Federal Register: September 15, 2009 (Volume 74, Number 177)
DOCID: fr15se09-3 FR Doc E9-22070
FEDERAL DEPOSIT INSURANCE CORPORATION
Federal Deposit Insurance Corporation
CFR Citation: 12 CFR Part 329
RIN ID: RIN 3064-AD46
NOTICE: RULES
DOCID: fr15se09-3
DOCUMENT ACTION: Final rule.
SUBJECT CATEGORY:
Interest on Deposits
DATES: This rule is effective on September 15, 2009.
DOCUMENT SUMMARY:
The Federal Deposit Insurance Corporation (FDIC) is amending its regulations to eliminate restrictions on certain kinds of transfers from savings deposits for state chartered banks that are not members of the Federal Reserve System and insured branches of foreign banks. The Board of Governors of the Federal Reserve System (the FRB) has already amended its regulations to eliminate these restrictions for member banks. Because this change is ministerial, the FDIC has determined for good cause that public notice and comment is unnecessary and impracticable under the Administrative Procedure Act (the APA) and is implementing this change by means of a final rule without notice and comment.
SUMMARY:
Interest On Deposits
SUPPLEMENTAL INFORMATION
I. Background
A. FRB Amendments to Regulation D
On May 20, 2009, the FRB announced the approval of final amendments to 12 CFR part 204, Reserve Requirements of Depository Institutions (Regulation D). Among other changes, the amendments will eliminate restrictions on certain types of transfers that consumers can make from savings deposits. See 74 FR 25629 (May 29, 2009). The changes were effective 30 days from the date of publication in the Federal Register, that is, July 2, 2009.
Prior to the FRB amendments, Regulation D limited the number of
``convenient'' transfers and withdrawals from savings deposits to not
more than six per month. Within this overall limit of six, not more
than three transfers or withdrawals could be made by check, debit card,
or similar order made by the depositor and payable to third parties
(the three transfer sublimit). Under the FRB final amendments, the
permissible monthly number of transfers or withdrawals from savings
deposits by check, debit card, or similar order payable to third
parties has been increased from three to six. In other words, while the
FRB has decided to retain the overall sixtransfer limit for savings
deposits, it has eliminated the threetransfer sublimit within the
overall limit that applied to transfers or withdrawals from savings
deposits by check, debit card, or similar order payable to third
parties. The FRB decided to eliminate the three transfer sublimit
because distinctions between such transfers and other types of pre
authorized or automatic transfers subject to the sixpermonth limit
were no longer logical in light of technological advances. See 74 FR 25631.
B. FDIC Responsibilities Under Section 18(g) of the Federal Deposit Insurance (FDI) Act
Section 18(g) of the FDI Act (12 U.S.C. 1828(g)) provides that the Board of Directors of the FDIC shall by regulation prohibit the payment of interest or dividends on demand deposits in insured nonmember banks and in insured branches of foreign banks. Accordingly, the FDIC promulgated regulations prohibiting the payment of interest or dividends on demand deposits at 12 CFR part 329. See 51 FR 10808 (Mar. 31, 1986). Section 18(g) of the FDI Act also provides that the FDIC shall make such exceptions to this prohibition as are prescribed with respect to demand deposits in member banks by section 19 of the Federal Reserve Act, as amended, or by regulation of the FRB.
Generally, member banks, state nonmember banks and insured branches
of foreign banks are subject to the statutory prohibition and
exceptions to that prohibition, although under different statutes and
regulations. From time to time the FRB issues or authorizes a new
exception to the prohibition applicable to member banks, and the FDIC
later issues or authorizes a similar exception affecting state
nonmember banks and insured branches of foreign banks, as is the case
in this particular rulemaking. Note, however, that under section 329.3
of part 329, state nonmember banks and insured branches of foreign
banks are already subject to the same exceptions to the prohibition
that member banks are subject to, regardless of whether the FDIC has
issued or authorized the specific exception. See 63 FR 8341 (Feb. 19, 1998).
[[Page 47051]]
C. Amendments to Sections 329.1(b)(3) and 329.102 of Part 329
Therefore, in accord with the FRB amendments to Regulation D, the FDIC is amending the part 329 definition of ``demand deposit'' to eliminate the three transfer sublimit. This will be done by eliminating the first proviso of subsection 329.1(b)(3). A minor change is also made to the interpretive rule set forth in section 329.102 to make it conform to section 329.1(b)(3) as amended by this rule.
II. Exemption From Public Notice and Comment
The FDIC is required by law to promulgate the same exception to the prohibition against the payment of interest on demand deposits that has been prescribed with respect to demand deposits in member banks by the FRB by regulation. Given this statutory requirement, the FDIC has no discretion in this matter, but must instead eliminate the three transfer sublimit for state nonmember banks and insured branches of foreign banks in the same way that the FRB has done for member banks. Moreover, under section 329.3 of FDIC Rules and Regulations, state nonmember banks and insured branches of foreign banks are already covered by the FRB elimination of the three transfer sublimit when that regulatory change becomes effective on July 2, 2009. As a result, amending part 329 to eliminate reference to the three transfer sublimit would essentially only be an official recognition by the FDIC of an already established requirement.
For these reasons, the FDIC has thus determined for good cause that public notice and comment is unnecessary and impracticable under the APA (5 U.S.C. 553(b)(3)(B)), and that the rule should be published in the Federal Register as a final rule.
III. Effective Date
For the same reasons that the FDIC has determined that public notice and comment is unnecessary and impractical for good cause, the FDIC also finds that it has good cause to adopt an effective date that would be less than 30 days after the date of publication in the Federal Register pursuant to the APA (5 U.S.C. 553(d)). The amendment to Part 329 will be effective as of the date of its publication in the Federal Register.
IV. Regulatory Flexibility Act
An initial regulatory flexibility analysis under the Regulatory Flexibility Act (RFA) (5 U.S.C. 603) is required only when an agency must publish a general notice of proposed rulemaking. As already noted, the FDIC has determined that publication of a notice of proposed rulemaking is not necessary for this final rule. Accordingly, the RFA does not require an initial regulatory flexibility analysis. Nevertheless, the FDIC has considered the likely impact of the rule on small entities and believes that the rule will not have a significant impact on a substantial number of small entities.
V. Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA) (Pub. L. 104121, 110 Stat. 857) provides generally for
agencies to report rules to Congress and for Congress to review such
rules. The reporting requirement is triggered in instances where the
FDIC issues a final rule as defined by the APA (5 U.S.C. 551 et seq.).
Because the FDIC is issuing a final rule as defined by the APA, the FDIC will file the reports required by the SBREFA.
VI. The Treasury and General Government Appropriations Act, 1999 Assessment of Federal Regulations and Policies on Families
The FDIC has determined that this final rule will not affect family wellbeing within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105277, 112 Stat. 2681 (1998)).
VII. Paperwork Reduction Act
No collection of information pursuant to section 3504(h) of the
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) is contained
in this rule. Consequently, no information has been submitted to the Office of Management and Budget for review.
VIII. Riegle Community Development and Regulatory Improvement Act
The final rule does not impose any new reporting or disclosure requirements on insured depository institutions under the Riegle Community Development and Regulatory Improvement Act.
IX. Plain Language
Section 722 of the GrammLeachBliley Act, Public Law 106102, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The final rule makes part 329 plainer by eliminating unnecessary language.
X. Authority for the Regulation
This regulation is authorized by the FDIC's general rulemaking
authority. Specifically, 12 U.S.C. 1819(a)(Tenth) provides the FDIC
with general authority to issue such rules and regulations as it deems
necessary to carry out the statutory mandates of the FDI Act and other
laws that the FDIC is charged with administering or enforcing.
Moreover, as previously noted, section 18(g) of the FDI Act provides
that the FDIC shall make such exceptions to the statutory prohibition
against the payment of interest on demand deposits as are prescribed
with respect to demand deposits in member banks by section 19 of the
Federal Reserve Act, as amended, or by regulation of the FRB (12 U.S.C. 1828(g)).
List of Subjects in 12 CFR Part 329
Banks, Banking, Interest rates.
For the reasons set out in the preamble, the Board of Directors of the
FDIC hereby amends part 329 of title 12 of the Code of Federal Regulations as follows:
PART 329INTEREST ON DEPOSITS
1. The authority for part 329 continues to read as follows:
Authority: 12 U.S.C. 1819, 1828(g), 1832(a).
2. Section 329.1 is amended by revising paragraph (b)(3) to read as follows:
Sec. 329.1 Definitions.
* * * * *
(b)* * *
(3) Any other deposit from which, under the terms of the deposit
contract, the depositor is authorized to make, during any month or
statement cycle of at least four weeks, more than six transfers by
means of a preauthorized or automatic transfer or telephonic (including
data transmission) agreement, order or instruction, which transfers are
made to another account of the depositor at the same bank, to the bank
itself, or to a third party, provided that no deposit specified in this
paragraph (3) will be deemed to be a demand deposit if the entire
beneficial interest of the deposit is held by a depositor identified in
paragraph (2) of section 2(a) of Public Law 93100 (12 U.S.C. 1832(a)(2)).\1\
\1\ Paragraph (1) of 12 U.S.C. 1832(a) authorizes banks to let
certain depositors make withdrawals from interestbearing deposits
by negotiable or transferable instruments for the purpose of making
transfers to third partiesi.e., to hold deposits commonly called NOW accounts.
Paragraph (2) of 12 U.S.C. 1832(a) provides: ``Paragraph (1)
shall apply only with respect to deposits or accounts which consist
solely of funds in which the entire beneficial interest is held by
one or more individuals or by an organization which is operated
primarily for religious, philanthropic, charitable, educational,
political, or other similar purposes and which is not operated for
profit, and with respect to deposits of public funds by an officer,
employee, or agent of the United States, any State, county,
municipality, or political subdivision thereof, the District of
Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, any
territory or possession of the United States, or any political subdivision thereof.''
* * * * *
[[Page 47052]]
3. Section 329.102 is amended by revising the introductory text to read as follows:
Sec. 329.102 Deposits described in Sec. 329.1(b)(3).
This interpretive rule explains the proviso of Sec. 329.1(b)(3). * * * * *
Dated this 9th day of September 2009.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E922070 Filed 91409; 8:45 am]
BILLING CODE 671401P
FOR FURTHER INFORMATION CONTACT
Mark Mellon, Counsel, Legal Division, (202) 8983884 or Samuel Frumkin, Senior Policy Analyst (Compliance), Compliance Policy Section, Division of Supervision and Consumer Protection, (202) 8986602, 550 17th Street, NW., Washington, DC 20429.