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of § 201.3(a) should be captured by all November 22, 2010) with specific found to violate sections 202(a) and/or livestock producers, swine production opportunities in Rapid City, South (b) of the Act without a finding of harm contract growers, and poultry growers. Dakota, on October 28, 2010, and or likely harm to competition. Based on the above analyses regarding Oklahoma City, Oklahoma on November (b) Effective dates. *** § 201.3(a), GIPSA certifies that this rule 3, 2010. All tribal headquarters were Larry Mitchell, is not expected to have a significant invited to participate in these venues for economic impact on a substantial consultation. GIPSA has received no Administrator, Grain Inspection, Packers and Stockyards Administration. number of small business entities as specific indication that the rule will defined in the Regulatory Flexibility Act have tribal implications and has [FR Doc. 2016–30424 Filed 12–19–16; 8:45 am] (5 U.S.C. 601 et seq.). While confident received no further requests for BILLING CODE 3410–KD–P in this certification, GIPSA consultation as of the date of this acknowledges that individual publication. If a Tribe requests businesses may have relevant data to consultation, GIPSA will work with the DEPARTMENT OF THE TREASURY supplement our analysis. We would Office of Tribal Relations to ensure Office of the Comptroller of the encourage small stakeholders to submit meaningful consultation is provided Currency any relevant data during the comment where changes, additions, and period. modifications herein are not expressly 12 CFR Part 51 B. Executive Order 12988 mandated by Congress. [Docket ID OCC–2016–0017] This interim final rule has been D. Paperwork Reduction Act reviewed under Executive Order 12988, This interim final rule does not RIN 1557–AE07 Civil Justice Reform. These actions are contain new or amended information not intended to have retroactive effect, Receiverships for Uninsured National collection requirements subject to the Banks although in some instances they merely Paperwork Reduction Act of 1995 (44 reiterate GIPSA’s previous U.S.C. 3501 et seq.). It does not involve AGENCY: Office of the Comptroller of the interpretation of the P&S Act. This collection of new or additional Currency, Treasury. interim final rule will not pre-empt state information by the federal government. ACTION: Final rule. or local laws, regulations, or policies, E. E-Government Act Compliance unless they present an irreconcilable SUMMARY: The Office of the Comptroller conflict with this rule. There are no GIPSA is committed to compliance of the Currency (OCC) is adopting a administrative procedures that must be with the E-Government Act, to promote final rule addressing the conduct of exhausted prior to any judicial the use of the Internet and other receiverships for national banks that are challenge to the provisions of this rule. information technologies to provide not insured by the Federal Deposit Nothing in this interim final rule is increased opportunities for citizen Insurance Corporation (FDIC) intended to interfere with a person’s access to Government information and (uninsured banks) and for which the right to enforce liability against any services, and for other purposes. FDIC would not be appointed as person subject to the P&S Act under List of Subjects in 9 CFR Part 201 receiver. The final rule implements the authority granted in section 308 of the provisions of the National Bank Act P&S Act. Contracts, Livestock, Poultry, Trade (NBA) that provide the legal framework practices. C. Executive Order 13175 for receiverships of such institutions. For the reasons set forth in the The final rule adopts the rule as This rule has been reviewed in preamble, we amend 9 CFR part 201 as proposed without change. accordance with the requirements of follows: DATES: Executive Order 13175, ‘‘Consultation This final rule is effective on and Coordination with Indian Tribal PART 201—REGULATIONS UNDER January 19, 2017. Governments.’’ Executive Order 13175 THE PACKERS AND STOCKYARDS FOR FURTHER INFORMATION CONTACT: requires Federal agencies to consult and ACT Mitchell Plave, Special Counsel, coordinate with tribes on a government- Legislative and Regulatory Activities to-government basis on policies that ■ 1. The authority citation for part 201 Division, (202) 649–5490, or for persons have tribal implications, including continues to read as follows: who are deaf or hard of hearing, TTY, regulations, legislative comments or Authority: 7 U.S.C. 181–229c. (202) 649–5597, or Richard Cleva, Senior Counsel, Bank Activities and proposed legislation, and other policy ■ 2. Section 201.3 is amended by statements or actions that have Structure Division, (202) 649–5500, redesignating the existing text as Office of the Comptroller of the substantial direct effects on one or more paragraph (b), adding new paragraph (a), Indian tribes, on the relationship Currency, 400 7th Street SW., and adding a heading to paragraph (b) Washington, DC 20219. between the Federal Government and to read as follows: Indian tribes or the distribution of SUPPLEMENTARY INFORMATION: § 201.3 Applicability of regulations in this power and responsibilities between the I. Introduction Federal Government and Indian tribes. part. Although GIPSA has assessed the (a) Scope of sections 202(a) and (b) of On September 13, 2016, the OCC impact of this rule on Indian tribes and the Act. The appropriate application of published a proposed rule to implement determined that this rule does not, to sections 202(a) and (b) of the Act the provisions of the NBA that provide our knowledge, have tribal implications depends on the nature and the legal framework for receiverships for that require tribal consultation under circumstances of the challenged uninsured banks,1 12 U.S.C. 191—200, Executive Order 13175, GIPSA offered conduct or action. A finding that the opportunities to meet with challenged conduct or action adversely 1 All Federal savings associations (FSAs), including trust-only FSAs, are required to be representatives from Tribal affects or is likely to adversely affect insured. For this reason, this final rule does not Governments during the comment competition is not necessary in all apply to FSAs, given that receiverships for FSAs period for the proposed rule (June 22 to cases. Certain conduct or action can be would be conducted by the FDIC.

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with comments due by November 14, institutional customers with global savings associations. These risks 2016.2 The OCC received 11 comments settlement and safekeeping of the include operational, compliance, concerning the proposal. For the reasons customer’s securities. strategic, and reputational risks without discussed in section III of the Many of the uninsured national trust the credit and liquidity risks that SUPPLEMENTARY INFORMATION, the OCC is banks are subsidiaries or affiliates of a additionally affect the solvency of adopting the rule as proposed, without full-service insured national bank or are commercial and consumer banks. While change. affiliates of an insured state bank. Other any of these risks can result in the uninsured national trust banks are not II. Background precipitous failure of a bank or savings affiliated with an insured depository association, from a historical As of December 2, 2016, the OCC institution, but are affiliated with an perspective, trust banks have been more supervised 52 uninsured banks, all of investment management firm or other likely to decline into a weakened which are national trust banks.3 financial services firm. Still other condition, allowing the OCC and the Uninsured national trust banks have uninsured national trust banks have no institution the time needed to find other fundamentally different business affiliation with a larger parent solutions for rehabilitating the models compared to commercial and company.4 institution or to successfully resolve the consumer banks and savings The OCC appoints and oversees institution without the need to appoint associations and therefore face very receivers for uninsured banks under the a receiver. different types of risks. National trust provisions of the NBA 5 and the The OCC believes it would banks typically have few assets on the substantial body of case law applying nevertheless be beneficial to financial balance sheet, usually composed of cash the statutory provisions and common market participants and the broader on deposit with an insured depository law receivership principles to national community of regulators for the OCC to institution, investment securities, bank receiverships.6 The FDIC is the clarify the receivership framework for premises and equipment, and intangible required receiver only for an insured uninsured banks. Although the OCC assets. These banks exercise fiduciary national (or state) bank.7 Based on the conducted 2,762 receiverships pursuant and custody powers, do not make loans, statutory history of the NBA and to this framework in the years prior to do not rely on deposit funding, and FIRREA, it is likely that the Federal the creation of the FDIC,8 and the consequently have simple liquidity Deposit Insurance Act (FDIA) would not associated legal issues are the subject of management programs. In view of these apply to an OCC receivership of an a robust body of published judicial differences, the OCC typically requires uninsured bank conducted by the OCC, precedents, the details have not been these banks to hold capital in a specific and that such a receivership would be widely articulated in recent minimum amount; as a result they hold governed exclusively by the NBA, the jurisprudence or legal commentary. This capital in amounts that exceed common law of receivers, and cases final rule may also facilitate synergies substantially the ‘‘well capitalized’’ applying the statutes and common law with the ongoing efforts of U.S. and standard that applies when national to national bank receiverships. While international financial regulators since banks calculate their capital pursuant to FIRREA and the Federal Deposit the financial crisis to enhance our the OCC’s rules in 12 CFR part 3. Insurance Corporation Improvement Act readiness to respond effectively to the The business model of national trust of 1991 (FDICIA) greatly expanded the banks is to generate income in the form different critical financial distresses that FDIC’s powers in resolving failed could manifest themselves of fees by offering fiduciary and insured depository institutions, the OCC custodial services that generally fall into unexpectedly in the diverse types of believes that those additional powers one or more of a few broad categories. financial firms presently operating in are not available to the OCC as receiver Some national trust banks focus on the market. of uninsured banks under the NBA. institutional asset management, The OCC has not appointed a receiver III. Public Comments on the Proposed providing trust and custodial services for an uninsured bank since shortly after Rule for investment portfolios of pension the Congress established the FDIC in plans, foundations and endowments, The OCC received 11 comments from response to the banking panics of 1930– the public in response to the OCC’s and other entities, often with an 1933. National trust banks face very investment management component. A notice of proposed rulemaking and the different types of risks because of the few other national trust banks serve alternatives the OCC discussed therein. fundamentally different business model primarily as a fiduciary and custodian The commenters included individuals, a of national trust banks compared to to facilitate the establishment of state trust company, and a think tank, as commercial and consumer banks and Individual Retirement Accounts by well as representatives of consumer customers of an affiliated mutual fund groups, financial reform advocacy 4 For additional discussion of the business model groups, state banking regulators, complex or broker-dealer firm. Some of uninsured national trust banks, see Proposed national trust banks provide custodial Rule, 81 FR at 62836–62837. banking institutions, and bitcoin firms. services, such as corporate trust 5 12 U.S.C. 191–200. These submissions offered issues and accounts, under which the bank 6 For a discussion of the statutory history relating viewpoints about selected portions of performs services for others in to receiverships of national banks conducted by the the proposed rule’s regulatory OCC, under the NBA, and by the FDIC, pursuant to provisions for the OCC’s consideration; connection with their issuance, transfer, the Financial Institutions Reform, Recovery and and registration of debt or equity Enforcement Act of 1989 (FIRREA), see Proposed these are discussed in connection with securities. Other custody accounts may Rule, 81 FR at 62836. the discussion of the OCC’s rationale for be a holding facility for customer 7 Section 11(c)(2)(A)(ii) of the FDIA provides that issuing the associated portions of the securities, where the bank assists the FDIC ‘‘shall’’ be appointed receiver, and ‘‘shall’’ final rule, in Section III of this accept such appointment, whenever a receiver is SUPPLEMENTARY INFORMATION. appointed for the purpose of liquidation or winding 2 Receiverships for Uninsured National Banks, 81 up the affairs of an insured Federal depository FR 62835 (September 13, 2016) (Proposed Rule). institution by the appropriate Federal banking 8 Annual Report of the Comptroller of the 3 The OCC may charter national banks whose agency, notwithstanding any other provision of Currency for the Year Ended October 31, 1934 at operations are limited to those of a trust company Federal law. 12 U.S.C. 1821(c)(2)(A)(ii). The term 33 (discussing the status of active and closed and related activities (national trust bank). See, e.g., ‘‘Federal depository institution’’ includes national receiverships under the jurisdiction of the 12 U.S.C. 27(a); 12 CFR 5.20(l). banks. 12 U.S.C. 1813(c)(4). Comptroller between 1865 and 1934).

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As part of the notice of proposed More broadly, some commenters said adoption of the final rule for uninsured rulemaking, the OCC also asked for the the OCC should consider receivership banks and many of them implicate public’s input on a number of specific and cost issues in deciding whether to issues that the OCC would need to questions and received comments on charter special purpose national banks evaluate on a case-by-case basis in two of these questions. One question engaged in fintech activities, or the connection with a decision on whether was whether any unique considerations terms on which they could be chartered. to charter a particular special purpose would be raised by applying the Two commenters said the nature of a national bank that engages in fintech proposed rule’s framework for fintech firm’s business diverges widely activities. The OCC has recently receivership of uninsured national from banks, and that creditor loss rates published and invited comment on a banks, which are all national trust banks in a receivership for an uninsured paper discussing these issues.10 We will at present, to other uninsured banks that special purpose national bank engaged consider the broader comments on would be organized to engage in the in fintech activities may exceed levels fintech chartering submitted as part of delivery of banking services in new and that are tolerable in the resolution of a this rulemaking together with those we innovative ways, such as special chartered bank. These commenters said receive in response to the paper. purpose national banks engaged in this was a contra-indication for In the second question asked in the financial technology (fintech) chartering such banks, but one of the preamble to the Proposed Rule, the OCC activities.9 commenters further elaborated that the asked for alternatives that would take On this receivership framework OCC can and should exercise into account the cost considerations that question, two commenters expressed particularly close supervision of these could arise for the OCC if the concerns that the earlier-established firms and thereby reduce the risk of administrative expenses of an uninsured legal regime for receiverships under the receiverships ever taking place. Another national bank receivership exceeded the 11 NBA and associated judicial precedent commenter said that fintech firms do assets in the receivership. In response does not include select elements not have national trust banks’ track to this question, one commenter urged subsequently created for insured record for remaining solvent and the OCC not to impose assessment costs depository institutions under FIRREA avoiding receivership, and the OCC for special purpose national banks that and FDICIA, and thus might not be as should mitigate potential concerns engage in fintech activities on insured effective outside the trust bank sphere about receivership costs by imposing national banks, and another commenter in application to the receivership of capital support agreements and similar further urged the OCC not to impose special purpose national banks engaged obligations in chartering special assessment costs for such banks on in fintech activities. These commenters purpose national banks that engage in uninsured national trust banks. The said the OCC should refrain from fintech activities. OCC continues to consider what chartering these special purpose In contrast to these views about the approach to assessments would be national banks until the law changes to uniqueness of special purpose national appropriate should it approve charters banks engaged in fintech activities, one address this difference. One commenter for special purpose national banks commenter said that a fintech firm, such engaged in fintech activities. Any expressed concern that the rule’s as a digital currency exchange, performs resulting modification to the OCC’s incorporation of the NBA’s priority a function comparable to a national trust assessment structure would be proposed requirements for payment of bank that obtains payments on behalf of for public comment in a separate receivership claims, which include no customers and provides security for rulemaking. preference for consumer claims over those funds, and therefore such other general creditors, might have the IV. The Final Rule institutions do not pose unique effect of distorting incentives among considerations for the receivership Overview debt investors across special purpose framework. Another commenter said the The final rule incorporates the national banks, and more broadly functions of special purpose national contribute to moral hazard. framework set forth in the NBA for the banks that engage in fintech activities Comptroller to appoint a receiver for an The OCC understands these could be even simpler than a national comments to be urging, in effect, uninsured bank, generally under the trust bank, such as a special purpose same grounds for appointment of the changes in the statutory receivership national bank that provides fintech provisions underlying the rule. Absent FDIC as receiver for insured national payment services where each customer banks. The uninsured bank may Congressional action to do so, however, transaction is brief and segregated. For the current provisions of the NBA are challenge the appointment in court, and special purpose national banks engaged the NBA affords jurisdiction to the the ones that would govern should it in fintech activities involving lending, become necessary to appoint a receiver appropriate United States district court this commenter stated the customer for this purpose. The OCC will provide for an uninsured national bank. The relationships are somewhat longer but OCC believes it is best to be clear, the public with notice of the still discrete, and that the OCC could appointment, as well as instructions for through a regulation implementing adequately eliminate concerns about the those NBA provisions, about the submitting claims against the uninsured impact of a receivership by ensuring the bank in receivership. The Comptroller framework that would apply in order to bank’s plans for back-up servicing and avoid clouding the ongoing discussion orderly wind-up were robust. 10 See Exploring Special Purpose National Bank about the chartering of special purpose Some commenters discussed Charters for Fintech Companies (Dec. 2016), national banks engaged in fintech additional topics not touching on the available at https://www.occ.gov/topics/bank- activities with uncertainty about how receivership issues covered by the operations/innovation/special-purpose-national- uninsured institutions are resolved. notice of proposed rulemaking, but bank-charters-for-fintech.pdf. 11 See Proposed Rule, 81 FR at 62838 (discussing more germane to the desired framework the receiver’s priority claim to liquidation proceeds 9 See Proposed Rule, 81 FR at 62837 (discussing for creating, regulating, and supervising for administrative expenses, the OCC’s potential the OCC’s initiative on responsible innovation in special purpose national banks that direct expenses for its receivership functions, and the Federal banking system, and the OCC’s engage in fintech activities or uninsured funding alternatives, such as building resources to authority to charter special purpose banks that defray these costs through the OCC’s regulations engage in selected core non-depository services national trust banks. These broader governing the OCC’s collection of assessments from within the business of banking). comments do not pertain to the OCC’s uninsured national banks).

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may appoint any person as receiver, Section-by-Section Analysis approval of the Comptroller, if needed including the OCC or another Section 51.1 of the final rule identifies to carry out the receivership. This government agency. The receiver carries the purpose and scope of the final rule section also identifies the grounds for out its duties under the direction of the and clarifies that the rule applies to appointment of a receiver for an Comptroller. receiverships conducted by the OCC uninsured bank and notes that uninsured banks may seek judicial The final rule also follows the under the NBA for national banks that review of the appointment pursuant to statutory framework under the NBA are not insured by the FDIC.14 The final 12 U.S.C. 191. with respect to claims, under which rule does not extend to receiverships for persons with claims against an Section 51.3 of the final rule provides uninsured Federal branches, although that the OCC will provide notice to the uninsured bank in receivership will file elements of the framework may be their claims with the receiver for the public of the appointment of a receiver similar for uninsured Federal branch for the uninsured bank. The final rule failed uninsured bank, for review by the receiverships, which would also be OCC. In the event the OCC denies the specifies that one component of this resolved under provisions of the NBA. notice will include publication in a claim, the only remedy available to the Section 51.2 of the final rule is based claimant is to bring a judicial action newspaper of general circulation on 12 U.S.C. 191 and 192 and concerns selected by the OCC for three against the uninsured bank’s appointment of a receiver. The final rule receivership estate and assert the claim consecutive months, as required by 12 sets out the Comptroller’s authority to U.S.C. 193. As a component of the de novo. A person is also free to initiate appoint any person, including the OCC a claim by bringing an action against the OCC’s notice to the public about the or another government agency, as receivership, the OCC will also provide receivership estate in court for receiver for an uninsured bank and adjudication and then submit the instructions for creditors and other provides that the receiver performs its claimants seeking to submit claims with judgment to the OCC to participate in duties subject to the approval and ratable dividends of liquidation the receiver for the uninsured bank. direction of the Comptroller.15 If the As noted in the proposed rule, the proceeds along with other approved and Comptroller were to appoint the OCC as adjudicated claims.12 OCC believes that the purpose of section receiver, the OCC would act in a 193 may be better served by publication Approved or adjudicated claims are receivership capacity with respect to the paid solely out of the assets of the through means in addition to the uninsured bank in receivership, rather statutorily required publication in a uninsured national bank in than in the OCC’s supervisory capacity. receivership. This reflects the legal newspaper. For example, the OCC could As discussed earlier, this dual provide direct notice to customers and distinction between the OCC as capacity (OCC as supervisor versus OCC regulatory agency and the OCC acting in creditors of the uninsured bank to the as receivership sponsor for an extent the uninsured bank’s records a receivership capacity. In the former, uninsured bank) recognizes that, while included current contact information. the OCC oversees national banks, FSAs, the NBA makes the receivership The OCC could also arrange to provide and Federal branches and Federal oversight and claims review functions of notice through electronic channels that agencies, supervising them under the the Comptroller part of the OCC’s customers would typically use to charge of assuring the safety and responsibilities, the receivership contact the uninsured bank, such as the soundness of, and compliance with laws oversight role is unique and distinct uninsured bank’s Web site. The OCC and regulations, fair access to financial from the OCC’s role as a Federal believes that an effective set of notice services, and fair treatment of customers regulatory agency and supervisor of protocols would best be established on by, the institutions and other persons national banks and FSAs. This is a case-by-case basis, in light of a specific subject to its jurisdiction. As receiver, comparable to the dual capacity of the uninsured bank’s fiduciary and the OCC appoints and oversees receivers FDIC’s receivership function for insured custodial activities, the types of for uninsured national banks, thereby depository institutions pursuant to the customers served by the bank, facilitating the winding down of bank FDIA. coordination with other notice protocols operations, assets, and accounts while Section 51.2 of the final rule also under way for any related entity that is minimizing disruptions to customers provides that the Comptroller may also undergoing resolution activity, and and creditors of the institution. Under require the receiver to post a bond or similar factors. The OCC requested the ‘‘separate capacities’’ doctrine, other security and the receiver may hire comment on alternative means of which has long been recognized in staff and professional advisors, with the communicating with customers of litigation involving the FDIC, it is well uninsured banks. established that the agency, when acting 14 A nationwide organization of state regulators One commenter, a trade association in one capacity, is not liable for claims requested clarity on how the NBA receivership for banks, suggested that the OCC against the agency acting in its other framework for uninsured national banks and the employ notice mechanisms that are capacity.13 OCC’s proposed rule thereunder would interact with the processes established for debtors and consistent with the way in which the As provided in the final rule, the creditors pursuant to the U.S. Bankruptcy Code. failed bank typically communicates receiver liquidates the assets of the The OCC is not aware of any opinion of a U.S. with its clients and counterparties. The uninsured bank, with court approval, Bankruptcy Court, or any other U.S. court, finding commenter suggested, for example, that and pays the proceeds into an account that an uninsured national bank is eligible to be a debtor subject to a petition under the Code. a receiver for an institution with clients as directed by the OCC. The categories 15 But see 12 U.S.C. 1821(c)(6) (Comptroller may in other countries should communicate of claims and the priority thereof for appoint the FDIC as conservator or receiver and the with those clients in the language payment are set out in the final rule. FDIC has discretion to accept such appointment); typically used by the institution in its The final rule also clarifies certain id. section 1821(c)(2)(C) (FDIC ‘‘not subject to any other agency’’ when acting as conservator or communications with those clients. The powers held by the receiver. receiver’’). Read together, these provisions likely OCC agrees that this approach would be mean that the provision in § 51.2 concerning appropriate in such cases and reiterates 12 See First Nat’l Bank of Bethel v. Nat’l oversight of the receiver by the Comptroller would that effective forms of notice, beyond Pahquioque Bank, 81 U.S. 383, 401 (1871). not apply to the FDIC acting as conservator or 13 For a discussion of the separate capacities receiver for an uninsured institution, should the the statutorily required notice in a doctrine and related case law, see Proposed Rule, Comptroller appoint the FDIC and the FDIC accept newspaper, will be evaluated on a case- 81 FR at 62838. such an appointment. by-case basis.

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Section 51.4 of the final rule The claims filing deadline established creditor may file a claim for the net addresses the submission of claims to by the Comptroller pursuant to § 51.4(a) amount remaining as any other general the receiver for an uninsured bank. of the final rule is the date by which creditor. Conversely, if, after set-off, an Under § 51.4(a), a person with a claim claimants seeking review under the amount is owed to the bank, the creditor against the receivership may submit a OCC’s claims process must make their does not have a claim and the net claim to the OCC, which will consider submission. Nevertheless, a claimant amount remaining is an asset of the the claim and make a determination that has not made a submission to the uninsured bank, which the receiver may concerning its validity and approved OCC by the deadline is not barred from obtain in connection with marshalling amount. This process reflects the initiating judicial claims against the the assets (as described further in provisions in 12 U.S.C. 193 and 194 uninsured bank in receivership solely § 51.7(a) of the final rule). regarding presentation of claims and by virtue of missing the claims The OCC requested comment on payment of dividends on claims that are deadline.17 whether there are additional proved to the satisfaction of the The NBA’s receivership provisions characteristics of set-offs or other Comptroller. Section 51.4 also provides are like the receivership regime situations in which set-off may arise that the Comptroller will establish a established by the FDIC under the FDIA, that should be included in the rule. One deadline for filing claims with the however, in that the avenue available to commenter, a trade association for receiver, which could not be earlier than a party whose claim has been denied by banks, said that the administration of 30 days after the three-month the FDIC or OCC, when performing the set-offs may be complex, given that the publication of notice required by § 51.3. agencies’ receivership claims functions, trust and fiduciary business is a fee- This provision reflects NBA case law is to file (or continue) a de novo judicial based industry. The commenter offered that permits the Comptroller to establish action asserting the facts and legal the example of instances in which fees a date for filing claims against the theory of the claim against the have been accrued or are otherwise in receiver for a failed bank.16 receivership of the bank. The NBA does the process of payment to one or more service providers at the time of Section 51.4(b) of the final rule not contemplate or support further receivership. The commenter suggested clarifies that persons with claims action by the claimant in an that the final rule acknowledge that a against an uninsured bank in administrative or judicial forum against given resolution may involve bespoke, receivership may present their claims to the OCC seeking review of the claim fact-specific set-off situations that a court of competent jurisdiction for determination. Section 51.4(c) of the final rule would need to be carefully considered, adjudication in addition to, or as an provides that if a person with a claim while also serving the need for the alternative to, filing a claim with the against an uninsured bank in receiver or a successor fiduciary to be in OCC. If successful in court, such receivership also has an obligation owed a position to continue providing persons will be required to submit a to the bank, the claim and obligation fiduciary services during the copy of the final judgment to the OCC will be set off against each other and receivership. to participate in ratable dividends of only the net balance remaining after set- The OCC believes that, on balance, it liquidation proceeds along with claims off will be considered as a claim. To this is not necessary to make this kind of an against the bank in receivership end, § 51.4(a) also includes language addition to the language of the final submitted to, and approved by, the referring to claims for set-off. The right rule. Section 51.4 as a whole is designed OCC. The final rule requires submission of set-off where parties have mutual to make the basic framework of claim of a copy of the court’s final judgment obligations has long been recognized as submission transparent to creditors of to the OCC. This provision is based on an equitable principle.18 Well-settled the uninsured bank, and set-off is 12 U.S.C. 193 and 194. case law has held that a receivership included as an element of this In this regard, the receivership regime creditor’s or other claimant’s equitable framework. As the commenter states, established by the NBA differs right to a set-off is not precluded by the the OCC’s determination of particular somewhat from the approach set out in ratable distribution requirement of the claims will require consideration of fact- other resolution regimes, such as the NBA, provided such set-off is otherwise specific situations prior to reaching a bankruptcy provisions of the United legally valid.19 If, after set-off, an disposition, and this extends to States Code and the receivership amount is owed to the creditor, the considerations of set-offs. The final rule provisions of the FDIA. Under those is designed to accommodate with resolution regimes, creditors and 17 See First Nat’l Bank of Bethel v. Nat’l flexibility the consideration of such claimants must generally submit their Pahquioque Bank, 81 U.S. 383, 401 (1871); factors in the context in which each claims to the receivership estate for Queenan v. Mays, 90 F.2d 525, 531 (10th Cir. 1937). claim is postured. centralized administration and As noted earlier, it is incumbent on a claimant that Section 51.5 of the final rule sets out pursues the judicial route and ultimately obtains disposition, and claims that are not judicial relief to submit the final judicial the order of priorities for payment of submitted by the claims deadline are determination and award to the OCC, in order to administrative expenses of the receiver barred from any participation in participate in the OCC’s periodic ratable dividends and claims against the uninsured bank liquidation payments. The NBA of liquidation proceeds of the receivership estate. in receivership. Under this section, the Except with respect to a valid and enforceable provisions are different in that security interest in specific property of the OCC will pay these expenses and claims claimants are provided the opportunity uninsured bank established as part of a final in the following order: (1) to submit claims to the OCC for judicial determination, there are no assets or funds administrative expenses of the receiver; evaluation, but are not foreclosed from available to a successful judicial claimant other (2) unsecured creditors, including than the ratable dividend process set out in 12 pursuing judicial resolution by filing U.S.C. 194 and described in § 51.8 of the final rule. secured creditors to the extent their litigation (or continuing a pre-existing 18 See, e.g., Scammon v. Kimball, 92 U.S. 362 claim exceeds their valid and lawsuit) in a court of competent (1876); Blount v. Windley, 95 U.S. 173, 177 (1877); enforceable security interest; (3) jurisdiction against the uninsured bank Carr v. Hamilton, 129 U.S. 252 (1889). creditors of the uninsured bank, if any, in receivership. 19 See Scott v. Armstrong, 146 U.S. 499, 510 whose claims are subordinated to (1892); InterFirst Bank of Abilene, N.A. v. FDIC, 777 F.2d 1092, 1095–1096 (5th Cir. 1985); FDIC v. general creditor claims; and (4) 16 See Queenan v. Mays, 90 F.2d 525, 531 (10th Mademoiselle of California, 379 F.2d 660, 663 (9th shareholders of the uninsured bank. The Cir. 1937). Cir. 1967). order is based on case law and, in the

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case of the first priority for for a refund of prepaid investment and appropriate to facilitate the orderly administrative expenses, on 12 U.S.C. management fees that were attributable liquidation or other resolution of the 196.20 to periods after the receiver returned the uninsured bank in receivership. To A creditor or other claimant with a fiduciary assets to the customer further illustrate the kinds of expenses security interest that was valid and generally would be a general unsecured that § 196 affords a first priority claim enforceable as to its terms prior to the claim covered by § 51.5(b). The claims on the uninsured bank’s receivership appointment of the receiver is entitled process described in § 51.4(b) is assets, § 51.6 enumerates examples of to exercise that security interest, outside available to a fiduciary customer, for such administrative expenses, such as the priority of distributions set out in both a direct claim for the return of wages and salaries of employees, the final rule.21 If the collateral value fiduciary assets, as well as a expenses for professional services, exceeds the amount of the claim as it receivership claim for amounts the contractual rent pursuant to an existing was immediately prior to the receiver’s customer believes it is owed by the lease or rental agreement, and payments appointment, the surplus remains an bank. to third-party or affiliated service asset of the uninsured bank, and the The OCC requested comment on providers, when the receiver determines receiver may obtain it in connection whether there are other Federal statutes these expenses are of benefit to the with marshalling the assets (as further regarding specific types of claims that receivership. described in § 51.7(a) of the final rule).22 may be applicable to a receivership of Section 51.7 of the final rule contains Liens arising from judicial an uninsured bank under the NBA and provisions describing the powers and determinations after the initiation of the that would give certain claims a duties of the receiver and the receivership, as well as contractual liens different priority, such as claims owed disposition of fiduciary and custodial that are triggered due to the to the Federal government. One accounts. As described in § 51.7, the appointment of a receiver or other post- commenter, a coalition that advocates receiver will take over the assets and appointment events, are not enforceable. for reform in the financial services operation of the uninsured bank, take This is because recognition of these industry, agreed that customer assets action to realize on debts owed to the liens would afford these claimants a held by a bank in a fiduciary capacity uninsured bank, sell the property of the priority that is not recognized under the should not be considered assets of the bank, and liquidate the assets of the established legal priorities described in bank, but questioned why other claims uninsured bank for payment of claims § 51.5 of the final rule. Similarly, a of the customer, such as a claim for a against the receivership. Section secured creditor is not entitled to a refund of prepaid investment 51.7(a)(1)–(5) lists some of the major priority distribution of any portion of management fees that were attributable powers and duties for the receiver set the claim that is not covered by the to periods after the receiver returned the out in 12 U.S.C. 192 and clarified by the value of the collateral because the fiduciary assets to the customer, would courts, including taking possession of creditor is in the position of a general be treated as a unsecured general the books and records of the bank, unsecured creditor for that portion of creditor claim. The commenter collecting on debts and claims owed to the claim and must participate in ratable suggested that such customer funds the bank, selling or compromising bad liquidation distributions on par with would have less protection in a or doubtful debts (with court approval), other unsecured creditors.23 receivership for an uninsured bank than and selling the bank’s real and personal Assets held by the uninsured bank at they would under certain modern property (also with court approval). the time of the receiver’s appointment receivership and bankruptcy statutes Section 51.7(b) of the final rule in a fiduciary or custodial capacity, as that set forth claim priorities which provides for the receiver to close the identified on the bank’s books and include preference to customer claims uninsured bank’s fiduciary and records, are not general assets of the over other general creditor claims. custodial appointments, or transfer such bank. Section 51.8(b) of the final rule The OCC is required, by statute, to accounts to a successor fiduciary or reiterates this point. In the same vein, pay claims on a ratable basis. As custodian under 12 CFR 9.16 or other the claim of the customer for the return discussed in connection with the applicable Federal law. The uninsured of the customer’s fiduciary or custodial description of § 51.8 of the final rule, banks currently in existence focus on assets is separate from, and not subject this requirement has been interpreted by fiduciary and custodial services, so this to, the priority set out in § 51.5. the courts as requiring the OCC to make function of the receiver will be of Fiduciary and custodial customers of distributions on OCC-approved claims primary importance. This provision the bank have direct claims on those and judicial awards on an equal footing, recognizes that the receiver’s power to assets pursuant to their fiduciary or determining the amount of each wind up the affairs of the uninsured custodial account contracts. However, creditor’s claim as it stands at the point bank in receivership, acting with court the priority of a fiduciary or custodial of insolvency. As a result, the approval to make disposition of bank customer’s other claims against the controlling ratable payment statute does assets, should properly encompass the bank, if any, would remain subject to not support a rule that makes power to transfer fiduciary or custodial the priority described in § 51.5. For distinctions in distribution priority appointments and any associated assets example, a fiduciary customer’s claim between customer and general creditor in appropriate circumstances. claimants. Transfer of fiduciary appointments 20 See Ticonic Nat’l Bank v. Sprague, 303 U.S. Section 51.6 of the final rule provides may occur under the terms of the 406, 410–411 (1938); Merrill v. Nat’l Bank of that all administrative expenses of the instrument creating the relationship, if Jacksonville, 173 U.S. 131, 146 (1899); Scott v. receiver for an uninsured bank will be it provides for transfer, or under a Armstrong, 146 U.S. 499, 510 (1892); Bell v. Hanover Nat’l Bank, 57 F. 821, 822 (C.C.S.D.N.Y. paid out of the assets of the receivership fiduciary transfer statute, if one is 1893). before payment of claims against the applicable. The OCC believes there are 21 Ticonic Nat’l Bank v. Sprague, 303 U.S. 406, receivership. This reflects the strong public policy interests in 410–411 (1938); Bell v. Hanover Nat’l Bank, 57 F. requirements in 12 U.S.C. 196. The final endeavoring to replace fiduciaries and 821, 822 (C.C.S.D.N.Y. 1893). rule also states that receivership custodians expeditiously, without an 22 Bell v. Hanover Nat’l Bank, 57 F. 821, 822 (C.C.S.D.N.Y. 1893). expenses will include pre-receivership interruption in service to their 23 Merrill v. Nat’l Bank of Jacksonville, 173 U.S. and post-receivership obligations that customers, if transfer can be arranged to 131, 146 (1899). the receiver determines are necessary a qualified successor, maintaining the

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same duties and standards of care with as receiver of failed insured depository designed to incorporate the associated respect to the customers that previously institutions.24 standards about the proper application pertained to their accounts at the Section 51.7(c) of the final rule of this statutory directive, which the uninsured bank in receivership. The incorporates, in general terms, the judiciary has articulated over the years. alternative, given that the uninsured powers, duties, and responsibilities of The ratable dividend requirement bank must be wound down and cannot receivers for national banks under the directs the OCC to make distributions provide services in the future, is to stop NBA and under judicial precedents on OCC-approved claims and judicial managing and reinvesting the determining the authorities and awards on an equal footing, determining customer’s assets, stop responding to responsibilities of receivers for national the amount of each creditor’s claim as directions to transfer or receive assets in banks. Examples of these powers it stands at the point of insolvency. As custody, close the accounts, and seek include: (1) the authority to repudiate one example, a court’s award of interest instructions from the account holders or certain contracts, including: (a) purely on an unpaid debt to the date of a the courts regarding return of associated executory contracts, upon determining judgment rendered in the plaintiff’s assets. For institutional customers, this that the contracts would be unduly favor after the receiver was appointed is likely to cause significant interruption burdensome or unprofitable for the does not increase the amount of the of the intricate machinery of their receivership estate,25 (b) contracts that plaintiff’s claim for purposes of making financial operations. For individuals, it involve fraud or misrepresentation,26 ratable dividends. As another example, can potentially result in loss of asset and (c) in limited cases, non-executory the ratable dividend requirement value in adverse markets, or loss of contracts that are contrary to public generally restricts claims against the income due to foregone reinvestments. policy; 27 (2) the authority to recover bank receivership for debts that were Across the United States, there are fraudulent transfers; 28 and (3) the not due and owing at the appointment disparate and often conflicting legal authority to enforce collection of notes of the receiver and arose for the first rules restricting or conditioning from debtors and collateral, regardless time as a consequence of the transfers of an appointment of a of the existence of side arrangements appointment or a post-appointment fiduciary for a beneficiary residing that would otherwise defeat the event. within the state. Depending on the collectability of such notes.29 The OCC requested comment on geographic area across which the Section 51.7(d) of the final rule alternatives to the proposed rule’s uninsured bank has established requires the receiver to make periodic approach to paying dividends on fiduciary relationships with its reports to the OCC concerning the status claims, under which the OCC would customers, and the standardization of its and proceedings of the receivership. exercise its discretion under section 194 fiduciary account agreements or Section 51.8 of the final rule contains to determine the timing of the appointing instruments, it may be provisions regarding the payment of distributions on established claims. practicable for the receiver to transition dividends on claims against the Under one alternative presented in the an uninsured bank’s fiduciary and uninsured bank and the distribution of proposed rule, the OCC would refrain custody accounts to a qualified any remaining proceeds to shareholders. from paying any dividends until all successor through the mechanisms This section provides that, after claims have been submitted and provided by applicable local law. On administrative expenses of the validated, with final allowed claim the other hand, if faced with dispersed receivership have been paid, the OCC amounts established. As we noted in the customers, diverse account agreements will make ratable dividends from proposal, this approach presents the or appointments of different vintage, or available receivership funds based on possibility that proven claims may be even the absence of an applicable law of the priority of claims in proposed § 51.5 delayed for a significant amount of time transfer for customers in certain states, for claims that have been proved to the pending more protracted resolution of reliance on these methods may be so OCC’s satisfaction or adjudicated in a other claims. Under a second option cumbersome as to effectively prevent court of competent jurisdiction, as presented in the proposed rule, the OCC accomplishment of the transfers in a provided in 12 U.S.C. 194. The OCC would make ongoing dividends on timely way. will make payment of dividends, if any, proven claims, subject to the receiver’s In order to address these potential periodically, at the discretion of the retaining a percentage of the funds on problems, the OCC, relying on the OCC, as the receiver liquidates the hand at the time of the distribution as support of existing case law, is assets of the uninsured bank. a pool of dividends for catch-up including language in the final rule to The final rule’s inclusion of the distributions to a successful plaintiff make it clear that the uninsured bank ‘‘ratable dividend’’ requirement is later. receiver’s power under 12 U.S.C. 192 to The OCC did not receive comments sell, with court approval, the real and 24 See NCNB Texas National Bank v. Cowden, on these alternative approaches for 895 F.2d 1488 (5th Cir. 1990) (holding that the personal property of the bank includes FDIC, as receiver of insolvent bank, had authority making ratable distributions on claims the power to transfer the bank’s to transfer fiduciary appointments to a bridge bank against a receivership. For this reason, fiduciary accounts and related assets, prior to the Financial Institutions Reform, Recovery, and because the proposed rule’s subject to the approval of the court and Enforcement Act of 1989). approach to payment of dividends 25 Bank One Texas v. Prudential Life Ins. Co., 878 exercising jurisdiction over the F. Supp. 943, 964–66 (N.D. Tex. 1995). provides the OCC with the discretion to receiver’s efforts to transfer the bank’s 26 A. Corbin, Corbin on Contracts § 228 at 320 tailor the dividend process to facts and assets. The final rule is consistent with (1952) (addressing contracts voidable for fraud, circumstances of a particular case law recognizing that a receiver for duress, or mistake). receivership, the final rule adopts § 51.8 a national bank may properly arrange 27 Cf. Fidelity Deposit Co. of Md. v. Conner, 973 as proposed. F.2d 1236, 1241 (5th Cir. 1992). Section 51.8(a)(2) of the final rule asset purchase and liability assumption 28 See Peters v. Bain, 133 U.S. 670 (1890) transactions to move the business of a (applying state substantive law to determine recognizes the basic legal premise under failed bank to a successor on an whether to void a transfer); Rogers v. Marchant, 91 the NBA receivership provisions and integrated basis, as part of the power to F.2d 660, 663 (4th Cir. 1937). judicial interpretations thereof that any transfer assets, as well as analogous case 29 D’Oench, Duhme & Co., Inc. v. FDIC, 315 U.S. dividend payments to creditors and 447, 458 (1942). A. Corbin, Corbin on Contracts, law concerning the transfer of fiduciary § 228 at 320 (1952) (addressing contracts voidable other claimants of an uninsured bank and custodial assets by the FDIC, acting for fraud, duress or mistake). will be made solely from receivership

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funds, if any, paid to the OCC by the agent to continue the liquidation of the scope of the final rule extends to receiver after payment of the expenses remaining assets, under the direction of uninsured banks. The maximum of the receiver. This provision is also the board of directors and shareholders, number of OCC-supervised small consistent with the established as in a liquidation that had commenced uninsured banks that could be subject to dichotomy of the OCC’s supervisory and under 12 U.S.C. 181. the receivership framework described in receivership capacities in the NBA, as There may be other circumstances the final rule is approximately 18.30 discussed earlier. under which termination would take Accordingly, the OCC certifies that the Section 51.8(b) of the final rule place, such as when there are no final rule will not have a significant similarly recognizes that assets held by receivership assets remaining after economic impact on a substantial an uninsured national bank at the time completion of receivership activities. number of small entities. of the receiver’s appointment in a Under this scenario, the receiver for an fiduciary or custodial capacity, as OCC Unfunded Mandates Reform Act of uninsured bank has liquidated all of the 1995 Determination designated on the bank’s books and bank’s assets, closed or transferred all records, are not part of the bank’s fiduciary accounts to a successor The OCC has analyzed the final rule general assets and liabilities held in fiduciary, paid all administrative under the factors in the Unfunded connection with its other business and expenses, and either paid creditor Mandates Reform Act of 1995 (UMRA) will not be considered a source for claims in full and distributed the (2 U.S.C. 1532). Under this analysis, the payment for unrelated claims of remaining proceeds to shareholders, as OCC considered whether the final rule creditors and other claimants. This provided in § 51.8(c) of the final rule, or includes a Federal mandate that may provision is intended to make clear that made ratable dividends of all remaining result in the expenditure by state, local, the receiver will segregate identified proceeds to creditors as provided in and tribal governments, in the aggregate, fiduciary and custodial assets and either § 51.8(a), but no additional assets or by the private sector, of $100 million transfer those assets to other fiduciaries remain in the estate. Under these or more in any one year (adjusted or custodians as described in circumstances, the provisions in 12 annually for inflation). As detailed in connection with § 51.7(b), or close the U.S.C. 197 for termination would not the SUPPLEMENTARY INFORMATION, the accounts and endeavor to make the apply. OCC currently supervises 52 uninsured associated assets available to the banks, all of which are uninsured trust account holders or their representatives V. Regulatory Analysis banks, and has not appointed a receiver through other means. A. Paperwork Reduction Act for an uninsured bank since 1933. One commenter, a trade association Unlike commercial and consumer banks for banks, agreed with the treatment of Under the Paperwork Reduction Act and savings associations, which fiduciary assets in the proposed rule, (PRA) of 1995 (44 U.S.C. 3501 et seq.), generally face credit and liquidity risks, but questioned whether § 51.8(b) the OCC may not conduct or sponsor, national trust banks primarily face indicates with sufficient clarity that and, notwithstanding any other operational, reputational, and strategic fiduciary assets will not be treated as provision of law, a person is not risks. While any of these risks could assets of the bank in receivership. As required to respond to, an information result in the precipitous failure of a stated in the final rule, fiduciary and collection unless the information bank or savings association, from a custodial assets ‘‘will not be considered collection displays a valid Office of historical perspective, trust banks have as part of the bank’s general assets. . .’’. Management and Budget (OMB) control been more likely to decline into a The OCC reiterates that, under this number. The final rule contains no weakened condition, allowing the OCC section, assets held by an uninsured information collection requirements and the institution the time needed to bank in a fiduciary or custodial under the PRA. find other solutions for rehabilitating capacity, as designated on the bank’s B. Regulatory Flexibility Act the institution or to successfully resolve books and records, are not part of the the institution without the need to bank’s general assets and liabilities held The Regulatory Flexibility Act (RFA), appoint a receiver. As such, we believe in connection with its other business 5 U.S.C. 601 et seq., generally requires the OCC is unlikely to place an and will not be a source for payment for that, in connection with a rulemaking, uninsured trust bank into receivership. unrelated claims of creditors and other an agency prepare and make available For this reason, and because the final claimants. for public comment a regulatory rule does not impose any Section 51.8(d) of the final rule flexibility analysis that describes the implementation requirements, the OCC provides that, after all administrative impact of the rule on small entities. concludes that the final rule will not expenses and claims have been paid in However, the regulatory flexibility result in an expenditure of $100 million full, any remaining proceeds will be analysis otherwise required under the or more by state, local, and tribal paid to shareholders in proportion to RFA is not required if an agency governments, or by the private sector, in their stock ownership, also as provided certifies that the rule will not have a any one year. in 12 U.S.C. 194. significant economic impact on a Section 51.9 of the final rule contains substantial number of small entities List of Subjects in 12 CFR Part 51 provisions for termination of (defined in regulations promulgated by Administrative practice and receiverships in which there are assets the Small Business Administration procedure, Banks, Banking, National remaining after all administrative (SBA) to include commercial banks and banks, Procedural rules, Receiverships. expenses and all claims had been paid. savings institutions, and trust This is the scenario addressed by 12 companies, with assets of $550 million 30 Consistent with the General Principles of Affiliation 13 CFR 121.103(a), the OCC counts the U.S.C. 197. In such a case, section 197 or less and $38.5 million or less, assets of affiliated financial institutions when requires the Comptroller to call a respectively) and publishes its determining if we should classify an institution we meeting of the shareholders of the bank certification and a brief explanatory supervise as a small entity. We used December 31, at which the shareholders would decide statement in the Federal Register 2015, to determine size because a financial institution’s assets are determined by averaging the whether to continue oversight by the together with the rule. assets reported on its four quarterly financial Comptroller, or whether to end the The OCC currently supervises statements for the preceding year. See footnote 8 of receivership and appoint a liquidating approximately 1,032 small entities. The the U.S. SBA’s Table of Size Standards.

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Authority and Issuance bank, the bank may seek judicial review uninsured bank in receivership in the For the reasons set forth in the of the appointment as provided in 12 following order of priority: preamble and under the authority of 12 U.S.C. 191(b). (a) Administrative expenses of the receiver; U.S.C. 16, 93a, 191–200, 481, 482, § 51.3 Notice of appointment of receiver. 1831c, and 1867 the Office of the (b) Unsecured creditors of the Upon appointment of a receiver for an Comptroller of the Currency adds part uninsured bank, including secured uninsured bank, the OCC will provide 51 to chapter I of title 12, Code of creditors to the extent their claim notice to the public of the receivership, Federal Regulations to read as follows: exceeds their valid and enforceable including by publication in a newspaper security interest; PART 51—RECEIVERSHIPS FOR of general circulation for three (c) Creditors of the uninsured bank, if UNINSURED NATIONAL BANKS consecutive months. The notice of the any, whose claims are subordinated to receivership will provide instructions general creditor claims; and Sec. for creditors and other claimants (d) Shareholders of the uninsured 51.1 Purpose and scope. seeking to submit claims with the bank. 51.2 Appointment of receiver. receiver for the uninsured bank. 51.3 Notice of appointment of receiver. § 51.6 Administrative expenses of 51.4 Claims. § 51.4 Claims. receiver. 51.5 Order of priorities. 51.6 Administrative expenses of receiver. (a) Submission of claims for (a) Priority of administrative 51.7 Powers and duties of receiver; consideration by the OCC. (1) Persons expenses. All administrative expenses disposition of fiduciary and custodial who have claims against the of the receiver for an uninsured bank accounts. receivership for an uninsured bank may shall be paid out of the assets of the 51.8 Payment of claims and dividends to present such claims, along with bank in receivership before payment of shareholders. supporting documentation, for claims against the receivership. 51.9 Termination of receivership. consideration by the OCC. The OCC will (b) Scope of administrative expenses. Authority: 12 U.S.C. 16, 93a, 191–200, determine the validity and approve the Administrative expenses of the receiver 481, 482, 1831c, and 1867. amounts of such claims. for an uninsured bank include those (2) The OCC will establish a date by § 51.1 Purpose and scope. expenses incurred by the receiver in which any person seeking to present a maintaining banking operations during (a) Purpose. This part sets out claim against the uninsured bank for the receivership, to preserve assets of procedures for receiverships of national consideration by the OCC must present the uninsured bank, while liquidating or banks conducted by the Office of the their claim for determination. The otherwise resolving the affairs of the Comptroller of the Currency (OCC) deadline for filing such claims will not uninsured bank. Such expenses include under the receivership provisions of the be less than 30 days after the end of the pre-receivership and post-receivership National Bank Act (NBA). These three-month notice period in § 51.3. obligations that the receiver determines receivership provisions apply to (3) The OCC will allow any claim are necessary and appropriate to national banks that are not insured by against the uninsured bank received on facilitate the orderly liquidation or other the Federal Deposit Insurance or before the deadline for presenting resolution of the uninsured bank in Corporation (FDIC). claims if such claim is established to the receivership. (b) Scope. This part applies to the OCC’s satisfaction by the information on (c) Types of administrative expenses. appointment of a receiver for uninsured the uninsured bank’s books and records Administrative expenses for the receiver national banks (uninsured banks) and or otherwise submitted. The OCC may of an uninsured bank include: the operation of a receivership after disallow any portion of any claim by a (1) Salaries, costs, and other expenses appointment of a receiver for an creditor or claim of a security, of the receiver and its staff, and costs of uninsured bank under 12 U.S.C. 191.31 preference, set-off, or priority which is contracts entered into by the receiver for § 51.2 Appointment of receiver. not established to the satisfaction of the professional services relating to (a) In general. The Comptroller of the OCC. performing receivership duties; and Currency (Comptroller) may appoint (b) Submission of claims to a court. (2) Expenses necessary for the any person, including the OCC or Persons with claims against an operation of the uninsured bank, another government agency, as receiver uninsured bank in receivership may including wages and salaries of for an uninsured bank. The receiver present their claims to a court of employees, expenses for professional performs its duties under the direction competent jurisdiction for adjudication. services, contractual rent pursuant to an of the Comptroller and serves at the will Such persons must submit a copy of any existing lease or rental agreement, and of the Comptroller. The Comptroller final judgment received from the court payments to third-party or affiliated may require the receiver to post a bond to the OCC, to participate in ratable service providers, that in the opinion of or other security. The receiver, with the dividends along with other proved the receiver are of benefit to the approval of the Comptroller, may claims. receivership, until the date the receiver employ such staff and enter into (c) Right of set-off. If a person with a repudiates, terminates, cancels, or contracts for professional services as are claim against an uninsured bank in otherwise discontinues the applicable necessary to carry out the receivership. receivership also has an obligation owed contract. (b) Grounds for appointment. The to the bank, the claim and obligation § 51.7 Powers and duties of receiver; Comptroller may appoint a receiver for will be set off against each other and only the net balance remaining after set- disposition of fiduciary and custodial an uninsured bank based on any of the accounts. grounds specified in 12 U.S.C. 191(a). off shall be considered as a claim, (c) Judicial review. If the Comptroller provided such set-off is otherwise (a) Marshalling of assets. In resolving appoints a receiver for an uninsured legally valid. the affairs of an uninsured bank in receivership, the receiver: § 51.5 Order of priorities. 31 This part does not apply to receiverships for (1) Takes possession of the books, uninsured Federal branches or uninsured Federal The OCC will pay receivership records and other property and assets of agencies. expenses and proved claims against the the uninsured bank, including the value

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of collateral pledged by the uninsured the claims that have been proved to the DEPARTMENT OF HEALTH AND bank to the extent it exceeds valid and OCC’s satisfaction or adjudicated in a HUMAN SERVICES enforceable security interests of a court of competent jurisdiction. claimant; (2) Dividend payments to creditors Food and Drug Administration (2) Collects all debts, dues and claims and other claimants of an uninsured belonging to the uninsured bank, bank will be made solely from 21 CFR Part 4 including claims remaining after set-off; receivership funds, if any, paid to the [Docket No. FDA–2008–N–0424] (3) Sells or compromises all bad or OCC by the receiver after payment of the doubtful debts, subject to approval by a expenses of the receiver. RIN 0910–AF82 court of competent jurisdiction; (b) Fiduciary and custodial assets. (4) Sells the real and personal Postmarketing Safety Reporting for Assets held by an uninsured bank in a Combination Products property of the uninsured bank, subject fiduciary or custodial capacity, as to approval by a court of competent designated on the bank’s books and AGENCY: Food and Drug Administration, jurisdiction, on such terms as the court records, will not be considered as part HHS. shall direct; and of the bank’s general assets and ACTION: Final rule. (5) Deposits all receivership funds liabilities held in connection with its SUMMARY: collected from the liquidation of the other business, and will not be The Food and Drug uninsured bank in an account considered a source for payment of Administration (FDA or Agency) is issuing regulations to set forth designated by the OCC. unrelated claims of creditors and other postmarketing safety reporting (b) Disposition of fiduciary and claimants. custodial accounts. The receiver for an requirements for combination products. (c) Timing of dividends. The payment uninsured bank closes the bank’s Specifically, this final rule describes the of dividends, if any, under paragraph (a) fiduciary and custodial appointments postmarketing safety reporting of this section, on proved or adjudicated and accounts or transfers some or all of requirements that apply when two or claims will be made periodically, at the such accounts to successor fiduciaries more different types of regulated discretion of the OCC, as the receiver and custodians, in accordance with 12 medical products (drugs, devices, and/ liquidates the assets of the uninsured CFR 9.16, and other applicable Federal or biological products, which are bank. law. referred to as ‘‘constituent parts’’ of a (c) Other powers. The receiver for an (d) Distribution to shareholders. After combination product) comprise a uninsured bank may exercise other all administrative expenses of the combination product and the rights, privileges, and powers receiver and proved claims of creditors combination product or its constituent authorized for receivers of national of the uninsured bank have been paid in parts have received FDA marketing banks under the NBA and the common full, to the extent there are receivership authorization. The rule is intended to law of receiverships as applied by the assets to make such payments, any promote and protect the public health courts to receiverships of national banks remaining proceeds shall be paid to the by setting forth the requirements for conducted under the NBA. shareholders, or their legal postmarketing safety reporting for these (d) Reports to OCC. The receiver for representatives, in proportion to their combination products, and is part of an uninsured bank shall make periodic stock ownership. FDA’s ongoing effort to ensure the reports to the OCC on the status and § 51.9 Termination of receivership. consistency and appropriateness of the proceedings of the receivership. regulatory requirements for combination (e) Receiver subject to removal; If there are assets remaining after full products. payment of the expenses of the receiver modification of fees. (1) The DATES: Effective date: This rule is and all claims of creditors for an Comptroller may remove and replace effective on January 19, 2017. uninsured bank and all fiduciary the receiver for an uninsured bank if, in Compliance dates: Some provisions of accounts of the bank have been closed the Comptroller’s discretion, the the rule have a compliance date that is or transferred to a successor fiduciary receiver is not conducting the the same as the effective date of this and fiduciary powers surrendered, the receivership in accordance with rule, and other provisions of the rule Comptroller shall call a meeting of the applicable Federal laws or regulations have a later compliance date as shareholders of the uninsured bank, as or fails to comply with decisions of the discussed in section III.I, Effective Date provided in 12 U.S.C. 197, for the Comptroller with respect to the conduct and Compliance Dates. shareholders to decide the manner in of the receivership or claims against the FOR FURTHER INFORMATION CONTACT: John receivership. which the liquidation will continue. The liquidation may continue by: Barlow Weiner, Associate Director for (2) The Comptroller may reduce the Policy, Office of Combination Products, (a) Continuing the receivership of the fees of the receiver for an uninsured Food and Drug Administration, 10903 uninsured bank under the direction of bank if, in the Comptroller’s discretion, New Hampshire Ave., Bldg. 32, Rm. the Comptroller; or the Comptroller finds the performance 5129, Silver Spring, MD 20933, 301– of the receiver to be deficient, or the fees (b) Ending the receivership and 796–8930, [email protected]. of the receiver to be excessive, oversight by the Comptroller and SUPPLEMENTARY INFORMATION: unreasonable, or beyond the scope of replacing the receiver with a liquidating the work assigned to the receiver. agent to proceed to liquidate the Table of Contents remaining assets of the uninsured bank Executive Summary § 51.8 Payment of claims and dividends to for the benefit of the shareholders, as set shareholders. out in 12 U.S.C. 197. I. Background (a) Claims. (1) After the administrative A. Rationale for Rulemaking expenses of the receivership have been Dated: December 15, 2016. B. The Proposed Rule Thomas J. Curry, II. Overview of the Final Rule paid, the OCC shall make ratable A. Section 4.100—What is the scope of this Comptroller of the Currency. dividends from time to time of available subpart? receivership funds according to the [FR Doc. 2016–30666 Filed 12–19–16; 8:45 am] B. Section 4.101—How does FDA define priority described in § 51.5, based on BILLING CODE 4810–33–P key terms and phrases in this subpart?

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