From a global perspective, many provisions of Part 5 have been reorganized, without fundamental change, to clarify OCC administrative procedures. Important in regularizing filing and notice requirements, the term “notice” has been replaced by “application” where prior OCC approval is required. Regulatory language has been modernized to reflect current writing convention, replacing references to “shall” with “must” or “will,” and gender-neutrality is injected by replacing “his” and “her” with “their.”
A recurring theme in the final rule is the OCC’s reaffirmation of its broad discretionary authority to treat corporate applications as it deems appropriate. Notable examples include distinguishing between substantive and non-substantive public comments; allowing expedited review; nullifying decisions for misrepresentation or omission of facts, actions contrary to law or OCC policy, or clerical or administrative error; and requiring submission of Interagency Biographical and Financial Reports by individuals who the OCC considers as pivotal. Moreover, when it encounters unusual situations, the OCC will have increased flexibility in adopting materially different procedures.
Definitions are key in engineering improvements to the policies and procedures covered by Part 5. In this vein, the terms “nonconforming assets” and “nonconforming activities,” which historically have been used for charter conversions and business combinations, are defined for the first time. “Previously approved activity” is newly defined for greater clarity in connection with applications for subsidiaries, equity investments and pass-through investments, and “well capitalized” and “well managed” have been standardized to eliminate unintended confusion and further the OCC’s supervisory objectives.
Among several amendments reinforcing OCC review of an institution’s Community Reinvestment Act (CRA) record, a new provision has been added relating to business combinations (i.e., mergers, consolidations and purchase and assumption transactions). Where a combination involves a CRA-grounded agreement between a national bank or federal savings association and a nongovernmental entity or person, the OCC filing must include summaries and documents relating to substantive discussions about the content of the agreement.
The final rule refines the concept of a national bank controlling an operating subsidiary to signify when no other person or entity has the ability to exercise effective control or influence over the management or operations equal to or greater than that of the parent bank or another operating subsidiary. For additional clarity, subsidiaries that are not operating subsidiaries will now be called “entities.” Also, in certain significant respects, federal savings association operating subsidiary rules have been coordinated with their national bank counterparts.