This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

20892 

Vol. 76, No. 72 

Thursday, April 14, 2011 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 204, 217, and 230 

[Regulations D, Q, and DD; Docket No. R– 

1413] 

RIN No. 7100–AD72 

Prohibition Against Payment of 

Interest on Demand Deposits 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Notice of proposed rulemaking; 

request for public comment. 

SUMMARY: The Board is requesting 

public comment on proposed 

amendments that would repeal 

Regulation Q, Prohibition Against 

Payment of Interest on Demand 

Deposits, effective July 21, 2011. 

Regulation Q implements the statutory 

prohibition against payment of interest 

on demand deposits by institutions that 

are member banks of the Federal 

Reserve System set forth in Section 19(i) 

of the Federal Reserve Act (‘‘Act’’). 

Section 627 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (‘‘Dodd-Frank Act’’) repeals Section 

19(i) of the Federal Reserve Act effective 

July 21, 2011. The proposed 

amendments implement the Dodd-Frank 

Act’s repeal of Section 19(i). The 

proposed amendments would also 

repeal the Board’s published 

interpretation of Regulation Q. The 

proposed amendments also remove 

references to Regulation Q found in the 

Board’s other regulations, 

interpretations, and commentary. 

DATES: Comments must be submitted by 

May 16, 2011. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1413 and 

RIN No. 7100–AD60, by any of the 

following methods: 

Agency Web site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

E-mail: 

regs.comments@federalreserve.gov. 

Include the docket number in the 

subject line of the message. 

Fax: (202) 452–3819 or (202) 452– 

3102. 

Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. 

Public comments may also be viewed 

electronically or in paper in Room MP– 

500 of the Board’s Martin Building (20th 

and C Streets, NW.) between 9 a.m. and 

5 p.m. on weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Sophia H. Allison, Senior Counsel (202/ 

452–3565), Legal Division, or Joshua S. 

Louria, Financial Analyst (202/263– 

4885), Division of Monetary Affairs; for 

users of Telecommunications Device for 

the Deaf (TDD) only, contact (202/263– 

4869); Board of Governors of the Federal 

Reserve System, 20th and C Streets, 

NW., Washington, DC 20551. 

SUPPLEMENTARY INFORMATION: 

I. Prohibition Against Payment of 

Interest on Demand Deposits 

Section 19(i) of the Federal Reserve 

Act (‘‘Act’’) (12 U.S.C. 371a) generally 

provides that no member bank ‘‘shall, 

directly or indirectly, by any device 

whatsoever, pay any interest on any 

deposit which is payable on demand 

* * *.’’ Section 19(i) was added to the 

Act by Section 11 of the Banking Act of 

1933 (48 Stat. 162, 181). Section 324 of 

the Banking Act of 1935 (49 Stat. 684, 

714) amended Section 19(a) of the Act 

to authorize the Board, ‘‘for the purposes 

of this section, to define the terms 

‘‘demand deposits’’, ‘‘gross demand 

deposits,’’ ‘‘deposits payable on 

demand’’ [and] to determine what shall 

be deemed to be a payment of interest, 

and to prescribe such rules and 

regulations as it may deem necessary to 

effectuate the purposes of this section 

and prevent evasions thereof * * *.’’ 

The Board promulgated Regulation Q 

on August 29, 1933 to implement 

Section 19(i) of the Act. In the past, 

Regulation Q also contained provisions 

implementing then-current statutory 

provisions regulating the rates of 

interest payable on various types of 

interest-bearing deposits. The 

Depository Institutions Deregulation Act 

of 1982 phased out these statutory 

interest rate limitations effective in 

March 1986. After that time, Regulation 

Q consisted primarily or exclusively of 

provisions related to implementing 

Section 19(i)’s prohibition of the 

payment of interest on demand deposits 

by member banks. 

Section 627 of the Dodd-Frank Act 

repeals Section 19(i) of the Act in its 

entirety, effective one year from the date 

of enactment. Accordingly, the Board 

will no longer have statutory authority 

to promulgate Regulation Q effective 

July 21, 2011. The Board therefore 

proposes to repeal Regulation Q, 

effective July 21, 2011. For the same 

reason, the Board proposes to repeal its 

published interpretation of Regulation Q 

currently set forth at 12 CFR 217.101 

(Premiums on deposits). The Board is 

proposing a conforming technical 

amendment to section 204.10 of 

Regulation D, 12 CFR part 204, to 

eliminate references to Regulation Q. 

The Board is also proposing conforming 

technical amendments to the official 

staff commentary to Regulation DD, 12 

CFR part 230. Specifically, comments 

230.2(n)–1 and 230.7(a)(1)–5 would be 

revised to eliminate references to the 

definition of ‘‘interest’’ in Regulation Q. 

The Dodd-Frank Act did not repeal 

the Board’s authority under Section 

19(a) of the Act to ‘‘determine what shall 

be deemed to be a payment of interest.’’ 

The Board believes, however, that the 

primary reason for this authority was to 

enforce Section 19(i)’s prohibition of the 

payment of interest on demand 

deposits. Accordingly, the Board 

believes that there will be no reason to 

retain the definition of ‘‘interest’’ in 

Regulation Q following the repeal of 

Section 19(i). The Board recognizes that 

there may be other laws or regulations 

that currently refer to Regulation Q or 

that incorporate the definition of 

‘‘interest’’ currently set forth in Section 

217.2(d) of Regulation Q. The Board 

believes, however, that such other laws 

and regulations can substantively 

incorporate the Regulation Q definition 

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Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Proposed Rules 20893 

of ‘‘interest’’ at any time if necessary, or 

can delete references to Regulation Q 

that will be obsolete after July 21, 2011. 

Accordingly, the Board does not 

propose retaining the definition of 

‘‘interest’’ currently set forth in 

Regulation Q. 

The Board seeks comments on all 

aspects of the proposal. In addition, the 

Board specifically seeks comments on 

the following: 

1. Does the repeal of Regulation Q 

have significant implications for the 

balance sheets and income of depository 

institutions? What are the anticipated 

effects on bank profits, on the allocation 

of deposit liabilities among product 

offerings, and on the rates offered and 

fees assessed on demand deposits, 

sweep accounts, and compensating 

balance arrangements? 

2. Does the repeal of Regulation Q 

have any implications for short-term 

funding markets such as the overnight 

federal funds market and Eurodollar 

markets, or for institutions such as 

institution-only money market mutual 

funds that are active investors in shortterm funding markets? 

3. Is the repeal of Regulation Q likely 

to result in strong demand for interestbearing demand deposits? 

4. Does the repeal of Regulation Q 

have any implications for competitive 

burden on smaller depository 

institutions? 

II. Form of Comment Letters 

Comment letters should refer to 

Docket No. R–1413 and RIN No. 7100– 

AD70 and, when possible, should use a 

standard typeface with a font size of 10 

or 12; this will enable the Board to 

convert text submitted in paper form to 

machine-readable form through 

electronic scanning, and will facilitate 

automated retrieval of comments for 

review. Comments may be mailed 

electronically to 

regs.comments@federalreserve.gov. 

III. Initial Regulatory Flexibility 

Analysis 

In accordance with Section 3(a) of the 

Regulatory Flexibility Act, 5 U.S.C. 601 

et seq. (RFA), the Board has reviewed 

the proposed amendments to Regulation 

Q. A final regulatory flexibility analysis 

will be conducted after consideration of 

comments received during the public 

comment period. 

1. Statement of the objectives of the 

proposal. The Board is proposing to 

repeal Regulation Q, which implements 

the statutory prohibition set forth in 

Section 19(i) of the Act, effective July 

21, 2011. The proposed repeal 

implements Section 627 of the DoddFrank Act, which repeals Section 19(i) 

of the Act effective July 21, 2011. 

2. Small entities affected by the 

proposal. The proposal would affect all 

member banks of the Federal Reserve 

System, regardless of size, that hold 

demand deposits. The proposal would 

permit, but not require, member banks 

to pay interest on demand deposits 

maintained at those institutions. As 

such, the Board expects that the 

proposal would have a positive impact 

on such entities because it would 

eliminate an obsolete regulatory 

provision and because member banks 

are not obligated to offer interest-bearing 

demand deposits following the repeal of 

Regulation Q. The Board is requesting 

comment on whether the repeal of 

Regulation Q has any implications for 

competitive burden on smaller member 

banks. 

3. Other federal rules. The Board 

believes that no federal rules duplicate, 

overlap, or conflict with the proposed 

amendments to Regulation Q. 

4. Significant alternatives to the 

proposed revisions. The Board 

welcomes comment on any significant 

alternatives that would minimize the 

impact of the proposal on small entities. 

IV. Paperwork Reduction Act Analysis 

In accordance with the Paperwork 

Reduction Act (PRA) of 1995 (44 U.S.C. 

3506; 5 CFR Part 1320 Appendix A.1), 

the Board reviewed the proposed rule 

under the authority delegated to the 

Board by the Office of Management and 

Budget (OMB). The proposed rule 

contains no requirements subject to the 

PRA. 

List of Subjects 

12 CFR Part 204 

Banks, banking, Reporting and 

recordkeeping requirements. 

12 CFR Part 217 

Banks, banking, Reporting and 

recordkeeping requirements. 

12 CFR Part 230 

Advertising, Banks, Banking, 

Consumer protection, Reporting and 

recordkeeping requirements, Truth in 

savings. 

For the reasons set forth in the 

preamble, under the authority of section 

627 of Public Law 111–203, 124 Stat. 

1376 (July 21, 2010), the Board is 

proposing to amend 12 CFR parts 204, 

217, and 230 to read as follows: 

PART 204—RESERVE 

REQUIREMENTS OF DEPOSITORY 

INSTITUTIONS 

1.The authority citation for part 204 is 

amended to read as follows: 

Authority: 12 U.S.C. 248(a), 248(c), 461, 

601, 611, and 3105. 

2. In § 204.10—Payment of interest on 

balances, paragraph (c) is revised to 

read as follows: 

§ 204.10 Payment of interest on balances. 

* * * * * 

(c) Pass-through balances. A passthrough correspondent that is an eligible 

institution may pass back to its 

respondent interest paid on balances 

held on behalf of that respondent. In the 

case of balances held by a pass-through 

correspondent that is not an eligible 

institution, a Reserve Bank shall pay 

interest only on the required reserve 

balances held on behalf of one or more 

respondents, and the correspondent 

shall pass back to its respondents 

interest paid on balances in the 

correspondent’s account. 

* * * * * 

PART 217—PROHIBITION AGAINST 

PAYMENT OF INTEREST ON DEMAND 

DEPOSITS (REGULATION Q) 

3. Part 217 is removed and reserved. 

PART 230—TRUTH IN SAVINGS 

(REGULATION DD) 

Supplement I to Part 230—Official Staff 

Interpretations 

4. The authority citation for part 230 

continues to read as follows: 

Authority: 12 U.S.C. 4301 et seq. 

5. In Supplement I to Part 230: 

A. Under Section 230.2—Definitions, 

paragraph (n) Interest, is revised. 

B. Under Section 230.7—Payment of 

interest, subsection (a)(1) Permissible 

methods, paragraph(5) is revised. 

The revisions read as follows: 

Supplement I to Part 230—Official Staff 

Interpretations 

Section 230.2 Definitions 

(n) Interest 

1. Relation to bonuses. Bonuses are not 

interest for purposes of this regulation. 

* * * * * 

Section 230.7 Payment of interest 

(a)(1) Permissible methods 

* * * * * 

5. Maturity of time accounts. Institutions 

are not required to pay interest after time 

accounts mature. Examples include: 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, acting through the 

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20894 Federal Register / Vol. 76, No. 72 / Thursday, April 14, 2011 / Proposed Rules 

Secretary under delegated authority, April 8, 

2011. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 2011–9002 Filed 4–13–11; 8:45 am] 

BILLING CODE 6210–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2011–0360; Directorate 

Identifier 2010–CE–061–AD] 

RIN 2120–AA64 

Airworthiness Directives; Univair 

Aircraft Corporation Models (ERCO) 

415–C, 415–CD, 415–D, E, G; (Forney) 

F–1 and F–1A; (Alon) A–2 and A2–A; 

and (Mooney) M10 Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to supersede an 

existing airworthiness directive (AD) 

that applies to Univair Aircraft 

Corporation Models (ERCO) 415–C, 

415–CD, 415–D, E, G; (Forney) F–1 and 

F–1A; (Alon) A–2 and A2–A; and 

(Mooney) M10 Airplanes. The existing 

AD currently requires an inspection of 

the aileron balance assembly and 

ailerons for cracks and excessive 

looseness of associated parts with the 

required repair or replacement of 

defective parts as necessary. Since we 

issued that AD, we received a report of 

a Univair Aircraft Corporation Model 

ERCO 415–D Ercoupe that crashed after 

an in-flight breakup due to possible 

aileron flutter. This proposed AD would 

add airplanes to the Applicability 

section and require inspections of the 

ailerons, inspections of the aileron 

balance assembly and aileron rigging for 

looseness or wear with a required repair 

or replacement of parts as necessary, 

and a reporting of the inspection results. 

We are issuing this proposed AD to 

prevent failure of the aileron assembly 

and associated parts, which could result 

in loss of control. 

DATES: We must receive comments on 

this proposed AD by May 31, 2011. 

ADDRESSES: You may send comments by 

any of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue, SE., 

Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

For service information identified in 

this AD, contact Univair Aircraft 

Corporation, 2500 Himalaya Road, 

Aurora, Colorado 80011; telephone: 

303–375–8882, fax: 303 375–8888; 

Internet: http://univairparts.com. You 

may review copies of the referenced 

service information at the FAA, Small 

Airplane Directorate, 901 Locust, 

Kansas City, Missouri 64106. For 

information on the availability of this 

material at the FAA, call 816–329–4148. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Management Facility between 9 

a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains this proposed AD, the 

regulatory evaluation, any comments 

received, and other information. The 

street address for the Docket Office 

(phone: 800–647–5527) is in the 

ADDRESSES section. Comments will be 

available in the AD docket shortly after 

receipt. 

FOR FURTHER INFORMATION CONTACT: 

Roger Caldwell, Aerospace Engineer, 

FAA, Denver Aircraft Certification 

Office, 26805 East 68th Ave., Room 214, 

Denver, Colorado 80249–6361; 

telephone: (303) 342–1086; fax: (303) 

342–1088; e-mail: 

roger.caldwell@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

We invite you to send any written 

relevant data, views, or arguments about 

this proposed AD. Send your comments 

to an address listed under the 

ADDRESSES section. Include ‘‘Docket No. 

FAA–2011–0360; Directorate Identifier 

2010–CE–061–AD’’ at the beginning of 

your comments. We specifically invite 

comments on the overall regulatory, 

economic, environmental, and energy 

aspects of this proposed AD. We will 

consider all comments received by the 

closing date and may amend this 

proposed AD because of those 

comments. 

We will post all comments we 

receive, without change, to http:// 

www.regulations.gov, including any 

personal information you provide. We 

will also post a report summarizing each 

substantive verbal contact we receive 

about this proposed AD. 

Discussion 

We issued AD 52–02–02 (21 FR 9447, 

December 4, 1956) for Ercoupe Model 

415 Series and Models E and G 

Airplanes. That AD requires an initial 

and repetitive inspection of the aileron 

balance assembly, including the aileron 

hinges, screws and control system, the 

ailerons for cracks in support structure 

and skin, and the repair or replacement 

of damaged parts. That AD resulted 

from several Ercoupe accidents. We 

issued that AD as a precautionary 

measure. 

Actions Since Existing AD Was Issued 

Since we issued AD 52–02–02, we 

received a report of a Univair Aircraft 

Corporation Model ERCO 415–D 

Ercoupe that crashed after an in-flight 

breakup. Witnesses of the accident 

noted that while the airplane was 

banking both ailerons were ‘‘fluttering’’ 

at a high frequency, and as the bank 

angle of the airplane increased to almost 

90 degrees, the left wing of the airplane 

‘‘folded back’’ and separated from the 

fuselage. We have received nine other 

documented cases of structural failures 

of the wing and associated components 

of the airframe. 

There are several Univair airplane 

models that have similar type design to 

that of above-referenced incidents, are 

not part of the compliance of AD 52–02– 

02, and should be subjected to the 

requirements of AD 52–02–02. 

Relevant Service Information 

We reviewed Ercoupe Service 

Memorandum Nos. 35, 56, and 57 (all 

not dated). The Ercoupe Service 

Memorandum No. 35 describes 

procedures for use in rigging or making 

adjustments to the rigging. The Ercoupe 

Service Memorandum No. 56 describes 

procedures for the inspection of control 

surfaces for cracks and excessive play 

and checking controls for excessive 

movement. The Ercoupe Service 

Memorandum No. 57 describes 

procedures for aileron balance weight 

inspection and removal. 

FAA’s Determination 

We are proposing this AD because we 

evaluated all the relevant information 

and determined the unsafe condition 

described previously is likely to exist or 

develop in other products of the same 

type design. 

Proposed AD Requirements 

This proposed AD would add 

airplanes to the Applicability section of 

AD 52–02–02 and require inspections of 

the ailerons, add airplanes to the 

Applicability section, add repetitive 

inspections of the aileron bell crank and 

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