Thank you for the opportunity to comment on the FDIC Advertisement of
Membership proposal that was issued on July 17, 2006. Citrus and Chemical
Bank is an $850 million community bank located in Bartow, Florida. I am the
compliance officer for the bank, a former OTS examiner, and have been in the
industry for approximately 19 years. Please consider the following comments:
• Section 328.1 - I agree that it would be in the best interests of both
insured banks and savings associations to require only one official FDIC
sign be used. Since I have worked for both types of financial institutions,
this part of the regulation was quite confusing and was probably more
onerous for savings institutions to abide by.
• Section 328.1 - I am not a proponent of the revision to the FDIC sign
that states “Each depositor insured to at least $100,000.” The revised FDIC
law states that the FDIC insurance limit could change every five years
depending on the rate of inflation. Therefore, if the rate of inflation
changes five years from now, will all insured banks and savings associations
need to again replace all the FDIC official signs if the language is revised
(i.e., “Each depositor insured to at least $105,000”)? This would be a
continuous cycle every five years if the limits change. That is burdensome
to financial institutions and unnecessary if the FDIC official sign language
is one that is not considered “PERMANENT.” While we are not a large bank,
can you imagine Bank of America having to replace all the official FDIC
signs every five years in its thousands of branches. Could that language be
removed entirely or at least revised where it will not need to be changed
again in the future? Most of the public is probably aware of the FDIC
insurance limits, there is ample reference material on the Internet, few
people probably look at the FDIC official sign, or financial institution
staff can answer questions related to the amount of insurance if need be.
• Section 328.3 – I strongly disagree with certain proposals related to
the use of the FDIC advertising statement (e.g., Member FDIC), specifically
removal of various items that were previously exempted (FDIC proposing to
remove 15 of 20 exemptions):
-- It is being proposed that “ALL advertisements that either promote
deposit products and services OR generally promote banking services offered
by the institution include the FDIC advertising statement.” “Generally
promote banking services” is too ambiguous in my opinion. Previously, the
regulation stated that advertisements relating to the making of loans by the
bank or loan services were exempted. Since loans are a banking service, will
the revision require us to add the “Member FDIC” to loan advertisements? I
thought only deposits were insured by the FDIC. Adding “all banking
services” that will require the FDIC advertising statement appears to be
more burdensome, will require policy and procedural changes, and training
where necessary. I recommend maintaining the exemption for loan-related
advertising so as not to burden financial institutions with this additional
regulatory requirement or confuse the public. I also recommend that the FDIC
advertising statement only be required for advertisements promoting deposit
products since that is all that FDIC will insure.
-- I am STRONGLY OPPOSED to removing the exemption for “bank supplies such
as stationery, envelopes, deposit slips, checks, drafts, signature cards,
deposit passbooks, certificates of deposit, etc.” The Regulatory Flexibility
Act section of the proposal states that “insured banks have complied with
similar advertising requirements for over seventy years without significant
expense…..Moreover, mandatory compliance with the advertising requirements
by savings associations would not entail significant expense.” Further, it
states that there would not be a significant economic impact on a
substantial number of small entities. If insured banks and savings
associations are going to be required to begin including “Member FDIC” to
its stationery, envelopes, and every other piece of bank supply that may
generally promote banking services, that will be a huge expense to every
financial institution that will need to comply. The Regulatory Flexibility
Act section as written does not appear to address all the expenses involved
in such a process. If the final regulation includes requiring the
advertising statement where we are generally promoting banking services,
then such items as envelopes that are given to customers to put cash in from
a withdrawal (envelope shows Polk County’s Bank Since 1954 and our bank
name) or even a post-it note that says “Thanks for recommending C&C Bank”
may need “Member FDIC” added since this could be considered as promoting
bank services or designed to attract public attention or patronage to a
product or business (definition of advertisement). This would be unduly
burdensome and costly to institutions, and I recommend that the bank supply
exemption remain in the final regulation.
-- “Listings in directories” also was an exemption to the “Member FDIC”
statement, but the proposal has removed it. I am assuming that this means
telephone directories. If so, I am opposed to the removal of this exemption
since insured financial institutions do not publish telephone directories
and cannot conceivably have “Member FDIC” shown after their name and
telephone number in a telephone book listing. If an institution has an
advertisement in the telephone directly, then I agree that the advertising
statement should be included when required. I recommend that the directory
exemption remain in the final regulation.
-- “Advertisements relating to safekeeping box business or services” is
another exemption that is proposing to be removed. I believe this refers to
safe deposit boxes. If so, I believe that safe deposit boxes are NOT insured
by the FDIC; therefore, advertisements of this type of service cannot
display “Member FDIC” in my opinion. I recommend that the safekeeping box
business or services exemption remain in the final regulation
• The proposed rule also stated that there would be clarifications in
section 328.3 regarding temporary exemptions from advertising requirements
for good cause, concerns on advertising copy that does not include the
official advertising statement that is on hand on the date the advertising
requirements become operative, and how to handle outstanding billboard
advertisements. However, none of these were included in the proposed rule
for review.
• The proposal requested comments on advertising for non-deposit products
(NDPs) or hybrid products that offer both NDP and deposit-related products
or services. This often is a matter of confusion for compliance officers and
should be clarified. The proposal also was somewhat confusing since it was
soliciting comments on prohibiting use of the official advertising statement
for hybrid products AND require that the official advertising statement be
segregated from information about NDPs and insured deposit products. Did the
proposal mean “OR” between these two statements. Our financial institution,
as well as probably many others, has a trust department that offers NDP
products such as insurance or investments. Some of the trust department
products such as IRAs are FDIC insured, while other investments such as
mutual funds are not. Marketing Departments often like to include all the
services that are offered by trust departments, investments, insurance and
the like all in one advertisement. This makes it difficult to comply with
the FDIC regulation and the Interagency Policy Statement on Retail Sales of
Nondeposit Investment Products at the same time. Not including “Member FDIC”
or including it in hybrid advertisements produces violations. To clarify, I
recommend that the official advertising statement not be required for NDP
only or hybrid products.
Thank you for your consideration of these comments when revising the FDIC
advertising regulation.
