Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 69577 

1Public Law 111–203 (July 21, 2010). 

2 75 FR 60341 (Sept. 30, 2010). 

if they would expect to realize profits by 

employing such methods. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. Under this rule: (1) All State 

and local laws and regulations that are 

inconsistent with this rule will be 

preempted; (2) no retroactive effect will 

be given to this rule; and (3) no 

retroactive proceedings will be required 

before parties may file suit in court 

challenging this rule. 

Paperwork Requirements 

FSIS has reviewed this rule under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520) and has determined 

that the information collection related to 

HACCP plans, Sanitation SOPs, and 

prerequisite programs has been 

approved by OMB under OMB Control 

Number 0583–0103. 

E-Government Act 

FSIS and USDA are committed to 

achieving the purposes of the 

E-Government Act (44 U.S.C. 3601, et 

seq.) by, among other things, promoting 

the use of the Internet and other 

information technologies and providing 

increased opportunities for citizen 

access to government information and 

services, and for other purposes. 

Executive Order 13175 

The policies contained in this rule do 

not have Tribal Implications that 

preempt Tribal Law. 

USDA Nondiscrimination Statement 

The U.S. Department of Agriculture 

(USDA) prohibits discrimination in all 

its programs and activities on the basis 

of race, color, national origin, gender, 

religion, age, disability, political beliefs, 

sexual orientation, and marital or family 

status. (Not all prohibited bases apply to 

all programs.) 

Persons with disabilities who require 

alternative means for communication of 

program information (Braille, large 

print, audiotape, etc.) should contact 

USDA’s Target Center at 202–720–2600 

(voice and TTY). 

To file a written complaint of 

discrimination, write USDA, Office of 

the Assistant Secretary for Civil Rights, 

1400 Independence Avenue, SW., 

Washington, DC 20250–9410 or call 

202–720–5964 (voice and TTY). USDA 

is an equal opportunity provider and 

employer. 

Additional Public Notification 

Public awareness of all segments of 

rulemaking and policy development is 

important. Consequently, in an effort to 

ensure that the public and in particular 

minorities, women, and persons with 

disabilities, are aware of this final rule, 

FSIS will announce it on-line through 

the FSIS Web page located at http:// 

www.fsis.usda.gov/regulations/ 

2010_Interim _&_Final_Rules_Index. 

FSIS also will make copies of this 

Federal Register publication available 

through the FSIS Constituent Update, 

which is used to provide information 

regarding FSIS policies, procedures, 

regulations, Federal Register notices, 

FSIS public meetings, and other types of 

information that could affect or would 

be of interest to our constituents and 

stakeholders. The Update is 

communicated via Listserv, a free e-mail 

subscription service consisting of 

industry, trade, and farm groups, 

consumer interest groups, allied health 

professionals, scientific professionals, 

and other individuals who have 

requested to be included. The Update 

also is available on the FSIS Web page. 

Through Listserv and the Web page, 

FSIS is able to provide information to a 

much broader, more diverse audience. 

In addition, FSIS offers an e-mail 

subscription service which provides 

automatic and customized access to 

selected food safety news and 

information. This service is available at 

http://www.fsis.usda.gov/ 

news_&_events/email_subscription/. 

Options range from recalls to export 

information to regulations, directives 

and notices. Customers can add or 

delete subscriptions themselves, and 

have the option to password protect 

their accounts. 

List of Subjects in 9 CFR Part 310 

Meat inspection. 

■ Accordingly, the Food Safety and 

Inspection Service amends 9 CFR part 

310 as follows: 

PART 310—POST-MORTEM 

INSPECTION 

■ 1. The authority citation for part 310 

continues to read as follows: 

Authority: 21 U.S.C. 601–695; 7 CFR 2.18, 

2.53. 

■ 2. Amend § 310.13 by revising 

paragraph (a), redesignating paragraph 

(b) as paragraph (b)(1), and adding 

paragraph (b)(2) to read as follows: 

§ 310.13 Inflating carcasses or parts 

thereof; transferring caul or other fat. 

(a) Establishments that slaughter 

livestock and prepare livestock 

carcasses and parts may inflate 

carcasses or parts of carcasses with air 

if they develop, implement, and 

maintain controls to ensure that the air 

inflation procedure does not cause 

insanitary conditions or adulterate 

product. Establishments shall 

incorporate these controls into their 

HACCP plans or Sanitation SOPs or 

other prerequisite programs. 

(b)(1) * * * 

(2) Injecting compressed air into the 

skulls of cattle in conjunction with a 

captive bolt stunner to hold the animal 

still for dressing operations is 

prohibited. 

* * * * * 

Done at Washington, DC, on October 29, 

2010. 

Alfred V. Almanza, 

Administrator. 

[FR Doc. 2010–28650 Filed 11–12–10; 8:45 am] 

BILLING CODE 3410–DM–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 330 

RIN 3064–AD65 

Deposit Insurance Regulations; 

Unlimited Coverage for NoninterestBearing Transaction Accounts 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: The FDIC is adopting a final 

rule amending its deposit insurance 

regulations to implement section 343 of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act (‘‘Dodd-Frank 

Act’’),1 providing for unlimited deposit 

insurance for ‘‘noninterest-bearing 

transaction accounts’’ for two years 

starting December 31, 2010. 

DATES: Effective Date: The final rule is 

effective December 31, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Joseph A. DiNuzzo, Supervisory 

Counsel, Legal Division (202) 898–7349 

or jdinuzzo@fdic.gov; Mike Figge, 

Honors Attorney, Legal Division (202) 

898–6750 or mfigge@fdic.gov; or James 

V. Deveney, Chief, Deposit Insurance 

Section, Division of Supervision and 

Consumer Protection (202) 898–6687 or 

jdeveney@fdic.gov. 

SUPPLEMENTARY INFORMATION: 

I. The Proposed Rule 

On September 30, 2010, the FDIC 

published a proposed rule (‘‘proposed 

rule’’) to implement section 343 of the 

Dodd-Frank Act (‘‘Section 343’’).2

Section 343 amended the deposit 

insurance provisions of the FDI Act (12 

U.S.C. 1821(a)(1)) to provide temporary 


jdjones on DSK8KYBLC1PROD with RULES
69578 Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 

separate insurance coverage for 

noninterest-bearing transaction 

accounts. In summary, the proposed 

rule: Followed the Section 343 

definition of noninterest-bearing 

transaction account; identified and 

discussed the differences between 

Section 343 and the FDIC’s Transaction 

Account Guarantee Program (‘‘TAGP’’); 

explained the separate deposit 

insurance available for noninterestbearing transaction accounts under 

Section 343; proposed disclosure and 

notice requirements as part of the 

implementation of Section 343; 

announced that, because of this 

Congressional action, the FDIC would 

not be extending the TAGP beyond its 

sunset date of December 31, 2010; and 

requested comments on all aspects of 

the proposed rule. 

II. Comments on the Proposed Rule 

The comment period on the proposed 

rule ended on October 15, 2010. The 

FDIC received ninety-three comments 

from trade associations, insured 

depository institutions (‘‘IDIs’’) and law 

firms, among others. In particular, the 

FDIC received eighty-four comments 

from state-bar affiliated associations and 

five comments from banking and other 

associations. The remaining four 

comments were from individual IDIs. 

Trade associations and bankers 

commented that the proposed rule 

reflects an accurate interpretation of 

Section 343. A number of banks and 

state bar associations commented that 

the exclusion of Interest on Lawyer 

Trust Accounts (‘‘IOLTAs’’) from Section 

343, and consequently the proposed 

rule, was the result of an inadvertent 

omission on the part of Congress. These 

comments referenced a pending bipartisan Senate bill to include IOLTAs 

in the Section 343 definition of 

noninterest-bearing transaction account. 

The commenters oppose the proposed 

rule’s requirement that IDIs notify 

IOLTA and negotiable order of 

withdrawal (‘‘NOW’’) account holders of 

changes in the deposit insurance 

scheme before Congress has the 

opportunity to amend Section 343 to 

include IOLTAs. Their comments reflect 

a concern that the exclusion of IOLTA 

and NOW accounts from the definition 

of noninterest-bearing transaction 

account will cause large IOLTA and 

NOW account depositors to spread these 

deposits across multiple IDIs to ensure 

full deposit insurance coverage or to 

place their deposits with institutions 

deemed ‘‘too big to fail.’’ Their 

comments also reflect a concern that 

failure to provide unlimited insurance 

to IOLTA and NOW accounts will 

significantly restrict community 

lending. 

One commenter requested that the 

final rule clarify whether the notice 

requirements apply to all depositors 

who hold NOW accounts in IDIs 

participating in the TAGP, or only to 

depositors who may be affected by the 

change in deposit insurance coverage. 

According to this comment letter, most 

NOW account holders will not be 

affected by the change because they 

have less than the standard maximum 

deposit insurance amount of $250,000 

(‘‘SMDIA’’) and remain fully insured 

should an IDI default. Another 

commenter requested clarification that 

one notice per account, rather than one 

notice per account holder, will satisfy 

the notice requirement. Similarly, when 

depositors have multiple accounts that 

are affected, the commenter requested 

clarification that compliance with the 

notice requirement is achieved by 

sending one notice which lists all 

affected accounts along with the 

account holder’s statement. Another 

comment letter requested clarification 

that the language included in the 

proposed rule under 12 CFR 

330.16(c)(1) is language that may be 

used to comply with the notice 

requirement. 

Several commenters expressed 

concerns over the unintended 

consequences of providing unlimited 

deposit insurance coverage for 

noninterest-bearing transaction 

accounts, contending that providing 

such coverage for these accounts 

promotes moral hazard. Four 

commenters suggested charging a 

separate assessment, in addition to the 

normal assessment rates, to address 

what they deem to be disproportionately 

high assessment rates on banks with a 

relatively low level of noninterestbearing transaction accounts. One 

commenter requested clarification on 

how the FDIC intends to treat official 

checks for deposit insurance purposes 

under the proposed rule, in light of the 

provision in the FDIC’s current deposit 

insurance regulations dealing with 

negotiable instruments,12 CFR 

330.5(b)(4)(i). 

Finally, one commenter requested 

clarification that the absence of a 

contract interest rate will determine 

whether an account qualifies for 

unlimited deposit-insurance coverage. 

Likewise, the commenter requested 

confirmation that interest-bearing 

accounts may be converted to 

noninterest-bearing accounts after 

December 31, 2010, and still obtain 

unlimited insurance. 

III. The Final Rule 

Definition of Noninterest-Bearing 

Transaction Account 

As in the proposed rule, the final rule 

follows the definition of noninterestbearing transaction account in Section 

343. Section 343 defines a noninterestbearing transaction account as ‘‘a 

deposit or account maintained at an 

insured depository institution with 

respect to which interest is neither 

accrued nor paid; on which the 

depositor or account holder is permitted 

to make withdrawals by negotiable or 

transferable instrument, payment orders 

of withdrawal, telephone or other 

electronic media transfers, or other 

similar items for the purpose of making 

payments or transfers to third parties or 

others; and on which the IDI does not 

reserve the right to require advance 

notice of an intended withdrawal.’’ One 

commenter on the proposed rule 

suggested that the FDIC define a 

depositor’s balance in a noninterestbearing transaction account as the 

‘‘average balance collected within the 

insured account over the past 30 days’’ 

prior to the date of failure of the IDI. 

The FDIC believes this definition would 

be inconsistent with the definition of 

noninterest-bearing transaction account 

in Section 343 and would lead to 

depositor confusion and uncertainty as 

to the extent of deposit insurance 

coverage available on noninterestbearing transaction accounts. 

The Section 343 definition of 

noninterest-bearing transaction account 

is similar to the definition of that term 

in the TAGP, but it includes no interestbearing accounts. The Section 343 

definition of noninterest-bearing 

transaction account encompasses only 

traditional, noninterest-bearing demand 

deposit (or checking) accounts that 

allow for an unlimited number of 

deposits and withdrawals at any time, 

whether held by a business, an 

individual or other type of depositor. 

Unlike the definition of noninterestbearing transaction account in the 

TAGP, the Section 343 definition of 

noninterest-bearing transaction account 

does not include NOW accounts 

(regardless of the interest rate paid on 

the account) or IOLTAs. Therefore, 

under the final rule, neither NOW 

accounts nor IOLTAs are within the 

definition of noninterest-bearing 

transaction account. Also, like the 

TAGP, the final rule does not include 

money market deposit accounts 

(‘‘MMDAs’’) within the definition of 

noninterest-bearing transaction account. 

As noted in the comment summary, 

the FDIC received numerous comments 

from law firms, IDIs, attorney trade 


jdjones on DSK8KYBLC1PROD with RULES
Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 69579 

groups and others requesting that the 

FDIC either postpone issuance of the 

final rule or exclude from the final rule 

the requirement that IDIs currently 

participating in the TAGP notify IOLTA 

customers that, beginning January 1, 

2011, IOLTAs no longer will be eligible 

for full deposit insurance coverage. The 

FDIC believes it is critically important 

for depositors to have a clear 

understanding of the deposit insurance 

rules before placing or retaining 

deposits at an FDIC-insured institution. 

As a result of the passage of the DoddFrank Act, the temporary full protection 

currently afforded to IOLTAs at IDIs 

participating in the TAGP will terminate 

on January 1, 2011, and the FDIC must 

ensure that IOLTA customers know 

about this change. If, as the commenters 

suggest, Congress acts before December 

31, 2010, to add IOLTAs to Section 343, 

thus providing temporary full coverage 

for these accounts, the FDIC will act 

quickly to notify IDIs of the statutory 

change and explain how to respond to 

this change in complying with the 

disclosure requirements in the final 

rule. 

Importantly, under the FDIC’s general 

deposit insurance rules, IOLTAs may 

qualify for ‘‘pass-through’’ deposit 

insurance coverage, so long as the 

regulatory requirements are met. 12 CFR 

330.7. That means each client for whom 

a law firm holds funds in an IOLTA may 

be insured up to $250,000 for his or her 

funds. In addition, the accrued interest 

to which a legal services entity or 

program is entitled may be separately 

insured for $250,000. For example, if a 

law firm maintains an IOLTA with 

$250,000 attributable to Client A, 

$150,000 to Client B and $75,000 to 

Client C, and the accrued interest of 

$5,000 is payable to a legal services 

program, the account likely would be 

fully insured. If the clients or the legal 

services entity have other funds at the 

same IDI, those funds would be added 

to their respective ownership interest in 

the IOLTA for insurance coverage 

purposes. But, coverage is available, 

generally, on a per-client basis; thus, a 

generous amount of deposit insurance 

coverage is available for IOLTAs, absent 

the availability of unlimited coverage 

for IOLTAs under either the TAGP or 

Section 343. 

Some commenters noted that, 

pursuant to Dodd-Frank Act revisions to 

the Federal Deposit Insurance Act, the 

FDIC would not have the authority to 

extend the TAGP beyond that program’s 

sunset date of December 31, 2010. The 

FDIC agrees with this conclusion. 

Therefore, in response to comments that 

the FDIC extend the TAGP, so that 

IOLTAs would continue to be fully 

protected, the FDIC does not have the 

statutory authority to do so. Likewise, in 

response to comments that the FDIC 

expand the final rule to include 

IOLTAs, the Dodd-Frank Act would not 

permit such an expansion, given that 

the Section 343 definition of 

noninterest-bearing transaction excludes 

accounts that may pay interest. 

One trade group suggested that the 

FDIC undertake a study of the benefits 

and costs of a permanent selfsupporting, and optional insurance 

program for qualifying accounts above 

the standard insurance limit. The FDIC 

will consider this suggestion. 

As under the TAGP, under the final 

rule, whether an account is noninterestbearing is determined by the terms of 

the account agreement and not by the 

fact that the rate on an account may be 

zero percent at a particular point in 

time. For example, an IDI might offer an 

account with a rate of zero percent 

except when the balance exceeds a 

prescribed threshold. Such an account 

would not qualify as a noninterestbearing transaction account even though 

the balance is less than the prescribed 

threshold and the interest rate is zero 

percent. Under the final rule, at all 

times, the account would be treated as 

an interest-bearing account because the 

account agreement provides for the 

payment of interest under certain 

circumstances. On the other hand, as 

under the TAGP, the waiving of fees 

would not be treated as the earning of 

interest. For example, IDIs sometimes 

waive fees or provide fee-reducing 

credits for customers with checking 

accounts. Under the final rule, such 

account features would not prevent an 

account from qualifying as a 

noninterest-bearing transaction account, 

as long as the account otherwise 

satisfies the definition of a noninterestbearing transaction account. 

One commenter on the proposed rule 

asked that the FDIC clarify that ‘‘rewards 

programs’’ offered by IDIs on noninterest checking accounts also would 

not prevent an account from meeting the 

definition of noninterest-bearing 

transaction account under the final rule. 

Generally, the FDIC will look to current 

requirements and interpretations under 

Part 329 of its regulations (Interest on 

Deposits, 12 CFR part 329) and such 

interpretations under Regulation Q of 

the Board of Governors of the Federal 

Reserve System (12 CFR part 217) to 

determine whether rewards provided in 

connection with transaction accounts 

will be considered interest paid on the 

account and, thus, disqualify an account 

for treatment as a noninterest-bearing 

transaction account. 

The same commenter requested that 

the FDIC confirm that interest-bearing 

accounts may be converted to 

noninterest-bearing checking accounts 

after December 31, 2010, and still obtain 

the benefits of unlimited FDIC coverage. 

Such account would be eligible for 

treatment as a noninterest-bearing 

transaction account as long as, under 

the modified deposit agreement, the 

depositor may not earn interest on the 

account. 

This same principle for determining 

whether a deposit account qualifies as a 

noninterest-bearing transaction account 

will apply when IDIs no longer are 

prohibited from paying interest on 

demand deposit accounts. Pursuant to 

section 627 of the Dodd-Frank Act, as of 

July 21, 2011 (one year after the 

enactment date of the Dodd-Frank Act), 

IDIs no longer will be restricted from 

paying interest on demand deposit 

accounts. At that time, demand deposit 

accounts offered by IDIs that allow for 

the payment of interest will not satisfy 

the definition of a noninterest-bearing 

transaction account. As discussed 

below, under the final rule, IDIs are 

required to inform depositors of any 

changes in the terms of an account that 

will affect their deposit insurance 

coverage under this new provision of 

the deposit insurance rules. 

As under the TAGP, the final rule’s 

definition of noninterest-bearing 

transaction account encompasses 

‘‘official checks’’ issued by IDIs. Official 

checks, such as cashier’s checks and 

money orders issued by IDIs, are 

‘‘deposits’’ as defined under the FDI Act 

(12 U.S.C. 1813(l)) and part 330 of the 

FDIC’s regulations. The payee of the 

official check (the party to whom the 

check is payable) is the insured party. 

Also, as a clarifying point made in one 

of the comments received on the 

proposed rule, if an official check is 

negotiated to a third party, the FDIC 

would recognize that person as the 

insured party, subject to certain 

requirements. 12 CFR 330.5(b)(4). 

Because official checks meet the 

definition of a noninterest-bearing 

transaction account, the payee (or the 

party to whom the payee has endorsed 

the check) would be insured for the full 

amount of the check upon the failure of 

the IDI that issued the official check. 

Under the FDIC’s rules and 

procedures for determining account 

balances at a failed IDI (12 CFR 360.8), 

funds swept (or transferred) from a 

deposit account to either another type of 

deposit account or a non-deposit 

account are treated as being in the 

account to which the funds were 

transferred prior to the time of failure. 

So, for example, if pursuant to an 


jdjones on DSK8KYBLC1PROD with RULES
69580 Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 

3 12 CFR 370.7. 

4 12 CFR part 327. 

agreement between an IDI and its 

customer, funds are swept daily from a 

noninterest-bearing transaction account 

to an account or product (such as a 

repurchase agreement) that is not a 

noninterest-bearing transaction account, 

the funds in the resulting account or 

product would not be eligible for full 

insurance coverage. This is how sweep 

account products are treated under the 

TAGP and under the final rule. 

As under the TAGP, however, the 

final rule includes an exception from 

the treatment of swept funds in 

situations where funds are swept from 

a noninterest-bearing transaction 

account to a noninterest-bearing savings 

account, notably a MMDA. Often 

referred to as ‘‘reserve sweeps,’’ these 

products entail an arrangement in 

which a single deposit account is 

divided into two sub-accounts, a 

transaction account and an MMDA. The 

amount and frequency of sweeps are 

determined by an algorithm designed to 

minimize required reserves. In some 

situations customers may be unaware 

that this sweep mechanism is in place. 

Under the final rule, the FDIC will 

consider such accounts noninterestbearing transaction accounts. In 

response to a comment on the proposed 

rule that treating such accounts as 

noninterest-bearing transaction accounts 

is contrary to Section 343, the FDIC 

notes that these are single accounts 

divided into sub-accounts, on neither of 

which the IDI pays interest. Considering 

‘‘reserve sweep accounts’’ to be 

noninterest-bearing transaction accounts 

also is consistent with the treatment of 

such accounts under the FDIC’s 

regulations on the treatment of sweep 

accounts upon the failure of an IDI. 12 

CFR 360.8. Apart from this exception for 

‘‘reserve sweeps,’’ MMDAs and 

noninterest-bearing savings accounts do 

not qualify as noninterest-bearing 

transaction accounts. 

Insurance Coverage 

As noted in the proposed rule, 

pursuant to Section 343, all funds held 

in noninterest-bearing transaction 

accounts will be fully insured, without 

limit. As also specifically provided for 

in Section 343, this unlimited coverage 

is separate from, and in addition to, the 

coverage provided to depositors with 

respect to other accounts held at an IDI. 

This means that funds held in 

noninterest-bearing transaction accounts 

will not be counted in determining the 

amount of deposit insurance on deposits 

held in other accounts, and in other 

rights and capacities, at the same IDI. 

Thus, for example, if a depositor has a 

$225,000 certificate of deposit and a nointerest checking account with a balance 

of $300,000, both held in a single 

ownership capacity, he or she would be 

fully insured for $525,000 (plus interest 

accrued on the CD), assuming the 

depositor has no other single-ownership 

funds at the same institution. First, 

coverage of $225,000 (plus accrued 

interest) would be provided for the 

certificate of deposit as a single 

ownership account (12 CFR 330.6) up to 

the SMDIA of $250,000. Second, full 

coverage of the $300,000 checking 

account would be provided separately, 

despite the checking account also being 

held as a single ownership account, 

because the account qualifies for 

unlimited separate coverage as a 

noninterest-bearing transaction account. 

One issue raised during the comment 

period is how the FDIC will apply the 

new Dodd-Frank coverage provision to 

determine the amount of insurance 

coverage available for revocable trust 

accounts. Coverage for revocable trust 

accounts, in general, is based on the 

number of ‘‘eligible’’ beneficiaries 

named in the account. 12 CFR 330.10. 

The specific question is how the FDIC 

will ‘‘count up’’ the number of eligible 

beneficiaries in determining revocable 

trust account coverage for an account 

owner who has multiple revocable trust 

accounts, including one or more such 

accounts that would qualify as 

noninterest-bearing transaction accounts 

under the Dodd-Frank provision. For 

example, if a depositor has an interestbearing account with a balance of 

$400,000 payable to a niece and a 

qualifying noninterest-bearing 

transaction account with a balance of 

$200,000 payable to a friend, how much 

coverage would be available for the 

accounts? To make this deposit 

insurance calculation, the FDIC would 

first determine the total number of 

different beneficiaries the account 

owner has named in all revocable trust 

accounts (both interest-bearing and 

noninterest-bearing) at the same IDI. In 

this example, there are two (the niece 

and the friend). We would then 

multiply that number times the SMDIA 

of $250,000 to determine the maximum 

coverage available on the account 

owner’s revocable trust accounts. In this 

example, the amount is $500,000. We 

then would apply that amount to the 

total balance of the account owner’s 

interest-bearing revocable trust 

accounts. Here, because that amount is 

$400,000, it would be fully covered. The 

balance of the noninterest-bearing 

transaction account (in this case, 

$200,000) would be separately and fully 

covered under the final rule. 

No Opting Out 

Under the TAGP, IDIs could choose 

not to participate in the program. 

Because Section 343 of the Dodd-Frank 

Act provides Congressionally mandated 

deposit insurance coverage, IDIs are not 

required to take any action (i.e., opt in 

or opt out) to obtain separate coverage 

for noninterest-bearing transaction 

accounts. From December 31, 2010, 

through December 31, 2012, 

noninterest-bearing transaction accounts 

at all IDIs will receive this temporary 

deposit insurance coverage. One 

commenter complained that the 

proposed rule did not allow IDIs to opt 

out of the temporary unlimited coverage 

for noninterest-bearing transaction 

accounts under Dodd-Frank. We note 

that, unlike under the TAGP, Section 

343 does not allow IDIs to opt out of this 

statutory provision. 

No Separate Assessment 

The FDIC imposes a separate 

assessment, or premium, on IDIs that 

participate in the TAGP.3 The FDIC will 

not charge a separate assessment for the 

insurance of noninterest-bearing 

transaction accounts pursuant to 

Section 343. The FDIC will take into 

account the cost for this additional 

insurance coverage in determining the 

amount of the deposit insurance 

assessment the FDIC charges IDIs under 

its risk-based assessment system.4 Four 

comments from trade groups and IDIs 

suggested that the FDIC charge more for 

the additional coverage on noninterestbearing transaction accounts similar to 

the way additional coverage is charged 

for under the TAGP. The proposed rule 

was not intended to address assessment 

issues, but the FDIC will take this 

comment into consideration when 

considering future changes to the 

assessment rate system. The FDIC notes, 

however, that the deposits covered by 

the TAGP were not defined as insured 

deposits. In contrast, Congress has 

specifically determined that 

noninterest-bearing transaction accounts 

are fully insured deposits. 

Disclosure and Notice Requirements 

The final rule includes disclosure and 

notice requirements as part of the 

implementation of Section 343. As 

indicated in the proposed rule, the 

purpose of these requirements is to 

ensure that depositors are aware of and 

understand what types of accounts will 

be covered by this temporary deposit 

insurance coverage for noninterestbearing transaction accounts. As in the 

proposed rule, the final rule includes 


jdjones on DSK8KYBLC1PROD with RULES
Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 69581 

three such requirements. As explained 

in detail below: (1) IDIs must post a 

prescribed notice in their main office, 

each branch and, if applicable, on their 

Web site; (2) IDIs currently participating 

in the TAGP must notify NOW account 

depositors (that are currently protected 

under the TAGP because of interest rate 

restrictions on those accounts) and 

IOLTA depositors that, beginning 

January 1, 2011, those accounts no 

longer will be eligible for unlimited 

protection; and (3) IDIs must notify 

customers individually of any action 

they take to affect the deposit insurance 

coverage of funds held in noninterestbearing transaction accounts. 

1. Posted Notice 

The final rule requires each IDI to 

post, prominently, a copy of the 

following notice in the lobby of its main 

office, in each domestic branch and, if 

it offers Internet deposit services, on its 

Web site. In response to comments 

received on the proposed rule, this 

notice has been revised from the notice 

in the proposed rule to make it more 

concise and reader-friendly: 

NOTICE OF CHANGES IN TEMPORARY 

FDIC INSURANCE COVERAGE FOR 

TRANSACTION ACCOUNTS 

All funds in a ‘‘noninterest-bearing 

transaction account’’ are insured in full by 

the Federal Deposit Insurance Corporation 

from December 31, 2010, through December 

31, 2012. This temporary unlimited coverage 

is in addition to, and separate from, the 

coverage of at least $250,000 available to 

depositors under the FDIC’s general deposit 

insurance rules. 

The term ‘‘noninterest-bearing transaction 

account’’ includes a traditional checking 

account or demand deposit account on which 

the insured depository institution pays no 

interest. It does not include other accounts, 

such as traditional checking or demand 

deposit accounts that may earn interest, 

NOW accounts, money-market deposit 

accounts, and Interest on Lawyers Trust 

Accounts (‘‘IOLTAs’’). 

For more information about temporary 

FDIC insurance coverage of transaction 

accounts, visit www.fdic.gov. 

2. Notice to Depositors Protected Under 

the TAGP But Not Under the DoddFrank Provision 

As discussed above, through 

December 31, 2010, low-interest NOW 

accounts and all IOLTAs are protected 

in full at IDIs participating in the TAGP. 

These accounts, however, are not 

eligible for unlimited deposit insurance 

coverage under the Dodd-Frank 

provision. Thus, starting January 1, 

2011, all NOW accounts and IOLTAs 

will be insured under the general 

deposit insurance rules and will no 

longer be eligible for unlimited 

protection. Because of the potential 

depositor confusion about this change 

in the FDIC’s treatment of NOWs and 

IOLTAs, the final rule requires IDIs 

currently participating in the TAGP to 

provide individual notices to depositors 

with NOW accounts currently protected 

in full under the TAGP and IOLTAs that 

those accounts will not be insured 

under the new temporary insurance 

category for noninterest-bearing 

transaction accounts. IDIs are required 

to provide such notice to applicable 

depositors by mail no later than 

December 31, 2010. To comply with this 

requirement, IDIs may use electronic 

mail for depositors who ordinarily 

receive account information in this 

manner. The notice may be in the form 

of a copy of the notice required to be 

posted in IDI main offices, branches and 

on Web sites. 

One commenter asked that the FDIC 

address certain specifics about 

complying with this notice requirement. 

In response to that comment: (1) As to 

joint accounts protected under the 

TAGP as of December 31, 2010, IDIs 

need only mail the notice to the address 

designated on the account; (2) if 

depositors have more than one affected 

account, one notice is sufficient if it 

identifies all the applicable accounts; 

and (3) the notice mailed to affected 

depositors may be in the form of the 

‘‘posting’’ notice in § 330.16(c) (1) of the 

final rule. 

Several commenters requested that 

this notice requirement either be 

eliminated, limited to NOW account 

owners with balances over the SMDIA 

or postponed until a date after the 

effective date of December 31, 2010. The 

FDIC has not adopted these suggestions 

because the Dodd-Frank coverage 

provision becomes effective on 

December 31, 2010; thus, starting 

January 1, 2011, low-interest NOW 

accounts and IOLTAs at IDIs 

participating in the TAGP no longer will 

be eligible for unlimited protection. As 

noted, the FDIC believes it is critical 

that depositors understand the current 

deposit insurance rules in placing or 

retaining funds at FDIC-insured 

institutions. 

3. Notice To Sweep Account and Other 

Depositors Whose Coverage on 

Noninterest-Bearing Transaction 

Accounts Is Affected by an IDI Action 

Under the TAGP regulations, if an IDI 

offers an account product in which 

funds are automatically transferred, or 

‘‘swept,’’ from a noninterest-bearing 

transaction account to another account 

(such as a savings account) or bank 

product that does not qualify as a 

noninterest-bearing transaction account, 

it must inform those customers that, 

upon such transfer, the funds will no 

longer be fully protected under the 

TAGP. As in the proposed rule, the final 

rule contains a similar, though 

somewhat more expansive, requirement, 

mandating that IDIs notify customers of 

any action that affects the deposit 

insurance coverage of their funds held 

in noninterest-bearing transaction 

accounts. This notice requirement is 

intended primarily to apply when IDIs 

begin paying interest on demand 

deposit accounts, as will be permitted 

beginning July 21, 2011, under section 

627 of the Dodd-Frank Act (discussed 

above). Thus, under the final rule’s 

notice requirements, if an IDI modifies 

the terms of its demand deposit account 

agreement so that the account may pay 

interest, the IDI must notify affected 

customers that the account no longer 

will be eligible for full deposit 

insurance coverage as a noninterestbearing transaction account. Though 

such notifications are mandatory, the 

final rule does not impose specific 

requirements regarding the form of the 

notice. Rather, the FDIC expects IDIs to 

act in a commercially reasonable 

manner and to comply with applicable 

state and federal laws and regulations in 

informing depositors of changes to their 

account agreements. 

One commenter on the proposed rule 

recommended that the FDIC issue 

additional guidance on the 

implementation of Section 343. The 

FDIC will consider publishing such 

guidance if it seems helpful to do so. 

IV. Regulatory Analysis and Procedure 

A. Effective Date 

Section 302 of the Riegle Community 

Development and Regulatory 

Improvement Act of 1994 (12 U.S.C. 

Section 4802(b)) requires, subject to 

certain exceptions, that regulations 

imposing additional reporting, 

disclosure or other requirements take 

effect on the first day of the calendar 

quarter after publication of the final 

rule. One of the statutory exceptions to 

this requirement is when the regulation 

is required to take effect on a date other 

than on the first day of the calendar 

quarter after publication of the final 

rule. The effective date of Section 343 

is December 31, 2010. Thus, the 

effective date of the final rule is 

December 31, 2010. 

B. Paperwork Reduction Act 

In accordance with section 3512 of 

the Paperwork Reduction Act of 1995 

(‘‘PRA’’), 44 U.S.C. 3501 et seq., an 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless it 


jdjones on DSK8KYBLC1PROD with RULES
69582 Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 

displays a currently valid Office of 

Management and Budget (‘‘OMB’’) 

control number. This final rule contains 

disclosure requirements, some of which 

implicate PRA as more fully explained 

below. In the proposed rule, the Board 

announced that the TAGP will not 

continue beyond December 31, 2010, 

thereby eliminating the need for an 

associated, currently approved 

information collection. Consequently, 

the FDIC will discontinue its 

information titled ‘‘Transaction Account 

Guarantee Extension,’’ OMB No. 3064– 

0170. 

The new disclosure requirements are 

contained in § 330.16(c)(1), (2) and (3). 

More specifically, § 330.16(c)(1) requires 

that each IDI post a ‘‘Notice of Changes 

in Temporary FDIC Insurance Coverage 

for Transaction Accounts’’ in the lobby 

of its main office and domestic branches 

and, if it offers Internet deposit services, 

on its Web site; § 330.16(c)(2) requires 

IDIs currently participating in the TAGP 

to provide individual notices to 

depositors alerting them to the fact that 

low-interest NOWs and IOLTAs are not 

eligible for unlimited coverage under 

the new temporary insurance category 

for noninterest-bearing transaction 

accounts; and § 330.16(c)(3) requires 

that IDIs notify customers of any action 

that affects the deposit insurance 

coverage of their funds held in 

noninterest-bearing transaction 

accounts. 

The disclosure requirement in 

§ 330.16(c)(1) would normally be subject 

to PRA. However, because the FDIC has 

provided the specific text for the notice 

and allows for no variance in the 

language, the disclosure is excluded 

from coverage under PRA because ‘‘the 

public disclosure of information 

originally supplied by the Federal 

government to the recipient for the 

purpose of disclosure to the public is 

not included’’ within the definition of 

‘‘collection of information.’’ 5 CFR 

1320.3(c)(2). Therefore, the FDIC is not 

submitting the § 330.16(c)(1) disclosure 

to OMB for review. 

The disclosure requirement in 

§ 330.16(c)(2) provides that IDIs 

currently participating in the TAGP 

provide individual notices to affected 

depositors alerting them to the fact that 

low-interest NOWs and IOLTAs will not 

be insured under the new temporary 

insurance category for noninterestbearing transaction accounts. The 

estimated burden for this new 

disclosure requirement has been added 

to the burden for an existing 

information collection, OMB No. 3064– 

0168, currently entitled SWEEP 

Accounts: Disclosure of Deposit Status. 

In conjunction with the revision of OMB 

No. 3064–0168, the FDIC has requested 

permission to modify the title of the 

collection as more fully explained 

below. 

The disclosure requirement in 

§ 330.16(c)(3) expands upon a similar, 

pre-existing requirement for sweep 

accounts offered by IDIs participating in 

the TAGP. The existing disclosure 

requirement is approved under OMB 

No. 3064–0168. The expanded 

disclosure requirement is mandatory for 

all IDIs, although institutions retain 

flexibility regarding the form of the 

notice. Therefore, in conjunction with 

publication of this final rule, the FDIC, 

on September 30, 2010, submitted to 

OMB a request to revise OMB No. 3064– 

0168 to reflect the estimated burden 

associated with the expanded disclosure 

requirement and to modify the title of 

the collection to ‘‘Disclosure of Deposit 

Status’’ to more accurately reflect the 

broader application of the requirement. 

This final rule results in no changes to 

the previously submitted burden 

estimates. 

The estimated burden for the new 

disclosure under §§ 330.16(c)(2) and (3) 

is as follows: 

Title: ‘‘Disclosure of Deposit Status.’’. 

Affected Public: Insured depository 

institutions. 

OMB Number: 3064–0168. 

Estimated Number of Respondents: 

Disclosure of action affecting deposit 

insurance coverage of funds in 

noninterest-bearing transaction 

accounts—7,830. 

Disclosure to NOW account and IOLTA 

depositors of change in insurance 

category—6,249. 

Frequency of Response: 

Disclosure of action affecting deposit 

insurance coverage of funds in 

noninterest-bearing transaction 

accounts—on occasion (average of 

once per year per bank). 

Disclosure to NOW account and IOLTA 

depositors of change in insurance 

category—once. 

Average Time per Response: 

Disclosure of action affecting deposit 

insurance coverage of funds in 

noninterest-bearing transaction 

accounts—8 hours. 

Disclosure to NOW account and IOLTA 

depositors of change in insurance 

category—8 hours. 

Estimated Annual Burden: 

Disclosure of action affecting deposit 

insurance coverage of funds in 

noninterest-bearing transaction 

accounts—62,640 hours. 

Disclosure to NOW account and IOLTA 

depositors of change in insurance 

category—49,992 hours. 

Total Annual Burden—112,632 hours. 

C. Regulatory Flexibility Act 

In accordance with section 3(a) of the 

Regulatory Flexibility Act (‘‘RFA’’), 5 

U.S.C. 603(a), the FDIC must publish an 

initial regulatory flexibility analysis 

with this final rulemaking or certify that 

the final rule does not have a significant 

economic impact on a substantial 

number of small entities. 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 final rule will not have a significant 

economic impact on a substantial 

number of small entities. 

As of June 30, 2010, there were 4,294 

IDIs that were considered small entities. 

A total of 1,121 of these institutions do 

not participate in the TAGP and receive 

additional insurance coverage under the 

final rule. Currently 3,173 small IDIs 

participate in the TAGP. Within this 

group of small institutions, 618, or 19.5 

percent, did not have TAGP eligible 

deposits as of the June 2010 Report of 

Condition and Income for banks and the 

Thrift Financial Report for thrifts 

(collectively, ‘‘June 2010 Call Reports’’); 

thus, they were not required to pay the 

fee currently assessed for participation 

in the TAGP. As to the remaining 2,555 

small entities that had TAGP eligible 

deposits as of the June 2010 Call 

Reports, they will no longer be assessed 

a fee after the termination of the TAGP, 

and they will not be charged a separate 

assessment for the new deposit 

insurance coverage. 

The FDIC has determined that under 

the final rule, the economic impact on 

small entities will not be significant for 

the following reasons. Because there is 

no separate FDIC assessment for the 

insurance of noninterest-bearing 

transaction accounts under section 343 

of the Dodd-Frank Act, small entities 

currently assessed fees for participation 

in the TAGP will realize an average 

annual cost savings of $2,373 per 

institution. All other small entities, 

whether they are currently in the TAGP 

or not, will gain additional insurance 

coverage with no direct cost. The FDIC 

asserts that the economic benefit of 

additional insurance coverage and 

coverage extension until 2013 

outweighs any future costs associated 

with the temporary insurance of 

noninterest-bearing transaction 

accounts. 

With respect to amending the 

disclosures related to Section 343, the 

FDIC asserts that the economic impact 

on all small entities participating in the 

program (regardless of whether they 


jdjones on DSK8KYBLC1PROD with RULES
Federal Register / Vol. 75, No. 219 / Monday, November 15, 2010 / Rules and Regulations 69583 

currently pay a fee) is de minimis in 

nature and is outweighed by the 

economic benefit of additional 

insurance coverage. 

Accordingly, the final rule does not 

have a significant economic impact on 

a substantial number of small entities. 

D. 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 wellbeing 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 (Pub. L. 105–277, 112 Stat. 2681). 

E. 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’’) (5 U.S.C. 801 et seq.). As 

required by SBREFA, the FDIC will file 

the appropriate reports with Congress 

and the General Accounting Office so 

that the final rule may be reviewed. 

F. Plain Language 

Section 722 of the Gramm-LeachBliley Act (Pub. L. 106–102, 113 Stat. 

1338, 1471), requires the Federal 

banking agencies to use plain language 

in all proposed and final rules 

published after January 1, 2000. The 

FDIC has sought to present the final rule 

in a simple and straightforward manner, 

and has made revisions to the proposed 

rule in response to commenter concerns 

seeking clarification of the application 

of the deposit insurance rules. 

List of Subjects in 12 CFR Part 330 

Bank deposit insurance, Banks, 

Banking, Reporting and recordkeeping 

requirements, Savings and loan 

associations, Trusts and trustees. 

■ For the reasons stated above, the 

Board of Directors of the Federal 

Deposit Insurance Corporation hereby 

amends part 330 of title 12 of the Code 

of Federal Regulations as follows: 

PART 330—DEPOSIT INSURANCE 

COVERAGE 

■ 1. The authority citation for part 330 

continues to read as follows: 

Authority: 12 U.S.C. 1813(1), 1813(m), 

1817(i), 1818(q), 1819 (Tenth), 1820(f), 

1821(a), 1822(c). 

■ 2. In § 330.1, paragraph (r) is added to 

read as follows: 

§ 330.1. Definitions. 

* * * * * 

(r) Noninterest-bearing transaction 

account means a deposit or account 

maintained at an insured depository 

institution— 

(1) With respect to which interest is 

neither accrued nor paid; 

(2) On which the depositor or account 

holder is permitted to make 

withdrawals by negotiable or 

transferable instrument, payment orders 

of withdrawal, telephone or other 

electronic media transfers, or other 

similar items for the purpose of making 

payments or transfers to third parties or 

others; and 

(3) On which the insured depository 

institution does not reserve the right to 

require advance notice of an intended 

withdrawal. 

* * * * * 

■ 3. New § 330.16 is added to read as 

follows: 

§ 330.16 Noninterest-bearing transaction 

accounts. 

(a) Separate insurance coverage. From 

December 31, 2010, through December 

31, 2012, a depositor’s funds in a 

‘‘noninterest-bearing transaction 

account’’ (as defined in § 330.1(r)) are 

fully insured, irrespective of the 

SMDIA. Such insurance coverage shall 

be separate from the coverage provided 

for other accounts maintained at the 

same insured depository institution. 

(b) Certain swept funds. 

Notwithstanding its normal rules and 

procedures regarding sweep accounts 

under 12 CFR 360.8, the FDIC will treat 

funds swept from a noninterest-bearing 

transaction account to a noninterestbearing savings deposit account as being 

in a noninterest-bearing transaction 

account. 

(c) Disclosure and notice 

requirements. (1) Each depository 

institution that offers noninterestbearing transaction accounts must post 

prominently the following notice in the 

lobby of its main office, in each 

domestic branch and, if it offers Internet 

deposit services, on its Web site: 

NOTICE OF CHANGES IN TEMPORARY 

FDIC INSURANCE COVERAGE FOR 

TRANSACTION ACCOUNTS 

All funds in a ‘‘noninterest-bearing 

transaction account’’ are insured in full by 

the Federal Deposit Insurance Corporation 

from December 31, 2010, through December 

31, 2012. This temporary unlimited coverage 

is in addition to, and separate from, the 

coverage of at least $250,000 available to 

depositors under the FDIC’s general deposit 

insurance rules. 

The term ‘‘noninterest-bearing transaction 

account’’ includes a traditional checking 

account or demand deposit account on which 

the insured depository institution pays no 

interest. It does not include other accounts, 

such as traditional checking or demand 

deposit accounts that may earn interest, 

NOW accounts, money-market deposit 

accounts, and Interest on Lawyers Trust 

Accounts (‘‘IOLTAs’’). 

For more information about temporary 

FDIC insurance coverage of transaction 

accounts, visit www.fdic.gov. 

(2) Institutions participating in the 

FDIC’s Transaction Account Guarantee 

Program on December 31, 2010, must 

provide a notice by mail to depositors 

with negotiable order of withdrawal 

accounts that are protected in full as of 

that date under the Transaction Account 

Guarantee Program and to depositors 

with Interest on Lawyer Trust Accounts 

that, as of January 1, 2011, such 

accounts no longer will be eligible for 

unlimited protection. This notice must 

be provided to such depositors no later 

than December 31, 2010. 

(3) If an institution uses sweep 

arrangements, modifies the terms of an 

account, or takes other actions that 

result in funds no longer being eligible 

for full coverage under this section, the 

institution must notify affected 

customers and clearly advise them, in 

writing, that such actions will affect 

their deposit insurance coverage. 

Dated at Washington DC, this 9th day of 

November 2010. 

By order of the Board of Directors. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 2010–28627 Filed 11–12–10; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF HOMELAND 

SECURITY 

U.S. Customs and Border Protection 

19 CFR Parts 4 and 10 

[CBP Dec. 10–33] 

Technical Corrections to Customs and 

Border Protection Regulations 

AGENCY: Customs and Border Protection, 

Department of Homeland Security. 

ACTION: Final rule. 

SUMMARY: Customs and Border 

Protection (CBP) periodically reviews its 

regulations to ensure that they are 

current, correct, and consistent. 

Through this review process, CBP 

discovered a number of discrepancies. 

This document amends various sections 

of title 19 of the Code of Federal 


jdjones on DSK8KYBLC1PROD with RULES