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  4. Board Policy Statements on the Board’s Rules of Procedure

Board Policy Statements on the Board’s Rules of Procedure

8-039

APPLICATIONS—Policy Statement on Notice of Applications, Timeliness of Comments, Informal Meetings

Notice of Applications
A bank or company applying to the Board for a deposit-taking facility must first publish notice of its application in local newspapers. This requirement, found in section 262.3(b)(1) of the Board’s Rules of Procedure covers applications under the Bank Holding Company Act, Bank Merger Act, and Home Owners’ Loan Act, as well as applications for membership in the Federal Reserve System and for new branches of State member banks. Notices of these applications are published in newspapers of general circulation in the communities where the applicant intends to do business as well as in the community where the applicant’s head office is located. These notices are important in calling the public’s attention to an applicant’s plans and giving the public a chance to comment on these plans. To improve the effectiveness of the notices, the Board has supplemented its notice procedures as follows.
The Board has adopted standard forms of notice for use by applicants that will specify the exact date on which the comment period on the application ends, which may not be less than 30 calendar days from the date of publication of the first notice. The newspaper forms also provide the name and telephone number of the community affairs officer of the appropriate Reserve Bank as the person to call to obtain more information about submitting comments on an application. In general, the community affairs officer will be available to answer questions of a general nature concerning the submission of comments and the processing of applications.
The Board also publishes notice of bank holding company applications for bank acquisitions (but not for bank mergers or branches) and savings and loan holding company applications for savings association acquisitions (but not for savings association mergers or branches) in the Federal Register after the application is received and the Community Affairs Officer can provide the exact date on which this comment period ends. (The Federal Register comment period will generally end after the date specified in the newspaper notice.)
In addition to the formal newspaper and Federal Register notices discussed above, each Reserve Bank publishes a weekly list of applications submitted to the Reserve Bank for which newspaper notices have been published. Any person or organization may arrange to have the list mailed to them regularly, or may request particular lists, by contacting the Reserve Bank’s Community Affairs Officer. Each Reserve Bank’s list includes only applications submitted to that particular Reserve Bank, and persons or groups should request lists from each Reserve Bank having jurisdiction over applications in which they may be interested. Since the lists are prepared as a courtesy by the Reserve Bank, and are not intended to replace any formal notice required by statute or regulation, the Reserve Banks and the Board do not assume responsibility for errors or omissions. In addition, the weekly lists prepared by Reserve Banks include certain applications by bank holding companies and savings and loan holding companies for nonbank and non-depository institution acquisitions, respectively, filed with the Reserve Bank.
With respect to applications by bank holding companies and savings and loan holding companies to engage de novo in nonbank activities or make acquisitions of nonbank firms, the Board publishes notice of most of these applications in the Federal Register when the applications are filed. Notice of certain small acquisitions may be published in a newspaper of general circulation in the area(s) to be served. While applications for nonbanking activities are not covered by the provisions of the Community Reinvestment Act or the notice provisions of section 262.3 of the Board’s Rules of Procedure, the provisions of this Statement apply to such applications.

Timeliness of Comments

All comments must be actually received by the Board or the Reserve Bank on or before the last date of the comment period specified in the notice. Where more than one notice is published with respect to an application, comments must be received on or before the last date of the latest comment period. The Board’s rules allow it to disregard comments received after the comment period expires. In particular, section 262.3(e) of the Board’s Rules of Procedure states that the Board will not consider comments on an application that are not received on or before the expiration of the comment period. Thus, a commenter who fails to comment on an application within the specified comment period (or any extension) may be precluded from participating in the consideration of the application.
In cases where a commenter for good cause is unable to send its comment within the specified comment period, section 265.2(a)(10) of the Board’s Rules Regarding Delegation of Authority (12 CFR 265.2(a)(10)) allows the secretary of the Board to grant requests for an extension of the period. Under this provision, upon receipt of a request received on or before the expiration of the comment period, the secretary may grant a brief extension upon clear demonstration of hardship or other meritorious reason for seeking additional time.

Private Meetings

When a timely protest to approval of an application is received, the Reserve Bank may arrange a meeting between the applicant and the protestant to clarify and narrow the issues and to provide a forum for the resolution of differences between the protestant and the applicant. If the Reserve Bank decides that a private meeting would be appropriate, the Reserve Bank will arrange a private meeting soon after the receipt of a protest and the applicant’s response, if any, to the protest. In scheduling the meeting, the Reserve Bank will consider convenience to the parties with respect to the time and place of the meeting. A decision to hold a private meeting will not preclude the Reserve Bank or the Board from holding a public meeting or other proceeding if it is deemed appropriate.

Public Meetings

The Board’s general counsel (in consultation with the Reserve Bank and the directors of other interested divisions of the Board) may order that a public meeting or other proceeding be held if requested by the applicant or a protestant who files a timely protest, or if such a proceeding appears appropriate. In most instances, the determination to order a public meeting will be made after a private meeting has been held; however, where appropriate, a public meeting may be convened immediately after receipt of the protest and the applicant’s response, if any. Additional information may be requested prior to making a determination to convene a public meeting. In these cases, a determination will be made within 10 days from the date all relevant information is received. The public meeting will be scheduled as soon as possible, but in no event later than 30 days after the decision to hold the proceeding is made. The purpose of the public meeting will be to elicit information, to clarify factual issues related to the application, and to provide an opportunity for interested individuals to provide testimony.
The Board has adopted the following guidelines to be used for convening public meetings, although specific provisions may be altered by the general counsel if circumstances warrant.
Requesting a public meeting. A meeting may be requested by a person or an organization objecting to the application during the comment period, and by the applicant during the period within which it must respond to comments. Such a request must be timely and in writing.
A protest does not have to be filed in a legal brief or other format in order for a public meeting to be granted. The community affairs officer at the Reserve Bank will be available to assist any member of the public regarding the types of information generally included in protests; the format generally used by protestants; and any other specific questions about the procedures of the Federal Reserve System regarding protested applications.
In general, a protest should identify the protestant, state the basis for objection to approval of the application, and provide available written evidence to support the objection. Objections to approval of an application must relate to the factors that the Board is authorized to consider in acting on an application. Generally, these factors relate to the financial and managerial resources of the companies and banks involved, the effects of the proposal on competition, and the convenience and needs of the communities to be served by the companies and banks involved. If a public meeting is requested, the protest should indicate that there are members of the public who wish to speak on the issues in a public forum.
The protest will be transmitted by the Reserve Bank to the applicant, and the applicant will generally be allowed eight business days to respond in writing to the protest.
Arranging the public meeting. Public meetings will be arranged and presided over by a representative of the Federal Reserve System (“presiding officer”). In determining the time and place for the public meeting, such factors as convenience to the parties, the number of people expected to attend the meeting, access to public transportation, and possible after-hour security problems will be taken into account.
Conducting the public meeting. Prior to the meeting, all necessary steps will be taken to ensure that the meeting is conducted appropriately, including scheduling of witnesses, submission of written materials and other arrangements. In conducting the public meeting the presiding officer will have the authority and discretion to ensure that the meeting proceeds in a fair and orderly manner. Generally, the public meeting will consist of opening and closing remarks by the presiding officer, a presentation by the protestant, and a presentation by the applicant. An official transcript will be made of the proceedings and entered into the record. The conclusion of the public meeting normally marks the close of the public portion of the record on the application.
Notification of Board decision on the application. After a decision is made on the application, and the applicant is notified of the decision, staff will notify the protestant by telephone. This notification will be confirmed promptly in writing. As set forth in section 262.3(k) of the Board’s Rules of Procedure (12 CFR 262.3(k)) or section 265.3 of the Board’s Rules Regarding Delegation of Authority (12 CFR 265.3), a party to the application may request reconsideration of the Board’s order, or review of the Reserve Bank’s decision. 12 CFR 262.25.
8-040

RULEMAKING PROCEDURES— Improving Board Regulations; Policy Statement

Policy. It is the policy of the Board of Governors of the Federal Reserve System to improve the quality and minimize the burdens of its regulations by carefully considering an analysis of proposed regulations before they are published for comment, encouraging maximum public participation in the development of the regulations, and informing the public of the reasons for the Board’s regulatory actions.
To achieve these objectives and to comply with the spirit of Executive Order 12044, the Board is setting forth in this statement expanded rulemaking procedures that it intends to follow in developing regulations. If the Board finds it necessary or beneficial in the public interest to avoid delay by following more expedited procedures, such as those set forth in the Board’s Rules of Procedure for Rulemaking (12 CFR 262.2), the Board will state its reasons in a notice accompanying its actions. The new procedures do not apply to the formulation of monetary policy or to amendments of regulations required to implement monetary policy decisions.
Examples of regulatory actions for which expedited procedures may be appropriate are the following:
  • 1.
    The regulation is a technical amendment (e.g., reflecting a name change) or a clarifying change,
  • 2.
    The regulation requires prompt action in the public interest (e.g., changes in reserve requirements, stock market margin requirements, or the discount rate, or actions designed to eliminate a loophole),
  • 3.
    The regulation reduces a burden where further delay would cause unnecessary harm,
  • 4.
    The regulation is a reformulation of a proposal previously issued for public comment,
  • 5.
    The regulation must be adopted within a statutory deadline.
Development of regulatory plan. Designated members of the Board will become involved at an early stage in the development of regulations and will meet with staff to review the issues to be considered, the alternative approaches to be explored, a tentative plan to obtain public comment, and target dates for completion of steps in the development of the regulation.
Public involvement in the development of proposals. The Board believes that the public can make valuable contributions in identifying issues that should be addressed in its regulations. With respect to regulations implementing new areas of law or major revisions of existing regulations, the Board will endeavor to obtain preliminary views of interested persons prior to the development of a proposed regulation. For this purpose, the Board will utilize such procedures as it deems appropriate, including publication of an advance notice of proposed rulemaking, which may suggest specific issues on which comments should be focused; scheduling of an open conference or informal public hearing; and direct solicitation of views from interested persons or groups, selected so as to assure that conflicting interests and appropriate public bodies are fairly represented.
Initial analysis of proposals. Before presenting any proposals regarding a regulation to the Board for formal action, the staff will prepare a regulatory analysis of the proposal. The extent of the regulatory analysis at this stage will vary, depending upon the nature of the regulation. In every case, at a minimum, the regulatory analysis will discuss the need for and purposes of the regulation; set forth the various options available; discuss, where appropriate, their possible economic implications; evaluate their compliance, record-keeping, and reporting burdens; and recommend the best course of action based on an evaluation of the alternatives. If the regulation concerns an area where considerable information is available, a correspondingly more exhaustive regulatory analysis will be expected.
When the designated Board members involved are satisfied that the issues have been adequately treated by the staff, that the proposals are as simple as possible and understandable to those who must comply, and that no unnecessary burdens would be imposed, the staff will present the proposals to the Board for action.
Preliminary action by the Board. Consideration of the proposals by the Board ordinarily will take place at a meeting open to public observation. The Board ordinarily will authorize publication of a proposed regulation for comment. At that time, the regulatory analysis of the proposals will be made available to the public.
General public participation. The Board generally will allow at least 60 days for public comment on a proposed regulation. The notice accompanying the proposal will contain a summary analysis of the regulation and inform the public that copies of the regulatory analysis are available through the Freedom of Information Office. When deemed appropriate, the Board may also schedule an informal public hearing.
Staff analysis following public comments. The staff will prepare a summary of comments received, and this document, as well as the written comments, will be made available to the public. After taking account of the public comments, the staff will prepare recommendations for consideration by the designated Board members. When these members are satisfied that the public comments have received full and appropriate attention, the staff’s analysis and recommendations will be presented to the Board for action.
Final action by the Board and announcement of its decision. Final action on the proposals by the Board ordinarily will take place at a meeting open to public observation. The Board will announce the reasons for whatever action it takes regarding a proposed regulation. The announcement will discuss the Board’s rationale for accepting or rejecting arguments regarding the significant issues raised by the public. If the earlier regulatory analysis made available to the public is changed materially, a revised regulatory analysis will be made available.
Semiannual agenda of regulations. On the first Monday in October, the Board will publish in the Federal Register a schedule showing the times during the next 12 months when it will publish a semiannual agenda of regulations under development or review. The agenda shall describe the regulations that the Board anticipates will be considered, the need and legal basis for the action being taken, and the status of regulations previously listed on the agenda. Each item on the agenda will include the name and telephone number of a knowledgeable member of the Board’s staff. Supplements to the agenda may be published at other times during the year as appropriate.
Periodic review of regulations. The Board will review each of its existing regulations at least once every five years. Each regulation is to be reexamined with a view toward eliminating or simplifying it and easing burdens imposed by it. In selecting regulations to be reviewed, the Board will consider such factors as the length of time since the last evaluation of the regulation, the continued need for it, the type and number of complaints and suggestions received, the direct and indirect burdens imposed by the regulation, and the need to simplify or clarify the regulation and eliminate duplication. Essentially the same procedures described in this policy statement will be followed in the periodic review of regulations. Jan. 15, 1979; 1979 Fed. Res. Bull. 137.
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