Final Rule Regarding Amendment of the Temporary Liquidity Guarantee Program To Extend the Transaction Account Guarantee Program, 36506-36511 [2010-15497]
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Federal Register / Vol. 75, No. 123 / Monday, June 28, 2010 / Rules and Regulations
Dated at Rockville, Maryland, this 18th day
of June 2010.
For the Nuclear Regulatory Commission.
Michael C. Layton,
Deputy Director, Division of Security Policy,
Office of Nuclear Security and Incident
Response.
[FR Doc. 2010–15627 Filed 6–25–10; 8:45 am]
BILLING CODE 7590–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 370
RIN 3064–AD37
Final Rule Regarding Amendment of
the Temporary Liquidity Guarantee
Program To Extend the Transaction
Account Guarantee Program
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
The FDIC is issuing a Final
Rule extending the Transaction Account
Guarantee (TAG) component of the
Temporary Liquidity Guarantee Program
(TLGP) through December 31, 2010, for
insured depository institutions (IDIs)
currently participating in the TAG
program, with the possibility of an
additional extension of up to 12 months
without additional rulemaking, upon a
determination by the FDIC’s Board of
Directors (Board) that continuing
economic difficulties warrant further
extension.
The Final Rule differs only slightly
from the interim rule that preceded it.
The interim rule provided for the
possibility of a further extension of the
TAG program until December 31, 2011,
without additional rulemaking, should
the FDIC’s Board determine that
economic conditions warrant a further
extension of the program. The Final
Rule provides that, under appropriate
economic conditions, the Board may
further extend the TAG program for a
period of time not to exceed December
31, 2011. Like the interim rule, the Final
Rule modifies the assessment basis for
calculating the assessment rate for an
IDI’s continued participation in the TAG
to the average daily balances in the
TAG-related accounts, but makes no
changes to the assessment rate itself.
Further, as in the interim rule the Final
Rule requires IDIs that are participating
in the TAG program and 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
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SUMMARY:
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accounts to remain eligible for the
FDIC’s continued guarantee.
DATES: Effective June 28, 2010.
FOR FURTHER INFORMATION CONTACT: A.
Ann Johnson, Counsel, Legal Division,
(202) 898–3573 or aajohnson@fdic.gov;
Robert C. Fick, Supervisory 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
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.
The FDIC’s October 2008 interim rule
provided the blueprint for the TLGP.2
The TLGP comprises two distinct
components: The Debt Guarantee
Program, 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.
The TAG component of the TLGP was
developed, in part, to address concerns
that a large number of account holders
might withdraw their uninsured
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.
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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account balances from IDIs due to thenprevailing 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.3 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.
As part of its rulemaking process, the
FDIC in November 2008 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 the interest rate
at a level no higher than 0.50 percent
through December 31, 2009.4
The TAG program was originally set
to expire on December 31, 2009.5 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,6 the FDIC
issued a final rule that extended the
TAG program through June 30, 2010.7
The initial TAG extension included
an increased assessment rate designed
to offset the potential losses associated
with the FDIC’s guarantee. 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.8 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.9
Since its inception, the TAG program
has been an important source of stability
for many banks with large transaction
account balances. Currently, over 6,300
insured depository institutions,
representing approximately 80 percent
of all IDIs, continue to participate in the
3 73
FR 64182–64183.
FR 72244, 72262 (Nov. 26, 2008).
5 73 FR 64179, 64182 (Oct. 29, 2008).
6 74 FR 31217 (June 30, 2009).
7 74 FR 45093 (Sept. 1, 2009).
8 Id.
9 74 FR 45098.
4 73
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TAG program and to benefit from the
guarantee provided by the FDIC. These
institutions held an estimated $356
billion of deposits in accounts currently
subject to the FDIC’s guarantee as of
March 31, 2010. Of these, $280 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
$1.04 million. About 509 institutions
rely on TAG accounts to fund 10
percent or more of their assets.
II. Interim Rule
While the immediate financial crisis
that led to the creation of the TLGP in
October 2008 has abated, several
economic factors led the FDIC’s Board
to authorize publication in the Federal
Register of an interim rule to amend the
TLGP to provide for a six month
extension, until December 31, 2010, of
the TAG Program, with the possibility of
an additional 12-month extension
without further rulemaking.10 Namely,
the recession that began in late 2007
continues to pressure local communities
across the country. The financial
distress has spread from large,
systemically important banks to banks
of all sizes, particularly in regions
suffering from ongoing economic
turmoil.11 Weaknesses facing
community banks have intensified as
the lingering consequences of the 2008
financial crisis and the resulting
recession place continued pressure on
earnings and asset quality. 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.12
With these factors in mind, as well as
the FDIC’s general concern 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 or negatively
affect IDI’s deposit franchise values, the
interim rule reflected several features
designed to continue to promote
confidence and stability in the banking
system and to monitor and minimize
risk of loss.13
In order to allow the majority of
participating IDIs to remain in the
program, the FDIC’s interim rule did not
increase fees for continued participation
in the extended TAG program.14 Rather,
the tiered-pricing assessment structure,
ranging from 15 to 25 basis points based
on an IDI’s deposit insurance
assessment risk category remains in
effect. However, the interim rule did
modify the basis for calculating the riskbased assessments from end-ofcalendar-quarter to average-dailyaccount-balance reporting.15
With respect to the treatment of NOW
accounts, the interim rule reduced the
permissible interest rate, from no higher
than 0.50 percent to no higher than 0.25
percent, for the NOW accounts covered
by the FDIC’s TAG guarantee in order to
better align the program with prevailing
market rates. It also required
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 the duration of
the program, if the Board further
extends the TAG program.16
In light of the regulatory
modifications to the existing TAG
program and in recognition that some
IDIs wished to discontinue participation
in the program, the interim rule
provided IDIs currently participating in
the TAG program with a one-time,
irrevocable opportunity to opt out of
this TAG extension by April 30, 2010.17
An additional 441 institutions took
advantage of this opt-out opportunity
and indicated their intent to exit the
program as of July 1, 2010. Under the
interim rule, 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 the duration of the program, if the
Board further extends the TAG program.
As to the disclosures required
regarding the extended TAG program,
the interim rule required IDIs that did
not opt out of the extension to update
their disclosures on or before May 20,
2010, to reflect the new termination date
for the extension.18 Under the interim
rule, those IDIs that chose to opt out of
the program similarly had to update
disclosures to reflect that they would no
longer be participating in the TAG
program and that deposits in
noninterest-bearing transaction accounts
would no longer be guaranteed in full
by the FDIC.19
The FDIC requested comment on the
interim rule, and the comment period
14 75
FR 20257, 20260 (April 19, 2010).
15 Id.
10 75
16 Id.
11 Id.
FR 20257, 20260–261 (April 19, 2010).
at 20258.
12 Id. at 20259.
13 Id. at 20260–261.
17 Id.
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at 20261.
18 Id.
19 Id.
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ended on May 19, 2010. A total of 10
comments were submitted by bankers,
trade groups, and Members of the U.S.
House of Representatives. The
comments are summarized below and
may be viewed in their entirety on the
FDIC’s Web site at https://www.fdic.gov/
regulations/laws/federal/.
IV. Comment Summary and Discussion
With one exception, commenters
generally supported the FDIC’s interim
rule extending the TAG program. They
cited the continued confidence and
stability that the TAG program instills
in customers as well as the ability for
banks to use the deposit base provided
by the TAG program to lend and
promote growth in their communities.
One commenter opposed to the
interim rule suggests, without providing
any supporting data, that, because
evidence shows the economy is
recovering, a further extension of the
TAG program is unwarranted and
would further cause participating IDIs to
postpone addressing their liquidity
positions. Although the FDIC agrees
there are many signs that the economy
is recovering, the recovery remains
fragile and is still threatened by weak
labor markets, household and business
uncertainty, and tight credit conditions.
The Final Rule extends the TAG
program in order to reduce the risk of
needless liquidity failures and increased
costs that might result if the TAG
program were not extended during this
still fragile economic period. In
addition, the Final Rule would maintain
an important source of liquidity for
participating IDIs to fund small business
lending, which will further contribute to
economic recovery. An orderly phaseout of the TAG program will be
appropriate once evidence points to a
more solid and sustained economic
recovery.
Further comments are detailed below
by subject.
Clarification of Possible Additional
Extension Period
As an initial matter, the FDIC notes
that some commenters viewed the
interim rule’s possible additional
extension beyond December 31, 2010, as
a term of ‘‘up to 12 months.’’ To provide
maximum flexibility in the event of a
more rapid resurgence of positive
economic conditions, the Final Rule
defines the ‘‘TAG expiration date’’ to
mean December 31, 2010, unless the
Board, for good cause, extends the
program for an additional period of time
not to exceed one year, in which case
the term ‘‘TAG expiration date’’ means
the last day of such additional period of
time. As with the interim rule, the Final
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Rule provides that the FDIC’s Board will
announce its decision regarding any
additional extension of the TAG
program no later than October 29, 2010.
At that time, if such a further extension
beyond December 31, 2010, is
warranted, the Board will announce the
TAG expiration date that will conclude
the TAG program.
Requests To Opt Into TAG Program/
Future Opt Out Provision
Three commenters requested that the
FDIC offer the opportunity to opt into
the TAG program to IDIs that had
previously opted out of the program.
Some commenters note that they had
opted out of the TAG program under the
premise that the program was temporary
in nature and that the increased
assessment basis would not justify the
cost of remaining in the program. All of
these commenters now cite the potential
for a competitive imbalance if similarly
situated IDIs are not permitted to opt
into the program. One commenter
suggests that IDIs that were healthy at
the time that they made their opt-out
decision be permitted to opt in to the
program.
After carefully considering these
comments, the FDIC has not provided
for opt-in opportunities in the Final
Rule. Primarily, as noted in the interim
rule, the extension of the TAG program
represents a continuation of the FDIC’s
action under the October 2008 systemic
risk determination to mitigate the
continuing adverse effects of the
financial crisis and recession.
Permitting non-participating IDIs to opt
back into the program would be
inconsistent with the FDIC’s previouslyannounced intent to conclude the
program. Further, the TAG extension
may terminate as soon as December 31,
2010, and only two institutions and one
trade group have indicated a desire to
opt in. At this stage of the TAG program,
the costs of establishing and
implementing systems to reinstate the
program for a few IDIs and the potential
for depositor confusion outweigh
arguments to the contrary.
In addition, if the Board decides that
an extension is warranted after
December 10, 2010, one commenter
believes that the FDIC should offer
another opportunity to opt out of the
TAG program. The commenter reasons
that a secondary extension would cause
IDIs to incur additional assessments.
However, the interim rule notified IDIs
that they would be obligated to remain
in the program (and pay any required
assessment) through December 31, 2010,
or for the duration of the program, if the
Board further extended the TAG
program. In making the decision to
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remain in the extended TAG program,
IDIs should have factored in the expense
of participating in the program for the
duration of the program. Moreover, the
interim rule provided for a secondary
extension of one year beyond December
31, 2010, until December 31, 2011. The
Final Rule provides for the possibility
that the program may be extended for a
period of less than one year beyond
December 31, 2010. If the Board
determines to extend the program for
less than one year beyond December 31,
2010, the costs of the extension
provided for in the Final Rule would be
less than those provided for in the
interim rule. Accordingly, the Final
Rule does not provide an additional opt
out opportunity.
Reduction of Interest Rate for TAGqualifying NOW Accounts
Some commenters expressed concern
regarding the reduction, from 0.50
percent to 0.25 percent, of the maximum
interest permissible for TAG-qualifying
NOW accounts provided for in the
interim rule. These commenters noted
that the interest rate reduction could
lead to decreased earnings on such
TAG-qualifying NOW accounts, and
may cause banks to divert funds to
pledge as collateral that might otherwise
be used to support lending. Further, a
commenter expressed concern that if the
TAG program is extended beyond
December 31, 2010, the 0.25 percent
maximum permissible interest rate for
TAG-qualifying accounts may not align
with future prevailing market rates.
Other commenters felt that the reduced
interest rate represented current market
rates in their regions, and did not
believe that such a reduction would
affect their earnings.
IDIs throughout the country
participate in the TAG program. In the
interim rule, the FDIC explained its
rationale for reducing the maximum
interest rate for TAG-qualifying NOW
accounts.20 Based on data provided by
RateWatch, the FDIC noted that the
nationwide average rates for regular
interest-bearing checking accounts
ranged from 0.12 percent to 0.15 percent
for most accounts, and from 0.26
percent to 0.29 percent for premium
accounts held by municipalities, school
districts, and other typical large
transaction account holders. In
providing for the interest rate reduction
on TAG-qualifying NOW accounts in
the interim rule, the FDIC sought to
align the interest rate with current
market rates and to ensure the program
is not used inappropriately by IDIs to
20 75
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Modification of the Reporting Basis for
the TAG Program
In order to monitor and assess fees
based on the ongoing risk exposure, the
interim rule modified the basis for
calculating risk-based assessments from
end-of-calendar-quarter to averagedaily-account-balance reporting. One
commenter suggested that the
modification is only appropriate for IDIs
that currently report their FDIC deposit
insurance assessments as the quarterly
average of daily closing balances
because of the significant cost
associated with altering general ledger
systems to meet this requirement for
potentially only two calendar quarters.
However, another commenter
representing community banks
expressly noted that even though this
change may create additional
administrative burdens on smaller IDIs,
the change ‘‘would more accurately
reflect the TAG amounts of these
fluctuating and volatile accounts.’’ 21
In the interim rule, the FDIC noted
that, of the institutions that use quarterend reporting for their deposit insurance
assessment base, fewer than 1,000
institutions report more than 25 TAGqualifying accounts. After carefully
considering this comment, the FDIC
continues to believe that the
modification in the assessment base for
such a limited universe of IDIs would
not create a significant burden that
would outweigh its responsibility to
accurately monitor the TAG program
and the associated risk of loss.
Increasing TAG Assessment Rate and
Assessing Non-Participating IDIs
One commenter suggested increasing
the tiered-pricing assessment for
participating IDIs in order to decrease
their reliance on the TAG Program.
However, the interim rule specifically
did not impose an increased TAG
assessment rate in order to keep the
21 Independent Community Banks of America,
May 19, 2010, Letter.
FR 20261.
Frm 00004
attract interest-sensitive deposits to
fund high-risk activities.
The FDIC has considered the
commenters’ concerns that the reduced
interest rate may not align with
prevailing rates by region or with future
interest rates, but has determined to
retain the 0.25 percent limit for
qualifying NOW accounts as
representative of the prevailing
nationwide interest rates for such
accounts at this time and for the
relatively short duration of the TAG
extension. The FDIC will continue to
monitor interest rates for TAGqualifying NOW accounts.
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program accessible to all participating
IDIs and to avoid further pressure on the
liquidity posture of those that
participate in the TAG program. The
FDIC remains committed to these goals;
consequently, as with the interim rule,
the Final Rule does not increase fees for
participation in the TAG program.
V. The Final Rule
For the reasons set forth in the
preceding section, the FDIC has issued
the Final Rule, with only one
modification. The change concerns the
length of any possible secondary
extension of the TAG program, should
the FDIC’s Board deem further
extensions necessary beyond December
31, 2010. The features of the Final Rule
are discussed below.
A. Extension of the TAG Program for
Participating IDIs
The Final Rule extends the TAG
program through December 31, 2010,
with the possibility of an additional
extension not to exceed December 31,
2011, without further rulemaking, at the
discretion of the Board upon a finding
of continued need for the TAG program.
If the Board determines that an
additional extension is warranted
beyond December 31, 2010, an
announcement to that effect will be
made by the FDIC no later than October
29, 2010.
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B. No Increased Fee for Continued
Participation in the Extended TAG
Program
As with the interim rule, the Final
Rule does not make any changes to the
existing tiered-pricing assessment,
ranging from 15 to 25 basis points based
on an institution’s deposit insurance
risk profile. As noted in the interim
rule, in order to prevent unanticipated
risk of loss, 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. Participating IDIs should not use
the extension period to aggressively
market or grow their TAG-related
accounts.
C. Change in Basis for Reporting
Assessment Purposes
The Final Rule provides that IDIs that
did not opt out of the TAG program will
be required to report their TAG amounts
as average daily balances in order to
enable the FDIC to monitor and assess
fees based upon the ongoing risk
exposure. Under the Final Rule,
beginning with the September 30, 2010,
report date for the Report of Condition
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or Thrift Financial Report, the total
dollar amount of TAG-qualifying
accounts and the total number of
accounts must be reported as an average
balance. The amounts to be reported as
daily averages are the total dollar
amounts of the noninterest-bearing
transaction accounts, as defined in 12
C.F.R. 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 IDI 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.
D. Treatment of NOW Accounts
Consistent with the interim rule, the
Final Rule provides that the interest rate
on NOW accounts that are eligible for
the FDIC’s guarantee may not exceed
0.25 percent. The 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 for the duration
of the program should the Board extend
it.
E. Opportunity to Opt Out
The interim rule provided IDIs
currently participating in the TAG
program with an opportunity to opt out
of this TAG extension by April 30, 2010,
and detailed the mechanism by which
an IDI was to provide the FDIC with
notice of its intent to opt out. The Final
Rule does not change this feature.
Accordingly, 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 the duration of a possible additional
extension if the Board determines such
extension is warranted.
V. Regulatory Analysis and Procedure
A. Administrative Procedure Act
The process of amending Part 370 by
means of this Final 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
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36509
553(d)(3) of the APA provides that the
publication of a rule shall be made not
less than 30 days before its effective
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, in publishing the interim rule,
the FDIC invoked the good cause
exception based on the furtherance of
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. (Nonetheless,
the FDIC solicited comments on the
interim rule, and has fully considered
the comments that were submitted.) For
similar reasons, the FDIC confirms that
the good cause exception, provided for
in section 553(b)(B) of the APA, applies
to the Final Rule.
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 date, except ‘‘as otherwise
provided by the agency for good cause
found and published with the rule.’’ For
reasons that supported its invocation of
the good cause exception to section
553(b)(B) of the APA, the FDIC relied
upon the good cause exception to
section 553(d)(3) and published the
interim rule with an immediate effective
date. For similar reasons, the FDIC
invokes the good cause exception
provided for in section 553(d)(3) of the
APA and provides for an immediate
effective date for this Final Rule.
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.22 For
the same reasons discussed above, the
FDIC finds that good cause exists for an
immediate effective date for the Final
Rule.
22 12
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C. Small Business Regulatory
Enforcement Fairness Act
F. Solicitation of Comments on Use of
Plain Language
The Office of Management and Budget
(OMB) has determined that the Final
Rule is not 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.
Section 722 of the Gramm-LeachBliley 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. No commenters suggested that the
interim rule was materially unclear, and
the FDIC believes that the Final Rule is
substantively similar to the interim rule.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (Pub.
L. 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.
erowe on DSK5CLS3C1PROD with RULES
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. The Interim Rule, by
extending the termination date for the
TAG Program, changed 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). Those burden
adjustments were submitted to OMB as
a request for a nonmaterial/
nonsubstantive change. This Final Rule
imposes no additional paperwork
burden; therefore, the previously
submitted burden estimates for the
Transaction Account Guarantee Program
Extension information collection require
no further adjustment.
Section 370.6(c)(5) of both the Interim
Rule and the Final Rule 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 was the subject of a
Federal Register notice published on
May 21, 2010 (75 FR 28612) by the FDIC
and the other bank regulatory agencies
as required by the Paperwork Reduction
Act.
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14:52 Jun 25, 2010
Jkt 220001
G. The Treasury and General
Government Appropriations Act, 1999—
Assessment of Federal Regulations and
Policies on Families
The FDIC has determined that the
Final Rule will not affect family wellbeing 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.
■ 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
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).
2. Amend section 370.2 by revising
paragraph (o) to read as follows:
■
§ 370.2
Definitions.
*
*
*
*
*
(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 beyond December
31, 2010 for an additional period of time
not to exceed one year, in which case
the term ‘‘TAG expiration date’’ means
the last day of such additional period of
time. 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
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
guarantee program for an additional
period of time will help mitigate or
resolve those conditions and
circumstances. If the Board decides to
extend the transaction account
guarantee program beyond December
31, 2010 for an additional period of
time, it will do so without further
rulemaking; however, the FDIC will
publish notice of any extension no later
than October 29, 2010. Participating
entities must update the disclosures
required by § 370.5(h)(5), as necessary,
to reflect the current TAG expiration
date, including any extension of such
date.
■ 3. Amend § 370.5 by revising
paragraph (h)(5) to read as follows:
§ 370.5
Participation.
*
*
*
*
*
(h) * * *
(5) Each insured depository
institution that offers noninterestbearing 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
§ 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 such other
date established by the Board as the TAG
expiration date pursuant to § 370.2(o),
whichever is applicable], all noninterestbearing 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
E:\FR\FM\28JNR1.SGM
28JNR1
Federal Register / Vol. 75, No. 123 / Monday, June 28, 2010 / Rules and Regulations
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
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.
*
*
*
*
*
Dated at Washington, DC, this 22nd day of
June, 2010.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2010–15497 Filed 6–25–10; 8:45 am]
BILLING CODE P
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 734, 738, 740, 742, 772,
and 774
[Docket No. 090126064–0122–01]
RIN 0694–AE56
Revisions to the Export Administration
Regulations Based Upon a Systematic
Review of the Commerce Control List:
Additional Changes
erowe on DSK5CLS3C1PROD with RULES
AGENCY: Bureau of Industry and
Security, Commerce.
ACTION: Final rule.
SUMMARY: This rule amends the Export
Administration Regulations (EAR) to
make revisions to the EAR as a result of
a systematic review of the Commerce
Control List (CCL) that was conducted
by the Bureau of Industry and Security
(BIS). This rule is the third phase of the
regulatory implementation of the results
of a review of the CCL that was
conducted by BIS starting in 2007. The
BIS CCL review benefited from input
received from BIS’s Technical Advisory
Committees (TACs) and comments that
were received from the interested public
VerDate Mar<15>2010
14:52 Jun 25, 2010
Jkt 220001
in response to the publication of a BIS
notice of inquiry on July 17, 2007.
The revisions in this rule include
clarifications to existing controls;
eliminating redundant or outdated
controls; and establishing more focused
and rationalized controls. This rule also
makes CCL related changes to other
parts of the EAR, including CCL related
definitions and license exceptions.
DATES: This rule is effective: June 28,
2010. Although there is no formal
comment period, public comments on
this regulation are welcome on a
continuing basis.
ADDRESSES: You may submit comments,
identified by RIN 0694–AE56, by any of
the following methods:
E-mail: publiccomments@bis.doc.gov.
Include ‘‘RIN 0694–AE56’’ in the subject
line of the message.
Fax: (202) 482–3355. Please alert the
Regulatory Policy Division, by calling
(202) 482–2440, if you are faxing
comments.
Mail or Hand Delivery/Courier:
Timothy Mooney, U.S. Department of
Commerce, Bureau of Industry and
Security, Regulatory Policy Division,
14th St. & Pennsylvania Avenue, NW.,
Room 2705, Washington, DC 20230,
Attn: RIN 0694–AE56.
Send comments regarding the
collection of information associated
with this rule, including suggestions for
reducing the burden, to Jasmeet K.
Seehra, Office of Management and
Budget (OMB), by e-mail to
Jasmeet_K._Seehra@omb.eop.gov, or by
fax to (202) 395–7285; and to the
Regulatory Policy Division, Bureau of
Industry and Security, Department of
Commerce, 14th St. & Pennsylvania
Avenue, NW., Room 2705, Washington,
DC 20230. Comments on this collection
of information should be submitted
separately from comments on the final
rule (i.e., RIN 0694–AE56)—all
comments on the latter should be
submitted by one of the three methods
outlined above.
FOR FURTHER INFORMATION CONTACT:
Timothy Mooney, Office of Exporter
Services, Bureau of Industry and
Security, U.S. Department of Commerce;
by telephone: (202) 482–2440; or by fax:
(202) 482–3355.
SUPPLEMENTARY INFORMATION:
Background
This rule amends the EAR to make
various revisions as a result of a
systematic review of the Commerce
Control List (CCL) that was conducted
by BIS. This rule is the third phase of
the regulatory implementation of the
results of that systematic review of the
CCL that was conducted by BIS
PO 00000
Frm 00007
Fmt 4700
Sfmt 4700
36511
beginning in 2007. The CCL review
benefited from input received from
BIS’s Technical Advisory Committees
(TACs) and public comments received
in response to a notice of inquiry (July
17, 2007, 72 FR 39052).
On April 18, 2008, BIS published the
first phase of the regulatory
implementation of the CCL review in a
rule titled, ‘‘Technical Corrections to the
Export Administration Regulations
based upon a Systematic Review of the
CCL’’ (73 FR 21035). The first CCL
review rule made needed technical
corrections and clarifications to the
CCL. The second CCL review rule made
substantive revisions to the EAR,
including the CCL (October 6, 2008, 73
FR 58033).
The revisions to the CCL in this third
CCL review rule are divided into three
types of revisions: (I) Clarifications to
Existing Controls; (II) Eliminating
Redundant or Outdated Controls; and
(III) Establishing More Focused and
Rationalized Controls. The changes in
this third CCL review rule are typically
additional changes from the 2007
review that required further U.S.
Government review and/or interagency
discussions before they could be
implemented. This rule also makes
certain revisions to other parts of the
EAR related to the CCL that were
recommended during the 2007 CCL
review.
As a part of the implementation phase
of the CCL review, BIS has also taken
other non-regulatory actions to improve
the public’s understanding of the CCL.
These actions have involved publishing
certain advisory opinions and creating
new web guidance to provide greater
clarity to exporters and reexporters
regarding existing provisions of the
CCL. BIS has also created a new process
whereby it has stated its intention to
conduct similar types of systematic
reviews of the CCL in the future in order
to continuously improve the CCL.
This rule makes the following
revisions to the Export Administration
Regulations (EAR):
In § 734.4(b)(1), this rule adds
paragraph (a)(9) of ECCN 5A002 to the
list of 5A002 classified commodities
that are subject to the special de
minimis requirements for certain
encryption items. ECCN 5A002.a.9 is
controlled for Encryption Items (EI)
reasons, so it should be included in
paragraph (b)(1) because that paragraph
is intended to include all of the ‘‘items’’
paragraphs of 5A002 that are controlled
for EI reasons.
In § 734.4 (De minimis U.S. content)
paragraph (a)(4) and § 742.14
(Significant items: hot section
technology for the development,
E:\FR\FM\28JNR1.SGM
28JNR1
]]>Agencies
[Federal Register Volume 75, Number 123 (Monday, June 28, 2010)]
[Rules and Regulations]
[Pages 36506-36511]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-15497]
=======================================================================
-----------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 370
RIN 3064-AD37
Final Rule Regarding Amendment of the Temporary Liquidity
Guarantee Program To Extend the Transaction Account Guarantee Program
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The FDIC is issuing a Final Rule extending the Transaction
Account Guarantee (TAG) component of the Temporary Liquidity Guarantee
Program (TLGP) through December 31, 2010, for insured depository
institutions (IDIs) currently participating in the TAG program, with
the possibility of an additional extension of up to 12 months without
additional rulemaking, upon a determination by the FDIC's Board of
Directors (Board) that continuing economic difficulties warrant further
extension.
The Final Rule differs only slightly from the interim rule that
preceded it. The interim rule provided for the possibility of a further
extension of the TAG program until December 31, 2011, without
additional rulemaking, should the FDIC's Board determine that economic
conditions warrant a further extension of the program. The Final Rule
provides that, under appropriate economic conditions, the Board may
further extend the TAG program for a period of time not to exceed
December 31, 2011. Like the interim rule, the Final Rule modifies the
assessment basis for calculating the assessment rate for an IDI's
continued participation in the TAG to the average daily balances in the
TAG-related accounts, but makes no changes to the assessment rate
itself. Further, as in the interim rule the Final Rule requires IDIs
that are participating in the TAG program and 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: Effective June 28, 2010.
FOR FURTHER INFORMATION CONTACT: A. Ann Johnson, Counsel, Legal
Division, (202) 898-3573 or aajohnson@fdic.gov; Robert C. Fick,
Supervisory 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 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
The FDIC's October 2008 interim rule provided the blueprint for the
TLGP.\2\ The TLGP comprises two distinct components: The Debt Guarantee
Program, 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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.\3\ 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.
---------------------------------------------------------------------------
\3\ 73 FR 64182-64183.
---------------------------------------------------------------------------
As part of its rulemaking process, the FDIC in November 2008
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
the interest rate at a level no higher than 0.50 percent through
December 31, 2009.\4\
---------------------------------------------------------------------------
\4\ 73 FR 72244, 72262 (Nov. 26, 2008).
---------------------------------------------------------------------------
The TAG program was originally set to expire on December 31,
2009.\5\ 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,\6\ the FDIC issued a final rule that
extended the TAG program through June 30, 2010.\7\
---------------------------------------------------------------------------
\5\ 73 FR 64179, 64182 (Oct. 29, 2008).
\6\ 74 FR 31217 (June 30, 2009).
\7\ 74 FR 45093 (Sept. 1, 2009).
---------------------------------------------------------------------------
The initial TAG extension included an increased assessment rate
designed to offset the potential losses associated with the FDIC's
guarantee. 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.\8\ 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.\9\
---------------------------------------------------------------------------
\8\ Id.
\9\ 74 FR 45098.
---------------------------------------------------------------------------
Since its inception, the TAG program has been an important source
of stability for many banks with large transaction account balances.
Currently, over 6,300 insured depository institutions, representing
approximately 80 percent of all IDIs, continue to participate in the
[[Page 36507]]
TAG program and to benefit from the guarantee provided by the FDIC.
These institutions held an estimated $356 billion of deposits in
accounts currently subject to the FDIC's guarantee as of March 31,
2010. Of these, $280 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 $1.04 million. About 509 institutions rely on TAG accounts to
fund 10 percent or more of their assets.
II. Interim Rule
While the immediate financial crisis that led to the creation of
the TLGP in October 2008 has abated, several economic factors led the
FDIC's Board to authorize publication in the Federal Register of an
interim rule to amend the TLGP to provide for a six month extension,
until December 31, 2010, of the TAG Program, with the possibility of an
additional 12-month extension without further rulemaking.\10\ Namely,
the recession that began in late 2007 continues to pressure local
communities across the country. The financial distress has spread from
large, systemically important banks to banks of all sizes, particularly
in regions suffering from ongoing economic turmoil.\11\ Weaknesses
facing community banks have intensified as the lingering consequences
of the 2008 financial crisis and the resulting recession place
continued pressure on earnings and asset quality. 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.\12\
---------------------------------------------------------------------------
\10\ 75 FR 20257, 20260-261 (April 19, 2010).
\11\ Id. at 20258.
\12\ Id. at 20259.
---------------------------------------------------------------------------
With these factors in mind, as well as the FDIC's general concern
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 or negatively affect IDI's deposit franchise values,
the interim rule reflected several features designed to continue to
promote confidence and stability in the banking system and to monitor
and minimize risk of loss.\13\
---------------------------------------------------------------------------
\13\ Id. at 20260-261.
---------------------------------------------------------------------------
In order to allow the majority of participating IDIs to remain in
the program, the FDIC's interim rule did not increase fees for
continued participation in the extended TAG program.\14\ Rather, the
tiered-pricing assessment structure, ranging from 15 to 25 basis points
based on an IDI's deposit insurance assessment risk category remains in
effect. However, the interim rule did modify the basis for calculating
the risk-based assessments from end-of-calendar-quarter to average-
daily-account-balance reporting.\15\
---------------------------------------------------------------------------
\14\ 75 FR 20257, 20260 (April 19, 2010).
\15\ Id.
---------------------------------------------------------------------------
With respect to the treatment of NOW accounts, the interim rule
reduced the permissible interest rate, from no higher than 0.50 percent
to no higher than 0.25 percent, for the NOW accounts covered by the
FDIC's TAG guarantee in order to better align the program with
prevailing market rates. It also required 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 the duration of the program, if
the Board further extends the TAG program.\16\
---------------------------------------------------------------------------
\16\ Id. at 20261.
---------------------------------------------------------------------------
In light of the regulatory modifications to the existing TAG
program and in recognition that some IDIs wished to discontinue
participation in the program, the interim rule provided IDIs currently
participating in the TAG program with a one-time, irrevocable
opportunity to opt out of this TAG extension by April 30, 2010.\17\ An
additional 441 institutions took advantage of this opt-out opportunity
and indicated their intent to exit the program as of July 1, 2010.
Under the interim rule, 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 the duration of the program, if the Board
further extends the TAG program.
---------------------------------------------------------------------------
\17\ Id.
---------------------------------------------------------------------------
As to the disclosures required regarding the extended TAG program,
the interim rule required IDIs that did not opt out of the extension to
update their disclosures on or before May 20, 2010, to reflect the new
termination date for the extension.\18\ Under the interim rule, those
IDIs that chose to opt out of the program similarly had to update
disclosures to reflect that they would no longer be participating in
the TAG program and that deposits in noninterest-bearing transaction
accounts would no longer be guaranteed in full by the FDIC.\19\
---------------------------------------------------------------------------
\18\ Id.
\19\ Id.
---------------------------------------------------------------------------
The FDIC requested comment on the interim rule, and the comment
period ended on May 19, 2010. A total of 10 comments were submitted by
bankers, trade groups, and Members of the U.S. House of
Representatives. The comments are summarized below and may be viewed in
their entirety on the FDIC's Web site at https://www.fdic.gov/regulations/laws/federal/.
IV. Comment Summary and Discussion
With one exception, commenters generally supported the FDIC's
interim rule extending the TAG program. They cited the continued
confidence and stability that the TAG program instills in customers as
well as the ability for banks to use the deposit base provided by the
TAG program to lend and promote growth in their communities.
One commenter opposed to the interim rule suggests, without
providing any supporting data, that, because evidence shows the economy
is recovering, a further extension of the TAG program is unwarranted
and would further cause participating IDIs to postpone addressing their
liquidity positions. Although the FDIC agrees there are many signs that
the economy is recovering, the recovery remains fragile and is still
threatened by weak labor markets, household and business uncertainty,
and tight credit conditions. The Final Rule extends the TAG program in
order to reduce the risk of needless liquidity failures and increased
costs that might result if the TAG program were not extended during
this still fragile economic period. In addition, the Final Rule would
maintain an important source of liquidity for participating IDIs to
fund small business lending, which will further contribute to economic
recovery. An orderly phase-out of the TAG program will be appropriate
once evidence points to a more solid and sustained economic recovery.
Further comments are detailed below by subject.
Clarification of Possible Additional Extension Period
As an initial matter, the FDIC notes that some commenters viewed
the interim rule's possible additional extension beyond December 31,
2010, as a term of ``up to 12 months.'' To provide maximum flexibility
in the event of a more rapid resurgence of positive economic
conditions, the Final Rule defines the ``TAG expiration date'' to mean
December 31, 2010, unless the Board, for good cause, extends the
program for an additional period of time not to exceed one year, in
which case the term ``TAG expiration date'' means the last day of such
additional period of time. As with the interim rule, the Final
[[Page 36508]]
Rule provides that the FDIC's Board will announce its decision
regarding any additional extension of the TAG program no later than
October 29, 2010. At that time, if such a further extension beyond
December 31, 2010, is warranted, the Board will announce the TAG
expiration date that will conclude the TAG program.
Requests To Opt Into TAG Program/Future Opt Out Provision
Three commenters requested that the FDIC offer the opportunity to
opt into the TAG program to IDIs that had previously opted out of the
program. Some commenters note that they had opted out of the TAG
program under the premise that the program was temporary in nature and
that the increased assessment basis would not justify the cost of
remaining in the program. All of these commenters now cite the
potential for a competitive imbalance if similarly situated IDIs are
not permitted to opt into the program. One commenter suggests that IDIs
that were healthy at the time that they made their opt-out decision be
permitted to opt in to the program.
After carefully considering these comments, the FDIC has not
provided for opt-in opportunities in the Final Rule. Primarily, as
noted in the interim rule, the extension of the TAG program represents
a continuation of the FDIC's action under the October 2008 systemic
risk determination to mitigate the continuing adverse effects of the
financial crisis and recession. Permitting non-participating IDIs to
opt back into the program would be inconsistent with the FDIC's
previously-announced intent to conclude the program. Further, the TAG
extension may terminate as soon as December 31, 2010, and only two
institutions and one trade group have indicated a desire to opt in. At
this stage of the TAG program, the costs of establishing and
implementing systems to reinstate the program for a few IDIs and the
potential for depositor confusion outweigh arguments to the contrary.
In addition, if the Board decides that an extension is warranted
after December 10, 2010, one commenter believes that the FDIC should
offer another opportunity to opt out of the TAG program. The commenter
reasons that a secondary extension would cause IDIs to incur additional
assessments. However, the interim rule notified IDIs that they would be
obligated to remain in the program (and pay any required assessment)
through December 31, 2010, or for the duration of the program, if the
Board further extended the TAG program. In making the decision to
remain in the extended TAG program, IDIs should have factored in the
expense of participating in the program for the duration of the
program. Moreover, the interim rule provided for a secondary extension
of one year beyond December 31, 2010, until December 31, 2011. The
Final Rule provides for the possibility that the program may be
extended for a period of less than one year beyond December 31, 2010.
If the Board determines to extend the program for less than one year
beyond December 31, 2010, the costs of the extension provided for in
the Final Rule would be less than those provided for in the interim
rule. Accordingly, the Final Rule does not provide an additional opt
out opportunity.
Reduction of Interest Rate for TAG-qualifying NOW Accounts
Some commenters expressed concern regarding the reduction, from
0.50 percent to 0.25 percent, of the maximum interest permissible for
TAG-qualifying NOW accounts provided for in the interim rule. These
commenters noted that the interest rate reduction could lead to
decreased earnings on such TAG-qualifying NOW accounts, and may cause
banks to divert funds to pledge as collateral that might otherwise be
used to support lending. Further, a commenter expressed concern that if
the TAG program is extended beyond December 31, 2010, the 0.25 percent
maximum permissible interest rate for TAG-qualifying accounts may not
align with future prevailing market rates. Other commenters felt that
the reduced interest rate represented current market rates in their
regions, and did not believe that such a reduction would affect their
earnings.
IDIs throughout the country participate in the TAG program. In the
interim rule, the FDIC explained its rationale for reducing the maximum
interest rate for TAG-qualifying NOW accounts.\20\ Based on data
provided by RateWatch, the FDIC noted that the nationwide average rates
for regular interest-bearing checking accounts ranged from 0.12 percent
to 0.15 percent for most accounts, and from 0.26 percent to 0.29
percent for premium accounts held by municipalities, school districts,
and other typical large transaction account holders. In providing for
the interest rate reduction on TAG-qualifying NOW accounts in the
interim rule, the FDIC sought to align the interest rate with current
market rates and to ensure the program is not used inappropriately by
IDIs to attract interest-sensitive deposits to fund high-risk
activities.
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\20\ 75 FR 20261.
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The FDIC has considered the commenters' concerns that the reduced
interest rate may not align with prevailing rates by region or with
future interest rates, but has determined to retain the 0.25 percent
limit for qualifying NOW accounts as representative of the prevailing
nationwide interest rates for such accounts at this time and for the
relatively short duration of the TAG extension. The FDIC will continue
to monitor interest rates for TAG-qualifying NOW accounts.
Modification of the Reporting Basis for the TAG Program
In order to monitor and assess fees based on the ongoing risk
exposure, the interim rule modified the basis for calculating risk-
based assessments from end-of-calendar-quarter to average-daily-
account-balance reporting. One commenter suggested that the
modification is only appropriate for IDIs that currently report their
FDIC deposit insurance assessments as the quarterly average of daily
closing balances because of the significant cost associated with
altering general ledger systems to meet this requirement for
potentially only two calendar quarters. However, another commenter
representing community banks expressly noted that even though this
change may create additional administrative burdens on smaller IDIs,
the change ``would more accurately reflect the TAG amounts of these
fluctuating and volatile accounts.'' \21\
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\21\ Independent Community Banks of America, May 19, 2010,
Letter.
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In the interim rule, the FDIC noted that, of the institutions that
use quarter-end reporting for their deposit insurance assessment base,
fewer than 1,000 institutions report more than 25 TAG-qualifying
accounts. After carefully considering this comment, the FDIC continues
to believe that the modification in the assessment base for such a
limited universe of IDIs would not create a significant burden that
would outweigh its responsibility to accurately monitor the TAG program
and the associated risk of loss.
Increasing TAG Assessment Rate and Assessing Non-Participating IDIs
One commenter suggested increasing the tiered-pricing assessment
for participating IDIs in order to decrease their reliance on the TAG
Program. However, the interim rule specifically did not impose an
increased TAG assessment rate in order to keep the
[[Page 36509]]
program accessible to all participating IDIs and to avoid further
pressure on the liquidity posture of those that participate in the TAG
program. The FDIC remains committed to these goals; consequently, as
with the interim rule, the Final Rule does not increase fees for
participation in the TAG program.
V. The Final Rule
For the reasons set forth in the preceding section, the FDIC has
issued the Final Rule, with only one modification. The change concerns
the length of any possible secondary extension of the TAG program,
should the FDIC's Board deem further extensions necessary beyond
December 31, 2010. The features of the Final Rule are discussed below.
A. Extension of the TAG Program for Participating IDIs
The Final Rule extends the TAG program through December 31, 2010,
with the possibility of an additional extension not to exceed December
31, 2011, without further rulemaking, at the discretion of the Board
upon a finding of continued need for the TAG program. If the Board
determines that an additional extension is warranted beyond December
31, 2010, an announcement to that effect will be made by the FDIC no
later than October 29, 2010.
B. No Increased Fee for Continued Participation in the Extended TAG
Program
As with the interim rule, the Final Rule does not make any changes
to the existing tiered-pricing assessment, ranging from 15 to 25 basis
points based on an institution's deposit insurance risk profile. As
noted in the interim rule, in order to prevent unanticipated risk of
loss, 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. Participating IDIs should not use the extension period
to aggressively market or grow their TAG-related accounts.
C. Change in Basis for Reporting Assessment Purposes
The Final Rule provides that IDIs that did not opt out of the TAG
program will be required to report their TAG amounts as average daily
balances in order to enable the FDIC to monitor and assess fees based
upon the ongoing risk exposure. Under the Final 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 balance. The amounts to be reported as daily averages are the
total dollar amounts of the noninterest-bearing transaction accounts,
as defined in 12 C.F.R. 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 IDI 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.
D. Treatment of NOW Accounts
Consistent with the interim rule, the Final Rule provides that the
interest rate on NOW accounts that are eligible for the FDIC's
guarantee may not exceed 0.25 percent. The 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 for
the duration of the program should the Board extend it.
E. Opportunity to Opt Out
The interim rule provided IDIs currently participating in the TAG
program with an opportunity to opt out of this TAG extension by April
30, 2010, and detailed the mechanism by which an IDI was to provide the
FDIC with notice of its intent to opt out. The Final Rule does not
change this feature. Accordingly, 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 the duration of a possible
additional extension if the Board determines such extension is
warranted.
V. Regulatory Analysis and Procedure
A. Administrative Procedure Act
The process of amending Part 370 by means of this Final 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
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, in publishing the
interim rule, the FDIC invoked the good cause exception based on the
furtherance of 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. (Nonetheless, the FDIC solicited
comments on the interim rule, and has fully considered the comments
that were submitted.) For similar reasons, the FDIC confirms that the
good cause exception, provided for in section 553(b)(B) of the APA,
applies to the Final Rule.
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 date,
except ``as otherwise provided by the agency for good cause found and
published with the rule.'' For reasons that supported its invocation of
the good cause exception to section 553(b)(B) of the APA, the FDIC
relied upon the good cause exception to section 553(d)(3) and published
the interim rule with an immediate effective date. For similar reasons,
the FDIC invokes the good cause exception provided for in section
553(d)(3) of the APA and provides for an immediate effective date for
this Final Rule.
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.\22\ For the same reasons discussed above, the FDIC finds
that good cause exists for an immediate effective date for the Final
Rule.
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\22\ 12 U.S.C. 4802.
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[[Page 36510]]
C. Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget (OMB) has determined that the
Final Rule is not 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.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (Pub. L. 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. The Interim Rule, by
extending the termination date for the TAG Program, changed 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). Those burden adjustments were submitted to OMB as a
request for a nonmaterial/nonsubstantive change. This Final Rule
imposes no additional paperwork burden; therefore, the previously
submitted burden estimates for the Transaction Account Guarantee
Program Extension information collection require no further adjustment.
Section 370.6(c)(5) of both the Interim Rule and the Final Rule
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 was the
subject of a Federal Register notice published on May 21, 2010 (75 FR
28612) by the FDIC and the other bank regulatory agencies as required
by the Paperwork Reduction Act.
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. No commenters suggested that the interim rule was
materially unclear, and the FDIC believes that the Final Rule is
substantively similar to the interim rule.
G. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The FDIC has determined that the Final 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 section 370.2 by revising paragraph (o) to read as follows:
Sec. 370.2 Definitions.
* * * * *
(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 beyond December 31, 2010 for an additional period of time not
to exceed one year, in which case the term ``TAG expiration date''
means the last day of such additional period of time. 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 period of time
will help mitigate or resolve those conditions and circumstances. If
the Board decides to extend the transaction account guarantee program
beyond December 31, 2010 for an additional period of time, it will do
so without further rulemaking; however, the FDIC will publish notice of
any extension no later than October 29, 2010. Participating entities
must update the disclosures required by Sec. 370.5(h)(5), as
necessary, to reflect the current TAG expiration date, including any
extension of such date.
0
3. Amend Sec. 370.5 by revising paragraph (h)(5) to read as follows:
Sec. 370.5 Participation.
* * * * *
(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 such other date established by the Board
as the TAG expiration date pursuant to Sec. 370.2(o), 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
[[Page 36511]]
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 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.
* * * * *
Dated at Washington, DC, this 22nd day of June, 2010.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2010-15497 Filed 6-25-10; 8:45 am]
BILLING CODE P
