FDIC Federal Register Citations

[Federal Register: April 2, 1997 (Volume 62, Number 63)]

[Notices]

[Page 15706]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr02ap97_dat-81]

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FEDERAL DEPOSIT INSURANCE CORPORATION

Eligibility to Make Application to Become an Insured Bank under

Section 5 of the Federal Deposit Insurance Act; Rescission of Statement

of Policy

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Rescission of Statement of Policy.

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SUMMARY: As part of the FDIC's systematic review of its regulations and

written policies under section 303(a) of the Riegle Community

Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is

rescinding its Statement Regarding Eligibility to Make Application to

Become an Insured Bank Under section 5 of the Federal Deposit Insurance

Act (Statement of Policy). The Statement of Policy describes the

analysis the FDIC used when carrying out a former statutory directive

to evaluate certain factors in determining an industrial loan company's

eligibility for deposit insurance. Since the statute is no longer in

force, the FDIC is rescinding this outmoded Statement of Policy.

EFFECTIVE DATE: This Statement of Policy is rescinded April 2, 1997.

FOR FURTHER INFORMATION CONTACT: Jesse G. Snyder, Assistant Director

(202/898-6915), Division of Supervision; Jamey Basham, Counsel, (202/

898-7265), Legal Division, FDIC, 550 17th Street, N.W., Washington,

D.C. 20429.

SUPPLEMENTARY INFORMATION: The FDIC is conducting a systematic review

of its regulations and written policies. Section 303(a) of the CDRI (12

U.S.C. 4803(a)) requires each federal banking agency to streamline and

modify its regulations and written policies in order to improve

efficiency, reduce unnecessary costs, and eliminate unwarranted

constraints on credit availability. Section 303(a) also requires each

federal banking agency to remove inconsistencies and outmoded and

duplicative requirements from its regulations and written policies.

As part of this review, the FDIC has determined that the Statement

of Policy is outmoded, and that the FDIC's written policies can be

streamlined by its elimination.

The FDIC originally adopted the Statement of Policy on February 27,

1984 (49 FR 7865 (March 2, 1984)). It addresses issues surrounding

implementation of certain provisions of the Garn-St. Germain Depository

Institutions Act of 1982, Pub. L. 97-320 (Garn Act), which expanded the

types of state-chartered depository institutions eligible for FDIC

insurance, to include industrial banking companies and similar

institutions. These special-purpose entities, known as industrial

banks, industrial loan companies, industrial loan and thrift companies,

or loan and investment companies, extend installment credit to

consumers and accept some form of savings deposits. Before the Garn

Act, the only eligible state-chartered entities were banks and trust

companies with explicit statutory authority to accept deposits other

than trust deposits.

The Garn Act amended section 5(a) of the Federal Deposit Insurance

Act (FDI Act) (12 U.S.C. 1815(a)) to list special procedural

requirements for the FDIC to fulfill before insuring industrial banking

companies lacking bank charters. The FDIC was required to determine

that the industrial banking company was chartered and operating under

state laws providing for examination, supervision, and liquidation

comparable to banks.

In the Federal Deposit Insurance Corporation Improvement Act of

1991, Pub. L. 102-242 (Improvement Act), section 5(a) of the FDI Act

was comprehensively rewritten without inclusion of these special

requirements. As a result, the FDIC is no longer required to apply a

specialized set of factors in determining the eligibility of industrial

banking companies as a class for deposit insurance.

The Statement of Policy presents a mix of the details of the

section 5(a) analysis and descriptions of the FDIC's approach to

general eligibility issues relating to industrial banking companies.

Given the removal of the section 5(a) factors from the FDI Act, the

former analysis is no longer necessary and these portions of the

Statement of Policy are outmoded. As for the latter analysis, a

description of general eligibility issues was salutary during the Garn

Act's implementation period, when numerous industrial banking companies

were first presented with the issue of eligibility for such companies

under the laws of their respective states. However, over a decade

later, these questions arise rarely, and the FDIC's written policies

can be streamlined by elimination of the Statement of Policy. For the

above reasons, the Statement of Policy is rescinded.

By order of the Board of Directors.

Dated at Washington, D.C. this 25th day of March, 1997.

Federal Deposit Insurance Corporation

Robert E. Feldman,

Deputy Executive Secretary.

[FR Doc. 97-8342 Filed 4-1-97; 8:45 am]

BILLING CODE 6714-01-P