FR 2020-28455

The document from the Federal Register discusses a final rule implemented by the Federal Deposit Insurance Corporation (FDIC) to remove outdated regulations related to "Prompt Corrective Action" that were inherited from the Office of Thrift Supervision (OTS) after the Dodd-Frank Wall Street Reform and Consumer Protection Act. The objective is to streamline these regulations and improve clarity by ensuring all FDIC-supervised institutions adhere to a consistent set of rules.

General Summary

The regulation initially transferred from the OTS involved administrative procedures designed to address the financial stability of state savings associations. By rescinding these duplicative rules, the FDIC aims to eliminate unnecessary regulatory complexity. The changes primarily impact state savings associations, but the FDIC asserts that the measures will likely not lead to substantive changes in how these institutions are supervised, thereby maintaining consistency with existing FDIC practices.

Significant Issues or Concerns

A noteworthy issue within the document is the technical and legal language that is heavily reliant on specific regulatory references, such as parts of the Federal Deposit Insurance Act and revisions under the Dodd-Frank Act. This reliance may pose a challenge for laypersons without specialized knowledge or access to these detailed legal codes.

Moreover, while it is communicated that the changes are not expected to have a significant impact on small entities or state savings associations, the document lacks detailed explanations or examples that elaborate on this assurance. The lengthy sections describing procedural changes could benefit from summarization to enhance clarity for a broader audience.

Impact on the Public

Broadly, the public may experience these changes as an effort towards regulatory simplification, potentially leading to a banking system that is easier to navigate and understand, especially for those within financial services. However, the technical nature of the document could limit broader public engagement or comprehension of its implications without additional context or simplified summaries.

Impact on Specific Stakeholders

For state savings associations, these regulatory adjustments are intended to make oversight more consistent and streamlined. The FDIC anticipates that this will reduce compliance burdens without altering the foundational supervisory requirements. However, there remains a need for clear communication to these entities to ensure they are well-informed about the changes.

Small financial institutions, while unlikely to face any substantive impacts, might lack clarity on how to adapt to these changes due to the technical nature of regulatory language used in the document. Therefore, stakeholders could benefit from additional guidance or educational resources from the FDIC to facilitate understanding and compliance.

In conclusion, while the FDIC's final rule represents a step towards regulatory efficiency, the effectiveness of its implementation may heavily depend on the accessibility of the information to those it affects most. Simplifying communication and offering targeted support could enhance the transition for institutions directly impacted by these regulatory changes.

The document reviewed involves actions taken by the Federal Deposit Insurance Corporation (FDIC) concerning regulations initially transferred from the Office of Thrift Supervision (OTS) to simplify and clarify procedures related to prompt corrective actions for financial institutions. While the primary focus of the document is on regulatory changes rather than financial expenditure, some financial references are worth noting.

One of the key financial references is the definition provided by the Small Business Administration (SBA) regarding small entities. These are categorized as banking organizations with total assets of less than or equal to $600 million. This definition is critical for assessing the impact of regulatory changes on financial institutions of varying sizes and ensuring that smaller entities are not disproportionately burdened by regulations.

Additionally, the Office of Management and Budget's (OMB) role in deeming whether a rule constitutes a "major rule" under the Congressional Review Act is discussed. A rule is considered "major" if it has an annual effect on the economy of $100,000,000 or more, significantly impacts costs or prices, or adversely affects competition, employment, or innovation within the U.S. This financial threshold helps evaluate the broader economic implications of regulatory changes.

The document asserts that the final rule presented does not meet the criteria for a "major rule" and thereby does not have a substantial financial impact exceeding the $100,000,000 benchmark set forth by the Congressional Review Act. Consequently, such classification streamlines the rule's implementation without the delay required for major rules.

In relation to the identified issues, the document emphasizes that changes will not have a significant economic impact on small entities, specifically small State savings associations. However, the conclusion lacks detailed explanation or methodology on how this was determined. It suggests an assessment that the rescission of regulatory parts does not introduce additional financial burdens or procedural regulations that would lead to notable economic effects on these entities.

Overall, the financial references serve as boundary markers to ensure regulatory changes do not unintentionally impose substantial economic burdens, especially on smaller financial institutions. This attention to financial implications aligns with regulatory efforts to maintain a balanced impact across institutions while fostering clarity and efficiency within the banking sector.