Legal and Regulatory:
Economic Growth And Regulatory Paperwork Reduction Act of 1996
Subtitle B -- Streamlining Government Regulations

Sec. 2221. Small Bank Examination Cycle.

Section 10(d) of the FDI Act (12 U.S.C. 1820(d)) requires the banking agencies to conduct annual on-site examinations of banks. However, CAMEL 1 banks with assets of less than $250 million are to be examined on an 18-month cycle. In addition, prior to the enactment of section 2221, the banking agencies could examine CAMEL 2 banks with assets of less than $100 million on an 18-month examination cycle and had the discretion to raise the test to up to $175 million in September 1996 if the agency determines that the greater amount would be consistent with safety and soundness. Section 2221 permits the banking agencies to raise the CAMEL 2 bank asset test from $175 million to up to $250 million.

Sec. 2222. Required Review of Regulations.

This section requires each appropriate Federal banking agency as well as the FFIEC to review their regulations at least once every 10 years in order to identify outdated or otherwise unnecessary regulatory requirements on financial institutions, and eliminate these unnecessary regulations as appropriate. In conducting this review, the agencies or the FFIEC must categorize the regulations under review by type and provide notice and comment on a particular category of regulations at regular intervals. The FFIEC is required to report to Congress on the issues raised by the review.

Sec. 2223. Repeal of Identification of Nonbank Financial Institution Customers.

This section repeals 31 U.S.C. 5327, which required the Treasury Department to issue regulations requiring financial institutions to identify their non-bank financial institution customers (i.e., a registered broker-dealer, investment banker, investment company, currency exchange, issuer or redeemer of traveler's checks, credit card system operator, pawn broker, loan or finance company, travel agent, or insurance company, among others).

Sec. 2224. Repeal of Certain Reporting Requirements.

This section eliminates: (1) the annual Fed report on the availability of credit to small businesses, small farms, and minority-owned small businesses (section 477 of FDICIA); (2)the annual report to Congress on enforcement actions of the Federal banking agencies (section 918 of FIRREA); and (3) the annual report on troubled foreign loans (section 913 of the International Lending Supervision Act of 1983).

Sec. 2225. Increase in Home Mortgage Disclosure Exemption Threshold.

The Home Mortgage Disclosure Act (HMDA) (12 U.S.C. 2801 et seq.) requires both depository institutions and non-depository institution mortgage lenders to compile and report prescribed data relating to home mortgage loans. Prior to the enactment of the Regulatory Paperwork Reduction Act, depository institutions with $10 million or less in assets were exempt from these requirements. In addition, the Fed, in consultation with HUD, could exempt from HMDA non-depository institutions that were comparable to the exempted depository institutions.

This section indexes HMDA's $10 million exemption threshold for depository institutions to inflation retroactive to the adoption of HMDA in 1975 (which should raise the threshold to approximately $28 million). It also requires the Fed to adjust this number annually for inflation. However, this section prohibits the Fed from applying any inflation adjustment to the reporting threshold for non-depository institutions, thereby maintaining the $10 million threshold for these entities.

This section also amends HMDA's requirement that each branch located in a designated metropolitan statistical area compile and make publicly available at the branch the annual number and total dollar amount and certain other information of the mortgage loans originated or purchased by the institution. Under section 2225, depository institutions may comply with this requirement if the required information is kept at the home office and if the branch office provides notice that the information is available upon request. An institution must comply with a request for this information within 15 days by providing either a paper copy or, if acceptable to the individual, an electronic copy of this information.

Sec. 2226. Elimination of Stock Loan Reporting Requirement.

Prior to the enactment of the Regulatory Paperwork Reduction Act, section 7(j) of the FDI Act (12 U.S.C. 1817(j)) required all financial institutions and their affiliates to file consolidated reports with the appropriate Federal banking agency if any of their extensions of credit, in the aggregate, were secured directly or indirectly by 25 percent or more of any class of shares of the same insured depository institution. Section 2226 applies this reporting requirement only to foreign banks and their affiliates.

Sec. 2227. Credit Availability Assessment.

This section requires the Fed, in consultation with the various Federal banking agencies, the Small Business Administration, and the Secretary of Commerce, to study and report to Congress on lending by all creditors to small businesses. These reports must include the demand for and availability of credit, the range of credit options and types of credit products available, and the credit needs and types of risks associated with lending to small businesses. The first report to Congress is due no later than 12 months after enactment, with reports to Congress to follow thereafter every 60 months.

Section 5146 of the Revised Statutes (12 U.S.C. 72) requires that the directors of a national bank must be citizens of the United States and that a majority of the directors must live in the same State where the bank is located, or within 100 miles of an office of the bank. Section 2241 allows the OCC to waive the State residency requirement. There is a technical drafting error in this amendment. As drafted, the amendment inadvertently deleted the OCC's current authority to waive the citizenship requirement for up to a minority of a national bank's directors if the bank is affiliated with a foreign bank. A colloquy on the Floor of the Senate between Chairman D'Amato of the Senate Banking Committee and Sens. Mack and Graham (142 Cong. Rec. S11,919 (daily ed. Sept. 30, 1996)) clarifies that no change in the OCC's authority was intended by Congress and instructs the OCC to treat the citizenship waiver authority as continuing in effect and not to require any national banks that have citizenship waivers to restructure their boards of directors.

Sec. 2242. Paperwork Reduction Review.

Section 303(a) of the CDRI Act (12 U.S.C. 4803(a)) requires the Federal banking agencies to conduct a two-year review of regulations and written policies to improve efficiency, eliminate unwarranted constraints on credit, remove inconsistencies and outmoded and duplicative requirements, and make regulations implementing the same statutory policies more uniform. This section amends the review required by the CDRI Act to include unnecessary internal written policies and to require the agencies to eliminate these requirements where appropriate.

Sec. 2243. State Bank Representation on Board of Directors of the FDIC.

The FDIC Board of Directors consists of five members, including the Comptroller of the Currency, the Director of the OTS, and three persons appointed by the President. This section requires that one of the five members of the Board must have State bank supervisory experience.

Sec. 2244. Consultation Among Examiners.

Section 10(d)(6) of the FDI Act (12 U.S.C. 1820(d)(6)) requires each Federal banking agency to coordinate examinations of an insured depository institution internally, with the other Federal banking agencies, and with State supervisors, if appropriate, and to jointly work to establish and implement a system for determining which one of the Federal banking agencies will be the lead agency responsible for managing a unified examination of each insured depository institution and its affiliates, as required by section 10(d) of the FDI Act.

Section 2244 amends section 10 of the FDI Act to require that each Federal banking agency also must ensure that its examiners consult with each other regarding examination activities of a depository institution and resolve any inconsistencies in their recommendations. It also requires each agency to consider appointing an examiner-in-charge with respect to a depository institution to ensure examiner consultation. In addition, this section amends section 10(d)(6)(B) of the FDI Act to provide that a State bank supervisor may be the lead agency responsible for managing a unified examination of an insured depository institution and its affiliates.

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