federal reserve system federal deposit insurance corporation

Friday,

May 19, 2000

Part II

Department of theTreasuryOffice of the Comptroller of theCurrencyOffice of the Thrift Supervision

Federal Reserve System

Federal DepositInsurance Corporation12 CFR Parts 35, 207, 346, 533Disclosure and Reporting of CRA-RelatedAgreements; Proposed Rule

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31962 Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules

DEPARTMENT OF THE TREASURY

Office of the Comptroller of theCurrency

12 CFR Part 35

[Docket No. 00–11]

RIN 1557–AB85

FEDERAL RESERVE SYSTEM

12 CFR Part 207

[Regulation G; Docket No. R–1069]

FEDERAL DEPOSIT INSURANCECORPORATION

12 CFR Part 346

RIN 3064–AC33

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 533

[Docket No. 2000–44]

RIN 1550–AB32

Disclosure and Reporting of CRA-Related Agreements

AGENCIES: Office of the Comptroller ofthe Currency (OCC); Board of Governorsof the Federal Reserve System (Board);Federal Deposit Insurance Corporation(FDIC); Office of Thrift Supervision(OTS).ACTION: Joint notice of proposedrulemaking.

SUMMARY: The OCC, Board, FDIC, andOTS (collectively, the agencies) arerequesting comment on a proposed rulethat implements provisions of therecently enacted Gramm-Leach-BlileyAct (the GLB Act or the Act). Theseprovisions require nongovernmentalentities or persons, insured depositoryinstitutions, and affiliates of insureddepository institutions that are partiesto certain agreements that are infulfillment of the CommunityReinvestment Act of 1977 to make theagreements available to the public andthe appropriate agency and file annualreports concerning the agreements withthe appropriate agency. Theseprovisions are contained in section 711of the Act and are codified as section 48of the Federal Deposit Insurance Act(FDI Act).

The rule identifies the types ofwritten agreements that are covered bysection 711 of the GLB Act (referred toas covered agreements) and definesmany of the terms used in the statute.

The rule also describes how the partiesto a covered agreement must make theagreement available to the public andthe appropriate agencies and explainsthe type of information that must beincluded in the annual report filed by aparty to a covered agreement.

The agencies solicit comments on allaspects of the proposed rule, includingthe specific areas discussed below. Theagencies will issue a final rule afterconsidering comments received.DATES: Comments must be received onor before July 21, 2000.ADDRESSES:

OCC: Comments should be addressedto Communications Division, Office ofthe Comptroller of the Currency, 250 EStreet, SW, Third floor, Washington, DC20219, Attention: Docket No. 00–11. Inaddition, comments may be sent byfacsimile transmission to fax number(202) 874–5274 or by Internet mail [email protected] will be available for publicinspection and photocopying at thesame location.

Board: Comments directed to theBoard should refer to Docket No. R–1069 and may be mailed to Ms. JenniferJ. Johnson, Secretary, Board ofGovernors of the Federal ReserveSystem, 20th and C Streets, NW,Washington, DC 20551 or mailedelectronically [email protected] addressed to Ms. Johnsonalso may be delivered to the Board’smailroom between 8:45 a.m. and 5:15p.m. and, outside those hours, to thesecurity control room. Both themailroom and the security control roomare accessible from the Eccles Buildingcourtyard entrance, located on 20thStreet between Constitution Avenue andC Street, NW. Members of the publicmay inspect comments in room MP–500of the Martin Building between 9:00a.m. and 5 p.m. on weekdays.

FDIC: Written comments should beaddressed to Robert E. Feldman,Executive Secretary, Attention:Comments/OES, Federal DepositInsurance Corporation, 550 17th Street,NW, Washington, DC 20429. Commentsmay be hand delivered to the guardstation at the rear of the 550 17th StreetBuilding (located on F Street) onbusiness days between 7 a.m. and 5 p.m.(Fax number: (202) 898–3838).Comments may be inspected andphotocopied in the FDIC PublicInformation Center, Room 100, 801 17thStreet, NW, Washington, DC, between 9a.m. and 4:30 p.m. on business days.

Comments may be submittedelectronically over the Internet atwww.fdic.gov. Further information

concerning this option may be foundbelow at the ‘‘FDIC’s Electronic PublicComment Site.’’ Comments also may bemailed electronically [email protected].

OTS: Send comments to Manager,Dissemination Branch, InformationManagement & Services Division, Officeof Thrift Supervision, 1700 G Street,NW, Washington, DC 20552, AttentionDocket No. 2000–44. Hand delivercomments to Public Reference Room,1700 G Street, NW, lower level, from 9a.m. to 5 p.m. on business days. Sendfacsimile transmissions to FAX number(202) 906–7755 or (202) 906–6959 (if thecomment is over 25 pages). Send e-mailsto [email protected] and includeyour name and telephone number.Interested persons may inspectcomments at 1700 G Street, NW, from10 a.m. until 4 p.m. on Tuesdays andThursdays.

FOR FURTHER INFORMATION CONTACT:OCC: Michael S. Bylsma, Director,

Community and Consumer Law (202)874–5750; or Karen O. Solomon,Director, Legislative and RegulatoryActivities (202) 874–5090.

Board: Scott G. Alvarez, AssociateGeneral Counsel (202) 452–3583, KieranJ. Fallon, Senior Counsel (202) 452–5270, or Andrew Miller, SeniorAttorney (202) 452–3428, LegalDivision; Glenn E. Loney, DeputyDirector (202) 452–3585, or James H.Mann, Attorney (202) 452–3667,Division of Consumer and CommunityAffairs; Board of Governors of theFederal Reserve System, 20th Street andConstitution Avenue, NW, Washington,DC 20551. For users ofTelecommunications Device for the Deaf(‘‘TDD’’) only, contact Janice Simms at(202) 452–4984.

FDIC: Deanna S. Caldwell,Community Affairs Officer (202) 736–0141; A. Ann Johnson, Counsel,Regulation and Legislation Section (202)898–3573; or Joan M. Bateman, ReviewExaminer (202) 736–0187.

OTS: Richard Bennett, Counsel(Banking and Finance), (202) 906–7409;Karen Osterloh, Assistant ChiefCounsel, (202) 906–6639; or Richard R.Riese, Director, Compliance Policy,(202) 906–6134, Office of ThriftSupervision, 1700 G Street, NW,Washington, DC 20552.SUPPLEMENTARY INFORMATION:

I. Executive Summary of Proposed Rule

Section 711 of the GLB Act (Pub. L.106–102, 113 Stat. 1338 (1999)) added anew section 48 to the FDI Act (12 U.S.C.1831y) entitled ‘‘CRA SunshineRequirements.’’ Section 711 applies towritten agreements that (1) are made in


31963Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Proposed Rules

1 12 U.S.C. 2901 et seq.2 See 12 CFR 25.21–25.29 (OCC); 12 CFR 228.21–

228.29 (Board); 12 CFR 345.21–345.29 (FDIC); 12CFR 563e.21–563e.29 (OTS).

fulfillment of the CommunityReinvestment Act of 1977 (CRA),1 (2)involve funds or other resources of aninsured depository institution oraffiliate with an aggregate value of morethan $10,000 in a year, or loans with anaggregate principal value of more than$50,000 in a year, and (3) are enteredinto by an insured depository institutionor affiliate of an insured depositoryinstitution and a nongovernmentalentity or person. Section 711 does not,however, cover any agreement with anongovernmental entity or person thathas not had a CRA contact with theinsured depository institution oraffiliate or a banking agency, such asagreements entered into by entities orpersons that solicit charitablecontributions or other funds withoutregard to the CRA. Under section 711,the parties to a covered agreement mustmake the agreement available to thepublic and the appropriate agency. Theparties also must file a report annuallywith the appropriate agency concerningthe disbursement, receipt and use offunds or other resources under theagreement.

The proposed rule defines variousterms necessary for determining whichagreements are covered agreements andprovides guidance for determiningwhen a CRA contact has been made forpurposes of identifying the partieswhose agreements are covered by therule. The proposed rule also describesthe manner and scope of the Act’sdisclosure and annual reportingrequirements.

Section 711 and the proposed ruleapply only to agreements that are inwriting. To be covered, a writtenagreement may be an understanding oragreement and need not be a legallybinding contract.

Importantly, section 711 applies onlyto written agreements that are ‘‘madepursuant to, or in connection with, thefulfillment of the CommunityReinvestment Act.’’ Section 711 defines‘‘fulfillment’’ of the CRA as a ‘‘list offactors’’ that the appropriate agencydetermines have a material impact onthe agency’s decision to approve ordisapprove an application for a depositfacility under the CRA or to assign aCRA examination rating. The agenciespropose to adopt for this purpose thelist of factors identified by the agenciesin the CRA regulations jointly issued bythe agencies (CRA Regulations).2 Thesefactors include providing the types ofloans considered in evaluating CRA

performance, providing communitydevelopment services, making CRAqualified investments, fulfilling a CRAstrategic plan, providing retail bankingservices as described in the CRARegulations, and providing or refrainingfrom providing comments or testimonyto an agency concerning the CRAperformance of an insured depositoryinstitution.

The GLB Act exempts specific typesof agreements from coverage, even ifthese agreements would otherwise meetthe definition of a covered agreement. Inparticular, the Act and the proposedrule do not apply to any individualmortgage loan. The Act and proposedrule also do not apply to any specificcontract or commitment for any type ofloan or extension of credit toindividuals, businesses, farms or otherentities if the funds are loaned at ratesthat are not substantially below marketrates and the purpose of the loan orextension of credit does not include anyre-lending of the borrowed funds tothird parties.

In addition, as noted above, the Actexempts from coverage any agreementwith a nongovernmental entity orperson that has not commented on,testified about, or discussed with theinsured depository institution, orotherwise contacted the institution,concerning the CRA. The proposed ruleadopts the exemption as written in thestatute and includes several examples ofcontacts that would be exempt underthis provision as well as contacts thatwould not qualify for this exemption.An example of a contact that wouldqualify for this exemption is thedissemination of a similar fundraisingletter to insured depository institutionsand other businesses in the communityencouraging all businesses in thecommunity to meet their obligation toassist in making the community a betterplace to live and work. A CRA contactwould be made, and a related agreementwould not be exempt under thisprovision, if the entity or person had,for example, submitted comments to anagency concerning the CRAperformance of the insured depositoryinstitution, contacted the institution orany affiliate about providing (orrefraining from providing) CRA-relatedcomments to an agency concerning theinstitution, or contacted the institutionor any affiliate about the CRAperformance of the institution.

The GLB Act requires thoseagreements that are covered by section711, and that are not exempt, to be madeavailable to the public and theappropriate agency. Section 711provides that these disclosureobligations apply only to covered

agreements entered into after November12, 1999. Section 711 also requires thatthe agencies’ rules for ensuringcompliance with the Act’s requirementsnot impose undue burden on theparties. Accordingly, the rule proposesto require disclosure of coveredagreements and to define the scope ofannual reports in a manner that fulfillsthe requirements of section 711 while atthe same time adopting simpleprocedures that reduce duplicativereporting and rely on existing reportsprepared by the parties for their ownuse or to fulfill other requirements.

The rule proposes that each party toa covered agreement be allowed tofulfill the public disclosure requirementof section 711 by making the agreementavailable to any member of the publicon request, and allows each party torecover reasonable copying and mailingcosts in responding to these requests.An insured depository institution mayfulfill its public disclosure obligation byplacing a copy of the agreement in theinstitution’s CRA public file and makingit available in the same manner as otherinformation in the CRA public file.

The proposed rule also requires thateach insured depository institution oraffiliate that enters into a coveredagreement file a complete copy of theagreement with the appropriate agencywithin 30 days of entering into theagreement. To avoid duplication ofefforts and reduce burden, the rulewould allow a nongovernmental entityor person to fulfill its obligation to makea covered agreement available to theappropriate agency by providing a copyto the agency upon the agency’s request.

In addition to making coveredagreements available, the GLB Actrequires that annual reports be filedregarding resources provided and usedunder the agreement. These annualreporting obligations apply only tocovered agreements entered into on orafter May 12, 2000. Fornongovernmental entities or persons,the type of information required to beincluded in an annual report dependson how the entity or person used thefunds or resources received under thecovered agreement. If anongovernmental entity or personallocates and uses the funds orresources received under a coveredagreement for a specific purpose, theperson’s annual report would have toprovide a description of the specificpurpose and state the amount used forthe specific purpose. If the entity orperson uses the funds or resourcesreceived under the covered agreementfor other or general purposes (e.g.,general operating expenses), the ruleproposes that the annual report provide



3 The OTS rule, however, refers to a‘‘nongovernmental entity or person’’ as a ‘‘NGEP.’’

the detailed, itemized list described insection 711 of how such funds wereused during the year. This list involvesdisclosure of the total amount ofresources used by the person or entityfor compensation of officers, directors,and employees; administrativeexpenses; travel expenses;entertainment expenses; consulting andprofessional fees; and other expenses oruses.

In keeping with section 711, theproposed rule includes a number ofprovisions designed to reduce thepotential reporting burden ofnongovernmental entities or persons.For example, the rule requires anongovernmental entity or person to filean annual report only for a year inwhich the entity or person has receivedfunds under a covered agreement. Inaddition, the annual report filed by anongovernmental entity or person mayconsist of, or incorporate, a report thatthe entity or person has prepared forother purposes—such as a Federal orstate tax return or annual financialstatements—if the report provides theinformation required by the rule. Tofacilitate the use of reports that areprepared for other purposes, the rulewould allow parties to file their annualreports on either a fiscal year orcalendar year basis. If anongovernmental entity or person is aparty to five or more coveredagreements, the entity or person mayfile a single, consolidated annual reportrelating to all of the agreements.Furthermore, a nongovernmental entityor person may fulfill its annualreporting requirements by sending itsannual reports to the insured depositoryinstitution or affiliate that is a party tothe agreement with a request that theinstitution or affiliate file the reportswith the appropriate agency.

Under the GLB Act, the annual reportfiled by an insured depositoryinstitution or affiliate generally mustinclude information on the amount,terms and conditions of any payments,fees, or loans provided by the institutionor affiliate under the covered agreement,as well as payments, fees or loansreceived by the institution or affiliateunder the agreement. The annual reportof an insured depository institution oraffiliate also must provide aggregatedata on any loans, investments, orservices provided under the coveredagreement by each party to theagreement. The rule includes theserequirements. The rule would allow aninsured depository institution oraffiliate that is a party to 5 or morecovered agreements to file a single,consolidated annual report for all of theagreements. In addition, if an insured

depository institution and affiliate areparties to the same covered agreement,the institution and affiliate may file aconsolidated annual report for theagreement.

Section 711 does not authorize anyagency to enforce the provisions of anycovered agreement, and the proposedrule adopts this provision. The GLB Act,however, provides that a coveredagreement may become unenforceable ifthe appropriate agency determines thata nongovernmental entity or person thatis a party to the agreement has willfullyfailed to comply in a material way withthe Act’s disclosure and reportingrequirements and the entity or person,after receiving notice, fails to complywith the Act after a reasonable period oftime. The proposed rule includes thisprovision and clarifies that, in thesecircumstances, the covered agreementbecomes unenforceable only by thenongovernmental entity or person thathas willfully and materially failed tocomply with section 711.

The Act requires the agencies toconsult and coordinate with each otherin drafting the proposed rule to assure,to the extent possible, that theregulations of each agency areconsistent and comparable. Theagencies have gone beyond theserequirements and have developed theproposed rule on an interagency basis.The agencies believe the adoption of auniform rule should assist the public incomplying with the requirements of theAct. Furthermore, as required by theAct, the agencies have sought to ensurethat the proposed rule does not place anundue burden on the parties to coveredagreements and protects proprietary andconfidential information to themaximum extent consistent with thelanguage and purpose of the Act.

The agencies request comment on allaspects of the proposed rule, includingthe specific provisions and issueshighlighted in this preamble, and willincorporate comments received into thefinal rule as appropriate. The agenciesrecognize that insured depositoryinstitutions, affiliates, andnongovernmental entities and personscan not identify agreements that arecovered by section 711 until, inparticular, the agencies adopt the list offactors that are considered to be in‘‘fulfillment’’ of the CRA. Accordingly,the agencies propose to actexpeditiously to adopt a rule in finalform following conclusion of thecomment period. Once a final rule isadopted, the parties to coveredagreements will be expected promptlyto disclose any agreement that iscovered by section 711 and was enteredinto after November 12, 1999, and file

an annual report for any coveredagreement entered into on or after May12, 2000, in accordance with therequirements of the final rule. Theagencies request comment on how theparties to covered agreements enteredinto after these dates, but beforeissuance of the final rule, should berequired to comply with therequirements of the final rule.

II. Detailed Explanation of ProposedRule

This section provides a more detaileddiscussion of the proposed rule andincludes examples that are designed toassist users in understanding the scopeand application of the proposed rule.The examples included in the preambleare not exclusive. The agencies requestcomment on whether the examplesincluded in the preamble are useful andwhether additional examples wouldprove helpful. The proposed ruleincludes examples only of situationsthat would and would not constitute aCRA contact by a nongovernmentalentity or person. These examplesrelating to CRA contact are part of therule. The agencies request comment onwhether examples illustrating otherparts of the rule should be incorporatedinto the text of the regulation.

In keeping with the goal ofconsistency among the agencies’ rulesand to facilitate compliance, theproposed rule uses the term ‘‘insureddepository institution’’ rather than‘‘bank’’ or ‘‘savings association.’’ Asdiscussed below, the rule identifies thespecific agency or agencies with whoma covered agreement and its relatedannual reports should be filed, and theagency or agencies that would beconsidered a relevant supervisoryagency for a covered agreement.

For ease of reference, the rule and theremaining portions of this preamblerefer to a ‘‘nongovernmental entity orperson’’ as a ‘‘person.’’ 3 The terms‘‘nongovernmental entity or person’’and ‘‘person,’’ as well as several otherterms used in the rule, are defined insection ll.8 of the proposed rule. Therule generally defines anongovernmental entity or person tomean any company or individual otherthan the Federal government, a state,local or tribal government, or an insureddepository institution or affiliate. Theagencies request comment on whetherusers would find it more helpful to havethis section of definitions at thebeginning of the rule.

The following description applies toeach agency’s proposed rule. Since the



4 12 U.S.C. 1831y(e)(1)(B)(ii).

rule of each agency will be codified ata different part of the Code of FederalRegulations, the following descriptionreferences the proposed rule using onlythe proposed rule’s section numbers.

A. Definition of Covered Agreement

Section ll.2 of the proposed ruledefines which agreements are coveredby the rule and the term ‘‘fulfillment ofthe CRA.’’ The Act’s exemptions fromthe definition of a covered agreementalso are set forth in section ll.2.

1. Covered Agreements

The proposed rule defines a coveredagreement as any contract, arrangement,or understanding that meets all of thefollowing four criteria:

• The agreement is in writing;• The agreement is made pursuant to,

or in connection with, the fulfillment ofthe CRA, as defined in section ll.2(c)of the proposed rule;

• The parties to the agreementinclude (1) an insured depositoryinstitution or an affiliate of an insureddepository institution, and (2) a person;and

• The agreement provides for theinsured depository institution oraffiliate to provide cash payments,grants, or other consideration (otherthan loans) having an aggregate value ofmore than $10,000 in any calendar year,or to make loans in an aggregateprincipal amount of more than $50,000in any calendar year.

The proposed rule clarifies that anagreement may be a covered agreementeven if the agreement is not legallybinding on the parties. Under theproposed rule, an exchange of writtencorrespondence reflecting a mutualagreement or a written agreement thatlacks the consideration necessary for itto be a legally binding contract wouldconstitute a covered agreement if theagreement meets the four criteriadiscussed above. Moreover, to becovered, an agreement may be with aninsured depository institution or anyaffiliate of an insured depositoryinstitution, including a bank holdingcompany or a nonbank affiliate.

The following examples illustratewhen a written contract, arrangement orunderstanding may exist under the rule.The proposed rule does not attempt tospecifically define what constitutes a‘‘contract,’’ ‘‘arrangement,’’ or‘‘understanding.’’

Example 1: An organization sends a letterto an insured depository institutionrequesting that the institution provide a$15,000 grant to the organization. Theinsured depository institution responds inwriting and agrees to provide the grant inconnection with its annual grant program.

The exchange of letters constitutes a writtenunderstanding. This written understandingwould be a covered agreement under theproposed rule if the agreement is madepursuant to, or in connection with, thefulfillment of the CRA and the agreement isnot otherwise exempt under sectionll.2(b).

Example 2: An organization issues ageneral, written solicitation for charitablecontributions to businesses in its localcommunity. An insured depositoryinstitution makes a $20,000 charitablecontribution by check to the organization inresponse to the solicitation. The insureddepository institution does not have anywritten contract, arrangement orunderstanding with the organizationconcerning the donation. The general requestfor funds and the check are not themselvesa contract, arrangement or understanding.Since there is no other written agreementbetween the insured depository institutionand the organization, there is no coveredagreement between the entities.

Example 3: A bank holding companyunilaterally issues a press release announcingthat its subsidiary banks have established agoal of making $100 million of communitydevelopment grants in low-and moderate-income (LMI) neighborhoods over the next 5years. The unilateral pledge is not a contract,arrangement or understanding entered intowith a person and, therefore, is not a coveredagreement.

Example 4: An association of communitygroups and an affiliate of an insureddepository institution orally agree that theaffiliate will seek to make $100,000 in grantsavailable to the organization’s constituentmembers over the next year. The oralagreement is not reduced to writing. Oralagreements are not within the scope of thestatute and, accordingly, the agreement is nota covered agreement.

The agencies invite comment onwhether the rule should define theterms ‘‘contract,’’ ‘‘arrangement’’ and‘‘understanding’’ and, if so, what thosedefinitions should be. The agencies alsorequest comment on whether any of theexamples provided above should bemodified or amended, and whetheradditional examples would be useful.

2. Exemptions for Certain AgreementsSection 711 specifically exempts

certain types of agreements fromcoverage even if they otherwise meet thedefinition of a covered agreement.Section ll.2(b) of the proposed ruleimplements these exemptions.

a. Qualifying LoansThe first statutory exemption is for

any individual mortgage loan. Underthis exemption, any mortgage loan madeby an insured depository institution oraffiliate to any individual or entity isexempt from the requirements of section711. This exemption is available for anymortgage loan, regardless of the identityof the borrower, the type of real estate

securing the loan, or the rate charged onthe loan.

The statute also exempts fromcoverage ‘‘any specific contract orcommitment for a loan or extension ofcredit to individuals, businesses, farms,or other entities if the funds are loanedat rates [that are] not substantially belowmarket rates and if the purpose of theloan or extension of credit does notinclude any re-lending of the borrowedfunds to other parties.’’ 4 Under thestatute, this exemption is available forany type of loan to any individual orentity if the loan meets the market rateand re-lending restrictions of the statute.

The agencies request comment on theapplication of this exemption toagreements that involve a commitmentto make one or more loans or extensionsof credit that meet the market rate andre-lending restrictions of the statute. Inparticular, comment is requested onwhether this exemption provides anexemption only for a specificcommitment to make a loan orextension or credit. Under thisinterpretation, the exemption would beavailable for a commitment by aninsured depository institution oraffiliate to provide a specific loan orextension of credit to one or moreindividuals or entities that is on marketterms and not for purposes of re-lending, such as a loan commitmenttypically made in the course ofproviding a line of credit to a smallbusiness. The agencies also requestcomment on whether this exemptionincludes an exemption for acommitment to make multiple loansthat meet the Act’s restrictions. Underthis interpretation, a commitment tomake any number or amount of loansthat meet the Act’s restrictions over aperiod of time would be exempt fromcoverage. The agencies request commenton which interpretation of theexemption is more consistent with thelanguage and purposes of the Act.

To be entirely exempt under theproposed rule, an agreement must beexclusively a loan, extension of credit orloan commitment that meets therequirements of the exemption.However, as discussed further below, ifan agreement includes a loan, extensionof credit or loan commitment that meetsthe rule’s requirements to be exemptand also provides for the insureddepository institution or affiliate toprovide other funds or resources, thevalue of the exempt loan, extension ofcredit or loan commitment may beexcluded in determining whether the



5 The agencies note, however, that if the otherconsideration is provided to reduce the effectiveinterest rate paid on the loan or extension of creditto a rate that is substantially below the market rate,the loan or extension of credit would not itself beexempt from coverage. 6 See H.R. Conf. Rep. No. 106–434 at 179 (1999).

7 As discussed further below, a contactconcerning the performance of a ‘‘CRA affiliate’’ ofan insured depository institution is considered tobe a contact concerning the CRA performance of theinsured depository institution.

agreement is in fulfillment of the CRAand meets the Act’s dollar thresholds.5

The following examples illustratethese provisions of the proposed rule:

Example 1: An insured depositoryinstitution provides a $1 million mortgageloan to an organization pursuant to a writtenagreement. The agreement is an individualmortgage loan and is exempt from coverageunder the rule, regardless of the interest rateon the loan or whether the purpose of theloan was for re-lending.

Example 2: An affiliate of an insureddepository institution provides a $500,000working capital loan to a small businesspursuant to a written agreement. The loan ismade on market terms and the purposes ofthe loan do not include re-lending. Theagreement is exempt from coverage under therule.

Example 3: An insured depositoryinstitution enters into a written agreementwith a community development organizationto make $250 million in small business loansin the community over the next five years.The loans would be made on market termsand not for purposes of re-lending. Eachsmall business loan made by the insureddepository institution pursuant to theagreement is exempt from coverage. Theagreement by the insured depositoryinstitution with the association, however, isnot a commitment to make a specific loan orextension of credit and would not be exemptunder one interpretation of the exemption.This commitment to make loans would beexempt under the other interpretation of theexemption.

Example 4: A business organizationreceives a mortgage loan from an affiliate ofan insured depository institution pursuant toa written agreement. The agreement alsoprovides that the affiliate will make a$12,000 investment in a local communitydevelopment corporation the followingmonth. The agreement is not an exemptagreement under the rule because it is notexclusively a mortgage loan. Although themortgage loan may be excluded whenconsidering if the agreement meets the Act’sdollar thresholds, the agreement would meetthese thresholds because it provides for theaffiliate to make other payments in excess of$10,000 in a calendar year.

The agencies request comment onthese exemptions. In particular,comment is invited on whether amortgage loan includes any loansecured by real estate, or only a loanthat is secured by real estate and madefor the purchase or improvement of thereal estate or for the refinancing of sucha loan. Comment also is invited onwhether the agencies should definewhen loans are made at ‘‘substantiallybelow market rates’’ and, if so, what thatdefinition should be. For example,

should the agencies provide that therelevant market rate for a loan is the ratethat would be charged on a comparabletransaction (e.g., a construction loan,permanent financing, a small businessloan, or an unsecured consumer loan)with a comparable person (e.g., a personwith similar financial resources andcredit history) that is not a party to theagreement? In addition, should theagencies provide a formula fordetermining whether a loan bears a ratethat is substantially below the marketrate? Such a formula could provide, forexample, that a rate is substantiallybelow the market rate if it is more thana specified percentage (e.g., 10 percent)or number of basis points (e.g., 200 basispoints) below the rate that would becharged in a comparable transaction.

The agencies also request comment onwhether the rule should provideguidance on when a loan is made ‘‘forpurposes of re-lending’’ and whatconstitutes ‘‘re-lending’’ under the rule.For example, should the rule providethat the purposes of a loan aredetermined by reference to theunderlying loan documents or by whomthe documents refer to as the lender?

b. Agreements With Persons Who HaveNot Made a CRA Contact

Section 711 also exempts fromcoverage any agreement entered into byan insured depository institution oraffiliate with a person who has notcommented on, testified about, ordiscussed with the institution, orotherwise contacted the institution,concerning the CRA. This provisionbroadly exempts from all of theprovisions of section 711 any agreementby an insured depository institution oraffiliate with a person that has not hada contact concerning the CRA (CRAcontact). The Conference Report for theAct indicates that a wide range oforganizations that solicit funds withoutregard to the CRA may benefit from thisexemption, including civil rightsgroups, community groups providinghousing or other services in low-incomeneighborhoods, the American Legion,and community theater groups.6

The proposed rule adopts theexemptive language contained insection 711. In addition, the proposedrule provides examples of actions by aperson that would constitute a CRAcontact under the rule and examples ofactions that would not constitute a CRAcontact under the rule. These examplesare intended to illustrate different typesof actions that are or are not CRAcontacts based on the wording andpurpose of the exemption and the scope

of the statutory exemption. Theseexamples are not exclusive. For ease ofreference, the proposed rule divides theexamples of actions that constitute aCRA contact into two categories:contacts with an agency and contactswith an insured depository institutionor affiliate.

As discussed below, the agenciesrequest comment on various aspects ofthis exemption. In particular, theagencies invite comment on whether therule should provide a more detaileddefinition of the exemption. Theagencies also request comment onwhether the examples provided areappropriate and useful and, if so,whether other examples should beincluded or areas addressed withexamples.

CRA Contact with an Agency. As ageneral matter, a person has made aCRA contact if the person submitswritten or oral comments or testimonyto an agency concerning the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or CRA affiliate.7 If a personhad this type of contact with an agencyand subsequently enters into anagreement with the insured depositoryinstitution or any affiliate of the insureddepository institution that meets therequirements of section 711, theagreement is not exempt.

‘‘Comments’’ and ‘‘testimony’’ refer toany type of written submission or oralstatement by a person to an agency. Theterms include the submission of writtenmaterials to an agency in connectionwith an application by an insureddepository institution or company for adeposit facility or an examination of aninsured depository institution under theCRA, and oral statements made by aperson to an agency during a public orprivate meeting held concerning atransaction or CRA examination.

The rule provides two examples ofcontacts with an agency that would notconstitute a CRA contact. The firstexample involves a person that provideswritten or oral comments or testimonyto an agency in response to a directrequest by the agency for comments ortestimony from that person. In suchcircumstances, the contact would resultdue to an action by the agency andimposing the rule’s requirements on theperson might impede the agency’sability to obtain necessary or usefulinformation. This example of a directrequest for comments or testimony doesnot apply, however, to comments or



8 See 12 CFR 25.43(a)(1) (OCC); 12 CFR228.43(a)(1) (Board); 12 CFR 345.43(a)(1) (FDIC); 12CFR 563e.43(a)(1) (OTS).

9 A CRA contact would occur under the proposedrule, however, if the offering materials indicatedthat the loans in the mortgage pool would receivefavorable consideration by the agencies under theCRA, or if the parties discussed how the transactionwould improve the institution’s CRA performance.

testimony that are provided in responseto a general invitation by an agency forpublic comments (e.g., a FederalRegister notification) in connection witha CRA performance evaluation or anapplication for a deposit facility.

The second example provides that aperson does not make a CRA contactwith an agency by making a statementconcerning an insured depositoryinstitution at a widely attendedconference or seminar on a generaltopic, even if representatives of anagency were in attendance at theconference or seminar when thestatement was made. A public or privatemeeting or hearing relating to one ormore insured depository institutions ora transaction to acquire a deposit facilityis not considered a widely attendedconference or seminar on a generaltopic.

CRA Contact with Insured DepositoryInstitution or Affiliate. Contacts by aperson with an insured depositoryinstitution or affiliate will not cause anagreement to become subject to therequirements of section 711 unless thecontact is a CRA contact. The ruleprovides several examples of the typesof contacts with an insured depositoryinstitution or affiliate that are CRAcontacts and that would make theexemption unavailable.

The first example involves a contactwith an insured depository institutionor affiliate about providing (or refrainingfrom providing) written or oralcomments or testimony to an agencyconcerning the record of performance orfuture performance under the CRA ofthe insured depository institution.

The second example involves acontact with an insured depositoryinstitution or affiliate about providing(or refraining from providing) writtencomments to the institution that wouldhave to be included in the institution’sCRA public file. Under the agencies’CRA Regulations, a written commentgenerally must be placed in aninstitution’s CRA public file if itspecifically relates to the institution’sperformance in helping to meetcommunity credit needs.8 Because thisinformation is intended forconsideration by the agencies in thecourse of a CRA examination orevaluation of an application for adeposit facility, the submission ofcomments for inclusion in aninstitution’s CRA public file isconsidered a CRA contact.

The third example involves a contactwith an insured depository institution

or affiliate concerning the CRA rating ofthe insured depository institution, orthe CRA record of performance of theinsured depository institution.

The fourth example involves a contactwith an insured depository institutionor affiliate concerning actions thatshould be taken to improve the CRAperformance of the insured depositoryinstitution.

The fifth example involves a contactwith an insured depository institutionor affiliate concerning any obligation orresponsibility that the insureddepository institution may have to meetthe banking needs of its community. Inthis example, the contact occurs whilethe insured depository institution or anaffiliate of the institution has anapplication for a deposit facilitypending before an agency or isundergoing a publicly announced CRAperformance examination.

If a person has one of the contactsdescribed above and subsequentlyenters into a covered agreement with theinsured depository institution or anyaffiliate of the insured depositoryinstitution, the agreement is not exemptunder the rule. The rule and theexamples do not contemplate that adiscussion or contact must include anyparticular words or phrases, such as‘‘Community Reinvestment Act,’’‘‘CRA’’ or ‘‘CRA rating’’ in order to bea CRA contact. Instead, the substanceand context of the discussion or contactare the controlling factors.

Under the examples included in therule, a person would not have a CRAcontact by sending a similar fundraisingletter to an insured depositoryinstitution or affiliate and otherbusinesses in the communityencouraging all businesses in thecommunity to meet their obligation toassist in making the local community abetter place to live and work. Inaddition, a person would not make aCRA contact by sending a generaloffering circular to financial institutionsoffering to sell a portfolio of loans andhaving discussions with a particularinsured depository institutionconcerning the loan portfolio if noreference to the CRA or the institution’sCRA performance is made in theoffering circular or in the parties’discussions.9 A person also would notmake a CRA contact with an insureddepository institution or affiliate bymaking a statement concerning theinstitution or affiliate before a widely

attended conference or seminar on ageneral topic, even if representatives ofthe institution or affiliate were inattendance at the conference or seminarwhen the statement was made.

The agencies request comment onwhether the rule should morespecifically define the terms of theexemption for persons that have notmade a CRA contact or more specificallydefine when a CRA contact has occurredand, if so, how a CRA contact should bedefined. The agencies also requestcomment on the examples of a CRAcontact included in the rule, includingwhether any of the examples should beamended or deleted or whetheradditional examples should beprovided. For example, the agenciesrequest comment on whether a CRAcontact under the Act includes a generaldiscussion about the CRA that does notinvolve any discussion of theperformance of an insured depositoryinstitution under the CRA or obligationof the institution to serve the bankingneeds of its community.

In addition, the agencies requestcomment on whether the rule can andshould be limited to exclude from thescope of CRA contacts discussions withan insured depository institution oraffiliate concerning whether particularloans, services, investments orcommunity development activities aregenerally eligible for consideration byan agency under the CRA Regulations.The marketing of products and servicesto insured depository institutionsfrequently may include a generalstatement of whether the product orservice is eligible for credit under theCRA. If the rule were limited in thismanner, then the situation described insection ll.2(b)(2)(iii)(D) of the rulewould not be a CRA contact even if theoffering circular included a statementthat the loans included in the loan poolwere of the type that could beconsidered by an agency under the CRARegulations. A discussion of whether orhow loans, services, investments oractivities would impact a particularinstitution’s CRA rating or performancewould, however, continue to beconsidered a CRA contact.

The agencies also request comment onwhether the rule can and should belimited to cover only contacts thatinvolve providing CRA-relatedcomments or testimony to an agency ordiscussions with an insured depositoryinstitution or affiliate about providing(or refraining from providing) suchcomments or testimony to an agency. Ifthe rule was limited in this fashion, theactions described in sectionll.2(b)(2)(ii)(B)(3), (4) and (5) wouldnot constitute a CRA contact because



10 12 U.S.C. 1831y(e)(1)(A).11 Id. at 1831y(e)(2).12 H.R. Conf. Rep. No. 106–434 at 179 (1999).13 See 12 CFR 25.21–25.29 (OCC); 12 CFR 228.21–

228.29 (Board); 12 CFR 345.21–345.29 (FDIC); 12CFR 563e.21–563e.29 (OTS).

the person did not submit CRA-relatedcomments or testimony to an agency ordiscuss with or contact the insureddepository institution or any affiliateabout providing (or refraining fromproviding) CRA-related comments ortestimony to an agency.

Additionally, the agencies requestcomment on whether there should be atemporal relationship between a CRAcontact and when an agreement is made.In this regard, under the proposed rule,a covered agreement entered into in2001 between an insured depositoryinstitution and a person would not beexempt if the person had submitted acomment to an agency concerning theCRA performance of the institutionseveral years earlier. Section 711,however, appears to have been intendedto apply to agreements that result from,or were influenced by, a CRA contact.Where a CRA contact occurs asignificant period of time before thenegotiation of an agreement, however,there may be no link or influencebetween the CRA contact and theagreement. Furthermore, the passage oftime may make it difficult for the partiesto a covered agreement to determine oreffectively track whether a CRA contactoccurred at all.

For these reasons, the agenciesspecifically request comment onwhether the rule should require that aCRA contact occur within a specifiedperiod, such as two years (or a shorteror longer period), before the partiesentered into the agreement. Similarly,the agencies request comment onwhether a CRA contact should includea contact that occurs after the partiesenter into an agreement, such as within90 days after the beginning of the termof the agreement, at any time during theterm of the agreement, or some otherperiod of time. For example, if a personprovides comments or testimony to anagency concerning the CRAperformance of an insured depositoryinstitution after entering into anagreement with the institution, wouldthe person’s actions suggest that theagreement and the comments ortestimony were linked?

The agencies also request comment onhow the rule and the exemptiondiscussed above should apply incircumstances where a coveredagreement involves several parties and aCRA contact has been made by orconcerning only one of the parties. Forexample, how should the rule applywhere several nongovernmental entitiesor persons enter into a coveredagreement with an insured depositoryinstitution and only one of the entitiesor persons has made a CRA contact?Similarly, how should the rule apply

where a nongovernmental entity orperson has a CRA contact concerningone insured depository institution andsubsequently enters into a coveredagreement jointly with the institutionand several other unaffiliated insureddepository institutions? In addition,how should the rule and exemptionapply where a person has a CRA contactwith an agency but the relevant insureddepository institution or affiliate doesnot know the contact occurred?

c. Request for Comment on AdditionalExemptions

The agencies recognize that thelanguage of section 711 and,accordingly, the types of agreementscaptured under the proposed rule arebroad. The agencies are concerned that,in light of this breadth, certainagreements that were not intended to becovered by the Act may be consideredcovered agreements under the proposedrule. For example, supervisoryexperience suggests that insureddepository institutions enter into a widevariety of contracts in their normal day-to-day operations that, directly orindirectly, relate to activities consideredby the agencies in connection with aCRA evaluation. During the negotiationof these contracts and as an incident tothe underlying business transaction, theparties may discuss whether theactivities contemplated by the contractare viewed favorably under theagencies’ CRA Regulations, involveloans within the institution’s CRAassessment area, or would otherwiseimprove the institution’s CRAperformance. These types of contactswould be CRA contacts under theproposed rule and a related businessagreement would be covered if theagreement was in fulfillment of the CRAand met the other criteria to be acovered agreement.

The Act grants the Board the abilityto determine, by regulation, that specifictypes of contacts are exempt and,consequently, that a related agreementis not covered by section 711. Theagencies specifically invite comment onwhether and how the Board shouldexercise its exemptive authority in thisarea, including whether there areparticular types of CRA contacts thatoccur and that, given their context andpurpose, do not implicate the concernsof the Act. For example, if the proposeddefinition of CRA contact is retained inthe final rule, should the Board exerciseits discretion in this area to provide anexemption for CRA contacts that occurin connection with the purchase ofloans by an insured depositoryinstitution or affiliate on an arm’s lengthbasis in the secondary market even

where the negotiation of the agreementincluded a general discussion of theeffect of the transaction on the CRAperformance of the insured depositoryinstitution? Are there other types ofcontacts that occur in connection withthe ordinary day-to-day business of aninsured depository institution oraffiliate that should be exempted fromcoverage because, for example, the CRAcontact does not involve any coerciveaspect or was initiated by the insureddepository institution? If so, how couldsuch an exemption or exemptions beframed narrowly to exclude only thosetypes of contacts (and relatedagreements) that are not within theintended scope of the Act?

3. Fulfillment of the CRAUnder the GLB Act, a written

agreement is a covered agreement onlyif it is ‘‘made pursuant to, or inconnection with the fulfillment of theCommunity Reinvestment Act of1977.’’ 10 The Act defines ‘‘fulfillment’’of the CRA to mean ‘‘a list of factors thatthe appropriate Federal banking agencydetermines have a material impact onthe agency’s decision to (A) approve ordisapprove an application for a depositfacility [under the CRA]; or (B) to assigna rating to an insured depositoryinstitution [under the CRA].’’ 11

The Conference Report for the GLBAct indicates that the list of factorsshould include ‘‘a full enumeration ofthe relevant factors that [an] agencyreviews and considers in examining theperformance of an insured financialinstitution in connection with the CRA,including any and all items a regulatorwould attach importance to indetermining the evaluation under the[CRA] of the performance of a financialinstitution.’’ 12 The agencies’ CRARegulations set forth the criteria that theagencies consider in evaluating the CRAperformance of an insured depositoryinstitution for purposes of assigning aCRA rating to an institution andevaluating an application by aninstitution or company for a depositfacility under the CRA.13 Theseregulations permit the agencies toconsider broadly the lending,investment and service activities of aninsured depository institution inevaluating the institution’s performanceunder the CRA.

For these reasons, the proposed rulewould define the list of factors forpurposes of section 711 generally by



14 The terms wholesale insured depositoryinstitution, limited-purpose insured depositoryinstitution, and small insured depository institutionrefer to a wholesale, limited-purpose or small bankor savings association as defined in Subpart A ofthe relevant agency’s CRA Regulations. See 12 CFR25.12(o), (t) and (w) (OCC); 12 CFR 228.12(o), (t),and (w) (Board); 12 CFR 345.12(o), (t), and (w)(FDIC); and 12 CFR 563e.12(n), (s), and (v) (OTS).An agreement that involves the performance ofactivities by a wholesale, limited-purpose or smallinsured depository institution is in fulfillment ofthe CRA only if the agreement involves theperformance of one of the activities within thescope of the relevant performance test or standardfor the particular type of institution.

15 Thus, for example, an agreement that relates tothe consumer lending activities of an insureddepository institution would be considered to be infulfillment of the CRA if the institution’s consumerlending activities were considered by theappropriate agency at the institution’s most recentCRA examination. Under the CRA Regulations, aninstitution’s consumer lending activities areconsidered in certain circumstances by an agencyif such lending constitutes a substantial majority ofthe institution’s business or the institution haselected to have its consumer lending activitiesconsidered by the appropriate agency. See 12 CFR25.22(a) (OCC); 12 CFR 228.22(d) (Board); 12 CFR345.22(a) (FDIC); 12 CFR 563.22(a) (OTS).

16 As discussed further below, a ‘‘CRA affiliate’’of an insured depository institution is viewed aspart of the insured depository institution.Accordingly, activities performed by a CRA affiliateof an insured depository institution are consideredto be performed by the insured depositoryinstitution.

17 See 12 CFR 25.21(b)(6) and 25.43(a)(1) (OCC);12 CFR 228.21(b)(6) and 228.43(a)(1) (Board); 12CFR 345.21(b)(6) and 345.43(a)(1) (FDIC); 12 CFR563e.21(b)(6) and 563e.43(a)(1) (OTS).

18 See 12 CFR 25.29(c) (OCC); 12 CFR 228.29(b)(Board); 12 CFR 345.29(c) (FDIC); 12 CFR 563e.29(c)(OTS).

reference to the criteria enumerated inSubpart B of the CRA Regulationsjointly issued by the agencies. Thesecriteria reflect the factors that theagencies previously have determinedhave a material impact on an agency’sassignment of a CRA rating andassessment of the CRA factor indecisions to approve or disapprove anapplication for a deposit facility. Thesefactors are summarized in the proposedrule as follows:

(1) Home purchase, homeimprovement, small business, smallfarm, community development, andconsumer lending as described in thelending test portion of the CRARegulations, including loan purchases,loan commitments, and letters of credit;

(2) Making investments, deposits, orgrants, or acquiring membership sharesthat have as their primary purposecommunity development, as describedin the investment test portion of theCRA Regulations;

(3) Delivering retail banking services,as described in the service test portionof the CRA Regulations;

(4) Providing communitydevelopment services, as described inthe service test portion of the CRARegulations;

(5) For a wholesale or limited-purposeinsured depository institution,community development lending,qualified investments, and communitydevelopment services, as described inthe community development testportion of the CRA Regulations forwholesale or limited-purpose insureddepository institutions;

(6) For small insured depositoryinstitutions, the lending and otheractivities described in the small insureddepository institution performancestandard of the CRA Regulations; 14

(7) For an insured depositoryinstitution whose CRA performance isevaluated on the basis of a strategicplan, any element of that plan asdescribed in the strategic plan portion ofthe CRA Regulations;

(8) Providing or refraining fromproviding written or oral comments ortestimony to any agency concerning the

record of performance or futureperformance under the CRA of aninsured depository institution that is aparty to the agreement or an affiliate ofa party to the agreement; and

(9) Providing or refraining fromproviding written comments to aninsured depository institution that is aparty to the agreement or an affiliate ofa party to the agreement that wouldhave to be included in the institution’sCRA public file.

An activity is within the factorsenumerated in paragraphs (1) through(7) if it would be considered by theagencies under the relevant performancetest or standard in the CRARegulations.15 These activities may beconducted by an insured depositoryinstitution that is a party to theagreement or an affiliate of a party to theagreement.16 In addition, an agreementwould be considered in fulfillment ofthe CRA if any of these activities isperformed by a nongovernmental entityor person that is a party to theagreement and an insured depositoryinstitution receives favorableconsideration for the activities underthe CRA.

The proposed rule’s list of factors alsoincludes providing (or refraining fromproviding) CRA-related comments ortestimony to an agency or writtencomments to an insured depositoryinstitution that must be included in theinstitution’s CRA public file. Theagencies’ CRA Regulations generallyrequire the agencies to considercomments received from the public orincluded in an insured depositoryinstitution’s CRA public file whenevaluating the CRA performance of theinstitution.17 The CRA Regulations alsorequire an agency to consider written ororal comments submitted to the agencywhen acting on applications for a

deposit facility.18 Accordingly, suchcomments and testimony are among thefactors that may have a material impacton an agency’s decision to assign a CRArating or evaluation under the CRA of anapplication for a deposit facility.

While the level of activity that willhave a material effect on a CRA ratingor an application decision varies withthe circumstances involving theparticular insured depositoryinstitution, the GLB Act by its termsrequires that the agencies identify thelist of factors that have a materialimpact on an agency’s decision to assigna CRA rating or to approve anapplication for a deposit facility underthe CRA. The Act does not appear toincorporate a quantitative threshold forthe agencies to use in defining the listof factors that are material to such adecision. Instead, the GLB Act explicitlysets a threshold dollar level for theminimum amount of activities that mustbe performed in order for an agreementto be covered by section 711. Asdiscussed below, these value thresholdsare $10,000 in cash payments, grants orother consideration and $50,000 inloans. For these reasons, the proposedrule provides that an agreement is infulfillment of the CRA if it pertains toa ‘‘factor’’ that the agencies determine is‘‘material’’ to an institution’s rating orapplication—such as the institution’slending—rather than to a level ofperformance that the agencies determineis material to the CRA evaluation of thatinsured depository institution.

The agencies request comment on thisreading of section 711 and on whetherthe list of factors properly identifies the‘‘factors’’ that are material to a CRAevaluation. The agencies also requestcomment on whether the agencies haveinterpreted the statutory mandate toidentify the ‘‘list of factors that * * *have a material impact’’ on an agency’sdecision to assign a CRA rating and toapprove or disapprove an applicationunder the CRA in a manner consistentwith the language and purposes ofsection 711. In particular, comment isinvited on whether the proposed list offactors that are considered to be infulfillment of the CRA can and shouldbe expanded, restricted, or alteredconsistent with the language andpurpose of the Act. For example,although the agencies consider aninsured depository institution’s lendingin all geographic areas and to borrowersof all income ranges for certain purposesin evaluating the institution’s CRAperformance, can and should the rule’s



19 For example, a requirement that an insureddepository institution publicly disclose anagreement to use ‘‘mystery shoppers’’ to test theinstitution’s compliance with the fair lending lawsor to settle a fair lending complaint could deter theinstitution from entering into such agreements.

20 See 12 U.S.C. 1831y(e)(1)(A)(i).

list of factors focus on those types oflending (and other activities) that arereasonably likely to receive favorableconsideration under the CRARegulations, such as certain types oflending in LMI areas or to LMIborrowers?

The terms of a written agreementgenerally determine whether thecontract, arrangement or understandingis in fulfillment of the CRA. However,the parties to a written agreement maynot evade coverage under the Act byreaching an oral understanding that aparty will submit (or refrain fromsubmitting) oral or written CRA-relatedcomments or testimony to an agency orwritten comments to an insureddepository institution that would haveto be included in the institution’s CRApublic file and excluding thisunderstanding from the terms of thewritten agreement. In addition, if anagreement includes a loan, extension ofcredit or loan commitment that, if doneseparately, would be exempt fromcoverage and also provides for theinsured depository institution oraffiliate to provide other funds orresources, the parties may exclude theexempt loan, extension of credit or loancommitment when determining if theagreement is in fulfillment of the CRA.

The following are examples ofagreements that would be in fulfillmentof the CRA under the proposed rule.Unlike the examples of CRA contacts,these examples are not included in theproposed rule. Each example illustratesonly the fulfillment criteria of the ruleand assumes that the agreement meetsthe other requirements necessary to beconsidered a covered agreement. In thisregard, even if an agreement is infulfillment of the CRA, it may still beexempt from coverage under the rule ifit is an exempt loan or loancommitment, or if the person that is aparty to the agreement has not had aCRA contact.

Example 1: An insured depositoryinstitution enters into an agreement with alocal business organization that provides forthe institution to make $500,000 in smallbusiness loans to third parties in theinstitution’s assessment area in the next twoyears. The agreement is in fulfillment of theCRA because an institution’s small businesslending activity is considered as part of thelending test under the CRA Regulations. Theagreement might still be exempt fromcoverage depending on the scope of theexemption for loan commitments.

Example 2: An insured depositoryinstitution enters into an agreement with adevelopment corporation to invest $1 millionin a project the purpose of which is therevitalization of an LMI neighborhood withinthe institution’s assessment area. Theagreement is in fulfillment of the CRA

because the investment is a qualifiedinvestment under the CRA Regulations andwould be considered as part of theinvestment test under the CRA Regulations.

Example 3: An insured depositoryinstitution enters into an agreement with asupermarket chain that provides for theinstitution to open a branch in certain of thechain’s stores. The agreement is infulfillment of the CRA because aninstitution’s record of opening and closingbranches is evaluated in the context of thedistribution of its branches as part of theservice test under the CRA Regulations.

Example 4: An insured depositoryinstitution enters into a written agreementwith an organization to provide theorganization with a $25,000 donation toassist in covering the organization’s generaloperating expenses. A representative of theorganization orally agrees that, in return forthe contribution, the organization will submita comment to or testify before the appropriateagency in support of the institution’s recentlyannounced proposal to merge with anotherinsured depository institution. The writtenagreement is in fulfillment of the CRAbecause the organization orally agreed inconnection with the agreement to providecomments or testimony to an agencyconcerning the CRA record of performance ofthe institution.

The following are examples ofagreements that would not be infulfillment of the CRA under theproposed rule:

Example 5: An insured depositoryinstitution enters into an agreement with alocal theater company for the institution tomake a $20,000 charitable donation to thecompany for each of the next five years. Theagreement is not in fulfillment of the CRAbecause the donation does not havecommunity development as its primarypurpose and, thus, would not be considereda qualified investment under the CRARegulations.

Example 6: An insured depositoryinstitution enters into an agreement with aneighborhood association to donate 100hours of employee time to the organization’sannual effort to clean up the neighborhood.The agreement is not in fulfillment of theCRA because the services are not consideredcommunity development services or otherqualifying services under the CRARegulations.

The agencies note that the proposedrule’s list of factors does not includeperformance of activities designed toensure compliance with Federal lawsthat prohibit discriminatory or otherillegal credit practices, such as theEqual Credit Opportunity Act (15 U.S.C.1691 et seq.) and the Fair Housing Act(42 U.S.C. 3601 et seq.). Although theagencies consider evidence of thesepractices in evaluating an insureddepository institution’s performanceunder the CRA, the agencies areconcerned that including such activitiesin the list of factors could have anunintended and detrimental impact on

compliance and enforcement of the fairlending laws.19 The agenciesspecifically request comment onwhether this view is correct, or whetherthe list of factors should be expanded toinclude activities designed to ensurecompliance with the fair lending laws.

Comment also is solicited on whetherthe list of factors should be expanded toinclude other activities. For example,the proposed rule’s list of factors doesnot specifically include the provision ofadvisory or consulting servicesconcerning CRA-related activities.Should the rule include a reference tothese or other activities?

4. ValueA written agreement is a covered

agreement only if it calls for an insureddepository institution or affiliate toprovide to one or more persons cashpayments, grants, or other considerationof more than $10,000 in any calendaryear, or to make loans that have anaggregate principal amount of more than$50,000 in any calendar year. Thestatutory threshold is based on the totalvalue of payments and loans providedunder the agreement and does notrequire that these payments or loans bemade to a party to the agreement.20

Accordingly, under the proposed rule,all cash payments, grants, considerationor loans provided by an insureddepository institution or affiliate underthe agreement, including amountsprovided to individuals or entities thatare not parties to the agreement, wouldbe considered in determining whetheran agreement meets the rule’s dollarthresholds. However, if an agreementincludes a loan, extension of credit orloan commitment that, if doneseparately, would be exempt fromcoverage and also provides for theinstitution or affiliate to provide otherfunds or resources, the parties mayexclude the exempt loan, extension ofcredit or loan commitment whendetermining if the agreement meets thedollar thresholds of the rule. Seediscussion under II.A.2.a. aboveconcerning qualifying loans.

Under the proposal, an agreement thatprovides for payments to be made inany calendar year in excess of the dollarthresholds established by the statute isa covered agreement for its entire term.The agencies believe that using acalendar year period for thesecalculations should facilitate



21 See 12 U.S.C.1831y(e)(1) and (2). 22 See 12 U.S.C. 1831y(e)(1)(A)(ii).

compliance with the rule by providingall parties to a covered agreement auniform basis for determining whetherthe agreement is covered by the rule andbecause the terms of an agreement maynot coincide with the parties’ fiscalyears. The agencies invite comment onwhether another 12-month periodwould provide a more appropriate basisfor these calculations.

The following are examples of thevalue provisions of the proposed rule.These examples illustrate only theapplication of the dollar thresholds ofthe proposed rule.

Example 1: An insured depositoryinstitution enters into an agreement with asmall business investment company pursuantto which the institution will invest $25,000in the company. The agreement meets thedollar threshold criterion to be a coveredagreement because the institution willprovide more than $10,000 in funds (otherthan loans) under the agreement.

Example 2: An insured depositoryinstitution and a community organizationenter into a written agreement pursuant towhich the institution will invest $1 millionin a state-sponsored investment fund thatsupports affordable housing initiatives forLMI individuals. The communityorganization will not receive any funds orother resources from the insured depositoryinstitution or its affiliates under theagreement. The agreement meets the dollarthreshold criterion for a covered agreementunder the proposed rule.

Example 3: An affiliate of an insureddepository institution provides a $100,000loan to an association of small businessespursuant to a written agreement. The loan ison market terms and not for purposes of re-lending. The agreement also provides for theaffiliate to make a $5,000 grant to the localchamber of commerce’s small businessincubator. Because the loan is made onmarket terms and not for purposes of re-lending, the loan would be an exemptagreement under the proposed rule if it werea separate agreement. Accordingly, the valueof the loan may be excluded in determiningthe value of the agreement. After excludingthe loan, the agreement would not meet thedollar criterion of the rule.

Example 4: An insured depositoryinstitution and a community developmentcorporation enter into a written agreementthat requires an affiliate of the insureddepository institution to provide theorganization with a grant of $5,000 in 2000,$8,000 in 2001, and $11,000 in 2002. Theagreement exceeds the dollar thresholdcriterion of the rule because the agreementprovides for payments in excess of $10,000during 2002. Assuming the agreement meetsthe other requirements of the rule and is nototherwise exempt, the agreement is a coveredagreement for its entire term.

The agencies request comment onhow the dollar thresholds in the statuteshould be applied in situations wherean agreement does not have a specificterm or does not specify a timetable for

the disbursement of funds or resourcesunder the agreement. For example, if anagreement provides that an insureddepository institution will make$40,000 in grants over a 5-year period,but does not specify the years in whichthe grants will be made, should the rulecreate a presumption that the entire sum($40,000) is provided in the first year ofthe agreement or assume that the valueis paid in equal yearly installments of$8,000? An alternative approach wouldrely on how the payments are actuallymade under the agreement. Under thisalternative approach, if the paymentsunder the agreement actually exceeded$10,000 in a calendar year, theagreement would then become acovered agreement.

The agencies also invite comment onwhether the rule should provideguidance on how to determine the valueof an agreement that does not specifythe amount of payments, grants, loans orother consideration to be providedunder the agreement, such as anagreement for an insured depositoryinstitution to open a branch or to beginoffering a new loan product.

5. Related Agreements Considered aSingle Agreement

In two circumstances, section 711 ofthe GLB Act requires that separateagreements or contracts be aggregatedfor purposes of determining whether theagreements—taken as a whole—meetthe definition of a covered agreement.21

Section ll.3 of the rule implementsthese requirements. If separateagreements are considered a singleagreement under section ll.3, thecombined agreement must still meet thecriteria to be a covered agreement to becovered by the rule. Loans, extensionsof credit and loan commitments that arespecifically excluded from thedefinition of covered agreement underll.2(b) of the rule are not required tobe aggregated with other agreements.

a. Agreements Entered Into by the SameParties

Section ll.3(a) provides that allwritten contracts, arrangements, orunderstandings that are entered into byan insured depository institution oraffiliate of an insured depositoryinstitution will be considered to be partof a single agreement if the contracts,arrangements, or understandings areentered into with the same personwithin a 12-month period and eachagreement is in fulfillment of the CRA.This aggregation rule applies to allwritten agreements entered into duringthe 12-month period by the same person

on the one hand, and any part of thesame organization, including an insureddepository institution and any of itsaffiliates, on the other hand.

Example 1: In April, an insured depositoryinstitution enters into a written agreementwith Community Development Organization,Inc. pursuant to which the institution makesan $8,000 investment in the organization. InNovember of the same year, an affiliate of theinsured depository institution andCommunity Development Organization, Inc.enter into a written agreement under whichthe affiliate makes an additional $8,000investment in the organization. For purposesof this example, both investments areassumed to be qualified investments underthe CRA Regulations and considered in theevaluation of the institution’s CRAperformance. The separate agreements mustbe aggregated under the rule and thecombined agreement meets the $10,000dollar threshold of the rule. Accordingly, theagreements are jointly considered a coveredagreement.

Example 2: In September, an insureddepository institution orally agrees to donate$15,000 of computer equipment to a localhousing organization. In December, theinstitution and organization enter into awritten agreement for the institution to makea $5,000 CRA qualified investment in localhousing project that is eligible for low-income housing tax credits. The agreementsdo not need to be aggregated under the rulebecause the September agreement was not inwriting.

Example 3: In February, an insureddepository institution enters into a writtenagreement with Partnership A for theinstitution to make a $9,000 grant toPartnership A for the purpose ofrehabilitating affordable-housing units. InAugust of the same year, an affiliate of theinsured depository institution enters into awritten agreement with Partnership A underwhich the affiliate makes a payment of$9,000 so that its employees may have accessto the child care center operated byPartnership A. The August agreement is notin fulfillment of the CRA. Accordingly, thetwo agreements would not be aggregatedunder the rule.

b. Substantively Related ContractsSection 711 requires the aggregation

of separate but ‘‘substantively relatedcontracts’’ even where the contracts areentered into with different persons. 22

Unlike the aggregation rule discussedabove, the rule aggregating‘‘substantively related contracts’’applies only to separate, writtencontracts and does not apply to othertypes of written arrangements orunderstandings.

The rule defines written contractsentered into by an insured depositoryinstitution or any of its affiliates as‘‘substantively related’’ if the contractswere negotiated in a coordinated



23 See CRA lending test (12 CFR 25.22(c),228.22(c), 345.22(c) and 563e.22(c)); CRAinvestment test (12 CFR 25.23(c), 228.23(c),345.23(c) and 563e.23(c)); CRA service test (12 CFR25.24(c), 228.24(c), 345.24(c) and 563e.24(c)); CRAcommunity development test for wholesale andlimited-purpose institutions (12 CFR 25.25(d),228.25(d), 345.25(d) and 5632.25(d)); and CRAstrategic plans (12 CFR 25.27(c), 228.27(c),245.27(c) and 563e.27(c)).

24 See Proposed Rule, section ll.8(c).

fashion. The rule does not require thatthe separate contracts each be infulfillment of the CRA or that the partiesto the contracts (other than the bankingorganization) be the same. Thus, therule prevents parties from evading thedisclosure and reporting obligations ofthe statute by separating out from anagreement payments or grants that maynot themselves be in fulfillment of theCRA.

Example 1: Two housing organizationsjointly approach an insured depositoryinstitution to obtain funding. Arepresentative of the insured depositoryinstitution meets with both organizations atthe same time to discuss their funding needs.The institution enters into a written contractwith one organization to provide it with$9,000 for the purpose of rehabilitatingaffordable housing units. The institutionenters into a separate written contract withthe other organization to provide theorganization with an unrestricted grant of$9,000. Because the contracts werenegotiated in a coordinated fashion, thecontracts must be aggregated under the rule.When aggregated, the contracts would meetthe statute’s $10,000 dollar threshold andeach contract would be a covered agreement.

Example 2: A bank holding companyannounces its intention to acquire an insureddepository institution. A Florida-based groupand a California-based group independentlyapproach the bank holding company to seekfunding for specific projects and separatelynegotiate written contracts with the bankholding company. The contracts would notbe aggregated under the rule, and eachcontract would be a covered agreement onlyif that contract on its own met therequirements of the rule.

The agencies request comment on theaggregation rules included in sectionll.3, including the proposeddefinition of ‘‘substantively relatedcontracts’’ and whether there arealternative definitions that wouldachieve the purposes of the statute. Theagencies also request comment on howthese aggregation rules should applywhen a CRA contact has not occurredprior to one of the agreements or wasmade by only one of the persons that isa party to the agreements. For example,when a single person enters into twoagreements with an insured depositoryinstitution during a 12-month period,but engages in a CRA contact betweenthe first and second agreement, shouldthe first agreement be excluded fromaggregation because a CRA contact hadnot occurred at the time it was enteredinto? Alternatively, should theagreements be aggregated because a CRAcontact occurred prior to the secondagreement and the agreements otherwisemeet the requirements for aggregationunder the rule? Similarly, shouldsubstantively related contracts enteredinto by separate persons be aggregated

under the rule only if each person hadengaged in a CRA contact?

6. CRA Affiliate Treated as InsuredDepository Institution

The CRA Regulations provide that aninsured depository institution, at itselection, may request that an agencyconsider certain activities conducted byan affiliate in evaluating the CRAperformance of the insured depositoryinstitution.23 In these circumstances, theselected activities of the affiliate areviewed as activities of the insureddepository institution.

The proposed rule generally considersa contact concerning this type ofaffiliate, referred to as a ‘‘CRA affiliate,’’of an insured depository institution tobe the equivalent of a contactconcerning an insured depositoryinstitution (see section ll.2(b)(2)).Similarly, an agreement is considered tobe in fulfillment of the CRA if itconcerns the performance of any of theactivities listed in section ll.2(c) by a‘‘CRA affiliate’’ of an insured depositoryinstitution (see section ll.2(c)).

The proposed rule defines a ‘‘CRAaffiliate’’ as any company that is anaffiliate of an insured depositoryinstitution and whose activities wereconsidered by an agency in assessingthe CRA performance of the institutionat the institution’s most recent CRAexamination.24 Under the rule, acompany is considered a CRA affiliateonly to the extent its activities weretaken into account in the CRAevaluation of an affiliated insureddepository institution.

Example 1: A person submits a writtencomment to an agency concerning thelending performance under the CRA of amortgage company that is affiliated with aninsured depository institution. The insureddepository institution elected, in accordancewith the agencies’ CRA Regulations, to havethe lending activities of the mortgagecompany considered in the institution’s mostrecent CRA performance evaluation. Themortgage affiliate, therefore, is considered aCRA affiliate with respect to its lendingactivities. Accordingly, the agreement is infulfillment of the CRA for purposes of section711 and the person has engaged in a CRAcontact under section ll.2(b)(2) becausethe selected activities of a CRA affiliate andcontacts with an agency regarding a CRAaffiliate are considered activities of and

contacts concerning an insured depositoryinstitution.

Example 2: An affiliate of an insureddepository institution engages in mortgagelending and provides credit counselingservices. The insured depository institutionelected to have only the mortgage lendingactivities of the affiliate considered in itsmost recent CRA performance evaluation.The affiliate and a community group enterinto an agreement that provides for theaffiliate to provide credit counseling servicesin the local community. The agreement is notin fulfillment of the CRA because the affiliateis not considered a CRA affiliate with respectto its credit counseling activities.

To assist persons in complying withthe rule, section ll.2(e) of theproposed rule requires that an insureddepository institution or affiliate informthe other parties to a covered agreementif the agreement concerns the activitiesof a CRA affiliate. The institution oraffiliate must provide this notificationnot later than the time the agreement isentered into if the affiliate is a CRAaffiliate at that time.

Because the status of an affiliate of aninsured depository institution maychange, an agreement that concerns theactivities of an affiliate may become acovered agreement after the date theparties enter into the agreement. Forexample, a person may enter into anagreement that concerns the lendingactivities of a newly formed affiliate. Ifan insured depository institutionsubsequently elects to have the lendingactivities of the new affiliate consideredduring its next CRA performanceexamination, the affiliate would becomea CRA affiliate. In such circumstances,the proposed rule requires the insureddepository institution or affiliate toinform the other parties to theagreement that the affiliate has becomea CRA affiliate within a reasonableperiod of time after the change of statusoccurs.

Where an agreement concerns theactivities of an affiliate that becomes aCRA affiliate, the agreement would be infulfillment of the CRA only once theaffiliate becomes a CRA affiliate. If theagreement met the other requirements ofthe rule, the agreement would become acovered agreement at that time. Sectionll.2(e) clarifies that in thesecircumstances the parties to theagreement have no disclosure orreporting obligations under the ruleuntil the agreement becomes a coveredagreement. In applying the disclosureand reporting requirements of the rule,the agreement would be considered tohave been entered into on the date itbecame a covered agreement.

The agencies request comment on theproposed rule’s treatment of CRAaffiliates, including whether the



25 See footnote 15 above.26 See 12 CFR 25.43 (OCC); 12 CFR 228.43

(Board); 12 CFR 345.43 (FDIC); 12 CFR 563e.43(OTS).

requirement that an insured depositoryinstitution or affiliate inform the otherparties when an agreement concerns aCRA affiliate is useful and practicable.The agencies also request comment onwhether the rule should provide asimilar notice procedure for agreementsthat involve an activity of an insureddepository institution, such asconsumer lending, that the institutionelects for the first time to be consideredunder the CRA during the term of theagreement. 25 In addition, the agenciesrequest comment on whether there is anappropriate and less burdensome wayfor the rule to determine whether anaffiliate is a CRA affiliate at the time theparties enter into an agreement.

B. Disclosure of Covered Agreements

Section 711 requires that each party toa covered agreement fully disclose theagreement in its entirety and make thefull text of the agreement available tothe public and the appropriate agencywith supervisory responsibility over therelevant insured depository institution.

1. Disclosure to the Public

The proposed rule requires that eachparty to a covered agreement make acomplete copy of the agreementavailable to any member of the publicupon request. The rule would permit aninsured depository institution to fulfillits public disclosure obligation byplacing a copy of a covered agreementin the institution’s CRA public file andmaking it available in accordance withthe procedures set forth in the CRARegulations relating to public files. 26

A party may make a coveredagreement available to any individual orentity that requests the agreement bymailing it to the requestor, and theproposal would specifically permit theparty to charge the requestor for thecosts of copying and mailing theagreement, so long as the fees arereasonable. The proposal does nototherwise specify or require a party toemploy any particular method inresponding to requests from the publicfor a covered agreement. For example, aparty also could make an agreementavailable to an individual or entity withaccess to the Internet by posting theagreement on a publicly accessiblewebsite or to members of the publicwithin a local geographic area bymaking the agreement available forinspection at an office within that area.

The proposed rule provides that aparty’s obligation to make a covered

agreement available to the publicterminates 12 months after the end ofthe term of the covered agreement. Theagencies believe that this time periodwould permit interested members of thepublic adequate time to obtain a coveredagreement from the parties, while notplacing an undue recordkeeping burdenon the parties to covered agreements.Members of the public would continueto be able to obtain copies of a coveredagreement from the relevant supervisoryagency under the Freedom ofInformation Act (5 U.S.C. 552 et seq.)after this 12-month period.

The agencies request comment on allaspects of the proposed rule’s publicdisclosure requirements. Comment issought on whether the rule shouldinclude illustrative examples of how aparty may make an agreement availableto a member of the public and, if so,whether there are additional methods(other than those discussed above) thatshould be allowed for making anagreement available to the public. Forexample, should the rule explicitlyallow a person to arrange for anotherentity or individual to make theperson’s covered agreements availableto the public, or allow a party to recoverreasonable fees for searching its recordsfor a covered agreement? Comment alsois requested on whether affiliates ofinsured depository institutions shouldbe permitted to disclose an agreement tothe public by placing the agreement inthe CRA public file of an affiliatedinsured depository institution. Inaddition, comment is invited onwhether it is reasonable, appropriateand consistent with the statute to relyon access to covered agreementsthrough the agencies for publicdisclosure requests made more than 12months after the term of the agreementand whether this period should belonger or shorter.

2. Filing of Covered Agreement byInsured Depository Institutions WithAgencies

The rule requires each insureddepository institution and affiliate thatis a party to a covered agreement toprovide a complete copy of theagreement to each relevant supervisoryagency (as defined below) within 30days after the parties enter into theagreement. If two or more insureddepository institutions or affiliates areparties to the same agreement, theinstitutions and affiliates may jointlyfile a copy of the agreement with therelevant supervisory agencies.

3. Persons Must Make CoveredAgreements Available to Agency

Section 711 requires each party to acovered agreement to make theagreement available to the appropriateagency. Because the relevantsupervisory agencies would receive acopy of any covered agreement from theinsured depository institution oraffiliate that is a party to the agreement,the rule provides that anongovernmental entity or person mayfulfill its statutory obligation in this areaby providing, upon request from therelevant supervisory agency, a completecopy of the agreement to the agency.The copy must be provided to theagency within 30 days of the agency’srequest. As with disclosure to thepublic, the rule provides that a person’sobligation to make an agreementavailable to an agency terminates 12months after the end of the term of theagreement.

The agencies believe this procedurewill reduce regulatory burden and avoidduplicative filings. At the same time,this procedure requires persons to makecopies of covered agreements availableto the agencies consistent with thestatute.

4. Relevant Supervisory Agency

The Act requires that parties to acovered agreement make the agreementavailable to, and file annual reportswith, the appropriate Federal bankingagency with supervisory responsibilityover the relevant insured depositoryinstitution. The proposed rule uses theterm ‘‘relevant supervisory agency’’ toidentify the appropriate agency for aparticular covered agreement. Under therule, the ‘‘relevant supervisory agency’’is—

• The OCC in the case where—* The parties to the agreement

include a national bank orsubsidiary of a national bank; or

* A national bank or subsidiary orCRA affiliate of a national bankprovides funds or resources underthe agreement;

• The Board in the case where—* The parties to the agreement

include a state member bank,subsidiary of a state member bank,bank holding company, orsubsidiary of a bank holdingcompany (other than an insureddepository institution or subsidiarythereof); or

* A state member bank or subsidiaryor CRA affiliate of a state memberbank provides funds or resourcesunder the agreement;

• The FDIC in the case where—* The parties to the agreement



27 12 U.S.C. 1831y(h)(2)(A).

include a state nonmember bank orsubsidiary of a state nonmemberbank; or

* A state nonmember bank orsubsidiary or CRA affiliate of a statenonmember bank provides funds orresources under the agreement; or

• The OTS in the case where—* The parties to the agreement

include a savings association,subsidiary of a savings association,savings and loan holding companyor subsidiary of a savings and loanholding company; or

* A savings association or subsidiaryor CRA affiliate of a savingsassociation provides funds orresources under the agreement.

The agencies believe this definition willensure that a covered agreement and itsrelated annual reports are filed with theagency or agencies that havesupervisory authority over the insureddepository institution or affiliate that isinvolved with the agreement, either asa party or as a source of funds orresources paid under the agreement.

More than one agency may be therelevant supervisory agency withrespect to a single covered agreement.For example, if a national bank, statenonmember bank, and a savingsassociation provide funds pursuant to acovered agreement entered into by theirparent bank holding company, the OCC,FDIC, OTS, and Board would each be arelevant supervisory agency for theagreement. The agencies solicitcomment on the proposed rule’sdefinition of ‘‘relevant supervisoryagency,’’ including whether there arealternative definitions that might reducethe filing burdens of parties whileensuring the appropriate agenciesreceive the filings contemplated by theAct.

5. Treatment of Confidential orProprietary Information

Covered agreements may containconfidential or proprietary informationthe disclosure of which may causecompetitive or other harm to one ormore of the parties to the agreement.Section 711 of the Act directs theagencies to ensure that theimplementing regulations ‘‘do notimpose an undue burden on the parties[to a covered agreement] and thatproprietary and confidentialinformation is protected.’’ 27 Thisprovision must be read in harmony withother provisions of section 711 thatrequire that a covered agreement ‘‘shallbe in its entirety fully disclosed, and thefull text thereof made available * * * tothe public.’’ Other provisions of section

711 require the reporting of the termsand value of covered agreements, theidentity of the parties to the agreement,and the uses of funds and resourcesprovided under covered agreements.

In light of these provisions, and inorder to ensure the uniform disclosureof covered agreements under the Act bythe parties and the agencies, theproposed rule would allow a party to acovered agreement to request adetermination from the relevantsupervisory agency whether the agencycould withhold specific portions of theagreement from public disclosure. Inconsidering these requests, the agencieswill apply the procedures and standardsof the Freedom of Information Act (5U.S.C. 552 et seq.) (FOIA), whichgoverns public access to all records ofan agency, including documents filedwith the agency by third parties. If therelevant supervisory agency determinesthat it could withhold specific portionsof the covered agreement from publicdisclosure under FOIA, the proposedrule would permit the parties to theagreement to also withhold thosespecific portions of the agreement fromany copies of the agreement directlymade available to the public. A partycould withhold from public disclosureonly those limited portions of a coveredagreement determined to be exemptfrom public disclosure under FOIA bythe relevant supervisory agency.

In applying the standards underFOIA, the agencies note that section 711may require disclosure of some types ofinformation that an agency mightnormally be able to withhold fromdisclosure under FOIA. In light of thedirective of section 711, the agenciesmay not be able to withhold underFOIA—or permit a party to withholdfrom public disclosure—many of theprovisions contained in a coveredagreement. For example, the agenciesmight not be able to permit a party towithhold the amount of payments orloans to be made under the agreement,the persons receiving such payments orloans, and the terms of any suchpayments or loans. It may be possiblethat only limited types of informationcould be withheld from publicdisclosure under the proposed rule.Such information might include, forexample, individual account numbers orinformation detailing a particularinstitution’s proprietary underwritingcriteria.

The agencies welcome comment onwhether covered agreements are likelyto contain confidential or proprietaryinformation the disclosure of whichwould harm the parties to the agreementgiven the definition of coveredagreements. The agencies also request

comment on whether, and if so to whatdegree, such information may bewithheld from public disclosure undersection 711. If covered agreementstypically contain particular types ofinformation that may properly bewithheld from public disclosure undersection 711, should the rule specifythese types of information and allow theparties to withhold this informationwithout seeking prior agency review orin lieu of the agency review process?The agencies also invite comment onwhether the proposed agency reviewprocess is useful and practicable andwhether there are alternative oradditional procedures that the agenciescan and should implement undersection 711 to protect confidential andproprietary information. The agenciesalso invite comment on whether the ruleshould specifically permit a party thathas requested agency review of acovered agreement to delay disclosingthe agreement to the public until theagency rules on the request.

6. Disclosure Limited to CoveredAgreements Entered Into AfterNovember 12, 1999

The proposed rule’s disclosureobligations apply only to coveredagreements entered into after November12, 1999, the effective date of section711 of the GLB Act. Under the rule, awritten modification, amendment,renewal, or extension of an agreementcreates a new agreement. Thus, if anagreement entered into before November12, 1999, is modified, amended,renewed or extended after that date, theparties must disclose the entire newagreement if it otherwise meets thecriteria to be a covered agreement.Disclosure is not required if the pre-November 12, 1999, agreementexpressly provided for the renewal orextension and established the terms ofthe agreement during the renewal orextension period.

Example: An insured depositoryinstitution and a community organizationenter into a written agreement in January1999 that calls for the institution to place anATM in the local community by December2000. In September 2000, the parties enterinto a written modification of the agreementthat calls for the institution to establish afull-service branch rather than an ATM. If themodified agreement meets the criteria to bea covered agreement, the modified agreementmust be disclosed in accordance with therule.

C. Annual ReportsThe Act requires each person, insured

depository institution, or affiliate of aninsured depository institution that is aparty to a covered agreement to file areport relating to the covered agreement.



28 See the discussion above concerning thetreatment of agreements entered into prior to May12, 2000, that are modified, amended, renewed, orextended after that date.

These annual reporting obligationsapply only to covered agreementsentered into on or after May 12, 2000.28

1. No Report Required by Person ThatDoes Not Receive Funds or Resources

The proposed rule requires that eachparty to a covered agreement file anannual report for the fiscal years duringthe term of the agreement. The rule doesnot, however, require anongovernmental entity or person to filean annual report with respect to aparticular covered agreement for anyfiscal year during which the person didnot receive any funds under the coveredagreement. The agencies believe thatrequiring an annual report in suchcircumstances would not further thepurpose of the statute because theperson would not have received anyfunds or resources under the agreementduring the fiscal year. Under theproposed rule, however, each insureddepository institution and affiliate thatis a party to a covered agreement mustfile an annual report each year duringthe term of the agreement. The agenciesrequest comment on whether thisreporting exemption for persons isappropriate.

Example 1: A savings association and acommunity development organization thatrehabilitates affordable housing in theassociation’s assessment area enter into acovered agreement pursuant to which theassociation will invest $100,000 in theorganization over three years. The investmentwill be used to support a rehabilitationproject that is expected to take three years tocomplete. If the savings association providesthe full $100,000 in the first year of theagreement, the organization must file anannual report with the OTS for the fiscal yearin which it received the $100,000. Theorganization is not required to file an annualreport with the OTS for its subsequent fiscalyears during the term of the agreement.

Example 2: A state non-member bankenters into a covered agreement with acommunity organization to make $1 millionin community development grants in thecommunity over the next two years. Thecommunity organization will not receive anyfunds or other resources under the agreement(including under the grants as they aremade). The agreement is a covered agreementand must be made available to the public andthe FDIC. In addition, the state non-memberbank must file annual reports concerninggrants made and actions taken under theagreement. The community organization isnot required, however, to file any annualreports concerning the agreement because theorganization receives no funds or resourcesunder the agreement.

Example 3: An insured depositoryinstitution and an organization enter into a

written agreement pursuant to which theinstitution commits to make $10 million insmall business loans in the local communityover the next three years. The loans wouldbe made at market rates and would not be forpurposes of re-lending. The organizationwould not receive any funds or resourcesunder the agreement, including under theloans as they are made. Even if acommitment by an insured depositoryinstitution to make multiple loans on marketterms and not for purposes of re-lending isa covered agreement (see Part I.A.2 above),the organization would not have to file anyannual report concerning the agreementbecause it would receive no funds orresources under the agreement. Under theproposed rule, the institution would have tofile an annual report during the term of theagreement indicating the aggregate amountand number of loans made during the yearunder the agreement. Each individual loanmade pursuant to the commitment would beexempt from coverage and, accordingly, eachborrower would have no reporting obligationunder the rule.

2. Contents of Annual Report Filed byPersons

Section 711 requires that the annualreport filed by a nongovernmental entityor person provide a detailed, itemizedaccounting of how the person used anyfunds or resources received under thecovered agreement during the previousyear. The proposed rule would allowthis detailed accounting to be providedin two ways: a description of thespecific purpose or purposes for whichthe funds were used, or a segmentationof funds used for general purposes in apre-defined list of expense categories.

a. Specific Purpose Funds andResources

The first reporting method applies tofunds or other resources that a personreceives under a covered agreement andallocates and uses for a specificpurpose. Specific purpose funds orresources are those that a person targetsand uses for a distinct program, thepurchase of a distinct asset, or thepayment of a distinct expense. Forexample, a person would use thisreporting method if, pursuant to theterms of the covered agreement orotherwise, the person specificallyallocated and used the funds receivedunder a covered agreement for aparticular loan program, to purchasecomputers, to sponsor a particularseminar, or to pay the salary of aparticular person. A specific purposemust be a purpose that is more limitedthan the categories of expensesenumerated below for the reporting ofgeneral purpose funds. In other words,funds or resources are not allocated orused for a specific purpose if they areallocated or used for general operational

expenses, to support the organization’sgeneral activities in the community, orto cover general compensation,administrative, travel, entertainment,consulting or professional expenses.

Under the proposed rule, funds orresources allocated and used for aspecific purpose must be segregated inthe annual report from funds used forgeneral purposes. For funds receivedunder a covered agreement andallocated and used for a specificpurpose, a person’s annual report mustprovide the following information: (1) Adescription of each specific purpose forwhich the funds or resources were usedduring the fiscal year; and (2) theamount of funds or resources used foreach specific purpose during the fiscalyear.

Example 1: An organization receives$15,000 from an insured depositoryinstitution under a covered agreement. Theorganization allocates and uses the $15,000to sponsor a seminar on affordable housinginitiatives. The organization’s annual reportfor the fiscal year would report that itreceived $15,000, that it used the $15,000 tosponsor the seminar, and provide a briefdescription of the seminar.

Example 2: A community group receives$50,000 from an insured depositoryinstitution under a covered agreement.During its fiscal year, the community groupspecifically allocates and uses $45,000 of thefunds to purchase computer equipment andthe remaining $5,000 is used for generaloperating expenses. The group’s annualreport for the fiscal year must state that thegroup received $50,000 under the agreementduring the fiscal year and that $45,000 wasused to purchase computer equipment. Inaddition, the annual report must provide thedetailed, itemized list of expenses describedbelow because some funds were used forgeneral purposes.

b. All Other Funds and ResourcesFunds or other resources received

under a covered agreement may be usedfor general purposes or unspecifiedpurposes. The second reporting methodaddresses funds or resources that arereceived under a covered agreement andthat are not allocated and used for aspecific purpose. Under this method,the reporting person must provide adetailed, itemized list of how thereporting person has used its fundsduring the fiscal year. This list mustinclude, at a minimum, the amount offunds used during the fiscal year for—

• Compensation of officers, directors,and employees;

• Administrative expenses;• Travel expenses;• Entertainment expenses;• Payment of consulting and

professional fees; and• Other expenses and uses.

The annual report may reflect the totalamount of funds from all sources that



29 See H.R. Conf. Rep. No. 106–434 at 179 (1999). 30 See 12 U.S.C. 1831y(h)(2)(B).

the person used during the fiscal yearfor the types of expenses listed above.The annual report must, however,specify the total amount of funds thatthe person received under the coveredagreement and that were used forgeneral or unspecified purposes. Theagencies may determine from thisinformation the proportion of generalpurpose funds received under thecovered agreement that were used foreach category of expenses listed above.

Example: In March, a person receives anunrestricted grant of $15,000 under a coveredagreement. The person includes the funds inits general operating budget and does notallocate and use the funds for a specificpurpose. The person’s annual report for thefiscal year must state that the person received$15,000 of general purpose funds. Theannual report also must indicate the totalamount of funds and resources that theperson used during the fiscal year forcompensation, administrative expenses,travel expenses, entertainment expenses,consulting and professional fees, and otherexpenses and uses.

c. Use of Other ReportsAs noted above, section 711 directs

the agencies to ensure that regulationsimplementing that section ‘‘do notimpose an undue burden on theparties.’’ The legislative history alsoindicates that the agencies should allowreporting parties to use reports preparedfor other purposes to fulfill the annualreporting requirements.29 Accordingly,the proposed rule does not require thata person’s annual report be prepared ona special form or in a particular format.Instead, the rule provides that a person’sannual report may consist of orincorporate reports or documents thatthe person has prepared for public,internal or other purposes so long as thedocuments filed with the relevantsupervisory agency contain all of theinformation required by the rule. Forexample, a person’s annual report mayconsist of a Federal or state tax return,a report prepared for the person’smembers or shareholders, or theperson’s financial statements if suchdocuments provide the informationrequired by the rule.

In this regard, the agencies havereviewed several tax forms commonlyfiled by tax-exempt nonprofitorganizations. Internal Revenue Form990, which is the Federal tax returnform for certain tax-exempt nonprofitorganizations, requires the filingorganization to provide information thatis at least as detailed, and in some casesmore detailed, than the list of expensescontained in section 711. In particular,Form 990 requires a tax-exempt

organization to separately state theamount that the organization spentduring the tax year on compensation ofofficers, directors, trustees and keyemployees; salaries and wages of otheremployees; professional fundraisingfees; accounting fees; legal fees;supplies; telephone; postage andshipping; occupancy; printing andpublications; travel; conferences,conventions and meetings; and anitemized list of other uses. Since thesecategories of expenses include and aremore specific than the list of expensesrequired to be provided for generalpurpose funds, a person may use aproperly completed Form 990 to fulfillthe rule’s reporting requirements forgeneral purpose funds. Other forms orreports also may be used, separately orin combination, to fulfill the rule’sreporting requirements so long as theycontain, in total, the informationrequired by the rule.

d. Consolidated Annual ReportsPermitted

The GLB Act requires the agencies topermit persons that are parties to a largenumber of covered agreements to file aconsolidated annual report relating toall of the covered agreements.30

Accordingly, section ll.5 of theproposed rule permits a person that isa party to 5 or more covered agreementsto file a single consolidated reportcovering all of the person’s coveredagreements. A person’s consolidatedreport must identify the person filingthe report and each agreement coveredby the report. All other informationrequired by the rule may be provided onan aggregate basis for all agreementscovered by the annual report. Anyconsolidated report must be filed withall of the relevant supervisory agenciesfor the covered agreements included inthe report.

Example: A community developmentorganization is a party to six separate coveredagreements with six unaffiliated insureddepository institutions. Under eachagreement, the organization receives $15,000to fund the rehabilitation of a specific low-income housing project identified in theagreement. The organization allocates anduses all of the funds for the specifiedpurpose. If the organization elects to file aconsolidated annual report, the consolidatedreport must (1) identify the organization andthe six covered agreements, (2) state that theorganization received $90,000 under theagreements, and (3) state that the personallocated and used the $90,000 to fund therehabilitation project and provide adescription of the project.

e. Specific Request for CommentsThe agencies invite comment on all

aspects of the proposed rule’s annualreporting requirements fornongovernmental entities and persons.The agencies also specifically requestcomment on the following:

• Are the rule’s reportingrequirements for specific purpose fundsand resources reasonable andappropriate? Would the proposed rulelimit the burden associated withreporting funds or resources received fora specific purpose? Should theregulation provide additional guidanceas to when a person has allocated andused funds or resources for a specificpurpose or allow, rather than require, aperson to use this reporting methodwhen it allocates and uses funds for aspecific purpose?

• Should the detailed, itemized list ofuses contained in the proposed rule beexpanded to include other categories ofuses or expenses, such as grants or loansmade, or services provided, to others?

• Are there additional informationitems that should be included in annualreports? For example, should a personbe required to state in each annualreport the aggregate amount of funds orresources that the person has received todate under the covered agreement?

• Should the agencies permit aperson to file a consolidated annualreport if the person is a party to 2 ormore covered agreements?

• Where a covered agreementprovides for an institution or affiliate totake several actions including making aspecific loan that, if agreed toseparately, would be exempt fromcoverage under the rule, can and shouldthe agencies allow the person’s annualreport to exclude informationconcerning the loan that wouldotherwise be exempt under the rule?

• Are there additional ways that theagencies could reduce the reportingburden on persons consistent with thelanguage and purposes of the Act? Forexample, should the agencies issueoptional sample reporting forms thatmight be used by a person, insureddepository institution or affiliate?

3. Contents of Annual Report of InsuredDepository Institutions and Affiliates

The annual reporting requirements forinsured depository institutions andaffiliates are largely specified in section711. The annual report for an insureddepository institution or affiliate mustidentify the entity filing the report andidentify the covered agreement to whichthe annual report relates. In addition,the annual report must provide—

• The aggregate amount of payments,fees and loans (listed separately)



31 As discussed in II.C.1. above, the proposed rulewould not require a nongovernmental entity orperson to file an annual report during the term ofa covered agreement if the entity or person did notreceive any funds or resources under the agreementin that fiscal year.

32 See Proposed Rule section l.8(f). The rule alsoprovides that the ‘‘fiscal year’’ for an individual orentity that does not have a fiscal year is thecalendar year.

33 See 12 U.S.C. 1818.34 Other Federal statutes outside the banking laws

also may provide for penalties if an insureddepository institution, affiliate, or person fails tocomply with the disclosure and reportingrequirements of the Act. See 18 U.S.C. 1001.

provided by the insured depositoryinstitution or affiliate under theagreement to any other party during thefiscal year;

• The aggregate amount of payments,fees and loans (listed separately)received by the insured depositoryinstitution or affiliate under theagreement from any other party duringthe fiscal year;

• A description of the terms andconditions of any payments, fees, orloans provided to, or received from,another party under the agreement; and

• The aggregate amount and numberof loans, amount and number ofinvestments, and amount of servicesprovided under the covered agreementto any person that is not a party to theagreement—

* By the insured depositoryinstitution or affiliate; and

* By any other party to theagreement, unless such information isnot known to the insured depositoryinstitution or affiliate or will becontained in an annual report filed bya person.These informational requirements trackthose established by the statute.

The rule would allow an insureddepository institution and an affiliatethat are parties to the same coveredagreement to file a single, consolidatedreport for the agreement. In addition, toreduce burden, the proposed rule wouldallow an insured depository institutionor affiliate that is a party to 5 or morecovered agreements to file a singleconsolidated report relating to all of theagreements.

The agencies request comment onwhether an insured depositoryinstitution or affiliate should bepermitted to file a consolidated report ifit is a party to 2 or more coveredagreements, and whether the rule canand should allow an insured depositoryinstitution or affiliate to not file anannual report for any fiscal year inwhich the institution or affiliate did notprovide or receive any payments, fees orloans under the agreement. The agenciesinvite comment on whether the ruleshould provide additional guidanceconcerning the level of detail requiredto be provided in the annual report ofan insured depository institution oraffiliate, and whether there areadditional ways the agencies couldreduce the reporting burden of insureddepository institutions and affiliatesconsistent with the Act. For example,are there ways the agencies couldreduce the reporting burden foragreements that involve loans that arethemselves exempt from coverage?

4. When and Where Must AnnualReports Be Filed

The proposed rule provides that eachparty to a covered agreement mustprepare and file an annual report withthe relevant supervisory agency for thefiscal year in which the party enters intothe agreement and each subsequentfiscal year during the term of thecovered agreement. 31 The agencies haveadopted a fiscal year reporting period toallow the parties to coordinatepreparation of their annual reports withother documents or reports thattypically are prepared on a fiscal yearbasis, such as income tax returns andfinancial statements. However, toprovide parties with maximumflexibility, the rule also permits a partyto elect to use the calendar year as theirfiscal year for purposes of the rule. 32

The agencies request comment onwhether providing the option of fiscalyear or calendar year reporting wouldreduce regulatory burden or whether therule should require reporting on acalendar year basis. In addition, theagencies request comment on whether aperson should be required to file anannual report after the end of a coveredagreement’s term if, by that time, theperson has not completely used all thefunds or resources received under theagreement.

Each party to a covered agreementmust file its annual report for a fiscalyear with each relevant supervisoryagency within 6 months of the end ofthe party’s fiscal year. Under section711 and the rule, a person may fulfillthis filing requirement by providing itsannual report to the insured depositoryinstitution or affiliate that is a party tothe agreement within 5 months of theend of the person’s fiscal year withinstructions for the institution oraffiliate to file the report with all of therelevant supervisory agencies on behalfof the person. An insured depositoryinstitution or affiliate that receives anannual report from a person in thismanner must forward it to the relevantsupervisory agencies within 30 days.

This method of filing allows theannual reports of a person and aninsured depository institution oraffiliate that relate to the same coveredagreement to be filed together. It alsoreduces the likelihood that annual

reports will be filed with the wrongagency because the insured depositoryinstitution or affiliate will know itsrelevant supervisory agency while thenongovernmental entity or person maynot.

The agencies invite comment on thefiling requirements of the rule. Inparticular, the agencies requestcomment on whether the 5- and 6-month filing windows will provide theparties sufficient time to prepare theirannual reports and whether there areadditional ways that the agencies mightreduce the filing burdens of partiesconsistent with the Act.

D. Compliance ProvisionsSection 711 specifically provides that

nothing in that section authorizes theagencies to enforce the provisions of anycovered agreement. The proposed ruleincorporates this provision. (See sectionll.7(e)) This is consistent with thelong-standing policy of the agencies thatCRA-related agreements entered intobetween insured depository institutions(or their affiliates) and persons areprivate matters between the parties andare not enforced by the agencies.

The agencies may enforce complianceby insured depository institutions andaffiliates with the disclosure andreporting requirements of section 711using the cease and desist and otherenforcement powers granted in section8 of the FDI Act. 33 Section 8 of the FDIAct, however, applies only to insureddepository institutions, affiliates andinstitution-affiliated parties, as definedin the FDI Act. The provisions of section8 of the FDI Act, therefore, generally donot apply to nongovernmental entitiesor persons that are parties to a coveredagreement. Section 711 instead includesspecial compliance provisionsapplicable to nongovernmental entitiesor persons that are party to a coveredagreement. 34

Under these provisions, the materialand willful failure of a person to complywith section 711 may cause the relatedcovered agreement to be unenforceable.In particular, under the Act, if theappropriate agency determines that aperson has willfully failed to complywith section 711 in a material way, andthe person does not comply with thelaw after receiving notice and areasonable period of time, the agreementthereafter is unenforceable by operationof section 711. The Act specificallyprovides that inadvertent or de minimis



35 The agencies note that the definition of‘‘insured depository institution’’ in the FDI Actincludes special-purpose insured depositoryinstitutions that are not subject to the CRA. See,e.g., 12 CFR 228.11(c)(3). An agreement that relatesto the activities of a special-purpose insureddepository institution, however, would not be infulfillment of the CRA and, thus, would not be acovered agreement under the rule.

reporting errors will not subject thefiling party to any penalty. The rulerequires the agencies to provide aperson written notice and anopportunity to respond beforedetermining the person has notcomplied with the rule, and allows theperson at least 90 days to correct awillful and material violation. Theagencies request comment on whetherthis written notice should be sent to allthe parties to the agreement.

The rule also clarifies that, in thesecircumstances, the agreement becomesunenforceable only by the party that haswillfully and materially failed tocomply with the rule. Any other partyto the agreement may continue toenforce the agreement against thenoncomplying party. The agenciesbelieve this construction is the mostconsistent reading of the language andpurpose of the Act. The agencies notethat an alternative construction couldencourage persons to violate the statutein an attempt to avoid performanceunder a legally binding contract, therebyfrustrating the purpose of the statute. Ifthe insured depository institution oraffiliate elects not to enforce the coveredagreement against the noncomplyingperson, the appropriate agency mayassist the institution or affiliate inidentifying a successor person toassume the responsibilities of theperson under a covered agreement thathas become unenforceable.

Section 711 also provides that, if anindividual diverts funds or resourcesreceived under a covered agreement forhis or her personal financial gain andcontrary to the purposes of theagreement, the appropriate agency mayorder the individual to disgorge thefunds and/or prohibit the individualfrom being a party to any coveredagreement for up to 10 years. As notedabove, the Act specifically provides thatit does not authorize the agencies toenforce any provision of a coveredagreement. If, however, a court or otherbody of competent jurisdictiondetermines that an individual hasdiverted funds or resources for personalfinancial gain and contrary to thepurposes of the agreement, the agenciesmay take one of the actions specified inthe statute.

E. Other Definitions and Rule ofConstruction

Section ll.8 of the proposed ruledefines other terms used in the rule.Because section 711 amended the FDIAct, the rule provides that the terms‘‘insured depository institution,’’‘‘control,’’ ‘‘Federal banking agency’’and ‘‘appropriate Federal banking

agency’’ have the same meaning as inthe FDI Act.35

1. ‘‘Person’’ and ‘‘NongovernmentalEntity or Person’’

Section 711 of the GLB Act appliesonly to agreements entered into by a‘‘nongovernmental entity or person’’with an insured depository institutionor affiliate. For ease of reference, therule uses the term ‘‘person’’ instead ofthe phrase ‘‘nongovernmental entity orperson.’’ (The OTS rule, however, refersto a ‘‘nongovernmental entity or person’’as a ‘‘NGEP.’’) As a general matter, therule defines a ‘‘person’’ to mean anyindividual or entity other than the U.S.government, a state government, a unitof local government, an Indian tribe, orany department, agency, orinstrumentality of such a governmentalentity. A ‘‘person’’ does not include afederally chartered public corporationthat receives federal funds appropriatedspecifically for that corporation. Anongovernmental entity that is affiliatedwith, or receives funding from, such afederally chartered public corporation,however, would be considered a‘‘person’’ under the rule, unless theentity independently qualified for anexclusion.

The proposal also would not treatinsured depository institutions and theiraffiliates as persons. Section 711appears to draw a distinction betweeninsured depository institutions (andtheir affiliates) and nongovernmentalentities and persons and imposesseparate obligations on insureddepository institutions (and theiraffiliates) and nongovernmental entitiesor persons.

The agencies request comment on theproposed definition of‘‘nongovernmental entity or person,’’including whether specific types ofentities should be added or removedfrom the list of entities and individualsexcluded from the definition of theterm.

2. Affiliate and ControlThe term ‘‘affiliate’’ is defined in the

FDI Act by reference to the BankHolding Company Act. Under the BankHolding Company Act, an affiliate isany company that controls, is controlledby, or is under common control withanother company. A company generallyis considered to control another entity if

it owns or controls 25 percent or moreof any class of the other entity’s votingsecurities.

The proposed rule creates a specialrule of construction that would apply insituations where an insured depositoryinstitution has filed an application withan agency to become affiliated or mergewith another entity. In suchcircumstances, a person may have aCRA contact and enter into anagreement with the acquiring insureddepository institution (or holdingcompany thereof) concerning the CRAperformance of the target institution.The agencies believe these types ofcontacts constitute a CRA contact undersection 711 and that any agreementresulting from such contact is a coveredagreement if it otherwise meets therequirements of section 711.Accordingly, the rule provides that aninsured depository institution isdeemed to be an affiliate of anycompany that would be under commoncontrol or merged with the institutionpursuant to a transaction that is pendingbefore an agency. This rule ofconstruction applies only where theagency application is pending at boththe time an agreement is entered intoand the time when a triggering CRAcontact occurs.

Example: A bank holding company files anapplication with the Board to acquire controlof an additional insured depositoryinstitution. While the application is pending,an organization contacts the bank holdingcompany to discuss perceived deficiencies inthe CRA performance record of the insureddepository institution to be acquired. Thebank holding company and the organizationenter into a written agreement that providesfor the target institution to increase its levelof community development grants by $1million per year for the next three years. Thetarget institution would be considered an‘‘affiliate’’ of the bank holding companyunder the proposed rule. Accordingly, theagreement would be a covered agreementbecause the organization had a CRA contactwith the holding company concerning theCRA record of performance of an affiliatedinsured depository institution.

3. Term of agreement

Under the rule, the duration of aparty’s obligation to make a coveredagreement publicly available and to fileannual reports concerning theagreement is based on the term of thecovered agreement. As a general matter,the term of an agreement ends on theagreement’s termination dateestablished by the parties. Agreementsthat do not establish a termination dateare deemed for purposes of theproposed rule to terminate on the lastdate on which any party makes anypayments or provides any loan or other



36 See 12 CFR Part 35 (OCC); 12 CFR Part 207(Board); 12 CFR Part 346 (FDIC); and 12 CFR Part533 (OTS).

resources under the agreement. The rulegives the agencies discretion, inappropriate circumstances, to determinethat the term of such an agreement is ashorter or longer period. Theappropriate agency could exercise thisdiscretion, for example, where a one-time grant is made to a person late ina year with the clear expectation thatthe funds would be used in the nextyear. In such circumstances, the agencycould require the person to file anannual report for the next year.

III. Placement of Proposed Rule

The agencies propose to implementsection 711 by adding a new part totheir regulations.36 These new partswould be separate from the agencies’CRA Regulations. The agencies believethis placement is appropriate becausesection 711 of the GLB Act amended theFDI Act, and not the CRA, and isindependent of the CRA and the CRARegulations. The agencies note,however, that because section 711concerns CRA-related agreements, theproposed rule includes several cross-references to the CRA Regulations. Theagencies request comment on whetherusers would find it more convenient ifthe proposed rule was incorporated intothe agencies’ existing CRA Regulationsand, if so, how the agencies could makeclear that the rule does not in any wayaffect the CRA.

IV. Regulatory Flexibility Act Analysis

OCC: In accordance with section 3(a)of the Regulatory Flexibility Act (5U.S.C. 603(a)), the OCC is publishingthe following initial regulatoryflexibility analysis with this proposedrulemaking.

The proposed rule would implementprovisions of section 711 of the GLBAct. A description of the reasons whyaction by the OCC is being consideredand a statement of the objectives of, andlegal basis for, the proposed rule arecontained in the SUPPLEMENTARYINFORMATION.

The proposed rule includes reportingrequirements that would apply to allinsured depository institutions,including national banks, affiliates ofinsured depository institutions,including national bank subsidiaries,and persons that enter into coveredagreements (as defined by the proposedrule). The proposed rule requiresinsured depository institutions,affiliates, and persons that enter into acovered agreement to make theagreement available to members of the

public and to the appropriate agency,and to file an annual report with theappropriate agency concerning thedisbursement and use of funds underthe agreement.

These reporting provisions arerequired by section 711 of the GLB Actand apply regardless of the size of theinsured depository institution, affiliate,or person. Section 711 does notauthorize the OCC to provide anexemption for covered agreements basedon the size of any entity within thescope of its provisions. The Act,however, directs the OCC and the otheragencies to ensure that the proposedrule does not impose an undue burdenon the parties to covered agreements.The proposed rule includes severalprovisions, described in detail in theSUPPLEMENTARY INFORMATION that aredesigned to limit the potential impact ofthe proposed rule on insured depositoryinstitutions, affiliates and persons orentities of any size. For example, therule gives entities and personsflexibility in determining how to makea covered agreement available to thepublic. In addition, the proposed rulewould allow persons to use reports thathave been prepared for other purposes,such as tax returns and financialstatements, to fulfill the annualreporting requirement. The rule alsoallows an insured depositoryinstitution, affiliate, or person that is aparty to 5 or more covered agreementsto prepare a single, consolidated annualreport relating to all of the agreements.

As noted above, the proposed ruleapplies to insured depositoryinstitutions, affiliates, and persons thatenter into covered agreements. Theseagreements are entered into by privateparties, are not enforced by the OCCand, to date, have not been required tobe disclosed to the OCC. In addition, theOCC and the other agencies havespecifically requested comment on thescope of the proposed rule and willissue a final rule after review of publiccomments. Accordingly, the OCCcannot estimate at this time the totalnumber of national banks or theirsubsidiaries that would be subject to therequirements of the rule and the numberof such entities that would beconsidered small entities. Similarly, theOCC cannot estimate at this time thetotal number of persons that may enterinto a covered agreement with theseentities, and therefore be subject to therequirements of the rule.

The OCC specifically seeks commenton the likely burden that the proposedrule would impose on national banksand other entities within the OCC’ssupervisory jurisdiction that are subject

to it and on persons who enter intocovered agreements with those entities.

Board: In accordance with section 3(a)of the Regulatory Flexibility Act (5U.S.C. 603(a)), the Board must publishan initial regulatory flexibility analysiswith this proposed rulemaking. Theproposed rule would implementprovisions of section 711 of the GLBAct. A description of the reasons whyaction by the Board is being consideredand a statement of the objectives of, andlegal basis for, the proposed rule arecontained in the supplementarymaterial provided above.

The proposed rule includes reportingrequirements that would apply to allinsured depository institutions,affiliates of insured depositoryinstitutions, and persons that enter intocovered agreements (as defined by theproposed rule). The proposed rulerequires insured depository institutions,affiliates, and persons that enter into acovered agreement to make theagreement available to members of thepublic and to the appropriate agency,and to file an annual report with theappropriate agency concerning thedisbursement and use of funds underthe agreement.

These reporting provisions arerequired by section 711 of the GLB Actand would apply regardless of the sizeof the insured depository institution,affiliate, or person. The Act does notauthorize the Board to provide anexemption for covered agreements basedon the size of the insured depositoryinstitution, affiliate or person that entersinto the agreement.

The Act, however, directs the Boardand the other agencies to ensure that theproposed rule does not impose anundue burden on the parties to coveredagreements and the proposed ruleincludes several provisions that aredesigned to limit the potential impact ofthe proposed rule on insured depositoryinstitutions, affiliates and persons,including small institutions, affiliatesand persons. For example, the rule givesentities and persons flexibility indetermining how to make a coveredagreement available to the public. Inaddition, the proposed rule would allowpersons to use reports that have beenprepared for other purposes, such as taxreturns and financial statements, tofulfill the annual reporting requirement.The rule also allows insured depositoryinstitutions, affiliates, and persons thatare a party to 5 or more coveredagreements to prepare a single,consolidated annual report relating toall of the agreements.

As noted above, the proposed ruleapplies only to insured depositoryinstitutions, affiliates, and persons that



37 OTS’s rule applies to the following affiliates:savings and loan holding companies and companiesthat are controlled by savings associations orsavings and loan holding companies.

enter into covered agreements. Theseagreements are entered into by privateparties, are not enforced by the Boardand, to date, have not been required tobe disclosed to the Board. In addition,the Board and the other agencies havespecifically requested comment on thescope of the proposed rule and willissue a final rule after review of publiccomments. Accordingly, the Boardcannot estimate at this time the totalnumber of state member banks, bankholding companies, and nonbanksubsidiaries of a bank holding companythat would be subject to therequirements of the rule and the numberof such entities that would beconsidered small entities. Similarly, theBoard cannot estimate at this time thetotal number of persons that may enterinto a covered agreement with the typesof entities listed above and, thereby, besubject to the requirements of the ruleor the number of such persons thatwould be considered small entities.

The Board specifically seeks commenton the likely burden that the proposedrule would impose on insureddepository institutions and affiliateswithin the Board’s supervisoryjurisdiction and on persons who enterinto covered agreements with suchentities.

FDIC: Consistent with the RegulatoryFlexibility Act (5 U.S.C. 601–612)(RFA), the FDIC is required to publishan initial regulatory flexibility analysisrelating to the proposed rule. Theproposed rule would implementprovisions of section 711 of the GLB Actand would apply to all insureddepository institutions, affiliates ofinsured depository institutions, andpersons that enter into the types ofcovered agreements described in section711 and in the proposed rule.

Material contained in theSupplementary Information section ofthis document contains statementsabout the legal basis for and objectivesof the FDIC in proposing this rule. TheGLB Act incorporates disclosure andreporting requirements applicable to allinsured depository institutions,affiliates, and persons that enter intocovered agreements. Insured depositoryinstitutions, affiliates, and persons mustmake the covered agreements availableto the general public and to theappropriate supervisory agency. Theymust also file an annual report with theappropriate supervisory agencydescribing the disbursement, receipt,and use of the funds under theagreement. The GLB Act does notprovide exemptions for the reporting ordisclosure requirements based on thesize of the insured depositoryinstitution, affiliate, or person; similarly

the GLB Act does not authorize theFDIC to provide for exemptions.

Because the GLB Act requires theagencies to ensure that the proposedrule does not impose an undue burdenon the parties to a covered agreement,the proposed rule contains provisionsthat limit the potential impact oninsured depository institutions,affiliates, and persons. For example, theproposed rule provides flexibility toentities and persons regarding the waya covered agreement is made availableto the public. Insured depositoryinstitutions are permitted to disclosecovered agreements to the public byplacing it in their CRA public files, andparties may satisfy their obligation tomake covered agreements available tothe public, in part, by posting theagreement on a publicly availableInternet website. Although the GLB Actstates that parties to a coveredagreement must make the agreementavailable to an agency, the proposedrule requires a person that is a party toan agreement to disclose the coveredagreement to an agency upon theagency’s request for a copy of theagreement. In addition, the proposedrule would allow persons to use reportsthat have been prepared for otherpurposes, such as tax returns andfinancial statements, to fulfill theannual reporting requirement.Recognizing that many tax returns andfinancial statements are based on fiscalyear reporting periods, the proposedregulation permits either a fiscal orcalendar year reporting period so thatparties may coordinate their requiredannual report with other reports orfilings. The rule also would permitinsured depository institutions,affiliates, and persons that are parties to5 or more covered agreements to file asingle, consolidated report relating to allof the agreements and would allowinsured depository institutions andaffiliates that are parties to the samecovered agreement to file a singleconsolidated report. Finally, theproposed rule does not require annualreports to be prepared on a special formor in a particular format. All of theseprovisions were developed to minimizethe impact and burden the proposedrule would have on parties to a coveredagreement.

Before passage of the GLB Act, partiesto covered agreements were not requiredto disclose the agreements to the FDIC;therefore, at this time, the FDIC cannotestimate the total number of insuredstate non-member banks, affiliates ofstate non-member banks, or persons thatwould be subject to the requirements ofthe proposed rule. Similarly, the FDICcannot predict which parties to covered

agreements may be classified as smallbusinesses or entities. Although theFDIC and the other agencies haverequested comment on the scope of theproposed rules, presently, the FDICcannot determine whether the proposedrule would have a significant economicimpact on a substantial number of smallentities. The FDIC requests comment onthe likely significance of the economicimpact the proposed rule would imposeon FDIC-supervised banks and affiliatesand on persons who enter into a coveredagreement.

OTS: The Regulatory Flexibility Actrequires federal agencies to eitherprepare an initial regulatory flexibilityanalysis (IRFA) with a proposed rule orcertify that the proposed rule would nothave a significant economic impact ona substantial number of small entities.OTS cannot, at this time, determinewhether this proposed rule would havea significant economic impact on asubstantial number of small entities.Therefore, OTS includes the followingIRFA.

A description of the reasons why OTSis considering this action and astatement of the objectives of, and legalbasis for, this proposed rule, arecontained in the supplementarymaterials provided above.

A. Small Entities to Which the ProposedRule Would Apply

The proposed rule would apply to thefollowing types of entities if they are aparty to a covered agreement: (1)Savings associations; (2) certainaffiliates of savings associations; 37 and(3) nongovernmental entities or personsthat enter into covered agreements withsavings associations or affiliates ofsavings associations. The proposed rulewould apply regardless of the size of thesavings association, affiliate, or persons.

OTS is unable to estimate how manycovered agreements exist, how manysavings associations, affiliates of savingsassociations, or persons are parties tosuch covered agreements, or how manyparties to covered agreements are ‘‘smallbusinesses’’ or ‘‘small organizations’’under the Regulatory Flexibility Act. Todate, parties to such agreements havenot had to disclose or report theagreements to OTS. Generally, neitherOTS nor any other Federal agency is aparty to covered agreements. Finally,OTS does not enforce such agreements.Thus, OTS does not have informationabout these agreements.

OTS has very limited information thatwould assist in an estimate. According



to December 31, 1999 data, OTScalculates that of the approximately1,100 savings associations, a maximumof 486 are small savings associations.Small savings associations are generallydefined, for Regulatory Flexibility Actpurposes, as those with assets under$100 million. 13 CFR 121.201, DivisionH (1999). OTS also calculates that these486 savings associations holdapproximately 100 subordinateorganizations that could possiblyqualify as small entities. OTS furthercalculates that a maximum of 205savings and loan holding companiescould possibly qualify as small entities.OTS does not have data on how manyof these subordinate organizations orholding companies may actually qualifyas small entities. Nor does OTS havedata on how many other affiliates ofsavings associations exist (e.g.,companies that are under commoncontrol with a savings association), howmany of these affiliates are affiliates ofsmall savings associations, or how manyof these affiliates are themselves smallentities. OTS does not know how manypersons have entered into coveredagreements with savings associations oraffiliates of savings associations or howmany of these persons are small entities.

OTS specifically seeks comment onthe number and size of savingsassociations, affiliates of savingsassociations, and persons that areparties to covered agreements. OTS alsoseeks comment on how many coveredagreements may currently exist andapproximately how many will beentered into each year in the future.

B. Requirements of the Proposed Rule

As described more fully in thesupplementary material provided above,the proposed rule contains newdisclosure and reporting requirements.Most of the requirements are mandatedby section 711 of the GLB Act. The GLBAct, however, directs the Federalbanking agencies to ensure that theregulations prescribed by the agency donot impose an undue burden on theparties.

The primary requirements under theproposed rule involve disclosure andreporting of covered agreements. Theproposal would require each party to acovered agreement to disclose theagreement to the public by making acomplete copy available to anyindividual or entity upon request. Itwould also require each savingsassociation or affiliate that is a party tothe covered agreement to provide a copyto each relevant supervisory agency (asdefined in the proposal) and wouldrequire each person that is a party to

provide a copy to each relevantsupervisory agency upon request.

To minimize the disclosure burden,the proposal would:

• Terminate the public disclosurerequirement and the requirement for aperson to provide a copy to the relevantsupervisory agencies upon request 12months after the end of the term of thecovered agreement;

• Not mandate any particular methodfor disclosing the agreement to thepublic;

• Allow each party to chargereasonable copying and mailing feeswhen it discloses an agreement to thepublic;

• Allow a savings association topublicly disclose by placing a copy ofthe covered agreement in its CRA publicfile and making it available under thepublic file procedures;

• Require a person to provide a copyto the relevant supervisory agenciesonly if the agency requests a copy; and

• Allow two or more insureddepository institutions or affiliates thatare parties to a covered agreement tojointly file with each relevantsupervisory agency.

The proposal would require eachparty to a covered agreement to file anannual report with each relevantsupervisory agency concerning thedisbursement, receipt, and uses of fundsor other resources under the coveredagreement. To minimize the reportingburden, the proposal would:

• Not mandate any particular form forthe annual report;

• Allow each party to report on itsown fiscal year basis;

• Exempt a person from filing a reportfor a fiscal year if the person does notreceive any funds or resources duringthat year;

• Provide simplified reportingprocedures for persons that allocate anduse funds or other resources under acovered agreement for a specificpurpose;

• Allow a person’s report to consistof, or incorporate, reports prepared forother purposes, such as tax forms andfinancial statements;

• Permit a savings association,affiliate, or person that is a party to fiveor more covered agreements to file asingle consolidated annual reportcovering all of the covered agreements,aggregating certain information;

• Allow a savings association and itsaffiliates that are parties to the samecovered agreement to file a singleconsolidated report; and

• Allow a person to file its reportwith the insured depository institutionor affiliate that is a party to theagreement (rather than with the relevantsupervisory agency).

It is possible that savings associations,affiliates, and persons have alreadyestablished recordkeeping and otherpolicies and practices that wouldalready enable them to partly or fullymeet the requirements of this proposedrule. To the extent that existingpractices and available resources areinsufficient, parties to coveredagreements would need professionalskills to comply with this proposed rule.To disclose covered agreements, partiesmay need clerical and computerpersonnel. To prepare required reports,parties may need personnel with theseskills, as well as personnel skilled infinancial and legal matters. Some degreeof personnel training may be necessary,such as to enable employees todetermine when they enter into coveredagreements, and how to retain, record,and compile information aboutagreements to disclose and report them.

OTS does not have a practicable orreliable basis for quantifying the costs ofthis proposed rule, or of any alternativesto the rule. The requirements are toonew for those subject to the law to havelearned what the law requires anddecide how to proceed. OTS cannotpredict how savings associations,affiliates, and persons would complywith the proposed rule. For example,OTS cannot assess the extent to whichsavings associations, affiliates, andpersons would avoid entering intocovered agreements as a result of a finalrule.

Rather than merely guess at theregulatory burden of this proposed rule,OTS solicits comment on these burdensand on ways to minimize the burdens,consistent with the GLB Act.

C. Significant Alternatives

The requirements in the proposedrule parallel those in the GLB Act. Theproposed rule would clarify thestatutory requirements in some areasand restate the requirements in a moreunderstandable manner in other areas. Itwould not impose any substantiallydifferent requirements.

Congress has decided that ‘‘each’’insured depository institution, affiliate,or person that is a party to a coveredagreement must disclose and report theagreement. The GLB Act does notexpressly authorize OTS to exemptsmall savings associations, affiliates, orpersons from these requirements. OTSdoes not interpret the statute to permitsuch an exemption.

The supplementary material providedabove describes and solicits commenton a number of alternatives that wouldreduce the regulatory burden. Theseinclude:



• Limiting the types of agreementsthat are covered by the rule (e.g.,defining ‘‘CRA contacts,’’ ‘‘fulfillment ofCRA,’’ and the calculation of value morenarrowly, or defining the statutoryexemptions for certain types of loans,extensions of credit and commitmentsmore broadly);

• Simplifying the procedures forparties to delete proprietary andconfidential information;

• Limiting which parties to anagreement must comply with thedisclosure and reporting requirementsin multi-party agreements (e.g., notapplying the requirements to partiesthat have not made CRA contacts, havenot been the subject of CRA contacts, ordo not know that CRA contacts haveoccurred); and

• Providing more flexible reportingrequirements (e.g., allowing parties totwo or more agreements to useconsolidated reporting procedures,permitting affiliated persons that areparties to the same covered agreement tofile a consolidated report, allowingpersons to elect to report on specificpurpose funds or resources under theitemized reporting procedures, andexempting savings associations andaffiliates from filing a report for a fiscalyear if the savings association or affiliatehas not had transactions to report).

OTS requests comment on whetherthese or other alternatives would reducethe burdens and whether any exceptionsfor small institutions would beappropriate.

D. Other MattersThese proposed requirements do not

appear to duplicate or overlap with anyother Federal rules. To the extent thatrequired information is alreadycontained in reports prepared for otherpurposes, the proposed rule allows aperson’s report to consist of, orincorporate, these existing reports.

OTS lacks sufficient informationabout the contents of coveredagreements, however, to concludewhether the proposed requirementsconflict with other Federal rules. Onearea of potential conflict is the rule’srequirement to make a ‘‘complete copy’’of a covered agreement available to thepublic and to the relevant supervisoryagencies. OTS solicits specific commenton whether covered agreements containinformation that savings associations,affiliates, or persons may be barred fromdisclosing under other Federal rules(e.g., private customer information), ormay be permitted to refrain fromdisclosing to the public or a Federalbanking agency under other Federalrules (e.g., proprietary information).OTS also generally seeks comment on

any Federal rules that may duplicate,overlap, or conflict with the proposal.

V. Executive Order 12866Determination

OCC: The Comptroller of the Currencyhas determined that this proposed ruledoes not constitute a significantregulatory action for the purpose ofExecutive Order 12866. Reporting anddisclosure are mandated by section 711of the GLB Act. The proposed ruleclosely follows the requirements of thatstatute. As described in theSUPPLEMENTARY INFORMATION, however,the proposal also contains regulatoryoptions designed to minimize costs andburdens, where feasible and consistentwith the statute. The OCC invitesnational banks and the public to providespecific cost estimates and related datathat would contribute to the accuracy ofthe OCC’s evaluations of the costs of therequirements in the rule.

OTS: OTS has determined that thisproposed rule does not constitute asignificant regulatory action for thepurpose of Executive Order 12866.Reporting and disclosure are mandatedby section 711 of the GLB Act. Many ofthe proposed provisions closely followthe requirements of this section. OTShas exercised its discretion, to theextent possible, to propose regulatoryoptions to minimize costs and burdens.Nevertheless, OTS acknowledges thatthe rule would impose costs on insureddepository institutions, affiliates, andnongovernmental entities or persons byrequiring these entities to disclose andreport on agreements. Therefore, OTSinvites the thrift industry and the publicto provide any cost estimates andrelated data that they think would beuseful to the agency in evaluating theoverall costs of the rule.

VI. Paperwork Reduction ActThe information collection and

reporting requirements of the proposedrule are described in II. above. Insummary, the proposed rule requirespersons, insured depository institutions,and affiliates of insured depositoryinstitutions that are parties to coveredagreements (as defined by the proposedrule) to make the agreements availableto the public and the relevantsupervisory agencies and to file annualreports relating to the agreements withthe relevant supervisory agencies. Thesereporting and disclosure requirementsare required under Title VII of the GLBAct (Pub. L. 106–102, 113 Stat. 1465(1999)), which adds new section 48 tothe Federal Deposit Insurance Act (12U.S.C. 1831y).

The proposed rule requires eachperson, insured depository institution,

and affiliate of an insured depositoryinstitution that is a party to a coveredagreement to make a complete copy ofthe agreement available to the public onrequest at any time during the term ofthe agreement and 12 months after theterm of the agreement (proposedll.4(b)). Accordingly, each party mustretain a copy of the agreement for thatperiod. Any party to a coveredagreement may request that the relevantsupervisory agency determine whethercertain portions of the agreement maybe exempt from disclosure under theFreedom of Information Act (5 U.S.C.552 et seq.) prior to making theagreement available to the public(proposed ll.4(b)(1)(ii)).

An insured depository institution oraffiliate of an insured depositoryinstitution that enters into a coveredagreement must file a copy of theagreement with the supervisory agencywithin 30 days of entering into theagreement (proposed ll.4(c)(2)(i)). Aperson must make the agreementavailable to the relevant supervisoryagency upon request (proposedll.4(c)(1)).

The proposed rule also requires eachperson, insured depository institution,or affiliate of an insured depositoryinstitution that is a party to a coveredagreement to file an annual report thatrelates to the agreement for each fiscalyear during the term of the agreementwith the relevant supervisory agency ofthe insured depository institution oraffiliate that is a party to the agreement(proposed ll.5(b)). The annual reportof a person must include (1) the nameand address of the person filing thereport, (2) the names of the parties to theagreement, and (3) the amount of fundsor resources received during the fiscalyear (proposed ll.5(d)). The annualreport of an insured depositoryinstitution or affiliate must include (1)the name and principal place ofbusiness of the institution or affiliate,(2) sufficient information to identify thecovered agreement for which the annualreport is being filed, and (3) informationon payments and other resourcesprovided or received under theagreement (proposed ll.5(e)). Theproposed rule allows a person to sendits annual report either to the relevantsupervisory agency of each insureddepository institution or affiliate that isa party to the agreement or to an insureddepository institution or affiliate that isa party to the agreement. The insureddepository institution or affiliate mustsend the annual report of a person to therelevant supervisory agency within 30days of receiving the report (proposedll.5(f)(2)(ii)).



Finally, an insured depositoryinstitution or affiliate that is a party toa covered agreement that concerns theperformance of any activity of a CRAaffiliate (as defined in ——.8(c)) isrequired to notify each person that is aparty to the agreement that theagreement concerns a CRA affiliate(proposed ll.2(d)).

The agencies request public commenton all aspects of the collections ofinformation contained in this proposedrule, including how burdensome itwould be for persons, insureddepository institutions, and affiliates tocomply with each of the reporting anddisclosure requirements of the proposedrule.

The estimated total annual reportingand disclosure burden of the proposedrule will depend on the number ofcovered agreements. The agreementsthat trigger the disclosure and reportingrequirements of the proposed rule,however, are entered into by privateparties on a voluntary basis, are notenforced by the agencies and, to date,have not been required to be disclosedto the agencies. As a result, the agenciescannot accurately estimate at this timethe total number of insured depositoryinstitutions, affiliates or persons that areparties to covered agreements or thetotal number of covered agreements thatmay be subject to the disclosure andreporting requirements of the rule. Theagencies also are unable to identify areasonable proxy for estimating thenumber of covered agreements. Solelyfor purposes of complying with therequirements of the PaperworkReduction Act, each agency hascomputed the estimate of annualpaperwork burden assuming that 50percent of the insured depositoryinstitutions it regulates are parties toone covered agreement. In addition, theagencies have assumed that one personis a party to each of these agreements.The agencies specifically requestcomment on these assumptions, thetotal number of persons, insureddepository institutions, and affiliatesthat may be parties to coveredagreements, and the total number ofcovered agreements that may be subjectto the disclosure and reportingrequirements of the rule.

The agencies also invite comment on:(1) Whether the collections of

information contained in the notice ofproposed rulemaking are necessary forthe proper performance of each agency’sfunctions, including whether theinformation has practical utility;

(2) The accuracy of each agency’sestimate of the burden of the proposedinformation collections;

(3) Ways to enhance the quality,utility, and clarity of the information tobe collected;

(4) Ways to minimize the burden ofthe information collections onrespondents, including the use ofautomated collection techniques orother forms of information technology;and

(5) Estimates of capital or start-upcosts and costs of operation,maintenance, and purchases of servicesto provide information.

The agencies will revisit theseestimates when they have moreinformation on the scope of the rule andthe number of potential respondentsand covered agreements. The revisedestimates will also reflect all commentsreceived concerning the burdenestimates. Respondents/recordkeepersare not required to respond to thesecollections of information unless theagencies display a currently valid Officeof Management and Budget (OMB)control number. The agencies arecurrently requesting their respectivecontrol numbers for these informationcollections from OMB.

OCC: The collection of informationrequirements contained in theRegulation will be submitted to theOMB in accordance with the PaperworkReduction Act of 1995 (44 U.S.C. 3507).Comments on the collections ofinformation should be sent to theCommunications Division, Office of theComptroller of the Currency, 250 EStreet, SW, Third Floor, Attention:1557–to be assigned, Washington, DC20219, with a copy to the Office ofManagement and Budget, PaperworkReduction Project (1557–to be assigned),Washington, DC 20503.

The potential respondents includenational banks, subsidiaries of nationalbanks, and nongovernmental entities orpersons.

Estimated number of financialinstitution respondents: 1,200.Estimated number of nongovernmentalentity or person respondents: 1,200.

Estimated average annual burdenhours for all disclosure and reportingrequirements of the proposed rule perfinancial institution respondent peragreement: 6 hours.

Estimated burden hours for alldisclosure and reporting requirementsof the proposed rule pernongovernmental entity or person peragreement: 4 hours.

Estimated total annual reporting anddisclosure burden: 12,000 hours.

Board: In accordance with section3506 of the Paperwork Reduction Act of1995 (44 U.S.C. Ch. 35; 5 CFR 1320,appendix A.1), the Board reviewed theRegulation under the authority

delegated to the Board by the OMB.Comments on the collections ofinformation should be sent to Mary M.West, Federal Reserve Board ClearanceOfficer, Division of Research andStatistics, Mail Stop 97, Board ofGovernors of the Federal ReserveSystem, Washington, DC 20551, with acopy to the Office of Management andBudget, Paperwork Reduction Project(7100–to be assigned), Washington, DC20503.

The potential respondents are statemember banks, bank holdingcompanies, affiliates of bank holdingcompanies other than savingsassociations, national banks, insurednonmember banks, and subsidiaries ofsuch associations and banks, andnongovernmental entities or persons.

Estimated number of financialinstitution respondents: 507.

Estimated number ofnongovernmental entity or personrespondents: 507.




FDIC: The collections of informationcontained in the Regulation will besubmitted to the OMB in accordancewith the Paperwork Reduction Act of1995 (44 U.S.C. 3507). The FDIC willuse any comments received to developits new burden estimates. Comments onthe collections of information should besent to Steven F. Hanft, AssistantExecutive Secretary (RegulatoryAnalysis), Federal Deposit InsuranceCorporation, F–4080, 550 17th Street,NW, Washington, DC 20429, with acopy to the Office of Management andBudget, Paperwork Reduction Project(3064–to be assigned), Washington, DC20503.

The potential respondents are insurednonmember banks, subsidiaries ofinsured nonmember banks, andnongovernmental entities or persons.

Estimated number of financialinstitution respondents: 2,850.

Estimated number ofnongovernmental entity or personrespondents: 2,850.






OTS: The collection of informationrequirements contained in theRegulation will be submitted to theOMB in accordance with the PaperworkReduction Act of 1995 (44 U.S.C. 3507).The OTS will use any commentsreceived to develop its new burdenestimates. Comments on the collectionof information should be sent to theDissemination Branch (1550-to beassigned), Office of Thrift Supervision,1700 G Street, NW, Washington, DC20552, with a copy to the Office ofManagement and Budget, PaperworkReduction Project (1550-to be assigned),Washington, DC 20503.

The potential respondents are savingsand loan holding companies, savingsassociations, companies controlled bysavings and loan holding companiesand savings associations, andnongovernmental entities or persons.

Estimated number of financialinstitution respondents: 552.

Estimated number ofnongovernmental entity or personrespondents: 552.




VII. Solicitation of CommentsRegarding the Use of ‘‘Plain Language’’

Section 722 of the GLB Act requiresthe agencies to use ‘‘plain language’’ inall proposed and final rules publishedafter January 1, 2000. The agenciesinvite comments about how to make theproposed rule easier to understand,including answers to the followingquestions:

(1) Have the agencies organized thematerial in an effective manner? If not,how could the material be betterorganized?

(2) Are the terms of the rule clearlystated? If not, how could the terms bemore clearly stated?

(3) Does the rule contain technicallanguage or jargon that is unclear? If so,which language requires clarification?

(4) Would a different format (withrespect to the grouping and order of

sections and use of headings) make therule easier to understand? If so, whatchanges to the format would make therule easier to understand?

(5) Would increasing the number ofsections (and making each sectionshorter) clarify the rule? If so, whichportions of the rule should be changedin this respect?

(6) What additional changes wouldmake the rule easier to understand?

The agencies also solicit commentabout whether it would be appropriateand useful to include in the rule theexamples discussed in this preamble.The agencies note that creating safeharbors in the rule may generate certainproblems over time due to changes intechnology or business practices. Arethere alternatives that the agenciesshould consider to illustrate the termsin the rule?

VIII. FDIC’s Electronic Public CommentSite

The FDIC has included a page on itsweb site to facilitate the submission ofelectronic comments in response to thisgeneral solicitation (the EPC site). TheEPC site provides an alternative to thewritten letter and may be a moreconvenient way for you to submit yourcomments. Commenting through theEPC site will assist the FDIC to moreaccurately and efficiently analyzecomments submitted electronically. Ifyou submit your comments through theEPC site your comments will receive thesame consideration that they wouldreceive if submitted in hard copy to theFDIC’s street address. Informationprovided through the EPC site will beused by the FDIC only to assist in itsanalysis of the proposed regulation. TheFDIC will not use an individual’s nameor any other personal identifier of anindividual to retrieve records orinformation submitted through the EPCsite. Like comments submitted in hardcopy to the FDIC’s street address, EPCsite comments will be made available intheir entirety (including thecommenter’s name and address if thecommenter chooses to provide them) forpublic inspection.

The EPC site will be available on theFDIC’s home page at http://www.fdic.gov. You will be able toprovide comments directly on any of thesections of the proposed regulation aswell as the specific questions that havebeen asked in the precedingSupplementary Information section.You will also be able to view theregulation and SupplementaryInformation sections that related to yourcomments directly on the site. Becausethe GLB Act requires promulgation ofthis regulation, the FDIC encourages you

to provide written comments in thespaces provided. Written commentsenable the FDIC to thoughtfullyconsider possible changes to theproposed regulation.

The FDIC is also interested in yourfeedback on the EPC site. We haveprovided a space for you to comment onthe site itself. Answers to this questionwill help the FDIC evaluate the EPC sitefor use in future rulemaking.

At the conclusion of the EPC site youwill have an opportunity to provide uswith your name, indicate whether youare an individual, insured depositoryinstitution, financial holding company,community-based organization, tradeassociation, government agency, orother, and provide the name of theorganization you represent, ifapplicable. Whether you choose torespond to these questions is entirely upto you. Any responses received mayhelp the FDIC to better understand thepublic comments it receives.

IX. Unfunded Mandates Act of 1995

OCC: Section 202 of the UnfundedMandates Reform Act of 1995, 2 U.S.C.1532 (Unfunded Mandates Act),requires that an agency prepare abudgetary impact statement beforepromulgating a rule that includes aFederal mandate that may result inexpenditures by state, local, and tribalgovernments, in the aggregate, or by theprivate sector, of $100 million or morein any one year. If a budgetary impactstatement is required, section 205 of theUnfunded Mandates Act also requiresan agency to identify and consider areasonable number of regulatoryalternatives before promulgating a rule.

The proposed rule would not apply tostate, local or tribal governments.Although the proposed rule wouldapply to insured depository institutions,affiliates, and nongovernmental entitiesand persons, OCC is not required toassess the effects of its regulatoryactions on the private sector to theextent such regulations incorporaterequirements specifically set forth inlaw. 2 U.S.C. 1531. Many of theproposed provisions closely follow therequirements of Section 711 of theGLBA. Moreover, the proposal containsregulatory options designed to minimizecosts and burdens. Therefore, the OCChas determined that this proposed rulewill not result in expenditures by State,local, and tribal governments, in theaggregate, or by the private sector, of$100 million or more in any one year.Accordingly, the OCC has not prepareda budgetary impact statement orspecifically addressed the regulatoryalternatives considered.



OTS: Section 202 of the UnfundedMandates Reform Act of 1995, 2 U.S.C.1532 (Unfunded Mandates Act),requires that an agency prepare abudgetary impact statement beforepromulgating a rule that includes aFederal mandate that may result inexpenditures by state, local, and tribalgovernments, in the aggregate, or by theprivate sector, of $100 million or morein any one year. If a budgetary impactstatement is required, section 205 of theUnfunded Mandates Act also requiresan agency to identify and consider areasonable number of regulatoryalternatives before promulgating a rule.

The proposed rule would not apply tostate, local or tribal governments.Although the proposed rule wouldapply to insured depository institutions,affiliates, and nongovernmental entitiesand persons, OTS is not required toassess the effects of its regulatoryactions on the private sector to theextent such regulations incorporaterequirements specifically set forth inlaw. 2 U.S.C. 1531. Many of theproposed provisions closely follow therequirements of section 711 of the GLBAct. Moreover, OTS has exercised itsdiscretion, to the extent possible, topropose regulatory options to minimizecosts and burdens. Therefore, the OTShas determined that this proposed rulewill not result in expenditures by State,local, and tribal governments, in theaggregate, or by the private sector, of$100 million or more in any one year.Accordingly, the OTS has not prepareda budgetary impact statement orspecifically addressed the regulatoryalternatives considered.

List of Subjects

12 CFR Part 35Community development, Credit,

Freedom of information, Investments,National banks, Reporting andrecordkeeping requirements.

12 CFR Part 207Banks, banking, Community

development, Federal Reserve System,Holding companies, Reporting andrecordkeeping requirements.

12 CFR Part 346Banks, banking, Community

development, and Reporting andrecordkeeping.

12 CFR Part 533Administrative practice and

procedure, Business and industry,Community development, Confidentialbusiness information, Credit, Freedomof information, Holding companies,Investments, Mortgages, Nonprofitorganizations, Penalties, Reporting and

recordkeeping requirements, Savingsassociation.

Office of the Comptroller of theCurrency

12 CFR Chapter I

Authority and IssuanceFor the reasons set out in the joint

preamble, the OCC proposes to amendtitle 12, chapter I, of the Code of FederalRegulations by adding a new part 35 toread as follows:

PART 35—DISCLOSURE ANDREPORTING OF CRA RELATEDAGREEMENTS

Sec.35.1 Purpose and scope.35.2 Definition of covered agreement.35.3 Related agreements considered a single

agreement.35.4 Disclosure of covered agreements.35.5 Annual reports.35.6 Release of information under FOIA.35.7 Compliance provisions.35.8 Other definitions and rules of

construction.

Authority: 12 U.S.C. 1831y.

§ 35.1 Purpose and scope.(a) General. This part implements

section 711 of the Gramm-Leach-BlileyAct (12 U.S.C. 1831y). That sectionrequires any nongovernmental entity orperson, insured depository institution,and affiliate of an insured depositoryinstitution that enters into a coveredagreement to:

(1) Make the covered agreementavailable to the public and theappropriate Federal banking agency;and

(2) File an annual report with theappropriate Federal banking agencyconcerning the covered agreement.

(b) The provisions of this part areenforced by the OCC with respect tonational banks and their subsidiaries.

§ 35.2 Definition of covered agreement.(a) General definition. A covered

agreement is any contract, arrangement,or understanding (whether or not legallybinding) that meets all of the followingcriteria:

(1) The agreement is in writing.(2) The parties to the agreement

include:(i) An insured depository institution

or an affiliate of an insured depositoryinstitution; and

(ii) A nongovernmental entity orperson (referred to hereafter as aperson).

(3) The agreement provides for theinsured depository institution or anyaffiliate to:

(i) Provide to one or more individualsor entities (whether or not parties to the

agreement) cash payments, grants, orother consideration (except loans) thathave an aggregate value of more than$10,000 in any calendar year; or

(ii) Make to one or more individualsor entities (whether or not parties to theagreement) loans that have an aggregateprincipal amount of more than $50,000in any calendar year.

(4) The agreement is made pursuantto, or in connection with, the fulfillmentof the Community Reinvestment Act of1977 (12 U.S.C. 2901 et seq.) (CRA), asdefined in paragraph (c) of this section.

(b) Agreements that are not coveredagreements— (1) Certain loans. Acovered agreement does not include:

(i) Any individual mortgage loan; or(ii) Any specific contract or

commitment for a loan or extension ofcredit to individuals, businesses, farms,or other entities if:

(A) The funds are loaned at rates notsubstantially below market rates; and

(B) The purpose of the loan orextension of credit does not include anyre-lending of the borrowed funds tothird parties.

(2) Agreements where there has notbeen a CRA contact—(i)General. Acovered agreement does not include anyagreement entered into by an insureddepository institution or affiliate of aninsured depository institution with aperson who has not commented on,testified about, or discussed with theinstitution, or otherwise contacted theinstitution, concerning the CRA.

(ii) Examples of CRA contact. Thefollowing are examples of CRA contacts.These examples are not exclusive andother actions by a person may also makethe exemption in paragraph (b)(2)(i) ofthis section unavailable. If a personengages in any of the following actionsand subsequently enters into anagreement with the insured depositoryinstitution or any affiliate of theinstitution, the agreement is not exemptunder paragraph (b)(2)(i) of this section.

(A) CRA contact with a Federalbanking agency. (1) The person submitsa written comment to a Federal bankingagency that discusses the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or any CRA affiliate of theinstitution.

(2) The person provides oraltestimony or comments to a Federalbanking agency concerning the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or any CRA affiliate of theinstitution.

(B) CRA contact with insureddepository institution or affiliate. (1)The person has a discussion with, orotherwise contacts, an insured



depository institution or any affiliate ofthe institution about providing (orrefraining from providing) written ororal comments or testimony to anyFederal banking agency concerning therecord of performance or futureperformance under the CRA of theinstitution or any CRA affiliate of theinstitution.

(2) The person has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution about providing (orrefraining from providing) writtencomments to the institution that must beincluded in the institution’s CRA publicfile.

(3) The person has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution concerning the CRArating of the institution, or the CRArecord of performance of the institutionor any CRA affiliate of the institution.

(4) The person has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution concerning actions thatshould be taken to improve the CRAperformance of the institution or anyCRA affiliate of the institution.

(5) The person has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution concerning anyobligation or responsibility that theinstitution or any CRA affiliate of theinstitution may have to meet thebanking needs of its community and thediscussion or contact occurs while theinstitution or any affiliate has anapplication for a deposit facilitypending at a Federal banking agency oris undergoing a publicly announcedCRA performance examination.

(iii) Examples of actions that are notCRA contacts. The following areexamples of actions that are not CRAcontacts. The actions described in theseexamples would not, by themselves,cause the exemption in paragraph(b)(2)(i) of this section to be unavailable.These examples are not exclusive.

(A) A person provides comments ortestimony concerning an insureddepository institution or affiliate to aFederal banking agency in response to adirect request by the agency forcomments or testimony from thatperson. Direct requests for comments ortestimony do not include a generalinvitation by a Federal banking agencyfor comments or testimony from thepublic in connection with a CRAperformance evaluation of, orapplication for a deposit facility by, aninsured depository institution or anapplication by a company to acquire aninsured depository institution.

(B) A person makes a statementconcerning an insured depositoryinstitution or affiliate at a widelyattended conference or seminarregarding a general topic. A public orprivate meeting, public hearing, or othermeeting regarding one or more specificinstitutions or affiliates or transactionsinvolving an application for a depositfacility is not considered a widelyattended conference or seminar.

(C) A person sends a similarfundraising letter to insured depositoryinstitutions and to other businesses inits community. The letter encourages allbusinesses in the community to meettheir obligation to assist in making thelocal community a better place to liveand work.

(D) A person sends a general offeringcircular to financial institutions offeringto sell a portfolio of loans. An insureddepository institution that receives theoffering circular discusses with theperson whether the loans are in theinstitution’s local community. Noreference to the CRA or the institution’sCRA performance is made in theoffering circular or in the discussions ofthe parties.

(c) Fulfillment of the CRA—(1)General. Fulfillment of the CRA meansthe list of factors that the Federalbanking agencies have determined havea material impact on an agency’sdecision:

(i) To approve or disapprove anapplication for a deposit facility (asdefined in section 803 of the CRA (12U.S.C. 2902)); or

(ii) To assign a rating to an insureddepository institution under section 807of the CRA (12 U.S.C. 2906).

(2) List of factors. The list of factorsreferred to in paragraph (c)(1) of thissection means the performance of any ofthe following activities by an insureddepository institution or CRA affiliatethat is a party to the agreement or thatis an affiliate of a party to the agreementor by any person that is a party to theagreement:

(i) Providing or refraining fromproviding written or oral comments ortestimony to any Federal bankingagency concerning the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or CRA affiliate that is aparty to the agreement or an affiliate ofa party to the agreement or writtencomments that are required to beincluded in the CRA public file of anysuch insured depository institution;

(ii) Home-purchase, home-improvement, small business, smallfarm, community development, andconsumer lending, as described in

§ 25.22, including loan purchases, loancommitments, and letters of credit;

(iii) Making investments, deposits, orgrants, or acquiring membership shares,that have as their primary purposecommunity development, as describedin § 25.23;

(iv) Delivering retail banking services,as described in § 25.24(d);

(v) Providing communitydevelopment services, as described in§ 25.24(e);

(vi) In the case of a wholesale orlimited-purpose insured depositoryinstitution, community developmentlending, including originating andpurchasing loans and making loancommitments and letters of credit,making qualified investments, orproviding community developmentservices, as described in § 25.25(c);

(vii) In the case of a small insureddepository institution, any lending orother activity described in § 25.26(a); or

(viii) In the case of an insureddepository institution that is evaluatedon the basis of a strategic plan, anyelement of the strategic plan, asdescribed in § 25.27(f).

(d) Agreements relating to activities ofCRA affiliates. An insured depositoryinstitution or affiliate that is a party toa covered agreement that concerns theperformance of any activity of a CRAaffiliate described in paragraph (c) ofthis section must notify each person thatis a party to the agreement that theagreement concerns a CRA affiliate. Theinsured depository institution oraffiliate must provide this notice priorto the time the agreement is entered intoif the affiliate is a CRA affiliate at thattime, or within a reasonable time afterthe affiliate becomes a CRA affiliate ifthe affiliate is not a CRA affiliate at thetime the agreement is entered into.

(e) Disclosure and reporting of certainexisting agreements that becomecovered agreements. An agreement thatconcerns the performance of anyactivity described in paragraph (c) ofthis section by an affiliate may becomea covered agreement after it is enteredinto if the affiliate subsequentlybecomes a CRA affiliate. In that event,the disclosure and reporting obligationsunder §§ 35.4 and 35.5 begin on the datethat the agreement becomes a coveredagreement and do not apply to theperiod prior to that date.

§ 35.3 Related agreements considered asingle agreement.

The following rules must be appliedin determining whether a writtencontract, arrangement, or understandingis a covered agreement under § 35.2.

(a) Contracts, arrangements, orunderstandings entered into by same



parties. All written contracts,arrangements, or understandings towhich an insured depository institutionor an affiliate of the insured depositoryinstitution is a party shall be consideredto be a single agreement if the contracts,arrangements, or understandings:

(1) Are entered into with the sameperson;

(2) Were entered into within the same12-month period; and

(3) Are each in fulfillment of the CRA.(b) Substantively related contracts.

All written contracts to which aninsured depository institution or anaffiliate of the insured depositoryinstitution is a party shall be consideredto be a single agreement, without regardto whether the other parties to thecontracts are the same or whether eachsuch contract is in fulfillment of theCRA, if the contracts were negotiated ina coordinated fashion and a person is aparty to each contract.

§ 35.4 Disclosure of covered agreements.(a) Effective date. This section applies

only to covered agreements entered intoafter November 12, 1999.

(b) Disclosure of covered agreementsto the public—(1) Disclosure required.(i) Each person and each insureddepository institution or affiliate thatenters into a covered agreement mustmake a complete copy of the coveredagreement available to any individual orentity upon request.

(ii) In disclosing a covered agreementto the public under paragraph (b)(1)(i) ofthis section, a person, insureddepository institution, or affiliate maywithhold from disclosure only thoseportions of an agreement that therelevant supervisory agency determinesare exempt from disclosure under theFreedom of Information Act (5 U.S.C.552 et seq.).

(2) Duration of obligation. Theobligation to disclose a coveredagreement terminates 12 months afterthe end of the term of the agreement.

(3) Reasonable copy and mailing fees.Each person and each insureddepository institution or affiliate maycharge an individual or entity thatrequests a copy of a covered agreementa reasonable fee not to exceed the costof copying and mailing the agreement.

(4) Use of CRA public file by insureddepository institution. An insureddepository institution may fulfill itsobligation under this paragraph (b) byplacing a copy of the covered agreementin the insured depository institution’sCRA public file and making theagreement available in accordance withthe procedures set forth in § 35.43.

(c) Disclosure of covered agreementsto the relevant supervisory agency—(1)

Disclosure by person. Each person thatis a party to a covered agreement mustprovide a complete copy of theagreement to the relevant supervisoryagency within 30 days of receiving arequest from the agency for theagreement. This obligation terminates12 months after the end of the term ofthe covered agreement.

(2) Disclosure by insured depositoryinstitution or affiliate—(i) Filing withthe relevant supervisory agency. Eachinsured depository institution oraffiliate that is a party to a coveredagreement must provide a copy of theagreement to each relevant supervisoryagency within 30 days after the date theinsured depository institution oraffiliate enters into the agreement.

(ii) Joint filings. In the event that twoor more insured depository institutionsor affiliates are parties to a coveredagreement, the insured depositoryinstitution(s) and affiliate(s) may jointlyfile a copy of the covered agreementwith each relevant supervisory agency.Any joint filing must identify theinsured depository institution(s) andaffiliate(s) for whom the coveredagreement is being filed.

(d) Relevant supervisory agency. Forpurposes of this section and § 35.5, the‘‘relevant supervisory agency’’ for acovered agreement means theappropriate Federal banking agencyfor—

(1) Each insured depositoryinstitution (or subsidiary thereof) that isa party to the covered agreement;

(2) Each insured depositoryinstitution (or subsidiary thereof) orCRA affiliate that makes payments orloans or provides services that aresubject to the covered agreement; and

(3) Any company (other than aninsured depository institution orsubsidiary thereof) that is a party to thecovered agreement.

§ 35.5 Annual reports.

(a) Effective date. This section appliesonly to covered agreements entered intoon or after May 12, 2000.

(b) Annual report required. Eachperson and each insured depositoryinstitution or affiliate that is a party toa covered agreement must file an annualreport with each relevant supervisoryagency concerning the disbursement,receipt, and uses of funds or otherresources under the covered agreement.

(c) Duration of reportingrequirement—(1) General. An annualreport under this section must be filedwith each relevant supervisory agencyfor:

(i) The fiscal year in which the partiesenter into the covered agreement; and

(ii) Each fiscal year during the term ofthe covered agreement.

(2) Exception for person that has notreceived any funds or resources. Aperson is not required to file an annualreport for a covered agreement for anyfiscal year during the term of theagreement in which the person did notreceive any funds or other resourcesunder the agreement.

(d) Annual reports filed by person—(1) General. The annual report filed bya person under this section mustinclude the following:

(i) The name and mailing address ofthe person filing the report;

(ii) Information sufficient to identifythe covered agreement for which theannual report is being filed, such as byproviding the names of the parties to theagreement and the date the agreementwas entered into or by providing a copyof the agreement;

(iii) The amount of funds or resourcesreceived under the covered agreementduring the fiscal year; and

(iv) The information required byparagraphs (d)(2) and (d)(3) of thissection concerning the use of fundsreceived under the covered agreement.

(2) Reporting for funds or resourcesallocated and used for a specificpurpose. For funds or other resourcesthat the person received during thefiscal year under the covered agreementand allocated and used for a specificpurpose during the fiscal year, theannual report must:

(i) Describe each specific purpose forwhich the funds or resources were usedduring the fiscal year; and (ii) State theamount of funds or resources usedduring the fiscal year for each specificpurpose.

(3) Funds or resources used for otherpurposes. For all funds or resources thatthe person received during the fiscalyear under the covered agreement anddid not use for a specific purpose, theannual report must:

(i) State the amount received duringthe fiscal year; and

(ii) Provide a detailed, itemized list ofhow the funds or resources were usedduring the fiscal year, including thetotal amount used for:

(A) Compensation of officers,directors, and employees;

(B) Administrative expenses;(C) Travel expenses;(D) Entertainment expenses;(E) Payment of consulting and

professional fees; and(F) Other expenses or uses.(4) Use of other reports. The annual

report filed by a person may consist of,or incorporate, a report prepared for anyother purpose, such as an InternalRevenue Service form, a state tax form,



a report to members or shareholders,financial statements, or other report, solong as the annual report contains all ofthe information required by thisparagraph (d).

(5) Consolidated reports permitted. Aperson that is a party to five or morecovered agreements may file with eachrelevant supervisory agency a singleconsolidated annual report covering allthe covered agreements. Anyconsolidated report must contain all theinformation required by this paragraph(d). The information required to bereported under paragraph (d)(1)(iii),(d)(2), and (d)(3) of this section may bereported on an aggregate basis for allcovered agreements.

(e) Annual report filed by insureddepository institution or affiliate—(1)General. The annual report filed by aninsured depository institution oraffiliate must include the following:

(i) The name and principal place ofbusiness of the insured depositoryinstitution or affiliate filing the report;


(iii) The aggregate amount ofpayments, aggregate amount of fees, andaggregate amount of loans provided bythe insured depository institution oraffiliate under the covered agreement toany other party to the agreement duringthe fiscal year;

(iv) The aggregate amount ofpayments, aggregate amount of fees, andaggregate amount of loans received bythe insured depository institution oraffiliate under the covered agreementfrom any other party to the agreementduring the fiscal year;

(v) A general description of the termsand conditions of any payments, fees, orloans reported under paragraphs(e)(1)(iii) and (iv) of this section, or, inthe event such terms and conditions areset forth:

(A) In the covered agreement, astatement identifying the coveredagreement and the date the agreementwas filed with the relevant supervisoryagency; or

(B) In a previous annual report filedby the insured depository institution oraffiliate, a statement identifying the datethe report was filed with the relevantsupervisory agency; and

(vi) The aggregate amount andnumber of loans, aggregate amount andnumber of investments, and aggregateamount of services provided under thecovered agreement to any individual orentity not a party to the agreement:

(A) By the insured depositoryinstitution or affiliate during its fiscalyear; and

(B) By any other party to theagreement, unless such information isnot known to the insured depositoryinstitution or affiliate filing the report orsuch information is or will be containedin the annual report filed by a personunder paragraph (d) of this section.

(2) Consolidated reports permitted—(i) Party to large number of agreements.An insured depository institution oraffiliate that is a party to five or morecovered agreements may file a singleconsolidated annual report with eachrelevant supervisory agency covering allthe covered agreements.

(ii) Affiliated entities party to thesame agreement. An insured depositoryinstitution and its affiliates that areparties to the same covered agreementmay file a single consolidated annualreport relating to the agreement witheach relevant supervisory agency for thecovered agreement.

(iii) Content of report. Anyconsolidated annual report must containall the information required by thisparagraph (e). The amounts and datarequired to be reported under paragraph(e)(1)(iii), (iv), and (vi) of this sectionmay be reported on an aggregate basisfor all covered agreements.

(f) Time and place of filing—(1)General. Each party must file its annualreport with each relevant supervisoryagency for the covered agreement nolater than six months following the endof the fiscal year covered by the report.

(2) Alternative method of fulfillingannual reporting requirement for aperson. (i) A person may fulfill the filingrequirements of this section byproviding the following materials to aninsured depository institution oraffiliate that is a party to the agreementno later than five months following theend of the person’s fiscal year:

(A) A copy of the person’s annualreport required under paragraph (d) ofthis section for the fiscal year; and

(B) Written instructions that theinsured depository institution oraffiliate promptly forward the annualreport to the relevant supervisoryagency or agencies on behalf of theperson.

(ii) An insured depository institutionor affiliate that receives an annual reportfrom a person pursuant to paragraph(f)(2)(i) of this section must file thereport with the relevant supervisoryagency or agencies on behalf of theperson within 30 days.

§ 35.6 Release of information under FOIA.The OCC will make covered

agreements and annual reports available

to the public in accordance with theFreedom of Information Act (5 U.S.C.552 et seq.) and the OCC’s RulesRegarding the Availability ofInformation (12 CFR part 4). A party toa covered agreement may requestconfidential treatment of proprietaryand confidential information in acovered agreement or an annual reportunder those procedures.

§ 35.7 Compliance provisions.

(a) Willful failure to comply withdisclosure and reporting obligations. (1)If the OCC determines that a person haswillfully failed to comply in a materialway with §§ 35.4 or 35.5, the OCC willnotify the person in writing of thatdetermination and provide the person aperiod of 90 days (or such longer periodas the OCC finds to be reasonable underthe circumstances) to comply.

(2) If the person does not complywithin the time period established bythe OCC, the agreement shall thereafterbe unenforceable by that person byoperation of section 48 of the FederalDeposit Insurance Act (12 U.S.C.1831y).

(3) The OCC may assist any insureddepository institution or affiliate that isa party to a covered agreement that isunenforceable by a person by operationof section 48 of the Federal DepositInsurance Act (12 U.S.C. 1831y) inidentifying a successor to assume theperson’s responsibilities under theagreement.

(b) Diversion of funds. If a court orother body of competent jurisdictiondetermines that funds or resourcesreceived under a covered agreementhave been diverted contrary to thepurposes of the covered agreement foran individual’s personal financial gain,the OCC may take either or both of thefollowing actions:

(1) Order the individual to disgorgethe diverted funds or resources receivedunder the agreement;

(2) Prohibit the individual from beinga party to any covered agreement for aperiod not to exceed 10 years.

(c) Notice and opportunity to respond.Before making a determination underparagraph (a)(1) of this section, or takingany action under paragraph (b) of thissection, the OCC will provide writtennotice and an opportunity to presentinformation to the OCC concerning anyrelevant facts or circumstances relatingto the matter.

(d) Inadvertent or de minimis errors.Inadvertent or de minimis errors inannual reports or other documents filedwith the OCC under §§ 35.4 or 35.5 willnot subject the reporting party to anypenalty.



(e) Enforcement of provisions incovered agreements. No provision ofthis part shall be construed asauthorizing the OCC to enforce theprovisions of any covered agreement.

§ 35.8 Other definitions and rules ofconstruction.

(a) Affiliate. ‘‘Affiliate’’ means:(1) Any company that controls, is

controlled by, or is under commoncontrol with another company; and

(2) For the purpose of determiningwhether an agreement is a coveredagreement under § 35.2, an ‘‘affiliate’’includes any company that would beunder common control or merged withanother company on consummation ofany transaction pending before aFederal banking agency at the time:

(i) The parties enter into theagreement; and

(ii) The person that is a party to theagreement makes a CRA contact, asdescribed in § 35.2(b)(2).

(b) Control. ‘‘Control’’ is defined insection 2(a) of the Bank HoldingCompany Act (12 U.S.C. 1841(a)).

(c) CRA affiliate. A ‘‘CRA affiliate’’ ofan insured depository institution is anycompany that is an affiliate of aninsured depository institution to theextent, and only to the extent, that theactivities of the affiliate were consideredby the appropriate Federal bankingagency when evaluating the CRAperformance of the institution at itsmost recent CRA examination.

(d) CRA public file. For purposes ofthis part, ‘‘CRA public file’’ means thepublic file maintained by an insureddepository institution and described in§ 25.43.

(e) Federal banking agency;appropriate Federal banking agency.The terms ‘‘Federal banking agency’’and ‘‘appropriate Federal bankingagency’’ have the same meanings as insection 3 of the Federal DepositInsurance Act (12 U.S.C. 1813).

(f) Fiscal year. (1) The fiscal year fora person that does not have a fiscal yearshall be the calendar year;

(2) Any person, insured depositoryinstitution, or affiliate that has a fiscalyear may elect to have the calendar yearbe its fiscal year for purposes of thispart.

(g) Insured depository institution.‘‘Insured depository institution’’ has thesame meaning as in section 3 of theFederal Deposit Insurance Act (12U.S.C. 1813).

(h) Nongovernmental entity or person.(1) General. A ‘‘nongovernmental entityor person’’ is any partnership,association, trust, joint venture, jointstock company, corporation, limitedliability corporation, company, firm,

society, other organization, orindividual.

(2) Exclusions. A nongovernmentalentity or person does not include:

(i) The United States government, astate government, a unit of localgovernment (including a county, city,town, township, parish, village, or othergeneral-purpose subdivision of a state)or an Indian tribe or tribal organizationestablished under Federal, state orIndian tribal law (including theDepartment of Hawaiian Home Lands),or a department, agency, orinstrumentality of any such entity;

(ii) A federally-chartered publiccorporation that receives federal fundsappropriated specifically for thatcorporation;

(iii) An insured depository institutionor affiliate of an insured depositoryinstitution; or

(iv) An officer, director, employee, orrepresentative (acting in his or hercapacity as an officer, director,employee, or representative) of an entitylisted in paragraphs (h)(2)(i) through(iii) of this section.

(i) Party. The term ‘‘party’’ withrespect to a covered agreement meanseach person and each insureddepository institution or affiliate thatentered into the agreement.

(j) Person. For purposes of this part,a ‘‘person’’ is any nongovernmentalentity or person.

(k) Term of agreement. An agreementthat does not by its terms establish atermination date is considered toterminate on the last date on which anyparty to the agreement makes anypayment or provides any loan or otherresources under the agreement, unlessthe appropriate Federal banking agencyotherwise notifies each party in writing.

Dated: May 10, 2000.John D. Hawke, Jr.,Comptroller of the Currency.

Federal Reserve System

12 CFR Chapter II

Authority and Issuance

For the reasons set out in the jointpreamble, Title 12, Chapter II, of theCode of Federal Regulations is proposedto be amended by adding a new part 207to read as follows:

PART 207—DISCLOSURE ANDREPORTING OF CRA-RELATEDAGREEMENTS (REGULATION G)

Sec.207.1 Purpose and scope of this part.207.2 Definition of covered agreement.207.3 Related agreements considered a

single agreement.207.4 Disclosure of covered agreements.

207.5 Annual reports.207.6 Release of information under FOIA.207.7 Compliance provisions.207.8 Other definitions and rules of

construction used in this part.


§ 207.1 Purpose and scope of this part.

(a) General. This part implementssection 711 of the Gramm-Leach-BlileyAct (12 U.S.C. 1831y). That sectionrequires any nongovernmental entity orperson, insured depository institution,and affiliate of an insured depositoryinstitution that enters into a coveredagreement to—



(b) The provisions of this part areenforced by the Board with respect tostate member banks, bank holdingcompanies, and affiliates of bankholding companies, other than banks,savings associations and subsidiaries ofbanks and savings associations.

§ 207.2 Definition of covered agreement.

(a) General definition. A coveredagreement is any contract, arrangement,or understanding (whether or not legallybinding) that meets all of the followingcriteria—


include—(i) An insured depository institution



(3) The agreement provides for theinsured depository institution or anyaffiliate to—

(i) Provide to one or more individualsor entities (whether or not parties to theagreement) cash payments, grants, orother consideration (except loans) thathave an aggregate value of more than$10,000 in any calendar year; or





(b) Agreements that are not coveredagreements—(1) Certain loans. Acovered agreement does not include—


commitment for a loan or extension ofcredit to individuals, businesses, farms,or other entities if—



(2) Agreements where there has notbeen a CRA contact. (i) General. Acovered agreement does not include anyagreement entered into by an insureddepository institution or affiliate of aninsured depository institution with aperson who has not commented on,testified about, or discussed with theinstitution, or otherwise contacted theinstitution, concerning the CRA.


(A) CRA contact with a Federalbanking agency. (1) The person submitsa written comment to a Federal bankingagency that discusses the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or any CRA affiliate of theinstitution.

(2) The person provides oraltestimony or comments to a Federalbanking agency concerning the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or any CRA affiliate of theinstitution.

(B) CRA contact with insureddepository institution or affiliate. (1)The person has a discussion with, orotherwise contacts, an insureddepository institution or any affiliate ofthe institution about providing (orrefraining from providing) written ororal comments or testimony to anyFederal banking agency concerning therecord of performance or futureperformance under the CRA of theinstitution or any CRA affiliate of theinstitution.

(2) The person has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution about providing (orrefraining from providing) written

comments to the institution that must beincluded in the institution’s CRA publicfile.



(5) The person has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution concerning anyobligation or responsibility that theinstitution or any CRA affiliate of theinstitution may have to meet thebanking needs of its community and thediscussion or contact occurs while theinstitution or any affiliate has anapplication for a deposit facilitypending at a Federal banking agency oris undergoing a publicly announcedCRA performance examination.


(A) A person provides comments ortestimony concerning an insureddepository institution or affiliate to aFederal banking agency in response to adirect request by the agency forcomments or testimony from thatperson. Direct requests for comments ortestimony do not include a generalinvitation by a Federal banking agencyfor comments or testimony from thepublic in connection with a CRAperformance evaluation of, orapplication for a deposit facility by, aninsured depository institution or anapplication by a company to acquire aninsured depository institution.


(C) A person sends a similarfundraising letter to insured depositoryinstitutions and to other businesses in

its community. The letter encourages allbusinesses in the community to meettheir obligation to assist in making thelocal community a better place to liveand work.

(D) A person sends a general offeringcircular to financial institutions offeringto sell a portfolio of loans. An insureddepository institution that receives theoffering circular discusses with theperson whether the loans are in theinstitution’s local community. Noreference to the CRA or the institution’sCRA performance is made in theoffering circular or in the discussions ofthe parties.

(c) Fulfillment of the CRA—(1)General. Fulfillment of the CRA meansthe list of factors that the Federalbanking agencies have determined havea material impact on an agency’sdecision—



(2) List of factors. The list of factorsreferred to in paragraph (c)(1) of thissection means the performance of any ofthe following activities by an insureddepository institution or CRA affiliatethat is a party to the agreement or thatis an affiliate of a party to the agreementor by any person that is a party to theagreement—


(ii) Home-purchase, home-improvement, small business, smallfarm, community development, andconsumer lending, as described in§ 228.22 of Regulation BB (12 CFR228.22), including loan purchases, loancommitments, and letters of credit;

(iii) Making investments, deposits, orgrants, or acquiring membership shares,that have as their primary purposecommunity development, as describedin § 228.23 of Regulation BB (12 CFR228.23);

(iv) Delivering retail banking services,as described in § 228.24(d) of RegulationBB (12 CFR 228.24(d));

(v) Providing communitydevelopment services, as described in



§ 228.24(e) of Regulation BB (12 CFR228.24(e));

(vi) In the case of a wholesale orlimited-purpose insured depositoryinstitution, community developmentlending, including originating andpurchasing loans and making loancommitments and letters of credit,making qualified investments, orproviding community developmentservices, as described in § 228.25(c) ofRegulation BB (12 CFR 228.25(c));

(vii) In the case of a small insureddepository institution, any lending orother activity described in § 228.26(a) ofRegulation BB (12 CFR 228.26(a)); or

(viii) In the case of an insureddepository institution that is evaluatedon the basis of a strategic plan, anyelement of the strategic plan, asdescribed in § 228.27(f) of RegulationBB (12 CFR 228.27(f)).


(e) Disclosure and reporting of certainexisting agreements that becomecovered agreements. An agreement thatconcerns the performance of anyactivity described in paragraph (c) ofthis section by an affiliate may becomea covered agreement after it is enteredinto if the affiliate subsequentlybecomes a CRA affiliate. In that event,the disclosure and reporting obligationsunder §§ 207.4 and 207.5 begin on thedate that the agreement becomes acovered agreement and do not apply tothe period prior to that date.



(a) Contracts, arrangements, orunderstandings entered into by sameparties. All written contracts,arrangements, or understandings towhich an insured depository institutionor an affiliate of the insured depositoryinstitution is a party shall be consideredto be a single agreement if the contracts,arrangements, or understandings—











(4) Use of CRA public file by insureddepository institution. An insureddepository institution may fulfill itsobligation under this paragraph (b) byplacing a copy of the covered agreementin the insured depository institution’sCRA public file and making theagreement available in accordance withthe procedures set forth in section§ 228.43 of Regulation BB (12 CFR228.43).

(c) Disclosure of covered agreementsto the relevant supervisory agency—(1)Disclosure by person. Each person thatis a party to a covered agreement mustprovide a complete copy of theagreement to the relevant supervisoryagency within 30 days of receiving a

request from the agency for theagreement. This obligation terminates12 months after the end of the term ofthe covered agreement.

(2) Disclosure by insured depositoryinstitution or affiliate. (i) Filing with therelevant supervisory agency. Eachinsured depository institution oraffiliate that is a party to a coveredagreement must provide a copy of theagreement to each relevant supervisoryagency within 30 days after the date theinsured depository institution oraffiliate enters into the agreement.


(d) Relevant supervisory agency. Forpurposes of this section and § 207.5, the‘‘relevant supervisory agency’’ for acovered agreement means theappropriate Federal banking agencyfor—




§ 207.5 Annual reports.(a) Effective date. This section applies

only to covered agreements entered intoon or after May 12, 2000.


(c) Duration of reportingrequirement—(1) General. An annualreport under this section must be filedwith each relevant supervisory agencyfor—

(i) The fiscal year in which the partiesenter into the covered agreement; and(ii) Each fiscal year during the term ofthe covered agreement.

(2) Exception for person that has notreceived any funds or resources. Aperson is not required to file an annualreport for a covered agreement for any



fiscal year during the term of theagreement in which the person did notreceive any funds or other resourcesunder the agreement.

(d) Annual reports filed by person—(1) General. The annual report filed bya person under this section mustinclude the following—





(2) Reporting for funds or resourcesallocated and used for a specificpurpose. For funds or other resourcesthat the person received during thefiscal year under the covered agreementand allocated and used for a specificpurpose during the fiscal year, theannual report must—

(i) Describe each specific purpose forwhich the funds or resources were usedduring the fiscal year; and

(ii) State the amount of funds orresources used during the fiscal year foreach specific purpose.

(3) Funds or resources used for otherpurposes. For all funds or resources thatthe person received during the fiscalyear under the covered agreement anddid not use for a specific purpose, theannual report must—


(ii) Provide a detailed, itemized list ofhow the funds or resources were usedduring the fiscal year, including thetotal amount used for—




report filed by a person may consist of,or incorporate, a report prepared for anyother purpose, such as an InternalRevenue Service form, a state tax form,a report to members or shareholders,financial statements, or other report, solong as the annual report contains all ofthe information required by thisparagraph (d).

(5) Consolidated reports permitted. Aperson that is a party to five or more

covered agreements may file with eachrelevant supervisory agency a singleconsolidated annual report covering allthe covered agreements. Anyconsolidated report must contain all theinformation required by this paragraph(d). The information required to bereported under paragraph (d)(1)(iii),(d)(2), and (d)(3) of this section may bereported on an aggregate basis for allcovered agreements.

(e) Annual report filed by insureddepository institution or affiliate—(1)General. The annual report filed by aninsured depository institution oraffiliate must include the following—





(v) A general description of the termsand conditions of any payments, fees, orloans reported under paragraphs(e)(1)(iii) and (iv) of this section, or, inthe event such terms and conditions areset forth—



(vi) The aggregate amount andnumber of loans, aggregate amount andnumber of investments, and aggregateamount of services provided under thecovered agreement to any individual orentity not a party to the agreement—


(B) By any other party to theagreement, unless such information isnot known to the insured depositoryinstitution or affiliate filing the report or

such information is or will be containedin the annual report filed by a personunder paragraph (d) of this section.

(2) Consolidated reports permitted. (i)Party to large number of agreements. Aninsured depository institution oraffiliate that is a party to five or morecovered agreements may file a singleconsolidated annual report with eachrelevant supervisory agency covering allthe covered agreements.


(iii) Content of report. Anyconsolidated annual report must containall the information required by thisparagraph (e). The amounts and datarequired to be reported underparagraphs (e)(1)(iii), (iv), and (vi) ofthis section may be reported on anaggregate basis for all coveredagreements.


(2) Alternative method of fulfillingannual reporting requirement for aperson. (i) A person may fulfill the filingrequirements of this section byproviding the following materials to aninsured depository institution oraffiliate that is a party to the agreementno later than five months following theend of the person’s fiscal year—




§ 207.6 Release of information under FOIA.The Board will make covered

agreements and annual reports availableto the public in accordance with theFreedom of Information Act (5 U.S.C.552 et seq.) and the Board’s RulesRegarding the Availability ofInformation (12 CFR part 261). A partyto a covered agreement may request



confidential treatment of proprietaryand confidential information in acovered agreement or an annual reportunder those procedures.


(a) Willful failure to comply withdisclosure and reporting obligations. (1)If the Board determines that a personhas willfully failed to comply in amaterial way with §§ 207.4 or 207.5, theBoard will notify the person in writingof that determination and provide theperson a period of 90 days (or suchlonger period as the Board finds to bereasonable under the circumstances) tocomply.

(2) If the person does not complywithin the time period established bythe Board, the agreement shall thereafterbe unenforceable by that person byoperation of section 48 of the FederalDeposit Insurance Act (12 U.S.C.1831y).

(3) The Board may assist any insureddepository institution or affiliate that isa party to a covered agreement that isunenforceable by a person by operationof section 48 of the Federal DepositInsurance Act (12 U.S.C. 1831y) inidentifying a successor to assume theperson’s responsibilities under theagreement.

(b) Diversion of funds. If a court orother body of competent jurisdictiondetermines that funds or resourcesreceived under a covered agreementhave been diverted contrary to thepurposes of the covered agreement foran individual’s personal financial gain,the Board may take either or both of thefollowing actions—



(c) Notice and opportunity to respond.Before making a determination underparagraph (a)(1) of this section, or takingany action under paragraph (b) of thissection, the Board will provide writtennotice and an opportunity to presentinformation to the Board concerning anyrelevant facts or circumstances relatingto the matter.

(d) Inadvertent or de minimis errors.Inadvertent or de minimis errors inannual reports or other documents filedwith the Board under §§ 207.4 or 207.5will not subject the reporting party toany penalty.

(e) Enforcement of provisions incovered agreements. No provision ofthis part shall be construed asauthorizing the Board to enforce theprovisions of any covered agreement.

§ 207.8 Other definitions and rules ofconstruction used in this part.

(a) Affiliate. ‘‘Affiliate’’ means—(1) Any company that controls, is


(2) For the purpose of determiningwhether an agreement is a coveredagreement under § 207.2, an ‘‘affiliate’’includes any company that would beunder common control or merged withanother company on consummation ofany transaction pending before aFederal banking agency at the time—





(d) CRA public file. For purposes ofthis part, ‘‘CRA public file’’ means thepublic file maintained by an insureddepository institution and described in§ 228.43 of Regulation BB (12 CFR228.43).

(e) Federal banking agency;appropriate Federal banking agency.The terms ‘‘Federal banking agency’’and ‘‘appropriate Federal bankingagency’’ have the same meanings as insection 3 of the Federal DepositInsurance Act (12 U.S.C. 1813).




(h) Nongovernmental entity orperson—(1) General. A‘‘nongovernmental entity or person’’ isany partnership, association, trust, jointventure, joint stock company,corporation, limited liabilitycorporation, company, firm, society,other organization, or individual.

(2) Exclusions. A nongovernmentalentity or person does not include—




(iv) An officer, director, employee, orrepresentative (acting in his or hercapacity as an officer, director,employee, or representative) of an entitylisted in paragraphs (h)(2)(i) through(iii) of this section.



(k) Term of agreement. An agreementthat does not by its terms establish atermination date is considered toterminate on the last date on which anyparty to the agreement makes anypayment or provides any loan or otherresources under the agreement, unlessthe appropriate Federal banking agencyotherwise notifies each party in writing.

By order of the Board of Governors of theFederal Reserve System, May 10, 2000.Jennifer J. Johnson,Secretary of the Board

Federal Deposit Insurance Corporation

12 CFR Chapter III


For the reasons set out in the jointpreamble, Title 12, Chapter III, of theCode of Federal Regulations is proposedto be amended by adding a new part 346to read as follows:

PART 346—DISCLOSURE ANDREPORTING OF CRA–RELATEDAGREEMENTS


single agreement.346.4 Disclosure of covered agreements.346.5 Annual reports.346.6 Release of information under FOIA.346.7 Compliance provisions.



346.8 Other definitions and rules ofconstruction used in this part.


§ 346.1 Purpose and scope of this part.(a) General. This part implements

section 711 of the Gramm-Leach-BlileyAct, Pub. L. 106–102, section 711, 113Stat. 1465 (1999) (12 U.S.C. 1831y). Thatsection requires any nongovernmentalentity or person, insured depositoryinstitution, and affiliate of an insureddepository institution that enters into acovered agreement to:

(1) Make the covered agreementavailable to the public and theappropriate federal banking agency; and

(2) File an annual report with theappropriate federal banking agencyconcerning the covered agreement.

(b) The provisions of this part areenforced by the FDIC with respect to astate nonmember insured bank or aforeign bank having an insured branch.


agreement is any contract, arrangement,or understanding (whether or not legallybinding) that meets all of the followingcriteria:


include:(i) An insured depository institution



(3) The agreement provides for theinsured depository institution or anyaffiliate to:




(b) Agreements that are not coveredagreements—(1) Certain loans. Acovered agreement does not include:


commitment for a loan or extension ofcredit to individuals, businesses, farms,or other entities if:



(2) Agreements where there has notbeen a CRA contact. (i) General. Acovered agreement does not include anyagreement entered into by an insureddepository institution or affiliate of aninsured depository institution with aperson who has not commented on,testified about, or discussed with theinstitution, or otherwise contacted theinstitution, concerning the CRA.


(A) CRA contact with a federalbanking agency. (1) The person submitsa written comment to a federal bankingagency that discusses the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or any CRA affiliate of theinstitution.

(2) The person provides oraltestimony or comments to a federalbanking agency concerning the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or any CRA affiliate of theinstitution.

(B) CRA contact with insureddepository institution or affiliate. (1)The person has a discussion with, orotherwise contacts, an insureddepository institution or any affiliate ofthe institution about providing (orrefraining from providing) written ororal comments or testimony to anyfederal banking agency concerning therecord of performance or futureperformance under the CRA of theinstitution or any CRA affiliate of theinstitution.

(2) The person has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution about providing (orrefraining from providing) writtencomments to the institution that must beincluded in the institution’s CRA publicfile.



(5) The person has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution concerning anyobligation or responsibility that theinstitution or any CRA affiliate of theinstitution may have to meet thebanking needs of its community and thediscussion or contact occurs while theinstitution or any affiliate has anapplication for a deposit facilitypending at a federal banking agency oris undergoing a publicly announcedCRA performance examination.


(A) A person provides comments ortestimony concerning an insureddepository institution or affiliate to afederal banking agency in response to adirect request by the agency forcomments or testimony from thatperson. Direct requests for comments ortestimony do not include a generalinvitation by a federal banking agencyfor comments or testimony from thepublic in connection with a CRAperformance evaluation of, orapplication for a deposit facility by, aninsured depository institution or anapplication by a company to acquire aninsured depository institution.


(C) A person sends a similarfundraising letter to insured depositoryinstitutions and to other businesses inits community. The letter encourages allbusinesses in the community to meettheir obligation to assist in making thelocal community a better place to liveand work.

(D) A person sends a general offeringcircular to financial institutions offeringto sell a portfolio of loans. An insureddepository institution that receives theoffering circular discusses with the



person whether the loans are in theinstitution’s local community. Noreference to the CRA or the institution’sCRA performance is made in theoffering circular or in the discussions ofthe parties.

(c) Fulfillment of the CRA—(1)General. Fulfillment of the CRA meansthe list of factors that the federalbanking agencies have determined havea material impact on an agency’sdecision:



(2) List of factors. The list of factorsreferred to in paragraph (c)(1) of thissection means the performance of any ofthe following activities by an insureddepository institution or CRA affiliatethat is a party to the agreement or thatis an affiliate of a party to the agreementor by any person that is a party to theagreement:

(i) Providing or refraining fromproviding written or oral comments ortestimony to any federal banking agencyconcerning the record of performance orfuture performance under the CRA of aninsured depository institution or CRAaffiliate that is a party to the agreementor an affiliate of a party to the agreementor written comments that are required tobe included in the CRA public file ofany such insured depository institution;

(ii) Home-purchase, home-improvement, small business, smallfarm, community development, andconsumer lending, as described in 12CFR 345.22, including loan purchases,loan commitments, and letters of credit;

(iii) Making investments, deposits, orgrants, or acquiring membership shares,that have as their primary purposecommunity development, as describedin 12 CFR 345.23;

(iv) Delivering retail banking services,as described in 12 CFR 345.24(d);

(v) Providing communitydevelopment services, as described in12 CFR 345.24(e);

(vi) In the case of a wholesale orlimited-purpose insured depositoryinstitution, community developmentlending, including originating andpurchasing loans and making loancommitments and letters of credit,making qualified investments, orproviding community developmentservices, as described in 12 CFR345.25(c);

(vii) In the case of a small insureddepository institution, any lending orother activity described in 12 CFR345.26(a); or

(viii) In the case of an insureddepository institution that is evaluatedon the basis of a strategic plan, anyelement of the strategic plan, asdescribed in 12 CFR 345.27(f).





(a) Contracts, arrangements, orunderstandings entered into by sameparties. All written contracts,arrangements, or understandings towhich an insured depository institutionor an affiliate of the insured depositoryinstitution is a party shall be consideredto be a single agreement if the contracts,arrangements, or understandings:











(4) Use of CRA public file by insureddepository institution. An insureddepository institution may fulfill itsobligation under this paragraph (b) byplacing a copy of the covered agreementin the insured depository institution’sCRA public file and making theagreement available in accordance withthe procedures set forth in 12 CFR345.43.

(c) Disclosure of covered agreementsto the relevant supervisory agency—(1)Disclosure by person. Each person thatis a party to a covered agreement mustprovide a complete copy of theagreement to the relevant supervisoryagency within 30 days of receiving arequest from the agency for theagreement. This obligation terminates12 months after the end of the term ofthe covered agreement.


(ii) Joint filings. In the event that twoor more insured depository institutionsor affiliates are parties to a coveredagreement, the insured depositoryinstitution(s) and affiliate(s) may jointly



file a copy of the covered agreementwith each relevant supervisory agency.Any joint filing must identify theinsured depository institution(s) andaffiliate(s) for whom the coveredagreement is being filed.

(d) Relevant supervisory agency. Forpurposes of this section and § 346.5, the‘‘relevant supervisory agency’’ for acovered agreement means theappropriate federal banking agency for:







(c) Duration of reportingrequirement—(1) General. An annualreport under this section must be filedwith each relevant supervisory agencyfor:

(i) The fiscal year in which the partiesenter into the covered agreement; and

(ii) Each fiscal year during the term ofthe covered agreement.

(2) Exception for person that has notreceived any funds or resources. Aperson is not required to file an annualreport for a covered agreement for anyfiscal year during the term of theagreement in which the person did notreceive any funds or other resourcesunder the agreement.

(d) Annual reports filed by person—(1) General. The annual report filed bya person under this section mustinclude the following:





(2) Reporting for funds or resourcesallocated and used for a specificpurpose. For funds or other resourcesthat the person received during thefiscal year under the covered agreementand allocated and used for a specificpurpose during the fiscal year, theannual report must:



(3) Funds or resources used for otherpurposes. For all funds or resources thatthe person received during the fiscalyear under the covered agreement anddid not use for a specific purpose, theannual report must:


(ii) Provide a detailed, itemized list ofhow the funds or resources were usedduring the fiscal year, including thetotal amount used for:




report filed by a person may consist of,or incorporate, a report prepared for anyother purpose, such as an InternalRevenue Service form, a state tax form,a report to members or shareholders,financial statements, or other report, solong as the annual report contains all ofthe information required by thisparagraph (d).

(5) Consolidated reports permitted. Aperson that is a party to five or morecovered agreements may file with eachrelevant supervisory agency a singleconsolidated annual report covering allthe covered agreements. Anyconsolidated report must contain all theinformation required by this paragraph(d). The information required to bereported under paragraphs (d)(1)(iii),(d)(2), and (d)(3) of this section may bereported on an aggregate basis for allcovered agreements.

(e) Annual report filed by insureddepository institution or affiliate—(1)General. The annual report filed by aninsured depository institution oraffiliate must include the following:





(v) A general description of the termsand conditions of any payments, fees, orloans reported under paragraphs(e)(1)(iii) and (iv) of this section, or, inthe event such terms and conditions areset forth:



(vi) The aggregate amount andnumber of loans, aggregate amount andnumber of investments, and aggregateamount of services provided under thecovered agreement to any individual orentity not a party to the agreement:


(B) By any other party to theagreement, unless such information isnot known to the insured depositoryinstitution or affiliate filing the report orsuch information is or will be containedin the annual report filed by a personunder paragraph (d) of this section.





(iii) Content of report. Anyconsolidated annual report must containall the information required by thisparagraph (e). The amounts and datarequired to be reported underparagraphs (e)(1)(iii), (iv), and (vi) ofthis section may be reported on anaggregate basis for all coveredagreements.


(2) Alternative method of fulfillingannual reporting requirement for aperson. (i) A person may fulfill the filingrequirements of this section byproviding the following materials to aninsured depository institution oraffiliate that is a party to the agreementno later than five months following theend of the person’s fiscal year:




§ 346.6 Release of information under FOIA.The FDIC will make covered

agreements and annual reports availableto the public in accordance with theFreedom of Information Act (5 U.S.C.552 et seq.) and the FDIC’s rulesregarding Disclosure of Information (12CFR part 309). A party to a coveredagreement may request confidentialtreatment of proprietary andconfidential information in a coveredagreement or an annual report underthose procedures.

§ 346.7 Compliance provisions.(a) Willful failure to comply with

disclosure and reporting obligations. (1)If the FDIC determines that a person haswillfully failed to comply in a materialway with §§ 346.4 or 346.5, the FDICwill notify the person in writing of thatdetermination and provide the person aperiod of 90 days (or such longer periodas the FDIC finds to be reasonable underthe circumstances) to comply.

(2) If the person does not complywithin the time period established bythe FDIC, the agreement shall thereafter

be unenforceable by that person byoperation of section 48 of the FederalDeposit Insurance Act (12 U.S.C.1831y).

(3) The FDIC may assist any insureddepository institution or affiliate that isa party to a covered agreement that isunenforceable by a person by operationof section 48 of the Federal DepositInsurance Act (12 U.S.C. 1831y) inidentifying a successor to assume theperson’s responsibilities under theagreement.

(b) Diversion of funds. If a court orother body of competent jurisdictiondetermines that funds or resourcesreceived under a covered agreementhave been diverted contrary to thepurposes of the covered agreement foran individual’s personal financial gain,the FDIC may take either or both of thefollowing actions:



(c) Notice and opportunity to respond.Before making a determination underparagraph (a)(1) of this section, or takingany action under paragraph (b) of thissection, the FDIC will provide writtennotice and an opportunity to presentinformation to the FDIC concerning anyrelevant facts or circumstances relatingto the matter.

(d) Inadvertent or de minimis errors.Inadvertent or de minimis errors inannual reports or other documents filedwith the FDIC under §§ 346.4 or 346.5will not subject the reporting party toany penalty.

(e) Enforcement of provisions incovered agreements. No provision ofthis part shall be construed asauthorizing the FDIC to enforce theprovisions of any covered agreement.


(a) Affiliate. ‘‘Affiliate’’ means:(1) Any company that controls, is


(2) For the purpose of determiningwhether an agreement is a coveredagreement under § 346.2, an ‘‘affiliate’’includes any company that would beunder common control or merged withanother company on consummation ofany transaction pending before a federalbanking agency at the time:





(d) CRA public file. For purposes ofthis part, ‘‘CRA public file’’ means thepublic file maintained by an insureddepository institution and described in12 CFR 345.43.

(e) Federal banking agency;appropriate federal banking agency. Theterms ‘‘federal banking agency’’ and‘‘appropriate federal banking agency’’have the same meanings as in section 3of the Federal Deposit Insurance Act (12U.S.C. 1813).




(h) Nongovernmental entity orperson—(1) General. A‘‘nongovernmental entity or person’’ isany partnership, association, trust, jointventure, joint stock company,corporation, limited liabilitycorporation, company, firm, society,other organization, or individual.

(2) Exclusions. A nongovernmentalentity or person does not include:

(i) The United States government, astate government, a unit of localgovernment (including a county, city,town, township, parish, village, or othergeneral-purpose subdivision of a state)or an Indian tribe or tribal organizationestablished under federal, state orIndian tribal law (including theDepartment of Hawaiian Home Lands),or a department, agency, orinstrumentality of any such entity;



(iv) An officer, director, employee, orrepresentative (acting in his or hercapacity as an officer, director,



employee, or representative) of an entitylisted in paragraphs (h)(2)(i) through(iii) of this section.



(k) Term of agreement. An agreementthat does not by its terms establish atermination date is considered toterminate on the last date on which anyparty to the agreement makes anypayment or provides any loan or otherresources under the agreement, unlessthe appropriate federal banking agencyotherwise notifies each party in writing.By order of the Board of Directors.

Federal Deposit Insurance Corporation.Dated at Washington, DC, this 10th day of

May, 2000.Robert E. Feldman,Executive Secretary.

Department of the Treasury

Office of Thrift Supervision

12 CFR Chapter V


For the reasons set out in the jointpreamble, OTS proposes to amend Title12, Chapter V, of the Code of FederalRegulations by adding a new part 533 toread as follows:

PART 533—DISCLOSURE ANDREPORTING OF CRA-RELATEDAGREEMENTS


single agreement.533.4 Disclosure of covered agreements.533.5 Annual reports.533.6 Release of information under FOIA.533.7 Compliance provisions.533.8 Other definitions and rules of

construction used in this part.

Authority: 12 U.S.C. 1462a, 1463, 1464,1467a, and 1831y.

§ 533.1 Purpose and scope of this part.

(a) General. This part implementssection 711 of the Gramm-Leach-BlileyAct (12 U.S.C. 1831y). That sectionrequires any nongovernmental entity orperson, insured depository institution,and affiliate of an insured depositoryinstitution that enters into a coveredagreement to—



(b) The provisions of this part areenforced by OTS with respect to savingsassociations, savings and loan holdingcompanies, and companies that arecontrolled by savings associations orsavings and loan holding companies.


agreement is any contract, arrangement,or understanding (whether or not legallybinding) that meets all of the followingcriteria—


include—(i) An insured depository institution


(ii) A nongovernmental entity orperson (referred to as a NGEP).

(3) The agreement provides for theinsured depository institution or anyaffiliate to—




(b) Agreements that are not coveredagreements. (1) Certain loans. A coveredagreement does not include—


commitment for a loan or extension ofcredit to individuals, businesses, farms,or other entities if—



(2) Agreements where there has notbeen a CRA contact. (i) General. Acovered agreement does not include anyagreement entered into by an insureddepository institution or affiliate of aninsured depository institution with aNGEP who has not commented on,testified about, or discussed with theinstitution, or otherwise contacted theinstitution, concerning the CRA.

(ii) Examples of CRA contact. Thefollowing are examples of CRA contacts.

These examples are not exclusive andother actions by a NGEP may also makethe exemption in paragraph (b)(2)(i) ofthis section unavailable. If a NGEPengages in any of the following actionsand subsequently enters into anagreement with the insured depositoryinstitution or any affiliate of theinstitution, the agreement is not exemptunder paragraph (b)(2)(i) of this section.

(A) CRA contact with a Federalbanking agency. (1) The NGEP submitsa written comment to a Federal bankingagency that discusses the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or any CRA affiliate of theinstitution.

(2) The NGEP provides oral testimonyor comments to a Federal bankingagency concerning the record ofperformance or future performanceunder the CRA of an insured depositoryinstitution or any CRA affiliate of theinstitution.

(B) CRA contact with insureddepository institution or affiliate. (1)The NGEP has a discussion with, orotherwise contacts, an insureddepository institution or any affiliate ofthe institution about providing (orrefraining from providing) written ororal comments or testimony to anyFederal banking agency concerning therecord of performance or futureperformance under the CRA of theinstitution or any CRA affiliate of theinstitution.

(2) The NGEP has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution about providing (orrefraining from providing) writtencomments to the institution that must beincluded in the institution’s CRA publicfile.

(3) The NGEP has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution concerning the CRArating of the institution, or the CRArecord of performance of the institutionor any CRA affiliate of the institution.

(4) The NGEP has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution concerning actions thatshould be taken to improve the CRAperformance of the institution or anyCRA affiliate of the institution.

(5) The NGEP has a discussion with,or otherwise contacts, an insureddepository institution or any affiliate ofthe institution concerning anyobligation or responsibility that theinstitution or any CRA affiliate of theinstitution may have to meet thebanking needs of its community and thediscussion or contact occurs while the



institution or any affiliate has anapplication for a deposit facilitypending at a Federal banking agency oris undergoing a publicly announcedCRA performance examination.


(A) A NGEP provides comments ortestimony concerning an insureddepository institution or affiliate to aFederal banking agency in response to adirect request by the agency forcomments or testimony from that NGEP.Direct requests for comments ortestimony do not include a generalinvitation by a Federal banking agencyfor comments or testimony from thepublic in connection with a CRAperformance evaluation of, orapplication for a deposit facility by, aninsured depository institution or anapplication by a company to acquire aninsured depository institution.

(B) A NGEP makes a statementconcerning an insured depositoryinstitution or affiliate at a widelyattended conference or seminarregarding a general topic. A public orprivate meeting, public hearing, or othermeeting regarding one or more specificinstitutions or affiliates or transactionsinvolving an application for a depositfacility is not considered a widelyattended conference or seminar.

(C) A NGEP sends a similarfundraising letter to insured depositoryinstitutions and to other businesses inits community. The letter encourages allbusinesses in the community to meettheir obligation to assist in making thelocal community a better place to liveand work.

(D) A NGEP sends a general offeringcircular to financial institutions offeringto sell a portfolio of loans. An insureddepository institution that receives theoffering circular discusses with theNGEP whether the loans are in theinstitution’s local community. Noreference to the CRA or the institution’sCRA performance is made in theoffering circular or in the discussions ofthe parties.

(c) Fulfillment of the CRA. (1)General. Fulfillment of the CRA meansthe list of factors that the Federalbanking agencies have determined havea material impact on an agency’sdecision—

(i) To approve or disapprove anapplication for a deposit facility (asdefined in section 803 of the CRA (12U.S.C. 2902)); or (ii) To assign a rating

to an insured depository institutionunder section 807 of the CRA (12 U.S.C.2906).

(2) List of factors. The list of factorsreferred to in paragraph (c)(1) of thissection means the performance of any ofthe following activities by an insureddepository institution or CRA affiliatethat is a party to the agreement or thatis an affiliate of a party to the agreementor by any NGEP that is a party to theagreement—


(ii) Home-purchase, home-improvement, small business, smallfarm, community development, andconsumer lending, as described in§ 563e.22 of this chapter, including loanpurchases, loan commitments, andletters of credit;

(iii) Making investments, deposits, orgrants, or acquiring membership shares,that have as their primary purposecommunity development, as describedin § 563e.23 of this chapter;

(iv) Delivering retail banking services,as described in § 563e.24(d) of thischapter;

(v) Providing communitydevelopment services, as described in§ 563e.24(e) of this chapter;

(vi) In the case of a wholesale orlimited-purpose insured depositoryinstitution, community developmentlending, including originating andpurchasing loans and making loancommitments and letters of credit,making qualified investments, orproviding community developmentservices, as described in § 563e.25(c) ofthis chapter;

(vii) In the case of a small insureddepository institution, any lending orother activity described in § 563e.26(a)of this chapter; or

(viii) In the case of an insureddepository institution that is evaluatedon the basis of a strategic plan, anyelement of the strategic plan, asdescribed in § 563e.27(f) of this chapter.

(d) Agreements relating to activities ofCRA affiliates. An insured depositoryinstitution or affiliate that is a party toa covered agreement that concerns theperformance of any activity of a CRAaffiliate described in paragraph (c) ofthis section must notify each NGEP thatis a party to the agreement that the

agreement concerns a CRA affiliate. Theinsured depository institution oraffiliate must provide this notice priorto the time the agreement is entered intoif the affiliate is a CRA affiliate at thattime, or within a reasonable time afterthe affiliate becomes a CRA affiliate ifthe affiliate is not a CRA affiliate at thetime the agreement is entered into.




(a) Contracts, arrangements, orunderstandings entered into by sameparties. All written contracts,arrangements, or understandings towhich an insured depository institutionor an affiliate of the insured depositoryinstitution is a party shall be consideredto be a single agreement if the contracts,arrangements, or understandings—

(1) Are entered into with the sameNGEP;



All written contracts to which aninsured depository institution or anaffiliate of the insured depositoryinstitution is a party shall be consideredto be a single agreement, without regardto whether the other parties to thecontracts are the same or whether eachsuch contract is in fulfillment of theCRA, if the contracts were negotiated ina coordinated fashion and a NGEP is aparty to each contract.



(b) Disclosure of covered agreementsto the public. (1) Disclosure required. (i)Each NGEP and each insured depositoryinstitution or affiliate that enters into acovered agreement must make acomplete copy of the covered agreementavailable to any individual or entityupon request.



(ii) In disclosing a covered agreementto the public under paragraph (b)(1)(i) ofthis section, a NGEP, insured depositoryinstitution, or affiliate may withholdfrom disclosure only those portions ofan agreement that the relevantsupervisory agency determines areexempt from disclosure under theFreedom of Information Act (5 U.S.C.552 et seq.).


(3) Reasonable copy and mailing fees.Each NGEP and each insured depositoryinstitution or affiliate may charge anindividual or entity that requests a copyof a covered agreement a reasonable feenot to exceed the cost of copying andmailing the agreement.

(4) Use of CRA public file by insureddepository institution. An insureddepository institution may fulfill itsobligation under this paragraph (b) byplacing a copy of the covered agreementin the insured depository institution’sCRA public file and making theagreement available in accordance withthe procedures set forth in § 563e.43 ofthis chapter.

(c) Disclosure of covered agreementsto the relevant supervisory agency. (1)Disclosure by NGEP. Each NGEP that isa party to a covered agreement mustprovide a complete copy of theagreement to the relevant supervisoryagency within 30 days of receiving arequest from the agency for theagreement. This obligation terminates12 months after the end of the term ofthe covered agreement.



(d) Relevant supervisory agency. Forpurposes of this section and § 533.5, therelevant supervisory agency for acovered agreement means theappropriate Federal banking agencyfor—






(b) Annual report required. EachNGEP and each insured depositoryinstitution or affiliate that is a party toa covered agreement must file an annualreport with each relevant supervisoryagency concerning the disbursement,receipt, and uses of funds or otherresources under the covered agreement.

(c) Duration of reporting requirement.(1) General. An annual report under thissection must be filed with each relevantsupervisory agency for—

(i) The fiscal year in which the partiesenter into the covered agreement; and(ii) Each fiscal year during the term ofthe covered agreement.

(2) Exception for NGEP that has notreceived any funds or resources. ANGEP is not required to file an annualreport for a covered agreement for anyfiscal year during the term of theagreement in which the NGEP did notreceive any funds or other resourcesunder the agreement.

(d) Annual reports filed by NGEP. (1)General. The annual report filed by aNGEP under this section must includethe following—

(i) The name and mailing address ofthe NGEP filing the report;




(2) Reporting for funds or resourcesallocated and used for a specificpurpose. For funds or other resourcesthat the NGEP received during the fiscalyear under the covered agreement andallocated and used for a specificpurpose during the fiscal year, theannual report must—



(3) Reporting for funds or resourcesused for other purposes. For all funds orresources that the NGEP received duringthe fiscal year under the coveredagreement and did not use for a specificpurpose, the annual report must—


(ii) Provide a detailed, itemized list ofhow the funds or resources were usedduring the fiscal year, including thetotal amount used for—




report filed by a NGEP may consist of,or incorporate, a report prepared for anyother purpose, such as an InternalRevenue Service form, a state tax form,a report to members or shareholders,financial statements, or other report, solong as the annual report contains all ofthe information required by thisparagraph (d).

(5) Consolidated reports permitted. ANGEP that is a party to five or morecovered agreements may file with eachrelevant supervisory agency a singleconsolidated annual report covering allthe covered agreements. Anyconsolidated report must contain all theinformation required by this paragraph(d). The information required to bereported under paragraphs (d)(1)(iii),(d)(2), and (d)(3) of this section may bereported on an aggregate basis for allcovered agreements.

(e) Annual report filed by insureddepository institution or affiliate. (1)General. The annual report filed by aninsured depository institution oraffiliate must include the following—



(iii) The aggregate amount ofpayments, aggregate amount of fees, andaggregate amount of loans provided bythe insured depository institution oraffiliate under the covered agreement to



any other party to the agreement duringthe fiscal year;


(v) A general description of the termsand conditions of any payments, fees, orloans reported under paragraphs(e)(1)(iii) and (e)(1)(iv) of this section,or, in the event such terms andconditions are set forth—



(vi) The aggregate amount andnumber of loans, aggregate amount andnumber of investments, and aggregateamount of services provided under thecovered agreement to any individual orentity not a party to the agreement—


(B) By any other party to theagreement, unless such information isnot known to the insured depositoryinstitution or affiliate filing the report orsuch information is or will be containedin the annual report filed by a NGEPunder paragraph (d) of this section.



(iii) Content of report. Anyconsolidated annual report must containall the information required by thisparagraph (e). The amounts and datarequired to be reported underparagraphs (e)(1)(iii), (e)(1)(iv), and(e)(1)(vi) of this section may be reportedon an aggregate basis for all coveredagreements.

(f) Time and place of filing. (1)General. Each party must file its annualreport with each relevant supervisory

agency for the covered agreement nolater than six months following the endof the fiscal year covered by the report.

(2) Alternative method of fulfillingannual reporting requirement for aNGEP. (i) A NGEP may fulfill the filingrequirements of this section byproviding the following materials to aninsured depository institution oraffiliate that is a party to the agreementno later than five months following theend of the NGEP’s fiscal year—

(A) A copy of the NGEP’s annualreport required under paragraph (d) ofthis section for the fiscal year; and

(B) Written instructions that theinsured depository institution oraffiliate promptly forward the annualreport to the relevant supervisoryagency or agencies on behalf of theNGEP.

(ii) An insured depository institutionor affiliate that receives an annual reportfrom a NGEP pursuant to paragraph(f)(2)(i) of this section must file thereport with the relevant supervisoryagency or agencies on behalf of theNGEP within 30 days.

§ 533.6 Release of information under FOIA.

OTS will make covered agreementsand annual reports available to thepublic in accordance with the Freedomof Information Act (5 U.S.C. 552 et seq.),OTS’s rules (part 505 of this chapter),and the Department of Treasury’s rules(31 CFR part 1). A party to a coveredagreement may request confidentialtreatment of proprietary andconfidential information in a coveredagreement or an annual report underthose procedures.


(a) Willful failure to comply withdisclosure and reporting obligations. (1)If OTS determines that a NGEP haswillfully failed to comply in a materialway with §§ 533.4 or 533.5, OTS willnotify the NGEP in writing of thatdetermination and provide the NGEP aperiod of 90 days (or such longer periodas OTS finds to be reasonable under thecircumstances) to comply.

(2) If the NGEP does not complywithin the time period established byOTS, the agreement shall thereafter beunenforceable by that NGEP byoperation of section 48 of the FederalDeposit Insurance Act (12 U.S.C.1831y).

(3) OTS may assist any insureddepository institution or affiliate that isa party to a covered agreement that isunenforceable by a NGEP by operationof section 48 of the Federal DepositInsurance Act (12 U.S.C. 1831y) inidentifying a successor to assume the

NGEP’s responsibilities under theagreement.

(b) Diversion of funds. If a court orother body of competent jurisdictiondetermines that funds or resourcesreceived under a covered agreementhave been diverted contrary to thepurposes of the covered agreement foran individual’s personal financial gain,OTS may take either or both of thefollowing actions—



(c) Notice and opportunity to respond.Before making a determination underparagraph (a)(1) of this section, or takingany action under paragraph (b) of thissection, OTS will provide written noticeand an opportunity to presentinformation to OTS concerning anyrelevant facts or circumstances relatingto the matter.

(d) Inadvertent or de minimis errors.Inadvertent or de minimis errors inannual reports or other documents filedwith OTS under §§ 533.4 or 533.5 willnot subject the reporting party to anypenalty.

(e) Enforcement of provisions incovered agreements. No provision ofthis part shall be construed asauthorizing OTS to enforce theprovisions of any covered agreement.


(a) Affiliate. Affiliate means—(1) Any company that controls, is


(2) For the purpose of determiningwhether an agreement is a coveredagreement under § 533.2, an affiliateincludes any company that would beunder common control or merged withanother company on consummation ofany transaction pending before aFederal banking agency at the time—


(ii) The NGEP that is a party to theagreement makes a CRA contact, asdescribed in § 533.2(b)(2).

(b) Control. Control is defined insection 2(a) of the Bank HoldingCompany Act (12 U.S.C. 1841(a)).

(c) CRA affiliate. A CRA affiliate of aninsured depository institution is anycompany that is an affiliate of aninsured depository institution to theextent, and only to the extent, that theactivities of the affiliate were consideredby the appropriate Federal bankingagency when evaluating the CRAperformance of the institution at itsmost recent CRA examination.



(d) CRA public file. For purposes ofthis part, CRA public file means thepublic file maintained by an insureddepository institution and described in§ 563e.43 of this chapter.

(e) Federal banking agency;appropriate Federal banking agency.The terms Federal banking agency andappropriate Federal banking agencyhave the same meanings as in section 3of the Federal Deposit Insurance Act (12U.S.C. 1813).

(f) Fiscal year. (1) The fiscal year fora NGEP that does not have a fiscal yearshall be the calendar year;

(2) Any NGEP, insured depositoryinstitution, or affiliate that has a fiscalyear may elect to have the calendar yearbe its fiscal year for purposes of thispart.

(g) Insured depository institution.Insured depository institution has thesame meaning as in section 3 of theFederal Deposit Insurance Act (12U.S.C. 1813).

(h) Nongovernmental entity or person.(1) General. A nongovernmental entityor person or NGEP is any partnership,

association, trust, joint venture, jointstock company, corporation, limitedliability corporation, company, firm,society, other organization, orindividual.

(2) Exclusions. A nongovernmentalentity or person does not include—




(iv) An officer, director, employee, orrepresentative (acting in his or hercapacity as an officer, director,

employee, or representative) of an entitylisted in paragraphs (h)(2)(i), (h)(2)(ii),or (h)(2)(iii) of this section.

(i) Party. The term party with respectto a covered agreement means eachNGEP and each insured depositoryinstitution or affiliate that entered intothe agreement.

(j) Term of agreement. An agreementthat does not by its terms establish atermination date is considered toterminate on the last date on which anyparty to the agreement makes anypayment or provides any loan or otherresources under the agreement, unlessthe appropriate Federal banking agencyotherwise notifies each party in writing.

Dated: May 10, 2000.

By the Office of Thrift Supervision.

Ellen Seidman,Director.[FR Doc. 00–12337 Filed 5–18–00; 8:45 am]

BILLING CODE 4810–33–U; 6210–01–U; 6714–01–U;6720–01–U


federal reserve system federal deposit insurance corporation

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