the receiver                medical products (drugs, devices, and/
                                                and custodians, in accordance with 12
                                                                                                        liquidates the assets of the uninsured                or biological products, which are
                                                CFR 9.16, and other applicable Federal
                                                                                                        bank.                                                 referred to as ‘‘constituent parts’’ of a
                                                law.
                                                   (c) Other powers. The receiver for an                   (d) Distribution to shareholders. After            combination product) comprise a
                                                uninsured bank may exercise other                       all administrative expenses of the                    combination product and the
                                                rights, privileges, and powers                          receiver and proved claims of creditors               combination product or its constituent
                                                authorized for receivers of national                    of the uninsured bank have been paid in               parts have received FDA marketing
                                                banks under the NBA and the common                      full, to the extent there are receivership            authorization. The rule is intended to
                                                law of receiverships as applied by the                  assets to make such payments, any                     promote and protect the public health
                                                courts to receiverships of national banks               remaining proceeds shall be paid to the               by setting forth the requirements for
                                                conducted under the NBA.                                shareholders, or their legal                          postmarketing safety reporting for these
                                                   (d) Reports to OCC. The receiver for                 representatives, in proportion to their               combination products, and is part of
                                                an uninsured bank shall make periodic                   stock ownership.                                      FDA’s ongoing effort to ensure the
                                                reports to the OCC on the status and                    § 51.9   Termination of receivership.                 consistency and appropriateness of the
                                                proceedings of the receivership.                                                                              regulatory requirements for combination
                                                   (e) Receiver subject to removal;                       If there are assets remaining after full            products.
                                                modification of fees. (1) The                           payment of the expenses of the receiver
                                                                                                                                                              DATES: Effective date: This rule is
                                                Comptroller may remove and replace                      and all claims of creditors for an
                                                                                                                                                              effective on January 19, 2017.
                                                the receiver for an uninsured bank if, in               uninsured bank and all fiduciary
                                                                                                                                                                 Compliance dates: Some provisions of
                                                the Comptroller’s discretion, the                       accounts of the bank have been closed
                                                                                                                                                              the rule have a compliance date that is
                                                receiver is not conducting the                          or transferred to a successor fiduciary
                                                                                                                                                              the same as the effective date of this
                                                receivership in accordance with                         and fiduciary powers surrendered, the
                                                                                                                                                              rule, and other provisions of the rule
                                                applicable Federal laws or regulations                  Comptroller shall call a meeting of the
                                                                                                                                                              have a later compliance date as
                                                or fails to comply with decisions of the                shareholders of the uninsured bank, as
                                                                                                                                                              discussed in section III.I, Effective Date
                                                Comptroller with respect to the conduct                 provided in 12 U.S.C. 197, for the
                                                                                                                                                              and Compliance Dates.
                                                of the receivership or claims against the               shareholders to decide the manner in
                                                                                                                                                              FOR FURTHER INFORMATION CONTACT: John
                                                receivership.                                           which the liquidation will continue.
                                                                                                        The liquidation may continue by:                      Barlow Weiner, Associate Director for
                                                   (2) The Comptroller may reduce the                                                                         Policy, Office of Combination Products,
                                                fees of the receiver for an uninsured                     (a) Continuing the receivership of the
                                                                                                                                                              Food and Drug Administration, 10903
                                                bank if, in the Comptroller’s discretion,               uninsured bank under the direction of
                                                                                                                                                              New Hampshire Ave., Bldg. 32, Rm.
                                                the Comptroller finds the performance                   the Comptroller; or
                                                                                                                                                              5129, Silver Spring, MD 20933, 301–
                                                of the receiver to be deficient, or the fees              (b) Ending the receivership and                     796–8930, john.weiner@fda.hhs.gov.
                                                of the receiver to be excessive,                        oversight by the Comptroller and
                                                                                                                                                              SUPPLEMENTARY INFORMATION:
                                                unreasonable, or beyond the scope of                    replacing the receiver with a liquidating
                                                the work assigned to the receiver.                      agent to proceed to liquidate the                     Table of Contents
                                                                                                        remaining assets of the uninsured bank                Executive Summary
                                                § 51.8 Payment of claims and dividends to               for the benefit of the shareholders, as set
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                                                shareholders.                                                                                                 I. Background
                                                                                                        out in 12 U.S.C. 197.                                    A. Rationale for Rulemaking
                                                  (a) Claims. (1) After the administrative
                                                expenses of the receivership have been                    Dated: December 15, 2016.                              B. The Proposed Rule
                                                                                                        Thomas J. Curry,                                      II. Overview of the Final Rule
                                                paid, the OCC shall make ratable                                                                                 A. Section 4.100—What is the scope of this
                                                dividends from time to time of available                Comptroller of the Currency.
                                                                                                                                                                   subpart?
                                                receivership funds according to the                     [FR Doc. 2016–30666 Filed 12–19–16; 8:45 am]             B. Section 4.101—How does FDA define
                                                priority described in § 51.5, based on                  BILLING CODE 4810–33–P                                     key terms and phrases in this subpart?



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Document Created: 2018-02-14 09:10:19
Document Modified: 2018-02-14 09:10:19
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesThis final rule is effective on January 19, 2017.
ContactMitchell Plave, Special Counsel, Legislative and Regulatory Activities Division, (202) 649-5490, or for persons who are deaf or hard of hearing, TTY, (202) 649-5597, or Richard Cleva, Senior Counsel, Bank Activities and Structure Division, (202) 649-5500, Office of the Comptroller of the Currency, 400 7th Street SW., Washington, DC 20219.
FR Citation81 FR 92594 
RIN Number1557-AE07
CFR AssociatedAdministrative Practice and Procedure; Banks; Banking; National Banks; Procedural Rules and Receiverships

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