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4000 - Advisory Opinions

FDIC-Insured Industrial Loan Company Subject to Federal Reserve Regulation AA, Not to Federal Trade Commission Rule


May 7, 1986

Alan J. Kaplan, Counsel

Your letter of February 13, 1986, addressed to Renee Rivkis in our San Francisco Regional Office, has been referred to this office for reply.

Your letter inquires as to whether your client, ***, an FDIC-insured ***-chartered industrial loan company, is subject to Regulation AA (the so-called "Credit Practices Rule") of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 277) or to the Credit Practices Rule of the Federal Trade Commission (15 C.F.R. Part 444). You had earlier inquired as to whether *** is under the jurisdiction of the Federal Deposit Insurance Corporation ("FDIC") or the Federal Trade Commission ("FTC") for purpose of compliance with the Equal Credit Opportunity Act ("ECOA") and the Federal Reserve Board's implementing Regulation B (12 C.F.R. Part 202), and apparently had been advised by Ms. Rivkis that, so long as *** is insured by the FDIC, it is the FDIC that enforces ECOA and Regulation B with respect to ***.

Let me first state that I am in agreement with Ms. Rivkis' opinion with respect to the enforcement of ECOA and Regulation B. ECOA designates the FDIC as the enforcing agency for "banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System)." 15 U.S.C. 1691(a)(1)(C). Although the word "bank" is not defined in ECOA, we believe the term includes any institution meeting the definition of "State bank" under section 3(a) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(a). That definition includes, inter alia, an ". . . industrial bank or similar financial institution which the [FDIC's] Board of Directors finds to be operating substantially in the same manner as an industrial bank, . . . ." Since a finding that *** meets the definition of "State bank" was a requisite to its eligibility for FDIC insurance, it therefore follows, we think, that *** is a "bank" within the meaning of ECOA.

The Federal Reserve Board's Regulation AA derives from section 18(f) of the Federal Trade Commission Act (15 U.S.C. 57a(f)). Inasmuch as that statute designates the FDIC as the enforcing agency for FDIC-insured banks other than national banks, District banks, or Federal Reserve member banks, in a manner nearly identical to that of ECOA, we think a similar result should follow. Accordingly, we are of the view that ***, as a State-chartered FDIC-insured institution, is subject to Federal Reserve Regulation AA and not to the FTC rule. It follows, in our view, that the FDIC is the enforcing agency with respect to *** compliance with Regulation AA.

Finally, you have asked whether the FDIC can advise you regarding the question of which agency will be the "controlling" agency with respect to FDIC-insured financial institutions generally. The answer to this question would depend upon the particular kind of institution involved and the specific statute, regulation, activity, etc. in question. While we would be happy to respond to this question should it ever arise in the context of a particular matter involving a particular institution, we cannot provide a meaningful answer to so general a question.

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