SUMMARY: As part of the FDIC's systematic review of its regulations and
written policies under section 303(a) of the Riegle Community
Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is
rescinding its Statement Regarding Eligibility to Make Application to
Become an Insured Bank Under section 5 of the Federal Deposit Insurance
Act (Statement of Policy). The Statement of Policy describes the
analysis the FDIC used when carrying out a former statutory directive
to evaluate certain factors in determining an industrial loan company's
eligibility for deposit insurance. Since the statute is no longer in
force, the FDIC is rescinding this outmoded Statement of Policy.
EFFECTIVE DATE: This Statement of Policy is rescinded April 2, 1997.
FOR FURTHER INFORMATION CONTACT: Jesse G. Snyder, Assistant Director
(202/898-6915), Division of Supervision; Jamey Basham, Counsel, (202/
898-7265), Legal Division, FDIC, 550 17th Street, N.W., Washington,
SUPPLEMENTARY INFORMATION: The FDIC is conducting a systematic review
of its regulations and written policies. Section 303(a) of the CDRI (12
U.S.C. 4803(a)) requires each federal banking agency to streamline and
modify its regulations and written policies in order to improve
efficiency, reduce unnecessary costs, and eliminate unwarranted
constraints on credit availability. Section 303(a) also requires each
federal banking agency to remove inconsistencies and outmoded and
duplicative requirements from its regulations and written policies.
As part of this review, the FDIC has determined that the Statement
of Policy is outmoded, and that the FDIC's written policies can be
streamlined by its elimination.
The FDIC originally adopted the Statement of Policy on February 27,
1984 (49 FR 7865 (March 2, 1984)). It addresses issues surrounding
implementation of certain provisions of the Garn-St. Germain Depository
Institutions Act of 1982, Pub. L. 97-320 (Garn Act), which expanded the
types of state-chartered depository institutions eligible for FDIC
insurance, to include industrial banking companies and similar
institutions. These special-purpose entities, known as industrial
banks, industrial loan companies, industrial loan and thrift companies,
or loan and investment companies, extend installment credit to
consumers and accept some form of savings deposits. Before the Garn
Act, the only eligible state-chartered entities were banks and trust
companies with explicit statutory authority to accept deposits other
than trust deposits.
The Garn Act amended section 5(a) of the Federal Deposit Insurance
Act (FDI Act) (12 U.S.C. 1815(a)) to list special procedural
requirements for the FDIC to fulfill before insuring industrial banking
companies lacking bank charters. The FDIC was required to determine
that the industrial banking company was chartered and operating under
state laws providing for examination, supervision, and liquidation
comparable to banks.
In the Federal Deposit Insurance Corporation Improvement Act of
1991, Pub. L. 102-242 (Improvement Act), section 5(a) of the FDI Act
was comprehensively rewritten without inclusion of these special
requirements. As a result, the FDIC is no longer required to apply a
specialized set of factors in determining the eligibility of industrial
banking companies as a class for deposit insurance.
The Statement of Policy presents a mix of the details of the
section 5(a) analysis and descriptions of the FDIC's approach to
general eligibility issues relating to industrial banking companies.
Given the removal of the section 5(a) factors from the FDI Act, the
former analysis is no longer necessary and these portions of the
Statement of Policy are outmoded. As for the latter analysis, a
description of general eligibility issues was salutary during the Garn
Act's implementation period, when numerous industrial banking companies
were first presented with the issue of eligibility for such companies
under the laws of their respective states. However, over a decade
later, these questions arise rarely, and the FDIC's written policies
can be streamlined by elimination of the Statement of Policy. For the
above reasons, the Statement of Policy is rescinded.
By order of the Board of Directors.
Dated at Washington, D.C. this 25th day of March, 1997.
Federal Deposit Insurance Corporation
Robert E. Feldman,
Deputy Executive Secretary.
[FR Doc. 97-8342 Filed 4-1-97; 8:45 am]
BILLING CODE 6714-01-P