[Federal Register Volume 63, Number 188 (Tuesday, September 29, 1998)]
[Rules and Regulations]
[Pages 52106-52107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26010]



[[Page 52105]]

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Part V





Federal Reserve System





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12 CFR Parts 205, 213 and 230



Truth in Savings; Consumer Leasing; Electronic Fund Transfers; Final 
Rules

  Federal Register / Vol. 63, No. 188 / Tuesday, September 29, 1998 / 
Rules and Regulations  

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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: Final rule.

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SUMMARY: The Board is publishing a final rule amending Regulation DD, 
which implements the Truth in Savings Act. The rule implements 
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 of 
one month or less, and repeals the civil liability provisions as of 
September 30, 2001.

DATES: This rule is effective September 24, 1998.

FOR FURTHER INFORMATION CONTACT: Kyung Cho-Miller, Staff Attorney, 
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 (12 CFR Part 230). 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. The act was amended by the 
Economic Growth and Regulatory Paperwork Reduction Act of 1996 (1996 
Act).

II. Regulatory Revisions

    On March 25, 1998, the Board published proposed amendments to 
Regulation DD to implement statutory amendments that eliminate the 
requirement that institutions provide disclosures in advance of 
maturity for automatically renewable (rollover) time accounts with a 
term of 30 days or less, expand an exemption from certain advertising 
provisions for signs on the premises of a depository institution, and 
repeal TISA's civil liability provisions, effective September 30, 2001 
(63 FR 14533). Commenters on the proposal--all financial institutions 
or their trade associations--unanimously supported the proposed 
amendments.
    In March 1998, the Board also published a proposal to allow 
institutions to provide Regulation DD disclosures electronically (63 FR 
14533, March 25, 1998). Similar proposals were made under Regulations B 
(Equal Credit Opportunity), M (Consumer Leasing), and Z (Truth in 
Lending); an interim rule was issued under Regulation E. The Board 
anticipates further action on these proposals by year-end.

III. Section-by-Section Analysis

Section 230.5  Subsequent Disclosures

5(c) Notice for Time Accounts One Month or Less That Renew 
Automatically
    Section 266(a)(3) of TISA requires institutions to provide certain 
disclosures for rollover time accounts at least 30 days before 
maturity. In implementing this provision, the Board determined in 1992 
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 does 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 
subsequent disclosures (that is, 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, Sec. 230.5(c) and the corresponding 
provision in the official staff commentary, comment 5(c)-1, are 
deleted.
    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 has eliminated these disclosures for 
rollover time accounts with a maturity of ``one month or less.'' 
Subsequent disclosures for accounts with a maturity of 31 days are not 
required under this approach, which 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 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) contained in the 1996 Act 
expands the exemption for signs on the premises of the depository 
institution. All signs inside the premises of an institution are now 
exempt from certain advertising disclosures (including signs that are 
intended to be viewed from outside the premises). Accordingly, the 
reference in Sec. 230.8(e) to signs that face outside the premises and 
the corresponding provision in the official staff commentary, comment 
8(e)(2)(I)-2, are deleted. 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 
electronic media.

Section 230.9  Enforcement and Record Retention

9(b) Civil Liability
    Section 271 of TISA, which provides for civil liability for 
violations of the act's provisions, was repealed by the 1996 Act, 
effective September 30, 2001. The regulation refers to TISA's civil 
liability provisions in Sec. 230.9(b), and has been revised to reflect 
the effective date of the repeal of Section 271.

IV. Regulatory Flexibility Analysis

    In accordance with section 3(a) of the Regulatory Flexibility Act 
(5 U.S.C. 604), the Board has reviewed the final amendments to 
Regulation DD. Two of the three requirements of a final regulatory 
flexibility analysis under this section are (1) a succinct statement of 
the need for and the objectives of the rule and (2) a summary of the 
issues raised by the public comments, the agency's assessment of the 
issues, and a statement of the changes made in the final rule in 
response to the comments. These two areas are discussed above.
    The third requirement of the analysis calls for a description of 
significant alternatives to the rule that would

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minimize the rule's economic impact on small entities and reasons why 
the alternatives were rejected. The final amendments will apply to all 
financial institutions subject to Regulation DD, including small 
institutions. The amendments represent minor changes to the existing 
regulation; in some cases, the amendments reduce economic burden. 
Accordingly, the amendments should not have a negative economic impact 
on small institutions, and, therefore, there were no significant 
alternatives that would have further minimized the economic impact on 
those institutions.

V. 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 rule under the 
authority delegated to the Board by the Office of Management and 
Budget. 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.
    The collection of information that is revised by this rulemaking is 
found in 12 CFR 230--Regulation DD, including Appendices A and B and 
Supplement I. This information collection is mandatory under the Truth 
in Savings Act (12 U.S.C. 4308) and the Board's Regulation DD, which 
requires that consumers be given certain account disclosures. The 
disclosures assist consumers in comparing deposit accounts offered by 
depository institutions, principally through the disclosure of fees, 
APY, interest rates, 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 are for-profit financial institutions, including small 
businesses. Institutions are also required to retain records for 
twenty-four months as evidence of compliance. No comments specifically 
addressing the burden estimate were received.
    The Board also extended the recordkeeping and disclosure 
requirements in connection with Regulation DD for three years. The 
current total annual burden for this information collection is an 
estimated 1,478,395 hours. This amount reflects the burden estimate of 
the Federal Reserve System for the 996 state member banks under its 
supervision. The modified rules for indoor lobby signs and elimination 
of subsequent disclosure requirements for automatically renewable time 
accounts with terms less than one month will decrease the frequency of 
response slightly. The estimated total annual burden after the 
revisions will be about 1,476,071 hours, a decrease of 2,324 hours. 
There is estimated to be no associated capital or start up cost and no 
annual cost burden.
    Because the records would be maintained at state member banks and 
the notices are not provided to the Federal Reserve, no issue of 
confidentiality arises under the Freedom of Information Act.
    The Board has a continuing interest in the public's opinions of 
Federal Reserve collections of information. At any time, comments 
regarding the burden estimate, or any other aspect of this collection 
of information, including suggestions for reducing the burden, may be 
sent to: Secretary, Board of Governors of the Federal Reserve System, 
20th and C Streets, N.W., Washington, DC 20551; and to the Office of 
Management and Budget, Paperwork Reduction Project (7100-0271), 
Washington, DC 20503.

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 Revisions

    For the reasons set forth in the preamble, the Board amends 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.


Sec. 230.5   [Amended]

    2. Section 230.5 is amended by removing paragraph (c) and 
redesignating paragraph (d) as new paragraph (c).
    3. Section 230.8 is 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.
* * * * *
    4. Section 230.9 is amended by revising paragraph (b) to read as 
follows:


Sec. 230.9  Enforcement and record retention.

* * * * *
    (b) Civil liability. Section 271 of the Act contains the provisions 
relating to civil liability for failure to comply with the requirements 
of the act and this part; Section 271 is repealed effective September 
30, 2001.
* * * * *

SUPPLEMENT I to PART 230--OFFICIAL STAFF INTERPRETATION

PART 230--SUPPLEMENT I  [AMENDED]

    5. In Supplement I to Part 230, in Section 230.5--Subsequent 
disclosures, under paragraph (c), paragraph 1. is removed.
    6. In Supplement I to Part 230, in Section 230.8--Advertising, 
under paragraph (e)(2)(i), paragraph 2. is removed.

    By order of the Board of Governors of the Federal Reserve 
System, September 23, 1998.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 98-26010 Filed 9-28-98; 8:45 am]
BILLING CODE 6210-01-P