[Federal Register Volume 63, Number 57 (Wednesday, March 25, 1998)]
[Proposed Rules]
[Pages 14533-14538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6989]



  Federal Register / Vol. 63, No. 57 / Wednesday, March 25, 1998 / 
Proposed Rules  

[[Page 14533]]



FEDERAL RESERVE SYSTEM

12 CFR Part 230

[Regulation DD; Docket No. R-1003]


Truth in Savings

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Board is publishing for comment a proposed rule amending 
Regulation DD which implements the Truth in Savings Act. The proposed 
rule would allow depository institutions to deliver by electronic 
communication disclosures required by the act and regulation, if the 
consumer agrees to such delivery. In addition, the Board is publishing 
proposed amendments to implement amendments to the Truth in Savings Act 
enacted as part of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996. The law modifies the rules for indoor lobby 
signs, eliminates subsequent disclosure requirements for automatically 
renewable time accounts with terms less than one month, and repeals the 
civil liability provisions as of September 30, 2001.

DATES: Comments must be received by May 15, 1998.

ADDRESSES: Comments should refer to Docket No. R-1003, and may be 
mailed to William W. Wiles, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, N.W., 
Washington, DC 20551. Comments also may be delivered to Room B-2222 of 
the Eccles Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the 
guard station in the Eccles Building courtyard on 20th Street, N.W. 
(between Constitution Avenue and C Street) at any time. Comments may be 
inspected in Room MP-500 of the Martin Building between 9:00 a.m. and 
5:00 p.m. weekdays, except as provided in 12 CFR 261.12 of the Board's 
Rules Regarding Availability of Information.

FOR FURTHER INFORMATION CONTACT: Michael Hentrel or Obrea Poindexter, 
Staff Attorneys, Division of Consumer and Community Affairs, at (202) 
452-3667 or 452-2412. For the hearing impaired only, Telecommunications 
Device for the Deaf (TDD), contact Diane Jenkins, at (202) 452-3544.

SUPPLEMENTARY INFORMATION:

I. Background

    The Truth in Savings Act (TISA) is implemented by the Board's 
Regulation DD, issued September 21, 1992 (57 FR 43337) (correction 
notice at 57 FR 46480, October 9, 1992). Compliance with the regulation 
became mandatory in June 1993. The act and regulation require 
depository institutions to disclose yields, fees, and other terms 
concerning deposit accounts to consumers at account opening. The 
regulation also includes rules about advertising of deposit accounts. 
Credit unions are governed by a substantially similar regulation issued 
by the National Credit Union Administration.
    As part of the Regulatory Planning and Review Program and its 
review of regulations under section 303 of the Riegle Community 
Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4803), 
the Board determined that the use of electronic communication for 
delivery of information to consumers that is required by federal 
consumer financial services and fair lending laws could effectively 
reduce regulatory compliance burden without adversely affecting 
consumer protections. Thus, the Board has been considering the issue 
and closely following the development of electronic communication. For 
example in May 1996, the Board proposed to amend Regulation E 
(Electronic Fund Transfers) to permit disclosures to be provided 
electronically. In March 1997, the Board issued an amendment to the 
staff commentary to Regulation CC (Availability of Funds and Collection 
of Checks) that allowed financial institutions to send notices 
electronically. (62 FR 13801, March 18, 1997.)
    Having considered the comments received on the Regulation E 
proposal and other rulemakings, the Board now proposes to amend 
Regulation DD to allow institutions to provide Regulation DD 
disclosures electronically; such disclosures would remain subject to 
any applicable timing, format, and other requirements of the act and 
the regulation. Concurrently, the Board is issuing similar proposed 
revisions to address electronic communication under Regulations B 
(Equal Credit Opportunity), M (Consumer Leasing), and Z (Truth in 
Lending), published elsewhere in today's Federal Register. In addition, 
the Board has issued an interim rule under Regulation E also published 
elsewhere in today's Federal Register, so that financial institutions 
can implement systems to provide Electronic Fund Transfer Act 
information electronically.

II. Proposed Regulatory Revisions

Electronic Communication

    The TISA and Regulation DD require several disclosures to be 
provided to consumers in writing. Under Regulation DD, the regulatory 
requirement that disclosures be in writing has been presumed to require 
institutions to provide paper documents. However, under many laws that 
call for information to be in writing, information in electronic form 
is considered to be ``written.'' Information produced, stored, or 
communicated by computer is also generally considered to be a writing 
at least where visual text is involved.
    Therefore, pursuant to its authority under Section 269 of the TISA, 
the Board proposes to amend Regulation DD to permit depository 
institutions to use electronic communication where the regulation calls 
for information to be provided in writing. The term ``electronic 
communication'' is limited to a communication that can be displayed as 
visual text. An example is an electronic visual text message that is 
displayed on a screen (such as the consumer's computer monitor). 
Communications by telephone voicemail systems do not meet the 
definition of ``electronic communication'' for purposes of this 
regulation because they do not have the feature generally associated 
with a writing--visual text.

Statutory Amendments

    The Economic Growth and Regulatory Paperwork Reduction Act of 1996 
(1996 Act) contains amendments to the TISA. An amendment to section 
266(a)(3) eliminates the requirement that institutions provide 
disclosures in advance of maturity for automatically renewable 
(rollover) time accounts with a term of 30 days or less. The Board 
believes the Congressional intent was to eliminate any subsequent 
disclosures for monthly time accounts. Accordingly, the proposed 
amendments to Regulation DD delete Sec. 230.5(c), which requires that 
institutions disclose (after the account is opened) any changes in 
account terms for rollover time accounts with a maturity of one month 
or less. Institutions will continue to provide disclosures when these 
accounts are opened.
    An amendment to section 263(c) of the act expands an exemption from 
certain advertising provisions for signs on the premises of a 
depository institution. The proposed amendments to Regulation DD apply 
this exemption to all signs on the premises of an institution. Section 
230.8(e) would be revised to exempt those signs that are inside the 
premises of the depository institution, including those that face out. 
Any sign posted outside the depository institution would remain

[[Page 14534]]

covered by the advertising provisions unless the sign is exempt by some 
other provision (such as the electronic media exemption). The 1996 Act 
repeals the TISA's civil liability provisions, effective September 30, 
2001. This statutory amendment does not require a regulatory revision, 
as the regulation generally does not address civil liability.

III. Section-by-Section Analysis

Section 230.3 General Disclosure Requirements

    Section 230.3(a) would be revised to address electronic 
communication. ``Electronic communication'' is a visual text message 
electronically transmitted between a depository institution and a 
consumer's home computer or other electronic device used by a consumer.

Agreements Between Institutions and Consumers

    Section 230.3(a)(2) would permit depository institutions to send 
electronic disclosures if the consumer agrees. There may be various 
ways that a financial institution and a consumer could agree to the 
electronic delivery of disclosures and other information. Whether such 
an agreement exists between the parties would be determined by 
applicable state law. The regulation would not preclude a depository 
institution and a consumer from entering into an agreement 
electronically, nor does it prescribe a formal mechanism for doing so. 
The Board does believe, however, that consumers should be clearly 
informed when they are consenting to the delivery of TISA disclosures 
and other information electronically.

Delivery Requirements for Electronic Communication

    Regulation DD provides that an institution must, for example, 
``provide'' or ``deliver'' information to a consumer. Generally, the 
delivery requirement anticipates that a depository institution will 
deliver the information--typically by mail--to an address designated by 
the consumer. For a paper communication, a depository institution would 
not satisfy that requirement by making disclosures ``available'' to 
consumers, for example, at a financial institution's office (or other 
location). The Board believes that consumers receiving disclosures by 
electronic communication should have protections regarding delivery 
similar to those afforded consumers receiving disclosures in paper 
form. Simply posting information on an Internet site without some 
appropriate notice and instructions about how the consumer may obtain 
the required information would not satisfy the requirement.
    The requirement to send or deliver disclosures to a consumer would 
be satisfied if the institution ensures that the disclosures will be 
displayed in a timely manner. For example, under Regulation DD, account 
disclosures must be provided before the consumer opens an account or a 
service is provided, whichever is earlier. Assume that a consumer uses 
a personal computer to open an account and consents to the electronic 
delivery of account disclosures. If the disclosures automatically 
appear on the computer screen before the account is opened or the 
service is provided (in accordance with the format, timing, and any 
other requirements of the act and regulation), the institution would 
satisfy the requirement to send (or deliver or transmit) disclosures to 
the consumer.
    As a practical matter, there may be little distinction between 
sending or delivering electronic disclosures and making them 
``available.'' Depository institutions have flexibility in how they 
deliver electronic disclosures to consumers including, but not limited 
to, the following examples. They may send disclosures to a consumer-
designated electronic mail address, or they may designate a location on 
a website where the consumer might enter a personal identification 
number or other identifier to access required information. If a 
consumer opens an account, receives the account disclosures at that 
time, and agrees to receive all Regulation DD disclosures 
electronically, subsequent disclosures, such as periodic statements or 
change-in-terms notices, sent (or delivered) to the designated address 
or placed at a designated location would generally satisfy the delivery 
requirements of the regulation.
    Electronic communication would remain subject to any timing or 
other applicable requirements under Regulation DD. For example, a 
depository institution that sends a change-in-terms notice required by 
Sec. 230.5(a) of Regulation DD must satisfy the requirement to provide 
the notice to a consumer at least 30 days in advance of the change. The 
Board solicits comment on whether further guidance is needed on how to 
comply wth the timing requirements when a notice is posted on an 
Internet website.

Timing of Providing Account Opening Disclosures

    Account opening disclosures, required under Sec. 230.4(a), set 
forth the terms and conditions of the account. These disclosures inform 
the consumers of the types and amount of any fees that may be imposed 
and the interest rate and annual percentage yield (APY) that will be 
paid on the account. Section 230.4(a)(1) requires that account 
disclosures be provided before an account is opened or a service is 
provided, whichever is earlier.
    Section 266(b) of the TISA provides that if the consumer is not 
present at the institution when an initial account is accepted (and the 
disclosures have not been furnished previously) the institution shall 
mail or deliver the disclosures no later than ten days after the 
account is opened or the service is provided. The rationale underlying 
the ten-day exception is that, in some instances (such as when an 
account is opened by telephone), the institution cannot provide written 
disclosures before an account is opened. Because this proposal would 
permit disclosures to be provided electronically, the same difficulty 
does not exist if an account is opened electronically. Thus, the Board 
believes that this ten-day exception should not apply. One major 
purpose of the TISA is to require clear and uniform disclosure so that 
consumers can make meaningful comparisons of deposit accounts offered 
by financial institutions before opening an account. The Board believes 
that permitting a ten-day delay would seriously diminish the consumer's 
ability to compare account terms and, therefore, hinder an explicit 
purpose of the TISA. Thus, the proposed rule requires that account 
opening disclosures be given before the account is opened or a service 
is provided, when an account is opened using electronic communication.

Requirement That Information be ``Clear and Conspicuous''

    Section 230.3(a) of Regulation DD requires depository institutions 
to present required information ``clearly and conspicuously.'' Under 
the proposed rule, the ``clear and conspicuous'' requirement applies to 
electronic communication. The Board does not intend to discourage or 
encourage specific types of technologies. Regardless of technology, 
however, the disclosures provided by electronic communication must meet 
the ``clear and conspicuous'' standard. While a depository institution 
is generally not required to ensure that the consumer has the equipment 
to read the disclosures, in some circumstances institutions would have 
the responsibility of making sure the proper equipment is in place. For 
example, if financial services are offered through terminals in an 
institution's premises, or through kiosks located in public or other 
places (such as grocery stores), the

[[Page 14535]]

institution must ensure that the equipment meets the clear and 
conspicuous standard for TISA disclosures that are being provided 
electronically.

Consumer Ability to Retain Disclosures

    Section 230.3(a) of Regulation DD requires that written disclosures 
be in a form the consumer may keep. This requirement would apply to 
disclosures provided by electronic communication. Depository 
institutions would satisfy the retention requirement if, for example, 
disclosures can be printed or downloaded by the consumer. The 
requirements for electronic delivery are similar to the current paper 
requirements, where depository institutions generally must mail or 
deliver the information to the consumer but need not ensure that the 
consumer reads or retains it. Thus, depository institutions would not 
be required to monitor an individual consumer's ability to retain the 
information, nor to take steps to find out whether the consumer has in 
fact retained it. The Board anticipates that a depository institution 
would inform the consumer of any special technical specifications for 
receiving or retaining information before or at the time a consumer 
agrees to receive information electronically.
    As in the case of the ``clear and conspicuous'' standard discussed 
above, in circumstances where the financial institution (or a network 
in which the institution is a member) controls the equipment to be used 
for a service--such as terminals in institution lobbies or kiosks in 
shopping centers--the institution would have the responsibility of 
ensuring retainability. Methods for fulfilling this requirement could 
include, for example, printers incorporated into terminals or a screen 
message offering to transmit the disclosure to the consumer's 
electronic mail or post office or other address provided that the 
delivery requirements (discussed above) are satisfied.

Current Need for Safeguards Concerning the Electronic Delivery of 
Disclosures

    Today, most consumers receive federal disclosures in paper form. As 
electronic commerce and electronic banking increase and technological 
advances take place, obtaining disclosures by electronic communication 
will likely become more commonplace. Currently, however, the use of 
electronic communication in the delivery of financial services is still 
evolving. In light of this evolution, it is difficult to fully predict 
the extent to which additional safeguards, if any, may be needed to 
ensure that consumers receive the same protections that exist for 
disclosures in paper form. The Board expects that depository 
institutions and other institutions subject to Regulation DD will 
provide sufficient details about the delivery of disclosures. The Board 
plans to closely monitor the development of electronic delivery of TISA 
disclosures and other information, and will address compliance or other 
issues that may arise as appropriate.

Section 230.5 Subsequent Disclosures

5(c) Notice for Time Accounts One Month or Less That Renew 
Automatically

    Section 266(a)(3) of the TISA requires institutions to provide 
certain disclosures for rollover time accounts at least 30 days before 
maturity. In implementing this provision in 1992, the Board looked to 
the legislative history of the TISA, which suggested special rules for 
short-term time accounts. The Board determined that the purposes of the 
legislation would not be served by requiring advance disclosures for 
rollover time accounts with maturities of one month or less. Regulation 
DD therefore did not require disclosures to be provided in advance of 
maturity for such time accounts. However, under Sec. 230.5(c) of the 
regulation, if a term disclosed when the account was opened is changed 
at renewal, institutions were required to send a notice describing the 
change within a reasonable time after the renewal of the account.
    The 1996 Act eliminates the requirement that institutions provide 
disclosures in advance of maturity for automatically renewable time 
accounts with a term of 30 days or less. (Institutions will continue to 
provide disclosures when these accounts are opened.) Accordingly, the 
Board proposes to delete Sec. 230.5(c) and the corresponding provision 
in the official staff commentary, comment 5(c)-1.
    The statute eliminates these disclosures for rollover time accounts 
with a maturity of 30 days or less. Technically, the statute could be 
read to require subsequent disclosures for rollover time accounts with 
a maturity of 31 days. For ease of compliance, the Board proposes to 
eliminate subsequent disclosures for rollover time accounts with a 
maturity of ``one month or less.'' This approach would not require 
subsequent disclosures for accounts with a maturity of 31 days and is 
consistent with other provisions of Regulation DD that interpret one 
month to include 31 days.

Section 230.8 Advertising

 8(e) Exemption for Certain Advertisements

8(e)(2) Indoor Signs

    Section 263(a) of the TISA provides that a reference to a specific 
interest rate, yield, or rate of earnings in an advertisement triggers 
a duty to state certain additional information, including the annual 
percentage yield. In 1994, the Congress amended section 263(c) of the 
advertising rules to provide that if a rate is displayed on a sign 
(including a rate board) designed to be viewed only from the interior 
of an institution, the disclosure requirements of section 263 do not 
apply.
    A further amendment to section 263(c) of the TISA contained in the 
1996 Act expands the exemption for signs on the premises of the 
depository institution. Under the Board's proposal, all signs inside 
the premises of an institution would be exempt from certain advertising 
disclosures (including signs that face outdoors and that are intended 
to be viewed from outside the premises). The proposal would delete the 
reference in Sec. 230.8(e) to signs that face outside and the 
corresponding provision in the official staff commentary, comment 
8(e)(2)(i)2. Any sign posted outside a depository institution remains 
covered by the advertising provisions unless the sign qualifies for 
some other exemption, such as the exemption for broadcast or electronic 
media.
    Section 230.8(e) of Regulation DD exempts advertisements made 
through broadcast or electronic media from several of the mandatory 
advertising disclosures. Questions have arisen about whether the 
limited exception for broadcast media applies to computer or other 
advertisements, such as those posted on the Internet. The Board 
believes that such advertisements are not exempt under the broadcast or 
electronic media provision. The rationale for broadcast and electronic 
media exemptions is that these media have time or space constraints 
that make it extremely burdensome to provide the required disclosures. 
Advertisements posted on the Internet generally do not have the same 
time and space constraints. Such advertisements would remain subject to 
the general advertising rules and, therefore, must comply with the 
requirements of Secs. 230.8(a), (b), (c), and (d) of this section.

Appendix B to Part 230--Model Clauses and Sample Forms

    The Board is not proposing any amendments to the model forms and

[[Page 14536]]

clauses in Appendix B. The Board believes that financial institutions 
can adapt the current forms and clauses in Appendix B for electronic 
use.

IV. Form of Comment Letters

    Comment letters should refer to Docket No. R-1003 and, when 
possible, should use a standard typeface with a type size of 10 or 12 
characters per inch. This will enable the Board to convert the text to 
machine-readable form through electronic scanning, and will facilitate 
automated retrieval of comments for review. Also, if accompanied by an 
original document in paper form, comments may be submitted on 3 \1/2\ 
inch or 5 \1/4\ inch computer diskettes in any IBM-compatible DOS-based 
format.

V. Regulatory Flexibility Analysis

    In accordance with section 3(a) of the Regulatory Flexibility Act, 
the Board's office of the Secretary has reviewed the proposed 
amendments to Regulation DD. Overall, the proposed amendments are not 
expected to have any significant impact on small entities. The proposed 
rule would relieve compliance burden. The proposed rule would also give 
depository institutions flexibility in providing disclosures. A final 
regulatory flexibility analysis will be conducted after consideration 
of comments received during the public comment period.

VI. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1), the Board reviewed the proposed rule 
under the authority delegated to the Board by the Office of Management 
and Budget.
    The Federal Reserve has no data with which to estimate the change 
in the burden that would be the result of the proposed acceptability of 
electronic communications. Depository institutions would be able to use 
electronic communication to provide disclosures and other information 
required by this regulation rather than having to print and mail the 
information in paper form. The use of electronic communication in home 
banking and financial services may reduce the paperwork burden on 
creditors and financial institutions or merely may reduce the dollar 
cost.
    The Federal Reserve requests comments from depository institutions, 
especially state member banks, that will help to estimate the number 
and burden of the various disclosures that would be made in the first 
year this rule is effective. Comments are invited on: (a) whether the 
proposed revised collection of information is necessary for the proper 
performance of the Federal Reserve's functions; including whether the 
information has practical utility; (b) the accuracy of the Federal 
Reserve's estimate of the burden of the proposed revised information 
collection, including the cost of compliance; (c) ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(d) ways to minimize the burden of information collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology. Comments on the 
collections of information should be sent to the Office of Management 
and Budget, Paperwork Reduction Project (7100-0271), Washington, DC 
20503, with copies of such comments to be sent to Mary M. McLaughlin, 
Chief, Financial Reports Section, Division of Research and Statistics, 
Mail Stop 97, Board of Governors of the Federal Reserve System, 
Washington, DC 20551.
    The collection of information requirements in this proposed 
regulation are found throughout 12 CFR part 230 and in Appendices A and 
B. This information is mandatory (12 U.S.C. 4308) to assist consumers 
in comparing deposit accounts offered by depository institutions, 
principally through the disclosure of fees, annual percentage yield, 
interest rate, and other account terms whenever a consumer requests the 
information and before an account is opened. The regulation also 
requires that fees and other information be provided on any periodic 
statement the institution sends to the consumer. The respondents/
recordkeepers are for-profit financial institutions, including small 
businesses. Records, required to evidence compliance with the 
regulation, must be retained for twenty-four months.
    The Board also proposes to extend the Recordkeeping and Disclosure 
Requirements in Connection with Regulation DD (OMB No. 7100-0271) for 
three years. The current estimated total annual burden for this 
information collection is 1,478,395 hours, as shown in the top half of 
the table below. These amounts reflect the burden estimate of the 
Federal Reserve System for the 996 state member banks under its 
supervision. This regulation applies to all types of depository 
institutions (except credit unions), not just to state member banks. 
However, under Paperwork Reduction Act regulations, the Federal Reserve 
only accounts for the burden of the paperwork associated with state 
member banks. Other agencies account for the paperwork burden for the 
institutions they supervise.
    Both the proposed rules for indoor lobby signs and elimination of 
subsequent disclosure requirements for automatically renewable time 
accounts with terms less than one month would decrease the frequency of 
response slightly; these reductions are shown in the bottom half of the 
table. It is estimated that the total amount of annual burden after 
these two proposed revisions would be 1,476,071 hours. There is 
estimated to be no associated capital or start up cost. The Federal 
Reserve has not estimated there to be any annual cost burden over the 
annual hour burden.

----------------------------------------------------------------------------------------------------------------
                                                                                                      Eestimated
                                           Number of    Estimated                                       annual  
                                          respondents     annual        Estimated response time         burden  
                                                        frequency                                       hours   
----------------------------------------------------------------------------------------------------------------
                 Current                                                                                        
                                                                                                                
Complete account disclosures (Upon                996          300  5 minutes                             24,900
 request and new accounts).                                                                                     
Subsequent notices:                                                                                             
    Change in terms.....................          996        1,130  1 minute                              18,757
    Prematurity notices.................          996        1,095  1 minute                              18,177
Periodic statements.....................          996       84,615  1 minute                           1,404,609
Advertising.............................          996           12  1 hour                                11,952
                                                                                                    ------------
    Total...............................  ...........  ...........  ...............................    1,478,395
                                                                                                                
                Proposed                                                                                        
                                                                                                                
Complete account disclosures (Upon                996          300  5 minutes                             24,900
 request and new accounts).                                                                                     
Subsequent notices:                                                                                             
    Change in terms.....................          996        1,130  1 minute                              18,757

[[Page 14537]]

                                                                                                                
    Prematurity notices.................          996        1,015  1 minute                              16,849
Periodic statements.....................          996       84,615  1 minute                           1,404,609
Advertising.............................          996           11  1 hour                                10,956
                                                                                                    ------------
    Total...............................  ...........  ...........  ...............................    1,476,071
                                                                                                    ============
    Change..............................  ...........  ...........  ...............................       -2,324
----------------------------------------------------------------------------------------------------------------

    The initial disclosures concerning consumers' rights and 
responsibilities for error resolution are available to the public. 
Transaction- or account-specific disclosures are not publicly available 
and are confidential between the depository institution and the 
consumer. Since the Federal Reserve does not collect any information, 
no issue of confidentiality normally arises. However, the information 
may be protected from disclosure under the exemptions (b)(4), (6), and 
(8) of the Freedom of Information Act (5 U.S.C. 552(b)). The Federal 
Reserve may not conduct or sponsor, and an organization is not required 
to respond to, this information collection unless it displays a 
currently valid OMB control number. The OMB control number is 7100-
0271.

List of Subjects in 12 CFR Part 230

    Advertising, Banks, Banking, Consumer protection, Federal Reserve 
System, Reporting and recordkeeping requirements, Truth in savings.

Text of Proposed Revisions

    Certain conventions have been used to highlight the proposed 
changes to Regulation DD. New language is shown inside bold-faced 
arrows, while language that would be removed is set off with brackets.
    For the reasons set forth in the preamble, the Board proposes to 
amend, 12 CFR part 230, as set forth below:

PART 230--TRUTH IN SAVINGS (REGULATION DD)

    1. The authority citation for part 230 continues to read as 
follows:

    Authority: 12 U.S.C. 4301 et seq.

    2. In Sec. 230.3, the following amendments would be made:
    a. By designating the text of paragraph (a) as paragraph (a)(1) and 
adding a heading to newly designated paragraph (a)(1);
    b. A new paragraph (a)(2) would be added.
    The addition and revisions would read as follows:


Sec. 230.3  General disclosure requirements.

    (a) Form.--(1) General requirements. * * *
    (2) Electronic communication. The term 
electronic communication means a message transmitted electronically 
between a consumer and a depository institution in a format that allows 
visual text to be displayed on equipment such as a personal computer 
monitor. A depository institution and a consumer may agree to send by 
electronic communication any information required by Secs. 230.4 
through 230.6 of this part. Information sent by electronic 
communication to a consumer must comply with paragraph (a)(1) of this 
section and any applicable timing requirements contained in this 
part.
* * * * *
    3. Section 230.5 would be amended by removing paragraph (c) and 
redesignating paragraph (d) as new paragraph (c):


Sec. 230.5  Subsequent disclosures.

* * * * *
    [(c) Notice for time accounts one month or less that renew 
automatically. For time accounts with a maturity one month or less that 
renew automatically at maturity, institutions shall disclose any 
difference in the terms of the new account as compared to the terms 
required to be disclosed under Sec. 230.4(b) of this part for the 
existing account, other than a change in the interest rate and 
corresponding change in the annual percentage yield. The notice shall 
be mailed or delivered within a reasonable time after the renewal.]
    4. Section 230.8 would be amended by revising paragraph (e)(2)(i) 
to read as follows:


Sec. 230.8  Advertising.

* * * * *
    (e) Exemption for certain advertisements. * * *
    (2) Indoor signs. (i) Signs inside the premises of a depository 
institution (or the premises of a deposit broker) are not subject to 
paragraphs (b), (c), (d) or (e)(1) of this section [unless they face 
outside the premises and can reasonably be viewed by a consumer only 
from outside the premises].
* * * * *
    5. In Supplement I to Part 230, in Sec. 230.5--Subsequent 
disclosures, under paragraph (c), paragraph 1. would be removed:

Supplement I to Part 230--Official Staff Interpretations

* * * * *


Sec. 230.5  Subsequent disclosures

* * * * *
    (c) Notice for time accounts one month or less that renew 
automatically
    [1. Providing disclosures within a reasonable time. Generally, 10 
calendar days after an account renews is a reasonable time for 
providing disclosures. For time accounts shorter than 10 days, 
disclosures should be given prior to the next renewal date. For 
example, if a time account automatically renews every 7 days, 
disclosures about an account that renews on Wednesday, December 7, 
1994, should be given prior to Wednesday, December 14.]
* * * * *
    6. In Supplement I to Part 230, in Sec. 230.8--Advertising, under 
paragraph (e)(2)(i), paragraph 2. would be removed.
* * * * *


Sec. 230.8  Advertising

* * * * *
    (e)(2) Indoor signs.
    (e)(2)(i)
* * * * *
    [2. Consumers outside the premises. Advertisements may be ``indoor 
signs'' even though they may be viewed by consumers from outside. An 
example is a banner, in an institution's glass-enclosed branch office, 
that is located behind a teller facing customers but is readable by 
passersby.]
* * * * *

[[Page 14538]]

    By order of the Board of Governors of the Federal Reserve 
System, March 12, 1998.
William W. Wiles,
Secretary of the Board.
[FR Doc. 98-6989 Filed 3-24-98; 8:45 am]
BILLING CODE 6210-01-P