[Federal Register Volume 75, Number 189 (Thursday, September 30, 2010)]
[Proposed Rules]
[Pages 60341-60347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24594]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 330

RIN 3064-AD37


Deposit Insurance Regulations; Unlimited Coverage for 
Noninterest-bearing Transaction Accounts

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is proposing to amend its regulations to implement

[[Page 60342]]

section 343 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (``Dodd-Frank Act''),\1\ providing for unlimited deposit 
insurance for ``noninterest-bearing transaction accounts'' for two 
years starting December 31, 2010. This unlimited coverage for 
``noninterest-bearing transaction accounts'' is similar but not 
identical to the protection provided for such account owners under the 
FDIC's Transaction Account Guarantee Program (``TAGP''). The proposed 
rule serves as a vehicle for the FDIC Board of Directors to announce 
that it will not extend the TAGP beyond the scheduled expiration date 
of December 31, 2010. Because of the differences between the TAGP and 
the new statutory provision, changes to the rules are necessary.
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    \1\ Public Law 111-203 (July 21, 2010).

DATES: Written comments must be received by the FDIC no later than 
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October 15, 2010.

ADDRESSES: You may submit comments on the proposed rule, by any of the 
following methods:
     Agency Web Site: http://www.FDIC.gov/regulations/laws/federal/notices.html. Follow instructions for submitting comments on 
the Agency Web Site.
     E-mail: [email protected]. Include RIN  [insert] 
on 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: Comments may be hand delivered to the 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 comments received will be posted generally 
without change to http://www.fdic.gov/regulations/laws/federal/final.html, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Joseph A. DiNuzzo, Supervisory 
Counsel, Legal Division (202) 898-7349 or [email protected]; Walter C. 
Siedentopf, Honors Attorney, Legal Division (703) 562-2744 or 
[email protected]; or James V. Deveney, Chief, Deposit Insurance 
Section, Division of Supervision and Consumer Protection (202) 898-6687 
or [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

The TAGP

    In October 2008, the FDIC adopted the Temporary Liquidity Guarantee 
Program (``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'').\2\ 
Designed to assist in the stabilization of the nation's financial 
system, the TLGP is composed of two distinct components: the Debt 
Guarantee Program and the TAGP. While all insured depository 
institutions (``IDIs'') were initially participants in both programs, 
the FDIC gave all IDIs the option to opt out of each program 
separately.
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    \2\ See 12 U.S.C. 1823(c)(4)(G) (amended 2010). 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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    Under the TAGP, the FDIC guarantees all funds held at participating 
IDIs in qualifying noninterest-bearing transaction accounts. This 
protection is in addition to and separate from the insurance of funds 
in all other types of deposit accounts. A noninterest-bearing 
transaction account is defined under the TAGP as a transaction account 
maintained at an IDI with respect to which interest is neither accrued 
nor paid and on which the IDI does not reserve the right to require 
advance notice of an intended withdrawal.\3\ The TAGP definition of 
noninterest-bearing transaction account specifically includes low-
interest negotiable order of withdrawal (``NOW'') accounts and Interest 
on Lawyers Trust Accounts (``IOLTAs'').\4\
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    \3\ 12 CFR 370.2(h).
    \4\ 73 FR 72244 (Nov. 26, 2008).
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    Under the TAGP, each IDI that offers noninterest-bearing 
transaction accounts is required to post a conspicuous notice in the 
lobby of its main office and each branch office, and on its Web site, 
if applicable, that discloses whether the IDI is participating in the 
TAGP.\5\ Disclosures for participating IDIs must contain a statement 
that indicates that all noninterest-bearing transaction accounts are 
fully guaranteed by the FDIC.\6\ IDIs are also required to disclose 
actions that cause funds to be transferred from accounts that are 
guaranteed under the TAGP.\7\ IDIs pay a separate assessment, or 
premium, to the FDIC for participating in the TAGP. This assessment is 
in addition to the assessment IDIs pay under the FDIC's risk-based 
assessment system.\8\
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    \5\ 12 CFR 370.5(h)(5).
    \6\ Id.
    \7\ Id.
    \8\ 12 CFR 370.7(c).
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    The TAGP was originally set to expire on December 31, 2009.\9\ The 
FDIC recognized that the TAGP was contributing significantly to 
improvements in the financial sector, but it also noted that many parts 
of the country were still suffering from the effects of economic 
turmoil. As a result, the FDIC extended the TAGP, first, through June 
30, 2010,\10\ and then through December 31, 2010.\11\ The rule 
implementing this last extension also provided for the possibility of 
an additional extension not to exceed December 31, 2011, without 
further rulemaking, at the discretion of the FDIC Board of Directors 
upon a finding of continued need for the TAGP.\12\ The rule also 
provided that the Board would announce any decision to implement such a 
further extension no later than October 29, 2010.\13\ The FDIC is using 
this proposed rule as the vehicle for announcing that it will not 
continue the TAGP beyond December 31, 2010.
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    \9\ 73 FR 64179, 64182 (Oct. 29, 2008).
    \10\ 74 FR 45093 (Sept. 1, 2009).
    \11\ 75 FR 36506 (June 28, 2010).
    \12\ Id.
    \13\ Id.
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The Dodd-Frank Act

    Section 343 of the Dodd-Frank Act amends the Federal Deposit 
Insurance Act (``FDI Act'') to include full deposit insurance coverage 
(beyond the Standard Maximum Deposit Insurance Amount (``SMDIA'')\14\) 
for the net amount held in a noninterest-bearing transaction account by 
any depositor at an insured depository institution. As explained more 
fully below, section 343 of the Dodd-Frank Act is similar to the TAGP, 
but differs from it in three significant ways. First, unlike under the 
TAGP, section 343 applies to all IDIs; IDIs are not required to take 
any action (i.e., opt in or opt out) to obtain coverage provided under 
section 343. Second, section 343 covers only traditional, noninterest-
bearing demand deposit accounts. Unlike the TAGP, section 343 does not 
include within the definition of noninterest-bearing transaction 
account either low-interest NOW accounts or IOLTAs. And, third, unlike 
under the TAGP, there is no separate FDIC assessment (or premium) for 
the insurance of noninterest-bearing transaction accounts under section 
343.
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    \14\ The SMDIA is defined as $250,000. 12 CFR 330.1(n).
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    Section 343 of the Dodd-Frank Act is effective from December 31, 
2010, through December 31, 2012.\15\
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    \15\ Because of overlapping termination and effective dates, on 
December 31, 2010, there will be overlapping coverage of the TAGP 
and section 343 of the Dodd-Frank Act. On January 1, 2011, coverage 
under the TAGP will have ended, but the deposit insurance coverage 
under section 343 of the Dodd-Frank Act will remain through December 
31, 2012.

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[[Page 60343]]

II. The Proposed Rule

Amendments to Deposit Insurance Rules

    Section 343 of the Dodd-Frank Act amends the deposit insurance 
provisions of the FDI Act (12 U.S.C. 1821(a)(1)) to provide separate 
insurance coverage for noninterest-bearing transaction accounts. As 
such, the FDIC is proposing to revise its deposit insurance regulations 
in 12 CFR Part 330 to include this new temporary deposit insurance 
account category.

Definition of Noninterest-Bearing Transaction Account

    The proposed rule follows the definition of noninterest-bearing 
transaction account in section 343 of the Dodd-Frank Act. Section 343 
defines a noninterest-bearing transaction account as ``a deposit or 
account maintained at an insured depository institution with respect to 
which interest is neither accrued nor paid; on which the depositor or 
account holder is permitted to make withdrawals by negotiable or 
transferable instrument, payment orders of withdrawal, telephone or 
other electronic media transfers, or other similar items for the 
purpose of making payments or transfers to third parties or others; and 
on which the IDI does not reserve the right to require advance notice 
of an intended withdrawal.'' This definition of noninterest-bearing 
transaction account is similar to the base definition of that term in 
the TAGP, but it includes no interest-bearing accounts. The section 343 
definition of noninterest-bearing transaction account encompasses only 
traditional, noninterest-bearing demand deposit (or checking) accounts 
that allow for an unlimited number of deposits and withdrawals at any 
time, whether held by a business, an individual or other type of 
depositor.
    Unlike the definition of noninterest-bearing transaction account in 
the TAGP, the section 343 definition of noninterest-bearing transaction 
account does not include NOW accounts (regardless of the interest rate 
paid on the account) or IOLTAs. Therefore, under the proposed rule, 
neither NOW accounts nor IOLTAs are within the definition of 
noninterest-bearing transaction account. Also, like the TAGP, the 
proposed rule does not include money market deposit accounts 
(``MMDAs'') within the definition of noninterest-bearing transaction 
account.
    As under the TAGP, under the proposed rule, whether an account is 
noninterest-bearing is determined by the terms of the account agreement 
and not by the fact that the rate on an account may be zero percent at 
a particular point in time. For example, an IDI might offer an account 
with a rate of zero percent except when the balance exceeds a 
prescribed threshold. Such an account would not qualify as a 
noninterest-bearing transaction account even though the balance is less 
than the prescribed threshold and the interest rate is zero percent. 
Under the proposed rule, at all times, the account would be treated as 
an interest-bearing account because the account agreement provides for 
the payment of interest under certain circumstances. On the other hand, 
as under the TAGP, the waiving of fees would not be treated as the 
earning of interest. For example, IDIs sometimes waive fees or provide 
fee-reducing credits for customers with checking accounts. Under the 
proposed rule, such account features would not prevent an account from 
qualifying as a noninterest-bearing transaction account, as long as the 
account otherwise satisfies the definition of a noninterest-bearing 
transaction account.
    This same principle for determining whether a deposit account 
qualifies as a noninterest-bearing transaction account will apply when 
IDIs no longer are prohibited from paying interest on demand deposit 
accounts. Pursuant to section 627 of the Dodd-Frank Act, as of July 21, 
2011 (one year after the enactment date of the Dodd-Frank Act), IDIs no 
longer will be restricted from paying interest on demand deposit 
accounts. At that time, demand deposit accounts offered by IDIs that 
allow for the payment of interest will not satisfy the definition of a 
noninterest-bearing transaction account. As discussed below, under the 
proposed rule, IDIs would be required to inform depositors of any 
changes in the terms of an account that will affect their deposit 
insurance coverage under this new provision of the deposit insurance 
rules.
    As under the TAGP, the proposed rule's definition of noninterest-
bearing transaction account would encompass ``official checks'' issued 
by IDIs. Official checks, such as cashier's checks and money orders 
issued by IDIs, are ``deposits'' as defined under the FDI Act (12 
U.S.C. 1813(l)) and Part 330 of the FDIC's regulations. The payee of 
the official check (the party to whom the check is payable) is the 
insured party. Because these checks meet the definition of a 
noninterest-bearing transaction account, the payee (or the party to 
whom the payee has endorsed the check) would be insured for the full 
amount of the check upon the failure of the IDI that issued the 
official check.
    Under the FDIC's rules and procedures for determining account 
balances at a failed IDI (12 CFR 360.8), funds swept (or transferred) 
from a deposit account to either another type of deposit account or a 
non-deposit account are treated as being in the account to which the 
funds were transferred prior to the time of failure. So, for example, 
if pursuant to an agreement between an IDI and its customer, funds are 
swept daily from a noninterest-bearing transaction account to an 
account or product (such as a repurchase agreement) that is not a 
noninterest-bearing transaction account, the funds in the resulting 
account or product would not be eligible for full insurance coverage. 
This is how sweep account products are treated under the TAGP and under 
the proposed rule.
    As under the TAGP, however, the proposed rule would include an 
exception from the treatment of swept funds in situations where funds 
are swept from a noninterest-bearing transaction account to a 
noninterest-bearing savings account, notably a MMDA. Often referred to 
as ``reserve sweeps,'' these products entail an arrangement in which a 
single deposit account is divided into two sub-accounts, a transaction 
account and an MMDA. The amount and frequency of sweeps are determined 
by an algorithm designed to minimize required reserves. In some 
situations customers may be unaware that this sweep mechanism is in 
place. Under the proposed rule, such accounts would be considered 
noninterest-bearing transaction accounts.\16\ Apart from this exception 
for ``reserve sweeps,'' MMDAs and noninterest-bearing savings accounts 
do not qualify as noninterest-bearing transaction accounts.
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    \16\ See 12 CFR 360.8.
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Insurance Coverage

    As noted, pursuant to section 343 of the Dodd-Frank Act, all funds 
held in noninterest-bearing transaction accounts will be fully insured, 
without limit. As also specifically provided for in section 343 of the 
Dodd-Frank Act, this unlimited coverage is separate from, and in 
addition to, the coverage provided to depositors with respect to other 
accounts held at an insured depository institution. This means that 
funds held in noninterest-bearing transaction accounts will not be 
counted for purposes of determining the amount of deposit insurance on 
deposits held in other accounts, and in other rights and

[[Page 60344]]

capacities, at the same IDI. Thus, for example, if a depositor has a 
$225,000 certificate of deposit and a no-interest checking account with 
a balance of $300,000, both held in a single ownership capacity, he or 
she would be fully insured for $525,000 (plus interest accrued on the 
CD), assuming the depositor has no other single-ownership funds at the 
same institution. First, coverage of $225,000 (plus accrued interest) 
would be provided for the certificate of deposit as a single ownership 
account (12 CFR 330.6) up to the SMDIA of $250,000. Second, full 
coverage of the $300,000 checking account would be provided separately, 
despite the checking account also being held as a single ownership 
account, because the account qualifies for unlimited separate coverage 
as a noninterest-bearing transaction account.

No Opting Out

    Under the TAGP, IDIs could choose not to participate in the 
program. Because section 343 of the Dodd-Frank Act provides 
Congressionally mandated deposit insurance coverage, IDIs are not 
required to take any action (i.e., opt in or opt out) to obtain 
separate coverage for noninterest-bearing transaction accounts. From 
December 31, 2010, through December 31, 2012, noninterest-bearing 
transaction accounts at all IDIs will receive this temporary deposit 
insurance coverage.

No Separate Assessment

    The FDIC imposes a separate assessment, or premium, on IDIs that 
participate in the TAGP.\17\ The FDIC does not plan to charge a 
separate assessment for the insurance of noninterest-bearing 
transaction accounts pursuant to section 343 of the Dodd-Frank Act. The 
FDIC will take into account the cost for this additional insurance 
coverage in determining the amount of the general assessment the FDIC 
charges IDIs under its risk-based assessment system.\18\
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    \17\ 12 CFR 370.7.
    \18\ 12 CFR part 327.
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Disclosure and Notice Requirements

    The FDIC is proposing notice and disclosure requirements to ensure 
that depositors are aware of and understand what types of accounts will 
be covered by this temporary deposit insurance coverage for 
noninterest-bearing transaction accounts. There are three such 
requirements. As explained in detail below: (1) IDIs must post a 
prescribed notice in their main office, each branch and, if applicable, 
on their Web site; (2) IDIs currently participating in the TAGP must 
notify NOW account depositors (that are currently protected under the 
TAGP because of interest rate restrictions on those accounts) and IOLTA 
depositors that, beginning January 1, 2011, those accounts no longer 
will be eligible for unlimited protection; and (3) IDIs must notify 
customers individually of any action they take to affect the deposit 
insurance coverage of funds held in noninterest-bearing transaction 
accounts.
1. Posted Notice
    The proposed rule would require each IDI to post, prominently, a 
copy of the following notice in the lobby of its main office, in each 
domestic branch and, if it offers Internet deposit services, on its Web 
site:

NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION 
ACCOUNTS

    In accordance with the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, from December 31, 2010, through December 
31, 2012, all funds in ``noninterest-bearing transaction accounts'' 
are insured in full by the Federal Deposit Insurance Corporation. 
This unlimited coverage is in addition to, and separate from, the 
coverage of at least $250,000 available to depositors under the 
FDIC's general deposit insurance rules.
    The term ``noninterest-bearing transaction account'' includes a 
traditional checking account (or demand deposit account) on which 
the insured depository institution pays no interest. It does not 
include any transaction account that may earn interest, such as a 
negotiable order of withdrawal (``NOW'') account, money-market 
deposit account, or Interest on Lawyers Trust Account (``IOLTA''), 
even if checks may be drawn on the account.
    The temporary full insurance coverage of ``noninterest-bearing 
transaction accounts'' expires on December 31, 2012. After December 
31, 2012, funds in noninterest-bearing transaction accounts will be 
insured under the FDIC's general deposit insurance rules, subject to 
the Standard Maximum Deposit Insurance Amount of $250,000.
    For more information about FDIC insurance coverage of 
transaction accounts, visit http://www.fdic.gov.
2. Notice to Depositors Protected Under the TAGP But Not Under the 
Dodd-Frank Provision
    As discussed above, low-interest NOW accounts and all IOLTAs are 
protected in full under the TAGP. These accounts, however, are not 
eligible for unlimited deposit insurance coverage under the Dodd-Frank 
provision. Thus, starting January 1, 2011, all NOW accounts and IOLTAs 
will be insured under the general deposit insurance rules and no longer 
will be eligible for unlimited protection. Because of the potential 
depositor confusion about this change in the FDIC's treatment of NOWs 
and IOLTAs, the proposed rule would require IDIs currently 
participating in the TAGP to provide individual notices to depositors 
with NOW accounts currently protected in full under the TAGP and IOLTAs 
that those accounts will not be insured under the new temporary 
insurance category for noninterest-bearing transaction accounts, but 
instead will be insured under the general insurance rules up to the 
SMDIA of $250,000. IDIs would be required to provide such notice to 
applicable depositors by mail no later than December 31, 2010. To 
comply with this requirement, IDIs may use electronic mail for 
depositors who ordinarily receive account information in this manner. 
The notice may be in the form of a copy of the notice required to be 
posted in IDI main offices, branches and on Web sites.
3. Notice to Sweep Account and Other Depositors Whose Coverage on 
Noninterest-Bearing Transaction Accounts Is Affected by an IDI Action
    Under the TAGP regulations, if an IDI offers an account product in 
which funds are automatically transferred, or ``swept,'' from a 
noninterest-bearing transaction account to another account (such as a 
savings account) or bank product that does not qualify as a 
noninterest-bearing transaction account, it must inform those customers 
that, upon such transfer, the funds will no longer be fully protected 
under the TAGP. The proposed rule contains a similar, though somewhat 
more expansive, requirement, mandating that IDIs notify customers of 
any action that affects the deposit insurance coverage of their funds 
held in noninterest-bearing transaction accounts. This notice 
requirement is intended primarily to apply when IDIs begin paying 
interest on demand deposit accounts, as will be permitted beginning 
July 22, 2011, under section 627 of the Dodd-Frank Act (discussed 
above). Thus, under the proposed notice requirements, if an IDI 
modifies the terms of its demand deposit account agreement so that the 
account may pay interest, the IDI must notify affected customers that 
the account no longer will be eligible for full deposit insurance 
coverage as a noninterest-bearing transaction account. Though such 
notifications would be mandatory, the proposed rule does not impose 
specific requirements regarding the form of the notice. Rather, the 
FDIC would expect IDIs to act in a commercially reasonable manner and 
to comply with applicable state and federal laws and regulations in 
informing depositors of changes to their account agreements.

[[Page 60345]]

III. Request for Comments

    The FDIC invites comments on all aspects of the proposed 
rulemaking. Written comments must be received by the FDIC no later than 
October 15, 2010.

IV. Regulatory Analysis and Procedure

A. Paperwork Reduction Act

    In accordance with section 3512 of the Paperwork Reduction Act of 
1995 (``PRA''), 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 Office of Management 
and Budget (``OMB'') control number. This Notice of Proposed Rulemaking 
(``NPR'') contains disclosure requirements, some of which implicate PRA 
as more fully explained below. The NPR also announces that the TAG 
program will not continue beyond December 31, 2010, thereby eliminating 
the need for an associated, currently approved information collection.
    The proposed new disclosure requirements are contained in sections 
330.16(c)(1), section 330.16(2) and 330.16(c)(3). More specifically, 
section 330.16(c)(1) would require that each IDI post a ``Notice of 
Changes In Temporary FDIC Insurance Coverage For Transaction Accounts'' 
in the lobby of its main office and domestic branches and, if it offers 
Internet deposit services, on its Web site; section 330.16(2) would 
require IDIs currently participating in the TAG program to provide 
individual notices to depositors alerting them to the fact that low-
interest NOWs and IOLTAs will not be eligible for unlimited coverage 
under the new temporary insurance category for noninterest-bearing 
transaction accounts, but will instead be insured under the general 
insurance rules up to the SMDIA of $250,000; and section 330.16(c)(3) 
would require that IDIs notify customers of any action that affects the 
deposit insurance coverage of their funds held in noninterest-bearing 
transaction accounts.
    The disclosure requirement in section 330.16(c)(1) would normally 
be subject to PRA. However, because the FDIC has provided the specific 
text for the notice and allows for no variance in the language, the 
disclosure is excluded from coverage under PRA because ``the public 
disclosure of information originally supplied by the Federal government 
to the recipient for the purpose of disclosure to the public is not 
included'' within the definition of ``collection of information.'' 5 
CFR 1320.3(c)(2). Therefore, the FDIC is not submitting the section 
330.16(c)(1) disclosure to OMB for review.
    The disclosure requirement in section 330.16(c)(2) provides that 
IDIs currently participating in the TAG program provide individual 
notices to depositors alerting them to the fact that low-interest NOWs 
and IOLTAs will not be insured under the new temporary insurance 
category for noninterest-bearing transaction accounts, but will instead 
be insured under the general insurance rules up to the SMDIA of 
$250,000. The estimated burden for this new disclosure requirement will 
be added to the burden for an existing information collection, OMB No. 
3064-0168, currently entitled SWEEP Accounts: Disclosure of Deposit 
Status. In conjunction with the revision of OMB No. 3064-0168, the FDIC 
will also seek to modify the title of the collection as more fully 
explained below.
    The disclosure requirement in section 330.16(c)(3) would expand 
upon a similar, pre-existing requirement for sweep accounts offered by 
IDIs participating in the TAG program. The existing disclosure 
requirement is approved under OMB No. 3064-0168. The expanded 
disclosure requirement would be mandatory for all IDIs, although 
institutions would retain flexibility regarding the form of the notice. 
Therefore, in conjunction with publication of this NPR, the FDIC is 
submitting to OMB a request to revise OMB No. 3064-0168 to reflect the 
estimated burden associated with the expanded disclosure requirement 
and to modify the title of the collection to ``Disclosure of Deposit 
Status'' to more accurately reflect the broader application of the 
requirement.
    Finally, the FDIC is using this NPR as a vehicle to announce that 
the TAG program will not be extended beyond December 31, 2010. 
Therefore, the FDIC will, simultaneous with publication of the NPR, 
request that OMB discontinue its existing ``Transaction Account 
Guarantee Program Extension'' information collection, OMB No. 3064-
0170, as of that date.
    The estimated burden for the proposed new disclosure under sections 
330.16(c)(2) 330.16(3) is as follows:
    Title: ``Disclosure of Deposit Status.''
    Affected Public: Insured depository institutions.
    OMB Number: 3064-0168.
    Estimated Number of Respondents:
    Disclosure of action affecting deposit insurance coverage of funds 
in noninterest-bearing transaction accounts--7,830.
    Disclosure to NOW account and IOLTA depositors of change in 
insurance category--6,249.
    Frequency of Response:
    Disclosure of action affecting deposit insurance coverage of funds 
in noninterest-bearing transaction accounts--on occasion (average of 
once per year per bank).
    Disclosure to NOW account and IOLTA depositors of change in 
insurance category--once.
    Average Time per Response:
    Disclosure of action affecting deposit insurance coverage of funds 
in noninterest-bearing transaction accounts--8 hours.
    Disclosure to NOW account and IOLTA depositors of change in 
insurance category--8 hours.
    Estimated Annual Burden:
    Disclosure of action affecting deposit insurance coverage of funds 
in noninterest-bearing transaction accounts--62,640 hours.
    Disclosure to NOW account and IOLTA depositors of change in 
insurance category--49,992 hours.
    Total Annual Burden--112,632 hours.
    Comments are invited on:
    (a) Whether this collection of information is necessary for the 
proper performance of the FDIC's functions, including whether the 
information has practical utility;
    (b) The accuracy of the estimates of the burden of the information 
collection, including the validity of the methodologies and assumptions 
used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the information collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.
    All comments will become a matter of public record. Comments may be 
submitted to the FDIC by any of the following methods:
     http://www.FDIC.gov/regulations/laws/federal/propose.html.
     E-mail: [email protected]. Include the name and number of 
the collection in the subject line of the message.
     Mail: Leneta Gregorie (202-898-3719), Counsel, Federal 
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 
20429.
     Hand Delivery: Comments may be hand-delivered to the 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.
    A copy of the comment may also be submitted to the OMB Desk Officer 
for

[[Page 60346]]

the FDIC, Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Room 3208, 
Washington, DC 20503. All comments should refer to the ``Deposit 
Insurance Regulations--Unlimited Coverage for Noninterest-Bearing 
Transaction Accounts.''

B. Regulatory Flexibility Act

    In accordance with section 3(a) of the Regulatory Flexibility Act 
(``RFA''), 5 U.S.C. 603(a), the FDIC must publish an initial regulatory 
flexibility analysis with this proposed rulemaking or certify that the 
proposed rule, if adopted, will not have a significant economic impact 
on a substantial number of small entities. For purposes of the RFA 
analysis or certification, financial institutions with total assets of 
$175 million or less are considered to be ``small entities.'' The FDIC 
hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed rule, if 
adopted, will not have a significant economic impact on a substantial 
number of small entities.
    As of June 30, 2010 there were 4,294 IDIs that were considered 
small entities. A total of 1,121 of these institutions do not 
participate in the TAGP and would receive additional insurance coverage 
under the proposed rule. Currently 3,173 small IDIs participate in the 
TAGP. Within this group of small institutions, 618, or 19.5 percent, 
did not have TAGP eligible deposits as of the June 2010 Report of 
Condition and Income for banks and the Thrift Financial Report for 
thrifts (collectively, ``June 2010 Call Reports''); thus, they were not 
required to pay the fee currently assessed for participation in the 
TAGP. As to the remaining 2,555 small entities that had TAG eligible 
deposits as of the June 2010 Call Reports, they would no longer be 
assessed a fee after the termination of the TAGP, and they would not be 
charged a separate assessment for the new deposit insurance coverage.
    The FDIC has determined that were the proposed rule to be adopted, 
the economic impact on small entities would not be significant for the 
following reasons. Because there is no separate FDIC assessment for the 
insurance of noninterest-bearing transaction accounts under section 343 
of the Dodd-Frank Act, small entities currently assessed fees for 
participation in the TAGP will realize an average annual cost savings 
of $2,373 per institution. All other small entities, whether they are 
currently in the TAGP or not, will gain additional insurance coverage 
with no direct cost. The FDIC asserts that the economic benefit of 
additional insurance coverage and coverage extension until 2013 would 
outweigh any future costs associated with the temporary insurance of 
noninterest-bearing transaction accounts.
    With respect to amending the disclosures related to section 343, 
the FDIC asserts that the economic impact on all small entities 
participating in the program (regardless of whether they currently pay 
a fee) would be de minimis in nature and would be outweighed by the 
economic benefit of additional insurance coverage.
    Accordingly, if adopted in final form, the proposed rule would not 
have a significant economic impact on a substantial number of small 
entities.

C. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations 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 
(Pub. L. 105-277, 112 Stat. 2681).

D. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the FDIC 
to use ``plain language'' in all proposed and final rules published 
after January 1, 2000. The FDIC invites comments on whether the 
proposal is clearly stated and effectively organized, and how the FDIC 
might make the proposed text easier to understand.

List of Subjects in 12 CFR Part 330

    Bank deposit insurance, Banks, Banking, Reporting and recordkeeping 
requirements, Savings and loan associations, Trusts and trustees.

    For the reasons stated above, the Board of Directors of the Federal 
Deposit Insurance Corporation proposes to amend part 330 of title 12 of 
the Code of Federal Regulations as follows:

PART 330--DEPOSIT INSURANCE COVERAGE

    1. The authority citation for part 330 continues to read as 
follows:

    Authority:  12 U.S.C. 1813(1), 1813(m), 1817(i), 1818(q), 1819 
(Tenth), 1820(f), 1821(a), 1822(c).

    2. Amend section 330.1 by adding new paragraph (r) to read as 
follows:


Sec.  330.1  Definitions.

* * * * *
    (r) Noninterest-bearing transaction account means a deposit or 
account maintained at an insured depository institution--
    (1) With respect to which interest is neither accrued nor paid;
    (2) On which the depositor or account holder is permitted to make 
withdrawals by negotiable or transferable instrument, payment orders of 
withdrawal, telephone or other electronic media transfers, or other 
similar items for the purpose of making payments or transfers to third 
parties or others; and
    (3) On which the insured depository institution does not reserve 
the right to require advance notice of an intended withdrawal.
* * * * *
    3. Add Sec.  330.16 to read as follows:


Sec.  330.16  Noninterest-bearing transaction accounts.

    (a) Separate insurance coverage. From December 31, 2010, through 
December 31, 2012, a depositor's funds in a ``noninterest-bearing 
transaction account'' (as defined in Sec.  330.1(r)) are fully insured, 
irrespective of the SMDIA. Such insurance coverage shall be separate 
from the coverage provided for other accounts maintained at the same 
insured depository institution.
    (b) Certain swept funds. Notwithstanding its normal rules and 
procedures regarding sweep accounts under 12 CFR 360.8, the FDIC will 
treat funds swept from a noninterest-bearing transaction account to a 
noninterest-bearing savings deposit account as being in a noninterest-
bearing transaction account.
    (c) Disclosure and notice requirements. (1) Each depository 
institution that offers noninterest-bearing transaction accounts must 
post prominently the following notice in the lobby of its main office, 
in each domestic branch and, if it offers Internet deposit services, on 
its Web site:

NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION 
ACCOUNTS

    In accordance with the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, from December 31, 2010, through December 
31, 2012, all funds in ``noninterest-bearing transaction accounts'' 
are insured in full by the Federal Deposit Insurance Corporation. 
This unlimited coverage is in addition to, and separate from, the 
coverage of at least $250,000 available to depositors under the 
FDIC's general deposit insurance rules.
    The term ``noninterest-bearing transaction account'' includes a 
traditional checking account (or demand deposit account) on which 
the insured depository institution pays no interest. It does not 
include any transaction account that may earn interest,

[[Page 60347]]

such as a negotiable order of withdrawal (``NOW'') account, money-
market deposit account, or Interest on Lawyers Trust Account 
(``IOLTA''), even if checks may be drawn on the account.
    The temporary full insurance coverage of ``noninterest-bearing 
transaction accounts'' expires on December 31, 2012. After December 
31, 2012, funds in noninterest-bearing transaction accounts will be 
insured under the FDIC's general deposit insurance rules, subject to 
the Standard Maximum Deposit Insurance Amount of $250,000.
    For more information about FDIC insurance coverage of 
transaction accounts, visit http://www.fdic.gov.

    (2) Institutions participating in the FDIC's Transaction Account 
Guarantee Program on December 31, 2010, must provide a notice by mail 
to depositors with negotiable order of withdrawal accounts that are 
protected in full as of that date under the Transaction Account 
Guarantee Program and to depositors with Interest on Lawyer Trust 
Accounts that, as of January 1, 2011, such accounts no longer will be 
eligible for unlimited protection, but instead will be insured under 
the general insurance rules up to the SMDIA of $250,000. This notice 
must be provided to such depositors no later than December 31, 2010.
    (3) If an institution uses sweep arrangements, modifies the terms 
of an account, or takes other actions that result in funds no longer 
being eligible for full coverage under this section, the institution 
must notify affected customers and clearly advise them, in writing, 
that such actions will affect their deposit insurance coverage.

    By order of the Board of Directors.

    Dated at Washington DC, this 27th day of September 2010. Federal 
Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2010-24594 Filed 9-29-10; 8:45 am]
BILLING CODE 6714-01-P