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FDIC Federal Register Citations

[Federal Register: October 18, 2005 (Volume 70, Number 200)]
[Rules and Regulations]              
[Page 60420-60422]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18oc05-4]                        

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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 333

RIN 3064-AC94

 
Extension of Corporate Powers

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Interpretive rule; request for comments.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending
an interpretative rule (12 CFR 333.101(b)) which states that insured
State nonmember banks not exercising trust powers may offer self-
directed traditional Individual Retirement and Keogh Plan accounts
without the prior written consent of the FDIC. As amended, the
interpretive ruling is expanded to expressly cover Coverdell Education
Savings Accounts, Roth Individual Retirement Accounts, Health Savings Accounts, and other
similar accounts.

DATES: These amendments are effective October 18, 2005. Submit comments
on or before January 17, 2006.

ADDRESSES: Interested parties are invited to submit written comments to
the FDIC by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.
     Agency Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html.
 Follow the instructions for submitting comments on the FDIC Web site.
     E-mail: comments@fdic.gov. Include ``Part 333--Extension
of Corporate Powers'' in the subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
     Hand Delivery/Courier: Comments may be hand-delivered to
the guard station located at the rear of the FDIC's 550 17th Street
building (accessible from F Street) on business days between 7 a.m. and
5 p.m.
    Instructions: All submissions received must include the agency name
and use the title ``Part 333--Extension of Corporate Powers.'' All
comments will be posted without change to http://www.fdic.gov/regulations/laws/federal/propose.html
, including any personal information provided. Comments may be inspected and photocopied in the
FDIC Public Information Center, Room 100, 801 17th Street, NW.,
Washington, DC, between 9 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Anthony J. DiMilo, Examination
Specialist, Division of Supervision and Consumer Protection, (202) 898-
7496, or Benjamin W. McDonough, Attorney, Legal Division, (202) 898-
7411, Federal Deposit Insurance Corporation, 550 17th St., NW.,
Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 333.2 of the FDIC's regulations (12 CFR 333.2) prohibits an
insured nonmember bank from changing the general character of its
business without the prior written consent of the FDIC. In general,
exercising trust powers constitutes a change in the general character
of the business of an insured nonmember bank that requires the prior
written consent of the FDIC. FDIC interpretive rule at 12 CFR
333.101(b) (section 333.101(b)) makes clear, however, that an insured
nonmember bank that does not have authority to exercise trust powers
may act as trustee or custodian of specific retirement accounts so long
as the bank does not exercise investment discretion or provide any
investment advice with respect to the accounts. (50 FR 10754).
    Prior to the issuance of amendments to section 333.101(b) in 1985,
this interpretive rule stated that insured nonmember banks could act as
trustee or custodian of Individual Retirement Accounts established
pursuant to the Employee Retirement Income Security Act of 1974 (ERISA)
\1\ and Self-Employed Retirement Plans established pursuant to the
Self-Employed Individuals Retirement Act of 1962 \2\ (traditional IRAs
and Keogh Plan accounts). However, a bank taking advantage of section
333.101(b) was permitted to invest the funds held in these accounts
only in its own time or savings deposits. (41 FR 2375). The 1985
amendments revised section 333.101(b) to state that FDIC-regulated
banks not exercising trust powers could offer self-directed traditional
IRAs and Keogh Plan accounts where the customer could direct the bank
to invest the funds from such plans in assets other than the bank's own
deposits ``at the direction of the customer provided the bank does not
exercise any investment discretion or provided [sic] any investment
advice with respect to such account assets.'' (50 FR 10754).
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    \1\ See 26 U.S.C. 408.
    \2\ See 26 U.S.C. 401.
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    Since 1985, Congress has introduced new accounts with tax-incentive
features analogous to traditional IRAs and Keogh Plan accounts. These
other accounts include: Coverdell Education Savings Accounts \3\ and
Roth Individual Retirement Accounts,\4\ both established pursuant to
the Taxpayer Relief Act of 1997, and Health Savings Accounts,\5\
established pursuant to the Medicare Prescription Drug Improvement, and
Modernization Act of 2003. Accordingly, the FDIC is amending section
333.101(b) to reflect the creation of these new accounts and to make
clear in the text of section 333.101(b) that ``other similar accounts''
with tax-incentive features may be offered by banks that lack authority
to exercise trust powers.\6\ The primary purpose of these amendments is
to formally recognize the existence of these new accounts, which did
not exist when the FDIC last amended section 333.101(b) in 1985.
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    \3\ See 26 U.S.C. 530.
    \4\ See 26 U.S.C. 408A.
    \5\ See 26 U.S.C. 223.
    \6\ Currently, national banks without fiduciary powers may act
as custodian, but not as trustee, of retirement accounts. See 12 CFR
9.3. Institutions regulated by the Office of Thrift Supervision
(OTS) may act as trustee or custodian of traditional IRAs and Keogh
Plan accounts without the prior approval of the OTS. 12 CFR 550.580.
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    The revision to section 333.101(b) retains the requirements that
the bank's duties be custodial or ministerial, and that the acceptance
of such accounts without trust powers be consistent with the applicable
state law.\7\
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    \7\ These amendments to section 333.101(b) will not impact the
FDIC's supervision of the trust and custodial activities of insured
nonmember banks, including the trust and fiduciary services such
banks provide to accounts with tax-incentive features. The FDIC will
continue to supervise the trust and fiduciary activities of insured
nonmember banks through regular examinations to ensure that banks
comply with their fiduciary obligations to customers in accordance
with applicable State and Federal law.
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    The revision also makes some minor technical amendments to the
regulatory text to correct typographical errors in section 333.101(b).

II. Request for Comments

    These amendments to part 333 will be effective upon publication.
However, the FDIC is interested in receiving any comments that may
improve the implementation of the rule. The FDIC therefore requests
comments on all aspects of this interpretive rule. The FDIC is
especially interested in learning whether there are other accounts that
it would be appropriate to include expressly within the scope of the
rule, and conversely, whether it would be appropriate to exclude any
facially similar accounts from the scope of the rule. The FDIC will
accept comments for 90 days from the date of publication.

III. Regulatory Analysis

a. Administrative Procedure Act

    Public Comment Waiver and Effective Date. Pursuant to the
Administrative Procedure Act, 5 U.S.C. 553(b) (``APA''), the FDIC is
issuing this interpretation without prior notice and comment. Section
553(b) of Title 5, U.S. Code, does not apply to interpretive rules. The
amendments to section 333.101(b) of the FDIC's regulations relate
solely to an interpretive rule, and the Board of Directors of the FDIC
has found that, because the primary purpose of the amendments is to
formally recognize the creation of new accounts, notice and comment
would be unnecessary. Moreover, pursuant to the APA, 5 U.S.C. 553(d),
interpretive rules do not require thirty days prior notice before they
may become effective; therefore, because section 333.101(b) is an
interpretive

[[Page 60422]]

rule, the amendments to it may have immediate effect.

b. Paperwork Reduction Act

    The amendment to section 333.101(b) will not entail any new
collections of information. Therefore, the Paperwork Reduction Act is
not applicable.

c. Regulatory Flexibility Act

    A regulatory flexibility analysis is required only when an agency
must publish a notice of proposed rulemaking (5 U.S.C. 603, 604).
Because the FDIC is revising an interpretive rule without notice and
comment, no regulatory flexibility analysis is required.

d. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (5 U.S.C.
801 et seq.) (SBREFA) provides generally for agencies to report rules
to Congress and for Congress to review these rules. Unless covered by
an exception in SBREFA (5 U.S.C. 804(3)), the reporting requirement is
triggered in instances where the FDIC issues a rule as defined by the
APA. Because the FDIC is issuing an interpretive rule, which is not
covered by one of the exceptions in SBREFA, the FDIC will file the
reports required by SBREFA.

List of Subjects in 12 CFR Part 333

    Bank, Banking, State nonmember banks, Trusts and trustees.

0
For the reasons set forth in this preamble, the Board of Directors of
the Federal Deposit Insurance Corporation hereby amends part 333 to
Title 12 of the Code of Federal Regulations as follows:

PART 333--EXTENSION OF CORPORATE POWERS

0
1. The authority citation for part 333 continues to read as follows:

    Authority: 12 U.S.C. 1816, 1818, 1819 (``Seventh'', ``Eighth''
and ``Tenth''), 1828, 1828(m), 1831p-1(c).


0
2. Section 333.101 is amended by revising paragraph (b) to read as
follows:


Sec.  333.101  Prior consent not required.

* * * * *
    (b) An insured State nonmember bank, not exercising trust powers,
may act as trustee or custodian of Individual Retirement Accounts
established pursuant to the Employee Retirement Income Security Act of
1974 (26 U.S.C. 408), Self-Employed Retirement Plans established
pursuant to the Self-Employed Individuals Retirement Act of 1962 (26
U.S.C. 401), Roth Individual Retirement Accounts and Coverdell
Education Savings Accounts established pursuant to the Taxpayer Relief
Act of 1997 (26 U.S.C. 408A and 530 respectively), Health Savings
Accounts established pursuant to the Medicare Prescription Drug
Improvement, and Modernization Act of 2003 (26 U.S.C. 223), and other
similar accounts without the prior written consent of the Corporation
provided:
    (1) The bank's duties as trustee or custodian are essentially
custodial or ministerial in nature,
    (2) The bank is required to invest the funds from such plans only
    (i) In its own time or savings deposits, or
    (ii) In any other assets at the direction of the customer, provided
the bank does not exercise any investment discretion or provide any
investment advice with respect to such account assets, and
    (3) The bank's acceptance of such accounts without trust powers is
not contrary to applicable State law.

    Dated at Washington, DC, this 6th day of October, 2005.

    By order of the Board of Directors.
Robert E. Feldman,
Executive Secretary, Federal Deposit Insurance Corporation.
[FR Doc. 05-20768 Filed 10-17-05; 8:45 am]

BILLING CODE 6714-01-P

 

Last Updated 10/18/2005 Regs@fdic.gov