FDIC Federal Register Citations

[Federal Register: February 11, 1997 (Volume 62, Number 28)]

[Proposed Rules]

[Page 6142-6147]

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

[DOCID:fr11fe97-18]

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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 328

RIN 3064-AB99

Advertisement of Membership

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking; request for comment.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is proposing

to amend its regulation entitled ``Advertisement of Membership''. The

proposed rule would: Consolidate the provisions that require insured

institutions to display official signs; extend the official advertising

statement that is currently required for insured banks to all insured

depository institutions; streamline the exceptions to the required use

of the official advertising statement; prohibit the use of the official

advertising statement in advertisements concerning nondeposit

investment products or similar nondeposit products; and specifically

delegate authority to approve the translation of the official

advertising statement to certain FDIC officials. The FDIC is inviting

comment on all aspects of its proposal as well as certain alternatives

to its proposal as discussed herein. In addition, the FDIC is

soliciting comment with respect to issues raised regarding the

applicability of this regulation to insured depository institutions

that are transmitting information to, or conducting business with,

existing or potential customers, over a computer network, such as the

Internet.

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

14, 1997.

ADDRESSES: Written comments shall be addressed to Office of the

Executive Secretary, Federal Deposit Insurance Corporation, 550 17th

Street, N.W., Washington, D.C. 20429. Comments may be hand delivered to

Room F-402, 1776 F Street, N.W., Washington, D.C., 20429, on business

days between 8:30

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a.m. and 5:00 p.m. [Fax number: (202) 898-3838; Internet address:

comments@fdic.gov]. Comments will be available for inspection at the

FDIC's Reading Room, Room 7118, 550 17th Street, N.W., Washington, D.C.

between 9:00 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Marc J. Goldstrom, Counsel, Legal

Division, Federal Deposit Insurance Corporation, Washington, D. C.

20429, telephone (202) 898-8807; Robert W. Walsh, Manager, Policy and

Program Development, Division of Supervision, Federal Deposit Insurance

Corporation, Washington, D.C. 20429, telephone (202) 898-6911.

SUPPLEMENTARY INFORMATION:

A. Need for the Proposed Rule

The FDIC is issuing this proposed rule in response to two

initiatives. Section 303 of the Riegle Community Development and

Regulatory Improvement Act of 1994 (CDRIA), Pub. L. 103-325, 108 Stat.

2160 (Sept. 23, 1994), requires that each federal banking agency,

consistent with the principles of safety and soundness, statutory law

and policy, and the public interest, conduct a review of the

regulations and written policies of that agency to, among other things:

streamline and modify those regulations and policies, and remove

inconsistencies and outmoded and duplicative requirements. In addition,

the FDIC has voluntarily committed itself to review its regulations on

a 5-year cycle. See Development and Review of FDIC Rules and

Regulations, 2 FED. DEPOSIT INS. CORP., LAW, REGULATIONS, RELATED ACTS

5057 (1984).

As a result of its review of part 328, and as described herein, the

FDIC has determined that certain aspects of the regulation may be

streamlined, another aspect of the regulation treats banks and savings

associations differently and accordingly should be modified to achieve

consistent treatment, another aspect of the regulation should be

modified to prohibit the use of the official advertising statement with

respect to the advertisement of nondeposit investment products and

similar nondeposit products, and a final aspect of the regulation

should clarify which FDIC officials are authorized to approve the

translation of the official advertising statement. In accordance with

section 303 of CDRIA, the FDIC believes that this proposal is

consistent with the principles of safety and soundness, statutory law

and policy, and the public interest.

B. The Current Rule and the Proposal

1. Signs

Part 328 contains requirements for the design and display of the

official bank sign of the FDIC. Only insured banks may use the official

bank sign. 12 U.S.C. 1828(a). 12 CFR 328.2(a).

Part 328 also contains requirements for the design and display of

the official savings association sign. Insured savings associations

must use the official savings association sign, and may not use the

official bank sign. Id. Sec. 328.4(a) and (e). Insured banks may use

either sign at their option. Id. Sec. 328.2(a).

The two sets of requirements are virtually identical. The FDIC

proposes to combine them into one.

Part 328 speaks of ``automatic service facilities'' in some places,

and of ``remote service facilities'' in other places. The two phrases

have the same meaning within part 328, however. The FDIC proposes to

use the phrase ``remote service facility'' in each place.

Part 328 contains an outdated reference to a date in 1989. The FDIC

proposes to delete it.

2. Advertising

(a) Proposal To Extend Official Advertising Statement Requirement to

Savings Associations

Part 328 requires insured banks to include the official advertising

statement in all their advertisements (with certain exceptions). Id.

Sec. 328.3(a). The basic form of the statement is ``Member of the

Federal Deposit Insurance Corporation'', which may be shortened to

``Member FDIC''. Id. Sec. 328.3(b). There is no equivalent requirement

for insured savings associations.

In light of the inconsistent treatment of banks and savings

associations, the FDIC proposes to require savings associations to use

the official statement in advertisements. The effect of this proposal

is that all insured depository institutions would be required to

include the statement in their advertisements.

The FDIC insures both banks and savings associations to the same

extent. See 12 U.S.C. 1811, 1813(c). There is no compelling

justification for applying the rule to banks and not savings

associations. Inconsistent treatment of banks and savings associations

on this matter only tends to confuse consumers as to whether the

institution's deposits are insured by the FDIC. We are of the view that

a consistent and uniform rule applicable to both banks and savings

associations will best serve the interests of the public and the

protection of the insurance funds.

The proposed rule is premised on the belief that if all insured

institutions are required to use the official advertising statement,

consumers are more likely to recognize the absence of federal deposit

insurance in advertisements by non-FDIC insured entities and can better

distinguish insured depository institutions from non-insured entities.

In today's environment with many non-banks providing banking type

services it is more important than ever that consumers have a method of

recognizing insured depository institutions. Recognition of FDIC

insurance is particularly needed in electronic media such as the

Internet where advertisements may originate from outside the United

States or from nonbank entities.

Alternatively, the FDIC could achieve consistent treatment of banks

and savings associations by eliminating the requirement that insured

banks use the official statement in advertisements. The effect of such

a proposal would be that all insured depository institutions would be

permitted (but not required) to include such a statement if they see

fit.

In support of such a proposal, one could argue that, as a general

matter, it is no longer necessary to require banks to use the official

statement in their advertising. Statutory and regulatory provisions

requiring banks to use the statement were enacted in 1935 ^{1, a}

time when the FDIC was new and unfamiliar. Moreover, having endured the

worst financial crisis in the nation's history, it was necessary to

restore public confidence in the banking system. Over the years, as a

result of the use of the official statement and other measures, banks

and FDIC insurance have become intertwined in consumers' minds. Indeed,

thrift customers arguably are aware of federal deposit insurance, even

though there is no requirement that thrifts use the official statement

in their advertisements.

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\1\ The statutory provision was originally enacted in the

Banking Act of 1935. Sec. 101 (v)(2), Banking Act of 1935, ch. 614,

49 Stat. 684, 701 (1935). Three months later, the FDIC promulgated a

regulation which, among other things, required banks to use the

official statement in advertisements. See Regulation III, section 3,

FDIC Annual Report 92 (1935). The statutory requirement for the

official statement in advertising was repealed in 1989. See

Financial Institutions Reform, Recovery and Enforcement Act of 1989

(``FIRREA''), Pub. L. 101-73, sec. 221, 103 Stat. 183, 266 (Aug. 9,

1989).

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Depository institutions and federal deposit insurance may be so

interconnected that, as discussed below, many consumers erroneously

assume that all bank products or services are FDIC insured.

Accordingly, a rule requiring all institutions to use the official

advertising statement may not

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alleviate such confusion and possibly could increase confusion among

consumers.

The issue of advertising by depository institutions is of great

importance to the FDIC. We are concerned that individuals understand

when they are entrusting their money to an FDIC insured institution and

when they are not. We are also extremely concerned that individuals

understand when their funds are insured and when they are not. The FDIC

invites comment on whether the proposed rule or the alternative

discussed herein (or some other alternative) would better achieve these

objectives. In addition we invite comment on the related issue of the

increased burden to savings associations that the proposed rule would

entail versus the potential benefits to be achieved.

(b) Proposals To Consolidate and Streamline Exceptions to the Required

Use of the Official Advertising Statement and To Prohibit Insured

Depository Institutions From Using the Official Advertising Statement

in Advertisements Concerning Nondeposit Investment Products

Part 328 contains 20 exceptions to the required use of the official

advertising statement. 12 CFR 328.3(c). The FDIC proposes to

consolidate and streamline this paragraph into 11 exceptions. The two

separate exceptions for radio and television advertisements not

exceeding thirty seconds in time, 12 CFR 328.3(8) and (9), would be

combined into one exception without any change in substance.

The nine exceptions for advertisements relating to various types of

products or services which do not relate to deposits, 12 CFR 328.3(12)

through (20), would be combined into a single exception for

advertisements which do not relate to deposit products or services. The

current rule only has exceptions for advertisements relating to certain

types of nondeposit products or services. The proposed rule would

create an exception for any advertisement which does not relate to a

deposit product or service. This would have the effect of broadening

the exceptions to the required use of the official advertising

statement. The FDIC believes that there is no need to require the use

of the official advertising statement in any advertisement which does

not relate to deposit products or services. This proposal is consistent

with the purpose of the regulation and the mandates of section 303 of

the CDRIA.

Paragraph (d) of the proposed rule would prohibit an insured

depository institution from including the official advertising

statement or any similar statement in advertisements relating to

nondeposit investment products or similar nondeposit products. In

advertisements containing information about both insured deposits and

nondeposit investment products (or similar nondeposit products), the

information concerning insured deposits shall be clearly segregated

from the information about nondeposit investment products (or similar

nondeposit products) and shall contain either the official statement,

or any similar statement, including, but not limited to, statements to

the effect that the depository institution's deposits or depositors are

insured by the Federal Deposit Insurance Corporation to the maximum of

$100,000 for each depositor, or that specific deposit products are

insured by the Federal Deposit Insurance Corporation.

As indicated above, many consumers erroneously believe that all

bank or thrift products or services are FDIC insured. A recent

independent survey found that 30% of investors are not aware that the

FDIC does not insure bank mutual funds. ^{2 The FDIC is making this}

proposal because it is extremely concerned that depository institution

customers understand what is and is not covered by FDIC insurance. The

FDIC believes that a prohibition on the use of the official advertising

statement in advertisements relating to nondeposit investment products

or similar nondeposit products and a requirement that advertisements

containing information about both insured deposits and nondeposit

investment products (or similar nondeposit products) clearly segregate

the information about the different products will help to minimize

customer confusion on this matter.

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\2\ Scott Smith, ``Survey Says 70% of Investors Know U.S.

Doesn't Insure Mutual Funds'', American Banker, May 15, 1996, at 3

(discussing results of a survey of Investor Protection Trust

conducted by Princeton Survey Research Associates).

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This proposal is premised on the belief that it would minimize

customer confusion with respect to the non-insured status of nondeposit

investment products, such as mutual funds, and other similar nondeposit

products. Conversely, there are other alternatives which may be more

effective at alleviating customer confusion. For example, it could be

argued that the proposal to require the use of the official statement

(or similar statement) in advertisements concerning both types of

products will further confuse consumers as to the insured and non-

insured status of the products involved. Accordingly, not requiring, or

prohibiting, the use of the official statement (or similar statement)

in advertisements containing information on both types of products may

be more effective at minimizing customer confusion. The FDIC invites

comment on the rule as proposed in paragraph (d), the alternatives

discussed herein, or any other possible approach. In addition we invite

comment on the related issue of the increased burden to insured

depository institutions that the proposed rule or the alternatives

would entail, versus the potential benefits to be achieved.

Another alternative to minimize customer confusion as to the

insured or non-insured status of the various products offered by

insured depository institutions is to require insured depository

institutions to make certain disclosures when they advertise nondeposit

investment products, such as mutual funds. Specifically, insured

depository institutions would be required to disclose that such

products are: not insured by the FDIC; not deposits or other

obligations of, or guaranteed by, the depository institution; and

subject to investment risk, including possible loss of the principal

amount invested.

These disclosure requirements would not impose a new obligation on

insured depository institutions. In fact, these provisions are

contained in the Federal banking agencies' ``Interagency Statement on

Retail Sales of Nondeposit Investment Products''. Financial Institution

Letter FIL 9-94 dated February 17, 1994 (the ``Interagency

Statement''). Among other things the Interagency Statement provides

that insured depository institutions should make the aforementioned

disclosures in all of their advertising and promotional materials with

respect to the retail sale of nondeposit investment products.

It may be desirable to include these provisions in part 328 in

light of the recent FDIC study which showed more than a fourth of the

institutions surveyed are still failing to make basic disclosures

required under the Interagency Statement. ^{3 By including the}

advertising disclosure provisions in part 328, such provisions would be

of greater weight and enforceability.

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\3\ ``Survey of Nondeposit Investment Sales at FDIC-Insured

Institutions'', prepared for the FDIC by Market Trends, Inc., dated

May 5, 1996.

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The FDIC invites comment as to whether codifying these disclosure

provisions in part 328 will more effectively minimize customer

confusion with respect to the insured or non-insured status of the

various

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products offered by insured depository institutions. In addition, we

invite comment on the related issue of any possible increased burden to

insured depository institutions that such provisions would entail

versus the potential benefits to be achieved.

(c) Proposals Enhance Safety and Soundness of Insured Depository

Institutions and Consumer Protection

In testimony before the U.S. House of Representatives' Subcommittee

on Financial Institutions and Consumer Credit ^{4 the Chairman of}

the Board of Directors of the FDIC indicated that in conducting its

review of regulations pursuant to section 303 of CDRIA, the FDIC would

consider, among other things, whether the regulations are necessary to

ensure a safe and sound banking system and whether the regulations can

be justified on strong public policy grounds related to consumer

protection. The FDIC believes that the proposed rule meets these

criteria. It is intended to promote stability and confidence in the

banking system and to minimize the possibility of customer confusion

with respect to whether they are dealing with an FDIC insured

institution and whether the advertised product is insured by the FDIC.

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\4\ Also reported in 60 FR 62345 (December 6, 1995).

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(d) Statutory Authority

The FDIC has the statutory authority to, by regulation, require all

insured depository institutions to use the official statement in

advertising and to prohibit its use in the advertisement of nondeposit

investment products. Section 9 of the FDIA authorizes the FDIC to

prescribe ``such rules and regulations as it may deem necessary to

carry out the provisions of [the FDIA] or of any other law which it has

the responsibility of administering or enforcing''. 12 U.S.C. 1819(a)

Tenth. The Supreme Court has stated that ``[w]here the empowering

provision of a statute states simply that the agency may `make * * *

such rules and regulations as may be necessary to carry out the

provisions of this Act,' * * * the validity of the regulation will be

sustained so long as it is `reasonably related to the purposes of the

enabling legislation' ''. Mourning v. Family Publications Service,

Inc., 411 U.S. 356, 369 (1973) (quoting Thorp v. Housing Authority of

the City of Durham, 393 U.S. 268, 280-281 (1969)). Congress, in

creating the FDIC, sought to instill public confidence in the banking

system, promote safe and sound banking practices, eliminate runs on

banks by depositors, and safeguard deposits. See FDIC v. Allen, 584 F.

Supp. 386, 397 (E.D. Tenn. 1984); Doherty v. United States, 94 F.2d

495, 497 (8th Cir. 1938); Weir v. United States, 92 F.2d 634, 636 (7th

Cir. 1937). The proposed rule seeks to promote stability and confidence

in the banking system and avoid runs on banks by depositors. It is

therefore reasonably related to the enabling legislation. Similarly, in

promoting the aforementioned goals, the use or non-use of the official

statement is related to the safety and soundness of insured depository

institutions and is therefore subject to regulation under section 8(a)

of the FDIA, 12 U.S.C. 1818(a), and section 9(a) of the FDIA, 12 U.S.C.

1819(a) Tenth. See also FDIC v. Sumner Fin. Corp., 451 F.2d 898, 903

(``the FDIC has the power to make such rules as are reasonable and

necessary to effectuate the purposes of the act'').

(e) Clarification of Delegated Authority

Part 328 provides that 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.

12 CFR 328.3(e). The proposed rule clarifies that the Director,

Division of Compliance and Consumer Affairs; the Deputy Director,

Division of Compliance and Consumer Affairs; and any Regional Director,

Division of Compliance and Consumer Affairs, may provide such approval

on behalf of the FDIC.

C. Request for Comment--Electronic Banking Issues

In recent years, new and innovative media by which insured

depository institutions may market their products and transact business

have developed. Such media include computer networks such as the

Internet. Many financial institutions have established ``world wide web

sites'' ^{5 by which customers may obtain information about an}

institution and, in certain cases, transact business with the

institution. This recent proliferation of world wide web sites gives

rise to certain issues concerning whether and under what circumstances

part 328 should apply with respect to the Internet or other computer

networks. The FDIC is not currently proposing any changes to the rule

to address explicit questions arising out of this new technology.

However, these issues are discussed below and the FDIC is also

soliciting comment for the purpose of gathering information from the

public on such issues.

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\5\ The FDIC is aware of over 200 insured depository

institutions that have a presence on the Internet.

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Neither the proposed or existing rule define the term

``advertisement''. The staff is of the view that such term as used in

the proposed and existing rule is not limited to television, radio, or

print advertisements. Rather, such term would include, but not be

limited to, advertisements transmitted via computer networks such as

the Internet. Consumers using the Internet may typically view any one

of an institution's web pages ^{6 directly, or may enter the}

institution's top level or ``home page''. The staff is of the view that

every institution's home page is to some extent an advertisement and

accordingly should contain the official statement to the extent

required by the rule. ^{7 Whether subsidiary web pages contain}

advertisements will vary depending upon the content of the information

within the particular web page. The staff is of the view that each such

subsidiary web page that contains an advertisement should include the

official statement, unless such advertisement is subject to one of the

exceptions in Sec. 328.3(c).

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\6\ Web pages vary in length and may in certain cases encompass

several computer screens of information.

\7\ The staff's view is with respect to part 328 only. We do not

express an opinion as to whether institutions' home pages are

advertisements for other purposes. Furthermore, staff's views on

this matter would not preclude an institution from demonstrating

that its home page does not contain an advertisement for purposes of

part 328.

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The FDIC also seeks comment on whether and under what circumstances

it should require insured depository institutions to utilize the

electronic equivalent of the official bank or savings association sign

in their world wide web sites. Should such determination be different

with respect to world wide web sites at which business may be

transacted as opposed to sites where only information is conveyed?

D. Paperwork Reduction Act

The proposed rule would not constitute a ``collection of

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

Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Accordingly, the

procedural and analytical requirements prescribed by that Act do not

apply to the proposed rule.

E. Regulatory Flexibility Act

Compliance with the proposed rule takes only nominal advertising

space or time and does not add significantly to the cost of

advertisement. Insured banks have complied with the identical

requirement for over sixty years without significant expense.

Accordingly, the

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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 et

seq.). The provisions of the Regulatory Flexibility Act relating to an

initial and final regulatory flexibility analysis (5 U.S.C. 603 and

604) are not applicable.

List of Subjects in 12 CFR Part 328

Advertising, Bank deposit insurance, Savings associations, Signs

and symbols.

For the reasons stated in the preamble, the Board of Directors of

the FDIC proposes to amend 12 CFR part 328 as follows:

PART 328--ADVERTISEMENT OF MEMBERSHIP

1. The authority citation for part 328 is revised to read as

follows:

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

2. Section 328.0 is revised to read as follows:

Sec. 328.0 Scope.

This part 328 describes the official bank sign and the official

savings association sign, and prescribes their use by insured

depository institutions. It also prescribes the official advertising

statement insured depository institutions must include in certain

advertisements. Finally, it prohibits the use of the official

advertising statement and similar statements in advertisements

concerning nondeposit investment products. For purposes of this part

328, the term ``insured depository institution'' includes insured

branches of a foreign bank. Insured depository institutions which

maintain offices that are not insured in foreign countries are not

required to include the advertising statement in advertisements

published in foreign countries.

3. Section 328.2 is revised to read as follows:

Sec. 328.2 Procurement and display of official signs.

(a) Display--(1) Official sign. Each insured depository institution

shall continuously display its official sign at the locations specified

in paragraph (a)(2)(i) of this section, as follows:

(i) Insured banks. At the option of the insured bank, its official

sign is either the official bank sign or the official savings

association sign.

(ii) Insured savings associations. Insured savings associations

shall display the official savings association sign as provided herein.

An insured savings association shall not display the official bank sign

at its principal place of business or at any of its branches.

(2) Locations--(i) Required locations. Except as provided in

paragraph (a)(2)(ii) of this section, an insured depository institution

shall display its 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.

(ii) Other locations--(A) Within the institution. An insured

depository institution may display its official sign in other locations

within the insured depository institution in other sizes, colors, or

materials.

(B) Other facilities. An insured depository institution is

permitted, but is not required, to display its official sign on remote

service facilities including automated teller machines, cash dispensing

machines, point-of-sale terminals, and other electronic facilities

where deposits are received. If an insured depository institution

displays its 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 its official

sign must clearly show that the sign refers only to a designated

insured depository institution(s).

(3) Newly insured institutions--(i) Initial grace period. A

depository institution becoming an insured depository institution shall

not be required to display its official sign until twenty-one (21) days

after its first day of operation as an insured depository institution.

(ii) Early display permitted. An insured depository institution may

display its official sign prior to the date display is required.

(b) Obtaining signs--(1) Procurement from the FDIC--(i) Cost;

design. An insured depository institution may procure the appropriate

official signs from the Corporation for official use at no charge.

(ii) Order blanks. The Corporation shall, upon request, furnish an

order blank to an insured depository institution for use in procuring

official signs.

(iii) Safe harbor rule. Any insured depository institution which

promptly, after the receipt of an order blank, fills it in, executes

it, and properly directs and forwards it to the Federal Deposit

Insurance Corporation, Washington, D.C. 20429, shall not be deemed to

have violated this section on account of not displaying an official

sign, or signs, unless the insured depository institution shall omit to

display such official sign or signs after receipt thereof.

(2) Procurement from other sources. Insured depository institutions

may procure official signs or signs reflecting variations in size,

colors, or materials from commercial suppliers.

(c) Receipt of deposits at same teller's station or window as

noninsured institution. An insured depository institution may not

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

institution receives deposits or similar liabilities, except a remote

service facility as defined in Sec. 303.0(b)(18) of this chapter.

(d) Required changes in signs. The Corporation may require any

insured depository institution, upon at least 30 days' written notice,

to change the wording of its official signs in a manner deemed

necessary for the protection of depositors or others.

4. Section 328.3 is revised to read as follows:

Sec. 328.3 Official advertising statement and manner of use by insured

depository institutions.

(a) Mandatory use. Each insured depository institution shall

include the official advertising statement, prescribed in paragraph (b)

of this section, in all of its advertisements except as provided in

paragraphs (c) and (d) of this section.

(1) An insured depository institution is not required to include

the official advertising statement in its advertisements until thirty

(30) days after its first day of operation as an insured depository

institution.

(2) In cases where the Board of Directors of the Federal Deposit

Insurance Corporation shall find the application to be meritorious,

that there has been no neglect or willful violation in the observance

of this section and that undue hardship will result by reason of its

requirements, the Board of Directors may grant a temporary exemption

from its provision to a particular depository institution upon its

written application setting forth the facts. For the procedure to be

followed in making such application see Sec. 303.8 of this chapter.

(3) In cases where advertising copy not including the official

advertising statement is on hand on the date the requirements of this

section become operative, the insured depository institution may cause

the official advertising statement to be included by use of a rubber

stamp or otherwise.

(4) When a foreign depository institution has both insured and

noninsured U.S. branches, the depository institution must identify

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which branches are insured and which branches are not insured in all of

its advertisements requiring the use of the official advertising

statement.

(b) Official advertising statement. The official advertising

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

Deposit Insurance Corporation''. The word ``the'' or the words ``of

the'' may be omitted. The words ``This bank is a'', ``This savings

association is a'', ``This savings and loan is a'', or the words ``This

institution is a'' or the name of the insured depository institution

followed by the words ``is a'' may be added before the word ``member.''

The short title ``Member of FDIC'' or ``Member FDIC'' or a reproduction

of the ``symbol'' may be used by insured depository institutions at

their option as the official advertising statement. The official

advertising statement shall be of such size and print to be clearly

legible. Where it is desired to use the ``symbol'' of the Corporation

as the official advertising statement, and the ``symbol'' must be

reduced to such proportions that the small lines of type and the

Corporation seal therein are indistinct and illegible, the Corporation

seal in the letter C and the two lines of small type may be blocked out

or dropped.

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

advertising statement. The following types of advertisements need not

include the official advertising statement:

(1) Statements of condition and reports of condition of an insured

depository institution which are required to be published by state or

federal law;

(2) Stationery (except when used for circular letters), envelopes,

deposit slips, checks, drafts, signature cards, deposit passbooks,

certificates of deposit, and other similar items;

(3) Signs or plates in the banking office or attached to the

building or buildings in which the banking offices are located;

(4) Listings in directories;

(5) Advertisements not setting forth the name of the insured

depository institution;

(6) Display advertisements in depository institution directory,

provided the name of the depository institution is listed on any page

in the directory with a symbol or other descriptive matter indicating

it is a member of the Federal Deposit Insurance Corporation;

(7) 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;

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

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

(9) Advertisements which are of the type or character making it

impractical to include thereon the official advertising statement

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

matchbooks, pens, pencils, and key chains;

(10) 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

the maximum of $100,000 for each depositor;

(11) Advertisements which do not relate to insured deposit products

or services.

(d) Prohibited use. (1) Except as provided in paragraph (d)(2) of

this section, an insured depository institution may not include the

official advertising statement or refer to either federal deposit

insurance or the Federal Deposit Insurance Corporation in any

advertisement relating to nondeposit investment products or similar

nondeposit products.

(2) In advertisements containing information about both insured

deposits and nondeposit investment products or similar nondeposit

products, the information concerning insured deposits shall be clearly

segregated from the information about nondeposit investment products

(or similar nondeposit products) and shall contain either the official

statement, or any similar statement, including, but not limited to,

statements to the effect that the depository institution's deposits or

depositors are insured by the Federal Deposit Insurance Corporation to

the maximum of $100,000 for each depositor, or that specific deposit

products are insured by the Federal Deposit Insurance Corporation.

(e) Billboard advertisements. Where an insured depository

institution has billboard advertisements in use as of [the effective

date of the final rule] which are required to include the official

advertising statement and the insured depository institution has direct

control of such advertisements either by possession or under the terms

of a contract, the institution shall, as soon as it can consistent with

its contractual obligations, cause the official advertising statement

to be included therein.

(f) 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. Authority to provide such

approval on behalf of the Corporation is hereby delegated to the

Director, Division of Compliance and Consumer Affairs; the Deputy

Director, Division of Compliance and Consumer Affairs; and each

Regional Director, Division of Compliance and Consumer Affairs.

Sec. 328.4 [Removed]

5. Section 328.4 is removed.

By order of the Board of Directors.

Dated at Washington, D.C., this 21st day of January, 1997.

Federal Deposit Insurance Corporation.

Jerry L. Langley,

Executive Secretary.

[FR Doc. 97-3319 Filed 2-10-97; 8:45 am]

BILLING CODE 6714-01-P