[Federal Register: July 16, 2001 (Volume 66, Number 136)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
FEDERAL DEPOSIT INSURANCE CORPORATION
Request for Comment on Study of Banking Regulations Regarding the
Online Delivery of Banking Services
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Request for comment.
SUMMARY: The FDIC is reviewing its regulations regarding the delivery
of financial services. The purpose of this review is to identify
changes or additions to its regulations that would facilitate the use
of new technologies by financial institutions. This Request for Comment
solicits comment on issues arising from the electronic delivery of
financial products and services.
DATES: Comments must be received by September 14, 2001.
ADDRESSES: Send written comments to Robert E. Feldman, Executive
Secretary, Attention: Comments/OES, Federal Deposit Insurance
Corporation, 550 17th Street, NW., Washington, DC 20429. Comments may
be hand-delivered to 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. (facsimile number (202) 898-3838; Internet address:
email@example.com ). Comments may be posted on
the FDIC internet site at http://www.fdic.gov/regulations/laws/federal/
propose.html and may be inspected and photocopied in the FDIC Public
Information Center, Room 100, 801 17th Street, NW., Washington, DC
20429, between 9 a.m. and 4:30 p.m. on business days.
FOR FURTHER INFORMATION CONTACT: Jeffrey M. Kopchik, Senior Policy
Analyst, Division of Supervision (202) 898-3872; or Robert A. Patrick,
Counsel, Legal Division (202) 898-3757.
Section 729 of the Gramm-Leach-Bliley Act, Public Law 106-102
(GLBA), requires the FDIC, and other federal bank regulatory agencies,
to review regulations regarding the delivery of financial services and
report to Congress recommendations for adapting existing requirements
to online banking and lending. The purpose of this Request for Comment
is to invite public comment on issues regarding financial institutions'
involvement in electronic banking, before submission of the
Corporation's report to Congress. Public comment will help determine
whether any FDIC regulations should be revised to remove regulatory
impediments to financial institutions' use of new technologies. The
FDIC also would like to know whether it should consider promulgating
regulations that would facilitate financial institutions' use of new
technologies. Based on the comments received, the FDIC, in its report
to Congress, may identify possible revisions or additions to FDIC
regulations or supervisory guidance.
The application of new technologies to traditional banking products
and services is dramatically altering the ways in which financial
institutions conduct business. Advances in telecommunications provide
financial institutions with faster and more efficient communication and
data transmission. The Internet provides financial institutions with a
vehicle to reach a global market area without an investment in ``brick
and mortar'' offices. Developments in technology are causing financial
institutions to reevaluate existing delivery channels and business
practices, develop new products and services, and serve customers more
Through the issuance of supervisory guidelines such as the
Standards for Safeguarding Customer Information, 12 CFR part 364,
Appendix B (66 FR 8616, Feb. 1, 2001) (FIL 22-2001, March 14, 2001),
the FDIC is working to identify and educate banks about the risks
presented by electronic banking and to ensure that its regulations
appropriately address these risks.\1\
\1\ The FDIC issued electronic banking examination procedures in
January 1997 and implemented an electronic banking subject matter
expert program in April 1997. The Division of Supervision created an
Electronic Banking Branch to focus attention on electronic banking
supervisory issues in September 2000. In addition, the FDIC has
issued a variety of written guidance concerning risks and
appropriate procedures for electronic banking. See e.g., FIL 81-
2000, Risk Management of Technology Outsourcing (November 29, 2000);
FIL 77-2000, Bank Technology Bulletin, Internet Domain Names
(November 9, 2000); FIL 72-2000, Electronic Signature in Global and
National Commerce Act (November 2, 2000); FIL 67-2000, Security
Monitoring of Computer Networks (October 3, 2000); FIL 63-2000,
Online Banking (September 21, 2000); FIL 131-97, Security Risks
Associated with the Internet (December 18, 1997).
Commenters are invited to submit comments and recommendations in
connection with any of the following questions or any other issues
relating to the FDIC's policies or procedures for supervising financial
institutions' use of electronic delivery channels.
Are there specific regulations the FDIC should modify
because they impede the use of a new technology that would allow
financial institutions to offer improved products or services in a more
efficient manner and at a lower cost?
Are there areas where financial institutions would benefit
from additional clarification of rules or guidance concerning the risks
associated with electronic banking activities?
Are there specific areas in which regulatory changes are
needed to enhance consumer acceptance of, confidence in, or access to,
The Internet has made it possible for financial institutions and
non-financial commercial enterprises to partner in ways that may not be
apparent to customers visiting a web site. For example, a financial
institution's web site may include hyperlinks that transfer the
customer to the web sites of one or more non-financial institutions.
These other web sites may provide non-financial information or sell
non-financial products or services. Sites differ in the degree to which
they inform a person that products or services accessible through the
selection of a hyperlink are, or are not, offered, sponsored, or
endorsed by the bank, which may be confusing to site visitors.
Should the FDIC promulgate a regulation or publish
guidance setting forth standards for state nonmember banks concerning
the use of hyperlinks?
Are there technology solutions to address these issues?
Internet banking raises issues with respect to how the FDIC should
interpret existing laws and regulations that reference geographic terms
or rely on concepts of physical presence. For example, the definition
of ``branch'' contained in Sec. 303.41(a) of the FDIC's regulations (12
CFR 303.41(a)) assumes the existence of a building permanently or
temporarily located at a specific physical location. It does not
address banking transactions conducted over the Internet where the
consumer and a bank representative do not meet face to face. See 12 CFR
part 303, subpart C.
Does reliance on these terms and concepts create an
impediment to financial institutions conducting operations on the
Internet? If so, how should the FDIC clarify its regulations?
Are there other instances in which online banking or
lending would benefit from a clarification of references to physical
location in FDIC regulations? If so, how should the FDIC address those
Certain loans must be supported by written real estate appraisals
performed in accordance with uniform standards, supported by the
presentation and analysis of relevant market information. See 12 CFR
Would online lending benefit from any clarification of the
FDIC's application of this regulation in terms of what constitutes a
written appraisal, or the presentation of relevant market information.
If so, what clarifications should the FDIC make to facilitate the use
of appraisals in electronic form?
What types of controls regarding authentication of an
electronic appraisal, certification of the appraiser, or other
standards would be appropriate to assure authenticity and integrity in
connection with filing electronic appraisals?
The Electronic Signatures in Global and National Commerce Act, 15
U.S.C. 7001, et seq. (E-Sign Act), provides that contracts and
signatures with respect to any transaction affecting interstate
commerce may not be denied validity solely because they are in
electronic form. The E-Sign Act also provides that records of such
contracts may be maintained in electronic form, subject to certain
requirements, i.e., they must accurately reflect the information in the
contract, be accessible to all persons who are entitled to access them,
and be capable of being accurately reproduced for later reference.
Should the FDIC promulgate regulations or publish guidance
setting forth standards for the use of electronic signatures and
records? See 15 U.S.C. 7004.
By order of the Board of Directors.
Dated at Washington, DC, this 10th day of July, 2001.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
[FR Doc. 01-17666 Filed 7-13-01; 8:45 am]
BILLING CODE 6714-01-P