[Federal Register Volume 75, Number 123 (Monday, June 28, 2010)]
[Rules and Regulations]
[Pages 36506-36511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-15497]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 370

RIN 3064-AD37


Final Rule Regarding Amendment of the Temporary Liquidity 
Guarantee Program To Extend the Transaction Account Guarantee Program

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: The FDIC is issuing a Final Rule extending the Transaction 
Account Guarantee (TAG) component of the Temporary Liquidity Guarantee 
Program (TLGP) through December 31, 2010, for insured depository 
institutions (IDIs) currently participating in the TAG program, with 
the possibility of an additional extension of up to 12 months without 
additional rulemaking, upon a determination by the FDIC's Board of 
Directors (Board) that continuing economic difficulties warrant further 
extension.
    The Final Rule differs only slightly from the interim rule that 
preceded it. The interim rule provided for the possibility of a further 
extension of the TAG program until December 31, 2011, without 
additional rulemaking, should the FDIC's Board determine that economic 
conditions warrant a further extension of the program. The Final Rule 
provides that, under appropriate economic conditions, the Board may 
further extend the TAG program for a period of time not to exceed 
December 31, 2011. Like the interim rule, the Final Rule modifies the 
assessment basis for calculating the assessment rate for an IDI's 
continued participation in the TAG to the average daily balances in the 
TAG-related accounts, but makes no changes to the assessment rate 
itself. Further, as in the interim rule the Final Rule requires IDIs 
that are participating in the TAG program and that offer NOW accounts 
covered by the program to reduce the interest rate on such accounts to 
a rate no higher than 0.25 percent and to commit to maintain that rate 
for the duration of the TAG extension in order for those NOW accounts 
to remain eligible for the FDIC's continued guarantee.

DATES: Effective June 28, 2010.

FOR FURTHER INFORMATION CONTACT: A. Ann Johnson, Counsel, Legal 
Division, (202) 898-3573 or [email protected]; Robert C. Fick, 
Supervisory Counsel, Legal Division, (202) 898-8962 or [email protected]; 
Julia E. Paris, Senior Attorney, Legal Division, (202) 898-3821 or 
[email protected]; Lisa D. Arquette, Associate Director, Division of 
Supervision and Consumer Protection, (202) 898-8633 or 
[email protected]; Donna Saulnier, Manager, Assessment Policy Section, 
Division of Finance, (703) 562-6167 or [email protected]; or Rose 
Kushmeider, Acting Chief, Banking and Regulatory Policy Section, 
Division of Insurance and Research, (202) 898-3861 or 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    In October 2008, the FDIC adopted the TLGP following a 
determination of systemic risk by the Secretary of the Treasury (after 
consultation with the President) that was supported by recommendations 
from the FDIC and the Board of Governors of the Federal Reserve System 
(Federal Reserve).\1\ The TLGP is part of an ongoing and coordinated 
effort by the FDIC, the U.S. Department of the Treasury, and the 
Federal Reserve to address unprecedented disruptions in the financial 
markets and preserve confidence in the American economy.
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    \1\ See Section 13(c)(4)(G) of the Federal Deposit Insurance Act 
(FDI Act), 12 U.S.C. 1823(c)(4)(G). The determination of systemic 
risk authorized the FDIC to take actions to avoid or mitigate 
serious adverse effects on economic conditions or financial 
stability, and the FDIC implemented the TLGP in response.
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    The FDIC's October 2008 interim rule provided the blueprint for the 
TLGP.\2\ The TLGP comprises two distinct components: The Debt Guarantee 
Program, pursuant to which the FDIC guarantees certain senior unsecured 
debt issued by entities participating in the TLGP; and the TAG program, 
pursuant to which the FDIC guarantees all funds held at participating 
IDIs (beyond the standard maximum deposit insurance limit) in 
qualifying noninterest-bearing transaction accounts.
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    \2\ 73 FR 64179 (Oct. 29, 2008). This Interim Rule was followed 
by a Final Rule, published in the Federal Register on November 26, 
2008. 73 FR 72244 (Nov. 26, 2008).
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    The TAG component of the TLGP was developed, in part, to address 
concerns that a large number of account holders might withdraw their 
uninsured account balances from IDIs due to then-prevailing economic 
uncertainties. Such withdrawals could have further destabilized 
financial markets and impaired the funding structure of smaller banks 
that rely on deposits as a primary source of funding while also 
negatively affecting other institutions that had relationships with 
these banks.\3\ In designing the TAG program, the FDIC sought to 
improve public confidence and to encourage depositors to maintain their 
transaction account balances at IDIs participating in the TAG program.
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    \3\ 73 FR 64182-64183.
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    As part of its rulemaking process, the FDIC in November 2008 
expanded the TAG program to cover, among other accounts, ``negotiable 
order of withdrawal,'' or NOW accounts, with interest rates no higher 
than 0.50 percent if the IDI offering the account committed to maintain 
the interest rate at a level no higher than 0.50 percent through 
December 31, 2009.\4\
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    \4\ 73 FR 72244, 72262 (Nov. 26, 2008).
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    The TAG program was originally set to expire on December 31, 
2009.\5\ The FDIC recognized that the TAG program was contributing 
significantly to improvements in the financial sector, but also noted 
that many parts of the country were still suffering from the effects of 
economic turmoil. As a result, on August 26, 2009, following a public 
notice and comment period,\6\ the FDIC issued a final rule that 
extended the TAG program through June 30, 2010.\7\
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    \5\ 73 FR 64179, 64182 (Oct. 29, 2008).
    \6\ 74 FR 31217 (June 30, 2009).
    \7\ 74 FR 45093 (Sept. 1, 2009).
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    The initial TAG extension included an increased assessment rate 
designed to offset the potential losses associated with the FDIC's 
guarantee. Beginning on January 1, 2010, the fee for continued 
participation in the TAG was raised and the basis changed to reflect an 
IDI's risk profile, ranging from 15 basis points to up to 25 basis 
points. The rule provided participating IDIs with a second opportunity 
to opt out of the TAG program.\8\ The initial TAG extension also 
required participating IDIs to extend their commitment to maintain 
interest rates on NOW account at no higher than 0.50 percent during the 
extended TAG program.\9\
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    \8\ Id.
    \9\ 74 FR 45098.
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    Since its inception, the TAG program has been an important source 
of stability for many banks with large transaction account balances. 
Currently, over 6,300 insured depository institutions, representing 
approximately 80 percent of all IDIs, continue to participate in the

[[Page 36507]]

TAG program and to benefit from the guarantee provided by the FDIC. 
These institutions held an estimated $356 billion of deposits in 
accounts currently subject to the FDIC's guarantee as of March 31, 
2010. Of these, $280 billion represented amounts above the insured 
deposit limit and guaranteed by the FDIC through its TAG program. Among 
the current participants in the program, the average TAG account size 
was about $1.04 million. About 509 institutions rely on TAG accounts to 
fund 10 percent or more of their assets.

II. Interim Rule

    While the immediate financial crisis that led to the creation of 
the TLGP in October 2008 has abated, several economic factors led the 
FDIC's Board to authorize publication in the Federal Register of an 
interim rule to amend the TLGP to provide for a six month extension, 
until December 31, 2010, of the TAG Program, with the possibility of an 
additional 12-month extension without further rulemaking.\10\ Namely, 
the recession that began in late 2007 continues to pressure local 
communities across the country. The financial distress has spread from 
large, systemically important banks to banks of all sizes, particularly 
in regions suffering from ongoing economic turmoil.\11\ Weaknesses 
facing community banks have intensified as the lingering consequences 
of the 2008 financial crisis and the resulting recession place 
continued pressure on earnings and asset quality. The effects of the 
financial crisis and recession are expected to persist for some time, 
especially as the magnitude of economic distress facing local markets 
places continued pressure on asset quality and earnings, with the 
potential for undermining the stability of the banking organizations 
that serve these markets.\12\
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    \10\ 75 FR 20257, 20260-261 (April 19, 2010).
    \11\ Id. at 20258.
    \12\ Id. at 20259.
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    With these factors in mind, as well as the FDIC's general concern 
that allowing the TAG program to expire in the current environment 
could cause a number of community banks to experience deposit 
withdrawals from their large transaction accounts and risk needless 
liquidity failures or negatively affect IDI's deposit franchise values, 
the interim rule reflected several features designed to continue to 
promote confidence and stability in the banking system and to monitor 
and minimize risk of loss.\13\
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    \13\ Id. at 20260-261.
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    In order to allow the majority of participating IDIs to remain in 
the program, the FDIC's interim rule did not increase fees for 
continued participation in the extended TAG program.\14\ Rather, the 
tiered-pricing assessment structure, ranging from 15 to 25 basis points 
based on an IDI's deposit insurance assessment risk category remains in 
effect. However, the interim rule did modify the basis for calculating 
the risk-based assessments from end-of-calendar-quarter to average-
daily-account-balance reporting.\15\
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    \14\ 75 FR 20257, 20260 (April 19, 2010).
    \15\ Id.
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    With respect to the treatment of NOW accounts, the interim rule 
reduced the permissible interest rate, from no higher than 0.50 percent 
to no higher than 0.25 percent, for the NOW accounts covered by the 
FDIC's TAG guarantee in order to better align the program with 
prevailing market rates. It also required participating IDIs to commit 
to maintain the interest rate at or below 0.25 percent after June 30, 
2010, and through December 31, 2010, or the duration of the program, if 
the Board further extends the TAG program.\16\
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    \16\ Id. at 20261.
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    In light of the regulatory modifications to the existing TAG 
program and in recognition that some IDIs wished to discontinue 
participation in the program, the interim rule provided IDIs currently 
participating in the TAG program with a one-time, irrevocable 
opportunity to opt out of this TAG extension by April 30, 2010.\17\ An 
additional 441 institutions took advantage of this opt-out opportunity 
and indicated their intent to exit the program as of July 1, 2010. 
Under the interim rule, a participating IDI's decision to remain in the 
extended TAG program obligates it to remain in the program through 
December 31, 2010, or for the duration of the program, if the Board 
further extends the TAG program.
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    \17\ Id.
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    As to the disclosures required regarding the extended TAG program, 
the interim rule required IDIs that did not opt out of the extension to 
update their disclosures on or before May 20, 2010, to reflect the new 
termination date for the extension.\18\ Under the interim rule, those 
IDIs that chose to opt out of the program similarly had to update 
disclosures to reflect that they would no longer be participating in 
the TAG program and that deposits in noninterest-bearing transaction 
accounts would no longer be guaranteed in full by the FDIC.\19\
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    \18\ Id.
    \19\ Id.
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    The FDIC requested comment on the interim rule, and the comment 
period ended on May 19, 2010. A total of 10 comments were submitted by 
bankers, trade groups, and Members of the U.S. House of 
Representatives. The comments are summarized below and may be viewed in 
their entirety on the FDIC's Web site at http://www.fdic.gov/regulations/laws/federal/.

IV. Comment Summary and Discussion

    With one exception, commenters generally supported the FDIC's 
interim rule extending the TAG program. They cited the continued 
confidence and stability that the TAG program instills in customers as 
well as the ability for banks to use the deposit base provided by the 
TAG program to lend and promote growth in their communities.
    One commenter opposed to the interim rule suggests, without 
providing any supporting data, that, because evidence shows the economy 
is recovering, a further extension of the TAG program is unwarranted 
and would further cause participating IDIs to postpone addressing their 
liquidity positions. Although the FDIC agrees there are many signs that 
the economy is recovering, the recovery remains fragile and is still 
threatened by weak labor markets, household and business uncertainty, 
and tight credit conditions. The Final Rule extends the TAG program in 
order to reduce the risk of needless liquidity failures and increased 
costs that might result if the TAG program were not extended during 
this still fragile economic period. In addition, the Final Rule would 
maintain an important source of liquidity for participating IDIs to 
fund small business lending, which will further contribute to economic 
recovery. An orderly phase-out of the TAG program will be appropriate 
once evidence points to a more solid and sustained economic recovery.
    Further comments are detailed below by subject.

Clarification of Possible Additional Extension Period

    As an initial matter, the FDIC notes that some commenters viewed 
the interim rule's possible additional extension beyond December 31, 
2010, as a term of ``up to 12 months.'' To provide maximum flexibility 
in the event of a more rapid resurgence of positive economic 
conditions, the Final Rule defines the ``TAG expiration date'' to mean 
December 31, 2010, unless the Board, for good cause, extends the 
program for an additional period of time not to exceed one year, in 
which case the term ``TAG expiration date'' means the last day of such 
additional period of time. As with the interim rule, the Final

[[Page 36508]]

Rule provides that the FDIC's Board will announce its decision 
regarding any additional extension of the TAG program no later than 
October 29, 2010. At that time, if such a further extension beyond 
December 31, 2010, is warranted, the Board will announce the TAG 
expiration date that will conclude the TAG program.

Requests To Opt Into TAG Program/Future Opt Out Provision

    Three commenters requested that the FDIC offer the opportunity to 
opt into the TAG program to IDIs that had previously opted out of the 
program. Some commenters note that they had opted out of the TAG 
program under the premise that the program was temporary in nature and 
that the increased assessment basis would not justify the cost of 
remaining in the program. All of these commenters now cite the 
potential for a competitive imbalance if similarly situated IDIs are 
not permitted to opt into the program. One commenter suggests that IDIs 
that were healthy at the time that they made their opt-out decision be 
permitted to opt in to the program.
    After carefully considering these comments, the FDIC has not 
provided for opt-in opportunities in the Final Rule. Primarily, as 
noted in the interim rule, the extension of the TAG program represents 
a continuation of the FDIC's action under the October 2008 systemic 
risk determination to mitigate the continuing adverse effects of the 
financial crisis and recession. Permitting non-participating IDIs to 
opt back into the program would be inconsistent with the FDIC's 
previously-announced intent to conclude the program. Further, the TAG 
extension may terminate as soon as December 31, 2010, and only two 
institutions and one trade group have indicated a desire to opt in. At 
this stage of the TAG program, the costs of establishing and 
implementing systems to reinstate the program for a few IDIs and the 
potential for depositor confusion outweigh arguments to the contrary.
    In addition, if the Board decides that an extension is warranted 
after December 10, 2010, one commenter believes that the FDIC should 
offer another opportunity to opt out of the TAG program. The commenter 
reasons that a secondary extension would cause IDIs to incur additional 
assessments. However, the interim rule notified IDIs that they would be 
obligated to remain in the program (and pay any required assessment) 
through December 31, 2010, or for the duration of the program, if the 
Board further extended the TAG program. In making the decision to 
remain in the extended TAG program, IDIs should have factored in the 
expense of participating in the program for the duration of the 
program. Moreover, the interim rule provided for a secondary extension 
of one year beyond December 31, 2010, until December 31, 2011. The 
Final Rule provides for the possibility that the program may be 
extended for a period of less than one year beyond December 31, 2010. 
If the Board determines to extend the program for less than one year 
beyond December 31, 2010, the costs of the extension provided for in 
the Final Rule would be less than those provided for in the interim 
rule. Accordingly, the Final Rule does not provide an additional opt 
out opportunity.

Reduction of Interest Rate for TAG-qualifying NOW Accounts

    Some commenters expressed concern regarding the reduction, from 
0.50 percent to 0.25 percent, of the maximum interest permissible for 
TAG-qualifying NOW accounts provided for in the interim rule. These 
commenters noted that the interest rate reduction could lead to 
decreased earnings on such TAG-qualifying NOW accounts, and may cause 
banks to divert funds to pledge as collateral that might otherwise be 
used to support lending. Further, a commenter expressed concern that if 
the TAG program is extended beyond December 31, 2010, the 0.25 percent 
maximum permissible interest rate for TAG-qualifying accounts may not 
align with future prevailing market rates. Other commenters felt that 
the reduced interest rate represented current market rates in their 
regions, and did not believe that such a reduction would affect their 
earnings.
    IDIs throughout the country participate in the TAG program. In the 
interim rule, the FDIC explained its rationale for reducing the maximum 
interest rate for TAG-qualifying NOW accounts.\20\ Based on data 
provided by RateWatch, the FDIC noted that the nationwide average rates 
for regular interest-bearing checking accounts ranged from 0.12 percent 
to 0.15 percent for most accounts, and from 0.26 percent to 0.29 
percent for premium accounts held by municipalities, school districts, 
and other typical large transaction account holders. In providing for 
the interest rate reduction on TAG-qualifying NOW accounts in the 
interim rule, the FDIC sought to align the interest rate with current 
market rates and to ensure the program is not used inappropriately by 
IDIs to attract interest-sensitive deposits to fund high-risk 
activities.
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    \20\ 75 FR 20261.
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    The FDIC has considered the commenters' concerns that the reduced 
interest rate may not align with prevailing rates by region or with 
future interest rates, but has determined to retain the 0.25 percent 
limit for qualifying NOW accounts as representative of the prevailing 
nationwide interest rates for such accounts at this time and for the 
relatively short duration of the TAG extension. The FDIC will continue 
to monitor interest rates for TAG-qualifying NOW accounts.

Modification of the Reporting Basis for the TAG Program

    In order to monitor and assess fees based on the ongoing risk 
exposure, the interim rule modified the basis for calculating risk-
based assessments from end-of-calendar-quarter to average-daily-
account-balance reporting. One commenter suggested that the 
modification is only appropriate for IDIs that currently report their 
FDIC deposit insurance assessments as the quarterly average of daily 
closing balances because of the significant cost associated with 
altering general ledger systems to meet this requirement for 
potentially only two calendar quarters. However, another commenter 
representing community banks expressly noted that even though this 
change may create additional administrative burdens on smaller IDIs, 
the change ``would more accurately reflect the TAG amounts of these 
fluctuating and volatile accounts.'' \21\
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    \21\ Independent Community Banks of America, May 19, 2010, 
Letter.
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    In the interim rule, the FDIC noted that, of the institutions that 
use quarter-end reporting for their deposit insurance assessment base, 
fewer than 1,000 institutions report more than 25 TAG-qualifying 
accounts. After carefully considering this comment, the FDIC continues 
to believe that the modification in the assessment base for such a 
limited universe of IDIs would not create a significant burden that 
would outweigh its responsibility to accurately monitor the TAG program 
and the associated risk of loss.

Increasing TAG Assessment Rate and Assessing Non-Participating IDIs

    One commenter suggested increasing the tiered-pricing assessment 
for participating IDIs in order to decrease their reliance on the TAG 
Program. However, the interim rule specifically did not impose an 
increased TAG assessment rate in order to keep the

[[Page 36509]]

program accessible to all participating IDIs and to avoid further 
pressure on the liquidity posture of those that participate in the TAG 
program. The FDIC remains committed to these goals; consequently, as 
with the interim rule, the Final Rule does not increase fees for 
participation in the TAG program.

V. The Final Rule

    For the reasons set forth in the preceding section, the FDIC has 
issued the Final Rule, with only one modification. The change concerns 
the length of any possible secondary extension of the TAG program, 
should the FDIC's Board deem further extensions necessary beyond 
December 31, 2010. The features of the Final Rule are discussed below.

A. Extension of the TAG Program for Participating IDIs

    The Final Rule extends the TAG program through December 31, 2010, 
with the possibility of an additional extension not to exceed December 
31, 2011, without further rulemaking, at the discretion of the Board 
upon a finding of continued need for the TAG program. If the Board 
determines that an additional extension is warranted beyond December 
31, 2010, an announcement to that effect will be made by the FDIC no 
later than October 29, 2010.

B. No Increased Fee for Continued Participation in the Extended TAG 
Program

    As with the interim rule, the Final Rule does not make any changes 
to the existing tiered-pricing assessment, ranging from 15 to 25 basis 
points based on an institution's deposit insurance risk profile. As 
noted in the interim rule, in order to prevent unanticipated risk of 
loss, the FDIC reminds participating IDIs to exercise prudent marketing 
of TAG accounts that qualify for the FDIC's guarantee and to continue 
to exercise risk-management principles applicable to an IDI's existing 
business plan. Participating IDIs should not use the extension period 
to aggressively market or grow their TAG-related accounts.

C. Change in Basis for Reporting Assessment Purposes

    The Final Rule provides that IDIs that did not opt out of the TAG 
program will be required to report their TAG amounts as average daily 
balances in order to enable the FDIC to monitor and assess fees based 
upon the ongoing risk exposure. Under the Final Rule, beginning with 
the September 30, 2010, report date for the Report of Condition or 
Thrift Financial Report, the total dollar amount of TAG-qualifying 
accounts and the total number of accounts must be reported as an 
average balance. The amounts to be reported as daily averages are the 
total dollar amounts of the noninterest-bearing transaction accounts, 
as defined in 12 C.F.R. 370.2(h), of more than $250,000 for each 
calendar day during the quarter divided by the number of calendar days 
in the quarter. For days that an office of the reporting IDI is closed 
(e.g., Saturdays, Sundays, or holidays), the amounts outstanding from 
the previous business day would be used. The total number of accounts 
to be reported should be calculated on the same basis. Documentation 
supporting the amounts used in the calculation of the average daily 
balance amounts must be retained and be readily available upon request 
by the FDIC or the IDI's primary Federal regulator.

D. Treatment of NOW Accounts

    Consistent with the interim rule, the Final Rule provides that the 
interest rate on NOW accounts that are eligible for the FDIC's 
guarantee may not exceed 0.25 percent. The Rule also requires 
participating IDIs to commit to maintain the interest rate at or below 
0.25 percent after June 30, 2010, and through December 31, 2010, or for 
the duration of the program should the Board extend it.

E. Opportunity to Opt Out

    The interim rule provided IDIs currently participating in the TAG 
program with an opportunity to opt out of this TAG extension by April 
30, 2010, and detailed the mechanism by which an IDI was to provide the 
FDIC with notice of its intent to opt out. The Final Rule does not 
change this feature. Accordingly, a participating IDI's decision to 
remain in the extended TAG program obligates it to remain in the 
program through December 31, 2010, or for the duration of a possible 
additional extension if the Board determines such extension is 
warranted.

V. Regulatory Analysis and Procedure

A. Administrative Procedure Act

    The process of amending Part 370 by means of this Final Rule is 
governed by the Administrative Procedure Act (APA). Pursuant to section 
553(b)(B) of the APA, general notice and opportunity for public comment 
are not required with respect to a rule making when an agency for good 
cause finds that ``notice and public procedure thereon are 
impracticable, unnecessary, or contrary to the public interest.'' 
Similarly, section 553(d)(3) of the APA provides that the publication 
of a rule shall be made not less than 30 days before its effective 
date, except ``* * * (3) as otherwise provided by the agency for good 
cause found and published with the rule.''
    Consistent with section 553(b)(B) of the APA, in publishing the 
interim rule, the FDIC invoked the good cause exception based on the 
furtherance of the public interest by extending the time period of the 
TAG program to promote continued stability in the banking system 
through guaranteeing large uninsured transaction account balances in 
order to provide participating IDIs with continued sources of funding 
to meet their liquidity needs. (Nonetheless, the FDIC solicited 
comments on the interim rule, and has fully considered the comments 
that were submitted.) For similar reasons, the FDIC confirms that the 
good cause exception, provided for in section 553(b)(B) of the APA, 
applies to the Final Rule.
    Section 553(d)(3) of the APA provides that the publication of a 
rule shall be made not less than 30 days before its effective date, 
except ``as otherwise provided by the agency for good cause found and 
published with the rule.'' For reasons that supported its invocation of 
the good cause exception to section 553(b)(B) of the APA, the FDIC 
relied upon the good cause exception to section 553(d)(3) and published 
the interim rule with an immediate effective date. For similar reasons, 
the FDIC invokes the good cause exception provided for in section 
553(d)(3) of the APA and provides for an immediate effective date for 
this Final Rule.

B. Riegle Community Development and Regulatory Improvement Act

    The Riegle Community Development and Regulatory Improvement Act 
provides that any new regulations or amendments to regulations 
prescribed by a Federal banking agency that impose additional 
reporting, disclosures, or other new requirements on insured depository 
institutions shall take effect on the first day of a calendar quarter 
which begins on or after the date on which the regulations are 
published in final form, unless the agency determines, for good cause 
published with the rule, that the rule should become effective before 
such time.\22\ For the same reasons discussed above, the FDIC finds 
that good cause exists for an immediate effective date for the Final 
Rule.
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    \22\ 12 U.S.C. 4802.

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[[Page 36510]]

C. Small Business Regulatory Enforcement Fairness Act

    The Office of Management and Budget (OMB) has determined that the 
Final Rule is not a ``major rule'' within the meaning of the relevant 
sections of the Small Business Regulatory Enforcement Act of 1996 
(SBREFA), 5 U.S.C. 801 et seq.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (Pub. L. 96-354, Sept. 19, 1980) 
(RFA) applies only to rules for which an agency publishes a general 
notice of proposed rule making pursuant to 5 U.S.C. 553(b). As 
discussed above, consistent with section 553(b)(B) of the APA, the FDIC 
has determined for good cause that general notice and opportunity for 
public comment would be impracticable and contrary to the public 
interest. Therefore, the RFA, pursuant to 5 U.S.C. 601(2), does not 
apply.

E. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), an agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless it 
displays a currently valid OMB control number. The Interim Rule, by 
extending the termination date for the TAG Program, changed the 
estimated number of respondents for the reporting and recordkeeping 
requirements in an existing OMB-approved information collection, 
entitled the ``Transaction Account Guarantee Program Extension,'' (OMB 
No. 3064-0170). Those burden adjustments were submitted to OMB as a 
request for a nonmaterial/nonsubstantive change. This Final Rule 
imposes no additional paperwork burden; therefore, the previously 
submitted burden estimates for the Transaction Account Guarantee 
Program Extension information collection require no further adjustment.
    Section 370.6(c)(5) of both the Interim Rule and the Final Rule 
requires that a new data element on average daily balances in 
noninterest-bearing transaction accounts be incorporated into the 
Consolidated Report of Income and Condition (CALL Report) filed by 
program extension participants. The reporting requirement will not be 
implemented until the quarterly report filed for the period July 1, 
2010, to September 30, 2010. This change to the CALL Report was the 
subject of a Federal Register notice published on May 21, 2010 (75 FR 
28612) by the FDIC and the other bank regulatory agencies as required 
by the Paperwork Reduction Act.

F. 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. No commenters suggested that the interim rule was 
materially unclear, and the FDIC believes that the Final Rule is 
substantively similar to the interim rule.

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

    The FDIC has determined that the Final Rule will not affect family 
well-being within the measure 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 
(Pub. L. 105-277, 112 Stat. 2681).

List of Subjects in 12 CFR Part 370

    Banks, Banking, Bank deposit insurance, Holding companies, National 
banks, Reporting and recordkeeping requirements, Savings associations.

0
For the reasons discussed in the preamble, the Federal Deposit 
Insurance Corporation amends part 370 of chapter III of Title 12 of the 
Code of Federal Regulations as follows:

PART 370--TEMPORARY LIQUIDITY GUARANTEE PROGRAM

0
1. The authority citation for part 370 continues to read as follows:

    Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818, 
1819(a)(Tenth), 1820(f), 1821(a), 1821(c), 1821(d), 1823(c)(4).


0
2. Amend section 370.2 by revising paragraph (o) to read as follows:


Sec.  370.2  Definitions.

* * * * *
    (o) TAG expiration date. The term ``TAG expiration date'' means 
December 31, 2010 unless the Board of Directors of the FDIC (the 
``Board''), for good cause, extends the transaction account guarantee 
program beyond December 31, 2010 for an additional period of time not 
to exceed one year, in which case the term ``TAG expiration date'' 
means the last day of such additional period of time. Good cause exists 
if the Board finds that the economic conditions and circumstances that 
led to the establishment of the transaction account guarantee program 
are likely to continue beyond December 31, 2010 and that extending the 
transaction account guarantee program for an additional period of time 
will help mitigate or resolve those conditions and circumstances. If 
the Board decides to extend the transaction account guarantee program 
beyond December 31, 2010 for an additional period of time, it will do 
so without further rulemaking; however, the FDIC will publish notice of 
any extension no later than October 29, 2010. Participating entities 
must update the disclosures required by Sec.  370.5(h)(5), as 
necessary, to reflect the current TAG expiration date, including any 
extension of such date.

0
3. Amend Sec.  370.5 by revising paragraph (h)(5) to read as follows:


Sec.  370.5  Participation.

* * * * *
    (h) * * *
    (5) Each insured depository institution that offers noninterest-
bearing transaction accounts must post a prominent notice in the lobby 
of its main office, each domestic branch and, if it offers Internet 
deposit services, on its Web site clearly indicating whether the 
institution is participating in the transaction account guarantee 
program. If the institution is participating in the transaction account 
guarantee program, the notice must state that funds held in 
noninterest-bearing transactions accounts at the entity are guaranteed 
in full by the FDIC. Participating entities must update their 
disclosures to reflect the current TAG expiration date, including any 
extension pursuant to Sec.  370.2(o) or, if applicable, any decision to 
opt-out.
    (i) These disclosures must be provided in simple, readily 
understandable text. Sample disclosures are as follows:

For Participating Institutions

    [Institution Name] is participating in the FDIC's Transaction 
Account Guarantee Program. Under that program, through [June 30, 
2010, December 31, 2010, or such other date established by the Board 
as the TAG expiration date pursuant to Sec.  370.2(o), whichever is 
applicable], all noninterest-bearing transaction accounts are fully 
guaranteed by the FDIC for the entire amount in the account. 
Coverage under the Transaction Account Guarantee Program is in 
addition to and separate from the coverage available under the 
FDIC's general deposit insurance rules.
    For Participating Institutions That Elect To Opt-Out of the 
Extended Transaction Account Guaranty Program Effective on July 1, 
2010
    Beginning July 1, 2010 [Institution Name] will no longer 
participate in the FDIC's Transaction Account Guarantee Program. 
Thus, after June 30, 2010, funds held in noninterest-bearing 
transaction accounts will

[[Page 36511]]

no longer be guaranteed in full under the Transaction Account 
Guarantee Program, but will be insured up to $250,000 under the 
FDIC's general deposit insurance rules.

For Non-Participating Institutions

    [Institution Name] has chosen not to participate in the FDIC's 
Transaction Account Guarantee Program. Customers of [Institution 
Name] with noninterest-bearing transaction accounts will continue to 
be insured for up to $250,000 under the FDIC's general deposit 
insurance rules.

    (ii) If the institution uses sweep arrangements or takes other 
actions that result in funds being transferred or reclassified to an 
account that is not guaranteed under the transaction account guarantee 
program, for example, an interest-bearing account, the institution must 
disclose those actions to the affected customers and clearly advise 
them, in writing, that such actions will void the FDIC's guarantee with 
respect to the swept, transferred, or reclassified funds.
* * * * *

    Dated at Washington, DC, this 22nd day of June, 2010.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2010-15497 Filed 6-25-10; 8:45 am]
BILLING CODE P