[Federal Register Volume 71, Number 138 (Wednesday, July 19, 2006)]
[Proposed Rules]
[Pages 40938-40940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11423]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 71, No. 138 / Wednesday, July 19, 2006 / 
Proposed Rules  

[[Page 40938]]



FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 308

RIN 3064-AD06


Penalty for Failure To Timely Pay Assessments

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking and request for comment.

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SUMMARY: The Federal Deposit Insurance Corporation (``FDIC'') proposes 
to amend its rule concerning penalties for failure to timely pay 
assessments in compliance with the Federal Deposit Insurance Reform Act 
of 2005 (``Reform Act''), which amended provisions of the Federal 
Deposit Insurance Act (``FDIA''). The revisions generally provide that 
an insured depository institution which fails or refuses to pay any 
assessment shall be subject to a penalty of not more than 1 percent of 
the assessment due for each day the violation continues. The statute 
provides for an exception if the failure to pay results from a dispute 
with the FDIC over the amount of the assessment and the institution 
deposits satisfactory security with the FDIC. A special statutory rule 
covering assessment amounts of less than $10,000 authorizes penalties 
up to $100 per day. The FDIC is accorded discretion to compromise, 
modify or remit any penalty imposed on a finding that good cause 
prevented timely payment. The FDIC proposes amending its rule 
concerning late assessment penalties in conformity with these 
provisions of the Reform Act. The proposed rule would incorporate these 
statutory provisions into the FDIC's regulations in place of the 
existing late assessment penalty rule at 12 CFR 308.132(c)(3)(v).

DATES: Comments must be received on or before September 18, 2006.

ADDRESSES: You may submit comments, identified by RIN number by any of 
the following methods:
     Agency Web site: http://www.fdic.gov/rules/laws/federal/propose.html. Follow instructions for submitting comments on the Agency 
Web site.
     E-mail: [email protected]. Include the RIN number in the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
     Hand Delivery/Courier: Guard station at the rear of the 
550 17th Street Building (located on F Street) on business days between 
7 a.m. and 5 p.m.
    Instructions: All submissions received must include the agency name 
and RIN for this rulemaking. All comments received will be posted 
without change to http://www.fdic.gov/rules/laws/federal/propose.html 
including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Donna M. Saulnier, Senior Assessment 
Policy Specialist, DOF, (703) 562-6167; or William V. Farrell, Manager, 
Assessments Section, DOF, (703) 562-6168; or Christopher Bellotto, 
Counsel, Legal Division, (202) 898-3801; or Stephen T. Weisweaver, 
Attorney, Legal Division, (202) 898-6976.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 2104(c) of the Reform Act amends section 18(h) of the FDIA, 
12 U.S.C. 1828(h).\1\ Section 18(h) was added to the FDIA in 1950 
subjecting insured banks who fail or refuse to pay any assessment to a 
penalty of not more than $100 for each day that such a violation 
continued.\2\ Section 18(h) has remained virtually unchanged since its 
enactment in 1950.\3\ The FDIC added the present rule concerning late 
assessment penalties when it amended 12 CFR 308.132 pursuant to the 
Debt Collection Improvement Act of 1996 (``DCIA'').\4\ See 61 FR 57987 
(Nov. 12, 1996). The DCIA required the head of each Federal Agency to 
enact rules adjusting each Civil Money Penalty (``CMP''), under the 
agency's jurisdiction, by a rate of inflation prescribed in the DCIA. 
Accordingly, the FDIC added a version of the paragraph presently found 
at 12 CFR 308.132(c)(3) entitled ``Adjustment of civil money penalties 
by the rate of inflation pursuant to section 31001(s) of the Debt 
Collection Improvement Act.'' \5\ 61 FR at 57988. The FDIC also added 
the present rule set forth in 12 CFR 308.132(c)(3)(v) increasing the 
amount of any CMP that may be assessed pursuant to section 18(h) of the 
FDIA. The rule increased that amount from the maximum of $100, as 
stated in section 18(h) of the FDIA, to a maximum of $110 for each day 
the violation continues. 61 FR at 57989.\6\
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    \1\ See Federal Deposit Insurance Reform Act of 2005, section 
2104(c), Public Law 109-171, 120 Stat. 9, 13.
    \2\ See An Act to Amend the Federal Deposit Insurance Act, 
section 2, Public Law 797, 64 Stat. 893 (1950).
    \3\ The Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (``FIRREA''), Public Law 101-187, 103 Stat. 187, amended 
section 18(h) of the FDIA making the provision applicable to 
``insured depository institutions'' versus ``insured banks.'' See 
section 201(a), Public Law 101-187.
    \4\ Public Law 104-134, 110 Stat. 1321-358, 373, amending 
section 4 of the Federal Civil Penalties Inflation Adjustment Act of 
1990 (``Inflation Adjustment Act''), 28 U.S.C. 2461 (2000).
    \5\ The original version of 12 CFR 308.132(c)(3) applied to 
violations which occurred after November 12, 1996. However, the DCIA 
requires an adjustment of CMP's every four years. The provision was 
updated in 2000 and 2004, and the present version of 12 CFR 
308.132(c)(3)(v) by its terms applies to violations that occur after 
December 31, 2004. The proposed amendment to 12 CFR 
308.132(c)(3)(v), however, will apply to violations that occur after 
the effective date of the Reform Act to avoid retroactive 
application of this change.
    \6\ Section 2104(c) of the Reform Act effectively returns the 
late assessment penalty on assessments of less than $10,000 to the 
original amount of up to $100. The Inflation Adjustment Act, supra 
note 4, may require a readjustment of this amount in 2008.
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    The Reform Act contains the first major statutory changes to the 
late assessment penalty provisions in the FDIA. The FDIC proposes 
amending its rule concerning late assessment penalties, 12 CFR 
308.132(c)(3)(v), to reflect the changes set forth in section 2104(c) 
of the Reform Act.

II. Description of the Proposal

    Section 2104(c) of the Reform Act amends subsection (h) of section 
18 of the FDIA, 12 U.S.C. 1828(h), by changing the late assessment 
penalty from not more than $100 per day to not more than 1 percent of 
any assessment owed if the amount owed is $10,000 or more at the time 
the institution fails or refuses to pay the assessment. If the 
institution owes less than $10,000 at the time the institution fails or 
refuses to

[[Page 40939]]

pay the assessment, then the amendment authorizes penalties up to $100 
for each day that the violation continues. The Reform Act also provides 
for an exception if the failure to pay results from a dispute with the 
FDIC over the amount of the assessment and the institution deposits 
satisfactory security with the FDIC.
    The FDIC proposes to amend its rule concerning late assessment 
penalties by revising the paragraph presently found at 12 CFR 
308.132(c)(3)(v) and replacing the paragraph with the language from 
section 2104(c) of the Reform Act. The late assessment penalty will 
change from a maximum of $110 per day to not more than 1 percent of the 
assessment owed if the institution owes an assessment of $10,000 or 
more at the time the institution refuses or fails to pay any 
assessment.\7\ Additionally, if the amount the institution fails or 
refuses to pay is less than $10,000, the rule will authorize penalties 
up to $100 for each day that the violation continues.
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    \7\ The FDIC can also initiate a termination of insurance 
proceeding, pursuant to section 8(a) of the FDIA, 12 U.S.C. 1818(a), 
when an institution withholds portions of its insurance assessments. 
Doolin Security Savings Bank v. FDIC, 53 F.3d 1395, 1408 (4th Cir. 
1995).
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    Finally, the proposed rule would adopt the statutory provisions 
providing for an exception if the failure to pay results from a dispute 
with the FDIC over the amount of the assessment and the institution 
deposits satisfactory security with the FDIC. The proposed rule would 
also adopt the statutory provisions according the FDIC discretion to 
compromise, modify, or remit any penalty that the FDIC may assess upon 
a finding that good cause prevented the timely payment of an 
assessment.

III. Regulatory Analysis and Procedure

A. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113 
Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies 
to use plain language in all proposed and final rules published after 
January 1, 2000. We invite your comments on how to make this proposal 
easier to understand. For example:
     Have we organized the material to suit your needs? If not, 
how could this material be better organized?
     Are the requirements in the proposed rule clearly stated? 
If not, how could the rule be more clearly stated?
     Does the proposed rule contain language or jargon that is 
not clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rule easier to understand? If 
so, what changes to the format would make the rule easier to 
understand?
     What else could we do to make the rule easier to 
understand?

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires that each Federal 
agency either certify that a proposed rule would not, if adopted in 
final form, have a significant economic impact on a substantial number 
of small entities or prepare an initial regulatory flexibility analysis 
of the proposal and publish the analysis for comment. See 5 U.S.C. 603, 
604, 605. The proposed rule would amend the FDIC's rule concerning late 
assessment penalties to adopt statutory language enacted by Congress in 
the Reform Act. The proposed rule would not create any additional 
economic impact because, if an economic impact exists, the only 
economic impact results from the language of the statute. Therefore, 
the proposed rule would not have a significant economic impact on a 
substantial number of small entities if adopted in final form.

C. Paperwork Reduction Act

    No collections of information pursuant to the Paperwork Reduction 
Act (44 U.S.C. 3501 et seq.) are contained in the proposed rule.

D. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Rules and Policies on Families

    The FDIC has determined that the proposed rule will not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, enacted as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act of 1999 
(Public Law 105-277, 112 Stat. 2681).

List of Subjects in 12 CFR Part 308

    Administrative practice and procedure, Bank deposit insurance, 
Banks, banking, Claims, Crime, Equal access to justice, Fraud, 
Investigations, Lawyers, Penalties.

    For the reasons set forth in the preamble, the FDIC proposes to 
amend Subpart H of 12 CFR 308 as follows:

PART 308--RULES OF PRACTICE AND PROCEDURE

    1. The authority citation continues to read as follows:

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505, 
1815(e), 1817, 1818, 1820, 1828, 1829, 1829b, 1831i, 1831m(g)(4), 
1831o, 1831p-1, 1832(c), 1884(b), 1972, 3102, 3108(a), 3349, 3909, 
4717; 15 U.S.C. 78(h) and (i), 78o-4(c), 78o-5, 78q-1, 78s, 78u, 
78u-2, 78u-3 and 78w, 6801(b), 6805(b)(1); 28 U.S.C. 2461 note; 31 
U.S.C. 330, 5321; 42 U.S.C. 4012a; Sec. 3100(s), Pub. L. 104-134, 
110 Stat. 1321-358.

    2. Revise paragraph (c)(3)(v) of section 308.132 as follows:


Sec.  308.132  Assessment of penalties.

* * * * *
    (c) * * *
    (3) * * *
    (v) Civil money penalties assessed pursuant to section 18(h) of the 
FDIA for failure to timely pay assessment--(A) In general. Subject to 
paragraph (c)(3)(v)(C) of this section, any insured depository 
institution which fails or refuses to pay any assessment shall be 
subject to a penalty in an amount of not more than 1 percent of the 
amount of the assessment due for each day that such violation 
continues.
    (B) Exception in case of dispute. Paragraph (c)(3)(v)(A) of this 
section shall not apply if--
    (1) The failure to pay an assessment is due to a dispute between 
the insured depository institution and the Corporation over the amount 
of such assessment; and
    (2) The insured depository institution deposits security 
satisfactory to the Corporation for payment upon final determination of 
the issue.
    (C) Special rule for small assessment amounts. If the amount of the 
assessment which an insured depository institution fails or refuses to 
pay is less than $10,000 at the time of such failure or refusal, the 
amount of any penalty to which such institution is subject under 
paragraph (c)(3)(v)(A) of this section shall not exceed $100 for each 
day that such violation continues.
    (D) Authority to modify or remit penalty. The Corporation, in the 
sole discretion of the Corporation, may compromise, modify or remit any 
penalty which the Corporation may assess or has already assessed under 
paragraph (c)(3)(v)(A) of this section upon a finding that good cause 
prevented the timely payment of an assessment.
* * * * *

    By order of the Board of Directors.

    Dated at Washington, DC, this 11th day of July, 2006.


[[Page 40940]]


Federal Deposit Insurance Corporation.
Valerie Best,
Assistant Executive Secretary.
 [FR Doc. E6-11423 Filed 7-18-06; 8:45 am]
BILLING CODE 6714-01-P