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FDIC Federal Register Citations

July 18, 2001

Robert E. Feldman 
Executive Secretary 
Attention: Comments/OES
Federal Deposit Insurance Corporation 
550 17th Street, NW
Washington, D.C. 20429

RE: Being Engaged in the Business of Receiving Deposits Other Than Trust Funds 
(66 Federal Register 20102)

Dear Mr. Feldman:

The Ohio Division of Financial Institutions1 welcomes the opportunity to comment on the Federal Deposit Insurance Corporation's proposal to adopt new 12 C.F.R. 303.14 to define "engaged in the business of receiving deposits other than trust funds" for purposes of the Federal Deposit Insurance Act.

We support the proposed definition as consistent with the intent of Congress in adopting 12 U.S.C. 1841(c)(2), particularly subdivisions (D) and (F). These provisions recognize two types of special purpose banks that may be chartered under states' banking laws or the National Bank Act and that may be insured by the Federal Deposit Insurance Corporation as banks, but that are restricted in their deposit-taking activity. By recognizing these special purpose banks as insurable under the FDI Act even though their deposit taking activity must be restricted, Congress has accomplished the following:

1. Assured that registered bank holding companies and financial holding companies have
the opportunity to conduct these activities (trust services and credit card operations) in separately organized corporate entities in structuring their business organizations;

2. Increased competition in the market place for these specialized banking services by opening the opportunity for other businesses and independents to provide these banking services without being subject to all of the restrictions under the Bank Holding Company Act;

3.  Preserved the structure established in The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 providing deference to state law, to permit banking organizations to enter states other than their home states for the purpose of conducting banking business; and

4.  Maintained competitive equality and consistency of regulation between state and federally chartered banks through Congress's use of the FDI Act to address matters to state banks that are addressed for federally chartered banks in the National Bank Act or the Federal Reserve Act.

We do not presume to opine as to the best specific parameters for the definition of "being engaged in the business of receiving deposits other than trust funds".  We do encourage the Federal Deposit Insurance Corporation to adopt a final regulation that is consistent with the intent of Congress  expressed in 12 U.S.C. 1841(c)(2) and the important inter-relationship between that section and a variety of other federal laws of substantial import to the banking system in the United States.

In response to a particular issue raised in the notice of proposed rulemaking, we do urge that the final regulation be sufficiently flexible to recognize that even general purpose banks may take some time to build a substantial deposit base, particularly in small communities.

We are pleased to have had the opportunity to comment on the Federal Deposit Insurance Corporation's proposed 12 C.F.R. 303.14.

1 The Division charters and supervises state banks, savings and loan associations, savings banks, and credit unions, licenses and regulates trust companies, money transmitters, and lender and non-lender consumer finance service providers, and provides ancillary services.

F. Scott O'Donnell
Superintendent of Financial Institutions
Ohio Division of Financial Institutions
Last Updated 07/19/2001

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