June 24, 2000 **Corporate Decision #2000-11**

## July 2000

Mr. William W. Templeton

Senior Counsel

Legal Department

Fleet Financial Group

Mail Stop: RI MO F18C

50 Kennedy Plaza

Providence, RI 02903

Re: Fleet National Bank, Providence, Rhode Island/Operating Subsidiary
Application

> Application Control Number: 2000-ML-08-018

Dear Mr. Templeton:

This responds to the application filed by Fleet National Bank,
Providence, Rhode Island ("Fleet"), to acquire and hold as an operating
subsidiary Curtis Associates, Inc. ("Curtis"), a company engaged in
providing government "welfare-to-work" program counseling and related
activities. Based upon the representations and commitments made by the
Bank, the Bank's application is approved.

# BACKGROUND

Curtis is a closely held company based in Kearny, Nebraska. Fleet has
entered into an agreement to acquire Curtis, subject to OCC approval of
this application. Under the terms of the agreement, Curtis will be
acquired and held as a wholly-owned subsidiary of an existing operating
subsidiary, ASFA Data Corporation ("AFSA"). AFSA, a wholly-owned
subsidiary of Fleet, engages in financial processing and administrative
services for government sponsored and guaranteed student loan programs.

AFSA's business strategy is to expand its financial processing and
administrative capabilities to include government health and human
services programs. To further its business strategy and to broaden its
capabilities, AFSA acquired Benova, Inc. ("Benova") in 1998.[^1] Benova
contracts with federal and state governments to provide Medicare and
Medicaid enrollment counseling to the programs' beneficiaries. In
connection with Benova's activities, AFSA bid successfully on contracts
for the payment processing components of the health care entitlement
programs.

Recent welfare legislation created an opportunity for AFSA to expand
further in the health and human services arena.[^2] However, to bid
successfully on welfare contracts, AFSA must be able to perform not only
payment processing capabilities but also the related administrative
services. To strengthen its administrative service capabilities, AFSA
proposes to acquire Curtis. The acquisition of Curtis will augment
AFSA's payment processing and servicing capabilities and improve its
standing as a bidder on both welfare contracts and, as AFSA's expertise
develops, contracts outsourcing the servicing and administration of
other health care entitlement programs.

Curtis serves as an intermediary between those people who are eligible
to participate in the welfare-to-work program and potential employers.
Curtis provides welfare-to-work program counseling and related
administrative services. These services focus on bringing together
potential employers with welfare-to-work program beneficiaries. As a
welfare-to-work counselor, Curtis advises potential employers, usually
small and medium-sized businesses, on their needs for unskilled labor
and the availability of welfare-to-work participants to meet those
needs; counsels welfare-to-work program beneficiaries on the program's
requirements, the work skills necessary to participate (*e.g.*, how to
dress, appropriate office conduct), and other program benefits (*i.e.*,
child care subsidies); brings together potential employers and program
beneficiaries; and performs related recordkeeping activities. Once
acquired by AFSA, Curtis will also possess payments processing
capabilities, allowing it to handle the transmission of all cash or cash
equivalent payments from the government agency to the employer or
employee.

# DISCUSSION

The services proposed to be provided by Curtis following the planned
acquisition are all aspects of well-recognized banking activities
previously approved by the OCC: (1) financial planning and counseling;
(2) payment processing and benefits disbursement; (3) acting as a
finder; and (4) collecting banking, financial, or related economic data.
National banks may engage in activities that are part of or incidental
to the business of banking, or otherwise authorized for a national bank,
by means of an operating subsidiary. 12 C.F.R. § 5.34(e).

# Financial Planning and Counseling

It is well established that national banks have the power to provide
financial advice and counseling to their customers as part of or
incidental to the business of banking pursuant to 12 U.S.C. §
24(Seventh).[^3] Curtis is a welfare-to-work counselor. As discussed
above, Curtis provides potential employers with information about the
availability of program participants to meet the employers' needs for
unskilled labor. Curtis also provides program beneficiaries, the
potential employees, with information about program benefits and
requirements.[^4]

Curtis's activities in the area of welfare-to-work counseling are
aspects of the financial planning and counseling services that are
permissible for national banks and their subsidiaries. The
administration of the welfare-to-work program directly impacts the
financial condition of participating employers. The cost of labor and
employee turnover rates bear upon the operating budgets and finances of
potential employers, and the welfare-to-work program allows the
participating employers to better manage their labor costs and reduce
employee turnover.[^5] Similarly, administration of the program confers
a direct financial benefit to the program beneficiaries. Since income is
a significant and necessary component of an individual's finances,
eligible program participants will accordingly seek information
regarding both employment opportunities and other benefits available
through the welfare-to-work program.

# Payment Processing 

Once acquired by AFSA, Curtis will possess payment processing
capabilities. Curtis will handle the transmission of all cash or cash
equivalent payments from the government agency to the employer or
employee, such as child care subsidies or wage support. Such payment
processing activities are permissible for national banks and their
subsidiaries.[^6]

# Finder Activity

After counseling a potential employer on the availability of
welfare-to-work participants to meet its need and counseling program
participants on necessary work skills and program benefits, Curtis
brings together employers and employees by matching program participants
together with potential employers. Curtis only brings the parties
together; it does not represent or act as an agent for either the
program participants or the potential employers. The employers make the
hiring decisions, and Curtis takes no financial interest in the terms
negotiated between the employers and the employees.

Curtis's role in bringing program participants together with employers
is properly characterized as a finder activity. The permissibility of a
national bank acting as a finder to bring together buyers and sellers of
various types of products and services is specifically set forth in
Interpretive Ruling 7.1002, 12 C.F.R. § 7.1002.[^7] More specifically,
in the area of government-sponsored entitlement programs, the OCC has
confirmed the permissibility of a national bank acting as a finder to
bring program beneficiaries together with program benefits.[^8]

# Collecting Banking, Financial, or Related Economic Data

Curtis also tracks the services it provides and the outcome of these
services in terms of employment placements, employee retention, and
length of employment. This information allows the sponsoring state
agencies to determine the cost-effectiveness of the programs. We have
long held that as part of the business of banking, national banks may
collect, transcribe, process, analyze, and store for themselves and
others banking, financial, or related economic data.[^9] Here, Curtis
provides the sponsoring state agency with similar information as part of
its administration of the welfare-to-work programs.

# CONCLUSION

Based on the facts as described, I conclude that the activities proposed
to be conducted by Curtis are permissible activities for a national bank
and its operating subsidiaries. Accordingly, the Bank's application is
approved.

This approval is granted based on a thorough review of all information
available, including the representations and commitments made in the
application and by Bank representatives. If you have any questions,
please do not hesitate to contact Richard Erb, Licensing Manager, (202)
874-5060.

Sincerely,

**-signed-**

Julie L. Williams

First Senior Deputy Comptroller and Chief Counsel

[^1]: Corporate Decision No. 98-13 (February 9, 1998).

[^2]: *See* Workforce Investment Act, Pub. L. No. 105-220, 112 Stat. 936
    (1998); Personal Responsibility and Work Opportunity Reconciliation
    Act, Pub. L. No. 104-193, 110 Stat. 2105 (1996).

[^3]: *See, e.g.*, Corporate Decision No. 99-43 (November 29, 1999)
    (approving application to provide relocation services counseling and
    advice); Corporate Decision No. 98-51 (November 30, 1998) (approving
    application to provide employee benefit consulting and compensation
    advisory services); Corporate Decision No. 98-13, *supra* (approving
    application to provide, *inter alia*, medical insurance cost
    information and benefits counseling); Letter from Judy Walter,
    Senior Deputy Comptroller for National Operations (July 17, 1986)
    (unpublished) (national bank operating subsidiary may provide
    financial advice and planning to customers interested in
    establishing a business).

[^4]: Curtis does not charge program participants and potential
    employers for its services. Rather, Curtis is compensated under a
    contract with the sponsoring government agency.

[^5]: AFSA estimates clerical employee turnover cost at approximately
    \$6,000 per employee, assuming two months training for the new
    employee at \$2,500 per month and \$1,000 cost of recruiting.
    Therefore, a company with an employee base of 100 will save
    approximately \$60,000 for each 10% reduction in employee turnover.

[^6]: Corporate Decision No. 98-13, *supra*; Interpretive Letter No. 712
    (February 29, 1996), *reprinted in* \[1995-1996 Transfer Binder\]
    Fed. Banking L. Rep. (CCH) ¶ 81-027.

[^7]: *See* Interpretive Letter No. 653 (December 22, 1994), *reprinted
    in* \[1994-1995 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶
    83,601 (finder with respect to certain insurance services);
    Interpretive Letter No. 567 (October 29, 1991), *reprinted in*
    \[1991-1992 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 83,337
    (finder services for personal property leasing); Interpretive Letter
    No. 437 (July 27, 1988), *reprinted in* \[1988-1989 Transfer
    Binder\] Fed. Banking L. Rep. (CCH) ¶ 85,661 (selling tax auditing
    representation services to customers).

[^8]: *See* Corporate Decision No. 98-13 (February 9, 1998) (finder
    services for callers seeking federal- or state-sponsored health
    insurance); *cf.* Conditional Approval No. 361 (March 3, 2000)
    (national bank operating subsidiary may, as finder, bring together
    potential consumers and suppliers of government services and goods).

[^9]: *See* Interpretive Letter No. 875 (October 31, 1999), *reprinted
    in* \[Current Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 81-369;
    Interpretive Letter No. 677 (June 28, 1995), *reprinted in*
    \[1994-1995 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 83,625.
    *See also* Interpretive Letter No. 737, *supra* (national bank may
    provide transaction and information processing services to support
    an electronic stored value system); Interpretive Letter No. 653
    (December 22, 1994), *reprinted in* \[1994-1995 Transfer Binder\]
    Fed. Banking L. Rep. (CCH) ¶ 83,601 (national bank may act as an
    informational and payments interface between insurance underwriters
    and general insurance agents); Interpretive Letter No. 346 (July 31,
    1985), *reprinted in* (1985-1987 Transfer Binder) Fed. Banking L.
    Rep. (CCH) ¶ 85,516 (national banks may maintain records on
    commodities transactions).