FR 2021-01536

The Federal Deposit Insurance Corporation (FDIC) is proposing a new rule aimed at simplifying its regulations, with a particular focus on removing certain outdated definitions that were transferred from the Office of Thrift Supervision (OTS). These definitions are deemed unnecessary as the related regulations have been or will soon be rescinded. This proposal is part of a broader effort to keep federal regulations current and minimize potential misunderstandings by the public. The rule is expected to specifically impact a small number of state savings associations supervised by the FDIC, with no anticipated significant effects on those institutions or the larger economy.

Significant Issues and Concerns

One of the document's main shortcomings is the absence of a clear explanation of the financial impact associated with the removal of these regulations. The text does not provide any concrete data or analysis to demonstrate potential cost savings, leaving the financial efficiency of the proposal uncertain. Additionally, while the document asserts that the proposed rule will not negatively impact small entities, it lacks detailed analysis or evidence to substantiate this assumption, particularly concerning state savings associations that might be affected.

The document claims that simplifying the Code of Federal Regulations will offer benefits, yet it provides no detailed examples or studies to support these claims. The lack of specificity makes it challenging to evaluate the true benefit of such regulatory streamlining. Moreover, the regulatory flexibility analysis concludes that the rule will not have a significant economic impact on small entities, but the criteria defining "significant effects" remain unclear.

Another issue arises from the document's complex legal terminology. Despite claims of using plain language, the regulatory jargon may be difficult for the general public to fully comprehend, potentially limiting effective public engagement. Although the FDIC invites public comments, the document does not clearly outline how these comments will be reviewed or integrated into the final decision-making process.

Impact on the Public

For the general public, the proposal represents a technical adjustment in federal regulations that might lead to a more streamlined and comprehensible framework. While this could theoretically promote ease of understanding, the actual benefits for everyday individuals and businesses remain uncertain without tangible evidence or specific examples of improvement.

Impact on Specific Stakeholders

For state savings associations, particularly the 35 institutions identified as being impacted by this proposal, the changes are not expected to cause significant disruptions. However, the lack of in-depth analysis supporting this assertion means stakeholders remain somewhat in the dark regarding potential minor operational adjustments they might need to implement.

The proposal's reach could extend to other financial institutions indirectly, as clearer and more organized federal regulations may eventually encourage more straightforward compliance procedures. Nevertheless, without concrete examples, such benefits are speculative.

In summary, while the FDIC's proposal aims to update and simplify regulations, the document does not convincingly demonstrate the practicality or financial efficiency of such efforts and might benefit from more explicit justification and examples to assist various stakeholders in understanding and adapting to the proposed changes.

In reviewing the Federal Register document, the focus is on the financial references made throughout the text. Here, financial terminology and definitions play a critical role, primarily relating to the concept of "small entities" as defined by the Small Business Administration (SBA).

The document defines small entities as banking organizations with total assets of less than or equal to $600 million. This definition is significant within the context of regulatory analysis because it establishes the threshold used to evaluate the potential financial impact of the proposed rule on smaller financial institutions. The importance of this threshold becomes apparent when considering whether these regulations significantly affect the operations of small entities.

Despite this clear definition provided by the SBA, one issue highlighted in the document concerns the lack of comprehensive analysis or evidence supporting the claim that the proposed rescission of certain regulations will not have a significant economic impact on a substantial number of small entities. While the document adopts the criterion that a significant effect would be in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total noninterest expenses, it does not thoroughly justify these thresholds or provide an analysis to confirm that impacts will remain below these levels.

Furthermore, the document does not detail any specific cost savings or financial impact as a result of rescinding and removing the regulations. This omission makes it difficult to assess directly the financial efficiency or potential fiscal benefits of the proposal. While the document asserts that removing these regulations will simplify the Code of Federal Regulations, it does not provide detailed examples or financial data demonstrating how such simplification translates to cost savings for the regulated entities or the FDIC itself.

In summary, while specific financial references establish a foundation for evaluating the economic impact on small entities, the document falls short in providing detailed analysis or evidence to support its conclusions regarding financial efficiency or impact. Consequently, readers may find it challenging to understand the financial implications of the proposed rule without more comprehensive data or examples.