Adjusting and Indexing Certain Regulatory Thresholds

FEDERAL DEPOSIT INSURANCE CORPORATION <CFR>12 CFR Parts 303, 314, 335, 340, 347, 363, and 380</CFR> <RIN>RIN 3064-AG15</RIN> <SUBJECT>Adjusting and Indexing Certain Regulatory Thresholds</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Deposit Insurance Corporation. <HD SOURCE="HED">ACTION:</HD> Notice of proposed rulemaking. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Federal Deposit Insurance Corporation (FDIC) is inviting comment on a proposed rule that would amend certain regulatory thresholds in the FDIC's regulations to reflect inflation. Specifically, the proposal would generally update such thresholds to reflect inflation from the date of initial implementation or the most recent adjustment, and provide for future adjustments pursuant to an indexing methodology. The changes set forth in this proposal would provide a more durable regulatory framework by helping to preserve, in real terms, the level of certain thresholds set forth in the FDIC's regulations, thereby avoiding the undesirable and unintended outcome where the scope of applicability for a regulatory requirement changes due solely to inflation rather than actual changes in an institution's size, risk profile or level of complexity. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received on or before September 26, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit comments, identified by RIN 3064-AG15, by any of the following methods: • <E T="03">FDIC Website: https://www.fdic.gov/federal-register-publications.</E> Follow instructions for submitting comments on the agency website. • <E T="03">Email: Comments@fdic.gov.</E> Include RIN 3064-AG15 in the subject line of the message. • <E T="03">Mail:</E> Jennifer M. Jones, Deputy Executive Secretary, Attention: Comments—RIN 3064-AG15, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. • <E T="03">Hand Delivery to FDIC:</E> Comments may be hand-delivered to the guard station at the rear of the 550 17th Street NW building (located on F Street) on business days between 7 a.m. and 5 p.m. • <E T="03">Public Inspection:</E> Comments received, including any personal information provided, may be posted without change to <E T="03">https://www.fdic.gov/federal-register-publications.</E> Commenters should submit only information that the commenter wishes to make available publicly. The FDIC may review, redact, or refrain from posting all or any portion of any comment that it may deem to be inappropriate for publication, such as irrelevant or obscene material. The FDIC may post only a single representative example of identical or substantially identical comments, and in such cases will generally identify the number of identical or substantially identical comments represented by the posted example. All comments that have been redacted, as well as those that have not been posted, that contain comments on the merits of the proposed rule will be retained in the public comment file and will be considered as required under all applicable laws. All comments may be accessible under the Freedom of Information Act. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Andrew Carayiannis, Chief, Policy & Risk Analytics Section; Bryan Jonasson, Deputy Chief Accountant; Keith Bergstresser, Senior Policy Analyst; Jim Yu, Senior Policy and Disclosure Analyst; Rachel Romm-Nisson, Risk Analytics Specialist, Capital Markets and Accounting Policy Branch, Division of Risk Management Supervision; Christopher Blickley, Counsel, Legal Division; Ryan Tetrick, Deputy Director, Division of Complex Institution Supervision and Resolution; Alex Greenberg, Assistant Director, Brock Walker, Assistant Director, Division of Resolutions and Receiverships; <E T="03">capitalmarkets@fdic.gov,</E> (202) 898-6888; Federal Deposit Insurance Corporation, 3701 Fairfax Drive, Arlington, VA 22203. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Introduction</FP> <FP SOURCE="FP1-2">A. Background</FP> <FP SOURCE="FP1-2">B. Considerations for Updating and Indexing Thresholds</FP> <FP SOURCE="FP1-2">C. Overview of the Proposal and Policy Objectives</FP> <FP SOURCE="FP-2">II. Initial Updates</FP> <FP SOURCE="FP1-2">A. 12 CFR Part 303 (Part 303)—Filing Procedures</FP> <FP SOURCE="FP1-2">B. 12 CFR Part 335 (Part 335)—Securities of State Nonmember Banks and Savings Associations</FP> <FP SOURCE="FP1-2">C. 12 CFR Part 340 (Part 340)—Restrictions on Sale of Assets of a Failed Institution by the Federal Deposit Insurance Corporation</FP> <FP SOURCE="FP1-2">D. 12 CFR Part 347 (Part 347)—International Banking</FP> <FP SOURCE="FP1-2">E. 12 CFR Part 363 (Part 363)—Annual Independent Audits and Reporting Requirements</FP> <FP SOURCE="FP1-2">F. 12 CFR Part 380 (Part 380)—Orderly Liquidation Authority</FP> <FP SOURCE="FP1-2">G. Additional Thresholds</FP> <FP SOURCE="FP-2">III. Indexing Methodology for Future Threshold Adjustments</FP> <FP SOURCE="FP1-2">A. Description of Methodology</FP> <FP SOURCE="FP1-2">B. Alternatives to the Proposed Indexing Methodology</FP> <FP SOURCE="FP1-2">1. Alternative Measures of Inflation</FP> <FP SOURCE="FP1-2">2. Adjustment Frequency Within the Indexing Methodology</FP> <FP SOURCE="FP1-2">3. Milestone Approach</FP> <FP SOURCE="FP1-2">4. Degree of Automation in Indexing</FP> <FP SOURCE="FP-2">IV. Economic Analysis</FP> <FP SOURCE="FP1-2">A. Expected Effects</FP> <FP SOURCE="FP1-2">B. Estimates of the Number of Directly Affected Entities</FP> <FP SOURCE="FP1-2">1. Part 303</FP> <FP SOURCE="FP1-2">2. Part 335</FP> <FP SOURCE="FP1-2">3. Part 340</FP> <FP SOURCE="FP1-2">4. Part 347</FP> <FP SOURCE="FP1-2">5. Part 363</FP> <FP SOURCE="FP1-2">6. Part 380</FP> <FP SOURCE="FP1-2">C. Costs and Benefits of the Proposal</FP> <FP SOURCE="FP1-2">1. Part 303</FP> <FP SOURCE="FP1-2">2. Part 335</FP> <FP SOURCE="FP1-2">3. Part 340</FP> <FP SOURCE="FP1-2">4. Part 347</FP> <FP SOURCE="FP1-2">5. Part 363</FP> <FP SOURCE="FP1-2">6. Part 380</FP> <FP SOURCE="FP-2">V. Administrative Matters</FP> <FP SOURCE="FP1-2">A. Paperwork Reduction Act</FP> <FP SOURCE="FP1-2">B. Regulatory Flexibility Act Analysis</FP> <FP SOURCE="FP1-2">C. Plain Language</FP> <FP SOURCE="FP1-2">D. Riegle Community Development and Regulatory Improvement Act of 1994</FP> <FP SOURCE="FP1-2">E. Executive Orders 12866 and 13563</FP> <FP SOURCE="FP1-2">F. Providing Accountability Through Transparency Act of 2023</FP> </EXTRACT> <HD SOURCE="HD1">I. Introduction</HD> <HD SOURCE="HD2">A. Background</HD> Thresholds are used to determine the scope of applicability for certain regulations promulgated by the FDIC. The most common threshold is the amount of total on-balance sheet assets of an institution (measured in dollars), which has long served as a proxy for an institution's size. <SU>1</SU> <FTREF/> In some cases, asset-based size thresholds are combined with other thresholds to serve as proxies for an institution's risk profile or level of complexity, such as the amount of nonbank assets or cross-jurisdictional activities. <SU>2</SU> <FTREF/> Combining thresholds in this manner helps to support a regulatory framework that is tailored to the risks presented by an individual institution or categories of institutions. <SU>3</SU> <FTREF/> <FTNT> <SU>1</SU>   <E T="03">See e.g.,</E> 12 CFR 337.12(b) (classifying institutions with less than $10 million in assets as small for examination cycle purpose); 12 CFR 327.8(e) (classifying institutions with assets of $10 billion or more as large for assessment purposes). </FTNT> <FTNT> <SU>2</SU>   <E T="03">See e.g.,</E> 12 CFR 329.3. </FTNT> <FTNT> <SU>3</SU>  For example, for large financial institutions with total assets of $100 billion or more, capital and liquidity requirements increase in stringency based on measures of size, cross-jurisdictional activity, weighted short-term wholesale funding, nonbank assets, and off-balance sheet exposure. <E T="03">See</E> 84 FR 59230 (Nov. 1, 2019). </FTNT> While most thresholds set a general level of applicability for a regulation, in some instances, thresholds are applied within a regulation to establish exclusions, provide for optionality, or to tailor individual requirements within a broad-based regulation to the varying sizes and risk profiles of all in-scope institutions. For example, as discussed further below, thresholds of $2,500 and $1,000 are used to define certain offenses that are exempt from the application requirements of section 19 of the Federal Deposit Insurance Act (FDI Act), as implemented by 12 CFR part 303. <SU>4</SU> <FTREF/> <FTNT> <SU>4</SU>  Specifically, under 12 CFR 303.227, the requirements of Section 19 do not apply to covered offenses where an individual could have been sentenced to a term of confinement in a correctional facility of three years or less and/or a fine of $2,500 or less, and that meet the additional criteria set forth in that section. In addition, the requirements of section 19 do not apply to “small dollar, simple theft,” which includes, among other requirements, the simple theft of goods, services, or currency (or other monetary instrument) if the value of the currency, goods, or services involved has a value of $1,000 or less. </FTNT> Under the FDIC's regulations, most thresholds are static, with no mechanism for periodic adjustments over time. To adjust a static threshold, the FDIC must, in general, provide notice and seek comment on such adjustment before it can be implemented as final. <SU>5</SU> <FTREF/> However, certain thresholds within the FDIC regulations are required by statute and therefore cannot be adjusted without legislative changes. <SU>6</SU> <FTREF/> <FTNT> <SU>5</SU>  5 U.S.C. 5 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 205k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━