[Federal Register Volume 83, Number 229 (Wednesday, November 28, 2018)]
[Rules and Regulations]
[Pages 61111-61116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25660]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 83, No. 229 / Wednesday, November 28, 2018 /
Rules and Regulations
[[Page 61111]]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 308 and 327
RIN 3064-AE75
Rules of Practice and Procedure
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Final rule.
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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending
its rules of practice and procedure to remove duplicative, descriptive
regulatory language related to civil money penalty (CMP) amounts that
restates existing statutory language regarding such CMPs; codify
Congress's recent change to CMP inflation-adjustments in the FDIC's
regulations; and direct readers to an annually published notice in the
Federal Register--rather than the Code of Federal Regulations (CFR)--
for information regarding the maximum CMP amounts that can be assessed
after inflation adjustments. These revisions are intended to simplify
the CFR by removing unnecessary and redundant text and to make it
easier for readers to locate the current, inflation-adjusted maximum
CMP amounts by presenting these amounts in an annually published chart.
Additionally, the FDIC is correcting four errors and revising cross-
references currently found in its rules of practice and procedure.
DATES: This rule is effective on January 15, 2019.
FOR FURTHER INFORMATION CONTACT: Graham N. Rehrig, Senior Attorney,
Legal Division, (202) 898-3829, [email protected]; or Sydney Mayer,
Attorney, Legal Division, (202) 898-3669; Federal Deposit Insurance
Corporation, 550 17th Street NW, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
The policy objective of the Rule is to simplify the presentation of
maximum CMP amounts within 12 CFR part 308 to support ease of reference
and public understanding. The Rule will amend the presentation of
maximum CMP limits to help ensure consistency with similar statutes of
other federal financial regulators.\1\ Additionally, the Rule will
implement recent Office of Management and Budget (OMB) guidance on
simplifying the publication of annual inflation adjustments.
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\1\ See 12 CFR 19.240 (2018) and 83 FR 1657 (Jan. 12, 2018)
(table containing the CMP adjustments published by the Office of the
Comptroller of Currency); 12 CFR 263.65 (2018) (table containing the
CMP adjustments published by the Board of Governors of the Federal
Reserve System); 12 CFR 747.1001 (2018) (table containing the CMP
adjustments published by the National Credit Union Association).
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II. Background
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 has established maximum penalties that can be
assessed under these statutes. In many cases, these statutes contain
multiple penalty tiers, permitting the assessment of penalties at
various levels depending on 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, 12 U.S.C. 1818(i)(2) provides for three tiers
of CMPs, with the size of the CMP increasing with the gravity of the
misconduct.
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Since 1990, Congress has required federal agencies with authority
to impose CMPs to periodically adjust the maximum CMP amounts these
agencies are authorized to impose.\4\ These periodic updates have
helped to ``maintain the deterrent effect of civil monetary penalties
and promote compliance with the law.'' \5\ In 2015, Congress revised
the process by which federal agencies adjust applicable CMPs for
inflation.\6\ Under the 2015 Adjustment Act, the FDIC is required to
make annual adjustments to its maximum CMP amounts to account for
inflation.\7\ These adjustments apply to all CMPs covered by the 2015
Adjustment Act.\8\ The 2015 Adjustment Act requires annual adjustments
be made by January 15 of each year.\9\ The FDIC's 2018 adjustments were
published on January 12, 2018.\10\
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\4\ See The Federal Civil Penalties Inflation Adjustment Act of
1990, Public Law 101-410.
\5\ See section 2 of the Federal Civil Penalties Inflation
Adjustment Act of 1990. Public Law 101-410, 104 Stat. 890 (amended
2015) (codified as amended at 28 U.S.C. 2461 note).
\6\ See The Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015, Public Law 114-74, sec. 701, 129 Stat. 584
(2015 Adjustment Act). Although the 2015 Adjustment Act increased
the maximum penalty that may be assessed under each applicable
statute, the FDIC still 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 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. See 63 FR 30227 (June 3, 1998). Such factors include, but
are not limited to, the gravity and duration of the misconduct and
the intent related to the misconduct.
\7\ See 2015 Adjustment Act at sec. 701(b).
\8\ See Public Law 101-410, sec. 3(2), 104 Stat. 890 (amended
2015) (codified as amended at 28 U.S.C. 2461 note).
\9\ Public Law 114-74, sec. 701(b), 129 Stat. 584.
\10\ See 83 FR 1519, https://www.fdic.gov/news/board/2017/2017-12-19-notice-sum-b-fr.pdf.
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The 2015 Adjustment Act directs federal agencies to follow guidance
issued by the OMB by December 15 of each year when calculating new
maximum penalty amounts.\11\ The OMB issued guidance for the 2018 CMP
adjustments on December 15, 2017.\12\ The OMB Guidance noted, ``Some
agencies have chosen to remove their specific penalty amounts from the
CFR and have instead codified the statutory formula for inflation
adjustments. Agencies must still calculate and publish their penalty
adjustments in the Federal Register.'' \13\
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\11\ See Public Law 114-74, sec. 701(b), 129 Stat. 584.
\12\ OMB, Implementation of Penalty Inflation Adjustments for
2018, Pursuant to the Federal Civil Penalties Inflation Adjustment
Act Improvements Act of 2015, M-18-03 (OMB Guidance), https://www.whitehouse.gov/wp-content/uploads/2017/11/M-18-03.pdf.
\13\ OMB Guidance at 4 (citing 81 FR 41438 (June 27, 2016)
(Social Security Administration) (codified at 29 CFR 498.103(g)
(2018))).
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III. Description and Expected Effects of the Rule
The FDIC is amending its rules of practice and procedure to remove
from
[[Page 61112]]
the CFR descriptive regulatory language related to maximum CMP amounts
that duplicates statutory language, codify the statutory formula for
inflation adjustments to the maximum CMP amounts, and direct readers to
a table published annually in the Federal Register, containing the
inflation-adjusted maximum CMP amounts. These changes will be
consistent with the OMB Guidance and the practices of other Federal
regulators.
Currently, 12 CFR 308.116(b) and 308.132(d) contain the maximum CMP
amounts that may be assessed for violations of various statutes, along
with lengthy descriptions of these statutes. Rather than providing any
interpretation of these statutes or providing guidance regarding the
assessment of CMPs for violations of these statutes, the descriptive
language contained in sections 308.116(b) and 308.132(d) merely
restates the enabling statutory language. The FDIC's current format for
identifying inflation-adjusted CMP figures differs significantly from
the formats published by other prudential regulators \14\ and makes it
more difficult for readers to locate applicable maximum CMP amounts.
Accordingly, the FDIC is removing descriptive language found in
sections 308.116(b) and 308.132(d). The FDIC believes that these
changes will remove unnecessary and redundant language from the CFR and
improve readability.
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\14\ The OCC, the FRB, and the National Credit Union Association
(NCUA) provide a simplified list in a tabular format, identifying
each enabling statute and the associated maximum CMP amount,
adjusted for inflation. See 12 CFR 19.240 (2018) and 83 FR 1657
(Jan. 12, 2018) (table containing the OCC's CMP adjustments); 12 CFR
263.65 (2018) (table containing the FRB's CMP adjustments); 12 CFR
747.1001 (2018) (table containing the NCUA's CMP adjustments).
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A sample annual table containing the current maximum CMP amounts
appears at the end of this section, for reference. Under the Rule, the
FDIC will calculate and publish a similar chart with inflation-adjusted
figures in the Federal Register on or before January 15 of each
calendar year, beginning with the January 15, 2019, annual inflation
adjustments.
The FDIC, however, will retain language in section 308.116(a), (c)
and (d) concerning violations of the Change in Bank Control Act. These
regulations, which the FDIC implemented in 1991, address requests for a
hearing, mitigating factors, and the consequences of a respondent's
failure to answer.\15\ The language in current section 308.116(b)(1)-
(3), however, repeats the relevant statutory language of 12 U.S.C.
1817(j)(16)(A)-(D). Further, current section 308.116(b)(4) merely
contains inflation adjustments. Therefore, the FDIC is removing current
section 308.116(b) and instead directing readers to section 308.132(d)
to determine current maximum CMP amounts.
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\15\ See 56 FR 37968 (Aug. 9, 1991).
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The FDIC is also keeping language concerning the late filing of
Call Reports at current section 308.132(d)(1) and (d)(3). 12 U.S.C.
1817(a) provides the maximum CMP amounts for the late filing of Call
Reports. In 1991, however, the FDIC issued regulations that further
subdivided these amounts based upon the size of the institution and the
lateness of the filing.\16\ These regulations accordingly differ from
other provisions found in section 308.132(d) that simply restate
relevant statutory language regarding maximum CMP amounts. The Rule
will merge language from current subsections 308.132(d)(1) and (d)(3)
into a new section 308.132(e), since, aside from the differing penalty
amounts, these two current subsections contain similar language. The
new section 308.132(e) will direct readers to the Federal Register to
determine the applicable inflation-adjusted penalty amounts.
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\16\ See 56 FR 37968, 37992-93 (Aug. 9, 1991).
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The FDIC is correcting four errors currently located at section
308.132(d)(1) and (d)(3) concerning the maximum amount that generally
will be assessed for violations of 12 U.S.C. 1464(v) and 1817(a)
regarding the late filing of Call Reports by certain small
institutions. The current text contains the inadvertent overstatement
of four fractions of an institution's total assets that are paired with
correctly stated basis-point figures. These corrections will align the
listed fractions of an institution's total assets with the listed
basis-point calculations, and these corrections will be reflected in
the annual Federal Register CMP notice.\17\
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\17\ For example, current section 308.132(d)(1)(i)(A) states,
``the amount assessed shall be the greater of [an inflation-adjusted
daily penalty] or 1/1,000th of the institution's total assets (1/
10th of a basis point)'' when it should read, ``the amount assessed
shall be the greater of [an inflation-adjusted daily penalty] or 1/
100,000th of the institution's total assets (1/10th of a basis
point).'' (Emphasis added.)
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Lastly, the FDIC is revising cross-references found at 12 CFR
308.502(a)(6), 12 CFR 308.502(b)(4), 12 CFR 308.530, and 12 CFR
327.3(c) to reflect the revisions to 12 CFR 308.132(d).
Since the Rule will amend the presentation of maximum CMP levels in
the Federal Register, the FDIC believes the Rule will not pose any
regulatory costs to IDIs or cost to the public in general.
Sample Civil Money Penalty Table
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Adjusted maximum CMP \18\
U.S. code citation (beginning January 15, 2018)
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12 U.S.C. 1464(v):
Tier One CMP.......................... $3,928.
Tier Two CMP.......................... $39,278.
Tier Three CMP \19\................... $1,963,870.
12 U.S.C. 1467(d)......................... $9,819.
12 U.S.C. 1817(a):
Tier One CMP \20\..................... $3,928.
Tier Two CMP.......................... $39,278.
Tier Three CMP \21\................... $1,963,870.
12 U.S.C. 1817(c):
Tier One CMP.......................... $3,591.
Tier Two CMP.......................... $35,904.
Tier Three CMP \22\................... $1,795,216.
12 U.S.C. 1817(j)(16):
Tier One CMP.......................... $9,819.
Tier Two CMP.......................... $49,096.
Tier Three CMP \23\................... $1,963,870.
12 U.S.C. 1818(i)(2): \24\
Tier One CMP.......................... $9,819.
Tier Two CMP.......................... $49,096.
Tier Three CMP \25\................... $1,963,870.
12 U.S.C. 1820(e)(4)...................... $8,977.
12 U.S.C. 1820(k)(6)...................... $323,027.
12 U.S.C. 1828(a)(3)...................... $122.
12 U.S.C. 1828(h): \26\
[[Page 61113]]
For assessments <$10,000.............. $122.
12 U.S.C. 1829b(j)........................ $20,521.
12 U.S.C. 1832(c)......................... $2,852.
12 U.S.C. 1884............................ $285.
12 U.S.C. 1972(2)(F):
Tier One CMP.......................... $9,819.
Tier Two CMP.......................... $49,096.
Tier Three CMP \27\................... $1,963,870.
12 U.S.C. 3909(d)......................... $2,443.
15 U.S.C. 78u-2:
Tier One CMP (individuals)............ $9,239.
Tier One CMP (others)................. $92,383.
Tier Two CMP (individuals)............ $92,383.
Tier Two CMP (others)................. $461,916.
Tier Three CMP (individuals).......... $184,767.
Tier Three penalty (others)........... $923,831.
15 U.S.C. 1639e(k):
First violation....................... $11,279.
Subsequent violations................. $22,556.
31 U.S.C. 3802............................ $11,181.
42 U.S.C. 4012a(f)........................ $2,133.
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CFR citation Adjusted presumptive CMP
(beginning January 15, 2018)
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12 CFR 308.132(e)(1)(i):
Institutions with $25 million or more
in assets:
1 to 15 days late................. $538.
16 or more days late.............. $1,078.
Institutions with less than 25 million
in assets:
1 to 15 days late \28\............ $180.
16 or more days late \29\......... $359.
12 CFR 308.132(e)(1)(ii):
Institutions with $25 million or more
in assets:
1 to 15 days late................. $897.
16 or more days late.............. $1,795.
Institutions with less than $25
million in assets:
1 to 15 days late................. 1/50,000th of the
institution's total assets.
16 or more days late.............. 1/25,000th of the
institution's total assets.
12 CFR 308.132(e)(2)...................... $39,278.
12 CFR 308.132(e)(3):
Tier One CMP.......................... $3,928.
Tier Two CMP.......................... $39,278.
Tier Three CMP \30\................... $1,963,870.
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IV. Alternatives Considered
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\18\ The maximum penalty amount is per day, unless otherwise
indicated.
\19\ The maximum penalty amount for an institution is the lesser
of this amount or 1 percent of total assets.
\20\ 12 U.S.C. 1817(a) provides the maximum CMP amounts for the
late filing of Call Reports. In 1991, however, the FDIC issued
regulations that further subdivided these amounts based upon the
size of the institution and the lateness of the filing. See 56 FR
37968, 37992-93 (Aug. 9, 1991), to be re-codified at 12 CFR
308.132(e)(1). These adjusted subdivided amounts are found at the
end of this chart.
\21\ The maximum penalty amount for an institution is the lesser
of this amount or 1 percent of total assets.
\22\ The maximum penalty amount for an institution is the lesser
of this amount or 1 percent of total assets.
\23\ The maximum penalty amount for an institution is the lesser
of this amount or 1 percent of total assets.
\24\ These amounts also apply to CMPs in statutes that cross-
reference 12 U.S.C. 1818, such as 12 U.S.C. 2601, 2804(b), 3108(b),
3349(b), 4009(a), 4309(a), 4717(b); 15 U.S.C. 1607(a), 1681s(b),
1691(b), 1691c(a), 1693o(a); 42 U.S.C. 3601.
\25\ The maximum penalty amount for an institution is the lesser
of this amount or 1 percent of total assets.
\26\ The $122-per-day maximum CMP under 12 U.S.C. 1828(h), for
failure or refusal to pay any assessment, applies only when the
assessment is less than $10,000. When the amount of the assessment
is $10,000 or more, the maximum CMP under section 1828(h) is 1
percent of the amount of the assessment for each day that the
failure or refusal continues.
\27\ The maximum penalty amount for an institution is the lesser
of this amount or 1 percent of total assets.
\28\ The maximum penalty amount for an institution is the
greater of this amount or 1/100,000th of the institution's total
assets.
\29\ The maximum penalty amount for an institution is the
greater of this amount or 1/50,000th of the institution's total
assets.
\30\ The maximum penalty amount for an institution is the lesser
of this amount or 1 percent of total assets.
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During preliminary discussions regarding the Rule, the FDIC
considered possible alternatives to issuing the Rule. The primary
alternative the FDIC considered was to maintain the current statutory
language in the CFR and Federal Register as well as the CMP
presentation format. This alternative (1) keeps the redundant statutory
language in the CFR and Federal Register, (2) does not improve the
clarity and readability of the maximum CMPs, and (3) does not address
the fact that the CMP presentation format is inconsistent with the
other prudential regulators. Therefore, the FDIC believes the Rule will
support ease of reference and public understanding more so than the
alternative.
V. Request for Comment
The FDIC believes that these changes to Part 308 are ministerial
and technical and that, therefore, notice-and-comment rulemaking is
unnecessary. Nonetheless, in the interest of transparency, the FDIC
invited comments on all aspects of the Rule in a Notice of Proposed
Rulemaking, dated August 3, 2018.\31\ Commenters were specifically
encouraged to identify any technical issues raised by the Rule. The
FDIC provided a 60-day comment period for this Rule, but the agency did
not receive any comments.
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\31\ See 83 FR 38080, https://www.gpo.gov/fdsys/pkg/FR-2018-08-03/pdf/2018-16548.pdf.
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VI. Regulatory Analysis
Riegle Community Development and Regulatory Improvement Act
Section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994 \32\ requires that each Federal banking agency,
in determining the effective date and administrative compliance
requirements
[[Page 61114]]
for new regulations that impose additional reporting, disclosure, or
other requirements on insured depository institutions, consider,
consistent with principles of safety and soundness and the public
interest, any administrative burdens that such regulations would place
on depository institutions, including small depository institutions,
and customers of depository institutions, as well as the benefits of
such regulations. In addition, in order to provide an adequate
transition period, new regulations that impose additional reporting,
disclosures, or other new requirements on IDIs generally must take
effect on the first day of a calendar quarter that begins on or after
the date on which the regulations are published in final form.
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\32\ 12 U.S.C. 4802.
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The Rule will not impose any new or additional reporting,
disclosures, or other requirements on insured depository institutions.
Therefore, the Rule is not subject to the requirements of this statute.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that, in
connection with a rulemaking, an agency prepare and make available for
public comment a final regulatory flexibility analysis describing the
impact of the rulemaking on small entities.\33\ A regulatory
flexibility analysis is not required, however, if the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. The Small Business Administration
(SBA) has defined ``small entities'' to include banking organizations
with total assets less than or equal to $550 million.\34\ The FDIC
supervises 3,575 depository institutions,\35\ of which 2,763 are
defined as small banking entities by the terms of the RFA.\36\ For the
reasons described below and under section 605(b) of the RFA, the FDIC
certifies that the Rule will not have a significant economic impact on
a substantial number of small entities.
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\33\ 5 U.S.C. 601 et seq.
\34\ The SBA defines a small banking organization as having $550
million or less in assets, where ``a financial institution's assets
are determined by averaging the assets reported on its four
quarterly financial statements for the preceding year.'' 13 CFR
121.201 n.8 (2018). ``SBA counts the receipts, employees, or other
measure of size of the concern whose size is at issue and all of its
domestic and foreign affiliates. . . .'' 13 CFR 121.103(a)(6)
(2018). Following these regulations, the FDIC uses a covered
entity's affiliated and acquired assets, averaged over the preceding
four quarters, to determine whether the covered entity is ``small''
for the purposes of RFA.
\35\ FDIC-supervised institutions are listed in 12 U.S.C.
1813(q)(2).
\36\ Call Report: June 30, 2018.
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The FDIC believes the amendments to 12 CFR parts 308 and 327 will
have a negligible impact on small entities. For a detailed description
of the Rule and its expected effects, please review Section III above.
The revisions are intended to simplify the text of the CFR by removing
unnecessary and redundant text in order to make it easier for readers
to reference and understand the current maximum CMP amounts.
Small Business Regulatory Enforcement Fairness Act
The OMB has determined that the Rule is not a ``major rule'' within
the meaning of the relevant sections of the Small Business Regulatory
Enforcement Act of 1996 (SBREFA).\37\ As required by the SBREFA, the
FDIC will submit the Rule and other appropriate reports to Congress and
the Government Accountability Office for review.
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\37\ 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 the Rule will not affect family wellbeing
within the meaning of section 654 of the Omnibus Consolidated and
Emergency Supplemental Appropriations Act, 1999.\38\
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\38\ Public Law 105-277, 112 Stat. 2681 (1998).
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Paperwork Reduction Act
The Rule does not create any new, or revise any existing,
collections of information under section 3504(h) of the Paperwork
Reduction Act of 1980.\39\ Consequently, no information-collection
request will be submitted to the OMB for review.
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\39\ 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.\40\ Accordingly, the FDIC has attempted to write the Rule in
clear and comprehensible language.
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\40\ Public Law 106-102, 113 Stat. 1338 (Nov. 12, 1999).
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List of Subjects
12 CFR Part 308
Administrative practice and procedure, Bank deposit insurance,
Banks, banking, Claims, Crime, Equal access to justice, Fraud,
Investigations, Lawyers, Penalties.
12 CFR Part 327
Bank deposit insurance, Banks, banking, Savings associations.
Authority and Issuance
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. The authority citation for part 308 continues 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. Amend Sec. 308.116 by revising paragraph (b) to read as follows:
Sec. 308.116 Assessment of penalties.
* * * * *
(b) Maximum penalty amounts. Under 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 in the maximum amounts
calculated and published in accordance with Sec. 308.132(d).
* * * * *
0
3. Amend Sec. 308.132 by revising paragraph (d) and adding paragraph
(e) to read as follows:
Sec. 308.132 Assessment of penalties.
* * * * *
(d) Maximum civil money penalty amounts. Under the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015, the Board
of Directors or its designee may assess civil money penalties in the
maximum amounts using the following framework:
(1) Statutory formula to calculate inflation adjustments. The FDIC
is required by statute to annually adjust for inflation the maximum
amount of each civil money penalty within its jurisdiction to
administer. The inflation adjustment is calculated by multiplying the
maximum dollar amount of the civil money penalty for the previous
calendar year by the cost-of-living inflation adjustment multiplier
provided annually by the Office of Management and Budget and rounding
the total to the nearest dollar.
[[Page 61115]]
(2) Notice of inflation adjustments. By January 15 of each calendar
year, the FDIC will publish notice in the Federal Register of the
maximum penalties that may be assessed after each January 15, based on
the formula in paragraph (d)(1) of this section, for conduct occurring
on or after November 2, 2015.
(e) Civil money penalties for violations of 12 U.S.C. 1464(v) and
12 U.S.C. 1817(a)--(1) Late filing--Tier One penalties. Where an
institution fails to make or publish its Report of Condition and Income
(Call Report) within the appropriate time periods, but 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 where the institution inadvertently
transmitted a Call Report that is minimally late, the Board of
Directors or its designee may assess a Tier One civil money penalty.
The amount of such a penalty shall not exceed the maximum amount
calculated and published annually in the Federal Register under
paragraph (d)(2) of this section. Such a penalty may be assessed for
each day that the violation continues.
(i) First offense. Generally, in such cases, the amount assessed
shall be an amount calculated and published annually in the Federal
Register under paragraph (d)(2) of this section. The Federal Register
notice will contain a presumptive penalty amount per day for each of
the first 15 days for which the failure continues, and a presumptive
amount per day for each subsequent days the failure continues,
beginning on the 16th day. The annual Federal Register notice will also
provide penalty amounts that generally may be assessed for institutions
with less than $25,000,000 in assets.
(ii) Subsequent offense. The FDIC will calculate and publish in the
Federal Register a presumptive daily Tier One penalty to be imposed
where an institution has been delinquent in making or publishing its
Call Report within the preceding five quarters. The published penalty
shall identify the amount that will generally be imposed per day for
each of the first 15 days for which the failure continues, and the
amount that will generally be imposed per day for each subsequent day
the failure continues, beginning on the 16th day. The annual Federal
Register notice will also provide penalty amounts that generally may be
assessed for institutions with less than $25,000,000 in assets.
(iii) Lengthy or repeated violations. The amounts set forth in this
paragraph (e)(1) 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.
(iv) Waiver. Absent extraordinary circumstances outside the control
of the institution, penalties assessed for late filing shall not be
waived.
(2) 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 Tier Two civil money
penalty for each day the failure continues. The amount of such a
penalty will not exceed the maximum amount calculated and published
annually in the Federal Register under paragraph (d)(2) of this
section.
(3) False or misleading reports or information--(i) 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 Tier One civil money penalty 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 where the institution inadvertently transmits a Call Report or
information that is false or misleading. The amount of such a penalty
will not exceed the maximum amount calculated and published annually in
the Federal Register under paragraph (d)(2) of this section.
(ii) 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 Tier Two civil money penalty for
each day the information is not corrected. The amount of such a penalty
will not exceed the maximum amount calculated and published annually in
the Federal Register under paragraph (d)(2) of this section.
(iii) 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 Tier
Three civil money penalty for each day the information is not
corrected. The penalty shall not exceed the lesser of 1 percent of the
institution's total assets per day or the amount calculated and
published annually in the Federal Register under paragraph (d)(2) of
this section.
(4) Mitigating factors. The amounts set forth in paragraphs (e)(1)
through (e)(3) of this section may be reduced based upon the factors
set forth in paragraph (b) of this section.
0
4. Amend Sec. 308.502 by revising paragraphs (a)(6) and (b)(4) 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).
* * * * *
(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).
* * * * *
0
5. Amend Sec. 308.530 by revising paragraph (d) to read as follows:
Sec. 308.530 Determining the amount of penalties and assessments.
* * * * *
(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 Sec.
308.132(d)).
PART 327--ASSESSMENTS
0
6. The authority citation for part 327 continues to read as follows:
Authority: 12 U.S.C. 1441, 1813, 1815, 1817-19, 1821.
0
7. Amend Sec. 327.3 by revising paragraph (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
[[Page 61116]]
timely pay assessments will be calculated and published in accordance
with 12 CFR 308.132(d).
* * * * *
Dated at Washington, DC, on November 20, 2018.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2018-25660 Filed 11-27-18; 8:45 am]
BILLING CODE 6714-01-P