FR 2020-28453

The recent action by the Federal Deposit Insurance Corporation (FDIC) involves a rule modification aimed at simplifying the regulatory environment for State savings associations. This final rule, which becomes effective on March 5, 2021, is primarily concerned with repealing regulations that the FDIC inherited from the Office of Thrift Supervision (OTS) as part of the Dodd-Frank Act's regulatory reformation. By doing so, the FDIC intends to streamline and bring uniformity to the filing processes for State savings associations and other FDIC-regulated entities.

General Summary

The FDIC's decision to rescind certain OTS-transferred regulations centers around application processing procedures for State savings associations, aiming to integrate these into existing frameworks that govern all FDIC-supervised institutions, notably under 12 CFR Part 303. The changes made are largely technical and intend to remove redundant provisions, thereby aligning State savings associations more closely with the frameworks used by State nonmember banks.

Significant Issues and Concerns

There are several concerns related to the complexity and technical nature of the document that may challenge the general audience's understanding. Notably, the document's dense regulatory language could be difficult for those unfamiliar with financial law. The document could benefit from clearer summaries or explanatory sections highlighting key changes and impacts. There is also a gap in detailing the actual day-to-day implications for State savings associations, potentially leading to confusion about procedural adjustments.

Moreover, the assertion that the rule will not significantly impact small entities might feel unsupported due to the generality of the analysis offered. The document also lacks detailed scenarios illustrating how specific regulations might affect operations, missing an opportunity to convey practical relevance.

Impact on the Public

Broadly, the simplification of regulations can reduce administrative burdens and potentially lower operational costs for State savings associations. This benefits these institutions by enabling them to allocate more resources to service efficiency rather than compliance, indirectly benefiting their customers.

However, the lack of clarity about new procedural changes could lead to a transitional period where State savings associations need additional guidance to ensure compliance with the newly amended rules. This could initially create operational uncertainty or require further adaptation costs.

Impact on Specific Stakeholders

For State savings associations, this regulatory change may have a positive effect by eliminating outdated or repetitive filing steps, thus extending greater efficiency and reducing regulatory confusion. But the document's lack of direct examples or detailed guides may delay these benefits as institutions work to understand the full scope of changes.

Smaller entities classified under the Small Business Administration's definition might be particularly sensitive to regulatory changes, even if indirectly affected. While the FDIC asserts a minimal impact on these institutions, such claims should have been backed by detailed analysis.

In summary, while the FDIC's regulatory adjustments aim to streamline the landscape for State savings associations, these changes come with a need for greater clarity and guidance to ensure stakeholders can smoothly transition and effectively benefit from the intended efficiencies.

The document presents a rule issued by the Federal Deposit Insurance Corporation (FDIC) regarding regulations for State savings associations. The rule entails the removal and revision of certain procedures transferred from the Office of Thrift Supervision (OTS), with an aim to streamline and standardize application procedures. Within this context, several financial references occur, which provide insight into the financial considerations and implications of the rule.

Definition of Small Entities

The Small Business Administration (SBA) defines small entities, particularly banking organizations, as those with total assets less than or equal to $600 million. This definition is crucial in understanding the impact of regulations on smaller banks and savings associations. It indicates a threshold that helps determine whether regulatory changes will significantly affect smaller financial institutions.

Assessment of Economic Impact

The document notes that generally, the FDIC considers a regulatory change to have a significant effect if it results in an impact exceeding 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total non-interest expenses. These benchmarks help clarify the financial thresholds at which changes are considered impactful, providing a metric to evaluate the financial effects of rescinding subpart F regulations on small State savings associations.

Congressional Review and Economic Thresholds

The Congressional Review Act mandates an assessment to determine if a regulation is a "major rule," defined by criteria such as an annual economic effect of $100 million or more. It's noted that the final rule is not considered a major rule by the Office of Management and Budget (OMB). This suggests that the rescission of the regulations in question does not have a large-scale financial impact on the economy or on the financial services industry at large.

Relevance to Identified Issues

These financial references relate to the issues identified in the document, particularly concerning the impact on small banking institutions. While it is stated that the rule will not have a significant impact on small entities, the justification appears somewhat broad, prompting a call for more detailed analysis. The specific mention of a $600 million threshold and the benchmarks for significant effects provide important context for assessing potential regulatory burdens on smaller entities, although the document could benefit from a more nuanced exploration of these impacts.

In summary, the document contains financial thresholds and definitions that frame the understanding of how these regulations may affect different sized institutions, particularly State savings associations. While not classified as a "major rule," the implications for small banking organizations remain an area where further clarity could enhance comprehension and address concerns regarding regulatory impact.