[Federal Register Volume 84, Number 140 (Monday, July 22, 2019)]
[Rules and Regulations]
[Pages 35022-35028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15502]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 330

RIN 3064-AF04


Joint Ownership Deposit Accounts

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The FDIC is amending its deposit insurance regulations to 
update one of the requirements that must be satisfied for an account to 
be separately insured as a joint account. Specifically, the final rule 
provides an alternative

[[Page 35023]]

method to satisfy the ``signature card'' requirement. Under the final 
rule, the signature card requirement may be satisfied by information 
contained in the deposit account records of the insured depository 
institution establishing co-ownership of the deposit account, such as 
evidence that the institution has issued a mechanism for accessing the 
account to each co-owner or evidence of usage of the deposit account by 
each co-owner.

DATES: This rule is effective on August 21, 2019.

FOR FURTHER INFORMATION CONTACT: James Watts, Counsel, Legal Division, 
(202) 898-6678, [email protected]; Teresa Franks, Associate Director, 
Division of Resolutions and Receiverships, (571) 858-8226, 
[email protected]; Martin Becker, Chief, Deposit Insurance, Division of 
Depositor and Consumer Protection, (202) 898-7207, [email protected].

SUPPLEMENTARY INFORMATION:

I. Policy Objectives

    The FDIC is amending its regulation governing the requirements for 
a deposit account to be insured as a joint account, 12 CFR 330.9, and 
specifically, the requirement that each co-owner of a joint account has 
personally signed a deposit account signature card. The FDIC 
periodically receives inquiries regarding this requirement. Those 
inquiries have increased following the issuance of a rule 
(Recordkeeping Rule) \1\ that requires certain large insured depository 
institutions (covered institutions) to configure their information 
technology systems to be capable of calculating insurance coverage for 
deposit accounts in the event of the institution's failure. The 
Recordkeeping Rule has introduced an element of pre-judgment involving 
identification of account categories and satisfaction of recordkeeping 
requirements for the institutions subject to that Rule.\2\ In 
particular, for purposes of that Rule, covered institutions are 
required to review their records and update missing and erroneous 
deposit account information (Legacy Data Cleanup).\3\ As part of the 
Legacy Data Cleanup, covered institutions must obtain signature cards 
for owners of accounts with multiple co-owners that are missing one or 
more required signature cards (affected joint accounts). Staff at the 
FDIC has engaged in discussions with these covered institutions as part 
of the implementation process, and these discussions have led the FDIC 
to reconsider the methods by which joint ownership may be established 
for purposes of deposit insurance.
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    \1\ See Recordkeeping for Timely Deposit Insurance 
Determination, 81 FR 87734 (Dec. 5, 2016); 12 CFR part 370.
    \2\ The Recordkeeping Rule generally applies to IDIs that have 2 
million or more deposit accounts. 12 CFR 370.2(c).
    \3\ Insured depository institutions that are not subject to the 
Recordkeeping Rule are not required to perform Legacy Data Cleanup, 
but may choose to do so to provide added certainty regarding deposit 
insurance coverage to their depositors.
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    The final rule is intended to reduce the regulatory burden 
associated with obtaining deposit account signature cards for all 
insured depository institutions (IDIs). For covered institutions (i.e., 
IDIs subject to the Recordkeeping Rule) discussed above, the final rule 
is also intended to reduce the burden of obtaining signature cards for 
owners of affected joint accounts. The final rule is intended to 
facilitate the prompt payment of deposit insurance in the event of an 
IDI's failure by providing alternative methods that the FDIC could use 
to determine the owners of joint accounts, consistent with its 
statutory authority. These changes promote confidence in FDIC-insured 
deposits. Finally, the final rule embodies a forward-looking approach 
that permits the use of new and innovative technologies and processes 
to meet the FDIC's policy objectives.

II. Background and Overview of the Proposed Rule

A. Current Regulatory Approach

    The FDIC is authorized to prescribe rules and regulations as it may 
deem necessary to carry out the provisions of the Federal Deposit 
Insurance Act (FDI Act).\4\ Under the FDI Act, the FDIC is responsible 
for paying deposit insurance in the event of an IDI's failure up to the 
standard maximum deposit insurance amount, which is currently set at 
$250,000.\5\ The statute provides that deposits maintained by each 
depositor in the same capacity and the same right at the same IDI 
generally must be aggregated and insured up to the standard maximum 
deposit insurance amount.\6\ Because the statute does not define 
``capacity'' or ``right,'' the FDIC has implemented these terms by 
issuing regulations recognizing particular categories of accounts, such 
as single ownership accounts and joint ownership accounts.\7\ If a 
deposit meets the requirements for a particular category, the deposit 
is insured up to the $250,000 limit separately from deposits held by 
the depositor in a different category at the same IDI. For example, 
deposits in the single ownership category will be separately insured 
from deposits in the joint ownership category held by the same 
depositor at the same IDI.
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    \4\ 12 U.S.C. 1819(Tenth); 1820(g).
    \5\ 12 U.S.C. 1821(a)(1).
    \6\ 12 U.S.C. 1821(a)(1)(B), (C).
    \7\ See 12 CFR part 330.
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    Section 330.9 of the FDIC's regulations governs insurance coverage 
for joint ownership accounts. Joint ownership accounts include deposit 
accounts held pursuant to various forms of co-ownership under state 
law. For example, joint tenants could each hold an equal, undivided 
interest in a deposit account. Section 330.9 provides that only 
``qualifying joint accounts'' (whether owned as joint tenants with the 
right of survivorship, as tenants in common, or as tenants by the 
entirety) are insured separately from individually-owned deposit 
accounts maintained by the co-owners.\8\ ``Qualifying joint accounts'' 
generally must satisfy three requirements: (1) All co-owners of the 
funds in the account are ``natural persons,'' as defined in Sec.  
330.1(l) of the FDIC's regulations; (2) each co-owner has personally 
signed a deposit account signature card; and (3) each co-owner 
possesses withdrawal rights on the same basis.\9\ If a joint deposit 
account is not a qualifying joint account, each co-owner's actual 
ownership interest in the account is aggregated with other single 
ownership accounts of such individual or other accounts of such 
entity.\10\ This may result in some uninsured deposits if a depositor's 
single ownership accounts at the same IDI, including deposits in any 
non-qualifying joint accounts, exceed $250,000.
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    \8\ 12 CFR 330.9(a).
    \9\ 12 CFR 330.9(c)(1). The signature card requirement does not 
apply to certificates of deposit, deposits evidenced by negotiable 
instruments, or accounts maintained by an agent, nominee, guardian, 
or conservator on behalf of two or more persons. 12 CFR 330.9(c)(2).
    \10\ 12 CFR 330.9(d).
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    The requirement that each co-owner of a joint account has 
personally signed a deposit account signature card (signature card 
requirement) in order for the account to be insured as a joint account 
has been included in the regulation governing insurance coverage since 
1967.\11\ This requirement was intended to address practices such as 
the addition of nominal co-owners to an account solely to increase 
deposit insurance coverage.\12\ The FDIC has

[[Page 35024]]

periodically considered whether the signature card requirement should 
be eliminated, but retained the requirement, concluding that signature 
cards are reliable indicators of deposit ownership.\13\ The FDIC 
continues to view the signature card requirement as important to 
ensuring consistency with the FDI Act, which expressly limits the 
amount of deposit insurance coverage available to each depositor at a 
particular IDI based on the right and capacity in which funds are held.
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    \11\ See 32 FR 10408, 10409 (July 14, 1967) (``A joint deposit 
account shall be deemed to exist, for purposes of insurance of 
accounts, only if each co-owner has personally executed a deposit 
account signature card and possesses withdrawal rights.'')
    \12\ The FDIC stated that its purpose was to ``carry out the 
concept of limited insurance coverage intended by Federal deposit 
insurance,'' and it interpreted the FDI Act to ``limit the various 
devices commonly used to increase such coverage beyond that meant to 
be provided by law.'' 32 FR 10408 (July 14, 1967).
    \13\ See, e.g., 55 FR 20111, 20113 (May 15, 1990).
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    Neither the FDI Act nor the FDIC's regulations define the term 
``deposit account signature card.'' FDIC staff has taken the position 
that section 330.9 does not require any particular format for a deposit 
account signature card. Therefore, staff has previously concluded that 
various forms of documentation used in an IDI's account opening 
processes may constitute a deposit account signature card. For example, 
staff has concluded that a deposit account agreement signed by each of 
an account's co-owners would satisfy the signature card requirement. 
Published guidance further states that the signature card requirement 
may be satisfied electronically.\14\
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    \14\ See FDIC Financial Institution Employee's Guide to Deposit 
Insurance, 2016 ed., at 34.
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B. The Proposed Rule

    On April 4, 2019, the FDIC published a notice of proposed 
rulemaking (NPR) to amend 12 CFR 330.9, the regulation governing the 
requirements for a deposit account to be insured as a joint 
account.\15\ Specifically, the FDIC proposed to provide an alternative 
method to satisfy the requirement that each co-owner of a joint account 
has personally signed a deposit account signature card. Under the 
proposal, information maintained in the deposit account records of an 
IDI establishing co-ownership of the account, such as the issuance of a 
mechanism for accessing the account to each co-owner or evidence of 
account usage by each co-owner, could satisfy the signature card 
requirement.
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    \15\ 84 FR 13143 (Apr. 4, 2019).
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    The FDIC also proposed a conforming amendment to section 330.9 
consistent with the Electronic Signatures in Global and National 
Commerce Act (E-Sign Act).\16\ Specifically, the FDIC proposed to amend 
section 330.9 to state expressly that the signature card requirement 
may be satisfied electronically.
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    \16\ Public Law 106-229; 15 U.S.C. 7001(a).
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    The FDIC received comments from four IDIs and four trade 
associations in response to the NPR. Commenters generally supported the 
proposed rule. Comments are discussed in the relevant sections below.

III. The Final Rule

    After careful consideration of all of the comments received, the 
FDIC is adopting the rule generally as proposed, with one additional 
clarifying cross-reference discussed below. The final rule amends Sec.  
330.9 to provide an alternative method to satisfy the signature card 
requirement. It allows the signature card requirement to be satisfied 
by information contained in the deposit account records of the IDI 
establishing co-ownership of the deposit account, such as evidence that 
the institution has issued a mechanism for accessing the account to 
each co-owner or evidence of usage of the deposit account by each co-
owner. For example, the requirement could be satisfied by evidence that 
an IDI has issued a debit card to each co-owner of the account or 
evidence that each co-owner of the account has transacted using the 
deposit account.
    Commenters requested confirmation that the types of evidence 
described in the NPR are not the only forms of evidence of co-ownership 
that could satisfy the signature card requirement. As noted in the NPR, 
these descriptions were only intended to serve as examples and not to 
limit the forms of evidence of co-ownership that could satisfy the 
signature card requirement.\17\
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    \17\ See 84 FR 13144 (Apr. 4, 2019).
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    A commenter requested that the FDIC clarify the rule to provide 
that evidence of online banking access or telephone banking access 
could be used to establish co-ownership of a joint account. Another 
commenter requested similar clarification with respect to access 
devices that are no longer effective, such as an expired debit card. 
Like the proposed rule, the final rule does not attempt to specify all 
of the forms of evidence of co-ownership that could be used to satisfy 
the signature card requirement. This flexible approach is intended to 
accommodate changes in technology and differences in IDIs' records. 
However, the FDIC believes that evidence of online banking access or 
telephone banking access generally could be used to establish co-
ownership of a joint account, though IDIs may differ in their 
implementation of these technologies. In the event of a deposit 
insurance determination, the FDIC would consider all of the information 
contained in an IDI's deposit account records, and would not disregard 
evidence with respect to a mechanism for accessing an account simply 
because that mechanism is expired.
    One commenter urged the FDIC to memorialize prior staff guidance by 
amending Sec.  330.9(c)(1)(ii) to refer to other types of documents 
that may be used to satisfy the signature card requirement, such as a 
deposit account agreement or other document indicating ownership of the 
account or agreement to the account terms. In general, the FDIC has 
sought to limit changes to the text of Sec.  330.9 to minimize the 
potential for confusion among IDIs that do not intend to use the new 
alternative method of satisfying the signature card requirement. The 
FDIC believes that expressly referencing other forms of acceptable 
documentation in the text of the rule could require additional 
conforming amendments and would unnecessarily complicate the rule.
    Three trade associations expressed concern that, because the FDIC 
proposed to retain the language of the signature card requirement in 
Sec.  330.9(c)(1)(ii), the addition of paragraph (c)(4) (defining the 
alternative method of satisfying the requirement) could be confusing. 
They requested that the FDIC amend Sec.  330.9(c)(1)(ii) to include a 
cross-reference to paragraph (c)(4). The FDIC agrees that a cross-
reference could provide useful clarification of the function of 
paragraph (c)(4), which is to provide an alternative method of 
satisfying the signature card requirement. The final rule therefore 
amends Sec.  330.9(c)(1)(ii) to cross reference to the alternative 
method of satisfying the signature-card requirement provided in 
paragraph (c)(4).
    A trade association also requested clarification that the final 
rule was not pre-empting state laws that require signatures to 
establish ownership rights in deposit accounts. The final rule does not 
modify or affect any state law requirements generally applicable to 
IDIs, including requirements to use signatures to establish ownership 
of a deposit account. The final rule only affects a requirement in the 
FDIC's regulations that must be satisfied for an account to be 
separately insured as a joint account. As stated in the NPR, ``IDIs 
may, for legal or other reasons, find it appropriate or necessary to 
continue collecting customers' signatures.'' \18\
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    \18\ See 84 FR 13144 (Apr. 4, 2019).

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[[Page 35025]]

    The final rule does not introduce new requirements that must be 
satisfied for an account to be insured as a joint account, and does not 
reduce or affect insurance coverage for any account for which the 
existing joint account requirements are satisfied. The rule simply 
provides an alternative method to satisfy the existing signature card 
requirement. If each co-owner of a joint account signs, or has 
previously signed, a deposit account signature card in accordance with 
the existing requirement, the alternative method provided by the final 
rule is unnecessary. Assuming that the remaining joint account 
requirements are satisfied--that is, all co-owners of the account are 
natural persons and possess equal withdrawal rights--the account would 
be insured as a joint account.
    The rule applies to all IDIs and provides an alternative method 
that may be used to satisfy the signature card requirement at the time 
of an IDI's failure. It does not impose any new recordkeeping 
requirements for joint accounts. The final rule also does not affect 
the general provisions of the FDIC's deposit insurance regulations 
concerning recognition of deposit ownership.\19\ These general rules 
continue to apply to all deposit accounts, including joint accounts.
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    \19\ See 12 CFR 330.5.
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    For institutions subject to part 370's recordkeeping requirements, 
the rule reduces the burden of obtaining signature cards for owners of 
affected joint accounts. The rule will facilitate the prompt payment of 
deposit insurance in the event of an IDI's failure by providing 
alternative methods that the FDIC could use to determine the owners of 
joint accounts, consistent with its statutory authority. These changes 
serve to promote confidence in FDIC-insured deposits. Finally, the rule 
embodies a forward-looking approach that permits the use of new and 
innovative technologies and processes to meet the FDIC's policy 
objectives.
    The FDIC is also adopting, as proposed, a conforming amendment to 
Sec.  330.9 consistent with the Electronic Signatures in Global and 
National Commerce Act (E-Sign Act).\20\ The final rule amends the 
regulation to state expressly that the signature card requirement may 
be satisfied electronically. As noted in the NPR, this amendment is 
consistent with published guidance and staff interpretations of Sec.  
330.9.\21\ It does not substantively alter the regulatory requirements 
for joint accounts.
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    \20\ Public Law 106-229; 15 U.S.C. 7001(a).
    \21\ See FDIC Financial Institution Employee's Guide to Deposit 
Insurance, 2016 ed., at 34.
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    A commenter requested clarification that an electronic signature 
acknowledging ownership of an account would satisfy the signature card 
requirement even in the absence of a paper or electronic document 
containing a physical representation of a customer's name. The final 
rule does not include any particular requirements with respect to 
electronic signatures, and is merely intended to clarify for IDIs and 
depositors that the signature card requirement may be satisfied 
electronically. If an IDI's records and processes establish an 
electronic signature with respect to a joint account for purposes of 
the E-Sign Act, the FDIC's signature requirement would be satisfied.

IV. Expected Effects

    The final rule applies to all joint deposit accounts at all IDIs 
and provides an alternative method that may be used to satisfy the 
signature card requirement at the time of an IDI's failure. For owners 
of joint deposit accounts, the rule alleviates delays in the 
recognition of account ownership and uncertainty regarding the extent 
of deposit insurance coverage. For IDIs, the final rule reduces the 
regulatory burden associated with obtaining deposit account signature 
cards personally signed by each co-owner. It does not impose any new 
recordkeeping requirements for joint accounts.
    The final rule is expected to have a regulatory burden relief 
impact on the covered institutions subject to the Recordkeeping Rule. 
For purposes of that Rule, as discussed above, covered institutions are 
currently engaged in Legacy Data Cleanup. As part of the Legacy Data 
Cleanup, covered institutions likely must obtain signature cards for 
owners of affected joint accounts. By providing an alternative method 
to satisfy the signature card requirement that relies on other 
information in the institution's deposit account records, the final 
rule should reduce the Legacy Data Cleanup burden associated with 
obtaining missing signature cards for covered institutions subject to 
the Recordkeeping Rule.
    To estimate the burden reduction of the final rule relating to 
Legacy Data Cleanup, the FDIC estimates: (1) The cost of obtaining 
signature cards for an affected joint account; and (2) the total number 
of affected joint accounts held at covered institutions subject to the 
Recordkeeping Rule. The product of these two figures is the estimated 
cost burden of collecting missing signatures. The final rule would 
reduce that burden by allowing covered institutions subject to the 
Recordkeeping Rule to satisfy the signature card requirement using 
other information in their deposit account records establishing co-
ownership of the deposit account.
    The FDIC's estimate of the cost of obtaining missing signature 
cards for an affected joint account is based on cost estimates used in 
connection with the Recordkeeping Rule. Legacy Data Cleanup costs for 
the Recordkeeping Rule were estimated at $226 million to address 
approximately 21 million deposit accounts held in covered 
institutions.22 23 This represents an average of 
approximately $11 per account. Although accounts may require Legacy 
Data Cleanup for a variety of reasons, the Recordkeeping Rule estimates 
that ``more than 90 percent of the legacy data cleanup costs are 
associated with manually collecting account information from customers 
and entering it into the covered institution's systems.'' \24\ The 
process of obtaining a missing signature fits this description, and the 
FDIC believes that $11 per account is a reasonable estimate of the 
average cost of obtaining signatures for an affected joint account.
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    \22\ See 81 FR 87742-43. The analysis for the Recordkeeping Rule 
estimated that approximately 5 percent of the approximately 416 
million deposit accounts held by covered institutions would require 
manual data cleanup.
    \23\ The $226 million estimate includes both costs incurred by 
the institutions and costs incurred by depositors to update missing 
account information. See 81 FR 87747.
    \24\ 81 FR 87742.
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    The cost estimates used in the Recordkeeping Rule are based in part 
on data from the Consolidated Reports of Condition and Income that were 
available at the time that Rule was issued. As of March 31, 2019, 33 
covered institutions subject to the Recordkeeping Rule held 
approximately 416 million deposit accounts.\25\ Assuming that 25 
percent of those accounts are joint,\26\ and assuming that

[[Page 35026]]

5 percent of joint accounts are missing at least one required 
signature,\27\ there are a total of approximately 5.2 (= 416 * 25% * 
5%) million affected joint accounts. At an estimated cost of $11 per 
affected joint account, the FDIC estimates a total cost burden of $57 
million for covered institutions subject to the Recordkeeping Rule to 
update deposit account records related to affected joint accounts. The 
final rule would reduce this burden, resulting in an estimated cost 
savings for these institutions of $57 million over several years.
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    \25\ FDIC Consolidated Reports of Condition and Income, as of 
March 31, 2019.
    \26\ According to recent Census estimates, approximately 60 
percent of Americans live with a spouse or partner (U.S. Census 
Bureau, Current Population Survey, Annual Social and Economic 
Supplement, 1967 to 2018). In addition, according to a recent 
banking survey, 58 to 76 percent of Americans in relationships have 
at least one joint account (TD Love & Money, Report of Findings, 
Customer Insights, July 2017). Based on these figures, the FDIC 
estimates that between 35 and 46 percent of Americans hold a joint 
account. Assuming that joint accounts have two owners on average, 
the FDIC estimates that between 21 and 30 percent of deposit 
accounts are joint. (For example, if 35 percent of Americans share a 
joint account with another American and the remaining 65 percent 
each has a personal account, then (35/2)/(35/2 + 65) = 21 percent of 
accounts are joint). For this analysis, the FDIC assumes the middle 
value of 25% as an estimate of the percent of accounts that are 
joint.
    \27\ Following the analysis in the Recordkeeping Rule, the FDIC 
assumes that 5% of accounts will require data cleanup.
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    IDIs that are not subject to the Recordkeeping Rule are not 
required to perform Legacy Data Cleanup. Nonetheless, some may choose 
to do so to provide added certainty regarding deposit insurance 
coverage to their depositors. These IDIs would also experience 
regulatory burden reduction due to the final rule. As of December 31, 
2018, there were approximately 164 million deposit accounts held at 
5,338 IDIs not covered by the Recordkeeping Rule. Given the same 
assumptions outlined in the previous paragraph, the FDIC estimates 
there are a total of 2.1 (= 164 * 25% * 5%) million affected joint 
accounts held at these IDIs. To the extent IDIs choose to perform 
Legacy Data Cleanup, the final rule would alleviate some of the burden 
of addressing these affected joint accounts, resulting in estimated 
cost savings of up to $23 ($11 * 2.1) million.
    The total estimated burden reduction for the industry associated 
with updating deposit account records for joint accounts is estimated 
to be between $57 and $80 million over several years, depending on the 
number of IDIs not subject to the Recordkeeping Rule that choose to 
update their deposit account records. In addition, the final rule could 
alleviate some of the burden of obtaining signature cards for new joint 
accounts at all IDIs. The FDIC expects this benefit to be de minimis 
because the signature card requirement may be satisfied electronically 
pursuant to the E-Sign Act.
    The final rule also provides non-quantifiable benefits to owners of 
joint accounts. By providing alternative methods that the FDIC could 
use in making a deposit insurance determination, the final rule further 
supports a prompt deposit insurance determination in the event of an 
IDI's failure, alleviating delays in the recognition of account 
ownership and uncertainty regarding the extent of deposit insurance 
coverage. These benefits promote depositor confidence in the nation's 
banking system and particularly in FDIC-insured deposits.
    The FDIC is also adopting a conforming amendment to section 330.9 
consistent with the E-Sign Act. This conforming amendment is not 
expected to result in any discernable economic effect, as current FDIC 
practice already permits IDIs to use electronic signatures. The effects 
of the conforming amendment are limited to eliminating uncertainty 
regarding the regulation.

V. Alternatives

    The FDIC considered several alternatives but believes that the 
final rule represents the most appropriate option. In particular, the 
FDIC considered four alternatives to the proposed rule, as discussed in 
the NPR: (1) Maintaining the current requirements for accounts to be 
insured as joint accounts, with IDIs potentially prioritizing accounts 
with balances of more than $250,000 for purposes of their Legacy Data 
Cleanup; (2) amending the Recordkeeping Rule's certification 
requirements to allow covered institutions to certify compliance based 
on substantial or good faith compliance with the deposit insurance 
rules with respect to joint deposit accounts; (3) amending Sec.  330.9 
to eliminate the signature card requirement for joint accounts; and (4) 
amending Sec.  330.9 to allow IDIs to satisfy the signature card 
requirement based on existing Bank Secrecy Act/Anti-Money Laundering 
(BSA/AML) processes. The FDIC concluded that the proposed rule would 
provide greater benefits than these alternatives, but invited comment 
on these and other potential approaches.
    Three commenters took the position that the FDIC should eliminate 
the signature card requirement (or eliminate the requirement for 
particular subsets of accounts). Generally, these commenters argued 
that because depositors have other options available for obtaining 
additional deposit insurance coverage, they would be unlikely to take 
the risks entailed in adding nominal co-owners to their accounts solely 
to increase deposit insurance coverage. Commenters cited, for example, 
the risk that a nominal co-owner might withdraw funds without 
permission or that a creditor of the nominal co-owner would garnish the 
account. While the risks of adding a nominal co-owner to an account may 
discourage such action in certain circumstances, the ability to 
increase insurance coverage by several multiples of the standard 
$250,000 deposit insurance limit may nonetheless motivate some 
depositors to add nominal co-owners. As discussed in the NPR, the FDIC 
believes the signature card requirement helps to ensure consistency 
with the FDI Act's limits on the amount of deposit insurance coverage 
available to each depositor. Because the final rule retains this 
benefit while reducing regulatory burden, the FDIC continues to believe 
the final rule is preferable to elimination of the signature card 
requirement.

VI. Regulatory Analysis

A. Regulatory Flexibility Act

    The RFA generally requires that, in connection with a final 
rulemaking, an agency prepare and make available for public comment a 
final regulatory flexibility analysis describing the impact of the 
proposed rule on small entities.\28\ However, a regulatory flexibility 
analysis is not required if the agency certifies that the final rule 
will not have a significant economic impact on a substantial number of 
small entities. The SBA has defined ``small entities'' to include 
banking organizations with total assets of less than or equal to $550 
million that are independently owned and operated or owned by a holding 
company with less than or equal to $550 million in total assets.\29\ 
Generally, the FDIC considers a significant effect to be a quantified 
effect in excess of 5 percent of total annual salaries and benefits per 
institution, or 2.5 percent of total non-interest expenses. The FDIC 
believes that effects in excess of these thresholds typically represent 
significant effects for FDIC-supervised institutions. For the reasons 
described below, the FDIC certifies pursuant to section 605(b) of the 
RFA that the final rule will not have a significant economic impact on 
a substantial number of small entities. As of March 31, 2019, the FDIC 
insured 5,371 institutions, of which 3,920 are considered small 
entities for the purposes of RFA.\30\ These small IDIs hold 
approximately 30 million deposit

[[Page 35027]]

accounts, with an average of approximately 7,700 deposit accounts and a 
maximum of approximately 332,000 deposit accounts held at a single 
small IDI.
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    \28\ 5 U.S.C. 601 et seq.
    \29\ The SBA defines a small banking organization as having $550 
million or less in assets, where an organization's ``assets are 
determined by averaging the assets reported on its four quarterly 
financial statements for the preceding year.'' See 13 CFR 121.201 
(as amended, effective December 2, 2014). In its determination, the 
``SBA counts the receipts, employees, or other measure of size of 
the concern whose size is at issue and all of its domestic and 
foreign affiliates.'' See 13 CFR 121.103. Following these 
regulations, the FDIC uses a covered entity's affiliated and 
acquired assets, averaged over the preceding four quarters, to 
determine whether the covered entity is ``small'' for the purposes 
of RFA.
    \30\ Consolidated Reports of Condition and Income for the 
quarter ending March 31, 2019.
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    The final rule amends Sec.  330.9 to provide an alternative method 
to satisfy the signature card requirement for joint accounts based on 
information contained in the deposit account records of the insured 
depository institution establishing co-ownership of the deposit 
account. As discussed in Expected Effects section, because no small 
IDIs are covered by the Recordkeeping Rule, a small IDI would only 
experience burden relief from the proposed rule if it chose to update 
its account records. If the IDI chooses to update its account records, 
the FDIC estimates the final rule will reduce burden in the amount of 
$11 per affected joint account.
    Following the burden reduction estimation outlined in the Expected 
Effects section, the FDIC estimates the potential burden reduction for 
each small IDI, conditional on the IDI's choice to update its records. 
Each IDI's potential burden reduction is estimated by multiplying the 
number of deposit accounts held by 25 percent to estimate the number of 
joint accounts, then by 5 percent to estimate the number of affected 
joint accounts, and finally by $11 to estimate the cost of addressing 
those affected joint accounts. The potential burden reductions range 
from less than a dollar to approximately forty-five thousand dollars, 
with an average of approximately one thousand dollars per small IDI. 
Expressed as proportions of annualized noninterest income expenses as 
of March 31, 2019, the potential burden reductions range from less than 
a millionth of one percent to less than half of one percent of 
annualized noninterest income expenses.
    The final rule would apply to all IDIs, affecting a substantial 
number of small entities. However, the economic impact on each small 
entity is insignificant, with no entity affected by more than half of 
one percent of annualized noninterest income expenses, as of March 31, 
2019. Accordingly, the FDIC certifies that the final rule will not have 
a significant economic impact on a substantial number of small 
entities.

B. Congressional Review Act

    The OMB has determined that the final rule is not a ``major rule'' 
within the meaning of the Congressional Review Act, 5 U.S.C. 801 et 
seq. As required by the statute, the FDIC will submit the final rule 
and other appropriate reports to Congress and the Government 
Accountability Office for review.

C. Paperwork Reduction Act of 1995

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995,\31\ the FDIC may not conduct or sponsor, and the respondent is 
not required to respond to, an information collection unless it 
displays a currently valid Office of Management and Budget (OMB) 
control number. This final rule does not require any new information 
collections or revise existing information collections, and therefore, 
no submission to OMB is necessary.
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    \31\ 44 U.S.C. 3501 et seq.
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D. Riegle Community Development and Regulatory Improvement Act of 1994

    Section 302 of the Riegle Community Development and Regulatory 
Improvement Act (RCDRIA) requires that the Federal banking agencies, 
including the FDIC, in determining the effective date and 
administrative compliance requirements of new regulations that impose 
additional reporting, disclosure, or other requirements on insured 
depository institutions, consider, consistent with principles of safety 
and soundness and the public interest, any administrative burdens that 
such regulations would place on depository institutions, including 
small depository institutions, and customers of depository 
institutions, as well as the benefits of such regulations.\32\ Subject 
to certain exceptions, new regulations and amendments to regulations 
prescribed by a Federal banking agency which 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.\33\
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    \32\ 12 U.S.C. 4802(a).
    \33\ 12 U.S.C. 4802(b).
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    The final rule does not impose additional reporting or disclosure 
requirements on insured depository institutions, including small 
depository institutions, or on the customers of depository 
institutions. It provides an alternative method to satisfy the existing 
signature card requirement for joint deposit accounts based on 
information contained in the deposit account records of the insured 
depository institution. Accordingly, the FDIC concludes that section 
302 of RCDRIA does not apply. The FDIC invited comment regarding the 
application of RCDRIA to the final rule, but did not receive comments 
on this topic.

E. 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 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.\34\
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    \34\ Public Law 105-277, 112 Stat. 2681.
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F. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \35\ requires the Federal 
banking agencies to use plain language in all proposed and final rules 
published after January 1, 2000. FDIC staff believes the final rule is 
presented in a simple and straightforward manner. The FDIC did not 
receive any comments with respect to the use of plain language.
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    \35\ Public Law 106-102, section 722, 113 Stat. 1338, 1471 
(1999).
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List of Subjects in 12 CFR Part 330

    Bank deposit insurance, Reporting and recordkeeping requirements, 
Savings associations.

Authority and Issuance

    For the reasons set forth in the preamble, the Federal Deposit 
Insurance Corporation amends 12 CFR part 330 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).


0
2. Revise Sec.  330.9(c) to read as follows:


Sec.  330.9  Joint ownership accounts.

* * * * *
    (c) Qualifying joint accounts--(1) Qualification requirements. A 
joint deposit account shall be deemed to be a qualifying joint account, 
for purposes of this section, only if:
    (i) All co-owners of the funds in the account are ``natural 
persons'' (as defined in Sec.  330.1(l));
    (ii) Each co-owner has personally signed, which may include signing 
electronically, a deposit account signature card, or the alternative 
method provided in paragraph (c)(4) of this section is satisfied; and
    (iii) Each co-owner possesses withdrawal rights on the same basis.

[[Page 35028]]

    (2) Limited exceptions. The signature-card requirement of paragraph 
(c)(1)(ii) of this section shall not apply to certificates of deposit, 
to any deposit obligation evidenced by a negotiable instrument, or to 
any account maintained by an agent, nominee, guardian, custodian or 
conservator on behalf of two or more persons.
    (3) Evidence of deposit ownership. All deposit accounts that 
satisfy the criteria in paragraph (c)(1) of this section, and those 
accounts that come within the exception provided for in paragraph 
(c)(2) of this section, shall be deemed to be jointly owned provided 
that, in accordance with the provisions of Sec.  330.5(a), the FDIC 
determines that the deposit account records of the insured depository 
institution are clear and unambiguous as to the ownership of the 
accounts. If the deposit account records are ambiguous or unclear as to 
the manner in which the deposit accounts are owned, then the FDIC may, 
in its sole discretion, consider evidence other than the deposit 
account records of the insured depository institution for the purpose 
of establishing the manner in which the funds are owned. The signatures 
of two or more persons on the deposit account signature card or the 
names of two or more persons on a certificate of deposit or other 
deposit instrument shall be conclusive evidence that the account is a 
joint account (although not necessarily a qualifying joint account) 
unless the deposit records as a whole are ambiguous and some other 
evidence indicates, to the satisfaction of the FDIC, that there is a 
contrary ownership capacity.
    (4) Alternative method to satisfy signature-card requirement. The 
signature-card requirement of paragraph (c)(1)(ii) of this section also 
may be satisfied by information contained in the deposit account 
records of the insured depository institution establishing co-ownership 
of the deposit account, such as evidence that the institution has 
issued a mechanism for accessing the account to each co-owner or 
evidence of usage of the deposit account by each co-owner.
* * * * *

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on July 16, 2019.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2019-15502 Filed 7-19-19; 8:45 am]
BILLING CODE 6714-01-P