DEPARTMENT OF THE TREASURY

Office of The Comptroller of The Currency

12 CFR Parts 7 and 24

[Docket No. 93Ä21]

RIN 1557ÄAB31

Community Development Corporation and Project Investments

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

SUMMARY: The Office of the Comptroller of the Currency (OCC) is amending its
regulations concerning national bank investments in community development
corporations (CDCs) and community development projects (CD projects) to
implement section 6 of the Depository Institutions Disaster Relief Act of
1992. The final rule allows national banks to request OCC approval to increase
the amount of their single project and aggregate investments in CDCs and CD
projects above current investment limits. The final rule also permits national
banks that meet certain criteria to make most CDC and CD-project investments
without prior OCC approval if they provide a brief self-certification notice
of compliance with the rule. This approach will reduce regulatory burdens
associated with CDC and CD-project investments, in a manner that will not
endanger banks' safety and soundness. The final rule is intended to promote
economic growth and investments in low- and moderate-income areas and
underserved rural communities by allowing national banks to make their equity
and special debt investments in CDCs and CD projects that provide affordable
housing, services and jobs for low- and moderate-income people, and promote
small business development.

EFFECTIVE DATE: December 31, 1993.

FOR FURTHER INFORMATION CONTACT: Karen Bellesi, Community Development
Specialist, Community Development Division, at (202) 874Ä4930, or Margaret C.
Hesse, Attorney, Bank Operations and Assets Division, at (202) 874Ä4460,
Office of the Comptroller of the Currency, 250 E Street, SW., Washington, DC
20219.

SUPPLEMENTARY INFORMATION:

I. Background

On October 23, 1992, section 6 of the Depository Institutions Disaster Relief
Act of 1992, Public Law 102Ä485, created 12 U.S.C. 24 (Eleventh), which
clarifies the community development investment authority of national banks.
The primary basis for the final rule is the new statutory authority in 12
U.S.C. 24 (Eleventh), and the final rule replaces Interpretive Ruling 7.7480
(I.R. 7.7480) at 12 CFR 7.7480 as the basis for community development
investments.

      The OCC has historically permitted community development investments
under the provisions of I.R. 7.7480 based upon the authority granted by 12
U.S.C. 24 (Eighth). Since the 1960s, national banks have submitted CDC and
CD-project investment proposals for OCC review and opinion, and the OCC has
responded to those requests by providing opinion letters indicating whether,
and under what conditions, the CDC or CD-project investments are consistent
with I.R. 7.7480.

Under 12 U.S.C. 24 (Eighth), a national bank may contribute to community funds
or to charitable, philanthropic, or benevolent instrumentalities conducive to
public welfare, if the bank is located in a state with laws that do not
expressly prohibit state banking institutions from contributing to such funds
or instrumentalities. I.R. 7.7480, originally issued in 1963 and revised in
1971, permits national banks to carry, as "other assets,'' equity or debt
investments in CDCs or CD projects that are not bankable assets by ordinary
standards, provided the investments are predominantly civic, community, or
public in nature. I.R. 7.7480 limits a bank's investment in an individual CDC
or CD project to no more than 2 percent of its capital and surplus and the
aggregate of all such investments by the bank to 5 percent of its capital and
surplus. Banking Circular 185, issued in 1984 and revised in 1990, further
describes OCC policies regarding CDC and CD-project investments and recommends
a process banks could use to seek a prior written opinion from the OCC.

The new statute and this final regulation do not alter the OCC's position
regarding any interpretations of 12 U.S.C. 24 (Eighth) that are already in
effect, including opinion letters approving or disapproving past CDC or
CD-project investments. While this final rule removes I.R. 7.7480, the OCC
intends no change in its interpretation of 12 U.S.C. 24 (Eighth) as it applies
to a national bank's charitable contributions to CDCs and CD projects. Banks
should continue to expense these contributions, follow 12 U.S.C. 24 (Eighth),
and refer to the Internal Revenue Code (26 U.S.C. 170) for tax treatment of
the contributions.

II. The Proposed Rule

On July 16, 1993, the OCC issued a notice of proposed rulemaking (proposed
rule), published at 58 FR 38474, entitled Community Development Corporation
and Project Investments, to implement 12 U.S.C. 24 (Eleventh) and remove I.R.
7.7480.

There were three major goals of this action.

First, the proposed rule implements the statutory requirement for investment
limits. Section 24 (Eleventh) requires the OCC to establish two limits on
national bank CDC and CD-project investments one on a national bank's
investments in any one CDC or CD project, and one on the total national bank's
investments in all CDCs and CD projects. A bank's aggregate investments may
not exceed 5 percent of its unimpaired capital and surplus unless the OCC
determines, by order, that the higher amount will pose no significant risk to
affected deposit insurance fund administered by the Federal Deposit Insurance
Corporation and the bank is adequately capitalized. In no case may a bank's
aggregate investments exceed 10 percent of its unimpaired capital and surplus.

Second, the proposed rule reduces by approximately 80 percent the number of
CDC and CD-project investments that would require the OCC's prior review. The
OCC proposed a streamlined review process for most banks and some investments
and established an expedited 30-day review process for investments requiring
prior review. As structured, the proposed rule allows the OCC to focus its
resources on the review of large, complex investments that involve structures
or activities not already approved. To help identify structures and activities
qualifying for self-certification, the proposed rule provides a list at 
24.13.

Third, the proposed rule clarifies the standards and definitions for CDC and
CD-project investments that are primarily designed to promote the public
welfare, including the welfare of low- and moderate-income families and
communities, under the new statutory requirements. This clarification was
intended to increase bank management's understanding of definitions, standards
and requirements, and improve banks' ability to meet them.

The OCC invited public comment on any aspect of the proposed rule during a
30-day period that ended on August 16, 1993. It received 22 comment letters
from national and state bank trade associations, national banks, community
groups, and other trade associations. Eighteen commenters specifically
supported the proposed rule. Four commenters raised issues without expressing
either support or opposition to the proposed rule.

      The final rule includes changes to the proposed rule based primarily on
comment letters and changes that grew out of the rulemaking process although
not specifically addressed by the commenters. Much of the final rule is
adopted, as proposed.

III. Review of Comments

The following is a discussion of the issues raised by the commenters, the
OCC's responses to those comments, and a summary of changes made as a result
of the comments.

A. Section 24.4(a) Permitted Public Welfare Investments

Investments to Promote the Public Welfare

The proposed rule provides that, subject to the provisions of 12 U.S.C. 24
(Eleventh), a national bank could make an equity or debt investment in a CDC
or CD project that is designed primarily to promote the public welfare. Under
proposed  24.4(a) (1) and (2), a CDC and CD-project investment promotes the
public welfare if it meets two criteria. First, the primary benefit of the
investment should go to low- and moderate-income persons and families or small
businesses, including minority-owned small businesses. Second, the investment
should benefit a community served by the bank by addressing one or more
demonstrated community development needs, including the needs of low- and
moderate-income areas, underserved rural communities, or
governmental-designated redevelopment areas.

Many commenters were concerned that the proposed rule excluded both public
purpose projects designed to benefit a bank's entire community and those
projects where low- and moderate-income residents are only some of the
project's beneficiaries, as occurs in mixed-use projects. Further, some
commenters were concerned that the proposed rule excluded economically
depressed areas with low-income residents, because of their interpretation of
the proposed rule's requirement that public welfare projects must meet both
the definitions of "low- and moderate-income areas'' and "low- and
moderate-income persons or families.'' Those commenters suggested that those
definitions might not be appropriate for every investment and every community,
and that the rule should permit bank investments in CDCs and CD projects that
benefit the bank's entire community.

The underlying statute for national bank investments in CDCs and CD projects,
12 U.S.C. 24 (Eleventh), permits banks to make investments designed primarily
to promote the public welfare, including the welfare of low- and
moderate-income communities or families, such as by providing housing,
services or jobs. The OCC did not intend to exclude public purpose projects
designed to benefit economically depressed areas or a bank's entire community
as long as the majority of the activities, services or products resulting from
a bank's CDC or CD-project investment benefit either low- and moderate-income
residents or small businesses, including minority-owned small businesses, and
address a community development need that has not been addressed by the
private market.

Based on the comments, the final rule modifies proposed  24.2(a)(2) to add
that the CDC or CD-project investment must address community development needs
that have not been addressed by the private market within low-and
moderate-income areas, underserved rural areas, or governmental-designated
redevelopment areas. In addition, to be consistent with the statute regarding
investments to promote the public welfare of low- and moderate-income
families,  24.4(a)(1) has been changed to add that CDC and CD-project
investments, which primarily benefit low- and moderate-income persons and
families, should be through activities such as those that provide housing,
services, or jobs.

Demonstration of Primary Benefit

One commenter asked the OCC to explain how a bank can demonstrate that an
investment primarily benefits low- and moderate-income residents or small
businesses. To determine if an investment primarily benefits low- and
moderate-income residents or small businesses, including minority-owned
small-owned businesses, the OCC generally will use the following guidelines.

An investment usually will qualify if the CDC or CD project: (1) Involves
initiatives to develop housing for low- and moderate-income persons or
families; (2) provides critical services or creates jobs for low- and
moderate-income persons; or (3) provides nonbankable loans or investments to
either small businesses, including minority-owned small businesses, or low-
and moderate-income persons. Additionally, the majority of the housing units
developed, non-bankable loans or investments provided, or jobs created must be
occupied by, or delivered to low- and moderate-income persons in low- to
moderate-income areas, underserved rural communities, or
governmental-designated redevelopment areas. In addition, if the CDC or
CD-project investment involves commercial or industrial development programs
and activities, the majority of the commercial and industrial space must be
leased to, and occupied by small businesses, including minority-owned small
businesses, located in low- to moderate-income areas, underserved rural
communities, or governmental-designated redevelopment areas.

Changes to Related Definitions

The final rule also revises the definitions of a CDC in  24.2(b) and a CD
project in  24.2(e). Specifically, the definition of a CDC in the final rule
indicates that other community development initiatives include activities
considered as permitted public welfare investments. Also, a CDC operates
generally in low- to moderate-income areas, underserved rural communities, or
governmental-designated redevelopment areas within local or state incorporated
areas, such as towns, cities, counties, or states. The CD- project definition
also adds reference to those community development initiatives considered as
permitted public welfare investments, and clarifies that bank investments in
community development banks or other community development financial
intermediaries qualify as CD-project investments.

B. Section 24.4(a)(3) Community Involvement Criteria

      Under proposed  24.4(a)(3), for an investment to be considered a public
welfare investment, nonbank community involvement must be demonstrated
including representation by the affected low- and moderate-income housing or
small business sector, including representatives of minority-owned small
businesses and public officials. The proposed rule also indicates that banks
must assure that a CDC controlled by one or more national banks would
demonstrate community involvement in the CDC's board of directors. Three
commenters suggested that the rule should provide further guidance regarding
what the OCC means by nonbank community involvement in CDCs and CD projects.

The OCC agrees with the commenters' suggestion that the rule should provide
additional clarity regarding nonbank community involvement. To provide that
clarity, the OCC has added a definition to the final rule, at  24.2(j), for
nonbank community involvement that describes how nonbank community involvement
should be demonstrated in both CDCs and CD projects.

C. Sec. 24.4(a)(4) Restrictions on Profits and Dividends

Under proposed  24.4(a)(4), profits and dividends received by a bank from its
CDC or CD-project investment must be devoted to activities that primarily
promote the public welfare, and, in the case of a for-profit CDC controlled by
one or more national banks, during the first three years of operation, all
profits and dividends must be reinvested in the CDC.

Some commenters said that the proposed rule's restrictions on the distribution
of profits and dividends are counterproductive. They said that these
restrictions would discourage bank investments in CDCs and CD projects and
would not allow banks to use such funds to cover potential bank losses or to
increase bank capital.

The OCC has always restricted a bank's use of profits, dividends, and other
distributions from CDC and CD-project investments to activities and programs
that fulfill qualifying, community or other public purposes. The OCC believes
that these bank investments, not normally permissible under law, are
permissible only because they meet the public welfare test of 12 U.S.C. 24
(Eleventh). Consequently, profits, dividends, tax credits and other
distributions from these investments are not for general bank use like those
from other private, entrepreneurial banking activities, but are restricted for
qualifying public purposes. The OCC believes that reinvesting profits and
dividends is one way to ensure a bank's long-term commitment to address the
ongoing needs of its communities and provide benefits to low- and
moderate-income persons and families and small businesses, including
minority-owned small businesses. In addition, a bank benefits from these
reinvestments because a strong economic environment increases the opportunity
and customer base for banks to provide bankable loans.

The OCC has retained the restrictions on profits and dividends. The OCC has
added in the final rule, under  24.4(a)(4), that tax credits and other
distributions from CD-project investments, for example, real estate limited
partnerships, and interest income from debt investments must also be used by
the bank to promote the public welfare as determined by the OCC. This will
ensure that there is consistent treatment of all distributions from CDCs and
CD-project investments.

D. Sec. 24.4(e) CDC and CD-Project Policies

Under proposed  24.4(e), the bank's board of directors must adopt written
policies governing CDC and CD-project investments. Some commenters opposed
this requirement because they believe that their community development
investments have become an integral part of their banks' Community
Reinvestment Act (CRA) programs, and that CRA currently requires active board
of director oversight of its CDC and CD-project investments.

The OCC continues to believe that CDC and CD-project investments can be
successful for most banks if bank management devotes adequate attention to
assuring compliance with regulatory requirements, evaluating and achieving CDC
and CD-project goals, and managing CDC and CD-project investments. This is
especially critical for CDC and CD-project investments that are eligible for
the self-certification process. Bank board oversight is critical for the
successful management of CDC and CD-project investments.

Based on the commenters' suggestion, the OCC has restated its requirement
regarding CDC and CD-project policies. The final rule indicates that a bank's
board of directors shall manage the bank's CDC and CD-project investments in a
prudent manner consistent with safe and sound banking policies.

E. Self-Certification Process

Threshold for Banks to Self-Certify Investments

Under proposed  24.11, the bank's asset size and the percent of its
unimpaired capital and surplus invested are factors in determining whether an
investment in a CDC or CD project is eligible for self-certification.
Specifically, the proposed rule requires that no prior, written OCC approval
was needed for investments in CDCs and CD projects made by banks with $100
million or less in assets in amounts up to 5 percent of their unimpaired
capital and surplus, or made by banks with assets of more than $100 million in
amounts up to 2 percent of their unimpaired capital and surplus.

      Some commenters suggested that the OCC revise the rule to permit banks
with assets of up to $150 million to self-certify investments in CDCs and CD
projects up to 5 percent of their capital and surplus. A commenter further
suggested that small banks should not be treated differently than large banks
in the self-certification process.

The OCC has proposed this self-certification process based on its 30-year
experience with national banks making investments in CDCs and CD projects. It
is part of the OCC's effort to identify ways to encourage more bank
investments in community development initiatives in a manner that does not
endanger banks' safety and soundness. The OCC also developed a streamlined
approval process to help small banks, in particular, that had been limited in
how much they could invest in CDCs and CD projects by the per project limit of
2 percent of unimpaired capital and surplus.

The OCC considered the commenters' suggestions, particularly those which
indicated that increasing the threshold asset size of adequately capitalized
banks to self-certify their CDC or CD-project investments would facilitate
additional community development investments. In response, the OCC has raised
the self-certification threshold to $250 million, which the OCC believes is a
more appropriate threshold to define small banks for regulatory and
supervisory purposes under this rule. Because this threshold asset size
represents approximately 83 percent of the national bank population, the OCC
believes that many small banks will benefit by the increase in the threshold.
Accordingly, the final rule permits banks with up to, and including $250
million in assets to self-certify their investments up to 5 percent of
unimpaired capital and surplus, if they meet the other factors under 
24.11(a).

The OCC also considered the appropriate maximum dollar investment that could
be made by banks with over $250 million in assets without prior written OCC
approval. The proposed rule permitted those investments made by banks with
assets greater than the threshold asset size, up to 2 percent of their
unimpaired capital and surplus. Upon further consideration, and review of the
comments received, the OCC became concerned that a bank could make a
multi-million dollar commitment in a CDC or CD project that would result in a
large concentration of the bank's resources in one CDC or CD project. The
OCC's prior approval of very large bank investments would help to ensure that
there is review of local capacity to absorb major dollar volume investments
and review for any safety or soundness concerns regarding the bank's CDC or
CD-project investment.

The final rule establishes a maximum dollar project limit of $10 million for
bank investments in CDCs and CD projects under the self-certification process.
A bank with assets greater than $250 million may self-certify CDC and
CD-project investments in amounts that do not exceed 2 percent of its
unimpaired capital and surplus, or $10 million, whichever is less. Such a bank
is required to seek OCC approval of its investments that exceed the lesser of
2 percent of its unimpaired capital and surplus or $10 million.

Bank Condition

Under proposed  24.11, another factor that the OCC will consider in
determining whether an investment in a CDC or CD project is eligible for
self-certification is the bank's condition. A bank with a composite rating of
3, 4 or 5, under the Uniform Financial Institutions Rating System, that is
operating under an informal or formal enforcement action, or that is not
adequately capitalized, is not eligible for self-certification. A commenter
questioned whether it is legal for the OCC to apply safety and soundness tests
to bank investments in CDCs and CD projects if the amounts of the investments
are less than 5 percent of the bank's capital and surplus. In addition, a few
commenters suggested that an adequately capitalized bank, with an "improving''
composite rating of 3, or a bank that is covered by an informal enforcement
action, should be allowed to notify the OCC prior to making an investment
rather than having to obtain prior written approval.

The statute at 12 U.S.C. 24 (Eleventh) does not specify safety and soundness
as a factor. However, the OCC has broad authority and responsibility under the
national banking statutes to oversee the safety and soundness of any activity
conducted by a national bank. Consequently, because participation in this
program is only permissible as a result of Section 24 (Eleventh) and may
entail varying degrees of risk, the OCC will require prior review and written
approval of an investment by a bank with a composite rating of 3, 4 or 5, a
bank that is covered by a formal enforcement action, or a bank that is not
adequately capitalized.

      Based on the commenters' suggestions, the final rule under  24.11(b)(2)
permits certain adequately capitalized banks with composite ratings of 3, with
improving trends, to request authority to self-certify their investments.
These banks may submit a letter to the OCC requesting approval to self-certify
their investments in CDCs and CD projects consistent with the other
self-certification requirements of the final rule. In addition, the final rule
removes the requirement for prior OCC approval of investments made by healthy,
1 or 2-rated banks that are covered by informal enforcement actions.

Expedited Approval of Investments

A commenter suggested that the OCC should establish a process to expedite the
approval of bank investments, in particular, investments in multi-bank CDC and
CD projects in which other banks already have received OCC approval.

As a result of this comment, the final rule under  24.11(d)(3) includes a
process for the expedited approval of investments in CDCs and CD projects that
already have been approved by the OCC as investments through either the
investment proposal process or the self-certification process for a different
national bank. The OCC has used this expedited approval process for the past
three years and has found it successful. Adopting this process is a technical
change to the rule that reduces the paperwork burden for some banks that, in
the proposed rule, would have been required to submit investment proposals for
prior OCC approval.

F. Section 24.13 Eligible Structures and Activities

Limited Partnership Investments

Under proposed  24.13(b)(4) and 24.13(c)(2), a bank could self-certify its
limited partnership investment if the partnership supports one or more
projects that qualify for the federal low-income housing tax credit program
and is managed by a nonprofit general or co-general partner. Some commenters
suggested that the final rule permit the self-certification of investments in
limited partnerships managed by a for-profit subsidiary of a nonprofit
corporation because this is permitted under the Internal Revenue Service (IRS)
requirements for federal low-income housing tax credits.

Based on these comments, the final rule at  24.13(a)(4), 24.13(b)(1)(v), and
24.13(b)(2)(ii) permits banks to self-certify those investments in limited
partnerships that are managed by a for-profit company that is a subsidiary of
a nonprofit organization that qualifies under 26 U.S.C. 501 of the Internal
Revenue Code as a 501(c)(3) or 501(c)(4) corporation. The final rule provides
that the for-profit subsidiary must be owned by one or more 501(c)(3) or
501(c)(4) nonprofit organizations that materially participate in the
development and operation of the partnership's projects, and must be
considered a qualified organization eligible for federal low-income housing
tax credits.

Under proposed  24.13(b)(4) and 24.13(c)(2), a bank could self-certify its
limited partnership investment if the partnership supported one or more
projects qualifying for the federal low-income housing tax credit program that
are located within the state in which the bank is located. Three commenters
suggested permitting a self-certified investment in a limited partnership that
operates outside the state in which the bank is located.

The OCC believes that banks will have few problems in determining the public
welfare requirements for self-certification when the project is within the
area or state where they operate. The OCC's review is needed when the target
areas of limited partnerships are regional and nationwide, and associated
questions regarding the structure of the investment, community involvement,
the quality of the proposed general partner, and limits on liability become
more difficult. Accordingly, no change has been made in the rule, and bank
investments in limited partnerships operating outside the state in which the
bank's headquarters office is located require prior written approval.

List of Structures and Activities

Under proposed  24.13(b) and 24.13(c), the OCC provides a list of investment
structures and activities eligible for self-certification. Some commenters
suggested that those investments should include investments in wholly owned
subsidiaries, community development loan funds, and community development
credit unions, as well as investments involving loan guarantees. A commenter
asked that the OCC clarify whether, if a CDC or CD-project investment involves
loans to small businesses, the bank should consider those loans to be
nonbankable.

      The OCC has considered these comments. Under proposed  24.13(c)(1)(ii),
a CDC or community-based development organization could provide loan
guarantees for small businesses, including minority-owned small businesses in
targeted governmental-designated redevelopment areas. The OCC considers
appropriate guarantees for self-certification to be no greater than 75 percent
of the amount of a loan, and the final rule under  24.13(b)(ii) provides this
clarification. Furthermore, the proposed rule in  24.4(a) discussing
permitted welfare investments, indicates that any type of financing, including
loans provided by a CDC or CD project to small businesses should be
nonbankable. This section is unchanged in the final rule.

The list of eligible structures and activities in the final rule under 
24.13(a) and (b) provides guidance for banks that wish to self-certify their
investments. The list is not intended to be all-inclusive and does not imply
that the OCC would not consider or approve any other investment structure or
activity. For example, bank investments in community development banks or
community development financial intermediaries are investments that the OCC
expects to consider for banks that submit investment proposals.

Finally, a few commenters suggested that the OCC adopt a specific schedule for
revising the regulation from time to time, to add new CDC and CD-project
structures and activities eligible for the self-certification process.
Proposed  24.13(a)(2) indicated that the OCC will propose revisions to the
rule, from time to time, to add new CDC and CD-project structures and
activities eligible for self-certification. Since the self-certification
process will be new to banks as well as to the OCC, the OCC will review how
well the self-certification process is working and will reconsider threshold
and investment limits and other aspects of the rule periodically. However, the
OCC does not believe that a set schedule is appropriate. All reference to the
timing of revisions has been deleted from the final rule.

G. OCC Approval/Disapproval of Investment Proposals

Investment Amounts Requiring Approval

Under proposed  24.11(b)(3), a bank must request the OCC's prior approval of
any CDC or CD-project investment that would cause its aggregate investments in
all CDCs or CD projects to exceed 5 percent of its unimpaired capital and
surplus. One commenter suggested that any "single'' investment which exceeds 5
percent of a bank's unimpaired capital and surplus also should be subject to
OCC review.

Based on this comment, the OCC has revised this section. In the final rule, 
24.11(b)(1)(iii) provides that a bank that plans to make one or more
investments in a CDC or CD project, that would cause the bank's aggregate
investment in one or all CDCs and CD projects to exceed 5 percent of its
unimpaired capital and surplus, must seek prior OCC approval.

Structures and Activities Requiring Prior OCC Approval

Under proposed  24.11(b)(4), banks must seek prior OCC written approval for
certain types of investments in CDCs and CD projects. As indicated earlier,
some commenters suggested that banks be permitted to self-certify other
investment structures, for example community development loan funds, community
development credit unions, or limited partnerships managed by for-profit
general partners.

This requirement is located at  24.11(b)(1)(iv)(D) of the final rule. After
careful consideration, the OCC has determined not to change the approach
contained in the proposed rule. Certain investment structures and activities
require prior review and approval. Examples of organizational structures that
would require prior review include bank investments in community development
banks, community development financial intermediaries, and in community
development limited partnerships that are managed by a for-profit general, or
co-general partner that is not a subsidiary of a qualifying nonprofit
organization. The OCC may revisit this issue after it has gained more
experience with these investments.

      Further, the OCC has added a new  24.11(b)(1)(iv)(E). This section
refers specifically to CDC and CD-project activities that require prior
written OCC approval. Examples of activities requiring approval include
critical services or job creation that primarily benefit low- and
moderate-income persons and families.

OCC's Conditions in Granting Approval

Under proposed  24.11(e)(5), the OCC may impose one or more conditions in
connection with its approval of a CDC or CD project. One commenter suggested
that the rule should list the conditions that usually are included in the
opinion letters to national banks.

The OCC includes conditions in the opinion letters to national banks approving
or disapproving their CDC or CD-project investments. These conditions
generally state the public welfare investment requirements under  24.4.
Further, as indicated in the proposed rule, under  24.11(e)(5), the OCC may
impose other conditions on a case-by-case basis in connection with its
approval of a CDC or CD-project investment, especially when those investment
structures and activities are unique. For example, if a bank makes an equity
or debt investment in a CDC that extends loans, the bank should be aware that
the CDC is a creditor covered by the Equal Credit Opportunity Act (15 U.S.C.
1691 et seq.), and the CDC may also be subject to other state and federal
laws. Also, the OCC may ask the bank to provide reports about its investment
in the CDC or CD project, including the financial status, activities, and
accomplishments of the CDC or CD project.

H. Effect of CDC and CD-Project Investments on CRA Ratings

Almost half of the commenters requested that the OCC indicate how a bank's
investments in CDCs or CD projects will affect its CRA rating of performance.
A few commenters were concerned that permitted public welfare investments
qualifying under CRA should include investments in CDCs and CD projects that
might not necessarily benefit a bank's community, for example in CDCs and CD
projects that operate statewide.

The OCC currently considers a bank's investment in a CDC or CD project to
affect positively its CRA performance rating to the extent that the investment
helps to meet the credit, investment and other needs of the bank's community.
Additionally, some CRA credit is given for investments outside the bank's
community when the investment augments or compliments an overall CRA program
that is directly responsive to the credit needs in an institution's delineated
community. Banks should consider this in planning CDC and CD-project
investments. The OCC also notes that bank investments in CDCs and CD projects
and other investments are being reviewed by the federal financial regulatory
agencies under the President's CRA reform initiative.

I. Calculation of Calendar Versus Work Days

Under proposed  24.11(e), the OCC would approve or disapprove an investment
proposal within 30 days of receipt and would provide the bank with written
notice indicating its receipt of the proposal. The OCC could extend the 30-day
review period, and after notification of the extension, a bank could proceed
with the investment only upon the OCC's written approval.

A commenter suggested that the final rule should eliminate the OCC's authority
to extend the 30-day review period and the requirement that the bank receive
explicit written approval from the OCC before investing. Another commenter
suggested that the final rule should discuss how the OCC would advise banks of
an investment proposal's status, when the 30-day response would occur, and
whether the rule intends 30-calendar or working days as the time frame for
OCC's response.

As indicated in the proposed rule, banks submitting investment proposals
receive two written notices, one acknowledging the OCC's receipt of the bank's
proposal and the other an OCC opinion letter approving or disapproving the
investment. The bank should expect to receive the opinion letter from the OCC
within 30-calendar days of the date the OCC receives the bank's investment
proposal. The OCC may extend this 30-calendar-day period for unusual
investment proposals if, for example, the proposed investment is novel or
precedent-setting, requires extensive additional consultation with the bank or
OCC policy review, poses unlimited liability or other safety or soundness
concerns for the bank, or conflicts with other related legal requirements.

      Based on these comments, the final rule indicates calendar or working
days when describing the time frames in OCC's schedule. The OCC will compute
this time consistent with 12 CFR 19.12. Generally, if 10 days or less, the
rule shall mean working days. If more than 10 days, the rule shall mean
calendar days. Also, if the last day of the calendar-day period falls on a
Saturday, Sunday, or federal holiday, the period runs until the end of the
next day that is not a Saturday, Sunday or federal holiday regulations.

Under  24.11(e) (2) and (3) of the final rule, the OCC will complete its
review and approval of bank investments in CDCs and CD projects within
30-calendar days of the date the OCC receives the bank's proposal, unless
otherwise notified. In addition, the OCC has added a new paragraph 
24.11(d)(3) regarding bank requests to make follow-up investments in CDCs and
CD projects that have been approved previously for other national banks. Under
the final rule, the OCC will complete its review within five working days of
the date it receives the bank's request. Further, the OCC has added a new
paragraph under  24.11(a)(3) stating that the OCC will notify the bank of its
receipt of the letter of self-certification and may include other pertinent
information.

J. Additional Definition Changes

Under proposed  24.2(b), a definition of "bankable'' describes loans and
investments that differ from those that can be made under the rule. The OCC
has deleted the definition of "bankable'' in the final rule. This will clarify
that banks should continue their practice of making regular bankable loans to
low- and moderate-income persons and small businesses that are consistent with
their flexible underwriting standards in the ordinary course of business. This
may include, for example, regular bankable loans with credit enhancements or
that involve a flexible interpretation of an applicant's credit history.

In response to a comment asking for clarification about what is meant by
"nonprofit community-based development corporations,'' the OCC has added a new
definition of a "community-based development corporation.'' Under new 
24.2(f), a "community-based development corporation'' means an organization
that qualifies under the Internal Revenue Code (26 U.S.C. 501) as a 501(c)(3)
or 501(c)(4) corporation.

In response to a comment asking the OCC to clarify the definition of a "real
estate limited partnership,'' the OCC has added a definition of a "community
development limited partnership'' to explain the special real estate limited
partnership permitted under the rule. Under  24.2(d), a "community
development limited partnership'' is a single-purpose, or master, limited
partnership, formed under state rules governing limited partnerships, the
primary purpose of which is the provision of housing for low- and
moderate-income persons, or other community and economic development
initiatives considered permitted public welfare investments under  24.4(a).
The community development limited partnership must be located in a particular
area, including a low- and moderate-income area, underserved rural community,
or governmental-designated redevelopment area, such as within a neighborhood,
town, city, county, or state.

Finally, the OCC includes a new definition for "unimpaired capital and
surplus'' for clarification. Under new  24.2(m), a bank's unimpaired capital
and surplus, for purposes of the rule, means the bank's capital and surplus as
defined in 12 CFR 3.100.

IV. Other Changes

To provide clarity and consistency, the OCC has made various technical
changes. Among those are the OCC's final rule modifies the proposed rule
regarding the information requested in a bank's notice of self-certification
and investment proposal. The final rule, at  24.11 (a)(2), clarifies what
should be included in the bank's self-certification notice for investments in
CDCs and CD projects to permit appropriate supervisory monitoring. Also, 
24.11(d)(2) clarifies what should be included in the bank's investment
proposal for investments that require prior written OCC approval, such as the
type of bank investment in the CDC or CD project (equity or nonbankable debt
investment).

V. Regulatory Flexibility Act

It is hereby certified that this regulation will not have a significant
economic impact on a substantial number of small entities. Accordingly, a
regulatory flexibility analysis is not required. All banks, especially small
banks, should benefit to some degree under this final rule. This final rule
will permit larger investments in CDCs and CD projects and also enable banks
to make investments on an expedited basis. This should improve the long-term
health of the participating banks' market areas. The overall impact of the
rule will not be significant, regardless of bank size.

VI. Effective Date

This final rule is effective on December 31, 1993. This expedited effective
date is adopted because this final rule grants an exemption and relieves a
restriction.

National banks that meet certain criteria will be exempted from submitting
certain CDC and CD project investments for prior OCC review and approval.
Instead of an investment proposal process, the final rule permits banks to
submit a brief self-certification of compliance notice to the OCC. This final
rule also raises the single project and aggregate limits for national bank
investments in CDCs and CD projects above current limits, thereby relieving an
existing restriction.

This final rule does not impose new restrictions or prohibit any currently
permissible activity. Consequently, national banks will not be adversely
affected by the immediate effective date.

Finally, delaying the effective date of this final rule would be contrary to
the public interest. This final rule will promote economic growth and
investment in low- and moderate-income areas, underserved rural communities,
and governmental-designated areas.

This final rule encourages and facilitates national banks to address community
financing needs by investing in CDCs and CD projects with community partners.
The final rule allows national banks to make equity and special debt
investments in CDCs and CD projects that go beyond regular bank lending to
provide affordable housing, services, and jobs for low- and moderate-income
people and to promote community development efforts designed to help small
businesses, including minority-owned small businesses.

VII. Executive Order 12866

It has been determined that this document is not a significant regulatory
action as defined in E.O. 12866. The final rule imposes only minimal costs and
burdens and is necessary to ensure bank safety and soundness. The overall
impact of the rule will not be significant, regardless of bank size.

VIII. Paperwork Reduction Act

The information requirements under this final rule were submitted to the
Office of Management and Budget for review in accordance with the Paperwork
Reduction Act of 1980 (44 U.S.C. 3504(h)). Comments on these requirements
should be sent to the Comptroller of the Currency, Legislative, Regulatory and
International Activities Division, Attention: 1557Ä0194, 250 E Street, SW.,
Washington, DC 20219, with a copy to the Office of Management and Budget,
Paperwork Reduction Project (1557Ä0194), Washington, DC 20503. The information
required under this final rule is outlined in 12 CFR 24.11. This information
is needed to promote the safety and soundness of national banks and compliance
with law. It will be used to identify banks making CDC and CD-project
investments, to plan examination and supervision of the investments, and to
conduct prior review of investments most likely to raise legal, policy, or
safety and soundness concerns.

The OCC estimates that 400 for-profit institutions will file investment
proposals or self-certification letters annually. The estimated average annual
burden will be approximately 1.9 hours per participating bank. The estimated
average annual burden per bank is one hour, on average, for a letter, to eight
hours, on average, for a complete investment proposal, depending on whether
the investment requires prior review and approval or only a letter of
self-certification. The estimated total annual reporting burden for 12 CFR
part 24 is 757 burden hours.

List of Subjects

12 CFR Part 7

Credit, Insurance, Investments, National banks, Reporting and recordkeeping
requirements, Securities, Surety bonds.

12 CFR Part 24

Community development, Credit, Investments, National banks, Reporting and
recordkeeping requirements.

Authority and Issuance

For the reasons set forth in the preamble, chapter I of title 12, of the Code
of Federal Regulations is amended as follows:

PART 7 [AMENDED]

1. The authority citation for part 7 is revised to read as follows:

Authority: 12 U.S.C. 1 et seq., 93a.

 7.7480 [Removed]

2. Section 7.7480 is removed.

3. A new part 24 is added to read as follows:

PART 24 COMMUNITY DEVELOPMENT CORPORATION AND PROJECT INVESTMENTS

Sec.

24.1. Authority, purpose, policy, and OMB control number.

24.2 Definitions.

24.4 Community development corporation and community development project
investments.

24.11 Community development corporation and community development project
investment self-certification and approval.

24.13 Structures and activities eligible for the self-certification process.

24.21 Examination, records, and remedial action.

      Authority: 12 U.S.C. 24 (Eleventh), 93a, 161, 481 and 1818.

 24.1 Authority, purpose, policy, and OMB control number.

(a) Authority. The requirements contained in this part are authorized under 12
U.S.C. 24 (Eleventh), 93a, 161, 481 and 1818.

(b) Purpose. This part implements 12 U.S.C. 24 (Eleventh), which permits
national banks to make equity and special debt investments in community
development corporations (CDCs) and community development projects (CD
projects). Section 24 (Eleventh) permits national banks to make these
investments, consistent with safe and sound banking practices, even though
they would not normally be permitted under the National Bank Act (12 U.S.C. 1
et seq.) because they promote the public welfare, and to carry these
investments as "other assets.'' This part provides the standards that will be
used by the Office of the Comptroller of the Currency (OCC) to determine
whether an investment is designed primarily to promote the public welfare and
sets forth the prior approval and self-certification procedures that apply to
CDC and CD-project investments.

(c) Policy. (1) The OCC encourages each national bank to make efforts,
consistent with its capabilities and condition, to address local community
development needs in low- and moderate-income areas, underserved rural areas
and governmental-designated redevelopment areas, through CDC and CD-project
investments that primarily benefit low- and moderate-income people and small
businesses, including minority-owned small businesses, and to promote economic
growth through the provision of housing, services, or jobs to low- and
moderate-income persons and families, consistent with the safe and sound
operation of the bank. The OCC believes that one effective way for many
national banks to address such needs is by making CDC and CD-project
investments.

(2) CDC and CD-project investments are equity investments, nonbankable loans
or lines of credit that supplement a bank's other lending and investing
programs to help meet credit, investment or other community needs. CDC and
CD-project investments are not regular bankable loans or investments. Under
this part, national banks may undertake community development activities, such
as equity investments in real estate, equity and special debt investments in
small, new companies, or the renovation of neighborhood commercial or
residential properties, only if they primarily serve the public welfare, as
described in  24.4(a).

(d) OMB control number. The collection of information requirements contained
in this part were approved by the Office of Management and Budget under OMB
control number 1557Ä0194.

 24.2 Definitions.

For purposes of this part, the following definitions apply:

(a) Adequately capitalized. A national bank is adequately capitalized if the
bank meets the definitional requirements for "well-capitalized'' or
"adequately capitalized'' in  6.4(b) of this chapter.

(b) Community development corporation (CDC) means a corporation established by
one or more financial institutions, or by financial institutions and other
investors or members, to develop housing, foster economic growth and
revitalization, create small businesses, including minority-owned businesses,
and support other community development initiatives considered permitted
public welfare investments under  24.4(a). A CDC operates within a defined
neighborhood or area, including low- and moderate-income areas, underserved
rural communities, and governmental-designated redevelopment areas, such as
within towns, cities, counties, or states.

(c) Community development corporation subsidiary (CDC subsidiary) means a CDC
that is a subsidiary of a national bank and that is majority-owned by that
national bank, or a CDC that is majority-owned by a national bank and its
affiliates.

(d) Community development limited partnership means a single-purpose or master
limited partnership, formed under state statutes governing limited
partnerships, to provide housing for low- and moderate-income persons or
families or other community and economic development initiatives considered
permitted public welfare investments under  24.4(a). These community
development limited partnerships operate in a particular area, including a
low- and moderate-income area, underserved rural community, or a
governmental-designated redevelopment area, such as within a town, city,
county, or state.

(e) Community development project (CD project) means a specific project in a
particular location or area, including a low- and moderate-income area,
underserved rural community, or a governmental-designated redevelopment area,
such as within a neighborhood, town, city, county, or state, whose purpose is
to foster economic improvement of that area, and other community development
initiatives considered permitted public welfare investments under  24.4(a). A
CD-project investment funds the development or renovation of one or more
specified residential or commercial properties in a manner consistent with
community and government revitalization plans. CD-project investments also
include nonbankable loans or special debt investments to support
community-based development organizations under  24.2(f), and special debt or
other investments in community development banks and other community
development financial intermediaries.

(f) Community-based development corporation means a nonprofit organization
that qualifies under 26 U.S.C. 501 of the Internal Revenue Code as a 501(c)(3)
or 501(c)(4) organization.

(g) Low- and moderate-income areas or communities means areas where at least
51 percent of the residents are low- and moderate-income persons and families.

      (h) Low- and moderate-income persons and families means individuals and
families whose incomes do not exceed 80 percent of the median income of the
area involved, as determined by the Secretary of the U.S. Department of
Housing and Urban Development, with adjustments for smaller and larger
families. In conjunction with this term, the area involved should be
determined in the same manner as an area is determined for purposes of
lower-income housing assistance under 42 U.S.C. 1437f.

(i) Minority-owned small businesses means small businesses under  24.2(l)
that are majority-owned by members of minority groups or by women.

(j) Nonbank community involvement in the CDC or CD project.  Nonbank community
involvement means:

(1) In all CDCs, community-based development organizations, and community
development banks or community development financial intermediaries, the
affected primary beneficiaries of the organization's programs and activities
are included on its board of directors and are involved in its
decision-making. The organization's board of directors should include
representatives with expertise in small business development, including
minority-owned small business development, or low- and moderate-income
housing, whichever is applicable, and public officials of the community to
demonstrate community and government support for the organization's programs
and activities; or

(2) In a CD project, the affected primary beneficiaries of the CD project and
public officials have endorsed and indicated support for the CD project. A CD
project should demonstrate that it addresses a community need that the private
market is not addressing; has community-based support (including support from
grass-roots community representatives and representatives with expertise in
small business development, including minority-owned small business
development, or low- and moderate-income housing, whichever is applicable);
and has support from local or state governments (including financing,
endorsements or approvals).

(k) Significant risk to the deposit insurance fund is present whenever there
is a high probability that any insurance fund administered by the Federal
Deposit Insurance Corporation could suffer a loss.

(l) Small businesses means businesses that are smaller than the maximum size
eligibility standards established by the Small Business Administration (SBA)
for:

(1) The Small Business Investment Company and Development Company Programs,
which are set forth in 13 CFR 121.802(a)(2); or

(2) The SBA section 7(a) loan and guarantee program which is set forth in 13
CFR 121.601.

(m) Unimpaired capital and surplus has the same meaning as capital and surplus
under 12 CFR 3.100.

 24.4 Community development corporation and community development project
investments.

(a) Permitted public welfare investments. Subject to  24.11, a national bank
may make equity or debt investments (a loan or line of credit that is not
bankable) in a CDC or CD project that is designed primarily to promote the
public welfare. The OCC will consider a CDC and CD-project investment to be
primarily designed to promote the public welfare, if all of the following
criteria are met:

(1) The investment primarily benefits low- and moderate-income persons and
families (such as by providing housing, services, or jobs) or small
businesses, including minority-owned small businesses;

(2) The investment addresses community development needs not met by the
private market in one or more communities served by the bank, including, for
example, the needs of low- and moderate-income areas, underserved rural
communities, or governmental-designated redevelopment areas, such as within a
town, city, county, or state;

(3) There is nonbank community involvement in the CDC and CD project, as
described under  24.2(j), indicating that the affected primary beneficiaries
and representatives of local or state government have endorsed and
demonstrated support for the CDC or CD-project activities; and, for all CDCs,
community-based development organizations, and community development banks or
community development financial intermediaries, such involvement is
demonstrated by the composition of the organization's board of directors; and

(4) The profits, dividends, tax credits and other distributions from equity
investments, or interest income from debt investments received by the bank
from the CDC or CD-project investment are devoted to activities that primarily
promote the public welfare as determined by the OCC, and, in the case of a
for-profit CDC subsidiary, are reinvested in the CDC during its first three
years of operation.

(b) Investment limits. A national bank's aggregate investments under this part
may not exceed 5 percent of its unimpaired capital and surplus, unless the OCC
determines, by order, as described in  24.11 that the higher amount will pose
no significant risk to the deposit insurance fund and the bank is adequately
capitalized. In no case may a bank's investments exceed 10 percent of its
unimpaired capital and surplus.

(c) Accounting for CDC and CD-project investments. The instructions for
Consolidated Reports of Condition and Income published by the Federal
Financial Institutions Examination Council (FFIEC Call Report Instructions)
provide guidance for regulatory accounting and reporting for investments in
subsidiaries and similar entities. A copy of the FFIEC Call Report
Instructions may be obtained from the National Technical Information Service,
U.S. Department of Commerce, 5285 Port Royal Road, Springfield, VA 22161. The
following guidance is provided for national bank investments in CDC and
CD-project investments consistent with the FFIEC Call Report Instructions:

      (1) A bank's investments in CDCs and CD projects typically involve a
limited ownership percentage and are not material. As a result, these
investments may be recorded as "other assets'' at cost.

(2) If the CDC or CD project meets the definition of a significant
majority-owned subsidiary in the FFIEC Call Report Instructions, the bank's
investment should be consolidated generally on a line-by-line basis.

(3) If the investment is a partnership, joint venture, or unconsolidated
subsidiary over which the bank exercises significant influence, the bank's
interest should be presented as an investment in a joint venture or associated
company and accounted for under the equity method of accounting.

(d) Limited liability. A national bank shall not make a CDC or CD-project
investment if that investment would expose the bank to unlimited liability.

(e) CDC and CD-project policies. The bank's board of directors shall manage
their CDC and CD-project investments in a prudent manner consistent with safe
and sound banking practices. Prudent bankers should maintain policies
governing CDC or CD-project investments that address such matters as
regulatory compliance, evaluation and achievement of CDC and CD-project goals,
and effective CDC or CD-project management.

 24.11 Community development corporation and community development project
investment self-certification and approval.

(a) Investments not requiring prior review. (1) Any investment where prior
written OCC approval is not required under  24.11(b) may be made without
prior notification to, or approval by, the OCC. However, within 10 working
days after the investment is made, the national bank shall submit a letter of
self-certification to the Director, Community Development Division, The Office
of the Comptroller of the Currency, Washington, DC 20219 (Community
Development Division).

(2) The bank's letter of self-certification must attest that the investment
meets the public welfare requirements of this part ( 24.4), and is not
subject to prior OCC review. Further, the letter of self-certification must
include:

(i) The name of CDC or CD project and the date the investment was made;

(ii) The type of investment (equity or nonbankable debt), the eligible
activities that will be undertaken, and the eligible investment structure
(from the list of eligible activities and structures under  24.13);

(iii) The bank's total investment in the CDC or CD project, and the bank's
aggregate investment commitments in all CDCs or CD projects, to date; and

(iv) The applicable percentage of unimpaired capital and surplus for the
bank's total investment in CDCs or CD projects, and the bank's aggregate
investment commitments in all CDCs or CD projects, to date.

(3) Within five working days after receiving the bank's letter of
self-certification, the OCC will provide a written notice to the bank to
indicate the date of its receipt of the bank's letter and also may include
other related information.

(b) Investments requiring prior written OCC approval. (1) A national bank
shall submit an investment proposal for any planned CDC or CD-project
investment to the OCC for prior review, if any of the following conditions in
paragraph (b)(1) of this section exist:

(i) The national bank:

(A) Has a composite rating of 3, 4 or 5 under the Uniform Financial
Institutions Rating System; or

(B) Is covered by a formal enforcement action; or

(C) Is not adequately capitalized;

(ii) The national bank has more than $250 million in assets and proposes to
make a single or subsequent CDC or CD-project investments that will total an
amount that exceeds the lesser of 2 percent of its unimpaired capital and
surplus, or $10 million;

(iii) The national bank proposes to make CDC or CD-project investment that
would cause its aggregate investment in one or all CDCs or CD projects to
exceed 5 percent of its unimpaired capital and surplus, or proposes subsequent
investments over 5 percent; or

(iv) The proposed CDC or CD-project investment falls in one of the following
five categories:

(A) The investment is in a new CDC subsidiary or is in a CDC controlled by one
national bank and its affiliates;

(B) The investment involves the transfer of properties, carried on the bank's
books as "other real estate owned'' (OREO), to a CDC in which the bank has or
will have an ownership interest (which the OCC will consider only under
limited circumstances as stated in  24.11(e)(1)(iii));

(C) The investment provides funds for projects in a state outside the state
where the bank's headquarters office is located;

(D) The investment will be in a structure other than those listed in 
24.13(a); or

(E) The investment will support an activity other than those listed in 
24.13(b).

- (2) The OCC will consider, on a case-by-case basis, whether an adequately
capitalized bank that has a composite rating of 3, with improving trends under
the Uniform Financial Institutions Rating System can self-certify its
investment in a CDC or CD project, consistent with the other requirements of
this part. Banks seeking such treatment may submit a letter to the Community
Development Division requesting eligibility to self-certify their proposed
investments in accordance with  24.11(a).

(c) Optional review. A national bank may request OCC review and approval of
investment proposals for investments not covered under  24.11(b).

(d) CDC or CD-project investment proposal. (1) A national bank shall submit an
investment proposal for any investment covered in  24.11(b) to the Community
Development Division.

(2) A national bank shall include in its CDC or CD-project investment proposal
a discussion of:

(i) The amount and type of bank investment in the CDC or CD project (equity or
debt);

(ii) How the bank's proposed CDC or CD-project investment meets the
requirements of a permitted public welfare investment, as described under 
24.4;

(iii) The investment structure and activities of the CDC or CD project; and

(iv) The bank's per project investment amount for the single proposed
investment and its aggregate investments, to date, including the applicable
percentage of the bank's unimpaired capital and surplus for the single and
aggregate investments.

(3) The OCC may expedite the approval of a proposed investment by a bank in a
CDC or CD project previously approved for another national bank by the OCC
through the investment proposal or self-certification process.

(i) The national bank requesting this expedited approval should submit a
one-page letter to the Community Development Division that includes:

(A) The name of the bank proposing to make the investment, and the name of the
national bank and CDC or CD-project investment that previously received the
opinion letter (from the investment proposal process) or the written response
(from the self-certification process);

(B) The bank's proposed total investment in the CDC or CD project, and the
bank's aggregate investment commitments in all CDCs or CD projects, to date;

(C) The applicable percentage of unimpaired capital and surplus for the bank's
proposed total investment in the CDC or CD project, and the bank's aggregate
investment commitments in all CDCs or CD projects, to date; and

(D) A statement that the bank has reviewed the opinion letter from the
investment proposal process, and any conditions therein, or the written
response from the self-certification process, and any statements therein,
provided by the OCC to the national bank that received the previous opinion
letter or written response and agrees to abide by the conditions or statements
contained therein.

(ii) Unless otherwise notified by the OCC, the bank may make the proposed
follow-up CDC or CD-project investment after seven working days from the date
the OCC receives the bank's investment proposal. Within five working days of
receiving the bank's request, the OCC will provide written notice to the bank
to indicate the date of its receipt of the bank's request and approval or
disapproval of the CDC or CD-project investment.

(e) OCC approval of investments. (1) The OCC may consider any information
available in its decisions regarding CDC and CD-project investment proposals.
The OCC generally will consider factors such as:

(i) Whether the proposal meets the requirements of this part;

(ii) Whether the investment is consistent with the safe and sound operation of
the bank;

(iii) If an OREO transfer is proposed, whether the primary public welfare
benefits of the transfer are demonstrated; whether all supervisory concerns
regarding the transfer are addressed; and whether other factors the OCC may
consider relevant are addressed; and

(iv) Whether the investment is consistent with other requirements and policies
of the OCC.

(2) Unless otherwise notified by OCC, the bank may make the proposed CDC or
CD-project investment after 30-calendar days from the date the OCC receives
the bank's investment proposal. Within five working days of its receipt of the
bank's investment proposal, the OCC will provide written notice to the bank to
indicate the date of its receipt of the proposal.

(3) The OCC, by notifying the bank, may extend the 30-calendar-day period. If
so notified, the bank may make the investment only with the written approval
of the OCC.

(4) Notwithstanding  24.11(e)(2), a bank must obtain explicit written
approval from the OCC for any CDC or CD-project investment that causes a
bank's single or aggregate investments under this part to exceed 5 percent of
its unimpaired capital and surplus, and for any subsequent larger investment
in excess of that amount. The OCC will approve investments only for adequately
capitalized banks as defined in  24.2(a) and only those that do not pose a
significant risk to the deposit insurance fund as defined in  24.2(k).

(5) The OCC may impose one or more conditions in connection with its approval
of a CDC or CD-project investment.

 24.13 Structures and activities eligible for the self-certification process.

This section describes CDC and CD-project organizational structures and
activities that are referred to in  24.11(b)(4) (iv) and (v). If consistent
with other requirements of  24.4 and 24.11, a bank may make these
investments without prior notice to, or approval by the OCC.

(a) Eligible structures. The structures listed in this paragraph (a) are
eligible structures for the self-certification process under  24.11(a):

(1) A for-profit or nonprofit multi-bank CDC, provided the CDC is not a CDC
subsidiary as defined in  24.2(c);

(2) A CDC, either for-profit or nonprofit, with bank and or nonbank investors,
that meets the requirements of this part, established by formal action of a
state or a general unit of local government or by government agencies
delegated that authority by action of the state or local government;

(3) A community-based development organization that undertakes permitted
public welfare investments consistent with  24.4(a); and

- (4) A community development limited partnership:

(i) Operating only in the one state where the bank's headquarters office is
located that qualifies for the federal low-income housing tax credit program
and is managed by a nonprofit general or co-general partner that qualifies
under 26 U.S.C. 501 of the Internal Revenue Code as a 501(c)(3) or 501(c)(4)
organization, or by a for-profit general or co-general partner that meets the
following characteristics:

(A) Is a subsidiary of one or more 501(c)(3) or 501(c)(4) nonprofit
organizations that materially participates in the development and operation of
the partnership's project(s); and

(B) Is a qualified organization eligible for federal low-income housing tax
credits; and

(ii) Structured to limit the bank's liability to an amount not exceeding the
bank's capital investment and any specific contingent liabilities, to avoid
bank participation in the control of the business of the partnership, and to
reflect steps taken by the bank to limit strictly its activities within the
limited partnership, consistent with state law, so that it clearly maintains
its limited partner status.

(b) Eligible activities. (1) Activities that are eligible for the
self-certification process under  24.11(a) and that may be undertaken through
CDCs or community-based development organizations listed under paragraphs
(a)(1) through (a)(3) of this section include:

(i) Acquiring, developing, rehabilitating, managing, and selling or renting
housing designed primarily to benefit low- and moderate-income residents of
the bank's community, or offering equity or debt financing, including loans,
to promote such housing activities, if the financing is not bankable;

(ii) Providing equity financing, loans that are not bankable, or loan
guarantees that are no greater than 75 percent of the loan amount for small
businesses, including minority-owned small businesses, to stimulate economic
development and job creation for low- and moderate-income persons and families
in a low- and moderate-income area, underserved rural community, or
governmental-designated redevelopment area;

(iii) Providing technical assistance services, credit counseling, community
development research, and/or program development assistance for small
businesses, including minority-owned small businesses, low- and
moderate-income families and areas, or nonprofit community development
corporations to help achieve community development goals;

(iv) Acquiring, developing, rehabilitating, managing, and selling or renting
commercial or industrial properties, if:

(A) Each property is in a low- and moderate-income area, underserved rural
community, or governmental-designated redevelopment area and is occupied
primarily by small businesses, including minority-owned small businesses;

(B) Each property is developed in accordance with a government plan for
revitalization or development; and

(C) The private market is not addressing the development need; or

(v) Investing in one or more community development limited partnerships as a
limited partner to support projects that qualify for the federal low-income
housing tax credit program. These community development limited partnerships
must be within the one state where the bank's headquarters office is located
and managed by a nonprofit general or co-general partner, or by a for-profit
general or co-general partner that is a subsidiary of one or more 501(c)(3) or
501(c)(4) nonprofit organizations, which materially participates in the
development and operation of the projects, and that meets all of the criteria
established for for-profit entities under the federal low-income housing tax
credit program.

(2) Activities that are eligible under  24.11(a) for the self-certification
process and that may be undertaken by the community development limited
partnerships described in paragraph (a)(4) of this section include:

(i) Equity investments in one or more low- and moderate-income housing
project(s) qualifying for the federal low-income housing tax credit, provided
the projects are located within the one state where the bank's headquarters
office is located; and

(ii) Equity investments as a limited partner in one or more operating limited
partnership(s) that are managed by nonprofit general or co-general partners,
or by a for-profit general or co-general partner that is a subsidiary of one
or more 501(c)(3) or 501(c)(4) nonprofit organizations, which materially
participates in the development and operation of the projects, and that
develop low- and moderate-income housing projects qualifying for the federal
low-income housing tax credit, provided that the projects are within the one
state where the bank's headquarters office is located.

 24.21 Examination, records, and remedial action.

(a) Examination. National bank CDC or CD-project investments are subject to
the examination provisions of 12 U.S.C. 481.

(b) Records. Each national bank shall maintain in its files information
adequate to demonstrate that it is in compliance with the requirements of this
part.

(c) Remedial action. If the OCC finds that a CDC or CD-project investment is
in violation of law or regulation, is inconsistent with the safe and sound
operation of the bank, or poses a significant risk to the bank deposit
insurance fund, the national bank shall take appropriate remedial action as
determined by the OCC.

Dated: October 22, 1993.

Eugene A. Ludwig,

Comptroller of the Currency.

[FR Doc. 93Ä31387 Filed 12Ä21Ä93; 12:52 pm]

BILLING CODE 4810Ä33ÄP

      Monday

December 27, 1993

Part III

Department of the Interior

Fish and Wildlife Service

50 CFR Part 17

Endangered and Threatened Wildlife and Plants; Reclassification of the Plant
Pediocactus Sileri and Determination of Status for the Relict Darter and
Bluemask Darter; Rules