[Federal Register Volume 76, Number 73 (Friday, April 15, 2011)]
[Proposed Rules]
[Pages 21265-21266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9210]


-----------------------------------------------------------------------

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 329 and 330

RIN 3064-AD78


Interest on Deposits; Deposit Insurance Coverage

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking (NPR) and request for comment.

-----------------------------------------------------------------------

SUMMARY: Effective July 21, 2011, the statutory prohibition against the 
payment of interest on demand deposits will be repealed pursuant to the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (the DFA).\1\ 
In light of this, the FDIC proposes to rescind regulations that have 
implemented this prohibition with respect to state-chartered nonmember 
(SNM) banks. Because the regulations include a definition of 
``interest'' that may assist the FDIC in interpreting a recent 
statutory amendment that provides temporary, unlimited deposit 
insurance coverage for noninterest-bearing transaction accounts, the 
FDIC also proposes to retain and move the definition of ``interest'' 
into the deposit insurance regulations.
---------------------------------------------------------------------------

    \1\ Public Law 111-203, 124 Stat. 1376.

---------------------------------------------------------------------------
DATES: Comments must be received on or before May 16, 2011.

ADDRESSES: You may submit comments on the notice of proposed 
rulemaking, identified by RIN number and the words ``Interest on 
Deposits; Deposit Insurance Coverage NPRM,'' by any of the following 
methods:
     Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow the instructions for submitting comments 
on the Agency Web site.
     E-mail: [email protected]. Include the RIN number in the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
     Hand Delivery: Guard station at the rear of the 550 17th 
Street Building (located on F Street) on business days between 7 a.m. 
and 5 p.m.
     Instructions: All submissions received must include the 
agency name and RIN for this rulemaking.
     Public Inspection: All comments received will be posted 
without change to http://www.fdic.gov/regulations/laws/federal/propose.html including any personal information provided. Paper copies 
of public comments may be ordered from the Public Information Center by 
telephone at 1-877-275-3342 or 703-562-2200.

FOR FURTHER INFORMATION CONTACT: Martin Becker, Senior Consumer Affairs 
Specialist, Division of Consumer and Depositor Protection (703) 254-
2233, Mark Mellon, Counsel, Legal Division, (202) 898-3884, Federal 
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 
20429.

[[Page 21266]]


SUPPLEMENTARY INFORMATION: 

I. Background

    Section 343 of the DFA amended section 11(a)(1) of the Federal 
Deposit Insurance Act, 12 U.S.C. 1821(a)(1), to provide full insurance 
coverage for depository institution noninterest-bearing transaction 
accounts from December 31, 2010, through December 31, 2012. Section 627 
of the DFA repealed the statutory prohibition against the payment of 
interest on demand deposits, effective one year from the date of the 
DFA's enactment, July 21, 2011.
    In light of the prospective repeal of the demand deposit interest 
prohibition, the FDIC proposes to rescind 12 CFR Part 329, the 
regulation which implements that prohibition with respect to SNM banks, 
to be effective on the same date as the statutory repeal, July 21, 
2011. At the same time, however, a regulatory definition of the term 
``interest'' will still be useful in interpreting the requirements of 
section 343 of the DFA providing temporary, unlimited deposit insurance 
coverage for noninterest-bearing transaction accounts. For this reason, 
the FDIC proposes, as part of this same rulemaking, to transfer the 
definition of ``interest'' currently found at 12 CFR 329.1(c) to Part 
330, specifically the definitions section at 12 CFR 330.1. The FDIC 
also specifically solicits comment on whether other parts of Part 329 
could also prove useful and therefore should be moved into Part 330 as 
well. For example, section 329.103 provides an interpretive rule that 
defines what constitutes a ``premium'' which may prove useful in 
determining whether an account qualifies as a noninterest-bearing 
transaction account. The FDIC seeks comment on every aspect of this 
proposed rule.

II. Regulatory Analysis and Procedure

A. Solicitation of Comments on Use of Plain Language

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

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires that each federal 
agency either certify that a proposed rule would not, if adopted in 
final form, have a significant economic impact on a substantial number 
of small entities or prepare an initial regulatory flexibility analysis 
of the rule and publish the analysis for comment. 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 NPR, if 
adopted, will not have a significant economic impact on a substantial 
number of small entities. This is because the FDIC already applies the 
Part 329 definition of ``interest'' for purposes of determining whether 
an account qualifies for full deposit insurance coverage as a 
noninterest-bearing transaction account. The FDIC is only proposing to 
transfer the definition from Part 329 to Part 330 because the former 
regulation will become moot on July 21, 2011, pursuant to section 627 
of the DFA and its repeal of the statutory ban on the payment of 
interest on demand deposits. There will therefore be no significant 
economic impact on a substantial number of small entities as a result 
of this change.

C. Paperwork Reduction Act

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

D. 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 ().

List of Subjects

12 CFR Part 329

    Banks, banking, interest rates.

12 CFR Part 330

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

    For the reasons set forth in the preamble, and under the authority 
of 12 U.S.C. 1813, the FDIC proposes to amend chapter III of title 12 
of the Code of Federal Regulations as follows:

PART 329--[REMOVED]

    1. Part 329 is removed and reserved.

PART 330--DEPOSIT INSURANCE COVERAGE

    2. The authority for part 330 continues to read as follows: 12 
U.S.C. 1813(l), 1813(m), 1817(i), 1818(q), 1819(Tenth), 1820(f), 
1821(a), 1822(c).
    3. In Sec.  330.1, paragraphs (k) through (r) are redesignated as 
paragraphs (l) through (s), respectively, and new paragraph (k) is 
added to read as follows:


Sec.  330.1  Definitions.

* * * * *
    (k) Interest, with respect to a deposit, means any payment to or 
for the account of any depositor as compensation for the use of funds 
constituting a deposit. A bank's absorption of expenses incident to 
providing a normal banking function or its forbearance from charging a 
fee in connection with such a service is not considered a payment of 
interest.
* * * * *

    By order of the Board of Directors.

    Dated at Washington, DC, this 12th day of April 2011.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2011-9210 Filed 4-14-11; 8:45 am]
BILLING CODE 6714-01-P