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FDIC Federal Register Citations

July 18, 2001

Attention: Comments/OES

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

Re: FDIC Notice of Proposed Rulemaking RIN 3064- AC49
Being Engaged in the Business of Receiving Deposits Other Than Trust Funds

Dear Mr. Feldman:

The following comments on the referenced proposed regulation are made on behalf of USAA Federal Savings Bank, its subsidiary, USAA Savings Bank (an FDIC-insured Nevada Thrift Company that has been federally insured since September 1996, and accepts deposits from the public), and USAA Financial Services Corporation, a Utah corporation that owns an inactive Utah industrial loan company license.
We agree that the language "engaged in the business of receiving deposits, other than trust funds" found in several sections of the Federal Deposit Insurance Act is ambiguous and therefore can be the subject of conflicting interpretations. The court's opinion in the Heaton v. Monogram Credit Card Bank case is an example of the conflicts that can arise. We support the FDIC's initiative to adopt a regulation codifying General Counsel's Opinion No. 12 as a way to ensure insured depository institutions and the customers they serve can have confidence that federal law is applied in a fair and uniform manner.

We have the following specific comments concerning the referenced proposed regulation:
  • An institution should be deemed to be "engaged in the business of receiving deposits other than trust funds" if the institution has the legal authority, under applicable state or federal law, to receive such deposits.
  •  Alternatively, no particular number of deposits, minimum dollar amount or other standard need be established.
  • One deposit (continuously held) should suffice.
  • $500,000 is an appropriate minimum amount.
  • Deposits may, but need not be, accepted from the general public.
  • Banks should not be required to offer a selection of deposit types; one type of deposit is enough.
  • The FDIC should have discretion to make exceptions where warranted.
  •  The same standard should apply to applications for and terminations of deposit insurance.
  • The same standard should also apply to the definition of "State Bank."

We believe that the FDIC has properly interpreted an ambiguous statute and established reasonable guidelines. Also, it is essential to insured institutions like USAA Savings Bank that FDIC interpretations be honored. We are concerned that the opinion in the Heaton case will set a precedent for the inconsistent application of federal banking laws, which could lead to unnecessary confusion, uncertainty and expense. The FDIC should adopt the proposed regulation so that those relying on federal deposit insurance may rest assured in the FDIC's authority to set standards.

I hope that this letter has been responsive to your request for comments. Please do not hesitate to contact me (210-498-7479) if you have any questions or need a clarification of any matter presented herein.

 Michael J. Broker.
Vice President - Banking Counsel
USAA Federal Savings Bank

Last Updated 07/19/2001

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