Board of Governors of the Federal Reserve System: Bank Holding Companies and Change in Bank Control (Regulation Y)

Published by the Government Accountability Office on 1997-03-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Office of the General Counsel


      March 12, 1997

      The Honorable Alfonse M. D'Amato
      The Honorable Paul S. Sarbanes
      Ranking Minority Member
      Committee on Banking, Housing, and Urban Affairs
      United States Senate

      The Honorable Jim Leach
      The Honorable Henry B. Gonzalez
      Ranking Minority Member
      Committee on Banking and Financial Services
      House of Representatives

      Subject:   Board of Governors of the Federal Reserve System: Bank Holding
                 Companies and Change in Bank Control (Regulation Y)

      Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on
      a major rule promulgated by the Board of Governors of the Federal Reserve System,
      entitled "Bank Holding Companies and Change in Bank Control (Regulation Y)"
      (Docket Nos. R-0935; R-0936). We received the rule on February 24, 1997. It was
      published in the Federal Register as a final rule on February 28, 1997. 62 Fed.
      Reg. 9290.

      The final rule amends Regulation Y to improve the competitiveness of bank holding
      companies by eliminating unnecessary regulatory burden and operating restrictions
      and streamlining the application and notice process.

      Enclosed is our assessment of the Board of Governors' compliance with the
      procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with
      respect to the rule. Our review indicates that the Board of Governors complied
      with the applicable requirements.

If you have any questions about this report, please contact James Vickers,
Assistant General Counsel, at (202) 512-8210. The official responsible for GAO
evaluation work relating to the Board of Governors of the Federal Reserve System
is Jean Gleason Stromberg, Director, Financial Institutions and Markets Issues.
Ms. Stromberg can be reached at (202) 512-8678.

Robert P. Murphy
General Counsel


cc: Mr. Donald J. Winn
    Assistant to the Board
    Board of Governors
    Federal Reserve System

Page 2                                                           GAO/OGC-97-28

       ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
                                ISSUED BY
                            (REGULATION Y)"
                      (DOCKET NOS. R-0935; R-0936)

(i) Cost-benefit analysis

A cost-benefit analysis was not required or prepared for the final rule.

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,
607 and 609

The Board of Governors has concluded that the final rule will have a significant
economic impact on a substantial number of small entities, and an initial regulatory
flexibility analysis and final regulatory flexibility analysis have been prepared and
are included in the notice of proposed rulemaking and the final rule notice,
respectively, as required by sections 603 and 604. The analyses comply with the
informational requirements of the sections including the number and sizes of the
small entities affected and the alternatives considered to reduce the burden on
small entities.

The final analysis points out that the expedited application/notice procedures and
the removal of unnecessary and outmoded regulatory restriction will be particularly
helpful to small bank holding companies.

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform
Act of 1995, 2 U.S.C. §§ 1532-1535

The rule, promulgated by an independent regulatory agency, is not subject to title II
of the act.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

The rule was promulgated through notice and comment rulemaking procedures of
5 U.S.C. § 553. The proposed rulemaking was published in the Federal Register on
September 6, 1996, 61 Fed. Reg. 47242, and afforded interested parties the
opportunity to comment on the proposed rule. Over 300 comments were received.

The final rule discusses and summarizes the comments submitted and the response
to them in promulgating the final rule.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

The preamble to the final rule discusses the information collection requirements of
the final rule, the reason for the collections, and burden estimates.

The various information collections have already been approved by the Office of
Management and Budget under the act and issued OMB control numbers which are
listed in the preamble.

The preamble points out that the number of responses and burden hours associated
with the collections are greatly reduced because of the streamlined procedures now
available to bank holding companies under the final rule. The total cost of
complying with the information collections prior to the issuance of the final rule
was estimated to be $2,743,130. It is estimated that the reduction in responses and
burden hours will result in a savings of $1,273,975 or a new yearly cost of
compliance of $1,469,155.

Statutory authorization for the rule

The final rule was promulgated under the authority of section 5(b) of the Bank
Holding Company Act of 1956 (12 U.S.C. § 1844(b)); sections 8 and 13(a) of the
International Banking Act of 1978 (12 U.S.C. §§ 3106 and 3108); section 7(j)(13) of
the Federal Deposit Insurance Act, as amended by the Change in Bank Control Act
of 1978 (12 U.S.C. § 1817(j)(13)); section 8(b) of the Federal Deposit Insurance Act
(12 U.S.C. § 1818(b)); section 914 of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (12 U.S.C. § 1831i); section 106 of the Bank Holding
Company Act Amendments of 1970 (12 U.S.C. § 1972) and the International Lending
Supervision Act of 1983 (Public Law 96-181).

Executive Order No. 12866

As an independent regulatory agency, rules promulgated by the Board of Governors
of the Federal Reserve System are not subject to review under the executive order.

Page 2                                                             GAO/OGC-97-28