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Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules

E-Government Act Compliance
FSA is committed to complying with
the E-Government Act, to promote the
use of the Internet and other
information technologies to provide
increased opportunities for citizen
access to Government information and
services, and for other purposes.
List of Subjects
7 CFR Part 761
Accounting, Loan programs—
agriculture, Rural areas.
7 CFR Part 762
Agriculture, Credit, Loan programs—
agriculture, Grant programs—
agriculture, Reporting and
recordkeeping requirements.
For the reasons set out in the
preamble, 7 CFR parts 761 and 762 are
proposed to be amended as follows:
PART 761—GENERAL PROGRAM
ADMINISTRATION
1. The authority citation for part 761
continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
§ 761.2

[Amended]

(ii) For lenders without a risk based
pricing model, the 10-year Treasury rate
plus 350 basis points for FO and the
New York Prime (as published in the
Wall Street Journal) plus 250 basis
points for OL. In the event of
extraordinary conditions resulting in
large interest rate changes or term
structure changes, the Agency may
temporarily set a different maximum
rate under this paragraph as determined
in consultation with the Department of
the Treasury; and
*
*
*
*
*
5. Amend § 762.150 by revising
paragraph (g) to read as follows:
§ 762.150

Interest Assistance Program.

*

*
*
*
*
(g) Rate of Interest. The lender interest
rate will be set according to
§ 762.124(a).
*
*
*
*
*

Signed at Washington, DC, on September
24, 2008.
Glen L. Keppy,
Acting Administrator, Farm Service Agency.
[FR Doc. E8–22871 Filed 9–29–08; 8:45 am]
BILLING CODE 3410–05–P

2. In § 761.2(b), remove the definition
of ‘‘average agricultural loan customer.’’
PART 762—GUARANTEED FARM
LOANS

DEPARTMENT OF THE TREASURY

3. The authority citation for part 762
continues to read as follows:

Office of the Comptroller of the
Currency

Authority: 5 U.S.C. 301, 7 U.S.C. 1989.

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§ 762.124
and fees.

[Docket ID OCC–2008–0014]
RIN 1557–AD13

Interest rate, terms, charges,

(a) * * *
(2) If a variable rate is used, it must
be tied to an index or rate specifically
agreed to between the lender and
borrower in the loan instruments and
the rate adjustments must be in
accordance with normal practices of the
lender for unguaranteed loans. Upon
request, the lender must provide the
Agency with copies of written rate
adjustment practices.
(3) At loan closing and at the time of
loan restructuring, the interest rate on
the guaranteed portion and the
unguaranteed portion of a fixed or
variable rate loan may not exceed the
following, as applicable:
(i) For lenders utilizing a pricing
model based on loan risk, the highest
interest rate for tier of the lender’s risk
rating matrix that reflects moderate risk.
The lender must provide the Agency
with this pricing model.

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Office of the Comptroller of
the Currency, Treasury; Board of
Governors of the Federal Reserve
System; Federal Deposit Insurance
Corporation; and Office of Thrift
Supervision, Treasury.
ACTION: Joint notice of proposed
rulemaking.
AGENCIES:

SUMMARY: The Office of the Comptroller
of the Currency (OCC), the Board of
Governors of the Federal Reserve
System (Board), the Federal Deposit
Insurance Corporation (FDIC), and the
Office of Thrift Supervision (OTS)
(collectively, the Agencies) are
proposing to permit banks, bank holding
companies, and savings associations
(collectively, banking organizations) to
reduce the amount of goodwill that a
banking organization must deduct from
tier 1 capital by the amount of any
deferred tax liability associated with
that goodwill. The proposed change
would effectively reduce the amount of
goodwill that a banking organization
must deduct from tier 1 capital and
would reflect a banking organization’s
maximum exposure to loss in the event
that such goodwill is impaired or
derecognized for financial reporting
purposes.

Comments must be received on
or before October 30, 2008.
ADDRESSES: Comments should be
directed to:
OCC: Because paper mail in the
Washington, DC area and at the OCC is
subject to delay, commenters are
encouraged to submit comments by the
Federal eRulemaking Portal or e-mail, if
possible. Please use the title ‘‘Capital
Adequacy Guidelines; Deduction of
Goodwill Net of Associated Deferred
Tax Liability’’ to facilitate the
organization and distribution of the
comments. You may submit comments
by any of the following methods:
• Federal eRulemaking Portal—
‘‘Regulations.gov’’: Go to http://
www.regulations.gov, under the ‘‘More
Search Options’’ tab click next to the
‘‘Advanced Docket Search’’ option
where indicated, select ‘‘Comptroller of
the Currency’’ from the agency dropdown menu, then click ‘‘Submit.’’ In the
‘‘Docket ID’’ column, select ‘‘OCC–
2008–0014’’ to submit or view public
comments and to view supporting and
related materials for this notice of
proposed rulemaking. The ‘‘How to Use
This Site’’ link on the Regulations.gov
DATES:

12 CFR Part 3

4. Amend § 762.124 by revising
paragraphs (a)(2) and (a)(3) to read as
follows:

Minimum Capital Ratios; Capital
Adequacy Guidelines; Capital
Maintenance; Capital: Deduction of
Goodwill Net of Associated Deferred
Tax Liability

FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 225
[Regulations H and Y; Docket No. R–1329]

FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 325
RIN 3064–AD32

DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 567
[Docket No. OTS–2008–0010]
RIN 1550–AC22

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ebenthall on PROD1PC60 with PROPOSALS

Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules
home page provides information on
using Regulations.gov, including
instructions for submitting or viewing
public comments, viewing other
supporting and related materials, and
viewing the docket after the close of the
comment period.
• E-mail:
regs.comments@occ.treas.gov.
• Mail: Office of the Comptroller of
the Currency, 250 E Street, SW., Mail
Stop 1–5, Washington, DC 20219.
• Fax: (202) 874–4448.
• Hand Delivery/Courier: 250 E
Street, SW., Attn: Public Information
Room, Mail Stop 1–5, Washington, DC
20219.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
Number OCC–2008–0014’’ in your
comment. In general, OCC will enter all
comments received into the docket and
publish them on the Regulations.gov
Web site without change, including any
business or personal information that
you provide such as name and address
information, e-mail addresses, or phone
numbers. Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
notice of proposed rulemaking by any of
the following methods:
• Viewing Comments Electronically:
Go to http://www.regulations.gov, under
the ‘‘More Search Options’’ tab click
next to the ‘‘Advanced Document
Search’’ option where indicated, select
‘‘Comptroller of the Currency’’ from the
agency drop-down menu, then click
‘‘Submit.’’ In the ‘‘Docket ID’’ column,
select ‘‘OCC–2008–0014’’ to view public
comments for this rulemaking action.
• Viewing Comments Personally: You
may personally inspect and photocopy
comments at the OCC’s Public
Information Room, 250 E Street, SW.,
Washington, DC. For security reasons,
the OCC requires that visitors make an
appointment to inspect comments. You
may do so by calling (202) 874–5043.
Upon arrival, visitors will be required to
present valid government-issued photo
identification and submit to security
screening in order to inspect and
photocopy comments.
• Docket: You may also view or
request available background
documents and project summaries using
the methods described above.
Board: You may submit comments,
identified by Docket No. R–1329, by any
of the following methods:

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• Agency Web Site: http://
www.Federalreserve.gov. Follow the
instructions for submitting comments at
http://www.Federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail:
regs.comments@Federalreserve.gov.
Include docket number in the subject
line of the message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Jennifer J. Johnson, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551.
All public comments are available from
the Board’s Web site at http://
www.Federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room MP–500 of the
Board’s Martin Building (20th and C
Streets, NW., Washington, DC) between
9 a.m. and 5 p.m. on weekdays.
FDIC: You may submit comments by
any of the following methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Agency Web Site: http://
www.FDIC.gov/regulations/laws/
federal/propose.html.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429.
• Hand Delivered/Courier: The guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7 a.m. and 5 p.m.
• E-mail: comments@FDIC.gov.
Instructions: Comments submitted
must include ‘‘FDIC’’ and ‘‘RIN # 3064–
AD32.’’ Comments received will be
posted generally without change to
http://www.FDIC.gov/regulations/laws/
federal/propose.html, including any
personal information provided.
OTS: You may submit comments,
identified by OTS–2008–0010 by any of
the following methods:
• Federal eRulemaking Portal—
‘‘Regulations.gov’’: Go to http://
www.regulations.gov, under the ‘‘More
Search Options’’ tab click next to the
‘‘Advanced Docket Search’’ option
where indicated, select ‘‘Office of Thrift
Supervision’’ from the agency dropdown menu, then click ‘‘Submit.’’ In the

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‘‘Docket ID’’ column, select ‘‘OTS–
2008–0010’’ to submit or view public
comments and to view supporting and
related materials for this notice of
proposed rulemaking. The ‘‘How to Use
This Site’’ link on the Regulations.gov
home page provides information on
using Regulations.gov, including
instructions for submitting or viewing
public comments, viewing other
supporting and related materials, and
viewing the docket after the close of the
comment period.
• E-mail address:
regs.comments@ots.treas.gov. Please
include OTS–2008–0010 in the subject
line of the message and include your
name and telephone number in the
message.
• Fax: (202) 906–6518.
• Mail: Regulation Comments, Chief
Counsel’s Office, Office of Thrift
Supervision, 1700 G Street, NW.,
Washington, DC 20552, Attention: OTS–
2008–0010.
• Hand Delivery/Courier: Guard’s
Desk, East Lobby Entrance, 1700 G
Street, NW., from 9 a.m. to 4 p.m. on
business days, Attention: Regulation
Comments, Chief Counsel’s Office,
OTS–2008–0010.
Instructions: All submissions received
must include the agency name and
docket number or Regulatory
Information Number (RIN) for this
rulemaking. All comments received will
be posted without change to the OTS
Internet Site at http://www.ots.treas.gov/
Supervision&Legal.Laws&Regulations,
including any personal information
provided. Comments received,
including attachments and other
supporting materials, are part of the
public record and subject to public
disclosure. Do not enclose any
information in your comment or
supporting materials that could be
considered confidential or inappropriate
for public disclosure.
• Viewing Comments Electronically:
Go to http://www.regulations.gov, under
the ‘‘More Search Options’’ tab click
next to the ‘‘Advanced Document
Search’’ option where indicated, select
‘‘Office of Thrift Supervision’’ from the
agency drop-down menu and click
‘‘Submit.’’ In the ‘‘Docket ID’’ column,
select ‘‘OTS–2008–0010’’ to view public
comments for this rulemaking action.
• Viewing Comments On-Site: You
may inspect comments at the Public
Reading Room, 1700 G Street, NW., by
appointment. To make an appointment
call (202) 906–5922, send an e-mail to
public.info@ots.treas.gov, or send a
facsimile transmission to (202) 906–
6518. (Prior notice identifying the
materials you will be requesting will
assist us in serving you.) We schedule

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Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules

appointments on business days between
10 a.m. and 4 p.m. In most cases,
appointments will be available the next
business day following the date we
receive a request.
FOR FURTHER INFORMATION CONTACT:
OCC: Paul Podgorski, Risk Expert,
Capital Policy (202–874–4755); or Jean
Campbell, Senior Attorney, or Ron
Shimabukuro, Special Counsel,
Legislative and Regulatory Activities
Division (202–874–5090).
Board: Barbara Bouchard, Associate
Director (202–452–3072 or
barbara.bouchard@frb.gov), Mary
Frances Monroe, Manager (202–452–
5231 or mary.f.monroe@frb.gov), David
Snyder, Supervisory Financial Analyst
(202–728–5893 or
david.snyder@frb.gov), Division of
Banking Supervision and Regulation; or
Mark Van Der Weide, Assistant General
Counsel (202–452–2263 or
mark.vanderweide@frb.gov) or Dinah
Knight, Senior Attorney (202–452–3838
or dinah.r.knight@frb.gov), Legal
Division. For users of
Telecommunications Device for the Deaf
(‘‘TDD’’) only, contact 202–263–4869.
FDIC: Christine M. Bouvier, Senior
Policy Analyst (Bank Accounting) (202–
898–7289), Accounting and Securities
Disclosure Section, Division of
Supervision and Consumer Protection;
Nancy Hunt, Senior Policy Analyst
(202–898–6643), Capital Markets
Branch, Division of Supervision and
Consumer Protection; Mark Handzlik,
Senior Attorney (202–898–3990), or
Michael Phillips, Counsel (202–898–
3581), Supervision Branch, Legal
Division.
OTS: Christine A. Smith, Project
Manager, Capital Policy (202–906–
5740); Marvin Shaw, Senior Attorney,
Regulations and Legislation (202–906–
6639); Patricia M. Hildebrand, Senior
Policy Accountant, Accounting (202–
906–7048); or Craig Phillips, Senior
Policy Accounting Fellow, Accounting
(202–906–5628).
SUPPLEMENTARY INFORMATION:

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Proposed Capital Treatment for
Goodwill Arising From a Taxable
Business Combination
Under the Agencies’ existing
regulatory capital rules, a banking
organization 1 must deduct certain
assets from tier 1 capital.2 A banking
1 Unless otherwise indicated, the term ‘‘banking
organization’’ includes banks, savings associations,
and bank holding companies (BHCs). The terms
‘‘bank holding company’’ and ‘‘BHC’’ refer only to
bank holding companies regulated by the Board.
2 See the Agencies’ capital rules for more detail
on what assets are required to be deducted from
regulatory capital and how these deductions are
calculated. See 12 CFR part 3 (national banks); 12

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organization is permitted to net any
associated deferred tax liability against
some of those assets prior to deduction
from tier 1 capital. Included among
those assets are certain intangible assets
arising from a nontaxable business
combination. Such netting generally is
not permitted for goodwill and other
intangible assets arising from a taxable
business combination. In these cases,
the full or gross carrying amount of the
asset is deducted.
Statement of Financial Accounting
Standards No. 141, Business
Combinations (FAS 141), requires that
all business combinations be accounted
for using the purchase method of
accounting for financial reporting
purposes under generally accepted
accounting principles (GAAP).3 FAS
141 also requires that the acquiring
entity assign the cost of the acquired
entity to each identifiable asset acquired
and liability assumed. The amounts
assigned are based generally upon the
fair values of such assets and liabilities
at the acquisition date. If the cost of the
acquired entity exceeds the net of the
amounts so assigned, the acquiring
entity must recognize the excess amount
as goodwill.
Statement of Financial Accounting
Standards No. 142, Goodwill and Other
Intangible Assets (FAS 142), prohibits
the amortization of goodwill for
financial reporting purposes under
GAAP and requires periodic testing of
the carrying amount of goodwill for
impairment. However, a banking
organization generally amortizes
goodwill for tax purposes. This
difference in treatment generally results
in the recognition of a deferred tax
liability under GAAP. The deferred tax
liability increases over time and is
reflected in corresponding reductions in
earnings for financial reporting
purposes until the goodwill has been
fully amortized for tax purposes. The
deferred tax liability generally is not
reduced or reversed for financial
CFR part 208 (state member banks); 12 CFR part 225
(bank holding companies); 12 CFR part 325 (state
nonmember banks); and 12 CFR part 567 (savings
associations). This proposal is focused on the
deduction of goodwill from tier 1 capital.
3 Under FAS 141, application of the purchase
method to combinations between mutual
institutions was deferred, pending the issuance of
interpretive guidance. A revised statement issued in
December 2007, FAS 141(R), supersedes FAS 141
for financial reporting years starting after December
15, 2008. The revisions to FAS 141 incorporated in
FAS 141(R) do not conflict with this proposal. FAS
141(R) retains the fundamental requirements in
FAS 141 that the acquisition method of accounting
(which FAS 141 called the ‘‘purchase method’’) be
used for all business combinations and extends
these requirements to combinations between two or
more mutual institutions. This proposal uses the
term ‘‘purchase method’’ in order to be consistent
with the current terminology under GAAP.

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reporting purposes unless the associated
goodwill is written down upon a finding
of impairment, or is otherwise
derecognized.
The Agencies have received requests
from several banking organizations to
permit the amount of goodwill arising
from a taxable business combination
that must be deducted from tier 1
capital to be reduced by any associated
deferred tax liability. The Agencies
believe that this treatment would
appropriately reflect a banking
organization’s maximum exposure to
loss if the goodwill becomes impaired or
is derecognized under GAAP.
Accordingly, the Agencies are
proposing to amend their respective
capital rules to permit a banking
organization to reduce the amount of
goodwill it must deduct from tier 1
capital by the amount of any deferred
tax liability associated with that
goodwill. However, a banking
organization that reduces the amount of
goodwill deducted from tier 1 capital by
the amount of the associated deferred
tax liability would not be permitted to
net this deferred tax liability against
deferred tax assets when determining
regulatory capital limitations on
deferred tax assets. The proposed
change would permit a banking
organization to effectively reduce its
regulatory capital deduction for
goodwill to an amount equal to the
maximum regulatory capital reduction
that could occur as a result of the
goodwill becoming completely impaired
or derecognized. This would increase a
banking organization’s tier 1 capital,
which is used to determine the banking
organization’s leverage ratio and riskbased capital ratios.
For example, assume that goodwill in
the amount of $9,000 arises from a
taxable business combination. For
income tax purposes, this goodwill is
amortized over 15 years at a rate of $600
per year ($9,000/15 years). However, the
banking organization cannot recognize
the $600 annual tax deduction for
goodwill amortization in current income
for financial reporting purposes.
Assuming an income tax rate of 30
percent, each year the banking
organization would have an income tax
reduction of $180 ($600 × 30%) and
would recognize this amount as a
deferred tax liability. Under GAAP, at
the end of the first year, the banking
organization would report a deferred tax
liability of $180. At the end of the 15year tax amortization period, it would
report a cumulative deferred tax liability
of $2,700 ($180 × 15 years).4
4 This example assumes that, throughout the tax
amortization period, there is no impairment or

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Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules
Under the Agencies’ existing
regulatory capital rules, the full carrying
amount of goodwill ($9,000) is deducted
from tier 1 capital. However, since the
amortization of this asset for income tax
purposes reduces income taxes by
$2,700 over the 15-year period, the
maximum amount of reduction in tier 1
capital that the banking organization
could experience in the event of total
impairment of the goodwill at the end
of the 15-year period is $6,300 ($9,000
minus $2,700), not $9,000. Under this
proposed rule, the total deduction from
tier 1 capital at the end of the first year
would be $8,820 ($9,000 minus $180)
and, at the end of the fifteenth year, the
deduction from tier 1 capital would be
$6,300.
The Agencies request comment on all
aspects of this proposal. Specifically,
the Agencies request comment on the
impact that the proposed treatment
could have on a banking organization’s
regulatory capital ratios.
The Agencies are considering for
purposes of any final rule whether they
should extend the treatment proposed
for goodwill to other intangible assets
acquired in a taxable business
combination that currently are not
deductible from tier 1 capital net of
associated deferred tax liabilities.5
Accordingly, the Agencies request
comment on whether they should
permit any additional intangible assets
to be deducted from tier 1 capital net of
associated deferred tax liabilities. For
such assets, the Agencies request
information regarding the type of
intangible asset and an estimate of the
potential impact on banking
organizations’ capital ratios from
extending this proposal to cover those
assets, as well as any other relevant data
or pertinent information.

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Other Revisions
The OCC is proposing to consolidate
the various provisions permitting a bank
to deduct assets from tier 1 capital on
a basis net of any associated deferred tax
liability together in one section of the
regulatory text to make it easier to
locate. In addition, the current
regulatory text’s special treatment of
intangible assets acquired due to a
nontaxable purchase business
combination exempts purchased
mortgage servicing rights and purchased
credit card relationships but does not
derecognition of the goodwill and there is no
change in the income tax rate.
5 As discussed above, under the Agencies’
existing regulatory capital rules, the full amount of
any intangible asset acquired in a taxable business
combination generally is deducted from tier 1
capital, without netting of any associated deferred
tax liability.

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make clear whether those assets may be
netted, and also does not make clear
whether intangible assets acquired in a
taxable purchase business combination
may be netted.
The OCC is clarifying the appropriate
treatment of disallowed servicing assets
and purchased credit card relationships
to be as follows: (1) Disallowed
servicing assets may be deducted net of
any associated deferred tax liability,
regardless of the method by which the
bank acquired such assets; and (2)
servicing assets that are includable in
tier 1 capital and purchased credit card
relationships may not be deducted net
of any associated deferred tax liability,
regardless of the method by which the
bank acquired such assets. The OCC is
proposing these changes for the
following reasons. The term ‘‘purchased
mortgage servicing rights’’ is obsolete
under GAAP. The OCC is replacing this
term with the broader term ‘‘servicing
assets’’ and making other clarifying
changes to more accurately reflect the
OCC’s existing interpretation of the
current regulatory text.
The OCC also is proposing technical
changes to its regulatory capital rules.
The OCC is proposing to amend the
definition of goodwill to conform to
FAS 141 and FAS 142. These changes
are non-substantive and are being made
because portions of the existing
regulatory text became obsolete when
FAS 141 made application of the
purchase method of accounting for
business combinations mandatory. In
addition, the OCC is proposing
technical amendments to revise cross
references and other miscellaneous
changes.
The Board also is proposing technical
changes to conform the definition of
goodwill in its regulatory capital rules
to GAAP, in particular, to the
terminology used in FAS 141 and FAS
142.6 These changes are non-substantive
and are being made because parts of the
existing regulatory text became obsolete
when FAS 141 made application of the
purchase method of accounting for
business combinations mandatory.
Further, the Board is proposing to
amend Appendix A to 12 CFR part 225
to remove obsolete text that relates to
goodwill recognized by a BHC prior to
December 31, 1992.
The OTS is proposing four changes to
its capital regulations. First, OTS is
proposing a change to amend its
definition of ‘‘intangible assets’’ in 12
CFR 567.1 to delete obsolete text that
6 The FDIC’s and OTS’s regulatory capital rules
do not include a definition of goodwill. Therefore,
this aspect of the proposal would not affect the
FDIC’s or OTS’s regulations.

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excluded servicing assets from the
definition of intangible assets, and to
add regulatory text to the definition to
include servicing assets as intangible
assets. Second, OTS is proposing a
change to its definition of ‘‘intangible
assets’’ in 12 CFR 567.9 that would
reference servicing assets as intangible
assets according to 12 CFR 567.1. Third,
OTS is proposing a change to conform
its regulatory text to that of the other
Agencies by adding regulatory text that
provides for netting a deferred tax
liability specifically related to an
intangible asset (other than disallowed
servicing assets that are already
permitted to be deducted on a basis net
of associated deferred tax liabilities, and
purchased credit card relationships that
may not be deducted on a basis net of
associated deferred tax liabilities)
arising from a nontaxable business
combination against that intangible
asset. Fourth, OTS is proposing other
regulatory rule text changes that will
conform its regulatory text to that of the
other Agencies by adding language to its
rules addressing the regulatory capital
limitation on deferred tax assets.
Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (RFA)
generally requires an agency that is
issuing a proposed rule to prepare and
make available for public comment an
initial regulatory flexibility analysis that
describes the impact of the proposed
rule on small entities.7 The RFA
provides that an agency is not required
to prepare and publish an initial
regulatory flexibility analysis if the
agency certifies that the proposed rule
will not, if promulgated, have a
significant economic impact on a
substantial number of small entities.8
Under regulations issued by the Small
Business Administration,9 a small entity
includes a bank holding company,
commercial bank, or savings association
with assets of $175 million or less
(collectively, small banking
organizations).10 The proposed rule
would permit a banking organization to
compute its deduction from regulatory
capital of goodwill net of any associated
deferred tax liability. The Agencies
believe that this proposed rule will not
have a significant economic impact on
a substantial number of small entities
because the proposed rule is elective
and, thus, does not require a bank to
7 See

5 U.S.C. 603(a).
5 U.S.C. 605(b).
9 See 13 CFR 121.201.
10 As of December 31, 2007, there were
approximately 2,785 small bank holding
companies, 932 small national banks, 467 small
state member banks, 3,274 small state nonmember
banks, and 428 small savings associations.
8 See

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Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules

compute its deduction from regulatory
capital of goodwill net of any associated
deferred tax liability. Each agency
certifies that the proposed rule will not,
if promulgated in final form, have a
significant economic impact on a
substantial number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995, the Agencies
reviewed the proposed rule regarding
the deduction of goodwill net of
associated deferred tax liability as
required by the Office of Management
and Budget.11 No collections of
information pursuant to the Paperwork
Reduction Act are contained in the
proposed rule. However,
implementation of this proposed rule
would necessitate clarifications to the
Agencies’ quarterly regulatory reports 12
to reflect the proposed change in a
banking organization’s tier 1 capital.
Plain Language
Section 722 of the Gramm-LeachBliley Act requires the Agencies to use
plain language in all proposed and final
rules published after January 1, 2000. In
light of this requirement, the Agencies
have sought to present the proposed
rule in a simple and straightforward
manner. The Agencies invite comment
on whether the Agencies could take
additional steps to make the proposed
rule easier to understand.
OCC and OTS Executive Order 12866
Determinations
Executive Order 12866 requires
Federal agencies to prepare a regulatory
impact analysis for agency actions that
are found to be significant regulatory
actions. Significant regulatory actions
include, among other things,
rulemakings that have an annual effect
on the economy of $100 million or more
or adversely affect in a material way the
economy, a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
state, local, or tribal governments or
communities. The OCC and OTS each
have determined that its portion of the
proposed rule is not a significant
regulatory action.

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OCC and OTS Executive Order 13132
Determinations
The OCC and OTS each determined
that its portion of the proposed
11 See

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Department of the Treasury

OCC and OTS Unfunded Mandates
Reform Act of 1995 Determinations

12 CFR Chapter I

Section 202 of the Unfunded
Mandates Reform Act of 1995, Public
Law 104–4 (UMRA) requires that an
agency prepare a budgetary impact
statement before promulgating a rule
that includes a Federal mandate that
may result in the expenditure by state,
local, and tribal governments, in the
aggregate, or by the private sector of
$100 million or more (adjusted annually
for inflation) in any one year. If a
budgetary impact statement is required,
section 205 of the UMRA also requires
an agency to identify and consider a
reasonable number of regulatory
alternatives before promulgating a rule.
The OCC and OTS each have
determined that its proposed rule will
not result in expenditures by state,
local, and tribal governments, or by the
private sector, of $133 million or more.
Accordingly, neither OCC nor OTS has
prepared a budgetary impact statement
or specifically addressed the regulatory
alternatives considered.

For the reasons set forth in the
common preamble, part 3 of chapter I of
title 12 of the Code of Federal
Regulations is proposed to be amended
as follows:

List of Subjects

Accounting, Administrative practice
and procedure, Banks, Banking, Capital,
National banks, Reporting and
recordkeeping requirements, Risk.
12 CFR Part 208
Accounting, Administrative practice
and procedure, Banks, Banking, Capital,
Reporting and recordkeeping
requirements, Risk.
12 CFR Part 225
Accounting, Administrative practice
and procedure, Banks, Banking, Capital,
Federal Reserve System, Reporting and
recordkeeping requirements, Risk.
12 CFR Part 325
Accounting, Banks, Banking,
Administrative practice and procedure,
Capital, Reporting and recordkeeping
requirements, Risk.

Capital, Reporting and recordkeeping
requirements, Risk, Savings
associations.

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Frm 00007

Fmt 4702

Office of the Comptroller of the
Currency
Authority and Issuance

PART 3—MINIMUM CAPITAL RATIOS;
ISSUANCE OF DIRECTIVES
1. The authority citation for part 3
continues to read as follows:
Authority: 12 U.S.C. 93a, 161, 1818,
1828(n), 1828 note, 1831n note, 1835, 3907
and 3909.

2. In appendix A to part 3, Section 1
is amended by:
a. Removing, in paragraph (c)(1), the
third sentence, the phrase ‘‘section
1(c)(8)’’ and by adding in lieu thereof
the phrase ‘‘section 1(c)(10)’’; and
b. Revising paragraph (c)(17) to read
as follows:
Appendix A to Part 3—Risk-Based
Capital Guidelines
Section 1. Purpose, Applicability of
Guidelines, and Definitions.

*

12 CFR Part 3

12 CFR Part 567

44 U.S.C. 3506; 5 CFR 1320 Appendix A.1.
Reports of Condition and Income
(Call Report) (OMB Nos. 7100–0036, 3064–0052,
1557–0081), Thrift Financial Report (TFR) (OMB
No. 1550–0023), Consolidated Financial Statements
for Bank Holding Companies (FR Y–9C) (OMB No.
7100–0128).
12 Consolidated

rulemaking does not have any
federalism implications for purposes of
Executive Order 13132.

Sfmt 4702

*

*

*

*

(c) * * *
(17) Goodwill is an intangible asset that
represents the excess of the cost of an
acquired entity over the net of the amounts
assigned to assets acquired and liabilities
assumed.

*

*
*
*
*
3. In appendix A to part 3, Section 2
is amended by:
a. Removing, in paragraphs (c)
introductory text and (c)(1) introductory
text, the word ‘‘items’’, and by adding
in lieu thereof the word ‘‘assets’’;
b. Removing, in paragraph (c)(1)(iii),
the phrase ‘‘section 2(c)(3)’’ and by
adding in lieu thereof the phrase
‘‘sections 2(c)(3) and (2)(c)(6)’’;
c. Removing, in paragraph (c)(1)(iv),
the phrase ‘‘section 4(a)(3)’’ and by
adding in lieu thereof the phrase
‘‘section 4(a)(2)’’;
d. Removing, in footnote 6, the phrase
‘‘section 1(c)(14)’’ and by adding in lieu
thereof the phrase ‘‘section 1(c)(18)’’,
and removing the phrase ‘‘section
4(a)(3)’’ and by adding in lieu thereof
the phase ‘‘section 4(a)(2)’’;
e. Removing paragraph (c)(2)(iv);
f. Adding a heading to paragraph
(c)(3)(i);
g. Removing paragraph (c)(3)(iii) and
redesignating paragraph (c)(3)(iv) as
paragraph (c)(3)(iii);
h. Removing paragraph (c)(4)(iii);

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Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules
i. Redesignating paragraph (c)(6) as
paragraph (c)(7) and adding a new
paragraph (c)(6) to read as follows; and
j. Revising the introductory text of
newly designated paragraph (c)(7) by
removing the word ‘‘items’’ and adding
in lieu thereof the word ‘‘assets’’.
The revision and addition are set forth
below.
Section 2. Components of Capital.

*

*

*

*

*

(c) * * *
(3) * * * (i) Net unrealized gains and
losses on available-for-sale securities. * * *

*

*

*

*

*

(6) Netting of Deferred Tax Liability. (i)
Banks may elect to deduct the following
assets from Tier 1 capital on a basis that is
net of any associated deferred tax liability:
(A) Goodwill;
(B) Intangible assets acquired due to a
nontaxable purchase business combination,
except banks may not elect to deduct from
Tier 1 capital on a basis that is net of any
associated deferred tax liability, regardless of
the method by which they were acquired:
(1) Purchased credit card relationships;
and
(2) Servicing assets that are includable in
Tier 1 capital;
(C) Disallowed servicing assets;
(D) Disallowed credit-enhancing interestonly strips; and
(E) Nonfinancial equity investments, as
defined in section 1(c)(1) of this appendix A.
(ii) Deferred tax liabilities netted in this
manner cannot also be netted against
deferred tax assets when determining the
amount of deferred tax assets that are
dependent upon future taxable income as
calculated under section 2(c)(1)(iii) of this
appendix A.

*

*

*

*

*

Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the
common preamble, the Board of
Governors of the Federal Reserve
System proposes to amend parts 208
and 225 of chapter II of title 12 of the
Code of Federal Regulations as follows:
PART 208—MEMBERSHIP OF STATE
BANKING INSTITUTIONS IN THE
FEDERAL RESERVE SYSTEM
(REGULATION H)

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1. The authority citation for part 208
continues to read as follows:
Authority: 12 U.S.C. 24, 92(a), 248(a),
248(c), 321–328a, 371d, 461, 481–486, 601,
611, 1814, 1816, 1818, 1820(d)(9), 1823(j),
1828(o), 1831, 1831o, 1831p–1, 1831r–1,
1831w, 1831x, 1835(a), 1882, 2901–2907,
3105, 3310, 3331–3351, and 3906–3909; 15
U.S.C. 78b, 781(b), 781(g), 781(i), 78o–4(c)(5),
78q, 78q–1, and 78w, 1681s, 1681w, 6801
and 6805; 31 U.S.C. 5318; 42 U.S.C. 4012a,
4104a, 4104b, 4106, and 4128.

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2. In appendix A to part 208, amend
section II.B. by revising paragraphs 1.a.,
1.e.iii., and 1.f. to read as follows:
Appendix A to Part 208—Capital
Adequacy Guidelines for State Member
Banks: Risk-Based Measure
*

*

*

*

*

II. * * *
B. * * *
1. * * *
a. Goodwill. Goodwill is an intangible asset
that represents the excess of the cost of an
acquired entity over the net of the amounts
assigned to assets acquired and liabilities
assumed. Goodwill is deducted from the sum
of core capital elements in determining Tier
1 capital.

*

*

*

*

*

e. * * *
iii. Banks may elect to deduct goodwill,
disallowed mortgage servicing assets,
disallowed nonmortgage servicing assets, and
disallowed credit-enhancing I/Os (both
purchased and retained) on a basis that is net
of any associated deferred tax liability.
Deferred tax liabilities netted in this manner
cannot also be netted against deferred tax
assets when determining the amount of
deferred tax assets that are dependent upon
future taxable income.
f. Valuation. Banks must review the book
value of goodwill and other intangible assets
at least quarterly and make adjustments to
these values as necessary. The fair value of
mortgage servicing assets, nonmortgage
servicing assets, purchased credit card
relationships, and credit-enhancing I/Os also
must be determined at least quarterly. This
determination shall include adjustments for
any significant changes in original valuation
assumptions, including changes in
prepayment estimates or account attrition
rates. Examiners will review both the book
value and the fair value assigned to these
assets, together with supporting
documentation, during the examination
process. In addition, the Federal Reserve may
require, on a case-by-case basis, an
independent valuation of a bank’s goodwill,
other intangible assets, or credit-enhancing
I/Os.

*

*

*

*

*

56761

II. * * *
B. * * *
1. * * *
a. Goodwill. Goodwill is an intangible asset
that represents the excess of the cost of an
acquired entity over the net of the amounts
assigned to assets acquired and liabilities
assumed. Goodwill is deducted from the sum
of core capital elements in determining tier
1 capital.

*

*

*

*

*

e. * * *
iii. Bank holding companies may elect to
deduct goodwill, disallowed mortgage
servicing assets, disallowed nonmortgage
servicing assets, and disallowed creditenhancing I/Os (both purchased and
retained) on a basis that is net of any
associated deferred tax liability. Deferred tax
liabilities netted in this manner cannot also
be netted against deferred tax assets when
determining the amount of deferred tax assets
that are dependent upon future taxable
income.
f. Valuation. Bank holding companies must
review the book value of goodwill and other
intangible assets at least quarterly and make
adjustments to these values as necessary. The
fair value of mortgage servicing assets,
nonmortgage servicing assets, purchased
credit card relationships, and creditenhancing I/Os also must be determined at
least quarterly. This determination shall
include adjustments for any significant
changes in original valuation assumptions,
including changes in prepayment estimates
or account attrition rates. Examiners will
review both the book value and the fair value
assigned to these assets, together with
supporting documentation, during the
inspection process. In addition, the Federal
Reserve may require, on a case-by-case basis,
an independent valuation of a bank holding
company’s goodwill, other intangible assets,
or credit-enhancing I/Os.

*

*

*

*

*

Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance

PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)

For the reasons set forth in the
common preamble, part 325 of chapter
III of title 12 of the Code of Federal
Regulations is proposed to be amended
as follows:

3. The authority citation for part 225
continues to read as follows:

PART 325—CAPITAL MAINTENANCE

Authority: 12 U.S.C. 1817(j)(13), 1818,
1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b),
1972(1), 3106, 3108, 3310, 3331–3351, 3906,
3907, and 3909; 15 U.S.C. 1681s, 1681w,
6801 and 6805.

4. In appendix A to part 225, amend
section II.B. by revising paragraphs 1.a.,
1.e.iii, and 1.f. to read as follows:
Appendix A to Part 225—Capital
Adequacy Guidelines for Bank Holding
Companies: Risk-Based Measure
*

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*

*

Frm 00008

*

Fmt 4702

*

Sfmt 4702

1. The authority citation for part 325
continues to read as follows:
Authority: 12 U.S.C. 1815(a), 1815(b),
1816, 1818(a), 1818(b), 1818(c), 1818(t),
1819(Tenth), 1828(c), 1828(d), 1828(i),
1828(n), 1828(o), 1831o, 1835, 3907, 3909,
4808; Pub. L. 102–233, 105 Stat. 1761, 1789,
1790 (12 U.S.C. 1831n note); Pub. L. 102–
242, 105 Stat. 2236, 2355, as amended by
Pub. L. 103–325, 108 Stat. 2160, 2233 (12
U.S.C. 1828 note); Pub. L. 102–242, 105 Stat.
2236, 2386, as amended by Pub. L. 102–550,
106 Stat. 3672, 4089 (12 U.S.C. 1828 note).

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Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules

2. Section 325.5 is amended by
revising paragraph (g)(5) to read as
follows:

2. Section 567.1 is amended by
revising the definition for intangible
assets to read as follows:

§ 325.5

§ 567.1

Miscellaneous.

*

*

Office of Thrift Supervision

§ 567.12 Purchased credit card
relationships, servicing assets, intangible
assets (other than purchased credit card
relationships and servicing assets), creditenhancing interest-only strips, and deferred
tax assets.

12 CFR Chapter V

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Definitions.

*
*
*
*
(g) * * *
(5) Goodwill and other intangible
assets. This paragraph (g)(5) provides
the capital treatment for intangible
assets acquired in a nontaxable business
combination, and goodwill acquired in
a taxable business combination.
(i) Intangible assets acquired in
nontaxable purchase business
combinations. A deferred tax liability
that is specifically related to an
intangible asset (other than mortgage
servicing assets, nonmortgage servicing
assets, and purchased credit card
relationships) acquired in a nontaxable
purchase business combination may be
netted against this intangible asset. Only
the net amount of this intangible asset
must be deducted from Tier 1 capital.
(ii) Goodwill acquired in a taxable
purchase business combination. A
deferred tax liability that is specifically
related to goodwill acquired in a taxable
purchase business combination may be
netted against this goodwill. Only the
net amount of this goodwill must be
deducted from Tier 1 capital.
(iii) Treatment of a netted deferred
tax liability. When a deferred tax
liability is netted in accordance with
paragraph (g)(5)(i) or (ii) of this section,
the taxable temporary difference that
gives rise to this deferred tax liability
must be excluded from existing taxable
temporary differences when
determining the amount of deferred tax
assets that are dependent upon future
taxable income and calculating the
maximum allowable amount of such
assets.
(iv) Valuation. The FDIC in its
discretion may require independent fair
value estimates for goodwill and other
intangible assets on a case-by-case basis
where it is deemed appropriate for
safety and soundness purposes.

For the reasons set forth in the
common preamble, part 567 of chapter
V of title 12 of the Code of Federal
Regulations is proposed to be amended
as follows:
PART 567—CAPITAL
1. The authority citation for part 567
continues to read as follows:
Authority: 12 U.S.C. 1462, 1462a, 1463,
1464, 1467a, 1828 (note).

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Jkt 214001

*
*
*
*
Intangible assets. The term intangible
assets means assets considered to be
intangible assets under generally
accepted accounting principles. These
assets include, but are not limited to,
goodwill, core deposit premiums,
purchased credit card relationships,
favorable leaseholds, and servicing
assets (mortgage and non-mortgage).
Interest-only strips receivable and other
nonsecurity financial instruments are
not intangible assets under this
definition.
*
*
*
*
*
3. Section 567.5 is amended by
adding new paragraph (a)(2)(vii) to read
as follows:
§ 567.5

Components of capital.

*

*
*
*
*
(a) * * *
(2) * * *
(vii) Deferred tax assets that are not
includable in core capital pursuant to
§ 567.12 of this part are deducted from
assets and capital in computing core
capital.
*
*
*
*
*
4. Section 567.9 is amended by
revising paragraph (c)(1) to read as
follows:
§ 567.9

Tangible capital requirements.

*

*
*
*
*
(c) * * *
(1) Intangible assets (as defined in
§ 567.1) and credit enhancing interestonly strips not includable in tangible
capital under § 567.12.
*
*
*
*
*
5. Section 567.12 is amended by:
a. Revising the heading and
paragraphs (a) and (b)(3);
b. Adding paragraph (b)(5);
c. Revising paragraph (e)(3); and
d. Adding paragraph (h) to read as
follows:

(a) Scope. This section prescribes the
maximum amount of purchased credit
card relationships, serving assets,
intangible assets (other than purchased
credit card relationships and servicing
assets), credit-enhancing interest-only
strips, and deferred tax assets that
savings associations may include in
calculating tangible and core capital.

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Fmt 4702

Sfmt 4702

(b) * * *
(3) Intangible assets, as defined in
§ 567.1 of this part, other than
purchased credit card relationships
described in paragraph (b)(1) of this
section, servicing assets described in
paragraph (b)(2) of this section, and core
deposit intangibles described in
paragraph (g)(3) of this section, are
deducted in computing tangible and
core capital, subject to paragraph
(e)(3)(ii) of this section.
*
*
*
*
*
(5) Deferred tax assets may be
included (that is not deducted) in
computing core capital subject to the
restrictions of paragraph (h) of this
section, and may be included in tangible
capital in the same amount.
*
*
*
*
*
(e) * * *
(3) * * *
(i) For purposes of computing the
limits and sublimits in paragraphs (e)
and (h) of this section, core capital is
computed before the deduction of
disallowed servicing assets, disallowed
purchased credit card relationships,
disallowed credit-enhancing interestonly strips (purchased and retained),
and disallowed deferred tax assets.
(ii) A savings association may elect to
deduct the following items on a basis
net of deferred tax liabilities:
(A) Disallowed servicing assets;
(B) Goodwill such that only the net
amount must be deducted from Tier 1
capital;
(C) Disallowed credit-enhancing
interest only strips (both purchased and
retained); and
(D) Other intangible assets arising
from non-taxable business
combinations. A deferred tax liability
that is specifically related to an
intangible asset (other than purchased
credit card relationships) arising from a
nontaxable business combination may
be netted against this intangible asset.
The net amount of the intangible asset
must be deducted from Tier 1 capital.
(iii) Deferred tax liabilities that are
netted in accordance with paragraph
(e)(3)(ii) of this section cannot also be
netted against deferred tax assets when
determining the amount of deferred tax
assets that are dependent upon future
taxable income.
*
*
*
*
*
(h) Treatment of deferred tax assets.
For purposes of calculating Tier 1
capital under this part (but not for
financial statement purposes) deferred
tax assets are subject to the conditions,
limitations, and restrictions described in
this section.
(1) Deferred tax assets that are
dependent upon future taxable income.
These assets are:

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Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Proposed Rules
(i) Deferred tax assets arising from
deductible temporary differences that
exceed the amount of taxes previously
paid that could be recovered through
loss carrybacks if existing temporary
differences (both deductible and taxable
and regardless of where the related
deferred tax effects are reported on the
balance sheet) fully reverse at the
calendar quarter-end date; and
(ii) Deferred tax assets arising from
operating loss and tax credit
carryforwards.
(2) Tier 1 capital limitations. (i) The
maximum allowable amount of deferred
tax assets that are dependent upon
future taxable income, net of any
valuation allowance for deferred tax
assets, will be limited to the lesser of:
(A) The amount of deferred tax assets
that are dependent upon future taxable
income that is expected to be realized
within one year of the calendar quarterend date, based on a projected future
taxable income for that year; or
(B) Ten percent of the amount of Tier
1 capital that exists before the deduction
of any disallowed servicing assets, any
disallowed purchased credit card
relationships, any disallowed creditenhancing interest-only strips, and any
disallowed deferred tax assets.
(ii) For purposes of this limitation, all
existing temporary differences should
be assumed to fully reverse at the
calendar quarter-end date. The recorded
amount of deferred tax assets that are
dependent upon future taxable income,
net of any valuation allowance for
deferred tax assets, in excess of this
limitation will be deducted from assets
and from equity capital for purposes of
determining Tier 1 capital under this
part. The amount of deferred tax assets
that can be realized from taxes paid in
prior carryback years and from the
reversal of existing taxable temporary
differences generally would not be
deducted from assets and from equity
capital.
(iii) Notwithstanding paragraph
(h)(2)(B)(ii) of this section, the amount
of carryback potential that may be
considered in calculating the amount of
deferred tax assets that a savings
association that is part of a consolidated
group (for tax purposes) may include in
Tier 1 capital may not exceed the
amount which the association could
reasonably expect to have refunded by
its parent.
(3) Projected future taxable income.
Projected future taxable income should
not include net operating loss
carryforwards to be used within one
year of the most recent calendar quarterend date or the amount of existing
temporary differences expected to
reverse within that year. Projected

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future taxable income should include
the estimated effect of tax planning
strategies that are expected to be
implemented to realize tax
carryforwards that will otherwise expire
during that year. Future taxable income
projections for the current fiscal year
(adjusted for any significant changes
that have occurred or are expected to
occur) may be used when applying the
capital limit at an interim calendar
quarter-end date rather than preparing a
new projection each quarter.
(4) Unrealized holding gains and
losses on available-for-sale debt
securities. The deferred tax effects of
any unrealized holding gains and losses
on available-for-sale debt securities may
be excluded from the determination of
the amount of deferred tax assets that
are dependent upon future taxable
income and the calculation of the
maximum allowable amount of such
assets. If these deferred tax effects are
excluded, this treatment must be
followed consistently over time.
Dated: September 18, 2008.
John C. Dugan,
Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, September 23, 2008.
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington, DC, this 18th day of
September 2008.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
Dated: September 23, 2008.
By the Office of Thrift Supervision.
John Reich,
Director.
[FR Doc. E8–22741 Filed 9–29–08; 8:45 am]
BILLING CODE 4810–33–P (25%), 6210–01–P (25%),
6714–01–P (25%), 6720–01–P (25%)

56763

SUMMARY: We propose to adopt a new
airworthiness directive (AD) for the
products listed above. This proposed
AD results from mandatory continuing
airworthiness information (MCAI)
originated by an aviation authority of
another country to identify and correct
an unsafe condition on an aviation
product. The MCAI describes the unsafe
condition as:

During overhaul on a Dornier 328–100
landing gear unit, parts of the MLG (main
landing gear) main body and trailing arm
bushings have been found corroded.
Investigation showed that over time, these
bushings can migrate, creating the risk of
corrosion in adjacent areas. Such corrosion,
if not detected, could cause damage to the
MLG, possibly resulting in MLG functional
problems or failure.

*
*
*
*
*
Functional problems or failure of the
MLG could result in the inability of the
MLG to extend or retract. The proposed
AD would require actions that are
intended to address the unsafe
condition described in the MCAI.
DATES: We must receive comments on
this proposed AD by October 30, 2008.
ADDRESSES: You may send comments by
any of the following methods:
• Federal eRulemaking Portal: Go to
http://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: (202) 493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue, SE.,
Washington, DC 20590.
• Hand Delivery: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–40, 1200 New Jersey Avenue, SE.,
Washington, DC, between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
Examining the AD Docket

DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2008–1043; Directorate
Identifier 2008–NM–036–AD]
RIN 2120–AA64

Airworthiness Directives; 328 Support
Services GmbH Dornier Model 328–100
Airplanes
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:

PO 00000

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You may examine the AD docket on
the Internet at http://
www.regulations.gov; or in person at the
Docket Operations office between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays. The AD docket
contains this proposed AD, the
regulatory evaluation, any comments
received, and other information. The
street address for the Docket Operations
office (telephone (800) 647–5527) is in
the ADDRESSES section. Comments will
be available in the AD docket shortly
after receipt.
FOR FURTHER INFORMATION CONTACT: Dan
Rodina, Aerospace Engineer,
International Branch, ANM–116, FAA,
Transport Airplane Directorate, 1601
Lind Avenue, SW., Renton, Washington

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