[Federal Register Volume 81, Number 125 (Wednesday, June 29, 2016)]
[Rules and Regulations]
[Pages 42235-42243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15027]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 308 and 327
RIN 3064-AE43
Rules of Practice and Procedure
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Interim final rule and request for comment.
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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending
its rules of practice and procedure under to adjust the maximum amount
of each civil money penalty (CMP) within its jurisdiction to account
for inflation. This action is required by the Federal Civil Penalties
Inflation
[[Page 42236]]
Adjustment Act Improvements Act of 2015 (2015 Adjustment Act).
DATES: This rule is effective on August 1, 2016. Comments must be
received by September 1, 2016.
ADDRESSES: You may submit comments, identified by RIN 3064-AE43, by any
of the following methods:
Agency Web site: http://www.fdic.gov/regulations/laws/federal/. Follow instructions for submitting comments on the Agency Web
site.
Email: [email protected]. Include the RIN 3064-AE43 on the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW.,
Washington, DC 20429.
Hand Delivery: Comments may be hand-delivered to the guard
station at the rear of the 550 17th Street Building (located on F
Street) on business days between 7:00 a.m. and 5:00 p.m.
Public Inspection: All comments received must include the agency
name and RIN for this rulemaking. All comments received will be posted
without change to http://www.fdic.gov/regulations/laws/federal/,
including any personal information provided. Paper copies of public
comments may be ordered from the FDIC Public Information Center, 3501
North Fairfax Drive, Room E-1002, Arlington, VA 22226 by telephone at
(877) 275-3342 or (703) 562-2200.
FOR FURTHER INFORMATION CONTACT: Seth P. Rosebrock, Supervisory
Counsel, Legal Division (202) 898-6609, or Graham N. Rehrig, Senior
Attorney, Legal Division (202) 898-3829.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
This interim final rule adjusts the maximum limit for CMPs
according to inflation as mandated by Congress in the 2015 Adjustment
Act.\1\ The intended effect of annually adjusting maximum civil money
penalties in accordance with changes in the Consumer Price Index is to
minimize any distortion in the real value of those maximums due to
inflation, thereby promoting a more consistent deterrent effect in the
structure of CMPs. Other technical changes to 12 CFR part 308 are
intended to improve the transparency of the regulation and to assist
readers in quickly identifying the applicable CMP amounts.
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\1\ Public Law 114-74, sec. 701, 129 Stat. 584.
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II. Background: Current Regulatory Approach
The FDIC assesses CMPs under section 8(i) of the Federal Deposit
Insurance Act (FDIA), 12 U.S.C. 1818, and a variety of other
statutes.\2\ Congress established maximum penalties that could be
assessed under these statutes. In many cases, these statutes contain
multiple penalty tiers, permitting the assessment of penalties at
various levels depending upon the severity of the misconduct at
issue.\3\
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\2\ See, e.g., 12 U.S.C. 1972(2)(F) (authorizing the FDIC to
impose CMPs for violations of the Bank Holding Company Act of 1970
related to prohibited tying arrangements); 15 U.S.C. 78u-2
(authorizing the FDIC to impose CMPs for violations of certain
provisions of the Securities Exchange Act of 1934); 42 U.S.C.
4012a(f) (authorizing the FDIC to impose CMPs for pattern or
practice violations of the Flood Disaster Protection Act).
\3\ For example, Section 8(i)(2) of the FDIA, 12 U.S.C.
1818(i)(2), provides for three tiers of CMPs, with the size of such
CMPs increasing with the gravity of the misconduct.
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In 1990, Congress determined that the assessment of CMPs plays ``an
important role in deterring violations and furthering the policy goals
embodied in such laws and regulations'' and concluded that ``the impact
of many civil monetary penalties has been and is diminished due to the
effect of inflation.'' \4\ Consequently, Congress required federal
agencies with authority to impose CMPs to periodically adjust by
rulemaking the maximum CMPs which these agencies were authorized to
impose in order to ``maintain the deterrent effect of civil monetary
penalties and promote compliance with the law.'' \5\ Under the 1990
Adjustment Act, the FDIC adjusted its CMP amounts every four years,
most recently in 2012.\6\
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\4\ Section 2 of the Federal Civil Penalties Inflation
Adjustment Act of 1990 (1990 Adjustment Act). Public Law 101-410,
104 Stat. 890 (amended 2015) (codified as amended at 28 U.S.C. 2461
note).
\5\ Id.
\6\ See 77 FR 74,573 (Dec. 17, 2012).
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In 2015, Congress revised the process by which federal agencies
adjust applicable CMPs for inflation.\7\ Under the 2015 Adjustment Act,
the FDIC is required to (1) adjust the CMP levels with an initial
catch-up adjustment through an interim final rulemaking and (2) make
subsequent annual adjustments for inflation. The FDIC must publish an
interim final rule with initial penalty adjustment amounts by July 1,
2016, and the new maximum penalty levels must take effect no later than
August 1, 2016. These adjustments will apply to all CMPs covered by the
2015 Adjustment Act.\8\
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\7\ Public Law 114-74, 129 Stat. 584.
\8\ The 2015 Adjustment Act defines ``civil monetary penalty''
as ``any penalty, fine, or other sanction that is for a specific
monetary amount as provided by Federal law; or has a maximum amount
provided for by Federal law; and is assessed or enforced by an
agency pursuant to Federal law; and is assessed or enforced pursuant
to an administrative proceeding or a civil action in the Federal
courts[.]'' Public Law 101-410, sec. 3(2), 104 Stat. 890 (amended
2015) (codified as amended at 28 U.S.C. 2461 note).
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Although the 2015 Adjustment Act increases the maximum penalty that
may be assessed under each applicable statute, the FDIC possesses
discretion to impose CMP amounts below the maximum level in accordance
with the severity of the misconduct at issue. When making a
determination as to the appropriate level of any given penalty, the
FDIC is guided by statutory factors set forth in section 8(i)(2)(G) of
the FDIA, 12 U.S.C. 1818(i)(2)(G), and those factors identified in the
Interagency Policy Statement Regarding the Assessment of CMPs by the
Federal Financial Institutions Regulatory Agencies.\9\ Such factors
include, but are not limited to, the gravity and duration of the
misconduct, and the intent related to the misconduct.
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\9\ 63 FR 30227 (June 3, 1998).
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III. Description of the Rule
This interim final rule adjusts the maximum limit for CMPs
according to inflation as mandated by Congress in the 2015 Adjustment
Act. Additionally, other technical changes to 12 CFR part 308 are being
made to correct typographical errors, to supplement 12 CFR 308.132 to
include references to previously omitted CMPs, and to reorder the
provisions of 12 CFR 308.132 to assist readers in quickly identifying
applicable CMP amounts.
The New CMP-Adjustment System
The 2015 Adjustment Act directs federal agencies to follow guidance
issued by the Office of Management and Budget (OMB) on February 24,
2016 (OMB Guidance) when calculating new maximum penalty levels.\10\
Initial catch-up adjustments are to be based on the percent change
between the Consumer Price Index for all Urban Consumers (CPI-U) \11\
for the month of October in the year for which the CMP was established
by Congress or last adjusted for inflation (other than through the 1990
Adjustment Act), and the October 2015 CPI-U.\12\ In addition, the OMB
[[Page 42237]]
Guidance provides a table of CMP-adjustment multipliers for each
year.\13\
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\10\ See OMB, Implementation of the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015, M-16-06 available
at https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf.
\11\ The CPI-U is compiled by the Bureau of Statistics of the
Department of Labor.
\12\ The OMB Guidance directs agencies to identify, for each
CMP, the year and corresponding amount(s) for which the maximum
penalty level or range of minimum and maximum penalties was
established (i.e., as originally enacted by Congress), or last
adjusted (i.e., by Congress in statute, or by the agency through
regulation), whichever is later, other than under the Inflation
Adjustment Act. OMB Guidance at 3.
\13\ OMB Guidance at 6.
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Summary of the FDIC's Calculations
In keeping with the OMB Guidance, the FDIC multiplied each of its
CMP amounts by the relevant inflation factor.\14\ After applying the
multiplier, the FDIC rounded each penalty level to the nearest dollar.
In accordance with the 2015 Adjustment Act, the FDIC did not increase
penalty levels by more than 150 percent of the corresponding levels in
effect on November 2, 2015. In making these calculations, the FDIC
consulted with staff from the Office of the Comptroller of the
Currency, the Board of Governors for the Federal Reserve System, the
National Credit Union Administration, and the Bureau of Consumer
Financial Protection to ensure that the FDIC's calculations and
adjustments are consistent with those being proposed by other federal
financial regulators for the same statutes.
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\14\ Under the 1990 Adjustment Act, adjustments have been made
only to CMPs that are for specific dollar amounts or maximums. CMPs
that are assessed based upon a fixed percentage of an institution's
total assets are not subject to adjustment.
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Summary of Adjustments
The following chart displays the adjusted CMP amounts for each CMP
identified in 12 CFR part 308.\15\ The following chart reflects the
maximum CMPs that may be assessed through July 31, 2016, and the
maximum CMPs that may be assessed on or after August 1, 2016, after the
required inflation adjustment:
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\15\ As noted previously, the FDIC retains discretion to impose
CMPs in amounts below the referenced maximums.
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Current maximum CMP Adjusted maximum CMP
U.S. Code citation (through July 31, 2016) (beginning August 1, 2016)
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12 U.S.C. 1464(v):
Tier One CMP.................................... $3,200 $3,787
Tier Two CMP.................................... 32,000 37,872
Tier Three CMP.................................. 1,425,000 1,893,610
12 U.S.C. 1467(d)................................... 7,500 9,468
12 U.S.C. 1817(a):
Tier One CMP.................................... 3,200 3,787
Tier Two CMP.................................... 32,000 37,872
Tier Three CMP.................................. 1,425,000 1,893,610
12 U.S.C. 1817(c):
Tier One CMP.................................... 3,200 3,462
Tier Two CMP.................................... 32,000 34,620
Tier Three CMP.................................. 1,425,000 1,730,990
12 U.S.C. 1818(i)(2):
Tier One CMP.................................... 7,500 9,468
Tier Two CMP.................................... 37,500 47,340
Tier Three CMP.................................. 1,425,000 1,893,610
12 U.S.C. 1820(e)(4)................................ 7,500 8,655
12 U.S.C. 1820(k)(6)................................ 275,000 311,470
12 U.S.C. 1828(a)(3)................................ 100 118
12 U.S.C. 1828(h):
For assessments <$10,000........................ 100 118
12 U.S.C. 1829b(j).................................. 16,000 19,787
12 U.S.C. 1832(c)................................... 1,100 2,750
12 U.S.C. 1884...................................... 110 275
12 U.S.C. 1972(2)(F):
Tier One CMP.................................... 7,500 9,468
Tier Two CMP.................................... 37,500 47,340
Tier Three CMP.................................. 1,425,000 1,893,610
12 U.S.C. 3909(d)................................... 1,100 2,355
15 U.S.C. 78u-2:
Tier One CMP (individuals)...................... 7,500 8,908
Tier One CMP (others)........................... 70,000 89,078
Tier Two CMP (individuals)...................... 70,000 89,078
Tier Two CMP (others)........................... 350,000 445,390
Tier Three CMP (individuals).................... 140,000 178,156
Tier Three penalty (others)..................... 700,000 890,780
15 U.S.C. 1639e(k):
First violation................................. 10,000 10,875
Subsequent violations........................... 20,000 21,749
31 U.S.C. 3802...................................... 7,500 10,781
42 U.S.C. 4012a(f).................................. 2,000 2,056
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Current maximum amount New maximum amount
CFR Citation (through July 31, 2016) (beginning August 1, 2016)
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12 CFR 308.132(c)--Late or Misleading Reports of Condition and Income (Call Reports)
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First Offense:
$25 million or more assets:
1 to 15 days late........................... $330 $519
16 or more days late........................ 660 1,039
Less than $25 million assets:
[[Page 42238]]
1 to 15 days late........................... 110 173
16 or more days late........................ 220 346
Subsequent Offenses
$25 million or more assets:
1 to 15 days late........................... 550 865
16 or more days late........................ 1,100 1,731
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Addition to Part 308 of CMPs Previously Omitted
This interim final rule incorporates adjustments to two categories
of CMPs previously inadvertently omitted from the FDIC's last
inflation-adjustment rulemaking in 2012. The Dodd-Frank Act \16\
amended the Truth in Lending Act to establish independence standards
for property appraisals and authorized the FDIC and other federal
agencies to assess specified CMPs against persons who violate these
provisions (Appraisal Independence CMP).\17\ Title III of the Dodd-
Frank Act also transferred the functions, powers, and duties of the
Office of Thrift Supervision relating to State savings associations to
the FDIC and amended section 3 of the Federal Deposit Insurance Act to
designate the FDIC as the ``appropriate Federal banking agency'' for
State savings associations. Among the transferred authorities was the
authority to impose CMPs against any State savings association under
section 9(d) of the Home Owners' Loan Act (HOLA) (12 U.S.C. 1467(d)) if
an affiliate of such an institution refuses to permit a duly-appointed
examiner to conduct an examination or refuses to provide information
during the course of an examination (Savings Association CMP).
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\16\ Public Law 111-203, tit. XIV, sec. 1472(a), 124 Stat. 2187.
\17\ 15 U.S.C. 1639e(k).
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Neither the Appraisal Independence CMP nor the Savings Association
CMP was previously included in part 308. Nonetheless, the FDIC is
required by the 2015 Adjustment Act to adjust all CMPs under the FDIC's
jurisdiction in the agency's inflation-adjustment rulemaking.
Consequently, the present amendment to part 308 specifically
incorporates provisions in 12 CFR 308.132 related to the Appraisal
Independence CMP and Savings Association CMP in 12 CFR 308.132,
applying the adjustments required under the 2015 Adjustment Act and the
OMB Guidance to these penalties.
Other Technical Changes to 12 CFR Part 308
The FDIC corrected a typographical error in 12 CFR 308.132(c) by
indicating that the FDIC's Board of Directors or its designee may
assess CMPs under 12 CFR 308.1(e) rather than the incorrect
``308.01(e)(1).''
The FDIC reorganized 12 CFR 308.132, listing all statutes cited
that give rise to CMPs in ascending alpha-numeric order by title and
section to assist readers in quickly identifying the applicable CMP
amounts.
Finally, the FDIC revised existing cross-references to 12 CFR
308.132 that are found in Chapter III of Title 12 of the Code of
Federal Regulations to reflect the resultant reorganization of 12 CFR
308.132.
IV. Expected Effects of the Rule
The interim final rule is expected to more precisely adjust CMP
maximums relative to inflation. These adjustments are expected to
minimize any year-to-year distortions in the real value of the CMP
maximums. These adjustments will promote a more consistent deterrent
effect in the structure of CMPs. As previously noted, the FDIC retains
discretion to impose CMP amounts below the maximum level. The actual
number and size of CMPs assessed in the future will depend on the
propensity and severity of the violations committed by banks and
institution-affiliated parties, as well as the particular statute that
is at issue. Such future violations cannot be reliably forecast. It is
expected that the FDIC will continue to exercise its discretion to
impose CMPs that are appropriate to their severity.
The 2015 Adjustment Act will likely result in a minimal increase in
administrative costs for the FDIC in order to establish new inflation-
adjusted maximum CMPs each year. Because these calculations are
relatively simple, the number of labor hours necessary to perform this
task is likely to be insignificant relative to total enforcement labor
hours for the Corporation.
V. Alternatives Considered
The 2015 Act mandates the frequency of the inflation adjustment and
the measure of inflation to be used in making these adjustments;
accordingly, the FDIC is not statutorily authorized to consider or
pursue alternative approaches. The other technical changes to 12 CFR
part 308 were relatively minor and designed to improve the transparency
and readability of the CFR, and therefore the FDIC did not actively
consider alternative approaches to these changes.
VI. Request for Comment
The 2015 Adjustment Act requires the FDIC to amend its rules
through an interim final rulemaking and provides the specific
adjustments to be made. These changes are ministerial and technical.
Under the OMB Guidance, the FDIC is not required to complete a notice-
and-comment process prior to publication of this interim final rule in
the Federal Register.\18\ Nonetheless, although notice and comment
rulemaking procedures are not required, the FDIC invites comments on
all aspects of this interim final rule. Commenters are specifically
encouraged to identify any technical issues raised by the rule,
including identifying any potential CMPs that may have been
unintentionally omitted from this adjustment rulemaking.
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\18\ OMB Guidance at 3.
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VII. Regulatory Analysis
Riegle Community Development and Regulatory Improvement Act
Section 302 of the Riegle Community Development and Regulatory
Improvement Act \19\ generally requires that regulations prescribed by
federal banking agencies which impose additional reporting,
disclosures, or other new requirements on insured depository
institutions take effect on the first day of a calendar quarter unless
the regulation is required to take effect on another date pursuant to
another act of Congress or the agency determines for good cause that
the regulation should become effective on an earlier date.
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\19\ 12 U.S.C. 4802.
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This interim final rule merely adjusts the maximum CMPs which the
FDIC may assess. It does not impose any new or additional reporting,
disclosures, or other requirements on insured depository institutions.
Additionally, as previously noted, the 2015 Adjustment
[[Page 42239]]
Act requires the interim final rule to take effect no later than August
1, 2016.\20\ Accordingly, this interim final rule will be effective
August 1, 2016.
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\20\ Public Law 114-74, 129 Stat. 584.
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Regulatory Flexibility Act
An initial regulatory flexibility analysis under the Regulatory
Flexibility Act \21\ (RFA) is required only when an agency must publish
a general notice of proposed rulemaking. As noted above, the FDIC
determined that publication of a notice of proposed rulemaking is not
necessary for this interim final rule. Accordingly, the RFA does not
require an initial regulatory flexibility analysis. Nevertheless, the
FDIC considered the likely impact of the rule on small entities. From
2011 through 2015, on average, only 1.6 percent of FDIC-supervised
institutions were ordered to pay a CMP each year. Accordingly, the FDIC
believes that the rule will not have a significant impact on a
substantial number of small entities.
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\21\ 5 U.S.C. 603.
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Small Business Regulatory Enforcement Fairness Act
The OMB has determined that the interim final rule is not a ``major
rule'' within the meaning of the relevant sections of the Small
Business Regulatory Enforcement Act of 1996 (SBREFA).\22\ As required
by SBREFA, the FDIC will submit the interim final rule and other
appropriate reports to Congress and the Government Accountability
Office for review.
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\22\ 5 U.S.C. 801 et seq.
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The Omnibus Consolidated and Emergency Supplemental Appropriations Act,
1999: Assessment of Federal Regulations and Policies on Families
The FDIC determined that this final rule will not affect family
wellbeing within the meaning of section 654 of the Omnibus Consolidated
and Emergency Supplemental Appropriations Act, 1999.\23\
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\23\ Public Law 105-277, 112 Stat. 2681 (1998).
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Paperwork Reduction Act
The interim rule will implement statutory changes to the FDIC's CMP
regulations. It does not create any new, or revise any existing,
collections of information under section 3504(h) of the Paperwork
Reduction Act of 1980.\24\ Consequently, no information collection
request will be submitted to the OMB for review.
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\24\ 44 U.S.C. 3501 et seq.
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Plain Language Act
Section 722 of the Gramm-Leach-Bliley Act requires the FDIC to use
plain language in all proposed and final rules published after January
1, 2000.\25\ The FDIC invites comment on how to make this rule easier
to understand. For example:
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\25\ Public Law 106-102, 113 Stat. 1338 (Nov. 12, 1999).
Has the FDIC organized the material to suit your needs?
If not, how could the FDIC present the rule more clearly?
Are the requirements in the rule clearly stated? If
not, how could the rule be more clearly stated?
Do the regulations contain technical language or jargon
that is not clear? If so, which language requires clarification?
Would a different format (grouping and order of
sections, use of headings, paragraphing) make the regulation easier
to understand? If so, what changes would achieve that?
Is this section format adequate? If not, which of the
sections should be changed and how?
What other changes can the FDIC incorporate to make the
regulation easier to understand?
List of Subjects
12 CFR Part 308
Administrative practice and procedure, Banks, banking, Claims,
Crime, Equal access to justice, Ex parte communications, Hearing
procedure, Lawyers, Penalties, State nonmember banks.
12 CFR Part 327
Bank deposit insurance, Banks, banking, Savings associations.
For the reasons set forth in the preamble, the FDIC amends 12 CFR
parts 308 and 327 to read as follows:
PART 308--RULES OF PRACTICE AND PROCEDURE
0
1. Revise the authority citation for 12 CFR part 308 to read as
follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505,
1464, 1467(d), 1467a, 1468, 1815(e), 1817, 1818, 1819, 1820, 1828,
1829, 1829(b), 1831i, 1831m(g)(4), 1831o, 1831p-1, 1832(c), 1884(b),
1972, 3102, 3108(a), 3349, 3909, 4717, 5412(b)(2)(C), 5414(b)(3); 15
U.S.C. 78(h) and (i), 78o(c)(4), 78o-4(c), 78o-5, 78q-1, 78s, 78u,
78u-2, 78u-3, 78w, 6801(b), 6805(b)(1); 28 U.S.C. 2461 note; 31
U.S.C. 330, 5321; 42 U.S.C. 4012a; Pub. L. 104-134, sec. 31001(s),
110 Stat. 1321; Pub. L. 109-351, 120 Stat. 1966; Pub. L. 111-203,
124 Stat. 1376; Pub. L. 114-74, sec. 701, 129 Stat. 584.
0
2. Revise Sec. 308.116(b)(4) to read as follows:
Sec. 308.116 Assessment of penalties.
* * * * *
(b) * * *
(4) Adjustment of civil money penalties by the rate of inflation
pursuant to the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015. On or after August 1, 2016:
(i) Any person who has engaged in a violation as set forth in
paragraph (b)(1) of this section shall forfeit and pay a civil money
penalty of not more than $9,468 for each day the violation continued.
(ii) Any person who has engaged in a violation, unsafe or unsound
practice or breach of fiduciary duty, as set forth in paragraph (b)(2)
of this section, shall forfeit and pay a civil money penalty of not
more than $47,340 for each day such violation, practice or breach
continued.
(iii) Any person who has knowingly engaged in a violation, unsafe
or unsound practice or breach of fiduciary duty, as set forth in
paragraph (b)(3) of this section, shall forfeit and pay a civil money
penalty not to exceed:
(A) In the case of a person other than a depository institution--
$1,893,610 per day for each day the violation, practice or breach
continued; or
(B) In the case of a depository institution--an amount not to
exceed the lesser of $1,893,610 or one percent of the total assets of
such institution for each day the violation, practice or breach
continued.
* * * * *
0
3. Amend Sec. 308.132 by revising paragraph (c)(1) and adding
paragraph (d) to read as follows:
Sec. 308.132 Assessment of penalties.
* * * * *
(c)
(1) Authority of the Board of Directors. The Board of Directors or
its designee may assess civil money penalties pursuant to section 8(i)
of the FDIA (12 U.S.C. 1818(i)), and Sec. 308.1(e) of the Uniform
Rules (this part).
* * * * *
(d) Maximum civil money penalty amounts. Pursuant to the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015, on
or after August 1, 2016, the Board of Directors or its designee may
assess civil money penalties in the maximum amounts as follows:
(1) Civil money penalties assessed pursuant to 12 U.S.C. 1464(v)
for late filing or the submission of false or misleading certified
statements by State savings associations. Pursuant to section 5(v) of
the Home Owners' Loan Act (12 U.S.C. 1464(v)), the Board of Directors
or its designee may assess civil money penalties as follows:
[[Page 42240]]
(i) Late filing--Tier One penalties. In cases in which an
institution fails to make or publish its Report of Condition and Income
(Call Report) within the appropriate time periods, a civil money
penalty of not more than $3,787 per day may be assessed where the
institution maintains procedures in place reasonably adapted to avoid
inadvertent error and the late filing occurred unintentionally and as a
result of such error; or the institution inadvertently transmitted a
Call Report that is minimally late. For penalties assessed on or after
August 1, 2016, for violations of this paragraph (d)(1)(i), the
following maximum Tier One penalty amounts contained in paragraphs
(d)(1)(i)(A) and (B) of this section shall apply for each day that the
violation continues.
(A) First offense. Generally, in such cases, the amount assessed
shall be $519 per day for each of the first 15 days for which the
failure continues, and $1,039 per day for each subsequent day the
failure continues, beginning on the sixteenth day. For institutions
with less than $25,000,000 in assets, the amount assessed shall be the
greater of $173 per day or 1/1000th of the institution's total assets
(1/10th of a basis point) for each of the first 15 days for which the
failure continues, and $346 or 1/500th of the institution's total
assets, 1/5 of a basis point) for each subsequent day the failure
continues, beginning on the sixteenth day.
(B) Subsequent offense. Where the institution has been delinquent
in making or publishing its Call Report within the preceding five
quarters, the amount assessed for the most current failure shall
generally be $865 per day for each of the first 15 days for which the
failure continues, and $1,731 per day for each subsequent day the
failure continues, beginning on the sixteenth day. For institutions
with less than $25,000,000 in assets, those amounts, respectively,
shall be 1/500th of the bank's total assets and 1/250th of the
institution's total assets.
(C) Lengthy or repeated violations. The amounts set forth in this
paragraph (d)(1)(i) will be assessed on a case by case basis where the
amount of time of the institution's delinquency is lengthy or the
institution has been delinquent repeatedly in making or publishing its
Call Reports.
(D) Waiver. Absent extraordinary circumstances outside the control
of the institution, penalties assessed for late filing shall not be
waived.
(ii) Late-filing--Tier Two penalties. Where an institution fails to
make or publish its Call Report within the appropriate time period, the
Board of Directors or its designee may assess a civil money penalty of
not more than $37,872 per day for each day the failure continues.
(iii) False or misleading reports or information--(A) Tier One
penalties. In cases in which an institution submits or publishes any
false or misleading Call Report or information, the Board of Directors
or its designee may assess a civil money penalty of not more than
$3,787 per day for each day the information is not corrected, where the
institution maintains procedures in place reasonably adapted to avoid
inadvertent error and the violation occurred unintentionally and as a
result of such error; or the institution inadvertently transmits a Call
Report or information that is false or misleading.
(B) Tier Two penalties. Where an institution submits or publishes
any false or misleading Call Report or other information, the Board of
Directors or its designee may assess a civil money penalty of not more
than $37,872 per day for each day the information is not corrected.
(C) Tier Three penalties. Where an institution knowingly or with
reckless disregard for the accuracy of any Call Report or information
submits or publishes any false or misleading Call Report or other
information, the Board of Directors or its designee may assess a civil
money penalty of not more than the lesser of $1,893,610 or 1 percent of
the institution's total assets per day for each day the information is
not corrected.
(iv) Mitigating factors. The amounts set forth in this paragraph
(d)(1) may be reduced based upon the factors set forth in paragraph (b)
of this section.
(2) Civil money penalties assessed pursuant to 12 U.S.C. 1467(d)
for refusal by an affiliate of a State savings association to allow
examination or to provide required information during an examination.
Pursuant to section 9(d) of the Home Owners' Loan Act (12 U.S.C.
1467(d)), civil money penalties may be assessed against any State
savings association if an affiliate of such an institution refuses to
permit a duly-appointed examiner to conduct an examination or refuses
to provide information during the course of an examination as set forth
12 U.S.C. 1467(d), in an amount not to exceed $9,486 for each day the
refusal continues.
(3) Civil money penalties assessed pursuant to 12 U.S.C. 1817(a)
for late filings or the submission of false or misleading reports of
condition. Pursuant to section 7(a) of the FDIA (12 U.S.C. 1817(a)),
the Board of Directors or its designee may assess civil money penalties
as follows:
(i) Late filing--Tier One penalties. In cases in which an
institution fails to make or publish its Report of Condition and Income
(Call Report) within the appropriate time periods, a civil money
penalty of not more than $3,787 per day may be assessed where the
institution maintains procedures in place reasonably adapted to avoid
inadvertent error and the late filing occurred unintentionally and as a
result of such error; or the institution inadvertently transmitted a
Call Report that is minimally late. For penalties assessed on or after
August 1, 2016, for violations of this paragraph (d)(3)(i), the
following maximum Tier One penalty amounts contained in paragraphs
(d)(3)(i)(A) and (B) of this section shall apply for each day that the
violation continues.
(A) First offense. Generally, in such cases, the amount assessed
shall be $519 per day for each of the first 15 days for which the
failure continues, and $1,039 per day for each subsequent day the
failure continues, beginning on the sixteenth day. For institutions
with less than $25,000,000 in assets, the amount assessed shall be the
greater of $173 per day or 1/1000th of the institution's total assets
(1/10th of a basis point) for each of the first 15 days for which the
failure continues, and $346 or 1/500th of the institution's total
assets, 1/5 of a basis point) for each subsequent day the failure
continues, beginning on the sixteenth day.
(B) Subsequent offense. Where the institution has been delinquent
in making or publishing its Call Report within the preceding five
quarters, the amount assessed for the most current failure shall
generally be $865 per day for each of the first 15 days for which the
failure continues, and $1,731 per day for each subsequent day the
failure continues, beginning on the sixteenth day. For institutions
with less than $25,000,000 in assets, those amounts, respectively,
shall be 1/500th of the bank's total assets and 1/250th of the
institution's total assets.
(C) Lengthy or repeated violations. The amounts set forth in this
paragraph (d)(3)(i) will be assessed on a case by case basis where the
amount of time of the institution's delinquency is lengthy or the
institution has been delinquent repeatedly in making or publishing its
Call Reports.
(D) Waiver. Absent extraordinary circumstances outside the control
of the institution, penalties assessed for late filing shall not be
waived.
(ii) Late-filing--Tier Two penalties. Where an institution fails to
make or publish its Call Report within the appropriate time period, the
Board of Directors or its designee may assess a
[[Page 42241]]
civil money penalty of not more than $34,620 per day for each day the
failure continues.
(iii) False or misleading reports or information--(A) Tier One
penalties. In cases in which an institution submits or publishes any
false or misleading Call Report or information, the Board of Directors
or its designee may assess a civil money penalty of not more than
$3,787 per day for each day the information is not corrected, where the
institution maintains procedures in place reasonably adapted to avoid
inadvertent error and the violation occurred unintentionally and as a
result of such error; or the institution inadvertently transmits a Call
Report or information that is false or misleading.
(B) Tier Two penalties. Where an institution submits or publishes
any false or misleading Call Report or other information, the Board of
Directors or its designee may assess a civil money penalty of not more
than $37,872 per day for each day the information is not corrected.
(C) Tier Three penalties. Where an institution knowingly or with
reckless disregard for the accuracy of any Call Report or information
submits or publishes any false or misleading Call Report or other
information, the Board of Directors or its designee may assess a civil
money penalty of not more than the lesser of $1,893,610 or 1 percent of
the institution's total assets per day for each day the information is
not corrected.
(iv) Mitigating factors. The amounts set forth in this paragraph
(d)(3) may be reduced based upon the factors set forth in paragraph (b)
of this section.
(4) Civil money penalties assessed pursuant to 12 U.S.C. 1817(c)
for late filing or the submission of false or misleading certified
statements. Tier One civil money penalties may be assessed pursuant to
section 7(c)(4)(A) of the FDIA (12 U.S.C. 1817(c)(4)(A)) in an amount
not to exceed $3,462 for each day during which the failure to file
continues or the false or misleading information is not corrected. Tier
Two civil money penalties may be assessed pursuant to section
7(c)(4)(B) of the FDIA (12 U.S.C. 1817(c)(4)(B)) in an amount not to
exceed $34,620 for each day during which the failure to file continues
or the false or misleading information is not corrected. Tier Three
civil money penalties may be assessed pursuant to section 7(c)(4)(C) in
an amount not to exceed the lesser of $1,730,990 or 1 percent of the
total assets of the institution for each day during which the failure
to file continues or the false or misleading information is not
corrected.
(5) Civil money penalties assessed pursuant to section 8(i)(2) of
the FDIA. Tier One civil money penalties may be assessed pursuant to
section 8(i)(2)(A) of the FDIA (12 U.S.C. 1818(i)(2)(A)) in an amount
not to exceed $9,468 for each day during which the violation continues.
Tier Two civil money penalties may be assessed pursuant to section
8(i)(2)(B) of the FDIA (12 U.S.C. 1818(i)(2)(B)) in an amount not to
exceed $47,340 for each day during which the violation, practice or
breach continues. Tier Three civil money penalties may be assessed
pursuant to section 8(i)(2)(C) (12 U.S.C. 1818(i)(2)(C)) in an amount
not to exceed, in the case of any person other than an insured
depository institution $1,893,610 or, in the case of any insured
depository institution, an amount not to exceed the lesser of
$1,893,610 or 1 percent of the total assets of such institution for
each day during which the violation, practice, or breach continues.
(i) Pursuant to 7(j)(16) of the FDIA (12 U.S.C. 1817(j)(16)), a
civil money penalty may be assessed for violations of change in control
of insured depository institution provisions pursuant to section
8(i)(2) of the FDIA (12 U.S.C. 1818(i)(2)) in the amounts set forth in
paragraph (d)(5) of this section.
(ii) Pursuant to the International Banking Act of 1978 (IBA) (12
U.S.C. 3108(b)), civil money penalties may be assessed for failure to
comply with the requirements of the IBA pursuant to section 8(i)(2) of
the FDIA (12 U.S.C. 1818(i)(2)), in the amounts set forth in paragraph
(d)(5).
(iii) Pursuant to section 1120(b) of the Financial Institutions
Recovery, Reform, and Enforcement Act of 1989 (FIRREA) (12 U.S.C.
3349(b)), where a financial institution seeks, obtains, or gives any
other thing of value in exchange for the performance of an appraisal by
a person that the institution knows is not a state certified or
licensed appraiser in connection with a federally related transaction,
a civil money penalty may be assessed pursuant to section 8(i)(2) of
the FDIA (12 U.S.C. 1818(i)(2)) in the amounts set forth in paragraph
(d)(5) of this section.
(iv) Pursuant to the Community Development Banking and Financial
Institution Act (Community Development Banking Act) (12 U.S.C. 4717(b))
a civil money penalty may be assessed for violations of the Community
Development Banking Act pursuant to section 8(i)(2) of the FDIA (12
U.S.C. 1818(i)(2)), in the amount set forth in paragraph (d)(5) of this
section.
(v) Civil money penalties may be assessed pursuant to section
8(i)(2) of the FDIA in the amounts set forth in this paragraph (d)(5)
for violations of various consumer laws, including, but not limited to,
the Home Mortgage Disclosure Act (12 U.S.C. 2804 et seq. and 12 CFR
203.6), the Expedited Funds Availability Act (12 U.S.C. 4001 et seq.),
the Truth in Savings Act (12 U.S.C. 4301 et seq.), the Real Estate
Settlement Procedures Act (12 U.S.C. 2601 et seq.), the Truth in
Lending Act (15 U.S.C. 1601 et seq.), the Fair Credit Reporting Act (15
U.S.C. 1681 et seq.), the Equal Credit Opportunity Act (15 U.S.C. 1691
et seq.), the Fair Debt Collection Practices Act (15 U.S.C. 1692 et
seq.), the Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.) and
the Fair Housing Act (42 U.S.C. 3601 et seq.).
(6) Civil money penalties assessed pursuant to 12 U.S.C. 1820(e)
for refusal to allow examination or to provide required information
during an examination. Pursuant to section 10(e)(4) of the FDIA (12
U.S.C. 1820(e)(4)), civil money penalties may be assessed against any
affiliate of an insured depository institution that refuses to permit a
duly-appointed examiner to conduct an examination or to provide
information during the course of an examination as set forth in section
20(b) of the FDIA (12 U.S.C. 1820(b)), in an amount not to exceed
$8,655 for each day the refusal continues.
(7) Civil money penalties assessed pursuant to 12 U.S.C. 1820(k)
for violation of one-year restriction on Federal examiners of financial
institutions. Pursuant to section 10(k) of the FDIA (12 U.S.C.
1820(k)), the Board of Directors or its designee may assess a civil
money penalty of up to $311,470 against any covered former Federal
examiner of a financial institution who, in violation of section 10(k)
of the FDIA (12 U.S.C. 1820(k)) and within the one-year period
following termination of government service as an employee, serves as
an officer, director, or consultant of a financial or depository
institution, a holding company, or of any other entity listed in
section 10(k) of the FDIA (12 U.S.C. 1820(k)), without the written
waiver or permission by the appropriate Federal banking agency or
authority under section 10(k)(5) of the FDIA (12 U.S.C. 1820(k)(5)).
(8) Civil money penalties assessed pursuant to 12 U.S.C. 1828(a)
for incorrect display of insurance logo. Pursuant to section 18(a)(3)
of the FDIA (12 U.S.C. 1828(a)(3)), civil money penalties may be
assessed against an insured depository institution that fails to
correctly display its insurance logo pursuant to that section, in an
amount
[[Page 42242]]
not to exceed $118 for each day the violation continues.
(9) Civil money penalties assessed pursuant to 12 U.S.C. 1828(h)
for failure to timely pay assessment.
(i) In general. Subject to paragraph (d)(9)(iii) of this section,
any insured depository institution that fails or refuses to pay any
assessment shall be subject to a penalty in an amount of not more than
1 percent of the amount of the assessment due for each day that such
violation continues.
(ii) Exception in case of dispute. Paragraph (d)(9)(i) of this
section shall not apply if--
(A) The failure to pay an assessment is due to a dispute between
the insured depository institution and the Corporation over the amount
of such assessment; and
(B) The insured depository institution deposits security
satisfactory to the Corporation for payment upon final determination of
the issue.
(iii) Special rule for small assessment amounts. If the amount of
the assessment that an insured depository institution fails or refuses
to pay is less than $10,000 at the time of such failure or refusal, the
amount of any penalty to which such institution is subject under
paragraph (d)(9)(i) of this section shall not exceed $118 for each day
that such violation continues.
(iv) Authority to modify or remit penalty. The Corporation, in the
sole discretion of the Corporation, may compromise, modify, or remit
any penalty that the Corporation may assess or has already assessed
under paragraph (d)(9)(i) of this section upon a finding that good
cause prevented the timely payment of an assessment.
(10) Civil money penalties assessed pursuant to 12 U.S.C. 1829b(j)
for recordkeeping violations. Pursuant to section 19b(j) of the FDIA
(12 U.S.C. 1829b(j)), civil money penalties may be assessed against an
insured depository institution and any director, officer or employee
thereof who willfully or through gross negligence violates or causes a
violation of the recordkeeping requirements of that section or its
implementing regulations in an amount not to exceed $19,787 per
violation.
(11) Civil money penalties pursuant to 12 U.S.C. 1832(c) for
violation of provisions regarding interest-bearing demand deposit
accounts. Pursuant to 12 U.S.C. 1832(c), any depository institution
that violates the prohibition regarding interest-bearing demand deposit
accounts shall be subject to a fine of $2,750 per violation.
(12) Civil penalties for violations of security measure
requirements under 12 U.S.C. 1884. Pursuant to 12 U.S.C. 1884, an
institution that violates a rule establishing minimum security
requirements as set forth in 12 U.S.C. 1882, shall be subject to a
civil penalty not to exceed $275 for each day of the violation.
(13) Civil money penalties assessed pursuant to 12 U.S.C.
1972(2)(F) for prohibited tying arrangements. Pursuant to the Bank
Holding Company Act of 1970, Tier One civil money penalties may be
assessed pursuant to 12 U.S.C. 1972(2)(F)(i) in an amount not to exceed
$9,468 for each day during which the violation continues. Tier Two
civil money penalties may be assessed pursuant to 12 U.S.C.
1972(2)(F)(ii) in an amount not to exceed $47,340 for each day during
which the violation, practice or breach continues. Tier Three civil
money penalties may be assessed pursuant to 12 U.S.C. 1972(2)(F)(iii)
in an amount not to exceed, in the case of any person other than an
insured depository institution $1,893,610 for each day during which the
violation, practice, or breach continues or, in the case of any insured
depository institution, an amount not to exceed the lesser of
$1,893,610 or 1 percent of the total assets of such institution for
each day during which the violation, practice, or breach continues.
(14) Civil money penalties assessed pursuant to 12 U.S.C. 3909(d).
Pursuant to the International Lending Supervision Act (ILSA) (12 U.S.C.
3909(d)), civil money penalties may be assessed against any institution
or any officer, director, employee, agent or other person participating
in the conduct of the affairs of such institution is an amount not to
exceed $2,355 for each day a violation of the ILSA or any rule,
regulation or order issued pursuant to ILSA continues.
(15) Civil money penalties assessed for violations of 15 U.S.C.
78u-2. Pursuant to section 21B of the Securities Exchange Act of 1934
(Exchange Act) (15 U.S.C. 78u-2), civil money penalties may be assessed
for violations of certain provisions of the Exchange Act, where such
penalties are in the public interest. Tier One civil money penalties
may be assessed pursuant to 15 U.S.C. 78u-2(b)(1) in an amount not to
exceed $8,908 for a natural person or $89,078 for any other person for
violations set forth in 15 U.S.C. 78u-2(a). Tier Two civil money
penalties may be assessed pursuant to 15 U.S.C. 78u-2(b)(2) in an
amount not to exceed--for each violation set forth in 15 U.S.C. 78u-
2(a)--$89,078 for a natural person or $445,390 for any other person if
the act or omission involved fraud, deceit, manipulation, or deliberate
or reckless disregard of a regulatory requirement. Tier Three civil
money penalties may be assessed pursuant to 15 U.S.C. 78u-2(b)(3) for
each violation set forth in 15 U.S.C. 78u-2(a), in an amount not to
exceed $178,156 for a natural person or $890,780 for any other person,
if the act or omission involved fraud, deceit, manipulation, or
deliberate or reckless disregard of a regulatory requirement; and such
act or omission directly or indirectly resulted in substantial losses,
or created a significant risk of substantial losses to other persons or
resulted in substantial pecuniary gain to the person who committed the
act or omission.
(16) Civil money penalties assessed pursuant to 15 U.S.C. 1639e(k)
for appraisal independence violations. Pursuant to section 1472(a) of
the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Appraisal Independence Rule) (15 U.S.C. 1639e(k)), civil money
penalties may be assessed for an initial violation of the Appraisal
Independence Rule in an amount not to exceed $10,875 for each day
during which the violation continues and, for subsequent violations,
$21,749 for each day during which the violation continues.
(17) Civil money penalties assessed for false claims and statements
pursuant to 31 U.S.C. 3802. Pursuant to the Program Fraud Civil
Remedies Act (31 U.S.C. 3802), civil money penalties of not more than
$10,781 per claim or statement may be assessed for violations involving
false claims and statements.
(18) Civil money penalties assessed for violations of 42 U.S.C.
4012a(f). Pursuant to the Flood Disaster Protection Act (FDPA) (42
U.S.C. 4012a(f)), civil money penalties may be assessed against any
regulated lending institution that engages in a pattern or practice of
violations of the FDPA in an amount not to exceed $2,056 per violation.
0
3. Revise 12 CFR 308.502(a)(6), (b)(4), and (d) to read as follows:
Sec. 308.502 Basis for civil penalties and assessments.
* * * * *
(a) * * *
(6) The amount of any penalty assessed under paragraph (a)(1) of
this section will be adjusted for inflation in accordance with Sec.
308.132(d)(17) of this part.
* * * * *
(b) * * *
(4) The amount of any penalty assessed under paragraph (a)(1) of
this section will be adjusted for inflation in accordance with Sec.
308.132(d)(17) of this part.
* * * * *
[[Page 42243]]
(d) Civil money penalties that are assessed under this subpart are
subject to annual adjustments to account for inflation as required by
the Federal Civil Penalties Inflation Adjustment Act Improvements Act
of 2015 (Pub. L. 114-74, sec. 701, 129 Stat. 584) (see also 12 CFR
308.132(d)(17)).
* * * * *
PART 327--ASSESSMENTS
0
4. The authority citation for part 327 continues to read as follows:
Authority: 12 U.S.C. 1441, 1813, 1815, 1817-19, 1821.
0
5. Revise Sec. 327.3(c) to read as follows:
Sec. 327.3 Payment of assessments.
* * * * *
(c) Necessary action, sufficient funding by institution. Each
insured depository institution shall take all actions necessary to
allow the Corporation to debit assessments from the insured depository
institution's designated deposit account. Each insured depository
institution shall, prior to each payment date indicated in paragraph
(b)(2) of this section, ensure that funds in an amount at least equal
to the amount on the quarterly certified statement invoice are
available in the designated account for direct debit by the
Corporation. Failure to take any such action or to provide such funding
of the account shall be deemed to constitute nonpayment of the
assessment. Penalties for failure to timely pay assessments are
provided for at 12 CFR 308.132(d)(9).
* * * * *
Dated at Washington, DC, this 21st day of June, 2016.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2016-15027 Filed 6-28-16; 8:45 am]
BILLING CODE 6714-01-P