Amendment of the Temporary Liquidity Guarantee Program To Extend the Transaction Account Guarantee Program With Opportunity To Opt Out, 20257-20265 [2010-8911]

Agencies

• FEDERAL DEPOSIT INSURANCE CORPORATION

[Federal Register Volume 75, Number 74 (Monday, April 19, 2010)]
[Rules and Regulations]
[Pages 20257-20265]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-8911]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 370

RIN 3064-AD37


Amendment of the Temporary Liquidity Guarantee Program To Extend 
the Transaction Account Guarantee Program With Opportunity To Opt Out

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Interim Rule with request for comments.

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SUMMARY: The FDIC is issuing this Interim Rule to amend the Transaction 
Account Guarantee (TAG) component of the Temporary Liquidity Guarantee 
Program (TLGP) by providing an 6-month extension of the TAG program for 
insured depository institutions (IDIs) currently participating in the 
TAG program, with the possibility of an additional 12-month extension 
of the program without further rulemaking, upon a determination by the 
FDIC's Board of Directors (Board) that continuing economic difficulties 
warrant a continued extension. By virtue of this Interim Rule, the TAG 
program will be extended through December 31, 2010, with the 
possibility of an additional 12-month extension through December 31, 
2011. In addition, while the Interim Rule presents no changes in the 
amount of the assessment for an IDI's continued participation in the 
TAG, it modifies the assessment basis for calculating the current risk-
based assessments to one based on average daily balances in the TAG-
related accounts. Further, the Interim Rule requires IDIs participating 
in the TAG program that offer NOW accounts covered by the program to 
reduce the interest rate on such accounts to a rate no higher than 0.25 
percent and to commit to maintain that rate for the duration of the TAG 
extension in order for those NOW accounts to remain eligible for the 
FDIC's continued guarantee.

DATES: The Interim Rule becomes effective on April 19, 2010. Comments 
on the Interim Rule must be received by the FDIC no later than May 19, 
2010.

ADDRESSES: You may submit comments on the Interim Rule, by any of the 
following methods:
     Agency Web Site: https://www.FDIC.gov/regulations/laws/federal/notices.html. Follow instructions for submitting comments on 
the Agency Web Site.
     E-mail: Comments@FDIC.gov. Include RIN  3064-AD37 
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.
    TInstructions: All comments received will be posted generally 
without change to https://www.fdic.gov/regulations/laws/federal/final.html, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: A. Ann Johnson, Counsel, Legal 
Division, (202) 898-3573 or aajohnson@fdic.gov; Robert C. Fick, 
Counsel, Legal Division, (202) 898-8962 or rfick@fdic.gov; Julia E. 
Paris, Senior Attorney, Legal Division, (202) 898-3821 or 
jparis@fdic.gov; Lisa D Arquette, Associate Director, Division of 
Supervision and Consumer Protection, (202) 898-8633 or 
larquette@fdic.gov; Donna Saulnier, Manager, Assessment Policy Section, 
Division of Finance, (703) 562-6167 or dsaulnier@fdic.gov; or Rose 
Kushmeider, Acting Chief, Banking and Regulatory Policy Section, 
Division of Insurance and Research, (202) 898-3861 or 
rkushmeider@fdic.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    In October 2008, the FDIC adopted the TLGP following a 
determination of

[[Page 20258]]

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).\1\ The TLGP is part of an ongoing and coordinated effort by 
the FDIC, the U.S. Department of the Treasury, and the Federal Reserve 
to address unprecedented disruptions in the financial markets and 
preserve confidence in the American economy.
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    \1\ See Section 13(c)(4)(G) of the Federal Deposit Insurance Act 
(FDI Act), 12 U.S.C. 1823(c)(4)(G). 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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    The FDIC's October 2008 interim rule provided the blueprint for the 
TLGP.\2\ The TLGP comprises two distinct components: The Debt Guarantee 
Program (DGP), pursuant to which the FDIC guarantees certain senior 
unsecured debt issued by entities participating in the TLGP; and the 
TAG program, pursuant to which the FDIC guarantees all funds held at 
participating IDIs (beyond the standard maximum deposit insurance 
limit) in qualifying noninterest-bearing transaction accounts.
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    \2\ 73 FR 64179 (Oct. 29, 2008). This Interim Rule was followed 
by a Final Rule, published in the Federal Register on November 26, 
2008. 73 FR 72244 (Nov. 26, 2008).
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    The DGP addressed the acute needs of banks to obtain funding by 
permitting participating entities to issue FDIC-guaranteed senior 
unsecured debt until June 30, 2009, with the FDIC's guarantee for such 
debt to expire on the earlier of the maturity or conversion of the debt 
(for mandatory convertible debt) or June 30, 2012.\3\ In order to 
reduce market disruption at the conclusion of the DGP and to facilitate 
the orderly phase-out of the program, the FDIC's Board, in March 2009, 
adopted another interim rule that, among other things, provided for a 
limited four-month extension for the issuance of senior unsecured debt 
under the DGP.\4\ At the same time, the FDIC extended the expiration of 
the guarantee period from June 30, 2012, until December 31, 2012.\5\ 
The DGP component of the TLGP has served a vital role in helping to 
restore market-based liquidity and confidence in the financial 
market.\6\
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    \3\ Id. at 64181-64182.
    \4\ 74 FR 12078 (Mar. 23, 2009). This Interim Rule was finalized 
and a Final Rule was published in the Federal Register on June 3, 
2009. 74 FR 26521 (June 3, 2009).
    \5\ 74 FR 12078, 12080.
    \6\ On September 16, 2009, the FDIC published for comment 
alternative proposals for winding down the DGP component of the 
TLGP. Ultimately, the FDIC issued a final rule terminating the DGP 
as of October 31, 2009, and establishing a limited, six-month 
emergency guarantee facility. 74 FR 54743 (Oct. 23, 2009).
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    The TAG component of the TLGP was developed, in part, to address 
concerns that a large number of account holders might withdraw their 
uninsured account balances from IDIs due to then-prevailing economic 
uncertainties. Such withdrawals could have further destabilized 
financial markets and impaired the funding structure of smaller banks 
that rely on deposits as a primary source of funding while also 
negatively affecting other institutions that had relationships with 
these banks.\7\ In designing the TAG program, the FDIC sought to 
improve public confidence and to encourage depositors to maintain their 
transaction account balances at IDIs participating in the TAG program.
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    \7\ 73 FR 64182-64183.
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    In response to comments received by the FDIC following publication 
of the October 2008 interim rule, the FDIC expanded the TAG program to 
cover, among other accounts, ``negotiable order of withdrawal,'' or NOW 
accounts, with interest rates no higher than 0.50 percent if the IDI 
offering the account committed to maintain that interest rate through 
December 31, 2009.\8\ If an IDI offering NOW accounts with an interest 
rate in excess of 0.50 percent committed to reduce the rate to 0.50 
percent or less by January 1, 2009, and to maintain that rate for the 
duration of the program, its NOW account would be considered eligible 
for the FDIC's TAG guarantee.\9\
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    \8\ 73 FR 72244, 72262 (Nov. 26, 2008).
    \9\ Id.
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    The TAG program was originally set to expire on December 31, 
2009.\10\ The FDIC recognized that the TAG program was contributing 
significantly to improvements in the financial sector, but also noted 
that many parts of the country were still suffering from the effects of 
economic turmoil. As a result, on August 26, 2009, following a public 
notice and comment period,\11\ the FDIC issued a final rule that 
extended the TAG program through June 30, 2010.\12\
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    \10\ 73 FR 64179, 64182 (Oct. 29, 2008).
    \11\ 74 FR 31217 (June 30, 2009).
    \12\ 74 FR 45093 (Sept. 1, 2009).
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    The initial TAG extension included an increased assessment rate 
designed to offset the potential losses associated with the FDIC's 
guarantee. Prior to the extension, the fee for participating IDIs was a 
flat rate of 0.10 percent annually on all amounts in eligible TAG 
accounts not covered by regular deposit insurance. Beginning on January 
1, 2010, the fee for continued participation in the TAG was raised and 
the basis changed to reflect an IDI's risk profile, ranging from 15 
basis points to up to 25 basis points. The rule provided participating 
IDIs with a second opportunity to opt out of the TAG program.\13\ The 
initial TAG extension also required participating IDIs to extend their 
commitment to maintain interest rates on NOW account at no higher than 
0.50 percent during the extended TAG program.\14\
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    \13\ Id.
    \14\ 74 FR 45098.
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    In extending the TAG program through June 30, 2010, the FDIC 
reiterated its belief that the country was experiencing overall 
improved economic conditions and that it had made progress toward a 
stable, fully functioning financial marketplace.\15\ Yet the FDIC 
cautioned that this progress could be impeded or even undone by 
terminating the TAG program too quickly. As such, the FDIC deemed its 
initial extension of the TAG an appropriate step to a gradual phase out 
the program.\16\
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    \15\ 74 FR 45095.
    \16\ Id.
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II. Rationale for Extending the TAG Program

    Since its inception, the TAG program has been an important source 
of stability for many banks with large transaction account balances. 
Currently, nearly 6,400 insured depository institutions, representing 
approximately 80 percent of all IDIs, continue to participate in the 
TAG program and to benefit from the guarantee provided by the FDIC. 
These institutions held an estimated $340 billion of deposits in 
accounts currently subject to the FDIC's guarantee as of the end of 
2009. Of these, $266 billion represented amounts above the insured 
deposit limit and guaranteed by the FDIC through its TAG program. Among 
the current participants in the program, the average TAG account size 
was about $1.15 million. About 550 institutions relied on TAG accounts 
to fund 10 percent or more of their assets. In this challenging banking 
environment, smaller IDIs have continued to find the TAG program 
especially beneficial.
    While the immediate financial crisis that led to the creation of 
the TLGP in October 2008 has abated, it was followed by an 
intensification of the recession that began in late 2007 and which 
continues to pressure local communities across the country. At the same 
time, the financial distress that emerged in 2008 has spread from 
large, systemically important banks to banks of all sizes, particularly 
in regions

[[Page 20259]]

suffering from ongoing economic turmoil.
    Since the establishment of the TLGP, there have been 187 bank and 
thrift failures, and the number of ``problem'' institutions has 
increased to 702, representing $403 billion in total assets, as of 
year-end 2009. Weaknesses facing community banks have intensified as 
the lingering consequences of the 2008 financial crisis and the 
recession place continued pressure on earnings and asset quality. In 
2009, community banks experienced an aggregate $104 million loss, their 
first annual loss on record. Community banks increased their provisions 
for loan and lease losses to $5.1 billion during the fourth quarter of 
2009, the highest level on record. The effects of the financial crisis 
and recession are expected to persist for some time, especially as the 
magnitude of economic distress facing local markets places continued 
pressure on asset quality and earnings, with the potential for 
undermining the stability of the banking organizations that serve these 
markets.
    Although the condition of IDIs as a whole has deteriorated since 
the establishment of the TLGP, the TAG program has lessened some of 
their distress by enabling them to retain longstanding customer 
transaction relationships, such as payroll accounts from municipalities 
and small businesses. These deposits have significantly improved the 
funding situation of IDIs and allowed them to continue making 
investments in the communities they serve. Over 70 percent of industry 
assets were funded by deposits as of fourth quarter 2009, up from 65 
percent a year ago. This increased reliance on deposit funding 
highlights the importance of the TAG program.
    Based on these economic factors, the FDIC has concluded that 
allowing the TAG to expire on June 30, 2010, could negatively affect 
the banking system at a time when many IDIs continue to experience 
stressful economic and financial conditions. The FDIC is concerned that 
allowing the TAG program to expire in the current environment could 
cause a number of community banks to experience deposit withdrawals 
from their large transaction accounts and risk needless liquidity 
failures. To the extent IDIs are able to replace these deposits with 
brokered deposits or secured borrowings, their overall liquidity risk 
profile would increase going forward. However, the loss of longstanding 
large depositor relationships would negatively affect IDIs' deposit 
franchise values to an acquirer in the event of a failure, thus 
increasing the FDIC's resolution costs.
    By extending the TAG program beyond its current program termination 
date of June 30, 2010, the FDIC seeks to maintain stability for IDIs 
and to promote a continuing and sustainable economic recovery 
throughout the country. Specifically, the FDIC anticipates that its 
extended guarantee of noninterest-bearing transaction accounts may 
provide participating institutions with a continued stable funding 
source. Moreover, recognizing the gap between funding costs of large 
and small banks,\17\ the FDIC believes that a continuation of its TAG 
program will help maintain community banks' ability to compete for and 
secure low-cost large deposits, thereby preserving deposit franchise 
value and supporting the rebuilding of earnings and capital.
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    \17\ At year-end 2007, the average cost of interest-bearing 
domestic deposits at banks with over $100 billion in total assets 
was 35 basis points lower than at banks with under $1 billion in 
total assts. At the end of the second quarter 2008, this difference 
increased to 64 basis points. By year-end 2009, the spread was 107 
basis points.
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    In providing for a six-month extension of the TAG program and for 
an additional 12-month extension without further rulemaking, if the 
Board concludes that such extension is warranted, the FDIC endeavors to 
avoid liquidity failures that may be indirectly precipitated by deposit 
migrations potentially caused by letting the TAG program expire on June 
30, 2010. In most cases, liquidity failures are more costly for the 
FDIC to resolve as there is little time to market the institution. This 
leads to fewer and less informed bidders who will reduce the value of 
their proposals to compensate for the uncertainty in the transaction. 
Bidders are more reluctant to enter into transactions that transfer 
high-risk assets without having the time to conduct due diligence; this 
will result in more assets being retained by the FDIC, as receiver for 
failed IDIs. In addition, the loss of large balance transaction 
accounts that may leave the IDIs in the absence of the TAG program 
extension will reduce franchise values and make it more difficult for 
all-deposit resolution transactions to satisfy the least cost test. 
Finally, the diminution of deposit franchises may lead to more deposit 
payouts, which are expensive and consume large amounts of FDIC 
resources. For these reasons, extending the TAG is mission-critical for 
the FDIC, as steward of the DIF.
    As the effects of the financial crisis and the recession continue 
to unfold, the FDIC remains committed to its primary goal of promoting 
confidence and stability in the banking system. The TAG program 
provides businesses and other large depositors with complete assurance 
that qualifying noninterest-bearing transaction accounts are fully 
guaranteed in participating IDIs. This, in turn, contributes to a more 
stable operating environment in which business activities may continue 
to normalize.
    Moreover, the FDIC has received support from some industry 
participants for extending the program. These stakeholders have 
commented that the TAG program has had a positive and stabilizing 
effect on the banking industry and public confidence; terminating the 
program on June 30, 2010, would be premature given the delicate state 
of the nation's financial recovery. They further note that the TAG 
program benefits small businesses by guaranteeing payroll accounts and 
increasing the amount of funding available to make loans. Community 
banks are key providers of credit to small businesses, which have 
historically made significant contributions to new job growth and the 
overall strengthening of the economy. Thus, community bankers argue 
that extending the TAG program would provide them with an important 
source of liquidity necessary to continue providing credit to small 
businesses and creditworthy borrowers.

III. Authority To Extend TAG Program

    The amendment to the TAG provided under the Interim Rule is based 
on the authority for the establishment of the TLGP, including the 
determination of systemic risk made in October 2008, pursuant to 
section 13(c)(4)(G) of the FDI Act.\18\ A systemic risk determination 
authorizes the FDIC to not only take actions necessary at that time to 
avoid or mitigate serious adverse effects on economic conditions or 
financial stability, but also to continue to take such action as 
necessary in the future where the economic conditions and threats to 
financial stability that first gave rise to the determination persist 
or have shifted to adversely affect other sections of the banking 
industry.\19\ The extension of the TAG component of the TLGP provided 
for in this Interim Rule represents a continuation of the previously 
authorized action by the FDIC to mitigate the continuing adverse 
effects, discussed in the preceding section, from the financial crisis 
and the recession by

[[Page 20260]]

providing additional stable funding for IDIs.
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    \18\ 12 U.S.C. 1823(c)(4)(G).
    \19\ See id.; see also Senior Unsecured Creditors' Comm. of 
First Republic Bank Corp. v. F.D.I.C., 749 F. Supp. 758, 768 (N.D. 
Tex. 1990).
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IV. The Interim Rule

A. Extension of the TAG Program for Participating IDIs

    The TAG program currently expires on June 30, 2010. This Interim 
Rule extends the termination of the TAG program for six months, through 
December 31, 2010, with the possibility of an additional 12-month 
extension, through December 31, 2011, without further rulemaking, at 
the discretion of the Board upon a finding of a continuing need for the 
TAG program. If the Board determines that an additional 12-month 
extension of the TAG program is warranted, an announcement to that 
effect will be made by the FDIC no later than October 29, 2010. The 
FDIC believes that extending the TAG program will assist participating 
IDIs in successfully weathering the nation's continuing financial 
distress and in ensuring a more sustainable economic recovery.

B. No Increased Fee for Continued Participation in the Extended TAG 
Program

    Under the current rule, the TAG program provides for a tiered-
pricing assessment, ranging from 15 to 25 basis points based on an 
institution's deposit insurance assessment risk category. The FDIC 
believes that maintaining the current tiered pricing for the TAG 
program will enable most participating IDIs to remain in the program, 
thereby providing a greater positive stimulus to the nation's economic 
recovery. The FDIC believes that increasing the assessment for 
participating IDIs at this time would frustrate the overall goal of the 
extension of the TAG program and could further pressure the liquidity 
posture of participating IDIs.
    Although costs from the TAG program will have exceeded revenues 
collected under the program through June 30, 2010, no increase in fees 
is being proposed for the extension of the TAG program under this 
Interim Rule. The FDIC estimates that projected revenues from 
assessments under a six-month extension in the TAG program could cover 
projected costs for the duration of the extension, but will more likely 
show a small loss under reasonable assumptions regarding continued 
participation in the program. In making our estimates, the FDIC expects 
that some IDIs will opt out of the TAG program and that participating 
IDIs will maintain, but not significantly increase, the amount of 
deposits in transaction accounts that are subject to the FDIC's 
guarantee.
    This Interim Rule provides that the Board may determine that an 
additional extension of the TAG through December 31, 2011, may be 
warranted without further rulemaking. FDIC estimates for this period 
assume some improvement in the outlook for the banking industry and 
consequently indicate that projected revenues could cover, and possibly 
exceed, projected costs without a change in fee structure. As above, 
FDIC estimates were made using reasonable assumptions regarding 
continued participation in the program. However, projections beyond six 
months are always more problematic.
    While the FDIC made reasonable assumptions regarding the costs that 
could be incurred during the 6-month extension and during a possible 
additional 12-month extension, under more severe, yet plausible, 
assumptions net losses under the TAG program could be greater. However, 
the FDIC does not believe that the losses would be so extreme under 
either extension as to cause the TLGP overall to experience a net loss. 
In fact, the FDIC believes it is reasonable to expect that the 6-month 
extension provided in this Interim Rule will result in only a slight 
loss and that if an additional 12-month extension is ultimately 
adopted, the TAG program for the two extension periods would be revenue 
neutral. Regardless of the ultimate duration of the program and even 
under the most severe loss estimates, the FDIC expects the TLGP will 
remain a profitable program. Accordingly, the Interim Rule does not 
increase the current tiered-assessment structure.
    To prevent unanticipated risks to the DIF, the FDIC reminds 
participating IDIs to exercise prudent marketing of TAG accounts that 
qualify for the FDIC's guarantee and to continue to exercise risk-
management principles applicable to an IDI's existing business plan. 
Because of the temporary nature of the TAG program, participating IDIs 
should not use the extension period to aggressively market or grow 
their TAG-related accounts.

C. Change in Basis for Reporting for Assessment Purposes

    Participating IDIs currently report the total dollar amount and the 
total number of TAG-qualifying noninterest-bearing transaction accounts 
as of the end of the calendar quarter. By the very nature of these 
transaction accounts, the account balances are volatile, fluctuating 
greatly on any given day due to the operational nature of the deposits, 
such as for payrolls, and withdrawals made by typical business 
customers. Currently, the TAG total amounts and accounts are reported 
on the IDI's Report of Condition or Thrift Report.
    In order to monitor and assess fees based upon the ongoing risk 
exposure of the DIF, the Interim Rule provides that IDIs that do not 
opt out of the TAG program under the mechanism described in Paragraph 
E, below, will be required to report their TAG amounts as average daily 
balance amounts. Under the Interim Rule, beginning with the September 
30, 2010, report date for the Report of Condition or Thrift Financial 
Report, the total dollar amount of TAG-qualifying accounts and the 
total number of accounts must be reported as an average daily balance. 
This will cover the period from July 1 through September 30, 2010. The 
amounts to be reported as daily averages are the total dollar amount of 
the noninterest-bearing transactions accounts, as defined in 12 CFR 
370.2(h), of more than $250,000 for each calendar day during the 
quarter divided by the number of calendar days in the quarter. For days 
that an office of the reporting institution is closed (e.g., Saturdays, 
Sundays, or holidays), the amounts outstanding from the previous 
business day would be used. The total number of accounts to be reported 
should be calculated on the same basis. Documentation supporting the 
amounts used in the calculation of the average daily balance amounts 
must be retained and be readily available upon request by the FDIC or 
the IDI's primary Federal regulator. In addition, all IDIs that do not 
opt of the TAG program must establish procedures to gather the 
necessary daily data beginning July 1, 2010.
    As indicated previously, the dollar amounts of TAG-related accounts 
are sizeable, and many institutions rely significantly on these 
accounts as a funding source. However, the FDIC notes that these 
balances are often held in a relatively small number of individual 
accounts. The FDIC further notes that certain institutions with total 
assets of more than $1 billion, all de novo IDIs, and some other IDIs 
already report their regular deposit insurance assessment balances 
based on an average daily balance basis and currently have in place the 
systems to report their TAG-qualifying account balances on an average 
daily basis. All other institutions report their deposit insurance 
assessment base on a quarter-end basis. However, of those institutions 
that use quarter-end reporting, fewer than 1,000 institutions report 
more than 25 TAG-qualifying accounts.
    Given the limited number of these accounts that would be included 
in an

[[Page 20261]]

IDI's average daily balance reporting base and the larger number of 
IDIs that currently use average daily balances reporting, the FDIC does 
not believe that this change in assessment base would create a 
significant administrative burden on IDIs that do not currently employ 
average daily balance reporting.

 D. Treatment of NOW Accounts

    Currently, the TAG program provides for an FDIC guarantee of NOW 
accounts with interest rates no higher than 0.50 percent at 
participating IDIs that have committed to maintain that rate for the 
duration of the program. At the inception of the TAG program, 0.50 
percent was viewed as a low rate of interest and, as such, a NOW 
account paying no more than this rate would be substantially similar to 
a noninterest bearing transaction account. Under the November 2008 
Final Rule for the TLGP, these accounts were included in the TAG 
program to provide stability to payment processing accounts structured 
as NOW accounts, without creating the risk of destabilizing money 
market mutual finds or allowing weaker institutions to attract deposits 
in these ownership categories through offering higher interest rates.
    However, the prevailing nationwide average rates for regular 
interest-bearing checking accounts now range from 0.12 percent to 0.16 
percent for most accounts, and from 0.26 percent to 0.29 percent for 
premium interest bearing accounts held by municipalities, school 
districts, and other typical large transaction account holders.\20\ In 
order to align NOW accounts covered by the TAG program with current 
market rates and to ensure the program is not used inappropriately by 
institutions to attract interest-rate-sensitive deposits to fund risk 
activities, the Interim Rule reduces the interest rate on NOW accounts 
eligible for the FDIC's guarantee from a maximum of 0.50 percent to a 
maximum of 0.25 percent. The Interim Rule also requires participating 
IDIs to commit to maintain the interest rate at or below 0.25 percent 
after June 30, 2010, and through December 31, 2010, or December 31, 
2011, if the Board further extends the TAG program.
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    \20\ FDIC analysis of data provided by RateWatch.
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    The Interim Rule does not prescribe specific disclosures related to 
NOW accounts. Participating IDIs are reminded, however, that 
contractual terms governing individual deposit accounts, as well as 
provisions of the Truth in Savings Act,\21\ may require disclosures to 
consumers regarding modifications of interest rates on applicable NOW 
accounts. Moreover, if an IDI offers both TAG-qualifying and non-
qualifying NOW accounts, appropriate disclosures should be provided in 
order to avoid consumer confusion.
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    \21\ 12 U.S.C. 4301, et seq.
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E. Opportunity To Opt Out of the Extended TAG Program

    The Interim Rule imposes certain regulatory modifications to the 
existing TAG program. Some IDIs currently participating in the TAG may 
feel that their existing financial condition or future business plans 
would be best served by discontinuing their involvement in the TAG 
program. For these reasons, the Interim Rule provides IDIs currently 
participating in the TAG program with a one-time, irrevocable 
opportunity to opt out of this TAG extension. A participating IDI's 
decision to remain in the extended TAG program obligates it to remain 
in the program through December 31, 2010, or for an additional 12 
months if the Board further extends the TAG program. An IDI that wishes 
to opt out of the TAG extension must provide the FDIC with notice of 
its intent to opt out by April 30, 2010 by submitting an e-mail with 
the subject line ``TLGP Election Form Opt Out Requested--Cert No. 
XXXXX'' to optout@fdic.gov. The e-mail must include the following 
information: name of the IDI; FDIC certificate number; city, state, and 
zip code for the IDI; contact name and contact information (telephone 
number and e-mail address); a concise statement that the IDI would like 
to opt out of the TAG program effective July 1, 2010; and confirmation 
that, no later than May 20, 2010, the IDI will post a notice in the 
lobby of its main office, each domestic branch, and if it offers 
Internet deposit services, on its website, clearly indicating that 
funds held in noninterest-bearing transaction accounts that are in 
excess of the standard maximum deposit insurance amount will not be 
guaranteed under the TAG program after June 30, 2010.
    Once this information has been received and processed, FDIC staff 
will contact the IDI to confirm the IDI's opt out decision.

F. Disclosure Requirements

Current Disclosure Requirements
    Regulations governing the existing TAG program contain certain 
disclosure requirements. Among other things, each IDI that offers 
noninterest-bearing transaction accounts is required to post a 
prominent notice in the lobby of its main office, in each domestic 
branch and, if it offers Internet deposit services, on its Web site 
clearly indicating whether the institution is participating in the TAG 
program.\22\ If an IDI is participating in the TAG program, the notice 
must state that funds held in noninterest-bearing transaction accounts 
at the institution are guaranteed in full by the FDIC. Although 
existing regulations do not require specific language to appear in 
disclosures regarding the TAG program, the notices must be provided in 
simple, readily understandable text.
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    \22\ 12 CFR 370.5(h)(5).
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Disclosure Requirements for IDIs Participating in the Extended TAG 
Program
    Under the Interim Rule, participating IDIs that do not opt out of 
the extended TAG program will be required to amend these disclosures on 
or before May 20, 2010. The Interim Rule requires IDIs that choose to 
remain in the TAG program to update their disclosures to reference 
December 31, 2010, as the termination date for this extension of the 
TAG program. Further disclosures may be required if the Board 
determines that the TAG program should be extended through December 31, 
2011.
Disclosure Requirements for IDIs Opting Out of the Extended TAG Program
    On or before May 20, 2010, participating IDIs that opt out of the 
extended TAG program will be required to update their disclosures to 
inform customers and depositors that, beginning on July 1, 2010, they 
will no longer participate in the TAG program and the deposits in 
noninterest-bearing transaction accounts will no longer be guaranteed 
in full by the FDIC.

V. Request for Comments

    The FDIC requests comments on all aspects of the Interim Rule and 
solicits suggestions regarding its implementation, especially as to the 
change in reporting basis for assessment purposes.

VI. Regulatory Analysis and Procedure

A. Regulatory Flexibility Act

    The process of amending part 370 by means of this Interim Rule is 
governed by the Administrative Procedure Act (APA). Pursuant to section 
553(b)(B) of the APA, general notice and opportunity for public comment 
are not required with respect to a rule making when an agency for good 
cause finds that ``notice and public procedure thereon are 
impracticable, unnecessary, or contrary to the public interest.'' 
Similarly, section 553(d)(3) of the APA provides that the publication 
of a rule shall be made not less than 30 days before its effective

[[Page 20262]]

date, except ``* * * (3) as otherwise provided by the agency for good 
cause found and published with the rule.''
    Consistent with section 553(b)(B) of the APA, the FDIC finds that 
good cause exists for a finding that general notice and opportunity for 
public comment are impracticable and contrary to the public interest. 
The TLGP was announced by the FDIC on October 14, 2008, as an 
initiative to counter the system-wide crisis in the nation's financial 
sector, and involved a determination of systemic risk by the Secretary 
of the Treasury after consultation with the President. The systemic 
risk determination allowed the FDIC to take certain actions to avoid or 
mitigate serious adverse effects on economic conditions and financial 
stability. The purpose of the TLGP is to promote financial stability by 
preserving confidence in the banking system and facilitating the flow 
of liquidity to creditworthy businesses and consumers, favorably 
affecting both the availability and cost of credit. Immediate issuance 
of this Interim Rule furthers the public interest by extending the time 
period of the TAG program to promote continued stability in the banking 
system through guaranteeing large uninsured transaction account 
balances in order to provide participating IDIs with continued sources 
of funding to meet their liquidity needs. For these same reasons, the 
FDIC finds good cause to publish this Interim Rule with an immediate 
effective date.\23\
---------------------------------------------------------------------------

    \23\ 5 U.S.C. 553(d)(3).
---------------------------------------------------------------------------

    Although general notice and opportunity for public comment are not 
required prior to the effective date, the FDIC invites comments on all 
aspects of the Interim Rule, which the FDIC may revise if necessary or 
appropriate in light of the comments received.

B. Riegle Community Development and Regulatory Improvement Act

    The Riegle Community Development and Regulatory Improvement Act 
provides that any new regulations or amendments to regulations 
prescribed by a Federal banking agency that impose additional 
reporting, disclosures, or other new requirements on insured depository 
institutions shall take effect on the first day of a calendar quarter 
which begins on or after the date on which the regulations are 
published in final form, unless the agency determines, for good cause 
published with the rule, that the rule should become effective before 
such time.\24\ For the same reasons discussed above, the FDIC finds 
that good cause exists for an immediate effective date for the Interim 
Rule.
---------------------------------------------------------------------------

    \24\ 12 U.S.C. 4802.
---------------------------------------------------------------------------

C. Small Business Regulatory Enforcement Fairness Act

    The Office of Management and Budget (OMB) has yet to issue its 
determination as to whether the Interim Rule is a ``major rule'' within 
the meaning of the relevant sections of the Small Business Regulatory 
Enforcement Act of 1996 (SBREFA), 5 U.S.C. 801 et seq. However, a 
previous rule extending the TAG Program was determined by OMB to be 
``not major'' and the FDIC believes that this Interim Rule is also 
``not major.'' As required by SBREFA, the FDIC will file the 
appropriate reports with Congress and the Government Accountability 
Office as soon as it receives a determination from OMB. Nevertheless, 
as discussed above, consistent with section 553(b)(B) of the APA, the 
FDIC has determined for good cause that general notice and opportunity 
for public comment would be impracticable and contrary to the public 
interest. Therefore, in accordance with 5 U.S.C. 808(2), this Interim 
Rule will take effect upon publication in the Federal Register.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (Pub. L. No. 96-354, Sept. 19, 1980) 
(RFA) applies only to rules for which an agency publishes a general 
notice of proposed rule making pursuant to 5 U.S.C. 553(b). As 
discussed above, consistent with section 553(b)(B) of the APA, the FDIC 
has determined for good cause that general notice and opportunity for 
public comment would be impracticable and contrary to the public 
interest. Therefore, the RFA, pursuant to 5 U.S.C. 601(2), does not 
apply.

E. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (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 OMB control number. This Interim Rule, by 
extending the termination date for the TAG Program, will change the 
estimated number of respondents for the reporting and recordkeeping 
requirements in an existing OMB-approved information collection, 
entitled the ``Transaction Account Guarantee Program Extension,'' (OMB 
No. 3064-0170). These burden adjustments are being submitted to OMB as 
a request for a nonmaterial/nonsubstantive change.
    Currently, there are 6,340 institutions participating in the TAG 
program. Pursuant to sections 370.5(c)(3) and (g)(3) of the Interim 
Rule, institutions that do not wish to participate in the program 
extension must request authorization by April 30, 2010, to opt out of 
the TAG Program, effective July 1, 2010. The FDIC estimates that 
approximately one-third of current participants will elect to opt-out 
of the extension. In addition, section 370.5(h)(5) requires continuing 
program participants to update notices posted in the lobby of their 
main offices and domestic branches and, if applicable, on their Web 
sites, to reflect the new TAG expiration date. The FDIC estimates that 
approximately two-thirds of current participants will be required to 
update their disclosures to reflect a new termination date for the TAG 
program. In the event the FDIC exercises the option to extend the 
program for an additional 12 months without further rulemaking, it 
estimates that the same number of participants may need to update their 
disclosures a second time. Any further adjustments to burden estimates 
required by a decision to extend the program for an additional 12 
months will be submitted to OMB at the time the extension is announced.
    Although Section 370.7(c)(5) requires that a new data element on 
average daily balances in noninterest-bearing transaction accounts be 
incorporated into the Consolidated Report of Income and Condition (CALL 
Report) filed by program extension participants, the reporting 
requirement will not be implemented until the quarterly report filed 
for the period July 1, 2010, to September 30, 2010. This change to the 
CALL Report will be the subject of a separate notice under the 
Paperwork Reduction Act.
    Therefore, the new estimated burden for the Transaction Account 
Guarantee Program Extension information collection is as follows:
    Title: Temporary Transaction Account Guarantee Program Extension.
    OMB Number: 3064-0166.
    Affected Public: Insured depository institutions.
    Estimated Number of Respondents:
    Opt out of TAG program extension/disclosure--2,113.
    Updated Disclosures by Participants to Amend Termination Date--
4,227.
    Frequency of Response:
    Opt out of TAG program extension/disclosure--once.
    Updated Disclosures by Participants to Amend Termination Date--
once.
    Average Time per Response:
    Opt out of TAG program extension/disclosure--1 hour.
    Updated Disclosures by Participants to Amend Termination Date--1 
hour.

[[Page 20263]]

    Estimated New Annual Burden:
    Opt out of TAG program extension/disclosure--2,113 hours.
    Updated Disclosures by Participants to Amend Termination Date--4227 
hours.
    Current Annual Burden--7,109 hours.
    Total New Burden--6,340 hours.
    Total Adjusted Annual Burden--13,449 hours.
    The FDIC has a continuing interest in public feedback on its 
information collections and paperwork burden estimates. Accordingly, 
public comment is invited on: (1) Whether this collection of 
information is necessary for the proper performance of the FDIC's 
functions, including whether the information has practical utility; (2) 
the accuracy of the estimates of the burden of the information 
collection, including the validity of the methodologies and assumptions 
used; (3) ways to enhance the quality, utility, and clarity of the 
information to be collected; and (4) 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. Interested parties are invited to submit written comments 
on the estimated burden for information collections associated with the 
TAG program extension by any of the following methods:
     https://www.FDIC.gov/regulations/laws/federalpropose.html.
     E-mail: comments@fdic.gov. 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 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 name and number 
of the collection.

F. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 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 FDIC invites your comments on how to make this 
regulation easier to understand. For example:
     Has the FDIC organized the material to suit your needs? If 
not, how could this material be better organized?
     Are the requirements in the regulation clearly stated? If 
not, how could the regulation be more clearly stated?
     Does the regulation contain language or jargon that is not 
clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation easier to 
understand? If so, what changes to the format would make the regulation 
easier to understand?
     What else could the FDIC do to make the regulation easier 
to understand?

G. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The FDIC has determined that the interim rule will not affect 
family well-being within the measure 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).

List of Subjects in 12 CFR Part 370

    Banks, Banking, Bank deposit insurance, Holding companies, National 
banks, Reporting and recordkeeping requirements, Savings associations.

0
For the reasons discussed in the preamble, the Federal Deposit 
Insurance Corporation amends part 370 of chapter III of Title 12 of the 
Code of Federal Regulations as follows:

PART 370--TEMPORARY LIQUIDITY GUARANTEE PROGRAM

0
1. The authority citation for part 370 continues to read as follows:

    Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818, 
1819(a)(Tenth), 1820(f), 1821(a), 1821(c), 1821(d), 1823(c)(4).


0
2. Amend Sec.  370.2 as follows:
0
a. Revise paragraph (g),
0
b. Revise paragraphs (h)(3) and (h)(4), and
0
c. Add paragraph (o), to read as follows:


Sec.  370.2  Definitions.

* * * * *
    (g) Participating entity. (1) Except as provided in paragraphs 
(g)(2) and (g)(3) of this section, the term ``participating entity'' 
means with respect to each of the debt guarantee program and the 
transaction account guarantee program,
    (i) An eligible entity that became an eligible entity on or before 
December 5, 2008 and that has not opted out, or
    (ii) An entity that becomes an eligible entity after December 5, 
2008, and that the FDIC has allowed to participate in the program, 
except.
    (2) A participating entity that opted out of the transaction 
account guarantee program in accordance with Sec.  370.5(c)(2) ceased 
to be a participating entity in the transaction account guarantee 
program effective on January 1, 2010.
    (3) A participating entity that opts out of the transaction account 
guarantee program in accordance with Sec.  370.5(c)(23) ceases to be a 
participating entity in the transaction account guarantee program 
effective on July 1, 2010.
* * * * *
    (h) * * *
    (3) Notwithstanding paragraphs (h)(1) and (h)(2) of this section, 
for purposes of the transaction account guarantee program, a 
noninterest-bearing transaction account includes:
    (i) Accounts commonly known as Interest on Lawyers Trust Accounts 
(IOLTAs) (or functionally equivalent accounts); and
    (ii) Negotiable order of withdrawal accounts (NOW accounts) with 
interest rates:
    (A) No higher than 0.50 percent through June 30, 2010, if the 
insured depository institution at which the account is held has 
committed to maintain the interest rate at or below 0.50 percent. 
through June 30, 2010; and
    (B) No higher than 0.25 percent after June 30, 2010, if the insured 
depository institution at which the account is held has committed to 
maintain the interest rate at or below 0.25 percent after June 30, 2010 
through the TAG expiration date.
    (4) Notwithstanding paragraph (h)(3) of this section, a NOW account 
with an interest rate above 0.50 percent as of November 21, 2008, may 
be treated as a noninterest-bearing transaction account for purposes of 
this part:
    (i) Through June 30, 2010, if the insured depository institution at 
which the account is held reduced the interest rate on that account to 
0.50 percent or lower before January 1, 2009, and committed to maintain 
that interest rate at no more than 0.50 percent through June 30, 2010; 
and
    (ii) After June 30, 2010 through the TAG expiration date, if the 
insured depository institution at which the account is held reduces the 
interest rate

[[Page 20264]]

on that account to 0.25 percent or lower before July 1, 2010, and 
commits to maintain that interest rate at no more than 0.25 percent 
through the TAG expiration date.
* * * * *
    (o) TAG expiration date. The term ``TAG expiration date'' means 
December 31, 2010 unless the Board of Directors of the FDIC (the 
``Board''), for good cause, extends the transaction account guarantee 
program for an additional year in which case the term ``TAG expiration 
date'' means December 31, 2011. Good cause exists if the Board finds 
that the economic conditions and circumstances that led to the 
establishment of the transaction account guarantee program are likely 
to continue beyond December 31, 2010 and that extending the transaction 
account guarantee program for an additional year will help mitigate or 
resolve those conditions and circumstances. If the Board decides to 
extend the transaction account guarantee program to December 31, 2011, 
it will do so without further rulemaking; however, the FDIC will 
publish notice of any extension no later than October 29, 2010.

0
3. Amend Sec.  370.4 by revising paragraph (a) to read as follows:


Sec.  370.4  Transaction Account Guarantee Program.

    (a) In addition to the coverage afforded to depositors under 12 CFR 
Part 330, a depositor's funds in a noninterest-bearing transaction 
account maintained at a participating entity that is an insured 
depository institution are guaranteed in full (irrespective of the 
standard maximum deposit insurance amount defined in 12 CFR 330.1(n)) 
from October 14, 2008 through:
    (1) The date of opt-out, in the case of an entity that opted out 
prior to December 5, 2008;
    (2) December 31, 2009, in the case of an entity that opted out 
effective on January 1, 2010; or
    (3) June 30, 2010, in the case of an entity that opts out of the 
transaction account guarantee program effective on July 1, 2010; or
    (4) The TAG expiration date, in the case of an entity that does not 
opt out.
* * * * *

0
4. Amend Sec.  370.5 as follows:
0
a. Add paragraph (c)(3),
0
b. Revise paragraph (g)(1),
0
c. Add paragraph (g)(3), and
0
d. Revise paragraph (h)(5), to read as follows:


Sec.  370.5  Participation.

* * * * *
    (c) * * *
    (3) Any insured depository institution that is participating in the 
transaction account guarantee program may request authorization to opt 
out of such program effective on July 1, 2010. Any such election to 
opt-out must be made in accordance with the procedures set forth in 
paragraph (g)(3) of this section. If the FDIC grants the request, the 
opt out is irrevocable.
* * * * *
    (g) * * *
    (1) Except as provided in paragraphs (g)(2) and (g)(3) of this 
section, the FDIC will provide procedures for opting out and for making 
an affirmative decision to opt in using FDIC's secure e-business Web 
site, FDICconnect. Entities that are not insured depository 
institutions will select and solely use an affiliated insured 
depository institution to submit their opt-out election or their 
affirmative decision to opt in.
* * * * *
    (3) Pursuant to paragraph (c)(3) of this section a participating 
entity may request authorization to opt out of the transaction account 
guarantee program effective on July 1, 2010 by submitting to the FDIC 
on or before 11:59 p.m., Eastern Daylight Saving Time, on April 30, 
2010 an e-mail conveying the entity's request to opt out. The subject 
line of the e-mail must include: ``TLGP Request to Opt Out--Cert. No. 
----------.'' The e-mail must be addressed to optout@fdic.gov and must 
include the following:
    (i) Institution Name;
    (ii) FDIC Certificate number;
    (iii) City, State, ZIP;
    (iv) Name, Telephone Number and Email Address of a Contact Person;
    (v) A statement that the institution is requesting authorization to 
opt out of the transaction account guarantee program effective July 1, 
2010; and
    (vi) Confirmation that no later than May 20, 2010 the institution 
will post a prominent notice in the lobby of its main office and each 
domestic branch and, if it offers Internet deposit services, on its Web 
site clearly indicating that after June 30, 2010, funds held in 
noninterest-bearing transaction accounts will no longer be guaranteed 
in full under the Transaction Account Guarantee Program, but will be 
insured up to $250,000 under the FDIC's general deposit insurance 
rules.
* * * * *
    (h) * * *
    (5) Each insured depository institution that offers noninterest-
bearing transaction accounts must post a prominent notice in the lobby 
of its main office, each domestic branch and, if it offers Internet 
deposit services, on its Web site clearly indicating whether the 
institution is participating in the transaction account guarantee 
program. If the institution is participating in the transaction account 
guarantee program, the notice must state that funds held in 
noninterest-bearing transactions accounts at the entity are guaranteed 
in full by the FDIC. Participating entities must update their 
disclosures to reflect the current TAG expiration date, including any 
extension pursuant to Sec.  370.2(o) or, if applicable, any decision to 
opt-out.
    (i) These disclosures must be provided in simple, readily 
understandable text. Sample disclosures are as follows:

For Participating Institutions

    [Institution Name] is participating in the FDIC's Transaction 
Account Guarantee Program. Under that program, through [June 30, 2010, 
December 31, 2010, or December 31, 2011, whichever is applicable], all 
noninterest-bearing transaction accounts are fully guaranteed by the 
FDIC for the entire amount in the account.
    Coverage under the Transaction Account Guarantee Program is in 
addition to and separate from the coverage available under the FDIC's 
general deposit insurance rules.

For Participating Institutions That Elect to Opt-out of the Extended 
Transaction Account Guaranty Program Effective on July 1, 2010

    Beginning July 1, 2010 [Institution Name] will no longer 
participate in the FDIC's Transaction Account Guarantee Program. Thus, 
after June 30, 2010, funds held in noninterest-bearing transaction 
accounts will no longer be guaranteed in full under the Transaction 
Account Guarantee Program, but will be insured up to $250,000 under the 
FDIC's general deposit insurance rules.

For Non-Participating Institutions

    [Institution Name] has chosen not to participate in the FDIC's 
Transaction Account Guarantee Program. Customers of [Institution Name] 
with noninterest-bearing transaction accounts will continue to be 
insured for up to $250,000 under the FDIC's general deposit insurance 
rules.
    (ii) If the institution uses sweep arrangements or takes other 
actions that result in funds being transferred or reclassified to an 
account that is not guaranteed under the transaction account guarantee 
program, for example, an interest-bearing account, the institution must 
disclose those

[[Page 20265]]

actions to the affected customers and clearly advise them, in writing, 
that such actions will void the FDIC's guarantee with respect to the 
swept, transferred, or reclassified funds.
* * * * *

0
5. Amend Sec.  370.7 by revising paragraphs (b) and (c) to read as 
follows:


Sec.  370.7  Assessment for the Transaction Account Guarantee program.

* * * * *
    (b) Initiation of assessments. Beginning on November 13, 2008 each 
eligible entity that does not opt out of the transaction account 
guarantee program on or before December 5, 2008 will be required to pay 
the FDIC assessments on all deposit amounts in noninterest-bearing 
transaction accounts calculated in accordance with paragraph (c) of 
this section.
    (c) Amount of assessment.
    (1) Except as provided in paragraphs (c)(2) and (c)(3) of this 
section any eligible entity that does not opt out of the transaction 
account guarantee program shall pay quarterly an annualized 10 basis 
point assessment on any deposit amounts exceeding the existing deposit 
insurance limit of $250,000, as reported on its quarterly Consolidated 
Reports of Condition and Income, Thrift Financial Report, or Report of 
Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks 
(each, a ``Call Report'') in any noninterest-bearing transaction 
accounts (as defined in Sec.  370.2(h)), including any such amounts 
swept from a noninterest-bearing transaction account into an 
noninterest-bearing savings deposit account as provided in Sec.  
370.4(c).
    (2) For the period after December 31, 2009 through and including 
June 30, 2010, each participating entity that does not opt out of the 
transaction account guarantee program in accordance with Sec.  
370.5(c)(2) shall pay quarterly a fee based upon its Risk Category 
rating. The amount of the fee for each such entity is equal to the 
annualized, TAG assessment rate for the entity multiplied by the amount 
of the deposits held in noninterest-bearing transaction accounts (as 
defined in Sec.  370.2(h) and including any amounts swept from a 
noninterest- bearing transaction account into an noninterest-bearing 
savings deposit account as provided in Sec.  370.4(c)) that exceed the 
existing deposit insurance limit of $250,000, as reported on the 
entity's most recent quarterly Call Report.
    (3) Beginning on July 1, 2010, each participating entity that does 
not opt out of the transaction account guarantee program shall pay 
quarterly a fee based upon its Risk Category rating. The amount of the 
fee for each such entity is equal to the annualized, TAG assessment 
rate for the entity multiplied by the aggregate amount of the deposits 
held in noninterest-bearing transaction accounts (as defined in Sec.  
370.2(h) and including any amounts swept from a noninterest-bearing 
transaction account into an noninterest-bearing savings deposit account 
as provided in Sec.  370.4(c)) that exceed the existing deposit 
insurance limit of $250,000, calculated based upon the average daily 
balances in such accounts as reported on the entity's most recent 
quarterly Call Report.
    (4) The annualized TAG assessment rates are as follows:
    (i) 15 basis points, for the portion of each quarter in which the 
entity is assigned to Risk Category I;
    (ii) 20 basis points, for the portion of each quarter in which the 
entity is assigned to Risk Category II; and
    (iii) 25 basis points, for the portion of each quarter in which the 
entity is assigned to either Risk Category III or Risk Category IV.
    (5) The amount to be reported for each noninterest-bearing 
transaction account as the average daily balance is the total dollar 
amount held in such account that exceeds $250,000 for each calendar day 
during the quarter divided by the number of calendar days in the 
quarter. For those days that an office of the reporting institution is 
closed (e.g., Saturdays, Sundays, or holidays), the amounts outstanding 
from the previous business day should be used. The total number of 
accounts to be reported should be calculated on the same basis. 
Documentation supporting the amounts used in the calculation of the 
average daily balance amounts must be retained and be readily available 
upon request by the FDIC or the institution's primary Federal 
regulator. In addition, all institutions that do not opt of the 
transaction account guarantee program must establish procedures to 
gather the necessary daily data beginning July 1, 2010.
    (6) An entity's Risk Category is determined in accordance with the 
FDIC's risk-based premium system described in 12 CFR part 327. The 
assessments provided in this paragraph (c) shall be in addition to an 
institution's risk-based assessment imposed under Part 327.
* * * * *

    By order of the Board of Directors.
    Dated at Washington, DC, this 13th day of April, 2010.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2010-8911 Filed 4-16-10; 8:45 am]
BILLING CODE 6714-01-P