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FDIC Federal Register Citations

People's Bank

Eric J. Appellof
Vice President and Senior Counsel
People’s Bank
850 Main Street, 13th Floor
Bridgeport, CT 06604

May 31, 2005

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW.
Washington, DC 20429

Re: Part 335 – Securities of Nonmember Insured Banks

Dear Mr. Feldman:

These comments relate to interim final rules published by the Federal Deposit Insurance Corporation (the “FDIC”) as amendments to 12 CFR Part 335 – Securities of Nonmember Insured Banks. These comments are being submitted by the undersigned on behalf of People’s Bank of Bridgeport, Connecticut.

Section 3, Adoption of Section 335.121
Section 12(i) of the Securities Exchange Act of 1934 (the “Exchange Act”) clearly gives the FDIC authority to issue regulations implementing Section 10A(m) of the Exchange Act. However, the regulation of national securities exchanges and national securities associations is otherwise exclusively within the purview of the Securities and Exchange Commission (the “SEC”), which some time ago adopted regulations mandating changes to the listing standards of these exchanges and associations in accordance with Section 10A(m). The national securities exchanges and associations have, in turn, revised their listing standards as required by the SEC’s regulations. The FDIC’s adoption of Section 335.121 would be entirely duplicative of an existing regulatory standard, and is therefore not necessary.

It is certainly appropriate for regulatory agencies to issue parallel or even identical regulations when the groups to be regulated are different. Thus, there is a definite need for the FDIC to promulgate regulations under Section 12(i) of the Exchange Act, where those regulations apply directly to state-chartered, non-member banks which would otherwise not be subject to certain SEC regulations. The situation differs, however, where a comprehensive system of regulation already applies to the regulated group. Section 10A(m) of the Exchange Act focuses on the national securities exchanges and associations as the entities to be regulated, not on the financial institutions which are otherwise the focus of Section 12(i) of the Exchange Act. It seems reasonable to conclude that all banks regulated by the FDIC pursuant to Section 12(i) have already taken action to comply with recent revisions to applicable listing standards. The adoption of Section 335.121 will not achieve anything different from that which has already been accomplished by virtue of existing SEC regulations.

By adopting Section 335.121, the FDIC will be exercising regulatory authority over national securities exchanges and associations, entities with which the FDIC has no prior experience (and which themselves may not anticipate the FDIC as the source of enforceable regulation). On the other hand, the SEC has long experience regulating these entities, and established procedures and processes in place for doing so. In this case, the FDIC should forego the exercise of its authority under Section 10A(m) of the Exchange Act, relying instead on the SEC’s broader oversight of the national securities exchanges and associations as the appropriate means to implement and enforce this portion of the law.

Section 6, Amendment of Section 335.221
The incorporation of SEC Regulation FD into applicable FDIC regulations is desirable. However, adding this reference as Section 335.221(d), under the heading “Forms for registration of securities and similar matters”, may not be the most appropriate placement. It would be preferable to add this item as its own regulation, perhaps as Section 335.271 or 335.341. This would make it more prominent and easily recognizable as a regulation dealing with disclosure obligations and not with forms.

Thank you for permitting us to submit these comments.

Sincerely,
/s/ Eric J. Appellof
Vice President and Senior Counsel
People’s Bank



Last Updated 06/01/2005 Regs@fdic.gov

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