Deposit Insurance Regulations; Unlimited Coverage for Noninterest-Bearing Transaction Accounts; Inclusion of Interest on Lawyers Trust Accounts, 4813-4816 [2011-1732]
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Federal Register / Vol. 76, No. 18 / Thursday, January 27, 2011 / Rules and Regulations
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Form NIFA–2009.
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NIFA.
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Assistant Director.
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agencies (reimbursable funds).
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59a. Amend § 3430.2 by:
a. Revising the definitions of
Cooperative agreement, Non-citizen
national of the United States, Program
announcement, and Program Officer;
■ b. Removing the definition of
Administrator; and
■ c. Adding a definition of Director in
alphabetical order to read as follows:
■
■
§ 3430.2
Definitions.
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Cooperative agreement means the
award by the Authorized Departmental
Officer of funds to an eligible awardee
to assist in meeting the costs of
conducting for the benefit of the public,
an identified project which is intended
and designed to accomplish the purpose
of the program as identified in the
program solicitation or RFA, and where
substantial involvement is expected
between NIFA and the awardee when
carrying out the activity contemplated
in the agreement.
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Director means the Director of NIFA
and any other officer or employee of
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NIFA to whom the authority involved is
delegated.
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Non-citizen national of the United
States means the award by the
Authorized Departmental Officer of
funds to an eligible awardee to assist in
meeting the costs of conducting for the
benefit of the public, an identified
project which is intended and designed
to accomplish the purpose of the
program as identified in the program
solicitation or RFA, and where
substantial involvement is expected
between NIFA and the awardee when
carrying out the activity contemplated
in the agreement.
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Program announcement (PA) means a
detailed description of the RFA without
the associated application package(s).
NIFA will not solicit or accept
applications in response to a PA.
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Program Officer means a NIFA
individual (often referred to as a
National Program Leader) who is
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responsible for the technical oversight
of the award on behalf of the
Department.
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Done in Washington, DC, on January 3,
2011.
Thomas J. Vilsack,
Secretary of Agriculture.
[FR Doc. 2011–1701 Filed 1–26–11; 8:45 am]
BILLING CODE 3410–22–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 330
RIN 3064–AD37
Deposit Insurance Regulations;
Unlimited Coverage for NoninterestBearing Transaction Accounts;
Inclusion of Interest on Lawyers Trust
Accounts
Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
AGENCY:
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4814
Federal Register / Vol. 76, No. 18 / Thursday, January 27, 2011 / Rules and Regulations
The FDIC is adopting a final
rule amending its deposit insurance
regulations to implement an amendment
to section 11(a)(1)(B)(iii) of the Federal
Deposit Insurance Act (FDI Act), as
added by section 343 of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (Pub. L. 111–203), that
includes Interest on Lawyers Trust
Accounts (‘‘IOLTAs’’) in the definition of
‘‘noninterest-bearing transaction
account’’ for purposes of providing
unlimited deposit insurance for such
accounts for two years starting
December 31, 2010.
DATES: Effective Date: The final rule is
effective January 27, 2011.
FOR FURTHER INFORMATION CONTACT:
Joseph A. DiNuzzo, Supervisory
Counsel, Legal Division (202) 898–7349
or jdinuzzo@fdic.gov; William
Piervincenzi, Attorney, Legal Division
(202) 898–6957 or
wpiervincenzi@fdic.gov; or James V.
Deveney, Chief, Deposit Insurance
Section, Division of Supervision and
Consumer Protection (202) 898–6687 or
jdeveney@fdic.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Background
On November 15, 2010, the FDIC
published a final rule (‘‘November final
rule’’) 1 to implement section 343 of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (‘‘Section
343’’).2 Section 343 amended the deposit
insurance provisions of the FDI Act (12
U.S.C. 1821(a)(1)) to provide temporary
separate insurance coverage for
noninterest-bearing transaction
accounts. The November final rule
followed the definition of noninterestbearing transaction account in Section
343. Section 343 defined a noninterestbearing transaction account as ‘‘a
deposit or account maintained at an
insured depository institution with
respect to which interest is neither
accrued nor paid; on which the
depositor or account holder is permitted
to make withdrawals by negotiable or
transferable instrument, payment orders
of withdrawal, telephone or other
electronic media transfers, or other
similar items for the purpose of making
payments or transfers to third parties or
others; and on which the insured
depository institution does not reserve
the right to require advance notice of an
intended withdrawal.’’
In the November final rule, the FDIC
noted that, unlike the definition of
noninterest-bearing transaction account
in the FDIC’s Transaction Account
1 75
FR 69577 (Nov. 15, 2010).
Law 111–203 (July 21, 2010).
2 Public
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Guarantee Program (‘‘TAGP’’), the
Section 343 definition did not include
NOW accounts (regardless of the
interest rate paid on the account) or
IOLTAs. Therefore, neither NOW
accounts nor IOLTAs were within the
November final rule’s definition of
noninterest-bearing transaction account.
The November final rule included
disclosure and notice requirements as
part of the implementation of Section
343. These included, among other
requirements, the requirements that: (1)
Insured depository institutions (‘‘IDIs’’)
post a prescribed notice in their main
office, at each branch and, if applicable,
on their Web site that indicated that
noninterest-bearing transactions
accounts do not include NOW accounts
or IOLTAs; and (2) IDIs then
participating in the TAGP notify NOW
account and IOLTA depositors that,
beginning January 1, 2011, those
accounts no longer will be eligible for
unlimited protection but would be
insured under the general deposit
insurance rules.
On December 29, 2010, the President
signed an act (the ‘‘Act’’) that amended
the definition of noninterest-bearing
transaction account in Section
11(a)(1)(B)(iii) of the FDI Act. The Act
replaced the Section 343 definition with
one that explicitly includes IOLTAs.
Section 11(a)(1)(B)(iii), as amended,
defines the term noninterest-bearing
transaction account as ‘‘a deposit or
account maintained at an insured
depository institution with respect to
which interest is neither accrued nor
paid; on which the depositor or account
holder is permitted to make
withdrawals by negotiable or
transferable instrument, payment orders
of withdrawal, telephone or other
electronic media transfers, or other
similar items for the purpose of making
payments or transfers to third parties or
others; and on which the insured
depository institution does not reserve
the right to require advance notice of an
intended withdrawal; and a trust
account established by an attorney or
law firm on behalf of a client,
commonly known as an Interest on
Lawyers Trust Account, or a
functionally equivalent account, as
determined by the Corporation.’’
II. The Final Rule
This final rule is in the form of a
technical amendment that generally
leaves intact the notice requirements of
the November final rule, but amends the
prescribed notice required by 12 CFR
330.16(c)(1). IDIs must post the revised
notice no later than February 28, 2011.
Also, this final rule eliminates the
requirement that IDIs participating in
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the TAGP as of December 31, 2010
notify IOLTA depositors that, beginning
January 1, 2011, IOLTAs will no longer
will be eligible for unlimited protection.
As indicated in informal guidance the
FDIC has provided to the industry,3 IDIs
that already have sent the notice
required in the November final rule to
IOLTA depositors are encouraged, but
not required, to send a revised notice to
such IOLTA depositors that their funds
will be fully insured from December 31,
2010 through December 31, 2012.
III. Administrative Procedure Act
The FDIC invokes the good cause
exception to the requirement in the
Administrative Procedure Act (‘‘APA’’) 4
that, before a rulemaking can be
finalized, it must first be issued for
public comment. The FDIC believes that
good cause exists for issuing a final rule
without providing an opportunity for
comment because seeking public
comment is ‘‘unnecessary,’’
‘‘impracticable,’’ and ‘‘contrary to the
public interest’’ under these
circumstances.5
The Act, signed into law on December
29, 2010, revises Section 11(a)(1)(B) of
the Federal Deposit Insurance Act 6 to
include IOLTAs within the definition of
noninterest-bearing transaction account
for purposes of providing IOLTAs with
temporary unlimited deposit insurance
coverage. This amendment is effective
December 31, 2010, to coincide with the
amendment to the FDI Act providing
temporary unlimited deposit insurance
coverage to noninterest-bearing
transaction accounts generally, as
required by Section 343. This final rule
amends the FDIC’s deposit insurance
regulations to reflect this change made
by Congress; none of the other
regulations affecting the calculation of
deposit insurance are changed by the
final rule. Additionally, the final rule
revises the prescribed notice to reflect
that IOLTAs are not excluded from the
separate deposit insurance coverage for
noninterest-bearing accounts enacted by
Congress; this change in the prescribed
notice is meant to allow institutions to
post the updated prescribed notice
immediately so that depositors will be
aware of this change in deposit
insurance coverage. Finally, the final
rule eliminates the requirement that IDIs
participating in the TAGP notify IOLTA
holders that, as of January 1, 2011, such
3 See FIL–2–2011 (Jan. 21, 2011); See also:
https://www.fdic.gov/deposit/deposits/
changes2.html.
4 5 U.S.C. 553.
5 5 U.S.C. 553(b)(3)(B).
6 12 U.S.C. 1821(a)(1)(B).
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Federal Register / Vol. 76, No. 18 / Thursday, January 27, 2011 / Rules and Regulations
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accounts no longer will be eligible for
unlimited protection.
Because the final rule involves mere
technical amendments that conform the
FDIC’s definition of noninterest-bearing
transaction account to the language of
the revised statute, revise the prescribed
notice to indicate this change in deposit
insurance coverage, and reduce the
number of required notifications, the
FDIC finds that notice and comment
procedures are ‘‘unnecessary,’’ and the
good cause exception to the APA’s
notice-and-comment requirement
applies. See, e.g., Gray Panthers
Advocacy Comm. v. Sullivan, 936 F.2d
1284, 1290–92 (DC Cir. 1991)
(regulations that ‘‘either restate or
paraphrase the detailed requirements’’ of
a self-executing statute do not require
notice and comment); Nat’l Customs
Brokers & Forwarders Ass’n v. United
States, 59 F.3d 1219, 1223–24 (Fed. Cir.
1995) (notice and comment unnecessary
where Congress directed agency to
change regulations and public would
benefit from amendments).
Additionally, staff believes that a
finding of good cause is warranted
because it would be ‘‘impracticable’’ and
‘‘contrary to the public interest’’ to delay
revising the disclosure requirements to
seek public comment on the revision.
Because the amendment to the
definition of noninterest-bearing
transaction account was effective two
days after enactment of the December 29
Act, it is in the public interest for the
Corporation to take immediate steps to
make depositors aware of this change in
deposit insurance coverage. A delay in
distribution of required notices and
prescribed lobby disclosures would be
detrimental to this goal, and therefore,
complying with formal notice and
comment procedures would be
‘‘impracticable’’ and ‘‘contrary to the
public interest.’’
Finally, a finding of good cause for
waiving the requirement of a 30-day
delayed effective date is warranted
because of the need for immediate
guidance to depositors, which
implementation and posting of the
prescribed notice would provide. A
delayed effective date is unnecessary
because the only provision of the final
rule requiring institutions to take certain
actions—i.e., the change in the
prescribed notice—would not be
enforced until February 28, 2011.
IV. Regulatory Analysis and Procedure
A. Effective Date
Section 302 of the Riegle Community
Development and Regulatory
Improvement Act of 1994 (12 U.S.C.
Section 4802(b)) requires, subject to
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certain exceptions, that regulations
imposing additional reporting,
disclosure or other requirements take
effect on the first day of the calendar
quarter after publication of the final
rule. One of the statutory exceptions to
this requirement is when the regulation
is required to take effect on a date other
than on the first day of the calendar
quarter after publication of the final
rule. The effective date of Section 343
is December 31, 2010, and the effective
date of the additional amendments to
Section 11(a)(i)(B) of the FDI Act is
December 31, 2010. Thus, the effective
date of the final rule is the Federal
Register publication date.
B. Paperwork Reduction Act
In accordance with section 3512 of
the Paperwork Reduction Act of 1995
(‘‘PRA’’), 44 U.S.C. 3501 et seq., an
agency may not conduct or sponsor, and
a person is not required to respond to,
a collection of information unless it
displays a currently valid Office of
Management and Budget (‘‘OMB’’)
control number. This final rule modifies
existing disclosure requirements in
sections 330.16(c)(1) and (c)(2).
Specifically, section 330.16(c)(1) revises
the language of the ‘‘Notice of Changes
In Temporary FDIC Insurance Coverage
For Transaction Accounts’’ to be posted
by insured depository institutions
offering noninterest-bearing transaction
accounts in the lobbies of their main
office and domestic branches and, if
they offer Internet deposit services, on
their Web sites. Disclosure requirements
are typically subject to PRA. However,
because the FDIC has provided the
specific text for the notice and allows
for no variance in the language, the
disclosure is excluded from coverage
under PRA because ‘‘the public
disclosure of information originally
supplied by the Federal Government to
the recipient for the purpose of
disclosure to the public is not included’’
within the definition of ‘‘collection of
information.’’ 5 CFR 1320.3(c)(2).
Therefore, the FDIC is not submitting
the revised section 330.16(c)(1)
disclosure to OMB for review.
This final rule also modifies the
existing section 330.16(c)(2). Currently,
section 330.16(c)(2) requires IDIs
participating in the TAGP to provide
individual notices to depositors alerting
them to the fact that IOLTAs and lowinterest NOWs are not eligible for
unlimited coverage under the new
temporary insurance category for
noninterest-bearing transaction
accounts. Although this final rule will
eliminate the requirement for
institutions to provide the disclosure to
depositors with IOLTAs, any change to
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4815
current burden estimates is assumed by
the FDIC to be negligible because the
rule retains the disclosure requirements
for low-interest NOW accounts. Since
there is no change to the current
estimated burden for section
330.16(c)(2), the FDIC is not submitting
the revised section 330.16(c)(2)
disclosure to OMB for review.
C. Regulatory Flexibility Act
In accordance with section 3(a) of the
Regulatory Flexibility Act (‘‘RFA’’), 5
U.S.C. 603(a), the FDIC must publish an
initial regulatory flexibility analysis
with this final rulemaking or certify that
the final rule does not have a significant
economic impact on a substantial
number of small entities. For purposes
of the RFA analysis or certification,
financial institutions with total assets of
$175 million or less are considered to be
‘‘small entities.’’ The FDIC hereby
certifies pursuant to 5 U.S.C. 605(b) that
the final rule will not have a significant
economic impact on a substantial
number of small entities.
As of June 30, 2010, there were 4,294
IDIs that were considered small entities.
As of December 31, 2010, 3,173 of these
small IDIs participated in the TAGP.
Within this group of small institutions,
618, or 19.5 percent, did not have TAGP
eligible deposits as of the June 2010
Report of Condition and Income for
banks and the Thrift Financial Report
for thrifts (collectively, ‘‘June 2010 Call
Reports’’); thus, they were not required
to pay the fee assessed for participation
in the TAGP. As to the remaining 2,555
small entities that had TAGP eligible
deposits as of the June 2010 Call
Reports, they will no longer be assessed
a fee after the termination of the TAGP,
and they will not be charged a separate
assessment for the new deposit
insurance coverage.
The FDIC has determined that under
the final rule, the economic impact on
small entities will not be significant for
the following reasons. Because there is
no separate FDIC assessment for the
insurance of noninterest-bearing
transaction accounts under section 343
of the Dodd-Frank Act, small entities
assessed fees for participation in the
TAGP will realize an average annual
cost savings of $2,373 per institution.
All other small entities, whether they
participated in the TAGP or not, will
gain additional insurance coverage with
no separate direct cost. The FDIC asserts
that the economic benefit of additional
insurance coverage and coverage
extension until 2013 outweighs any
future costs associated with the
temporary insurance of noninterestbearing transaction accounts.
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Federal Register / Vol. 76, No. 18 / Thursday, January 27, 2011 / Rules and Regulations
With respect to amending the
disclosures related to Section 343, the
FDIC asserts that the economic impact
on all small entities participating in the
program (regardless of whether they
currently pay a fee) is de minimis in
nature and is outweighed by the
economic benefit of additional
insurance coverage.
Accordingly, the final rule does not
have a significant economic impact on
a substantial number of small entities.
D. 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 meaning of section 654
of the Treasury and General
Government Appropriations Act,
enacted as part of the Omnibus
Consolidated and Emergency
Supplemental Appropriations Act of
1999 (Pub. L. 105–277, 112 Stat. 2681).
E. Small Business Regulatory
Enforcement Fairness Act
The Office of Management and Budget
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.). As
required by SBREFA, the FDIC will file
the appropriate reports with Congress
and the General Accounting Office so
that the final rule may be reviewed.
F. Plain Language
Section 722 of the Gramm-LeachBliley Act (Pub. L. 106–102, 113 Stat.
1338, 1471), requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000. The
FDIC has sought to present the final rule
in a simple and straightforward manner,
and has previously made revisions to
the proposed rule in response to
commenter concerns seeking
clarification of the application of the
deposit insurance rules.
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List of Subjects in 12 CFR Part 330
Bank deposit insurance, Banks,
Banking, Reporting and recordkeeping
requirements, Savings and loan
associations, Trusts and trustees.
For the reasons stated above, the
Board of Directors of the Federal
Deposit Insurance Corporation hereby
amends part 330 of title 12 of the Code
of Federal Regulations as follows:
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PART 330—DEPOSIT INSURANCE
COVERAGE
1. The authority citation for part 330
continues to read as follows:
■
Authority: 12 U.S.C. 1813(1), 1813(m),
1817(i), 1818(q), 1819 (Tenth), 1820(f),
1821(a), 1822(c).
2. In § 330.1, paragraph (r) is revised
to read as follows:
■
§ 330.1.
Definitions.
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(r) Noninterest-bearing transaction
account means—
(1) A deposit or account maintained at
an insured depository institution—
(i) With respect to which interest is
neither accrued nor paid;
(ii) On which the depositor or account
holder is permitted to make
withdrawals by negotiable or
transferable instrument, payment orders
of withdrawal, telephone or other
electronic media transfers, or other
similar items for the purpose of making
payments or transfers to third parties or
others; and
(iii) On which the insured depository
institution does not reserve the right to
require advance notice of an intended
withdrawal; and
(2) A trust account established by an
attorney or law firm on behalf of a
client, commonly known as an Interest
on Lawyers Trust Account, or a
functionally equivalent account, as
determined by the Corporation.
■ 3. In § 330.16, revise paragraphs (c)(1)
and (c)(2) to read as follows:
interest. It also includes Interest on Lawyers
Trust Accounts (‘‘IOLTAs’’). It does not
include other accounts, such as traditional
checking or demand deposit accounts that
may earn interest, NOW accounts, and
money-market deposit accounts.
For more information about temporary
FDIC insurance coverage of transaction
accounts, visit www.fdic.gov.
(2) Institutions participating in the
FDIC’s Transaction Account Guarantee
Program on December 31, 2010, must
provide a notice by mail to depositors
with negotiable order of withdrawal
accounts that are protected in full as of
that date under the Transaction Account
Guarantee Program that, as of January 1,
2011, such accounts no longer will be
eligible for unlimited protection. This
notice must be provided to such
depositors no later than December 31,
2010.
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Dated at Washington, DC, this 18th day of
January 2011.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2011–1732 Filed 1–26–11; 8:45 am]
BILLING CODE 6741–01–P
DEPARTMENT OF THE TREASURY
Office of the Secretary
31 CFR Part 1
RIN 1505–AC27
§ 330.16 Noninterest-bearing transaction
accounts.
Privacy Act of 1974; Implementation
*
AGENCY:
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(c) * * *
(1) By no later than February 28, 2011,
each depository institution that offers
noninterest-bearing transaction accounts
must post prominently the following
notice in the lobby of its main office, in
each domestic branch and, if it offers
Internet deposit services, on its Web
site:
NOTICE OF CHANGES IN TEMPORARY
FDIC INSURANCE COVERAGE FOR
TRANSACTION ACCOUNTS
All funds in a ‘‘noninterest-bearing
transaction account’’ are insured in full by
the Federal Deposit Insurance Corporation
from December 31, 2010, through December
31, 2012. This temporary unlimited coverage
is in addition to, and separate from, the
coverage of at least $250,000 available to
depositors under the FDIC’s general deposit
insurance rules.
The term ‘‘noninterest-bearing transaction
account’’ includes a traditional checking
account or demand deposit account on which
the insured depository institution pays no
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ACTION:
Departmental Offices, Treasury.
Final rule.
In accordance with the
requirements of the Privacy Act of 1974,
the Department of the Treasury gives
notice of an amendment to update its
Privacy Act regulations, and to add an
exemption from certain provisions of
the Privacy Act for a system of records
related to the Office of Foreign Assets
Control (OFAC).
DATES: Effective Date: January 27, 2011.
FOR FURTHER INFORMATION CONTACT:
Assistant Director, Disclosure Services,
Office of Foreign Assets Control,
Department of the Treasury, 1500
Pennsylvania Avenue, NW.,
Washington, DC 20220, tel.: 202–622–
2510 (not a toll free number), or Chief
Counsel (Foreign Assets Control), Office
of General Counsel, Department of the
Treasury, 1500 Pennsylvania Avenue,
NW., Washington, DC 20220, tel.: 202–
622–2410 (not a toll free number).
SUMMARY:
E:\FR\FM\27JAR1.SGM
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]]>Agencies
[Federal Register Volume 76, Number 18 (Thursday, January 27, 2011)]
[Rules and Regulations]
[Pages 4813-4816]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1732]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 330
RIN 3064-AD37
Deposit Insurance Regulations; Unlimited Coverage for
Noninterest-Bearing Transaction Accounts; Inclusion of Interest on
Lawyers Trust Accounts
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rule.
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[[Page 4814]]
SUMMARY: The FDIC is adopting a final rule amending its deposit
insurance regulations to implement an amendment to section
11(a)(1)(B)(iii) of the Federal Deposit Insurance Act (FDI Act), as
added by section 343 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Pub. L. 111-203), that includes Interest on Lawyers
Trust Accounts (``IOLTAs'') in the definition of ``noninterest-bearing
transaction account'' for purposes of providing unlimited deposit
insurance for such accounts for two years starting December 31, 2010.
DATES: Effective Date: The final rule is effective January 27, 2011.
FOR FURTHER INFORMATION CONTACT: Joseph A. DiNuzzo, Supervisory
Counsel, Legal Division (202) 898-7349 or jdinuzzo@fdic.gov; William
Piervincenzi, Attorney, Legal Division (202) 898-6957 or
wpiervincenzi@fdic.gov; or James V. Deveney, Chief, Deposit Insurance
Section, Division of Supervision and Consumer Protection (202) 898-6687
or jdeveney@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Background
On November 15, 2010, the FDIC published a final rule (``November
final rule'') \1\ to implement section 343 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (``Section 343'').\2\ Section
343 amended the deposit insurance provisions of the FDI Act (12 U.S.C.
1821(a)(1)) to provide temporary separate insurance coverage for
noninterest-bearing transaction accounts. The November final rule
followed the definition of noninterest-bearing transaction account in
Section 343. Section 343 defined a noninterest-bearing transaction
account as ``a deposit or account maintained at an insured depository
institution with respect to which interest is neither accrued nor paid;
on which the depositor or account holder is permitted to make
withdrawals by negotiable or transferable instrument, payment orders of
withdrawal, telephone or other electronic media transfers, or other
similar items for the purpose of making payments or transfers to third
parties or others; and on which the insured depository institution does
not reserve the right to require advance notice of an intended
withdrawal.''
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\1\ 75 FR 69577 (Nov. 15, 2010).
\2\ Public Law 111-203 (July 21, 2010).
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In the November final rule, the FDIC noted that, unlike the
definition of noninterest-bearing transaction account in the FDIC's
Transaction Account Guarantee Program (``TAGP''), the Section 343
definition did not include NOW accounts (regardless of the interest
rate paid on the account) or IOLTAs. Therefore, neither NOW accounts
nor IOLTAs were within the November final rule's definition of
noninterest-bearing transaction account.
The November final rule included disclosure and notice requirements
as part of the implementation of Section 343. These included, among
other requirements, the requirements that: (1) Insured depository
institutions (``IDIs'') post a prescribed notice in their main office,
at each branch and, if applicable, on their Web site that indicated
that noninterest-bearing transactions accounts do not include NOW
accounts or IOLTAs; and (2) IDIs then participating in the TAGP notify
NOW account and IOLTA depositors that, beginning January 1, 2011, those
accounts no longer will be eligible for unlimited protection but would
be insured under the general deposit insurance rules.
On December 29, 2010, the President signed an act (the ``Act'')
that amended the definition of noninterest-bearing transaction account
in Section 11(a)(1)(B)(iii) of the FDI Act. The Act replaced the
Section 343 definition with one that explicitly includes IOLTAs.
Section 11(a)(1)(B)(iii), as amended, defines the term noninterest-
bearing transaction account as ``a deposit or account maintained at an
insured depository institution with respect to which interest is
neither accrued nor paid; on which the depositor or account holder is
permitted to make withdrawals by negotiable or transferable instrument,
payment orders of withdrawal, telephone or other electronic media
transfers, or other similar items for the purpose of making payments or
transfers to third parties or others; and on which the insured
depository institution does not reserve the right to require advance
notice of an intended withdrawal; and a trust account established by an
attorney or law firm on behalf of a client, commonly known as an
Interest on Lawyers Trust Account, or a functionally equivalent
account, as determined by the Corporation.''
II. The Final Rule
This final rule is in the form of a technical amendment that
generally leaves intact the notice requirements of the November final
rule, but amends the prescribed notice required by 12 CFR 330.16(c)(1).
IDIs must post the revised notice no later than February 28, 2011.
Also, this final rule eliminates the requirement that IDIs
participating in the TAGP as of December 31, 2010 notify IOLTA
depositors that, beginning January 1, 2011, IOLTAs will no longer will
be eligible for unlimited protection.
As indicated in informal guidance the FDIC has provided to the
industry,\3\ IDIs that already have sent the notice required in the
November final rule to IOLTA depositors are encouraged, but not
required, to send a revised notice to such IOLTA depositors that their
funds will be fully insured from December 31, 2010 through December 31,
2012.
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\3\ See FIL-2-2011 (Jan. 21, 2011); See also: https://www.fdic.gov/deposit/deposits/changes2.html.
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III. Administrative Procedure Act
The FDIC invokes the good cause exception to the requirement in the
Administrative Procedure Act (``APA'') \4\ that, before a rulemaking
can be finalized, it must first be issued for public comment. The FDIC
believes that good cause exists for issuing a final rule without
providing an opportunity for comment because seeking public comment is
``unnecessary,'' ``impracticable,'' and ``contrary to the public
interest'' under these circumstances.\5\
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\4\ 5 U.S.C. 553.
\5\ 5 U.S.C. 553(b)(3)(B).
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The Act, signed into law on December 29, 2010, revises Section
11(a)(1)(B) of the Federal Deposit Insurance Act \6\ to include IOLTAs
within the definition of noninterest-bearing transaction account for
purposes of providing IOLTAs with temporary unlimited deposit insurance
coverage. This amendment is effective December 31, 2010, to coincide
with the amendment to the FDI Act providing temporary unlimited deposit
insurance coverage to noninterest-bearing transaction accounts
generally, as required by Section 343. This final rule amends the
FDIC's deposit insurance regulations to reflect this change made by
Congress; none of the other regulations affecting the calculation of
deposit insurance are changed by the final rule. Additionally, the
final rule revises the prescribed notice to reflect that IOLTAs are not
excluded from the separate deposit insurance coverage for noninterest-
bearing accounts enacted by Congress; this change in the prescribed
notice is meant to allow institutions to post the updated prescribed
notice immediately so that depositors will be aware of this change in
deposit insurance coverage. Finally, the final rule eliminates the
requirement that IDIs participating in the TAGP notify IOLTA holders
that, as of January 1, 2011, such
[[Page 4815]]
accounts no longer will be eligible for unlimited protection.
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\6\ 12 U.S.C. 1821(a)(1)(B).
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Because the final rule involves mere technical amendments that
conform the FDIC's definition of noninterest-bearing transaction
account to the language of the revised statute, revise the prescribed
notice to indicate this change in deposit insurance coverage, and
reduce the number of required notifications, the FDIC finds that notice
and comment procedures are ``unnecessary,'' and the good cause
exception to the APA's notice-and-comment requirement applies. See,
e.g., Gray Panthers Advocacy Comm. v. Sullivan, 936 F.2d 1284, 1290-92
(DC Cir. 1991) (regulations that ``either restate or paraphrase the
detailed requirements'' of a self-executing statute do not require
notice and comment); Nat'l Customs Brokers & Forwarders Ass'n v. United
States, 59 F.3d 1219, 1223-24 (Fed. Cir. 1995) (notice and comment
unnecessary where Congress directed agency to change regulations and
public would benefit from amendments).
Additionally, staff believes that a finding of good cause is
warranted because it would be ``impracticable'' and ``contrary to the
public interest'' to delay revising the disclosure requirements to seek
public comment on the revision. Because the amendment to the definition
of noninterest-bearing transaction account was effective two days after
enactment of the December 29 Act, it is in the public interest for the
Corporation to take immediate steps to make depositors aware of this
change in deposit insurance coverage. A delay in distribution of
required notices and prescribed lobby disclosures would be detrimental
to this goal, and therefore, complying with formal notice and comment
procedures would be ``impracticable'' and ``contrary to the public
interest.''
Finally, a finding of good cause for waiving the requirement of a
30-day delayed effective date is warranted because of the need for
immediate guidance to depositors, which implementation and posting of
the prescribed notice would provide. A delayed effective date is
unnecessary because the only provision of the final rule requiring
institutions to take certain actions--i.e., the change in the
prescribed notice--would not be enforced until February 28, 2011.
IV. Regulatory Analysis and Procedure
A. Effective Date
Section 302 of the Riegle Community Development and Regulatory
Improvement Act of 1994 (12 U.S.C. Section 4802(b)) requires, subject
to certain exceptions, that regulations imposing additional reporting,
disclosure or other requirements take effect on the first day of the
calendar quarter after publication of the final rule. One of the
statutory exceptions to this requirement is when the regulation is
required to take effect on a date other than on the first day of the
calendar quarter after publication of the final rule. The effective
date of Section 343 is December 31, 2010, and the effective date of the
additional amendments to Section 11(a)(i)(B) of the FDI Act is December
31, 2010. Thus, the effective date of the final rule is the Federal
Register publication date.
B. Paperwork Reduction Act
In accordance with section 3512 of the Paperwork Reduction Act of
1995 (``PRA''), 44 U.S.C. 3501 et seq., an agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid Office of Management
and Budget (``OMB'') control number. This final rule modifies existing
disclosure requirements in sections 330.16(c)(1) and (c)(2).
Specifically, section 330.16(c)(1) revises the language of the ``Notice
of Changes In Temporary FDIC Insurance Coverage For Transaction
Accounts'' to be posted by insured depository institutions offering
noninterest-bearing transaction accounts in the lobbies of their main
office and domestic branches and, if they offer Internet deposit
services, on their Web sites. Disclosure requirements are typically
subject to PRA. However, because the FDIC has provided the specific
text for the notice and allows for no variance in the language, the
disclosure is excluded from coverage under PRA because ``the public
disclosure of information originally supplied by the Federal Government
to the recipient for the purpose of disclosure to the public is not
included'' within the definition of ``collection of information.'' 5
CFR 1320.3(c)(2). Therefore, the FDIC is not submitting the revised
section 330.16(c)(1) disclosure to OMB for review.
This final rule also modifies the existing section 330.16(c)(2).
Currently, section 330.16(c)(2) requires IDIs participating in the TAGP
to provide individual notices to depositors alerting them to the fact
that IOLTAs and low-interest NOWs are not eligible for unlimited
coverage under the new temporary insurance category for noninterest-
bearing transaction accounts. Although this final rule will eliminate
the requirement for institutions to provide the disclosure to
depositors with IOLTAs, any change to current burden estimates is
assumed by the FDIC to be negligible because the rule retains the
disclosure requirements for low-interest NOW accounts. Since there is
no change to the current estimated burden for section 330.16(c)(2), the
FDIC is not submitting the revised section 330.16(c)(2) disclosure to
OMB for review.
C. Regulatory Flexibility Act
In accordance with section 3(a) of the Regulatory Flexibility Act
(``RFA''), 5 U.S.C. 603(a), the FDIC must publish an initial regulatory
flexibility analysis with this final rulemaking or certify that the
final rule does not have a significant economic impact on a substantial
number of small entities. For purposes of the RFA analysis or
certification, financial institutions with total assets of $175 million
or less are considered to be ``small entities.'' The FDIC hereby
certifies pursuant to 5 U.S.C. 605(b) that the final rule will not have
a significant economic impact on a substantial number of small
entities.
As of June 30, 2010, there were 4,294 IDIs that were considered
small entities. As of December 31, 2010, 3,173 of these small IDIs
participated in the TAGP. Within this group of small institutions, 618,
or 19.5 percent, did not have TAGP eligible deposits as of the June
2010 Report of Condition and Income for banks and the Thrift Financial
Report for thrifts (collectively, ``June 2010 Call Reports''); thus,
they were not required to pay the fee assessed for participation in the
TAGP. As to the remaining 2,555 small entities that had TAGP eligible
deposits as of the June 2010 Call Reports, they will no longer be
assessed a fee after the termination of the TAGP, and they will not be
charged a separate assessment for the new deposit insurance coverage.
The FDIC has determined that under the final rule, the economic
impact on small entities will not be significant for the following
reasons. Because there is no separate FDIC assessment for the insurance
of noninterest-bearing transaction accounts under section 343 of the
Dodd-Frank Act, small entities assessed fees for participation in the
TAGP will realize an average annual cost savings of $2,373 per
institution. All other small entities, whether they participated in the
TAGP or not, will gain additional insurance coverage with no separate
direct cost. The FDIC asserts that the economic benefit of additional
insurance coverage and coverage extension until 2013 outweighs any
future costs associated with the temporary insurance of noninterest-
bearing transaction accounts.
[[Page 4816]]
With respect to amending the disclosures related to Section 343,
the FDIC asserts that the economic impact on all small entities
participating in the program (regardless of whether they currently pay
a fee) is de minimis in nature and is outweighed by the economic
benefit of additional insurance coverage.
Accordingly, the final rule does not have a significant economic
impact on a substantial number of small entities.
D. 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 meaning of section 654 of the Treasury and
General Government Appropriations Act, enacted as part of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1999
(Pub. L. 105-277, 112 Stat. 2681).
E. Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget 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.). As required by SBREFA, the FDIC
will file the appropriate reports with Congress and the General
Accounting Office so that the final rule may be reviewed.
F. Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113
Stat. 1338, 1471), requires the Federal banking agencies to use plain
language in all proposed and final rules published after January 1,
2000. The FDIC has sought to present the final rule in a simple and
straightforward manner, and has previously made revisions to the
proposed rule in response to commenter concerns seeking clarification
of the application of the deposit insurance rules.
List of Subjects in 12 CFR Part 330
Bank deposit insurance, Banks, Banking, Reporting and recordkeeping
requirements, Savings and loan associations, Trusts and trustees.
For the reasons stated above, the Board of Directors of the Federal
Deposit Insurance Corporation hereby amends part 330 of title 12 of the
Code of Federal Regulations as follows:
PART 330--DEPOSIT INSURANCE COVERAGE
0
1. The authority citation for part 330 continues to read as follows:
Authority: 12 U.S.C. 1813(1), 1813(m), 1817(i), 1818(q), 1819
(Tenth), 1820(f), 1821(a), 1822(c).
0
2. In Sec. 330.1, paragraph (r) is revised to read as follows:
Sec. 330.1. Definitions.
* * * * *
(r) Noninterest-bearing transaction account means--
(1) A deposit or account maintained at an insured depository
institution--
(i) With respect to which interest is neither accrued nor paid;
(ii) On which the depositor or account holder is permitted to make
withdrawals by negotiable or transferable instrument, payment orders of
withdrawal, telephone or other electronic media transfers, or other
similar items for the purpose of making payments or transfers to third
parties or others; and
(iii) On which the insured depository institution does not reserve
the right to require advance notice of an intended withdrawal; and
(2) A trust account established by an attorney or law firm on
behalf of a client, commonly known as an Interest on Lawyers Trust
Account, or a functionally equivalent account, as determined by the
Corporation.
0
3. In Sec. 330.16, revise paragraphs (c)(1) and (c)(2) to read as
follows:
Sec. 330.16 Noninterest-bearing transaction accounts.
* * * * *
(c) * * *
(1) By no later than February 28, 2011, each depository institution
that offers noninterest-bearing transaction accounts must post
prominently the following notice in the lobby of its main office, in
each domestic branch and, if it offers Internet deposit services, on
its Web site:
NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION
ACCOUNTS
All funds in a ``noninterest-bearing transaction account'' are
insured in full by the Federal Deposit Insurance Corporation from
December 31, 2010, through December 31, 2012. This temporary
unlimited coverage is in addition to, and separate from, the
coverage of at least $250,000 available to depositors under the
FDIC's general deposit insurance rules.
The term ``noninterest-bearing transaction account'' includes a
traditional checking account or demand deposit account on which the
insured depository institution pays no interest. It also includes
Interest on Lawyers Trust Accounts (``IOLTAs''). It does not include
other accounts, such as traditional checking or demand deposit
accounts that may earn interest, NOW accounts, and money-market
deposit accounts.
For more information about temporary FDIC insurance coverage of
transaction accounts, visit www.fdic.gov.
(2) Institutions participating in the FDIC's Transaction Account
Guarantee Program on December 31, 2010, must provide a notice by mail
to depositors with negotiable order of withdrawal accounts that are
protected in full as of that date under the Transaction Account
Guarantee Program that, as of January 1, 2011, such accounts no longer
will be eligible for unlimited protection. This notice must be provided
to such depositors no later than December 31, 2010.
* * * * *
Dated at Washington, DC, this 18th day of January 2011.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2011-1732 Filed 1-26-11; 8:45 am]
BILLING CODE 6741-01-P
