FDIC Federal Register Citations

[Federal Register: July 17, 2006 (Volume 71, Number 136)]

[Proposed Rules]

[Page 40440-40443]

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

[DOCID:fr17jy06-15]

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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 328

RIN 3064-AD05

Advertisement of Membership

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is proposing to revise its regulation governing

official FDIC signs and advertising of FDIC membership. The proposed

rule would replace the separate signs used by Bank Insurance Fund (BIF)

and Savings Association Insurance Fund (SAIF) members with a new sign,

or insurance logo, to be used by all insured depository institutions.

In addition, the proposed rule would extend the advertising

requirements to savings associations and consolidate the exceptions to

those requirements. The proposed rule also would restructure the text

in certain sections in order to make them easier to read. Finally, the

current prohibition pertaining to receipt of deposits at the same

teller's station or window as noninsured institutions would be placed

in its own section.

DATES: Written comments must be received by the FDIC on or before

September 15, 2006.

ADDRESSES: You may submit comments by any of the following methods:

Agency Web site: http://www.FDIC.gov/regulations/laws/federal/propose.html.

Follow the instructions for submitting comments. E-mail: comments@fdic.gov..

Mail: Robert E. Feldman, Executive Secretary, Attention:

Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th

Street, NW., Washington, DC 20429.

Hand Delivered/Courier: The guard station at the rear of

the 550 17th Street Building (located on F Street), on business days

between 7 a.m. and 5 p.m.

Public Inspection: Comments may be inspected and

photocopied in the FDIC Public Information Center, 3501 North Fairfax

Drive, Room E-1002, Arlington, Virginia 22226, between 9 a.m. and 5

p.m. on business days.

Internet Posting: Comments received will be posted without

change to http://www.FDIC.gov/regulations/laws/federal/propose.html,

including any personal information provided.

Federal e-Rulemaking Portal: http://www.regulations.gov.

Follow the instructions for submitting comments.

FOR FURTHER INFORMATION CONTACT: Kara L. Ritchie, Policy Analyst, (202)

898-3716, Division of Supervision and Consumer Protection (DSC); John

M. Jackwood, Acting Chief, Compliance Section, (202) 898-3991, DSC;

Kathleen G. Nagle, Supervisory Consumer Affairs Specialist, (202) 898-

6541, DSC; or Richard B. Foley, Counsel, (202) 898-3784, Legal

Division, Federal Deposit Insurance Corporation, Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. The Proposed Rule

A. Section 328.0--Scope

The scope provision would be revised by the proposed rule to

reflect that there would now be one sign used by all insured depository

institutions and the advertising requirements in section 328.3 would be

extended to savings associations.

B. Section 328.1--Official Sign

Pursuant to section 18(a) of the Federal Deposit Insurance Act (FDI

Act), as amended by section 2(c)(2) of the Federal Deposit Insurance

Reform Conforming Amendments Act of 2005, Public Law 109-173, 119 Stat.

3601-19 (FDIRCA Act), the FDIC must promulgate regulations prescribing

a sign or signs that each insured depository institution will be

required to display at each place of business it maintains. Section

18(a)(1)(B) of the FDI Act, as amended by the FDIRCA Act, specifies

that the required sign must include a statement that insured deposits

are backed by the full faith and credit of the United States

Government. Therefore, this section would be revised to eliminate the

separate official bank sign and official savings association sign, and

display a black and white version of the new official sign that would

be used by all insured depository institutions.

The proposed official sign would be 7 by 3 in

size, with black lettering and gold background. The design is similar

in color scheme and layout to the current bank sign but with the

following differences: First, the language above ``FDIC'' states ``Each

depositor insured to at least $100,000,'' instead of ``Each depositor

insured to $100,000.'' The revised language more accurately reflects

the new deposit insurance coverage limits in the FDIRCA Act and the

Federal Deposit Insurance Reform Act of 2005, Public Law 109-171, title

II, subtitle B, 120 Stat. 9-21. Second, the proposed sign includes the

FDIC's internet website and leaves out the FDIC seal. Finally, the full

faith and credit statement required by the FDIRCA Act is in italics on

the left side of the proposed sign and is bordered by a semi-circle of

stars, a design that partially reflects the current savings association

sign.

Section 328.1 also describes the ``symbol'' of the Corporation that

insured depository institutions could use at their option as the

official advertising statement. The ``symbol'' would be that portion of

the proposed official sign consisting of ``FDIC'' and the two lines of

smaller type above and below ``FDIC.''

C. Section 328.2--Display and Procurement of Official Sign

Conforming changes have been proposed to this section in order to

make it applicable to all insured depository institutions, not just

insured banks. The proposed rule also restructures this section to make

it easier to read but without making any substantive changes.

Part 328 uses the term ``automatic service facilities'' in some

places, and the term ``remote service facilities'' in other places,

although the two terms have the same meaning within that part. The

proposed rule uses the term ``remote service facility'' in each place

and defines that term in section 328.2(a)(1)(ii) to include any

automated teller machine, cash dispensing machine, point-of-sale

terminal, or other remote electronic facility where deposits are

received.

The current sections 328.2 and 328.4 are virtually identical,

except that one applies to insured banks and the other applies to

insured savings associations. The key difference between these

provisions is that section 328.4 has a

[[Page 40441]]

paragraph (e) prohibiting insured savings associations from using the

official bank sign. As the new official sign would be applicable to all

insured depository institutions, the proposed rule would combine

current sections 328.2 and 328.4 into a new section 328.2.

As in the current section 328.2, the proposed revision would allow

an insured depository institution to vary the size, color, and

materials of the official sign at its expense, and to display such

altered signs within the institution at locations other than where

insured deposits are received. However, the official sign provided by

the FDIC would adhere to the specifications of section 328.1, and only

the official sign could be displayed where insured deposits are

received. The proposed rule refers to the FDIC's Internet Web site,

http://www.fdic.gov, for information on obtaining the official sign.

D. Section 328.3--Official Advertising Statement Requirements

(1) Proposal to Extend Official Advertising Statement Requirement to

Savings Associations

Section 328.3 requires insured banks to include the official

advertising statement in all their advertisements (with certain

exceptions). The basic form of the statement is ``Member of the Federal

Deposit Insurance Corporation,'' which may be shortened to ``Member

FDIC.'' There is no equivalent requirement for insured savings

associations. The FDIC proposes to revise section 328.3 to provide for

consistent treatment of banks and savings associations by requiring all

insured depository institutions to include the official advertising

statement in their advertisements.

The FDIC believes there are compelling reasons to apply the

advertising requirements equally to banks and savings associations,

particularly now that the BIF and SAIF have been merged into one fund,

the Deposit Insurance Fund, and there will be one official sign for

both banks and savings associations. Consistent treatment of banks and

savings associations on this matter would significantly enhance the

public's ability to determine whether an institution's deposits are

federally insured or not, and it would eliminate any possibility for

public confusion. A consistent and uniform rule applicable to both

banks and savings associations would best serve the interests of the

public and best protect the Deposit Insurance Fund.

(2) Proposals To Consolidate Exceptions to the Required Use of the

Official Advertising Statement

There are currently twenty exceptions to the required use of the

official advertising statement. The FDIC proposes to simplify the

advertising requirements by reducing the number of exceptions to five.

The proposed rule does this by limiting the applicability of section

328.3 to advertisements that specifically promote deposit products or

generally promote banking services offered by an insured depository

institution. The latter would include advertisements that contain an

institution's name and a statement about the availability of general

banking services. The term advertisement is defined as a commercial

message, in any medium, that is designed to attract public attention or

patronage to a product or business. By limiting the applicability of

section 328.3 in this way, most of the current exceptions to the

advertising requirements become unnecessary. The exemptions eliminated

from the proposed rule are for: statements and reports of condition;

bank supplies; listings in directories; and advertisements relating to

loan services, safekeeping box services, trust services, real estate

services, armored car services, service or analysis charges, securities

services, travel department business, and savings bank life insurance.

(3) Other Proposed Revisions

The proposed rule also would make certain clarifying, non-

substantive, and conforming editorial changes in section 328.3. In

addition, three provisions in the current rule have not been included

in the proposed rule because they address narrow situations that rarely

occur. The first provision, section 328.3(a)(2), allows the Board to

grant temporary exemptions from the advertising requirements for good

cause. The second provision, section 328.3(a)(3), concerns advertising

copy not including the official advertising statement that is on hand

on the date the advertising requirements become operative. The third

provision, section 328.3(d), addresses how to handle outstanding

billboard advertisements that require use of the official advertising

statement.

E. Section 328.4--Prohibition Against Receiving Deposits at Same

Teller's Station or Window as Noninsured Institution

Sections 328.2 currently has a provision that prohibits banks from

receiving deposits at the same teller's station or window where a

noninsured institution receives deposits, except for a remote service

facility. Since this provision does not relate directly to the display

and procurement of the official sign and is significant enough that it

should be set apart in a separate section, the proposed rule would move

the provision to section 328.4.

II. Effective Date

In order to give insured depository institutions a transition

period to adjust to the new requirements in the proposed revision of

part 328, the final rule would be effective six months after

publication in the Federal Register.

III. Request for Comments

The FDIC requests comments on all aspects of the proposed rule and,

in particular, the following issues:

(1) Effective Date

The final rule would be effective six months after publication in

the Federal Register. The FDIC solicits comment on whether the proposed

effective date would give insured depository institutions sufficient

time to adjust to the new requirements in the proposed revision of part

328.

(2) Use of Official Advertising Statement in Advertisements Marketing

Non-Deposit Products

Many insured depository institutions offer both deposit products

and non-deposit products (NDPs). NDPs include both insurance and

investment products. Where NDPs are offered, insured depository

institutions are required to disclose that they are not federally

insured.\1\ However, consumers may be confused about Federal deposit

insurance coverage when the official advertising statement is used in

advertisements that market NDPs. The FDIC therefore solicits comment on

whether the final rule should include a provision that would: (1)

Prohibit use of the official advertising statement in advertisements

relating solely to NDPs or hybrid products containing NDP and deposit

features (e.g., sweep accounts); and (2) require that the official

advertising statement be clearly segregated from information about NDPs

in advertisements containing information about both NDPs and insured

deposit products.

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\1\ See e.g., 12 CFR 343.40 (Consumer Protection in Sales of

Insurance rules applicable to FDIC supervised institutions) and the

Interagency Policy Statement on retail Sales of Nondeposit

Investment Products, issued on February 15, 1994.

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[[Page 40442]]

IV. Paperwork Reduction Act

The proposed rule does not contain any ``collections of

information'' within the meaning of section 3502(3) of the Paperwork

Reduction Act of 1995 (44 U.S.C. 3502(3)).

V. Regulatory Flexibility Act

Display of the official sign is required by section 18(a) of FDI

Act, as amended by section 2(c)(2) of the FDIRCA Act. There would not

be any compliance costs with displaying the official sign, because it

would be provided by the FDIC free of charge. Insured banks have

complied with similar advertising requirements for over seventy years

without significant expense. Although savings associations have not

been subject to such advertising requirements, many have used the

official advertising statement voluntarily. Moreover, mandatory

compliance with the advertising requirements by savings association

would not entail significant expense. Accordingly, the Board hereby

certifies that the proposed rule would not have a significant economic

impact on a substantial number of small entities within the meaning of

the Regulatory Flexibility Act (5 U.S.C. 601-612).

VI. The Treasury and General Government Appropriations Act, 1999--

Assessment of Federal Regulations and Policies on Families

The FDIC has determined that the proposed 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).

List of Subjects in 12 CFR Part 328

Advertising, Bank deposit insurance, Savings associations, Signs

and symbols.

For the reasons stated above, the Board of Directors of the Federal

Deposit Insurance Corporation hereby proposes to amend part 328 of

title 12, chapter III of the Code of Federal Regulations by revising it

to read as follows:

PART 328--ADVERTISEMENT OF MEMBERSHIP

Sec.

328.0 Scope.

328.1 Official sign.

328.2 Display and procurement of official sign.

328.3 Official advertising statement requirements.

328.4 Prohibition against receiving deposits at same teller's

station or window as noninsured institution.

Authority: 12 U.S.C. 1818(a), 1819 (Tenth), 1828(a).

Sec. 328.0 Scope.

Part 328 describes the official sign of the FDIC and prescribes its

use by insured depository institutions. It also prescribes the official

advertising statement insured depository institutions must include in

their advertisements. For purposes of part 328, the term ``insured

depository institution'' includes insured branches of a foreign

depository institution. Part 328 does not apply to non-insured offices

or branches of insured depository institutions located in foreign

countries.

Sec. 328.1 Official sign.

(a) The official sign referred to in this part shall be

7 by 3 in size, with black lettering and gold

background, and of the following design:

        (b) The symbol of the Corporation, as used in this part, shall be

    that portion of the official sign consisting of ``FDIC'' and the two

    lines of smaller type above and below ``FDIC.''

    Sec.  328.2  Display and procurement of official sign.

        (a) Display of official sign. Each insured depository institution

    shall continuously display the official sign at each station or window

    where insured deposits are usually and normally received in the

    depository institution's principal place of business and in all its

    branches.

        (1) Other locations--

        (i) Within the institution. An insured depository institution may

    display signs in other locations within the insured depository

    institution that vary from the official sign in size, colors, or

    materials.

        (ii) Other facilities. An insured depository institution may

    display the official sign on or at Remote Service Facilities. If an

    insured depository institution displays the official sign at a Remote

    Service Facility, and if there are any noninsured institutions that

    share in the Remote Service Facility, any insured depository

    institution that displays the official sign must clearly show that the

    sign refers only to a designated insured depository institution(s). As

    used in this part, the term ``Remote Service Facility'' includes any

    automated teller machine, cash dispensing machine, point-of-sale

    terminal, or other remote electronic facility where deposits are

    received.

        (2) Newly insured institutions. A depository institution shall

    display the official sign no later than its twenty-first

    [[Page 40443]]

    day of operation as an insured depository institution, unless the

    institution promptly requested the official sign from the Corporation,

    but did not receive it before that date.

        (b) Procuring official sign. An insured depository institution may

    procure the official sign from the Corporation for official use at no

    charge. Information on obtaining the official sign is posted on the

    FDIC's Internet Web site, http://www.fdic.gov. Alternatively, insured

    depository institutions may procure from commercial suppliers signs

    that vary from the official sign in size, colors, or materials.

    However, only the official sign may be displayed at stations or windows

    where insured deposits are usually and normally received. Any insured

    depository institution which has promptly submitted a written request

    for an official sign to the Corporation shall not be deemed to have

    violated this section by failing to display the official sign, unless

    the insured depository institution fails to display the official sign

    after receipt thereof.

        (c) Required changes in sign. The Corporation may require any

    insured depository institution, upon at least thirty (30) days' written

    notice, to change the wording of the official sign in a manner deemed

    necessary for the protection of depositors or others.

    Sec.  328.3  Official advertising statement requirements.

        (a) Advertisement defined. The term advertisement, as used in this

    part, shall mean a commercial message, in any medium, that is designed

    to attract public attention or patronage to a product or business.

        (b) Official advertising statement. The official advertising

    statement shall be in substance as follows: ``Member of the Federal

    Deposit Insurance Corporation.''

        (1) Optional short title and symbol. The short title ``Member of

    FDIC'' or ``Member FDIC,'' or a reproduction of the ``symbol'' of the

    Corporation (as defined in section 328.1 of this part), may be used by

    insured depository institutions at their option as the official

    advertising statement.

        (2) Size and print. The official advertising statement shall be of

    such size and print to be clearly legible. If the ``symbol'' of the

    Corporation is used as the official advertising statement, and the

    ``symbol'' must be reduced to such proportions that the two lines of

    smaller type above and below ``FDIC'' are indistinct and illegible,

    those lines of smaller type may be blocked out or dropped.

        (c) Use of official advertising statement in all advertisements.

        (1) General requirement. Except as provided in paragraph (d) of

    this section, each insured depository institution shall include the

    official advertising statement, prescribed in paragraph (b) of this

    section, in all advertisements that either promote deposit products and

    services or generally promote banking services offered by the

    institution.

        (2) Foreign depository institutions. When a foreign depository

    institution has both insured and noninsured U.S. branches, the

    depository institution must also identify which branches are insured

    and which branches are not insured in all of its advertisements

    requiring use of the official advertising statement.

        (3) Newly insured institutions. A depository institution shall

    include the official advertising statement in its advertisements no

    later than its twenty-first day of operation as an insured depository

    institution.

        (d) Types of advertisements which do not require the official

    advertising statement. The following types of advertisements do not

    require use of the official advertising statement:

        (1) Signs or plates in the insured depository institution offices

    or attached to the building or buildings in which such offices are

    located;

        (2) Joint or group advertisements of banking services where the

    names of insured depository institutions and noninsured institutions

    are listed and form a part of such advertisements;

        (3) Advertisements by radio or television, other than display

    advertisements, which do not exceed thirty (30) seconds in time;

        (4) Advertisements which are of the type or character that make it

    impractical to include the official advertising statement, including,

    but not limited to, promotional items such as calendars, matchbooks,

    pens, pencils, and key chains; and

        (5) Advertisements which contain a statement to the effect that the

    depository institution is a member of the Federal Deposit Insurance

    Corporation, or that the depository institution is insured by the

    Federal Deposit Insurance Corporation, or that its deposits or

    depositors are insured by the Federal Deposit Insurance Corporation to

    at least $100,000 for each depositor.

        (e) Official advertising statement in non-English language. The

    non-English equivalent of the official advertising statement may be

    used in any advertisement, provided that the translation has had the

    prior written approval of the Corporation.

    Sec.  328.4  Prohibition against receiving deposits at same teller's

    station or window as noninsured institution.

        (a) Prohibition. An insured depository institution may not receive

    deposits at any teller's station or window where any noninsured

    institution receives deposits or similar liabilities.

        (b) Exception. This section does not apply to deposits received at

    a Remote Service Facility.

        Dated at Washington DC, this 11th day of July, 2006.

        By order of the Board of Directors.

    Federal Deposit Insurance Corporation.

    Robert E. Feldman,

    Executive Secretary.

    [FR Doc. 06-6261 Filed 7-14-06; 8:45 am]

    BILLING CODE 6714-01-P