[Federal Register Volume 62, Number 204 (Wednesday, October 22, 1997)]
[Rules and Regulations]
[Pages 54759-54765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27842]


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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 506, 545, 556, 557, 561, 563, 563g

[No. 97-108]
RIN 1550-AB00


Deposits

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Thrift Supervision (OTS) is issuing a final rule 
streamlining its deposit-related regulations. The final rule will 
eliminate duplicative, overlapping, and outdated regulations, and those 
that micromanage savings associations. The final rule also codifies the 
OTS position on federal preemption of state laws affecting deposit-
related activities.

EFFECTIVE DATE: January 1, 1998.

FOR FURTHER INFORMATION CONTACT: Edward J. O'Connell, III, Project 
Manager, (202) 906-5694, Supervision Policy; Robyn H. Dennis, Manager, 
Thrift Policy, (202) 906-5751; Christine Harrington, Counsel (Banking 
and Finance), (202) 906-7957; or Karen Osterloh, Assistant Chief 
Counsel, (202) 906-6639, Regulations and Legislation Division, Chief 
Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, D.C. 20552.

SUPPLEMENTARY INFORMATION:

I. Background of the Proposal

    OTS published a notice of proposed rulemaking (NPR) on April 2, 
1997 proposing to amend its deposit-related regulations.<SUP>\1\</SUP> 
The NPR proposed to streamline the regulations by eliminating 
duplicative, overlapping, and outdated regulations, and those that 
micromanage savings associations. Additionally, OTS sought to codify 
its long-standing position on federal preemption of state laws 
affecting deposit-related activities. Finally, OTS proposed to remove 
regulations that merely restate existing statutory authority or 
universally recognized incidental deposit-related powers.
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    \\1\\ 62 FR 15626 (April 2, 1997). (Notice of Proposed 
Rulemaking on Deposits and Advance Notice of Proposed Rulemaking on 
Electronic Banking). OTS has separately published a proposed rule on 
Electronic Banking. 62 FR 51817 (October 3, 1997).
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    With these goals in mind, OTS proposed to consolidate all remaining 
deposit-related regulations in a new part 557. OTS predicted that this 
change would make deposit-related regulations easier to locate and 
follow. OTS issued the NPR pursuant to the Regulatory Reinvention 
Initiative of the Vice President's National Performance Review and 
section 303 of the Riegle Community Development and Regulatory 
Improvement Act of 1994.

II. General Discussion of the Comments

    Eight commenters responded to the NPR including five federal thrift 
institutions and three trade associations. The commenters generally 
supported the proposal to remove unnecessary, duplicative, or outdated 
regulations. They specifically endorsed the removal of OTS regulations 
duplicating areas covered by the Federal Reserve Board's (FRB) 
Regulation D and Regulation DD.<SUP>\2\</SUP> Commenters also generally 
endorsed the proposed consolidation of the remaining deposit-related 
regulations at new part 557. Comments addressing specific regulations 
are discussed in the section-by-section analysis below.
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    \\2\\ Regulation D addresses the Reserve Requirements of 
Depository Institutions. 12 CFR part 204 (1997). Regulation DD 
implements the Truth in Savings Act (TISA). 12 CFR part 230 (1997).
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III. Section-by-Section Analysis

A. Disposition of Existing Deposit-Related Regulations

    The OTS proposed to delete certain existing regulations, and 
consolidate the remaining relevant provisions in a new part. Sections 
proposed for deletion included: Sec. 545.10 (Savings Deposits or 
Shares); Sec. 545.11 (Issuance of Accounts); Sec. 545.12 (Demand 
Deposit Accounts); Sec. 545.13 (Account Records); Sec. 545.14 
(Determination and Distribution of Earnings); Sec. 556.12 (Deposit 
Assurance of Direct Deposit of Social Security Payments); Sec. 563.2 
(Simple Form of Certificate; Passbooks); Sec. 563.3 (Long Form of 
Membership Certificate); Sec. 563.6 (Payment of Accounts on Demand); 
Sec. 563.7 (Fixed-Term Accounts); Sec. 563.9 (Eurodollar Deposits); and 
Sec. 563.10 (Earnings-Based Accounts).
    OTS received comments supporting the deletion of most of the cited 
sections. These sections are deleted as proposed. Comments opposing the 
deletion of specific sections, however, are discussed below. Comments 
received on existing provisions that were retained and incorporated 
into the new part 557 are discussed in connection with the relevant 
section under that part. A derivation chart has been provided at the 
end of this preamble.
    OTS emphasizes that the changes made in this final rule are not 
intended to reduce, in any way, the scope of federal thrifts' authority 
to conduct deposit activities.
    Section 545.12  Demand Deposit Accounts. Existing Sec. 545.12(b) 
prohibits a federal association from paying interest on demand deposits 
and specifically states that finders' fees, as defined in 
Sec. 561.16(b), are not interest. OTS proposed to delete this paragraph 
and to include the finders' fees exception in the Thrift Activities 
Handbook (``Handbook''). One commenter supported retaining the finders' 
fee provisions in OTS regulations. This commenter argued that the 
Handbook would not override the statutory prohibition on interest on 
demand deposits at 12 U.S.C. 1464(b)(1)(B)(i), and feared that the 
Handbook may not be issued until after the effective date of the new 
deposit regulation. Another commenter supported deleting the finders' 
fee provision.
    OTS regulations at Sec. 561.16 define ``demand accounts'' for the 
purposes of 12 U.S.C. 1464(b) and the implementing regulations. This 
definition specifically states that fees paid by a savings association 
to a person who introduces a depositor to the savings association shall 
not be deemed an interest payment, if the fee meets certain criteria. 
OTS believes this definition is sufficient to qualify for the statutory 
prohibition. Accordingly, the final rule deletes Sec. 545.12(b) as 
proposed.
    Like section 5 of the HOLA, section 11 of the Banking Act of 1933 
(12 U.S.C. 371a) and section 18(g) of the Federal Deposit Insurance Act 
(12 U.S.C. 1828(g)) prohibit the payment of interest on demand 
deposits. The Federal Reserve Board (FRB) and the Federal Deposit 
Insurance Corporation (FDIC)

[[Page 54760]]

have issued regulations implementing this prohibition at 12 CFR part 
217 (1997) and 12 CFR part 329 (1997), and have issued interpretive 
rules describing when premiums will not be considered to be interest 
within the scope of this prohibition. See 12 CFR 217.101 (1997) and 12 
CFR 329.103 (1997). These interpretations permit premiums to be paid, 
inter alia, if the premium is given only when the depositor opens a new 
account, or adds to, or renews an existing account. As a result of this 
guidance, FRB- and FDIC-regulated institutions were constrained from 
offering incentives to use their products, including the use of new 
services such as automated teller machines (ATM) or debit 
cards.<SUP>\3\</SUP>
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    \\3\\ For example, one bank was prevented from offering 
incentives to existing demand customers who signed up for an ATM 
card because the incentives did not coincide with opening, adding 
to, or renewing an account. Similarly, another bank was prevented 
from offering incentives to encourage deposit customers to use an 
ATM card more than three times per month because premiums from the 
use of a debit card, which reduce the amount on deposit, would have 
been interest on the deposit under the FRB and FDIC interpretive 
guidance.
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    To address this issue, FRB and the FDIC recently revised their 
interpretive guidance to permit regulated institutions to pay any 
premium that is not, directly or indirectly, related to or dependent on 
the balance in a demand deposit account and the duration of the account 
balance.<SUP>\4\</SUP> While OTS has no interpretive rule specifically 
addressing premiums, OTS agrees that premiums under such circumstances 
are not interest and will generally follow the FRB and FDIC 
interpretations on this point.
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    \\4\\ 62 FR 26736 (May 15, 1997); 62 FR 40731 (July 30, 1997).
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    Section 556.12  Deposit Assurance of Direct Deposit of Social 
Security Payments. The OTS policy statement at Sec. 556.12 states that 
a federal association has implied powers to provide deposit assurance 
in connection with the Social Security Administration's direct deposit 
program. This policy statement also includes advice on safeguards and 
controls required to address the risks of the direct deposit program. 
OTS proposed to delete the policy statement.
    Two commenters supported this deletion, but noted that additional 
regulatory guidance would be helpful to address such issues as 
safeguards and controls, and compliance with the FRB's Regulation E 
(Electronic Funds Transfers).<SUP>\5\</SUP> The OTS Compliance Handbook 
addresses Regulation E matters in section 330, Electronic Funds 
Transfer. OTS is reviewing whether the issuance of additional guidance 
is necessary.
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    \\5\\ 12 CFR part 204 (1997).
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    Section 563.7  Fixed-Term Accounts (Term Accounts). Existing 
Sec. 563.7(d) states that a certificate account may prohibit withdrawal 
prior to maturity, except under circumstances set forth in the 
certificate. This paragraph further provides that, in case of the 
accountholder's death or incompetence, a savings association may not 
prohibit early withdrawal and may not impose an early withdrawal 
penalty. OTS proposed to delete this paragraph because it duplicates 
Regulation D.<SUP>6</SUP>
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    \6\ 12 CFR 204.2(c)(1) n.1 (1997).
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    Two commenters specifically addressed this paragraph. One supported 
deletion. The other argued that the section is not duplicative. This 
commenter argued that Regulation D neither authorizes an institution to 
prohibit early withdrawal nor forbids an institution from prohibiting 
early withdrawal. The commenter noted that Sec. 563.7(d) correctly 
allows the matter to be addressed by the contract between the savings 
association and its depositors.
    Unless restricted by statute or regulation, a federal savings 
association needs no specific authorization to enter into agreements 
establishing maturity dates for accounts and prohibiting early 
withdrawal under circumstances specified in those agreements. 
Regulation D does, however, limit this broad authority. For example, to 
meet the definition of time deposit under Regulation D, an institution 
must limit the depositor's right to withdraw his account unless the 
deposit is subject to a specified penalty for early 
withdrawal.<SUP>7</SUP>
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    \7\ See 12 CFR 204.2(c)(1) (1997).
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    The commenter correctly noted that, unlike existing Sec. 563.7, 
Regulation D does not require a savings association to permit early 
withdrawal, subject to penalties, upon the death or incompetency of the 
accountholder. Rather, Regulation D merely permits the savings 
association to take such action under these and other 
circumstances.<SUP>8</SUP> However, in the interest of uniformity with 
other insured institutions, the OTS had determined that it is not 
necessary to impose this additional requirement on federal savings 
associations. Therefore, OTS concludes that existing Sec. 563.7 may be 
deleted in this final rule.
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    \8\ 12 CFR 204.2(c)(1)(i), n.1 (1997).
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    Section 563.9  Eurodollar Deposits. Existing Sec. 563.9 addresses 
the issuance of Eurodollar deposits. OTS proposed to delete this 
provision as unnecessary. Three commenters supported deleting this 
provision. One of these commenters, however, suggested that OTS 
reiterate, either in a regulation or the preamble, that savings 
associations have authority to accept Eurodollar deposits under their 
general authority to accept deposits. OTS has deleted this regulation 
as proposed, but notes that federal savings associations continue to be 
permitted to issue Eurodollar certificates as part of their deposit 
activities authorized by the HOLA.<SUP>9</SUP>
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    \9\ 12 U.S.C. 1464(b)(1)(A).
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B. Proposed Part 557

    OTS proposed to adopt a new part 557, which would include all of 
the agency's deposit-related regulations. Although OTS proposed part 
557 in a traditional format, this final rule uses the plain language 
drafting techniques promoted by the Vice President's National 
Performance Review Initiative and new guidance in the Federal Register 
Document Drafting Handbook (January 1997 edition). The primary goal of 
plain language drafting is to make regulations more readily 
understandable. Plain language drafting emphasizes informative headings 
(often written as a question), non-technical language (including the 
use of ``you''), and sentences in the active voice.
    Although commenters did not have an opportunity to comment on the 
plain language format prior to its use in this final rule, OTS believes 
that the benefits of the plain language format justify its use. The 
substance of the proposed regulation did not change as a result of the 
plain language drafting. OTS welcomes comments on the format and 
suggestions on how to improve this format.
Subpart A--General
    Section 557.1  What does this part do? New Sec. 557.1 states that 
part 557 applies to savings associations' deposit activities. 
Specifically, subpart B applies to federal savings associations, while 
subpart C applies to both federal and state chartered savings 
associations.
Subpart B--Deposit Activities of Federal Savings Associations
    Section 557.10  What authorities govern the issuance of deposit 
accounts by a federal savings association? Proposed Sec. 557.1 stated 
that a federal savings association may raise funds through accounts and 
may issue evidence of accounts under section 5(b)(1) of the HOLA, by 
the terms of its charter, and by part 557.
    OTS received two comments on the proposed section. One commenter 
feared that savings association personnel may not realize that

[[Page 54761]]

Regulation D is applicable. This commenter suggested that the final 
rule specifically cite Regulation D. OTS believes this suggestion is 
helpful and has added a reference to Regulation D and Regulation DD in 
the new Sec. 557.10.
    Another commenter suggested deleting the reference to authority 
granted under the association's charter. The reference to the charter 
was included to maintain consistency with section 5(b) of the HOLA 
which authorizes a federal savings association to accept deposits 
``[s]ubject to the terms of its charter and regulations of the [OTS].'' 
<SUP>10</SUP> To the extent that the commenter feared that retention of 
this reference would require charter amendments whenever a new deposit 
product is offered, the OTS notes that charters are broad authorizing 
documents that typically do not specifically address unique deposit 
products. The model federal stock and mutual charters, for example, 
contain no restrictions on permissible deposit products.<SUP>11</SUP>
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    \10\ 12 U.S.C. 1464(b)(1)(A).
    \11\ 12 CFR 552.3 and 544.1 (1997).
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    Section 557.11  To what extent does federal law preempt state 
deposit-related law? Section 557.11 sets forth OTS's long-standing 
position on federal preemption of state laws purporting to affect 
deposit-related activities of federal savings associations. It 
explicitly states our intent to occupy the entire field of deposit-
related regulations for federal savings associations, and sets forth 
the statutory and regulatory bases for preemption. See proposed 
Sec. 557.2(a).
    One commenter opposed the preemption provision as an infringement 
on the dual banking system. OTS disagrees. Deposit-taking is one of the 
most important functions of a savings association, and preemption is 
essential to OTS regulation of these activities. Section 557.11 merely 
restates long-standing preemption principles applicable to federal 
savings associations' operations, as developed in a long line of court 
cases and legal opinions issued by OTS and the FHLBB.<SUP>12</SUP>
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    \12\ For a discussion of general preemption principles 
applicable to the operations of federal thrifts, see 61 FR 50951 at 
50965-50967 (September 30, 1996).
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    This final rule should not be construed as evidencing, in any way, 
an intent by OTS to change its long-standing position on preemption. 
Moreover, whether OTS continues to have a specific regulation 
addressing a particular deposit activity or chooses to remove a federal 
regulation to streamline its regulations and reduce regulatory burden, 
OTS still intends to occupy the entire field of regulation of the 
deposit activities of federal savings associations.
    One commenter argued that all preemption questions should be 
decided on a case-by-case basis, rather than by regulation. Sections 
557.11 through 557.13 of the final rule set forth only well-settled 
principles of preemption and examples of preempted and non-preempted 
state laws. These are derived from statutory and regulatory authority, 
as interpreted in case law and prior FHLBB and OTS case-by-case 
determinations. While OTS will continue to address new questions by 
issuing interpretive guidance on a case-by-case basis, OTS is hopeful 
that the increased clarity and specificity of the final rule will 
reduce confusion and the need for frequent preemption inquiries to OTS.
    Section 557.12  What are some examples of preempted state laws 
affecting deposits? Section 557.12 (proposed Sec. 557.2(b)) contains an 
illustrative list of preempted state laws. Various commenters suggested 
additions to the list of preempted state laws. Some would expand the 
list to reference new types of preempted state laws (e.g., state laws 
addressing abandoned property, safe deposit boxes, licensing of deposit 
operations, and reporting requirements).<SUP>13</SUP>
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    \13\ Other commenters made suggestions that would merely add 
greater specificity to the proposed list of preempted laws. 
Commenters suggested adding state laws that address particular 
special purpose savings services, specific kinds of service charges 
or fees, or particular aspects of state funds availability laws. The 
OTS believes that its rule is sufficiently clear, and has not made 
these changes.
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    Except as discussed below, OTS has not revised Sec. 557.12 to add 
new items to the list of preempted state laws. As the section heading 
to this final rule emphasizes, the list of preempted state laws is not 
intended to be exhaustive. Failure to mention a particular state law 
that affects deposit-taking should not be deemed to constitute evidence 
of any intent to permit that type of state law to apply.<SUP>14</SUP> 
As state laws are addressed in future case law and agency opinions, OTS 
will consider appropriate revisions to this regulation.
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    \14\ To the contrary, the preemption rules are based on the 
premise that any state law that affects the deposit activities of 
federal thrifts is preempted unless it clearly falls within the 
parameters of Sec. 557.13.
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    OTS has decided to revise the regulation to include one suggested 
addition. On numerous occasions, the OTS, FHLBB and the courts, have 
concluded that states may not impose licensing or registration 
requirements on federal savings associations.<SUP>15</SUP> Accordingly, 
state licensing and registration laws have been added to the list in 
Sec. 557.12.
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    \15\ See e.g., OTS Op. Chief Counsel. (December 14, 1994) and 
opinions and case law cited therein.
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    One additional type of state law merits discussion--state escheat 
laws. Some commenters argued that escheat laws should be added to the 
list of preempted state laws. Other commenters suggested that these 
laws should be added to the list of laws that are not preempted. This 
agency has concluded in prior opinions that federal law does not 
preempt state laws requiring a federal savings association to remit the 
balance of an abandoned account to a state at a designated time. 
Additionally, the agency has opined that states may review the records 
of, or obtain reports from, a federal savings association only in very 
limited circumstances, including determining whether the federal 
savings association has complied with the escheat law.<SUP>16</SUP> On 
the other hand, certain other laws (e.g., state laws prohibiting a 
savings association from charging any fees for lack of activity during 
the designated escheat period) are subject to preemption.<SUP>17</SUP> 
Because some aspects of state escheat laws are preempted and other 
aspects are not, OTS declines to address these laws in the final 
regulation.
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    \16\ OTS Op. Chief Counsel (January 18, 1996) at 3; FHLBB Op. 
Dep. Chief Counsel (May 24, 1984).
    \17\ OTS Op. Chief Counsel (July 8, 1992).
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    Section 557.13  What state laws affecting deposits are not 
preempted? Section 557.13 describes which state laws are not preempted. 
Specifically, this section states that OTS has not preempted certain 
types of laws to the extent that the laws only incidentally affect the 
deposit-related activities of federal savings associations or are 
otherwise consistent with the purposes of Sec. 557.11. State laws that 
are not preempted include: Contract and commercial law, tort law, and 
criminal law. In addition, OTS will not preempt any other state law if 
OTS, upon review, finds that the law furthers a vital state interest 
and either has only an incidental effect on deposit-related activities 
or is not otherwise contrary to the purposes of Sec. 557.11.
    One commenter suggested that OTS should clarify that the phrase 
``incidental effect on deposit-related activities'' requires that the 
state law must be directed at businesses in general, rather than at 
deposit-related activities in particular. Certainly, many state laws 
directed at businesses in general will not be preempted.

[[Page 54762]]

However, the focus of this aspect of the preemption inquiry is the 
effect of a state law on federal associations, not on how many other 
businesses or industries the law may also affect.
    Another commenter suggested that OTS should employ a presumption in 
favor of preempting state laws. When confronted by interpretative 
questions under the final rule, OTS will follow the same analytical 
format that it described in the preemption discussion to the recently 
issued lending regulation.<SUP>18</SUP> To determine whether a state 
law is preempted, the first step is to ascertain whether the law in 
question is of the type listed in Sec. 557.12 as an example of 
preempted law. If it is, the analysis ends there; the law is preempted. 
If the law is not covered by Sec. 557.12, the next question is whether 
the law affects deposit-taking. If so, then, in accordance with 
Sec. 557.11, the presumption arises that the law is preempted. This 
presumption can be reversed only if the law can clearly be shown to fit 
within the confines of Sec. 557.13. For these purposes, Sec. 557.13 is 
intended to be interpreted narrowly. Any doubt should be resolved in 
favor of preemption.
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    \18\ See 61 FR 50951, 50966-50967 (September 30, 1996).
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    Section 557.14  What interest rate may I pay on savings accounts? 
New Sec. 557.14 addresses interest payments on savings accounts. The 
proposed rule, entitled ``interest and earnings,'' stated that a 
savings association may pay interest on a savings account, whether in 
the form of a deposit or share, at any rate or anticipated rate of 
return determined when the account is accepted and as provided in the 
association's charter and bylaws and the terms of the account. See 
proposed Sec. 557.3.
    One commenter suggested that the proposed rule should be revised to 
delete the outdated term ``share'' and that the title of any new 
section should not include the term ``earnings.'' The term ``share'' is 
drawn from the HOLA.<SUP>19</SUP> OTS will continue to use this term in 
the final regulation to keep the regulation consistent with the 
statute. OTS dropped the reference to ``earnings'' since this term is 
not used in the regulation text.
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    \19\ 12 U.S.C. 1461(b)(1)(A).
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    One commenter noted that modern charters and bylaws do not address 
interest payments on savings accounts and suggested the final rule on 
interest should delete the references to these documents. Again, the 
reference to the association's charter is based on the statute, which 
authorizes a federal savings association to accept deposits subject to 
the terms of its charter.<SUP>20</SUP> In order to maintain consistency 
with this statutory authority, this reference is retained. OTS agrees 
that the reference to bylaws is unnecessary, and has deleted it from 
the final rule.
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    \20\ 12 U.S.C. 1464(b)(1)(A).
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    Another commenter suggested that the regulation should state that 
all interest payments must be consistent with the TISA and Regulation 
DD, which implements TISA. This change is unnecessary because OTS has 
included a citation to Regulation DD in Sec. 557.10, which addresses 
the authorities governing federal savings associations' issuance of 
deposit accounts.
    One commenter suggested that the proposed rule should be revised to 
delete the outdated term ``anticipated rate of return.'' Share type 
mutual associations use this term in making earnings distributions to 
account holders. Additionally, as discussed under Sec. 557.15, rates 
may vary and may not be known with certainty when an account is opened. 
OTS believes the term anticipated rate of return is appropriate, and 
has retained this term in the final regulation.
    The proposed regulation would have allowed federal savings 
associations to pay fixed rates on savings accounts, or pay rates that 
vary according to a schedule, index, or formula specified when the 
account is accepted. See proposed Sec. 557.3.
    One commenter was concerned that the proposed text would 
unnecessarily disallow ``bump-rate'' certificates of deposit. Bump-rate 
accounts provide the depositor with the option of changing the rate 
during the certificate's term. OTS did not intend to disallow ``bump-
rates.'' Therefore, the final regulation does not require a federal 
association to fix interest rates on savings accounts when it accepts 
the accounts. Rather, the final rule requires that the schedule, index, 
or formula be specified in the account's terms.
    Section 557.15  Who owns a deposit account? Section 557.15 provides 
that a federal association may treat the account holder of record as 
the owner, regardless of contrary notice, until the account is 
transferred on the association's records. See proposed Sec. 557.4(b). 
OTS received one comment in support of the proposed rule. Accordingly, 
OTS adopts this provision without substantive change.
Subpart C--Deposit Activities of All Savings Associations
    Section 557.20  What records should I maintain on deposit 
activities? Section 557.20 states that federal and state chartered 
savings associations should establish and maintain deposit 
documentation practices and records that demonstrate appropriate 
administration and monitoring of its deposit-related activities. These 
records should adequately evidence ownership, balances, and all 
transactions for each account. See proposed Sec. 557.4(a). This section 
replaces the more specific deposit recordkeeping requirements contained 
in the existing regulations.
    One commenter suggested that the recordkeeping requirements should 
apply only to federal savings associations. OTS specifically intends 
the recordkeeping requirements to apply to both federal and state 
chartered savings associations. To make this distinction clear, OTS has 
included this provision in subpart C which governs the deposit 
activities of all associations.
    Another commenter suggested that the regulation should specifically 
state that electronic records are acceptable. OTS has recently issued a 
proposed regulation addressing the electronic operations of federal 
savings associations.<SUP>21</SUP> This regulation would permit federal 
savings associations to use electronic means and facilities to perform 
any authorized function, including recordkeeping. To clarify that 
electronic recordkeeping is available, the final rule states that 
savings associations may maintain records in any format consistent with 
standard business practices.
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    \21\ 62 FR 51817 (October 3, 1997).
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C. Related Regulations

    Several commenters addressed regulations that were not covered by 
the NPR. For example, one commenter suggested that OTS delete 
Sec. 561.28 (a)(2), (a)(3) and (b), which defines money market deposit 
accounts. This commenter argued that Sec. 561.28(a)(2)(i) which 
authorizes no more than six transfers per calendar month or statement 
cycle, prohibits thrifts from offering money market deposit accounts 
with debit cards. The commenter believed that this restriction and the 
other restrictions at Sec. 561.28 are unnecessary and may be deleted.
    The cited restrictions were originally imposed to preserve uniform 
treatment of money market accounts between Federal Reserve System 
members and insured institutions, <SUP>22</SUP> and are based on the 
definitions contained in the FRB's Regulation D. <SUP>23</SUP> Even if 
the restrictions contained in 12 CFR 561.28 were removed, savings 
associations would still be subject to such restrictions by

[[Page 54763]]

Regulation D. Moreover, OTS notes that the FRB recently considered and 
rejected a proposal to increase the number of transfers permitted on 
corporate money market accounts.
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    \22\ 51 FR 10810 at 10812 (March 31, 1986).
    \23\ See 12 CFR 204.2(d)(2) (1997).
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    While one of the purposes of this rulemaking was to remove OTS 
regulations that duplicate areas covered by the FRB's Regulation D, the 
regulatory definitions applicable to deposits at 12 CFR parts 541 and 
561 were not proposed for revision in the proposed rule. Accordingly, 
OTS has left these provisions unchanged. The future regulatory 
restructuring rulemaking may review these definitions to determine if 
they should be modified or removed.
    Several existing OTS regulations contain cross-references to 
provisions that are being removed. <SUP>24</SUP> Consequently, 
technical revisions to remove these cross-references are included in 
this rule.
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    \24\  12 CFR 561.16, 561.42, 563g.1.
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    One commenter suggested that OTS give thrifts parity with national 
banks in connection with selling annuities and insurance. Another 
commenter suggested that the equal housing lender logo should be 
required only for advertisements for residential mortgage loans, rather 
than in all advertisements. OTS will review these regulations for 
possible revision when they are scheduled for reconsideration.

IV. Executive Order 12866

    The Director of OTS has determined that this final rule does not 
constitute a ``significant regulatory action'' for the purposes of 
Executive Order 12866.

V. Unfunded Mandates Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 
104-4 (Unfunded Mandates Act), requires that an agency prepare a 
budgetary impact statement before promulgating a rule that includes a 
federal mandate that may result in expenditure by state, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 of the Unfunded Mandates Act also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule. This final rule simplifies 
existing procedures and reduces regulatory burden. OTS has determined 
that the final rule will not result in expenditures by state, local, or 
tribal governments or by the private sector of $100 million or more. 
Accordingly, this rulemaking is not subject to section 202 of the 
Unfunded Mandates Act.

VI. Regulatory Flexibility Act Analysis

    Pursuant to section 605(b) of the Regulatory Flexibility Act, OTS 
certifies that the final rule does not have a significant impact on a 
substantial number of small entities. As discussed in the preamble, 
this final rule does not impose any additional burdens or requirements 
on small entities. Rather, the final rule reduces several paperwork and 
other burdens on all savings associations.

VII. Paperwork Reduction Act

    The reporting and recordkeeping requirements contained in this 
final rule have been submitted to and approved by the Office of 
Management and Budget in accordance with the Paperwork Reduction Act of 
1995 (44 U.S.C. 3507(d)) under OMB control No. 1550-0092. Comments on 
all aspects of this information collection should be sent to the Office 
of Management and Budget, Paperwork Reduction Project (1550), 
Washington, D.C. 20503, with copies to the OTS, 1700 G Street, N.W., 
Washington, D.C. 20552.
    The recordkeeping requirements contained in this final rule are 
found at 12 CFR 557.20. The reporting requirements are found in the 
Federal Reserve Board's Regulation DD, 12 CFR part 230. In part 557, 
OTS relies on the disclosure requirements applicable to savings 
associations under Regulation DD. OTS needs the information to 
supervise savings associations and to develop regulatory policy. The 
likely respondents/recordkeepers are OTS-regulated savings 
associations.
    Records are to be maintained for the period of time the account is 
open, plus three years.
    Respondents/recordkeepers are not required to respond to this 
collection of information unless it displays a currently valid OMB 
control number.

VIII. Disposition of Existing Rules

----------------------------------------------------------------------------------------------------------------
          Original provision                  New provision                           Comment                   
----------------------------------------------------------------------------------------------------------------
545.10................................  .........................  Removed.                                     
545.11 (a) & (c)......................  .........................  Removed.                                     
545.11(b).............................  557.10...................  Redesignated/modified.                       
545.12................................  .........................  Removed.                                     
545.13 (a) & (b)(2)...................  557.20...................  Redesignated/modified.                       
545.13(b)(1)..........................  557.15...................  Redesignated/modified.                       
545.14(a).............................  557.14...................  Redesignated/modified.                       
545.14(b).............................  557.14...................  Redesignated/modified.                       
545.14(c).............................  .........................  Removed.                                     
556.12................................  .........................  Removed.                                     
563.2.................................  .........................  Removed.                                     
563.3.................................  .........................  Removed.                                     
563.6.................................  .........................  Removed.                                     
563.7 (a), (c) & (d)..................  .........................  Removed.                                     
563.7(b)..............................  557.14...................  Redesignated/modified.                       
563.9.................................  .........................  Removed.                                     
563.10................................  .........................  Removed.                                     
----------------------------------------------------------------------------------------------------------------

List of Subjects

12 CFR Part 506

    Reporting and recordkeeping requirements.

12 CFR Part 545

    Accounting, Consumer protection, Credit, Electronic funds 
transfers, Investments, Reporting and recordkeeping requirements, 
Savings associations.

12 CFR 556 and 561

    Savings associations.

[[Page 54764]]

12 CFR Part 557

    Consumer protection, Reporting and recordkeeping requirements, 
Savings associations.

12 CFR Part 563

    Accounting, Advertising, Crime, Currency, Investments, Reporting 
and recordkeeping requirements, Savings associations, Securities, 
Surety bonds.

12 CFR 563g

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

    Accordingly, the Office of Thrift Supervision hereby amends chapter 
V, title 12, as follows:

PART 506--INFORMATION COLLECTION REQUIREMENTS UNDER THE PAPERWORK 
REDUCTION ACT

    1. The authority citation for part 506 continues to read as 
follows:

    Authority: 44 U.S.C. 3501 et seq.

    2. Section 506.1 is amended by adding one entry to the table in 
paragraph (b) in numerical order to read as follows:


Sec. 506.1  OMB control numbers assigned pursuant to the Paperwork 
Reduction Act.

* * * * *
    (b) Display. 

------------------------------------------------------------------------
                                                          Current OMB   
12 CFR part or section where identified and described     control No.   
------------------------------------------------------------------------
                                                                        
                  *        *        *        *        *                 
557.20...............................................          1550-0092
                                                                        
                  *        *        *        *        *                 
------------------------------------------------------------------------

PART 545--OPERATIONS

    3. The authority citation for part 545 continues to read as 
follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.


Secs. 545.10--545.14  [Removed]

    4. Sections 545.10, 545.11, 545.12, 545.13, and 545.14 are removed.

PART 556--STATEMENTS OF POLICY

    5. The authority citation for part 556 continues to read as 
follows:

    Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1464, 1701j-3; 15 U.S.C. 
1693-1693r.


Sec. 556.12  [Removed]

    6. Section 556.12 is removed.
    7. Part 557 is added to read as follows:

PART 557--DEPOSITS

Subpart A--General

Sec.
557.1 What does this part do?

Subpart B--Deposit Activities of Federal Savings Associations

557.10  What authorities govern the issuance of deposit accounts by 
a federal savings association?
557.11  To what extent does federal law preempt state deposit-
related law?
557.12  What are some examples of preempted state laws affecting 
deposits?
557.13  What state laws affecting deposits are not preempted?
557.14  What interest rate may I pay on savings accounts?
557.15  Who owns a deposit account?

Subpart C--Deposit Activities of All Savings Associations

557.20  What records should I maintain on deposit activities?

    Authority: 12 U.S.C. 1462a, 1463, 1464.

Subpart A--General


Sec. 557.1  What does this part do?

    This part applies to the deposit activities of savings 
associations. If you are a federal savings association, subpart B of 
this part applies to your deposit activities. Subpart C of this part 
applies to the deposit activities of all federal and state chartered-
savings associations.

Subpart B--Deposit Activities of Federal Savings Associations


Sec. 557.10  What authorities govern the issuance of deposit accounts 
by a federal savings association?

    A federal savings association (``you'') may raise funds through 
accounts and may issue evidence of accounts under section 5(b)(1) of 
the HOLA (12 U.S.C. 1464(b)(1)), your charter, and this part. 
Additionally, 12 CFR parts 204 and 230 apply to your deposit 
activities.


Sec. 557.11  To what extent does federal law preempt state deposit-
related law?

    (a) Under sections 4(a) and 5(b) of the HOLA, 12 U.S.C. 1463(a), 
1464(b), OTS is authorized to promulgate regulations that preempt state 
laws affecting the operations of federal savings associations when 
appropriate to:
    (1) Facilitate the safe and sound operations of federal savings 
associations;
    (2) Enable federal savings associations to operate according to the 
best thrift institutions practices in the United States; or
    (3) Further other purposes of HOLA.
    (b) To further these purposes without undue regulatory duplication 
and burden, OTS hereby occupies the entire field of federal savings 
associations' deposit-related regulations. OTS intends to give federal 
savings associations maximum flexibility to exercise deposit-related 
powers according to a uniform federal scheme of regulation. Federal 
savings associations may exercise deposit-related powers as authorized 
under federal law, including this part, without regard to state laws 
purporting to regulate or otherwise effect deposit activities, except 
to the extent provided in Sec. 557.13. State law includes any statute, 
regulation, ruling, order, or judicial decision.


Sec. 557.12  What are some examples of preempted state laws affecting 
deposits?

    The OTS preempts state laws that purport to impose requirements 
governing the following:
    (a) Abandoned and dormant accounts;
    (b) Checking accounts;
    (c) Disclosure requirements;
    (d) Funds availability;
    (e) Savings account orders of withdrawal;
    (f) Service charges and fees;
    (g) State licensing or registration requirements; and
    (h) Special purpose savings services.


Sec. 557.13  What state laws affecting deposits are not preempted?

    (a) The OTS has not preempted the following types of state law, to 
the extent that the law only incidentally affects your deposit-related 
activities or is otherwise consistent with the purposes of Sec. 557.11:
    (1) Contract and commercial law;
    (2) Tort law; and
    (3) Criminal law.
    (b) The OTS will not preempt any other state law if the OTS, upon 
review, finds that the law:
    (1) Furthers a vital state interest; and
    (2) Either only incidentally affects your deposit-related 
activities or is not otherwise contrary to the purposes expressed in 
Sec. 557.11.


Sec. 557.14  What interest rate may I pay on savings accounts?

    (a) You may pay interest at any rate or anticipated rate of return 
on savings accounts, either in deposit or in share form, as provided in 
your charter and the account's terms.
    (b) You may pay fixed or variable rates. If you pay a variable 
rate, you must base it on a schedule, index, or formula that you 
specify in the account's terms.


Sec. 557.15  Who owns a deposit account?

    You may treat the holder of record as the account owner, even if 
you receive contrary notice, until you transfer the account on your 
records.

[[Page 54765]]

Subpart C--Deposit Activities of All Savings Associations


Sec. 557.20  What records should I maintain on deposit activities?

    All federal and state chartered savings associations (``you'') 
should establish and maintain deposit documentation practices and 
records that demonstrate that you appropriately administer and monitor 
deposit-related activities. Your records should adequately evidence 
ownership, balances, and all transactions involving each account. You 
may maintain records on deposit activities in any format that is 
consistent with standard business practices.

PART 561--DEFINITIONS

    8. The authority citation for part 561 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.


Sec. 561.16  [Amended]

    9. Section 561.16 is amended, in paragraph (a), by removing the 
phrase ``, as provided in Sec. 563.6(b) of this chapter''.


Sec. 561.42  [Amended]

    10. Section 561.42 is amended by removing the phrase ``Secs. 563.6 
and 561.16'' and adding in its place ``Sec. 561.16''.

PART 563--OPERATIONS

    11. The authority citation for part 563 continues to read as 
follows:

    Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
1817, 1820, 1828, 3806; 42 U.S.C. 4106.


Secs. 563.2, 563.3, 563.6, 563.7, 563.9, 563.10  [Removed]

    12. Sections 563.2, 563.3, 563.6, 563.7, 563.9, and 563.10 are 
removed.

PART 563g--SECURITIES OFFERINGS

    13. The authority citation for part 563g continues to read as 
follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 78c(b), 78l, 
78m, 78n, 78p, 78w.


Sec. 563g.1  [Amended]

    14. Section 563g.1 is amended by removing the last sentence of 
paragraph (a)(13).

    Dated: October 15, 1997.

    By the Office of Thrift Supervision.
Nicolas P. Retsinas,
Director.
[FR Doc. 97-27842 Filed 10-21-97; 8:45 am]
BILLING CODE 6720-01-P