[Federal Register Volume 80, Number 208 (Wednesday, October 28, 2015)]
[Rules and Regulations]
[Pages 65919-65921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27294]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 330 and 370

RIN 3064-AE34


Temporary Liquidity Guarantee Program; Unlimited Deposit 
Insurance Coverage for Noninterest-Bearing Transaction Accounts

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: The FDIC is rescinding and removing its regulations 
implementing the Temporary Liquidity Guarantee Program (TLGP) and the 
unlimited deposit insurance coverage for ``noninterest-bearing 
transaction accounts'' provided by section 343 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act, and related definitions. 
Because these programs have expired by their terms, the regulations 
implementing them are unnecessary and obsolete.

DATES: Effective Date: The final rule is effective October 28, 2015.

FOR FURTHER INFORMATION CONTACT: Schuyler Livingston, Economic Analyst, 
Division of Insurance and Research (202) 898-6830 or 
[email protected]; Marc Steckel, Deputy Director, Division of 
Resolutions and Receiverships (571) 858-8224 or [email protected]; Lisa 
D. Arquette, Associate Director, Division of Risk Management 
Supervision (202) 898-8633 or [email protected]; or Gregory S. Feder, 
Counsel, Legal Division (202) 898-8724 or [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    In October 2008, acting in response to unprecedented disruptions to 
the nation's credit markets and pursuant to section 13(c)(4)(G) of the 
Federal Deposit Insurance Act (FDI Act),\1\ the Board of Directors of 
the Federal Deposit Insurance Corporation (FDIC) and the Board of 
Governors of the Federal Reserve System (FRB) recommended that the 
Secretary of the Treasury, following consultation with the President, 
make a determination that systemic risk existed in the nation's 
financial system. After the Treasury Secretary's determination of 
systemic risk, the FDIC was authorized to take action or to provide 
assistance as necessary to avoid or to mitigate the effects of the 
perceived risks to the financial system. Pursuant to this

[[Page 65920]]

authority, the FDIC issued part 370 of Title 12 of the Code of Federal 
Regulations (part 370) which established the TLGP. The TLGP was 
composed of two distinct components: The Debt Guarantee Program (DGP) 
and the Transaction Account Guarantee Program (TAGP). The DGP provided 
a temporary FDIC guarantee for all newly issued senior unsecured debt 
issued by participating entities up to prescribed limits; the TAGP 
provided a temporary FDIC guarantee for all funds held at FDIC-insured 
depository institutions in noninterest-bearing transaction accounts 
above the existing deposit insurance limit.
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    \1\ 12 U.S.C. 1823(c)(4)(G).
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    From its inception, the TLGP was intended to be a time-limited 
program. The FDIC's initial guarantee under the DGP expired on the 
earlier of the maturity date of the debt or June 30, 2012, for newly 
issued senior unsecured debt issued through June 30, 2009, by entities 
that opted into the DGP.\2\ To reduce market disruption at the 
conclusion of the DGP and to facilitate the orderly phase-out of the 
program, in 2009, the FDIC extended the issuance period for senior 
unsecured debt through October 31, 2009, and similarly extended the 
FDIC's guarantee on such obligations to the earlier of the stated 
maturity date of the debt or December 31, 2012.\3\ Later in 2009, the 
FDIC established a limited six-month emergency guarantee facility, 
available to participating entities on an application basis. Although 
no entities applied to avail themselves of the FDIC's emergency 
guarantee facility, the FDIC would have permitted approved entities to 
issue FDIC-guaranteed debt through April 30, 2010, for which the FDIC's 
guarantee would have expired on the earlier of the stated maturity date 
of the debt or December 31, 2012.\4\
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    \2\ 73 FR 72244 (Nov. 26, 2008).
    \3\ 74 FR 26521 (Jun. 3, 2009).
    \4\ 74 FR 54743 (Oct. 23, 2009).
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    Under the TAGP, the FDIC's guarantee of all noninterest-bearing 
transaction accounts originally was scheduled to expire on December 31, 
2009.\5\ In recognition of the continuing effects of economic turmoil, 
the FDIC twice extended the expiration deadline for the TAGP: First, 
until June 30, 2010,\6\ and, later, until December 31, 2010, ``unless 
the Board, for good cause, extends the program for an additional period 
of time not to exceed one year.'' \7\ On September 30, 2010, the FDIC 
indicated that the TAGP would not be extended beyond December 31, 
2010.\8\
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    \5\ 73 FR 72244 (Nov. 26, 2008).
    \6\ 74 FR 45093 (Sept. 1, 2009).
    \7\ 75 FR 36506 (Jun. 28, 2010).
    \8\ 75 FR 60341 (Sept. 30, 2010).
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    Over the course of the DGP's existence, 122 entities issued TLGP 
debt. At its peak, the DGP guaranteed $345.8 billion of outstanding 
debt. The DGP guarantee on all TLGP debt that had not already matured 
expired on December 31, 2012. Therefore, at the end of 2012, no debt 
guaranteed by the FDIC under the DGP remained.
    The FDIC collected $10.4 billion in fees and surcharges under the 
DGP. As of December 31, 2012, the FDIC had paid $153 million in losses 
resulting from six participating entities defaulting on debt issued 
under the DGP. The majority of these losses ($113 million) arose from 
banks with outstanding DGP notes that failed in 2011 and were placed 
into receivership.
    The FDIC collected $1.2 billion in fees under the TAGP. Cumulative 
estimated TAGP losses on failures as of December 31, 2012, totaled $2.1 
billion.
    Overall, TLGP fees exceeded the losses from the program. From the 
inception of the TLGP, it was the FDIC's policy to recognize revenue to 
the Deposit Insurance Fund (DIF) for any portion of guarantee fees in 
excess of amounts needed to cover potential losses upon expiration of 
the TLGP guarantee period (December 31, 2012) or earlier. In total, 
$9.3 billion in TLGP fees were deposited into the DIF.
    On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act) was enacted.\9\ Section 343 of the 
Dodd-Frank Act provided for unlimited deposit insurance for 
noninterest-bearing transaction accounts for two years starting 
December 31, 2010, after which, by its terms, the section was repealed. 
This unlimited coverage for ``noninterest-bearing transaction 
accounts'' as defined in the Dodd-Frank Act was similar to, but not 
identical to, the protection provided for such account owners under the 
FDIC's TAGP. On November 15, 2010, the FDIC published a final rule in 
the Federal Register amending 12 CFR part 330 to implement section 343 
of the Dodd-Frank Act, providing for unlimited deposit insurance for 
``noninterest-bearing transaction accounts'' for two years starting 
December 31, 2010.\10\ The final rule added a new definition of 
noninterest-bearing transaction account to the FDIC's regulations at 
Sec.  330.1(r) (now Sec.  330.1(s)). The final rule also added new 
Sec.  330.16 to provide for full insurance coverage, regardless of the 
standard maximum deposit insurance limit, to noninterest-bearing 
transaction accounts from December 31, 2010, through December 31, 2012.
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    \9\ Public Law 111-203 (July 21, 2010).
    \10\ 75 FR 69577 (Nov. 15, 2010) (adding 12 CFR 303.1(r), 
303.16). The FDIC used its proposed rule implementing the Dodd-Frank 
coverage for noninterest-bearing transaction accounts as a vehicle 
for the FDIC's Board of Directors to announce that it would not 
continue the TAGP beyond December 31, 2010. 75 FR 60341(Sept. 30, 
2010).
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    On January 27, 2011, the FDIC published a final rule in the Federal 
Register (1) amending the definition of ``noninterest-bearing 
transaction account'' to include IOLTA accounts; (2) requiring that 
notice be posted regarding the scope of coverage of the Dodd-Frank Act 
transaction account guarantee program at the bank's main office, in 
branch lobbies, and on its Web site; and (3) requiring that notice be 
provided to holders of NOW accounts that such accounts are no longer 
covered.\11\
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    \11\ 76 FR 4813 (Jan. 27, 2011) (amending 12 CFR 303.1(r), 
303.16).
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    The expiration dates for the DGP and the TAGP were stated clearly 
in the FDIC's TLGP regulation. Because December 31, 2010 (the 
expiration date of the TAGP) and December 31, 2012 (the expiration of 
the DGP) have passed, all of the FDIC's obligations under either 
component of the TLGP have expired. With the expiration of both the DGP 
and the TAGP, part 370 is unnecessary and obsolete.
    Similarly, Sec.  330.16(a) clearly provides that the unlimited 
deposit insurance for noninterest-bearing transaction accounts under 
the Dodd-Frank Act expired on December 31, 2012. After that date, by 
its terms, the section was repealed. As such, Sec.  330.16 and the 
definition of ``noninterest-bearing transaction account'' at Sec.  
330.1(s) are unnecessary and obsolete.

II. The Final Rule

    For the reasons set forth in the preceding section, the FDIC is 
issuing the final rule, which will rescind part 370, Sec.  330.16, and 
Sec.  330.1(s) and remove them from the FDIC's regulations.

III. Regulatory Analysis

A. Administrative Procedure Act

1. Notice and Opportunity for Public Comment
    Pursuant to section 553(b)(3)(B) of the Administrative Procedure 
Act (APA), providing notice and an opportunity for public comment is 
not required prior to the issuance of a substantive rule if an agency 
for good cause finds that notice and public procedure thereon are 
impracticable, unnecessary, or contrary to the public interest. In this 
instance,

[[Page 65921]]

the FDIC invokes this good cause exception to Section 553 of the APA.
    The FDIC believes that good cause exists for issuing a final rule 
without providing notice and an opportunity for public comment because 
such an exercise is ``unnecessary.'' By the express terms of both 
regulations, the underlying programs described in part 370 and Sec.  
330.16 have expired, and, because of that, the rescission of these 
rules can have no effect on the banking industry or the public. 
Moreover, the rescission of part 370, Sec.  330.1(s), and Sec.  330.16 
is not ``substantive'' as the programs that these regulations 
implemented have expired and they affect no substantive rights or 
obligations.
2. Effective Date
    In addition, section 553(d)(3) of the APA provides that an agency, 
for good cause found and published with the rule, does not have to 
comply with the requirement that a substantive rule be published not 
less than 30 days before its effective date. The FDIC invokes this good 
cause exception because the rescission of part 370, Sec.  330.1(s), and 
Sec.  330.16 is not ``substantive'' as the programs that these 
regulations implemented have expired and they affect no substantive 
rights or obligations.\12\
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    \12\ 5 U.S.C. 553(d)(3).
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B. The Economic Growth and Regulatory Paperwork Reduction Act

    Under section 2222 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (EGRPRA),\13\ the FDIC is required to review all 
of its regulations, at least once every 10 years, in order to identify 
any outdated or otherwise unnecessary regulations imposed on insured 
institutions. The FDIC completed the last comprehensive review of its 
regulations under EGRPRA in 2006 and has commenced the next decennial 
review. Rescission of part 370 and Sec.  330.16 is consistent with the 
required regulatory response to the EGRPRA review process: To eliminate 
unnecessary regulations to the extent such action is appropriate.
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    \13\ 12 U.S.C. 3311.
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C. Small Business Regulatory Enforcement Fairness Act

    The Office of Management and Budget 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).\14\ As required by law, the FDIC will file the appropriate 
reports with Congress and the General Accounting Office so that the 
Final Rule may be reviewed.
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    \14\ Public Law 104-121 (Mar. 29, 1996), as amended by Public 
Law 110-28 (May 25, 2007).
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D. Paperwork Reduction Act

    Existing collections of information shall be discontinued or 
modified, as appropriate, to the extent that this rule obviates or 
alters any collection of information.

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act \15\ (RFA) applies only to rules for 
which an agency publishes a general notice of proposed rulemaking 
pursuant to 5 U.S.C. 553(b), or any other law.\16\ As discussed above, 
consistent with section 553(b)(3)(B) of the APA, the FDIC has 
determined for good cause that general notice and opportunity for 
public comment would be unnecessary. Therefore, pursuant to 5 U.S.C. 
601(2), the RFA does not apply.
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    \15\ Public Law 96-354 (Sept. 19, 1980).
    \16\ 5 U.S.C. 601(2).
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List of Subjects

12 CFR Part 330

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

12 CFR Part 370

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

Authority and Issuance

    For the reasons set forth in the preamble above, under the 
authority of 12 U.S.C. 1821, the Board of Directors of the Federal 
Deposit Insurance Corporation amends chapter III of title 12 of the 
Code of Federal Regulations as follows:

PART 330--DEPOSIT INSURANCE COVERAGE

0
1. The authority citation for part 330 continues to read as follows:

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


Sec.  330.1  [Amended]

0
2. Remove and reserve Sec.  330.1(s).


Sec.  330.16  [Removed and Reserved]

0
3. Remove and reserve Sec.  330.16.

PART 370--[Removed and Reserved]

0
4. Remove and reserve part 370.

    Dated at Washington, DC, this 22nd day of October 2015.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2015-27294 Filed 10-27-15; 8:45 am]
BILLING CODE 6714-01-P