FDIC PROPOSES LICENSING REQUIREMENTS FOR SECURITIES REPRESENTATIVES,
SETS SAIF ASSESSMENTS AND APPROVES AGENCY BUDGET
FOR IMMEDIATE RELEASE PR-95-96 (12-11-96)
Media Contact: Robert M. Garsson (202) 898-6993
The Federal Deposit Insurance Corporation today proposed
licensing requirements for bank employees who sell nondeposit
investments such as mutual funds. The program, if approved after a
60-day comment period, would be administered by the National
Association of Securities Dealers Inc. (NASD).
In other action, the Board took steps to set assessments on
SAIF-assessable deposits at zero for the best-managed institutions;
announced assessment rates for Financing Corporation bonds;
approved a 1997 budget that is 12 percent lower than the current
year's budget; and proposed a rule that clarifies securities
recordkeeping requirements for state-chartered nonmember banks.
The proposed securities licensing rule would establish
requirements for banks and bank securities representatives (BSR)
that are consistent with the professional qualifications for broker-
dealers and registered representatives. The NASD will administer
the licensing of bank securities representatives for the FDIC and
has agreed to use its central registration depository as a database
for tracking sponsoring banks and BSRs.
"This rule will enhance consumer protection by assuring
bank customers that the securities representatives they deal with
have adequate training and knowledge of the uninsured products
they sell," said FDIC Chairman Ricki Helfer.
Under the rule, bank employees will be required to take and
pass a qualification examination as a prerequisite to engaging in
the retail solicitation, recommendation, purchase, or sale of
certain securities. After passing the exam, they would be required
to register with the NASD as a bank securities representative.
The rule would also require institutions employing BSRs to
register with the NASD as sponsoring organizations and to notify
the NASD when securities representative leave the bank.
Institutions would be required to withdraw their name as a
sponsoring organization through the NASD if they no longer
employ any BSRs.
The Federal Reserve Board and the Comptroller of the
Currency are expected to issue similar proposals.
In setting new Savings Association Insurance Fund
assessment rates for the first semiannual period, the board
established a risk-based schedule that ranges from 4 basis points --
or 4 cents for each $100 of assessable deposits -- to 31 basis points.
The rule also gives the board the flexibility to adjust rates by as
much as five basis points without notice-and-comment rulemaking.
The board used that authority today to lower SAIF assessment
rates to a range of 0 to 27 basis points.
The new rates, which are identical to those previously
approved for Bank Insurance Fund members, are effective as of
October 1, 1996, for Sasser and Oakar institutions and on January
1, 1997, for all other SAIF-insured institutions.
The board also announced Financing Corporation
assessment rates for the first semiannual period of 1997. The
annualized rate amounts to 6.48 basis points for SAIF members
and 1.3 basis points for BIF members. Although FICO has legal
authority to set the rate, the FDIC acts as collection agent for
FICO. Under the Deposit Insurance Funds Act of 1996, the FICO
assessment is collected separately and in addition to the insurance
fund assessment. The FICO assessment pays interest on debt
incurred in an effort to recapitalize the former Federal Savings and
Loan Insurance Corporation.
In addition, the board also approved a 1997 budget of $1.62
billion, down $221 million or 12 percent from the $1.84 billion
authorized in 1996. The budget reduction follows a year in which
spending is expected to be $80 million below budget and reflects
the continued impact of the Corporation's downsizing initiatives.
The 1997 budget includes $39 million in expenses related
to the downsizing. The spending, which will pay for office
consolidation and an employee buyout program, will result in
substantial savings beginning in 1998. In 1996, the Corporation
was able to achieve savings by consolidating the RTC Financial
Service Centers into FDIC Field Financial Operations in Dallas,
Texas; through staff reductions; and by decreasing reliance on
outside lawyers as the banking industry's health improved and
The board also approved a proposed rule for recordkeeping
and confirmation requirements for state-chartered, nonmember
banks. The proposal reorganizes Part 344 of the FDIC's rules and
regulations, clarifies areas where the rule was confusing,
incorporates significant interpretive positions and updates various
provisions to address market developments and regulatory changes
by other regulators.
Congress created the Federal Deposit Insurance Corporation
in 1933 to restore public confidence in the nation's banking
system. The FDIC insures deposits at the nation's 11,670
banks and savings associations and it promotes the safety and
soundness of these institutions by identifying, monitoring and
addressing risks to which they are exposed.
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NW, Room 100, Washington, DC, ((703) 562-2200).