[Federal Register Volume 75, Number 189 (Thursday, September 30, 2010)]
[Proposed Rules]
[Pages 60341-60347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24594]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 330
RIN 3064-AD37
Deposit Insurance Regulations; Unlimited Coverage for
Noninterest-bearing Transaction Accounts
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The FDIC is proposing to amend its regulations to implement
[[Page 60342]]
section 343 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (``Dodd-Frank Act''),\1\ providing for unlimited deposit
insurance for ``noninterest-bearing transaction accounts'' for two
years starting December 31, 2010. This unlimited coverage for
``noninterest-bearing transaction accounts'' is similar but not
identical to the protection provided for such account owners under the
FDIC's Transaction Account Guarantee Program (``TAGP''). The proposed
rule serves as a vehicle for the FDIC Board of Directors to announce
that it will not extend the TAGP beyond the scheduled expiration date
of December 31, 2010. Because of the differences between the TAGP and
the new statutory provision, changes to the rules are necessary.
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\1\ Public Law 111-203 (July 21, 2010).
DATES: Written comments must be received by the FDIC no later than
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October 15, 2010.
ADDRESSES: You may submit comments on the proposed rule, by any of the
following methods:
Agency Web Site: http://www.FDIC.gov/regulations/laws/federal/notices.html. Follow instructions for submitting comments on
the Agency Web Site.
E-mail: [email protected]. Include RIN [insert]
on the subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW.,
Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to 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.
Instructions: All comments received will be posted generally
without change to http://www.fdic.gov/regulations/laws/federal/final.html, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Joseph A. DiNuzzo, Supervisory
Counsel, Legal Division (202) 898-7349 or [email protected]; Walter C.
Siedentopf, Honors Attorney, Legal Division (703) 562-2744 or
[email protected]; or James V. Deveney, Chief, Deposit Insurance
Section, Division of Supervision and Consumer Protection (202) 898-6687
or [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The TAGP
In October 2008, the FDIC adopted the Temporary Liquidity Guarantee
Program (``TLGP'') following a determination of systemic risk by the
Secretary of the Treasury (after consultation with the President) that
was supported by recommendations from the FDIC and the Board of
Governors of the Federal Reserve System (``Federal Reserve'').\2\
Designed to assist in the stabilization of the nation's financial
system, the TLGP is composed of two distinct components: the Debt
Guarantee Program and the TAGP. While all insured depository
institutions (``IDIs'') were initially participants in both programs,
the FDIC gave all IDIs the option to opt out of each program
separately.
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\2\ See 12 U.S.C. 1823(c)(4)(G) (amended 2010). The
determination of systemic risk authorized the FDIC to take actions
to avoid or mitigate serious adverse effects on economic conditions
or financial stability, and the FDIC implemented the TLGP in
response.
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Under the TAGP, the FDIC guarantees all funds held at participating
IDIs in qualifying noninterest-bearing transaction accounts. This
protection is in addition to and separate from the insurance of funds
in all other types of deposit accounts. A noninterest-bearing
transaction account is defined under the TAGP as a transaction account
maintained at an IDI with respect to which interest is neither accrued
nor paid and on which the IDI does not reserve the right to require
advance notice of an intended withdrawal.\3\ The TAGP definition of
noninterest-bearing transaction account specifically includes low-
interest negotiable order of withdrawal (``NOW'') accounts and Interest
on Lawyers Trust Accounts (``IOLTAs'').\4\
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\3\ 12 CFR 370.2(h).
\4\ 73 FR 72244 (Nov. 26, 2008).
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Under the TAGP, each IDI that offers noninterest-bearing
transaction accounts is required to post a conspicuous notice in the
lobby of its main office and each branch office, and on its Web site,
if applicable, that discloses whether the IDI is participating in the
TAGP.\5\ Disclosures for participating IDIs must contain a statement
that indicates that all noninterest-bearing transaction accounts are
fully guaranteed by the FDIC.\6\ IDIs are also required to disclose
actions that cause funds to be transferred from accounts that are
guaranteed under the TAGP.\7\ IDIs pay a separate assessment, or
premium, to the FDIC for participating in the TAGP. This assessment is
in addition to the assessment IDIs pay under the FDIC's risk-based
assessment system.\8\
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\5\ 12 CFR 370.5(h)(5).
\6\ Id.
\7\ Id.
\8\ 12 CFR 370.7(c).
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The TAGP was originally set to expire on December 31, 2009.\9\ The
FDIC recognized that the TAGP was contributing significantly to
improvements in the financial sector, but it also noted that many parts
of the country were still suffering from the effects of economic
turmoil. As a result, the FDIC extended the TAGP, first, through June
30, 2010,\10\ and then through December 31, 2010.\11\ The rule
implementing this last extension also provided for the possibility of
an additional extension not to exceed December 31, 2011, without
further rulemaking, at the discretion of the FDIC Board of Directors
upon a finding of continued need for the TAGP.\12\ The rule also
provided that the Board would announce any decision to implement such a
further extension no later than October 29, 2010.\13\ The FDIC is using
this proposed rule as the vehicle for announcing that it will not
continue the TAGP beyond December 31, 2010.
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\9\ 73 FR 64179, 64182 (Oct. 29, 2008).
\10\ 74 FR 45093 (Sept. 1, 2009).
\11\ 75 FR 36506 (June 28, 2010).
\12\ Id.
\13\ Id.
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The Dodd-Frank Act
Section 343 of the Dodd-Frank Act amends the Federal Deposit
Insurance Act (``FDI Act'') to include full deposit insurance coverage
(beyond the Standard Maximum Deposit Insurance Amount (``SMDIA'')\14\)
for the net amount held in a noninterest-bearing transaction account by
any depositor at an insured depository institution. As explained more
fully below, section 343 of the Dodd-Frank Act is similar to the TAGP,
but differs from it in three significant ways. First, unlike under the
TAGP, section 343 applies to all IDIs; IDIs are not required to take
any action (i.e., opt in or opt out) to obtain coverage provided under
section 343. Second, section 343 covers only traditional, noninterest-
bearing demand deposit accounts. Unlike the TAGP, section 343 does not
include within the definition of noninterest-bearing transaction
account either low-interest NOW accounts or IOLTAs. And, third, unlike
under the TAGP, there is no separate FDIC assessment (or premium) for
the insurance of noninterest-bearing transaction accounts under section
343.
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\14\ The SMDIA is defined as $250,000. 12 CFR 330.1(n).
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Section 343 of the Dodd-Frank Act is effective from December 31,
2010, through December 31, 2012.\15\
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\15\ Because of overlapping termination and effective dates, on
December 31, 2010, there will be overlapping coverage of the TAGP
and section 343 of the Dodd-Frank Act. On January 1, 2011, coverage
under the TAGP will have ended, but the deposit insurance coverage
under section 343 of the Dodd-Frank Act will remain through December
31, 2012.
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[[Page 60343]]
II. The Proposed Rule
Amendments to Deposit Insurance Rules
Section 343 of the Dodd-Frank Act amends the deposit insurance
provisions of the FDI Act (12 U.S.C. 1821(a)(1)) to provide separate
insurance coverage for noninterest-bearing transaction accounts. As
such, the FDIC is proposing to revise its deposit insurance regulations
in 12 CFR Part 330 to include this new temporary deposit insurance
account category.
Definition of Noninterest-Bearing Transaction Account
The proposed rule follows the definition of noninterest-bearing
transaction account in section 343 of the Dodd-Frank Act. Section 343
defines a noninterest-bearing transaction account as ``a deposit or
account maintained at an insured depository institution with respect to
which interest is neither accrued nor paid; on which the depositor or
account holder is permitted to make withdrawals by negotiable or
transferable instrument, payment orders of withdrawal, telephone or
other electronic media transfers, or other similar items for the
purpose of making payments or transfers to third parties or others; and
on which the IDI does not reserve the right to require advance notice
of an intended withdrawal.'' This definition of noninterest-bearing
transaction account is similar to the base definition of that term in
the TAGP, but it includes no interest-bearing accounts. The section 343
definition of noninterest-bearing transaction account encompasses only
traditional, noninterest-bearing demand deposit (or checking) accounts
that allow for an unlimited number of deposits and withdrawals at any
time, whether held by a business, an individual or other type of
depositor.
Unlike the definition of noninterest-bearing transaction account in
the TAGP, the section 343 definition of noninterest-bearing transaction
account does not include NOW accounts (regardless of the interest rate
paid on the account) or IOLTAs. Therefore, under the proposed rule,
neither NOW accounts nor IOLTAs are within the definition of
noninterest-bearing transaction account. Also, like the TAGP, the
proposed rule does not include money market deposit accounts
(``MMDAs'') within the definition of noninterest-bearing transaction
account.
As under the TAGP, under the proposed rule, whether an account is
noninterest-bearing is determined by the terms of the account agreement
and not by the fact that the rate on an account may be zero percent at
a particular point in time. For example, an IDI might offer an account
with a rate of zero percent except when the balance exceeds a
prescribed threshold. Such an account would not qualify as a
noninterest-bearing transaction account even though the balance is less
than the prescribed threshold and the interest rate is zero percent.
Under the proposed rule, at all times, the account would be treated as
an interest-bearing account because the account agreement provides for
the payment of interest under certain circumstances. On the other hand,
as under the TAGP, the waiving of fees would not be treated as the
earning of interest. For example, IDIs sometimes waive fees or provide
fee-reducing credits for customers with checking accounts. Under the
proposed rule, such account features would not prevent an account from
qualifying as a noninterest-bearing transaction account, as long as the
account otherwise satisfies the definition of a noninterest-bearing
transaction account.
This same principle for determining whether a deposit account
qualifies as a noninterest-bearing transaction account will apply when
IDIs no longer are prohibited from paying interest on demand deposit
accounts. Pursuant to section 627 of the Dodd-Frank Act, as of July 21,
2011 (one year after the enactment date of the Dodd-Frank Act), IDIs no
longer will be restricted from paying interest on demand deposit
accounts. At that time, demand deposit accounts offered by IDIs that
allow for the payment of interest will not satisfy the definition of a
noninterest-bearing transaction account. As discussed below, under the
proposed rule, IDIs would be required to inform depositors of any
changes in the terms of an account that will affect their deposit
insurance coverage under this new provision of the deposit insurance
rules.
As under the TAGP, the proposed rule's definition of noninterest-
bearing transaction account would encompass ``official checks'' issued
by IDIs. Official checks, such as cashier's checks and money orders
issued by IDIs, are ``deposits'' as defined under the FDI Act (12
U.S.C. 1813(l)) and Part 330 of the FDIC's regulations. The payee of
the official check (the party to whom the check is payable) is the
insured party. Because these checks meet the definition of a
noninterest-bearing transaction account, the payee (or the party to
whom the payee has endorsed the check) would be insured for the full
amount of the check upon the failure of the IDI that issued the
official check.
Under the FDIC's rules and procedures for determining account
balances at a failed IDI (12 CFR 360.8), funds swept (or transferred)
from a deposit account to either another type of deposit account or a
non-deposit account are treated as being in the account to which the
funds were transferred prior to the time of failure. So, for example,
if pursuant to an agreement between an IDI and its customer, funds are
swept daily from a noninterest-bearing transaction account to an
account or product (such as a repurchase agreement) that is not a
noninterest-bearing transaction account, the funds in the resulting
account or product would not be eligible for full insurance coverage.
This is how sweep account products are treated under the TAGP and under
the proposed rule.
As under the TAGP, however, the proposed rule would include an
exception from the treatment of swept funds in situations where funds
are swept from a noninterest-bearing transaction account to a
noninterest-bearing savings account, notably a MMDA. Often referred to
as ``reserve sweeps,'' these products entail an arrangement in which a
single deposit account is divided into two sub-accounts, a transaction
account and an MMDA. The amount and frequency of sweeps are determined
by an algorithm designed to minimize required reserves. In some
situations customers may be unaware that this sweep mechanism is in
place. Under the proposed rule, such accounts would be considered
noninterest-bearing transaction accounts.\16\ Apart from this exception
for ``reserve sweeps,'' MMDAs and noninterest-bearing savings accounts
do not qualify as noninterest-bearing transaction accounts.
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\16\ See 12 CFR 360.8.
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Insurance Coverage
As noted, pursuant to section 343 of the Dodd-Frank Act, all funds
held in noninterest-bearing transaction accounts will be fully insured,
without limit. As also specifically provided for in section 343 of the
Dodd-Frank Act, this unlimited coverage is separate from, and in
addition to, the coverage provided to depositors with respect to other
accounts held at an insured depository institution. This means that
funds held in noninterest-bearing transaction accounts will not be
counted for purposes of determining the amount of deposit insurance on
deposits held in other accounts, and in other rights and
[[Page 60344]]
capacities, at the same IDI. Thus, for example, if a depositor has a
$225,000 certificate of deposit and a no-interest checking account with
a balance of $300,000, both held in a single ownership capacity, he or
she would be fully insured for $525,000 (plus interest accrued on the
CD), assuming the depositor has no other single-ownership funds at the
same institution. First, coverage of $225,000 (plus accrued interest)
would be provided for the certificate of deposit as a single ownership
account (12 CFR 330.6) up to the SMDIA of $250,000. Second, full
coverage of the $300,000 checking account would be provided separately,
despite the checking account also being held as a single ownership
account, because the account qualifies for unlimited separate coverage
as a noninterest-bearing transaction account.
No Opting Out
Under the TAGP, IDIs could choose not to participate in the
program. Because section 343 of the Dodd-Frank Act provides
Congressionally mandated deposit insurance coverage, IDIs are not
required to take any action (i.e., opt in or opt out) to obtain
separate coverage for noninterest-bearing transaction accounts. From
December 31, 2010, through December 31, 2012, noninterest-bearing
transaction accounts at all IDIs will receive this temporary deposit
insurance coverage.
No Separate Assessment
The FDIC imposes a separate assessment, or premium, on IDIs that
participate in the TAGP.\17\ The FDIC does not plan to charge a
separate assessment for the insurance of noninterest-bearing
transaction accounts pursuant to section 343 of the Dodd-Frank Act. The
FDIC will take into account the cost for this additional insurance
coverage in determining the amount of the general assessment the FDIC
charges IDIs under its risk-based assessment system.\18\
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\17\ 12 CFR 370.7.
\18\ 12 CFR part 327.
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Disclosure and Notice Requirements
The FDIC is proposing notice and disclosure requirements to ensure
that depositors are aware of and understand what types of accounts will
be covered by this temporary deposit insurance coverage for
noninterest-bearing transaction accounts. There are three such
requirements. As explained in detail below: (1) IDIs must post a
prescribed notice in their main office, each branch and, if applicable,
on their Web site; (2) IDIs currently participating in the TAGP must
notify NOW account depositors (that are currently protected under the
TAGP because of interest rate restrictions on those accounts) and IOLTA
depositors that, beginning January 1, 2011, those accounts no longer
will be eligible for unlimited protection; and (3) IDIs must notify
customers individually of any action they take to affect the deposit
insurance coverage of funds held in noninterest-bearing transaction
accounts.
1. Posted Notice
The proposed rule would require each IDI to post, prominently, a
copy of the following notice in the lobby of its main office, in each
domestic branch and, if it offers Internet deposit services, on its Web
site:
NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION
ACCOUNTS
In accordance with the Dodd-Frank Wall Street Reform and
Consumer Protection Act, from December 31, 2010, through December
31, 2012, all funds in ``noninterest-bearing transaction accounts''
are insured in full by the Federal Deposit Insurance Corporation.
This unlimited coverage is in addition to, and separate from, the
coverage of at least $250,000 available to depositors under the
FDIC's general deposit insurance rules.
The term ``noninterest-bearing transaction account'' includes a
traditional checking account (or demand deposit account) on which
the insured depository institution pays no interest. It does not
include any transaction account that may earn interest, such as a
negotiable order of withdrawal (``NOW'') account, money-market
deposit account, or Interest on Lawyers Trust Account (``IOLTA''),
even if checks may be drawn on the account.
The temporary full insurance coverage of ``noninterest-bearing
transaction accounts'' expires on December 31, 2012. After December
31, 2012, funds in noninterest-bearing transaction accounts will be
insured under the FDIC's general deposit insurance rules, subject to
the Standard Maximum Deposit Insurance Amount of $250,000.
For more information about FDIC insurance coverage of
transaction accounts, visit http://www.fdic.gov.
2. Notice to Depositors Protected Under the TAGP But Not Under the
Dodd-Frank Provision
As discussed above, low-interest NOW accounts and all IOLTAs are
protected in full under the TAGP. These accounts, however, are not
eligible for unlimited deposit insurance coverage under the Dodd-Frank
provision. Thus, starting January 1, 2011, all NOW accounts and IOLTAs
will be insured under the general deposit insurance rules and no longer
will be eligible for unlimited protection. Because of the potential
depositor confusion about this change in the FDIC's treatment of NOWs
and IOLTAs, the proposed rule would require IDIs currently
participating in the TAGP to provide individual notices to depositors
with NOW accounts currently protected in full under the TAGP and IOLTAs
that those accounts will not be insured under the new temporary
insurance category for noninterest-bearing transaction accounts, but
instead will be insured under the general insurance rules up to the
SMDIA of $250,000. IDIs would be required to provide such notice to
applicable depositors by mail no later than December 31, 2010. To
comply with this requirement, IDIs may use electronic mail for
depositors who ordinarily receive account information in this manner.
The notice may be in the form of a copy of the notice required to be
posted in IDI main offices, branches and on Web sites.
3. Notice to Sweep Account and Other Depositors Whose Coverage on
Noninterest-Bearing Transaction Accounts Is Affected by an IDI Action
Under the TAGP regulations, if an IDI offers an account product in
which funds are automatically transferred, or ``swept,'' from a
noninterest-bearing transaction account to another account (such as a
savings account) or bank product that does not qualify as a
noninterest-bearing transaction account, it must inform those customers
that, upon such transfer, the funds will no longer be fully protected
under the TAGP. The proposed rule contains a similar, though somewhat
more expansive, requirement, mandating that IDIs notify customers of
any action that affects the deposit insurance coverage of their funds
held in noninterest-bearing transaction accounts. This notice
requirement is intended primarily to apply when IDIs begin paying
interest on demand deposit accounts, as will be permitted beginning
July 22, 2011, under section 627 of the Dodd-Frank Act (discussed
above). Thus, under the proposed notice requirements, if an IDI
modifies the terms of its demand deposit account agreement so that the
account may pay interest, the IDI must notify affected customers that
the account no longer will be eligible for full deposit insurance
coverage as a noninterest-bearing transaction account. Though such
notifications would be mandatory, the proposed rule does not impose
specific requirements regarding the form of the notice. Rather, the
FDIC would expect IDIs to act in a commercially reasonable manner and
to comply with applicable state and federal laws and regulations in
informing depositors of changes to their account agreements.
[[Page 60345]]
III. Request for Comments
The FDIC invites comments on all aspects of the proposed
rulemaking. Written comments must be received by the FDIC no later than
October 15, 2010.
IV. Regulatory Analysis and Procedure
A. Paperwork Reduction Act
In accordance with section 3512 of the Paperwork Reduction Act of
1995 (``PRA''), 44 U.S.C. 3501 et seq., an agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid Office of Management
and Budget (``OMB'') control number. This Notice of Proposed Rulemaking
(``NPR'') contains disclosure requirements, some of which implicate PRA
as more fully explained below. The NPR also announces that the TAG
program will not continue beyond December 31, 2010, thereby eliminating
the need for an associated, currently approved information collection.
The proposed new disclosure requirements are contained in sections
330.16(c)(1), section 330.16(2) and 330.16(c)(3). More specifically,
section 330.16(c)(1) would require that each IDI post a ``Notice of
Changes In Temporary FDIC Insurance Coverage For Transaction Accounts''
in the lobby of its main office and domestic branches and, if it offers
Internet deposit services, on its Web site; section 330.16(2) would
require IDIs currently participating in the TAG program to provide
individual notices to depositors alerting them to the fact that low-
interest NOWs and IOLTAs will not be eligible for unlimited coverage
under the new temporary insurance category for noninterest-bearing
transaction accounts, but will instead be insured under the general
insurance rules up to the SMDIA of $250,000; and section 330.16(c)(3)
would require that IDIs notify customers of any action that affects the
deposit insurance coverage of their funds held in noninterest-bearing
transaction accounts.
The disclosure requirement in section 330.16(c)(1) would normally
be subject to PRA. However, because the FDIC has provided the specific
text for the notice and allows for no variance in the language, the
disclosure is excluded from coverage under PRA because ``the public
disclosure of information originally supplied by the Federal government
to the recipient for the purpose of disclosure to the public is not
included'' within the definition of ``collection of information.'' 5
CFR 1320.3(c)(2). Therefore, the FDIC is not submitting the section
330.16(c)(1) disclosure to OMB for review.
The disclosure requirement in section 330.16(c)(2) provides that
IDIs currently participating in the TAG program provide individual
notices to depositors alerting them to the fact that low-interest NOWs
and IOLTAs will not be insured under the new temporary insurance
category for noninterest-bearing transaction accounts, but will instead
be insured under the general insurance rules up to the SMDIA of
$250,000. The estimated burden for this new disclosure requirement will
be added to the burden for an existing information collection, OMB No.
3064-0168, currently entitled SWEEP Accounts: Disclosure of Deposit
Status. In conjunction with the revision of OMB No. 3064-0168, the FDIC
will also seek to modify the title of the collection as more fully
explained below.
The disclosure requirement in section 330.16(c)(3) would expand
upon a similar, pre-existing requirement for sweep accounts offered by
IDIs participating in the TAG program. The existing disclosure
requirement is approved under OMB No. 3064-0168. The expanded
disclosure requirement would be mandatory for all IDIs, although
institutions would retain flexibility regarding the form of the notice.
Therefore, in conjunction with publication of this NPR, the FDIC is
submitting to OMB a request to revise OMB No. 3064-0168 to reflect the
estimated burden associated with the expanded disclosure requirement
and to modify the title of the collection to ``Disclosure of Deposit
Status'' to more accurately reflect the broader application of the
requirement.
Finally, the FDIC is using this NPR as a vehicle to announce that
the TAG program will not be extended beyond December 31, 2010.
Therefore, the FDIC will, simultaneous with publication of the NPR,
request that OMB discontinue its existing ``Transaction Account
Guarantee Program Extension'' information collection, OMB No. 3064-
0170, as of that date.
The estimated burden for the proposed new disclosure under sections
330.16(c)(2) 330.16(3) is as follows:
Title: ``Disclosure of Deposit Status.''
Affected Public: Insured depository institutions.
OMB Number: 3064-0168.
Estimated Number of Respondents:
Disclosure of action affecting deposit insurance coverage of funds
in noninterest-bearing transaction accounts--7,830.
Disclosure to NOW account and IOLTA depositors of change in
insurance category--6,249.
Frequency of Response:
Disclosure of action affecting deposit insurance coverage of funds
in noninterest-bearing transaction accounts--on occasion (average of
once per year per bank).
Disclosure to NOW account and IOLTA depositors of change in
insurance category--once.
Average Time per Response:
Disclosure of action affecting deposit insurance coverage of funds
in noninterest-bearing transaction accounts--8 hours.
Disclosure to NOW account and IOLTA depositors of change in
insurance category--8 hours.
Estimated Annual Burden:
Disclosure of action affecting deposit insurance coverage of funds
in noninterest-bearing transaction accounts--62,640 hours.
Disclosure to NOW account and IOLTA depositors of change in
insurance category--49,992 hours.
Total Annual Burden--112,632 hours.
Comments are invited on:
(a) Whether this collection of information is necessary for the
proper performance of the FDIC's functions, including whether the
information has practical utility;
(b) The accuracy of the estimates of the burden of the information
collection, including the validity of the methodologies and assumptions
used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments may be
submitted to the FDIC by any of the following methods:
http://www.FDIC.gov/regulations/laws/federal/propose.html.
E-mail: [email protected]. Include the name and number of
the collection in the subject line of the message.
Mail: Leneta Gregorie (202-898-3719), Counsel, Federal
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC
20429.
Hand Delivery: Comments may be hand-delivered to 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.
A copy of the comment may also be submitted to the OMB Desk Officer
for
[[Page 60346]]
the FDIC, Office of Information and Regulatory Affairs, Office of
Management and Budget, New Executive Office Building, Room 3208,
Washington, DC 20503. All comments should refer to the ``Deposit
Insurance Regulations--Unlimited Coverage for Noninterest-Bearing
Transaction Accounts.''
B. Regulatory Flexibility Act
In accordance with section 3(a) of the Regulatory Flexibility Act
(``RFA''), 5 U.S.C. 603(a), the FDIC must publish an initial regulatory
flexibility analysis with this proposed rulemaking or certify that the
proposed rule, if adopted, will not have a significant economic impact
on a substantial number of small entities. For purposes of the RFA
analysis or certification, financial institutions with total assets of
$175 million or less are considered to be ``small entities.'' The FDIC
hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed rule, if
adopted, will not have a significant economic impact on a substantial
number of small entities.
As of June 30, 2010 there were 4,294 IDIs that were considered
small entities. A total of 1,121 of these institutions do not
participate in the TAGP and would receive additional insurance coverage
under the proposed rule. Currently 3,173 small IDIs participate in the
TAGP. Within this group of small institutions, 618, or 19.5 percent,
did not have TAGP eligible deposits as of the June 2010 Report of
Condition and Income for banks and the Thrift Financial Report for
thrifts (collectively, ``June 2010 Call Reports''); thus, they were not
required to pay the fee currently assessed for participation in the
TAGP. As to the remaining 2,555 small entities that had TAG eligible
deposits as of the June 2010 Call Reports, they would no longer be
assessed a fee after the termination of the TAGP, and they would not be
charged a separate assessment for the new deposit insurance coverage.
The FDIC has determined that were the proposed rule to be adopted,
the economic impact on small entities would not be significant for the
following reasons. Because there is no separate FDIC assessment for the
insurance of noninterest-bearing transaction accounts under section 343
of the Dodd-Frank Act, small entities currently assessed fees for
participation in the TAGP will realize an average annual cost savings
of $2,373 per institution. All other small entities, whether they are
currently in the TAGP or not, will gain additional insurance coverage
with no direct cost. The FDIC asserts that the economic benefit of
additional insurance coverage and coverage extension until 2013 would
outweigh any future costs associated with the temporary insurance of
noninterest-bearing transaction accounts.
With respect to amending the disclosures related to section 343,
the FDIC asserts that the economic impact on all small entities
participating in the program (regardless of whether they currently pay
a fee) would be de minimis in nature and would be outweighed by the
economic benefit of additional insurance coverage.
Accordingly, if adopted in final form, the proposed rule would not
have a significant economic impact on a substantial number of small
entities.
C. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The FDIC has determined that the proposed rule will not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, enacted as part of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1999
(Pub. L. 105-277, 112 Stat. 2681).
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the FDIC
to use ``plain language'' in all proposed and final rules published
after January 1, 2000. The FDIC invites comments on whether the
proposal is clearly stated and effectively organized, and how the FDIC
might make the proposed text easier to understand.
List of Subjects in 12 CFR Part 330
Bank deposit insurance, Banks, Banking, Reporting and recordkeeping
requirements, Savings and loan associations, Trusts and trustees.
For the reasons stated above, the Board of Directors of the Federal
Deposit Insurance Corporation proposes to amend part 330 of title 12 of
the Code of Federal Regulations as follows:
PART 330--DEPOSIT INSURANCE COVERAGE
1. The authority citation for part 330 continues to read as
follows:
Authority: 12 U.S.C. 1813(1), 1813(m), 1817(i), 1818(q), 1819
(Tenth), 1820(f), 1821(a), 1822(c).
2. Amend section 330.1 by adding new paragraph (r) to read as
follows:
Sec. 330.1 Definitions.
* * * * *
(r) Noninterest-bearing transaction account means a deposit or
account maintained at an insured depository institution--
(1) With respect to which interest is neither accrued nor paid;
(2) On which the depositor or account holder is permitted to make
withdrawals by negotiable or transferable instrument, payment orders of
withdrawal, telephone or other electronic media transfers, or other
similar items for the purpose of making payments or transfers to third
parties or others; and
(3) On which the insured depository institution does not reserve
the right to require advance notice of an intended withdrawal.
* * * * *
3. Add Sec. 330.16 to read as follows:
Sec. 330.16 Noninterest-bearing transaction accounts.
(a) Separate insurance coverage. From December 31, 2010, through
December 31, 2012, a depositor's funds in a ``noninterest-bearing
transaction account'' (as defined in Sec. 330.1(r)) are fully insured,
irrespective of the SMDIA. Such insurance coverage shall be separate
from the coverage provided for other accounts maintained at the same
insured depository institution.
(b) Certain swept funds. Notwithstanding its normal rules and
procedures regarding sweep accounts under 12 CFR 360.8, the FDIC will
treat funds swept from a noninterest-bearing transaction account to a
noninterest-bearing savings deposit account as being in a noninterest-
bearing transaction account.
(c) Disclosure and notice requirements. (1) Each depository
institution that offers noninterest-bearing transaction accounts must
post prominently the following notice in the lobby of its main office,
in each domestic branch and, if it offers Internet deposit services, on
its Web site:
NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION
ACCOUNTS
In accordance with the Dodd-Frank Wall Street Reform and
Consumer Protection Act, from December 31, 2010, through December
31, 2012, all funds in ``noninterest-bearing transaction accounts''
are insured in full by the Federal Deposit Insurance Corporation.
This unlimited coverage is in addition to, and separate from, the
coverage of at least $250,000 available to depositors under the
FDIC's general deposit insurance rules.
The term ``noninterest-bearing transaction account'' includes a
traditional checking account (or demand deposit account) on which
the insured depository institution pays no interest. It does not
include any transaction account that may earn interest,
[[Page 60347]]
such as a negotiable order of withdrawal (``NOW'') account, money-
market deposit account, or Interest on Lawyers Trust Account
(``IOLTA''), even if checks may be drawn on the account.
The temporary full insurance coverage of ``noninterest-bearing
transaction accounts'' expires on December 31, 2012. After December
31, 2012, funds in noninterest-bearing transaction accounts will be
insured under the FDIC's general deposit insurance rules, subject to
the Standard Maximum Deposit Insurance Amount of $250,000.
For more information about FDIC insurance coverage of
transaction accounts, visit http://www.fdic.gov.
(2) Institutions participating in the FDIC's Transaction Account
Guarantee Program on December 31, 2010, must provide a notice by mail
to depositors with negotiable order of withdrawal accounts that are
protected in full as of that date under the Transaction Account
Guarantee Program and to depositors with Interest on Lawyer Trust
Accounts that, as of January 1, 2011, such accounts no longer will be
eligible for unlimited protection, but instead will be insured under
the general insurance rules up to the SMDIA of $250,000. This notice
must be provided to such depositors no later than December 31, 2010.
(3) If an institution uses sweep arrangements, modifies the terms
of an account, or takes other actions that result in funds no longer
being eligible for full coverage under this section, the institution
must notify affected customers and clearly advise them, in writing,
that such actions will affect their deposit insurance coverage.
By order of the Board of Directors.
Dated at Washington DC, this 27th day of September 2010. Federal
Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2010-24594 Filed 9-29-10; 8:45 am]
BILLING CODE 6714-01-P