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Each depositor insured to at least $250,000 per insured bank

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FDIC Federal Register Citations

July 18, 2001

Robert E. Feldman
Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429


In response to the Notice of Proposed Rulemaking concerning the adoption of a new regulation codifying General Counsel Opinion No. 12's definition of being engaged in the business of receiving deposits, we respectfully take this opportunity to endorse the adoption of the proposed new regulation.

Bank of New Castle is a Delaware bank, whose deposits are insured by the Federal Deposit Insurance Corporation. Bank of New Castle is not a "bank" for purposes of the Bank Holding Company Act of 1956 (the "BHCA"), since it limits its activities in accordance with section 2(C)(2)(F) of the BHCA. This Section provides that such institution "(i) engages only in credit card operations; (ii) does not accept demand deposits or deposits that the depositor may withdraw by check of similar means for payment to third parties or others; (iii) does not accept any savings or time deposit of less than $100,000; (iv) maintains only one office that accepts deposits; and (v) does not engage in the business of making commercial loans." Such a limited-purpose institution is typically referred to as a "credit card bank."

General Counsel's Opinion No. 12 concluded on the basis of the statutory language, the legislative history, the practices of the FDIC and the OCC, construction with other federal banking law, relevant case law, and state banking statutes that the statutory requirement of being "engaged in the business of receiving deposits other than trust funds" is satisfied by continuous maintenance of one or more non-trust deposit accounts in an aggregate amount of $500,000. It also sets forth clear and appropriate guidelines for interpreting the relevant portions of the Federal Deposit Insurance Act. These guidelines reflect the sound FDIC policy that there is no fixed or specific meaning for "receiving deposits." Since at least 1969, the FDIC has routinely approved applications from nontraditional depository institutions, such as Bank of New Castle, that fund their activities from a variety of sources, including deposits. The FDIC's well-established stance on "receiving deposits" has engendered widespread reliance upon a broad reading of the statute. Continued reliance on agency principles is important to both banks and bank customers. Uncertainty as to meaning of being "engaged in the business of receiving deposits" would cause needless confusion within the banking industry. The general public needs to know when they make deposits that the financial institution is FDIC insured and that a court will not reverse that status based on second-guessing the federal agency's determination.

We thank you for this opportunity to express our support for the proposed regulation.

Please let me know if I may be of further assistance.

Very Truly Yours
Hugh M. Hayden
Bank of New Castle
Last Updated 07/19/2001

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