Grab And Bind Of Tera Patrick: The Perils Of Tera
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The Federal Deposit Insurance Corporation (FDIC) is making technical corrections to two regulations to reflect a reorganization and change in the name of its former Consumer Response Center. The new name is the National Center for Consumer and Depositor Assistance (NCDA). The two regulations are the FDIC's Fair Housing Rule and its Consumer Protection in Sales of Insurance Rule.
The final regulations that are subject to this technical correction are the Fair Housing Rule and the Consumer Protection in Sales of Insurance Rule. The Fair Housing Rule prohibits FDIC-supervised institutions from engaging in discriminatory advertising involving residential real estate-related transactions. The Consumer Protection in Sales of Insurance Rule prohibits certain actions in connection with retail sales practices, solicitations, advertising, or offers of insurance products.
Historically, the FDIC operated two separate offices to handle its consumer assistance and depositor assistance functions, the Consumer Response Center and the Deposit Insurance Section respectively. To improve the efficiency and effectiveness of these offices and better serve consumers and depositors, the FDIC consolidated the two offices under one organization, entitled the National Center for Consumer and Depositor Assistance.
This technical correction may benefit some consumers by making it easier for them to contact the FDIC regarding complaints or questions about deposit insurance. The correction does not change any FDIC requirements affecting its supervised institutions.
Aged, Banks, banking, Civil rights, Credit, Fair housing, Individuals with disabilities, Marital status discrimination, Mortgages, Religious discrimination, Reporting and recordkeeping requirements, Savings associations, Sex discrimination, Signs and symbols.
This final rule revises various regulations related to SBA's Surety Bond Guarantee (SBG) program because they are obsolete, unnecessary, ineffective, or burdensome. Additionally, this final rule clarifies and modernizes certain regulations and conforms them to industry standards.
The U.S. Small Business Administration (SBA) guarantees bid, payment, and performance bonds for small and emerging contractors who cannot obtain surety bonds through regular commercial channels. SBA's guarantee, authorized pursuant to part B of title IV of the Small Business Investment Act of 1958, 15 U.S.C. 694a et seq., gives Sureties an incentive to provide bonding for small businesses and thereby assists small businesses in obtaining greater access to contracting opportunities. SBA's guarantee is an agreement between a Surety and SBA that SBA will assume a certain percentage of the Surety's loss should a contractor default on the underlying contract. SBA is authorized to guarantee a Surety for a contract up to $6.5 million and, with the certification of a contracting officer of a Federal agency, up to $10 million. For more information about SBA's Surety Bond Guarantee Program (SBG Program), see -programs/surety-bonds.
As part of its ongoing responsibility to ensure that the rules it issues do not have an adverse economic impact on those affected by those rules, the U.S. Small Business Administration (SBA) published an Advance Notice of Proposed Rulemaking (ANPRM) in the Federal Register on June 3, 2019 (84 FR 25496) seeking input from the public in identifying regulations under the SBG Program that affected parties believed should be repealed, replaced, or modified because they are obsolete, unnecessary, ineffective, or burdensome. In the ANPRM, SBA also solicited comments from the public on how SBA can improve the surety bond products, procedures, forms, and reporting requirements of the SBG Program. SBA considered the 54 comments submitted by the public in response and published a proposed rule in the Federal Register on September 23, 2021 (86 FR 52844) to revise various regulations in part 115 of title 13 of the Code of Federal Regulations that are obsolete, unnecessary, ineffective, or burdensome and to clarify and modernize certain regulations to conform them to industry standards. The comment period was open until November 22, 2021.
In response to the request for comments, SBA received 8 comments, including 2 from national trade associations, 5 from surety organizations, and 1 was anonymous. The commenters expressed general support for all or some of the proposed changes, and SBA received no comments expressing opposition to any of the proposed changes (with one comment received that did not relate to any of the proposed changes).
Under the current definition, SBA will guarantee the bond for a maintenance agreement if the agreement is for 2 years or less and covers defective workmanship or materials only. It has been SBA's long-standing interpretation that the maintenance agreement must be ancillary to the Contract for which SBA is guaranteeing the bond and may not cover defective workmanship or materials that is covered by a manufacturer's warranty. The current definition also provides that, with SBA's written approval, the term of a maintenance agreement can be longer than 2 years for defective workmanship or materials or cover something other than defective workmanship or materials if the agreement is ancillary to the Contract for which SBA is guaranteeing a bond, is performed by the same Principal, and is customarily required in the relevant trade or industry.
For clarity, SBA proposed to modify the existing definition by expressly applying the following requirements to all ancillary maintenance agreements: (1) the agreement must be ancillary to a Contract for which SBA is guaranteeing a bond; (2) the agreement must be performed by the same Principal; and (3) the agreement may only cover defective workmanship or materials that are not covered by a manufacturer's warranty. With SBA's prior written approval, the agreement covering defective workmanship or materials may be for a term longer than 2 years, or the agreement may cover something other than defective workmanship or materials, if such agreement is customarily required in the relevant trade or industry.
SBA received one comment from a national trade association expressing support for the changes to the definition, noting that the need for the SBG Program to cover stand-alone maintenance bonds was raised by a small contractor participant at a bonding awareness education program. The commenter also suggested that maintenance bonds can be structured as an annual renewable performance bond. However, annually renewable multi-year stand-alone maintenance agreements would be covered by SOP 50 45 3, section 5.5, which states that such contracts are eligible for SBA's guarantee provided that the contract amount does not exceed the statutory limit and provided that each option year following the initial contract year is treated as a separate obligation for which a new guarantee application must be submitted. SBA is adopting the changes as proposed.
Section 115.12. Under section 411(a)(1)(B) of the Small Business Investment Act of 1958, SBA may guarantee a surety bond for a total work order or contract amount that is greater than $6,500,000 (as adjusted for inflation under 41 U.S.C. 1908), but not exceeding $10,000,000, if a Contracting Officer (CO) of a Federal agency certifies that such a guarantee is necessary. Paragraph (e)(3) of section 115.12 currently requires the CO's certification to include a statement that the small business is experiencing difficulty obtaining a bond and that an SBA bond guarantee would be in the best interests of the Government. In response to comments received in response to the ANPRM ((84 FR 25496), SBA proposed to streamline paragraph (e)(3) to remove the requirement of this statement and require only that the CO certify that the guarantee is necessary, which as noted above is the standard set forth in the statute. SBA also proposed to update the manner in which this certification may be submitted to SBA by providing that it may be either express mailed to SBA, Office of Surety Guarantees, 409 Third Street SW, Washington, DC 20416, or submitted by email to suret...@sba.gov, along with additional information that identifies the small business and the contract. SBA received two comments from two national trade associations expressing support for these changes, and 4 other comments expressing general support for the proposed rule. SBA is adopting the changes as proposed.
Section 115.14. Paragraph (a) of this section provides that, if one of the six events listed in paragraph (a) occurs under an SBA-guaranteed bond, the Principal and its Affiliates lose eligibility for further SBA bond guarantees. One such event, described in paragraph (a)(3), is when the Surety has established a claim reserve for an SBA-guaranteed bond of at least $1,000, an amount which was set by the SBG Program in 1996. As SBA explained in the proposed rule, SBA considered the purpose of this provision, which is to exclude Principals that have demonstrated an unacceptable financial risk under a current SBA-guaranteed bond from receiving future SBA bond guarantees and determined that the $1,000 claim reserve threshold no longer reflects a degree of financial risk that should trigger the Principal's ineligibility for future SBA bond guarantees. After evaluating several factors, including inflation since 1996, the increase in the maximum contract amount for which SBA can issue a bond guarantee (from $1,250,000 in 1996 to $6,500,000 today), and historical claim reserve data, SBA proposed to increase the amount of the claim reserve that would result in the Principal and its Affiliates losing eligibility for further SBA bond guarantees from at least $1,000 to at least $10,000. SBA received five comments in general support of this change, and SBA is adopting this change as proposed.
Section 115.30. SBA proposed to revise the introductory language of paragraph (d)(2) to increase the maximum amount of the contracts for which a Prior Approval Surety would be permitted to use the Quick Bond Guarantee Application and Agreement (SBA Form 990A) (Quick Bond Application) from $400,000 to $500,000. As explained in the proposed rule, SBA conducted a risk assessment, considered factors such as the increasing average contract value, and considered the potential decrease in overall application burden on small businesses. SBA determined that increasing the maximum contract value for using the Quick Bond Application would minimally increase program risk while reducing costs to Sureties and small businesses by $36,343 per year. In addition to reducing costs, SBA expressed hope that this change would result in the additional benefit of increasing overall access to the SBG Program.
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