[Federal Register Volume 74, Number 48 (Friday, March 13, 2009)]
[Proposed Rules]
[Pages 10843-10849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5305]


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FEDERAL TRADE COMMISSION

16 CFR Part 320

RIN 3084-AA99


Disclosures for Non-Federally Insured Depository Institutions 
under the Federal Deposit Insurance Corporation Improvement Act 
(FDICIA)

AGENCY: Federal Trade Commission (FTC or Commission).

ACTION: Supplemental notice of proposed rulemaking; request for public 
comment.

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SUMMARY: The Federal Deposit Insurance Corporation Improvement Act of 
1991 (FDICIA) directs the Commission to prescribe the manner and 
content of certain mandatory disclosures for depository institutions 
that lack federal deposit insurance. On March 16, 2005, the Commission 
published a notice of proposed rulemaking (NPRM) seeking comment on 
disclosure rules for such institutions. Subsequently, Congress passed 
the Financial Services Regulatory Relief Act of 2006 (FSRRA), which 
amended FDICIA's requirements. To ensure that the FTC's requirements 
are consistent with the FSRRA amendments, the Commission is seeking 
comment on conforming changes to the proposed Rule.

DATES: Written comments must be received on or before June 5, 2009.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to 
``Supplemental Proposed Rule for FDICIA Disclosures, Matter No. 
R411014'' to facilitate the organization of comments. Please note that 
comments will be placed on the public record of this proceeding--
including on the publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm) -- and therefore should not include 
any sensitive or confidential information. In particular, comments 
should not include any sensitive personal information, such as an 
individual's Social Security Number; date of birth; driver's license 
number or other state identification number, or foreign country 
equivalent; passport number; financial account number; or credit or 
debit card number. Comments also should not include any sensitive 
health information, such as medical records or other individually 
identifiable health information. In addition, comments should not 
include any ``[t]rade secrets and commercial or financial information 
obtained from a

[[Page 10844]]

person and privileged or confidential . . .,'' as provided in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 4.10(a)(2), 
16 CFR 4.10(a)(2). Comments containing material for which confidential 
treatment is requested must be filed in paper form, must be clearly 
labeled ``Confidential,'' and must comply with FTC Rule 4.9(c).\1\
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    \1\ FTC Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted by using the following weblink: (https://secure.commentworks.com/ftc-fdiciasupp) (and following the instructions 
on the web-based form). To ensure that the Commission considers an 
electronic comment, you must file it on the web-based form at the 
weblink (https://secure.commentworks.com/ftc-fdiciasupp). If this 
Notice appears at (http://www.regulations.gov/search/index.jsp), you 
may also file an electronic comment through that website. The 
Commission will consider all comments that regulations.gov forwards to 
it. You may also visit the FTC website at http://www.ftc.gov to read 
the Notice and the news release describing it.
    A comment filed in paper form should include the ``Supplemental 
Proposed Rule for FDICIA Disclosures, Matter No. R411014'' reference 
both in the text and on the envelope, and should be mailed or delivered 
to the following address: Federal Trade Commission, Office of the 
Secretary, Room H-135 (Annex A), 600 Pennsylvania Avenue, N.W., 
Washington, D.C. 20580. The FTC is requesting that any comment filed in 
paper form be sent by courier or overnight service, if possible, 
because U.S. postal mail in the Washington area and at the Commission 
is subject to delay due to heightened security precautions.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
public comments that it receives, whether filed in paper or electronic 
form. Comments received will be available to the public on the FTC 
website, to the extent practicable, at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the Commission makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC website. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Hampton Newsome, (202) 326-2889, 
Attorney, Division of Enforcement, Bureau of Consumer Protection, 
Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, 
D.C. 20580.

SUPPLEMENTARY INFORMATION:

I. Background

    In 1991, as part of the Federal Deposit Insurance Corporation 
Improvement Act (FDICIA), Congress directed the Commission to prescribe 
certain disclosures for depository institutions lacking federal deposit 
insurance. Although FDICIA was enacted in 1991, Congress prohibited the 
FTC from spending resources on FDICIA's disclosure requirements until 
2003. After Congress lifted that ban, the Commission published proposed 
disclosures consistent with FDICIA's statutory directives (70 FR 12823 
(March 16, 2005)). In response, many commenters raised concerns with 
the proposal.\2\ Thereafter, Congress passed the Financial Services 
Regulatory Relief Act of 2006 (FSRRA) (Pub. L. 109-351) amending 
FDICIA. The FSRRA amendments addressed almost all of the concerns 
raised by commenters with the FTC's proposed Rule.
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    \2\ See (http://www.ftc.gov/os/comments/FDICIA/index.shtm).
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    While the FSRRA amendments contained some modifications to the 
requirements, they did not alter significantly the basic statutory 
obligations for affected institutions. It is important to note that 
FDICIA's disclosure requirements apply regardless of the status of 
FTC's regulations in this area. Accordingly, institutions lacking 
federal deposit insurance must comply with the law's disclosure 
requirements now.
    To conform with the FSRRA amendments, the Commission now publishes 
revised proposed Rule provisions. Section II of this Notice describes 
these proposed provisions in detail. Before addressing the FTC's 
proposed Rule provisions, the following discussion provides background 
about federal deposit insurance, institutions that lack such insurance, 
statutory disclosure requirements for such institutions, the FTC's role 
in this area, and the changes to the law effected by the FSRRA 
amendments.
    Under existing law, all federally-chartered and most state-
chartered depository institutions must have federal deposit insurance. 
Federal deposit insurance funds currently guarantee all deposits at 
federally insured institutions up to and including $250,000 per 
depositor.\3\ Federally insured banks and credit unions must display 
signs disclosing this guarantee at each station or window where insured 
deposits are normally received in the depository institution's 
principal place of business and in all its branches.\4\
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    \3\ On October 3, 2008, the enactment of the Emergency Economic 
Stabilization Act of 2008 temporarily raised the basic limit on 
federal deposit insurance coverage from $100,000 to $250,000 per 
depositor. The legislation provides that the basic deposit insurance 
limit will return to $100,000 after December 31, 2009.
    \4\ See 12 CFR Part 328 and 12 CFR Part 740.
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    Although the vast majority of depository institutions have federal 
deposit insurance, there are some exceptions. For example, the Puerto 
Rican government provides deposit insurance for non-federal credit 
unions located in Puerto Rico. In addition, approximately 200 state-
chartered credit unions in approximately eight states do not have 
federal deposit insurance, and seek to protect their customers through 
private deposit insurance.\5\
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    \5\ According to the U.S. Government Accountability Office 
(GAO), eight states have credit unions that purchase private deposit 
insurance in lieu of federal insurance. Other states either require 
federal insurance or allow private insurance but do not have any 
privately insured credit unions. GAO also identified two 
institutions that have no federal or private insurance. ``Federal 
Deposit Insurance Act: FTC Best Among Candidates to Enforce Consumer 
Protection Provisions,'' GAO-03-971 (Aug. 2003), 6-7. In addition, 
the Commission understands that there are a small number of state 
banks and savings associations that do not have federal deposit 
insurance.
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    In response to incidents affecting the safety of deposits at 
certain financial institutions lacking federal deposit insurance, 
Congress amended the Federal Deposit Insurance Act (FDIA) in 1991 
adding Section 43 (12 U.S.C. 1831t), which imposes several requirements 
on non-federally insured institutions\6\ and private deposit

[[Page 10845]]

insurers.\7\ In general, Section 43(b), as amended by FSRRA, mandates 
that depository institutions lacking federal deposit insurance provide 
certain disclosures to consumers.\8\ Specifically, in all periodic 
statements, signature cards, passbooks, and share certificates, the 
institution must disclose that it does not have federal deposit 
insurance and that, if the institution fails, the federal government 
does not guarantee that depositors will get their money back 
(hereinafter ``required long disclosure''). Moreover, in most 
advertising and at deposit windows, principal places of business, and 
branches, the institution must disclose that it is not federally 
insured (hereinafter ``required short disclosure'').\9\
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    \6\ ``Depository institutions'' lacking federal insurance 
include credit unions, banks, and savings associations that are not 
either: a) insured depository institutions as defined under the 
FDIA; or b) insured credit unions as defined in Section 101 of the 
Federal Credit Union Act (FCUA) (12 U.S.C. 1752). The FDIA defines 
``insured depository institution'' as any bank or savings 
association the deposits of which are insured by the FDIC pursuant 
to this chapter (12 U.S.C. 1813(c)). The FCUA defines ``insured 
credit union'' to mean ``any credit union the member accounts of 
which are insured by the National Credit Union Administration.'' (12 
U.S.C. 1752).
    \7\ Congress passed these amendments as part of FDICIA. See Pub. 
L. No. 102-242, 105 Stat. 2236 (1991) (Section 151 of FDICIA, 
Subtitle F of Title 1, S. 543). Section 43 was initially designated 
as Section 40 of the FDIA. See also S. Rep. No. 167, 102 Cong., 1st 
Sess., at 61 (1992).
    \8\ The definition of ``depository institution'' in Section 
43(f)(2) also includes any entity that, as determined by the FTC, 
engages in the business of receiving deposits and could reasonably 
be mistaken for a depository institution by the entity's current or 
prospective customers (i.e., ``look-alike'' institutions). The 
Commission has not identified any ``look-alike'' institutions to 
date and does not plan to address the issue in this proceeding. If, 
in the future, the Commission or commenters identify ``look-alike'' 
institutions of concern that are not subject to existing legal 
requirements, the FTC may consider whether to develop requirements 
for such entities.
    \9\ 12 U.S.C. 1831t(b).
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    For many years after FDICIA's passage, Congress prohibited the 
Commission from using FTC resources to enforce the law's requirements. 
In 2003, Congress lifted this prohibition for certain provisions of 
FDICIA, including the disclosure provisions of Section 43.\10\ 
Subsequently, the Commission published an NPRM seeking comments on its 
proposed implementation of Section 43 (70 FR 12823 (March 16, 2005)). 
In response, the Commission received numerous comments raising serious 
concerns with the proposal, and, therefore, indirectly with Section 43. 
In October 2006, Congress substantially addressed these concerns by 
amending Section 43 as part of FSRRA. These new amendments rendered 
significant portions of the Commission's proposed Rule obsolete.
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    \10\ Making Appropriations for Agriculture, Rural Development, 
Food and Drug Administration, and Related Agencies, for the Fiscal 
Year Ending September 30, 2004, and for Other Purposes, H.R. Conf. 
Rep. No. 108-401, Cong., 1st Sess., at 88 (2003).
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    Accordingly, the Commission now proposes modifications to its 
proposed Rule and seeks comments on these changes. The FSRRA amendments 
did not alter the basic content of the required disclosures. Section 43 
continues to require depository institutions lacking federal deposit 
insurance affirmatively to disclose that fact to their depositors or 
members. (12 U.S.C. 1831t(b)). The FSRRA amendments did, however, amend 
the law to: (1) significantly alter Section 43(b)(3) (12 U.S.C. 
1831t(b)(3)), which requires institutions to obtain signed 
acknowledgments from depositors related to the lack of federal deposit 
insurance; (2) establish specific exemptions to the advertising 
disclosure requirements; (3) modify the requirements for disclosures on 
periodic statements and account records and at depository locations; 
and (4) limit some of the FTC's authority under the law and provide 
state regulators with specific enforcement authority. These four 
changes are discussed in detail as follows.
    First, the FSRRA amendments significantly change the signed 
acknowledgement requirements of the law, an issue of concern to many 
commenters. Specifically, the amendments allow institutions under 
certain circumstances to provide notice to depositors in lieu of 
obtaining signed acknowledgments.\11\ For example, the law previously 
required institutions to obtain signed acknowledgments from all 
customers who became depositors after 1994. Under the amended law, 
institutions must obtain signed acknowledgments from anyone who becomes 
a depositor after the effective date of FSRRA (October 13, 2006), 
except for those who become depositors through the conversion of a 
federally insured institution to a non-federally insured institution or 
through the merger of a federally insured institution with a non-
federally insured institution. For depositors obtained through a 
conversion or merger after October 13, 2006, the institution may obtain 
the depositor's signed acknowledgement, or make an attempt to obtain 
such an acknowledgment, by sending the consumer a card with the 
required long disclosure, a signature line, and instructions for 
returning the card to the institution. For current depositors (i.e., 
those who became depositors before October 13, 2006 and have not 
submitted an acknowledgement), the institution either must obtain a 
signed acknowledgement, or make two attempts to obtain such a signed 
acknowledgement, by transmitting the above described card to the 
depositor.
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    \11\ The acknowledgments and notices must indicate that the 
institution is not federally insured and that the federal government 
does not guarantee that depositors will recover their money if the 
institution fails (see Section 43(b)(3)).
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    Second, the FSRRA amendments contain specific exemptions to the 
law's disclosure requirements for advertising. In particular, the 
required short disclosure (that the institution is not federally 
insured) need not appear in any ``sign, document, or other item that 
contains the name of the depository institution, its logo, or its 
contact information, but only if the sign, document, or item does not 
include any information about the institution's products or services or 
information otherwise promoting the institution.'' The law also exempts 
from the disclosure requirement ``[s]mall utilitarian items [e.g., 
common pens and key chains] that do not mention deposit products or 
insurance if inclusion of the notice would be impractical.'' (12 U.S.C. 
1831t(b)(2)(B)).
    Third, the FSRRA amendments alter the disclosure requirements for 
periodic statements, account records, and depository locations. Before 
the amendments, Section 43(b)(1) required the long disclosure on ``all 
periodic statements of account, on each signature card, and on each 
passbook, certificate of deposit, or similar instrument evidencing a 
deposit.'' The amended provision eliminates the reference to ``similar 
instrument evidencing a deposit'' and replaces it with ``share 
certificate.'' In addition, before the FSRRA amendments, the statute 
required such notices ``at each place where deposits are normally 
received.'' The FSRRA amendments changed the law to require affected 
institutions to clearly and conspicuously disclose that the institution 
is not federally insured ``at each station or window place where 
deposits are normally received, its principal place of business and all 
its branches where it accepts deposits or opens accounts (excluding 
automated teller machines or point of sale terminals), and on its main 
Internet page . . . .'' (12 U.S.C. 1831t(b)(2)(A)).
    Finally, the FSRRA amendments eliminate the ``shut-down'' provision 
of the law\12\ and limit the FTC's authority

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to the promulgation of regulations and the enforcement of the law's 
disclosure requirements (12 U.S.C. 1831t(b), (c), & (e)). The 
amendments also provide state regulators with broad authority to 
enforce all provisions of Section 43, as amended (see 13 U.S.C. 
1831(f)(2)).
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    \12\ The ``shut-down'' provision, formerly Section 43(e), 
prohibited depository institutions lacking federal deposit insurance 
from using the mails or other instrumentalities of interstate 
commerce to facilitate depository activities unless the appropriate 
state supervisor had determined that the institution met eligibility 
requirements for such insurance.
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II. Proposed Amendments and Comment Analysis

    The disclosure requirements in Section 43, as amended by FSRRA, 
currently apply to covered institutions. As directed by Section 43,\13\ 
however, the Commission plans to issue regulations that track those 
statutory disclosure requirements. As part of that effort and to 
conform the proposed Rule to the FSRRA amendments, we seek comment on 
changes to the proposed Rule published on March 16, 2005 (70 FR 
12823).\14\ Specifically, the changes address disclosure requirements 
for periodic statements and account records, advertising, and locations 
that receive deposits; signed acknowledgment requirements; and an 
exception to these requirements for certain depository institutions. 
Three sections of the revised proposed Rule simply adopt FSRRA's new 
provisions relating to signed acknowledgments (Section 320.5); the 
specific advertising disclosure exemptions (Section 320.4); and the 
disclosure requirements applicable to periodic statements and account 
records and depository locations (Sections 320.3 and 320.4).\15\ There 
are, however, a few rule revisions that require further explanation, 
specifically, which depository locations are covered by the Rule, the 
proposed exceptions for institutions not receiving retail deposits, and 
the format and size requirements for disclosures.
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    \13\ 12 U.S.C. 1831t(c) & (d).
    \14\ The Commission does not propose to revise Sections 320.1 
(Scope); 320.2 (Definitions); 320.6 (Exception for Certain 
Depository Institutions); and 320.7 (Enforcement) of the 2005 
proposed Rule.
    \15\ These particular FSRRA amendments, summarized in Section I 
of this Notice, and the revised proposed Rule provisions that relate 
to them, are straightforward and do not warrant additional 
discussion here.
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A. Depository Locations - ATMs, Service Centers, and Shared Facilities

    Issue and Comments: The Commission's 2005 proposed Rule would have 
required disclosures regarding the lack of federal deposit insurance at 
each location ``where the depository institution's account funds or 
deposits are normally received including, but not limited to, its 
principal place of business, its branches, its automated teller 
machines, and credit union centers, service centers, or branches 
servicing more than one credit union or institution.'' Many credit 
unions commented that the disclosures should not be required at shared 
facilities and service centers. They explained that, among other 
things, postings required by the National Credit Union Administration 
(NCUA) alert consumers that some participating institutions are 
federally insured and that others are not (presumably because the 
absence of NCUA postings for a particular institution will imply that 
the institution lacks federal insurance).\16\ Additionally, American 
Share Insurance (ASI) (146)) suggested that the FTC may not 
have jurisdiction over the shared facilities because some of these 
facilities are housed in federally insured institutions and are not 
owned or operated by the privately insured institutions subject to 
FDICIA's disclosure requirements. On the other hand, some comments\17\ 
urged the Commission to require signage at shared branch locations 
disclosing the names of all non-federally insured institutions 
operating on the premises. Finally, the American Bankers Association 
(2) urged the FTC to adopt the definition of service facility 
in NCUA's regulations, presumably to provide consistency in the 
application of the disclosure requirements.\18\
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    \16\ See, e.g., California and Nevada Credit Union League 
(128); Greater Cincinnati Credit Union (81); and 
Elkhart County Bureau Credit Union (123). See (http://www.ftc.gov/os/comments/FDICIA/index.shtm).
    \17\ North Shore Gas Credit Union (105) and America's 
Community Bankers (130).
    \18\ NCUA defines ``service facility'' as a place where shares 
are accepted for members' accounts, loan applications are accepted, 
or loans are disbursed. See, e.g., 71 FR 36667 (June 28, 2006).
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    Discussion: Pursuant to the FSRRA amendments, the revised proposed 
Rule (Section 320.4) would require covered depository institutions to 
place the short disclosure ``at each station or window where deposits 
are normally received, its principal place of business and all its 
branches where it accepts deposits or opens accounts (excluding 
automated teller machines or point of sale terminals), and on its main 
Internet page . . . .'' This proposed provision simply restates the 
language of Section 43, as amended. Accordingly, the revised proposed 
Rule would require disclosures at credit union centers and service 
centers to the extent they contain stations or windows ``where deposits 
are normally received.'' The statutory language does not give the FTC 
the flexibility to exempt such locations from the requirement to 
disclose that the institution is not federally insured. We do not 
expect that such a disclosure at shared facilities would cause 
confusion or contradict existing disclosures required by the NCUA. To 
the contrary, it would appear the FDICIA disclosure, coupled with the 
NCUA disclosures, would help to clarify which participating 
institutions are federally insured and which are not. In addition, the 
fact that the shared facility itself may not be owned by the uninsured 
or privately insured institution or may not be subject to FTC 
jurisdiction does not control the ability of the institution itself to 
ensure that the disclosures are made. For example, depository 
institutions could arrange for the posting of the required disclosure 
through their contract with the shared facility.

B. Exceptions For Institutions Not Receiving Retail Deposits

    Issue: Section 43(d) of the FDIA (``Exceptions for institutions not 
receiving retail deposits'') provided the Commission with discretion to 
except certain institutions from the disclosure requirements, 
specifically, depository institutions that do not receive initial 
deposits of less than $100,000 from individuals who are citizens or 
residents of the U.S. (other ``than money received in connection with 
any draft or similar instrument issued to transmit money''). The 
Commission's 2005 proposed Rule contained such an exception.\19\ In 
proposing the provision, the Commission reasoned that customers of 
institutions that handle only initial deposits of $100,000 or more are 
sufficiently sophisticated that they do not need the same disclosures 
as other customers.
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    \19\ See 70 FR 12823, 12825 (March 16, 2005). The statute 
indicates that the FTC should not consider ``money received in 
connection with any draft or similar instrument issued to transmit 
money'' to be a deposit for the purposes of this exemption.
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    Comments: In response to the Commission's 2005 proposed Rule, the 
National Association of Federal Credit Unions (NAFCU) (121) 
and the Greater Cincinnati Credit Union (81) opposed the 
proposed exception. According to NAFCU, some customers with initial 
deposits over the standard maximum insurance amount at federal credit 
unions do not understand how their funds are insured. Also, NAFCU 
expressed concern that consumers making an initial deposit of more than 
$100,000 at institutions covered by the exception may mistakenly assume 
that the first $100,000 is federally insured. Conversely, the Navy 
Federal Credit Union (83) supported the proposed exception.
    Finally, the Comptroller of the Currency (OCC) (201) urged 
the Commission to except from the disclosure requirements uninsured

[[Page 10847]]

federally-chartered branches of foreign banks in the U.S. and uninsured 
national trust banks. The OCC explained that the proposed disclosure 
requirements substantially overlap with existing FDIC and OCC 
disclosure regulations for Federal branches of foreign banks and that 
Congress ``evidenced no focused or express concern'' about such 
institutions.\20\
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    \20\ OCC also indicated that national trust banks do not meet 
the definition of depository institution in the proposed Rule 
because they do not ``receive or hold'' deposits and that such 
institutions would fall under the FTC's proposed exceptions for 
certain depository institutions that do not receive initial deposits 
of less than $100,000.
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    Discussion: In 2006, Congress amended the exception language in the 
statute by changing the threshold from ``$100,000'' to ``an amount 
equal to the standard maximum deposit insurance amount.''\21\ The 
Commission's new proposal tracks the 2006 amendment and identifies the 
threshold as the ``standard maximum insurance amount.'' The proposed 
Rule also defines that term to mean the maximum amount of deposit 
insurance as determined under Section 11(a)(1) of the Federal Deposit 
Insurance Act (12 U.S.C. 1821(a)(1)). As discussed earlier, the 
threshold is currently set at $250,000.
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    \21\ Public Law 109-173 (Feb. 26, 2006). The statute now reads: 
``The Federal Trade Commission may, by regulation or order, make 
exceptions to subsection (b) of this section for any depository 
institution that, within the United States, does not receive initial 
deposits of less than an amount equal to the standard maximum 
deposit insurance amount from individuals who are citizens or 
residents of the United States, other than money received in 
connection with any draft or similar instrument issued to transmit 
money.'' 12 U.S.C. 1831t.
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    Because the few comments received were not in agreement on the 
exception issue, the Commission seeks further comment on whether such 
an exception is appropriate. Among other things, we are interested in 
information about whether persons who make deposits of more than the 
standard maximum deposit insurance amount understand the insurance 
coverage associated with their deposit.
    With regard to OCC's concerns about Federal branches of foreign 
banks, we have identified no specific basis in the statute to except 
institutions that otherwise meet the definition of a depository 
institution ``lacking Federal deposit insurance'' as established by 
Congress in Section 43(e)(3) (12 U.S.C. 1831t(e)(3)) other than the 
non-retail deposit exception proposed at Sec.  320.6.\22\
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    \22\ Based on information provided by OCC in its comment, 
uninsured national trust banks would not have to follow the 
disclosure requirements because they fall under the FTC's proposed 
exception (i.e., they ``do not receive initial deposits of less than 
the standard maximum deposit insurance amount'').
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C. Format and Type Size Requirements

    Issue and Discussion: Consistent with the FSRRA amendments, Section 
320.4(b) of the proposed Rule directs institutions to present the 
required disclosures ``in such format and in such type size and manner 
as to be simple and easy to understand.'' The Commission has considered 
proposing prescriptive requirements to implement this provision such as 
specific rules for disclosure location and font size. Given the likely 
variation in the types and sizes of advertisements, however, the 
development of useful, comprehensive, prescriptive requirements appears 
unworkable. In addition, prescriptive requirements would deny 
institutions the flexibility to make disclosures in the most effective 
and efficient way.\23\ Finally, prescriptive requirements could result 
in depository institutions incurring greater costs than necessary to 
make effective disclosures. Therefore, the Commission is not proposing 
prescriptive requirements related to the size and format of the 
required disclosures.
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    \23\ For general guidance on clear and conspicuous disclosures, 
see, e.g., ``Dot Com Disclosures: Information about Online 
Advertising,'' Federal Trade Commission, (http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/).
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III. Invitation to Comment

    The Commission seeks comments on all aspects of the supplemental 
notice of proposed rulemaking. All comments should be filed as 
prescribed in the ``ADDRESSES'' section above, and must be received on 
or before June 5, 2009. In addition to the questions and requests for 
comment found throughout this Notice, we also ask that commenters 
address the following questions:
    (1) What costs or burdens, or other impacts, do the proposed 
requirements create, and on whom? What evidence supports the asserted 
costs, burdens, or other impacts? Please submit any such evidence.
    (2) What modifications, if any, consistent with current law, should 
the Commission make to the proposed requirements to increase their 
benefits to consumers?
    (a) What evidence supports your proposed modifications? Please 
submit any such evidence.
    (b) How would these modifications affect the costs and benefits of 
the proposed requirements for consumers?
    (c) How would these modifications affect the costs and benefits of 
the proposed requirements for businesses, and in particular, small 
businesses?
    (3) What modifications, if any, should be made to the proposed 
requirements to decrease their burdens on businesses?
    (a) What evidence supports your proposed modifications? Please 
submit any such evidence.
    (b) How would these modifications affect the costs and benefits of 
the proposed requirements for consumers?
    (c) How would these modifications affect the costs and benefits of 
the proposed requirements for businesses, and in particular, small 
businesses?

IV. Paperwork Reduction Act

    The proposed disclosures and written acknowledgment statements do 
not constitute a ``collection of information'' under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3520) because they are a ``public 
disclosure of information originally supplied by the government to the 
recipient for the purpose of disclosure to the public'' as indicated in 
Office of Management and Budget regulations.\24\
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    \24\ 5 CFR 1320.3(c)(2).
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V. Regulatory Flexibility Act

    For information regarding the Commission's Initial Regulatory 
Flexibility Analysis (IRFA) prepared pursuant to the Regulatory 
Flexibility Act (RFA), 5 U.S.C. 601-612, commenters should refer to the 
Commission's March 16, 2005 NPRM (70 FR 12823).

VI. Communications by Outside Parties to Commissioners or Their 
Advisors

    Written communications and summaries or transcripts of oral 
communications respecting the merits of this proceeding from any 
outside party to any Commissioner or Commissioner's advisor will be 
placed on the public record. See 16 CFR 1.26(b)(4).

VII. Proposed Rule Language

List of Subjects in 16 CFR Part 320

    Credit unions, Depository institutions, Federal Deposit Insurance 
Act, Federal Trade Commission Act, and Federal deposit insurance.

0
For the reasons stated in the preamble, the Federal Trade Commission 
proposes to add Part 320 to 16 CFR chapter I, subchapter C as set forth 
below:

PART 320--DISCLOSURE REQUIREMENTS FOR DEPOSITORY INSTITUTIONS 
LACKING FEDERAL DEPOSIT INSURANCE

320.1 Scope
320.2 Definitions
320.3 Disclosures in periodic statements and account records

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320.4 Disclosures in advertising and on the premises
320.5 Disclosure acknowledgment
320.6 Exception for certain depository institutions
320.7 Enforcement

    Authority: 12 U.S.C. 1831t; 15 U.S.C. 41 et seq.


Sec.  320.1  Scope.

    This part applies to all depository institutions lacking federal 
deposit insurance. It requires the disclosure of certain insurance-
related information in periodic statements, account records, locations 
where deposits are normally received, and advertising. This part also 
requires such depository institutions to obtain a written 
acknowledgment from depositors regarding the institution's lack of 
federal deposit insurance.


Sec.  320.2  Definitions.

    (a) Lacking federal deposit insurance means the depository 
institution is not an insured depository institution as defined in 12 
U.S.C. 1813(c)(2), or is not an insured credit union as defined in 
Section 101 of the Federal Credit Union Act, 12 U.S.C. 1752.
    (b) Depository institution means any bank or savings association as 
defined under 12 U.S.C. 1813, or any credit union organized and 
operated according to the laws of any State, the District of Columbia, 
the several territories and possessions of the United States, the 
Panama Canal Zone, or the Commonwealth of Puerto Rico, which laws 
provide for the organization of credit unions similar in principle and 
objectives to federal credit unions.
    (c) Standard maximum deposit insurance amount means the maximum 
amount of deposit insurance as determined under Section 11(a)(1) of the 
Federal Deposit Insurance Act (12 U.S.C. Sec.  1821(a)(1)).


Sec.  320.3  Disclosures in periodic statements and account records.

    Depository institutions lacking federal deposit insurance must 
include in all periodic statements of account, on each signature card, 
and on each passbook, certificate of deposit, or share certificate a 
notice disclosing clearly and conspicuously that the institution is not 
federally insured, and that if the institution fails, the Federal 
Government does not guarantee that depositors will get back their 
money. For example, a notice would comply with the requirement if it 
conspicuously stated the following: ``[Institution's name] is not 
federally insured. If it fails, the Federal Government does not 
guarantee that you will get your money back.'' The disclosures required 
by this section must be clear and conspicuous and presented in such 
format and in such type size and manner as to be simple and easy to 
understand.


Sec.  320.4  Disclosures in advertising and on the premises.

    (a) Required Disclosures. Depository institutions lacking federal 
deposit insurance must include clearly and conspicuously a notice 
disclosing that the institution is not federally insured:
    (1) At each station or window where deposits are normally received, 
its principal place of business and all its branches where it accepts 
deposits or opens accounts (excluding automated teller machines or 
point of sale terminals), and on its main Internet page; and
    (2) In all advertisements except as provided in subsection (c).
    (b) Format and Type Size. The disclosures required by this section 
must be clear and conspicuous and presented in such format and in such 
type size and manner as to be simple and easy to understand.
    (c) Exceptions. The following need not include a notice that the 
institution is not federally insured:
    (1) Any sign, document, or other item that contains the name of the 
depository institution, its logo, or its contact information, but only 
if the sign, document, or item does not include any information about 
the institution's products or services or information otherwise 
promoting the institution; and
    (2) Small utilitarian items that do not mention deposit products or 
insurance if inclusion of the notice would be impractical.


Sec.  320.5  Disclosure acknowledgment.

    (a) New Depositors Obtained Other Than Through a Conversion or 
Merger. With respect to any depositor who was not a depositor at the 
depository institution before October 13, 2006, and who is not a 
depositor as described in paragraph (b) of this section, any depository 
institution lacking federal deposit insurance may receive any deposit 
for the account of such depositor only if the institution has obtained 
the depositor's signed written acknowledgement that:
    (1) The institution is not federally insured; and
    (2) If the institution fails, the Federal Government does not 
guarantee that the depositor will get back the depositor's money.
    (b) New Depositors Obtained Through a Conversion or Merger. With 
respect to a depositor at a federally insured depository institution 
that converts to, or merges into, a depository institution lacking 
federal insurance after October 13, 2006, any depository institution 
lacking federal deposit insurance may receive any deposit for the 
account of such depositor only if:
    (1) The institution has obtained the depositor's signed written 
acknowledgement described in paragraph (a) of this section; or
    (2) The institution makes an attempt, sent by mail no later than 45 
days after the effective date of the conversion or merger, to obtain 
the acknowledgment. In making such an attempt, the institution must 
transmit to each depositor who has not signed and returned a written 
acknowledgement described in paragraph (a) of this section:
    (i) A conspicuous card containing the information described in 
paragraphs (a)(1) and (a)(2) of this section, and a line for the 
signature of the depositor; and
    (ii) Accompanying materials requesting the depositor to sign the 
card, and return the signed card to the institution.
    (c) Current Depositors. Any depository institution lacking federal 
deposit insurance may receive any deposit after October 13, 2006 for 
the account of any depositor who was a depositor on that date only if:
    (1) The depositor has signed a written acknowledgement described in 
paragraph (a) of this section; or
    (2) The institution has transmitted to each depositor who was a 
depositor before October 13, 2006, and has not signed a written 
acknowledgement described in paragraph (a) of this section:
    (i) A conspicuous card containing the information described in 
paragraphs (a)(1) and (a)(2) of this section, and a line for the 
signature of the depositor; and
    (ii) Accompanying materials requesting that the depositor sign the 
card, and return the signed card to the institution.
    Note to paragraph (c): The institution must make the transmission 
described in paragraph (c)(2) of this section via mail not later than 
three months after October 13, 2006 and must make a second identical 
transmission via mail not less than 30 days, and not more than three 
months, after the first transmission to the depositor in accordance 
with paragraph (c)(2), if the institution has not, by the date of such 
mailing, received from the depositor a card referred to in paragraph 
(c)(1) of this section which has been signed by the depositor.
    (d) Format and Type Size. The disclosures required by this section 
must be clear and conspicuous and

[[Page 10849]]

presented in such format and in such type size and manner as to be 
simple and easy to understand.


Sec.  320.6  Exception for certain depository institutions.

    The requirements of this part do not apply to any depository 
institution lacking federal deposit insurance and located within the 
United States that does not receive initial deposits of less than an 
amount equal to the standard maximum deposit insurance amount from 
individuals who are citizens or residents of the United States, other 
than money received in connection with any draft or similar instrument 
issued to transmit money.


Sec.  320.7  Enforcement.

    Compliance with the requirements of this part shall be enforced 
under the Federal Trade Commission Act, 15 U.S.C. 41 et seq.
    By direction of the Commission.

Donald S. Clark,
Secretary,
[FR Doc. E9-5305 Filed 3-12-09: 8:45 am]
BILLING CODE 6750-01-S