[Federal Register Volume 62, Number 28 (Tuesday, February 11, 1997)]
[Proposed Rules]
[Pages 6142-6147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3319]


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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 328

RIN 3064-AB99


Advertisement of Membership

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking; request for comment.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is proposing 
to amend its regulation entitled ``Advertisement of Membership''. The 
proposed rule would: Consolidate the provisions that require insured 
institutions to display official signs; extend the official advertising 
statement that is currently required for insured banks to all insured 
depository institutions; streamline the exceptions to the required use 
of the official advertising statement; prohibit the use of the official 
advertising statement in advertisements concerning nondeposit 
investment products or similar nondeposit products; and specifically 
delegate authority to approve the translation of the official 
advertising statement to certain FDIC officials. The FDIC is inviting 
comment on all aspects of its proposal as well as certain alternatives 
to its proposal as discussed herein. In addition, the FDIC is 
soliciting comment with respect to issues raised regarding the 
applicability of this regulation to insured depository institutions 
that are transmitting information to, or conducting business with, 
existing or potential customers, over a computer network, such as the 
Internet.

DATES: Written comments must be received by the FDIC on or before April 
14, 1997.

ADDRESSES: Written comments shall be addressed to Office of the 
Executive Secretary, Federal Deposit Insurance Corporation, 550 17th 
Street, N.W., Washington, D.C. 20429. Comments may be hand delivered to 
Room F-402, 1776 F Street, N.W., Washington, D.C., 20429, on business 
days between 8:30

[[Page 6143]]

a.m. and 5:00 p.m. [Fax number: (202) 898-3838; Internet address: 
<a href="/cdn-cgi/l/email-protection#0764686a6a626973744761636e6429606871"><span class="__cf_email__" data-cfemail="54373b3939313a20271432303d377a333b22">[email protected]</span></a>]. Comments will be available for inspection at the 
FDIC's Reading Room, Room 7118, 550 17th Street, N.W., Washington, D.C. 
between 9:00 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Marc J. Goldstrom, Counsel, Legal 
Division, Federal Deposit Insurance Corporation, Washington, D. C. 
20429, telephone (202) 898-8807; Robert W. Walsh, Manager, Policy and 
Program Development, Division of Supervision, Federal Deposit Insurance 
Corporation, Washington, D.C. 20429, telephone (202) 898-6911.

SUPPLEMENTARY INFORMATION:

A. Need for the Proposed Rule

    The FDIC is issuing this proposed rule in response to two 
initiatives. Section 303 of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (CDRIA), Pub. L. 103-325, 108 Stat. 
2160 (Sept. 23, 1994), requires that each federal banking agency, 
consistent with the principles of safety and soundness, statutory law 
and policy, and the public interest, conduct a review of the 
regulations and written policies of that agency to, among other things: 
streamline and modify those regulations and policies, and remove 
inconsistencies and outmoded and duplicative requirements. In addition, 
the FDIC has voluntarily committed itself to review its regulations on 
a 5-year cycle. See Development and Review of FDIC Rules and 
Regulations, 2 FED. DEPOSIT INS. CORP., LAW, REGULATIONS, RELATED ACTS 
5057 (1984).
    As a result of its review of part 328, and as described herein, the 
FDIC has determined that certain aspects of the regulation may be 
streamlined, another aspect of the regulation treats banks and savings 
associations differently and accordingly should be modified to achieve 
consistent treatment, another aspect of the regulation should be 
modified to prohibit the use of the official advertising statement with 
respect to the advertisement of nondeposit investment products and 
similar nondeposit products, and a final aspect of the regulation 
should clarify which FDIC officials are authorized to approve the 
translation of the official advertising statement. In accordance with 
section 303 of CDRIA, the FDIC believes that this proposal is 
consistent with the principles of safety and soundness, statutory law 
and policy, and the public interest.

B. The Current Rule and the Proposal

1. Signs

    Part 328 contains requirements for the design and display of the 
official bank sign of the FDIC. Only insured banks may use the official 
bank sign. 12 U.S.C. 1828(a). 12 CFR 328.2(a).
    Part 328 also contains requirements for the design and display of 
the official savings association sign. Insured savings associations 
must use the official savings association sign, and may not use the 
official bank sign. Id. Sec. 328.4(a) and (e). Insured banks may use 
either sign at their option. Id. Sec. 328.2(a).
    The two sets of requirements are virtually identical. The FDIC 
proposes to combine them into one.
    Part 328 speaks of ``automatic service facilities'' in some places, 
and of ``remote service facilities'' in other places. The two phrases 
have the same meaning within part 328, however. The FDIC proposes to 
use the phrase ``remote service facility'' in each place.
    Part 328 contains an outdated reference to a date in 1989. The FDIC 
proposes to delete it.

2. Advertising

(a) Proposal To Extend Official Advertising Statement Requirement to 
Savings Associations
    Part 328 requires insured banks to include the official advertising 
statement in all their advertisements (with certain exceptions). Id. 
Sec. 328.3(a). The basic form of the statement is ``Member of the 
Federal Deposit Insurance Corporation'', which may be shortened to 
``Member FDIC''. Id. Sec. 328.3(b). There is no equivalent requirement 
for insured savings associations.
    In light of the inconsistent treatment of banks and savings 
associations, the FDIC proposes to require savings associations to use 
the official statement in advertisements. The effect of this proposal 
is that all insured depository institutions would be required to 
include the statement in their advertisements.
    The FDIC insures both banks and savings associations to the same 
extent. See 12 U.S.C. 1811, 1813(c). There is no compelling 
justification for applying the rule to banks and not savings 
associations. Inconsistent treatment of banks and savings associations 
on this matter only tends to confuse consumers as to whether the 
institution's deposits are insured by the FDIC. We are of the view that 
a consistent and uniform rule applicable to both banks and savings 
associations will best serve the interests of the public and the 
protection of the insurance funds.
    The proposed rule is premised on the belief that if all insured 
institutions are required to use the official advertising statement, 
consumers are more likely to recognize the absence of federal deposit 
insurance in advertisements by non-FDIC insured entities and can better 
distinguish insured depository institutions from non-insured entities. 
In today's environment with many non-banks providing banking type 
services it is more important than ever that consumers have a method of 
recognizing insured depository institutions. Recognition of FDIC 
insurance is particularly needed in electronic media such as the 
Internet where advertisements may originate from outside the United 
States or from nonbank entities.
    Alternatively, the FDIC could achieve consistent treatment of banks 
and savings associations by eliminating the requirement that insured 
banks use the official statement in advertisements. The effect of such 
a proposal would be that all insured depository institutions would be 
permitted (but not required) to include such a statement if they see 
fit.
    In support of such a proposal, one could argue that, as a general 
matter, it is no longer necessary to require banks to use the official 
statement in their advertising. Statutory and regulatory provisions 
requiring banks to use the statement were enacted in 1935 <SUP>1, a 
time when the FDIC was new and unfamiliar. Moreover, having endured the 
worst financial crisis in the nation's history, it was necessary to 
restore public confidence in the banking system. Over the years, as a 
result of the use of the official statement and other measures, banks 
and FDIC insurance have become intertwined in consumers' minds. Indeed, 
thrift customers arguably are aware of federal deposit insurance, even 
though there is no requirement that thrifts use the official statement 
in their advertisements.
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    \1\ The statutory provision was originally enacted in the 
Banking Act of 1935. Sec. 101 (v)(2), Banking Act of 1935, ch. 614, 
49 Stat. 684, 701 (1935). Three months later, the FDIC promulgated a 
regulation which, among other things, required banks to use the 
official statement in advertisements. See Regulation III, section 3, 
FDIC Annual Report 92 (1935). The statutory requirement for the 
official statement in advertising was repealed in 1989. See 
Financial Institutions Reform, Recovery and Enforcement Act of 1989 
(``FIRREA''), Pub. L. 101-73, sec. 221, 103 Stat. 183, 266 (Aug. 9, 
1989).
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    Depository institutions and federal deposit insurance may be so 
interconnected that, as discussed below, many consumers erroneously 
assume that all bank products or services are FDIC insured. 
Accordingly, a rule requiring all institutions to use the official 
advertising statement may not

[[Page 6144]]

alleviate such confusion and possibly could increase confusion among 
consumers.
    The issue of advertising by depository institutions is of great 
importance to the FDIC. We are concerned that individuals understand 
when they are entrusting their money to an FDIC insured institution and 
when they are not. We are also extremely concerned that individuals 
understand when their funds are insured and when they are not. The FDIC 
invites comment on whether the proposed rule or the alternative 
discussed herein (or some other alternative) would better achieve these 
objectives. In addition we invite comment on the related issue of the 
increased burden to savings associations that the proposed rule would 
entail versus the potential benefits to be achieved.
(b) Proposals To Consolidate and Streamline Exceptions to the Required 
Use of the Official Advertising Statement and To Prohibit Insured 
Depository Institutions From Using the Official Advertising Statement 
in Advertisements Concerning Nondeposit Investment Products
    Part 328 contains 20 exceptions to the required use of the official 
advertising statement. 12 CFR 328.3(c). The FDIC proposes to 
consolidate and streamline this paragraph into 11 exceptions. The two 
separate exceptions for radio and television advertisements not 
exceeding thirty seconds in time, 12 CFR 328.3(8) and (9), would be 
combined into one exception without any change in substance.
    The nine exceptions for advertisements relating to various types of 
products or services which do not relate to deposits, 12 CFR 328.3(12) 
through (20), would be combined into a single exception for 
advertisements which do not relate to deposit products or services. The 
current rule only has exceptions for advertisements relating to certain 
types of nondeposit products or services. The proposed rule would 
create an exception for any advertisement which does not relate to a 
deposit product or service. This would have the effect of broadening 
the exceptions to the required use of the official advertising 
statement. The FDIC believes that there is no need to require the use 
of the official advertising statement in any advertisement which does 
not relate to deposit products or services. This proposal is consistent 
with the purpose of the regulation and the mandates of section 303 of 
the CDRIA.
    Paragraph (d) of the proposed rule would prohibit an insured 
depository institution from including the official advertising 
statement or any similar statement in advertisements relating to 
nondeposit investment products or similar nondeposit products. In 
advertisements containing information about both insured deposits and 
nondeposit investment products (or similar nondeposit products), the 
information concerning insured deposits shall be clearly segregated 
from the information about nondeposit investment products (or similar 
nondeposit products) and shall contain either the official statement, 
or any similar statement, including, but not limited to, statements to 
the effect that the depository institution's deposits or depositors are 
insured by the Federal Deposit Insurance Corporation to the maximum of 
$100,000 for each depositor, or that specific deposit products are 
insured by the Federal Deposit Insurance Corporation.
    As indicated above, many consumers erroneously believe that all 
bank or thrift products or services are FDIC insured. A recent 
independent survey found that 30% of investors are not aware that the 
FDIC does not insure bank mutual funds. <SUP>2 The FDIC is making this 
proposal because it is extremely concerned that depository institution 
customers understand what is and is not covered by FDIC insurance. The 
FDIC believes that a prohibition on the use of the official advertising 
statement in advertisements relating to nondeposit investment products 
or similar nondeposit products and a requirement that advertisements 
containing information about both insured deposits and nondeposit 
investment products (or similar nondeposit products) clearly segregate 
the information about the different products will help to minimize 
customer confusion on this matter.
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    \2\ Scott Smith, ``Survey Says 70% of Investors Know U.S. 
Doesn't Insure Mutual Funds'', American Banker, May 15, 1996, at 3 
(discussing results of a survey of Investor Protection Trust 
conducted by Princeton Survey Research Associates).
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    This proposal is premised on the belief that it would minimize 
customer confusion with respect to the non-insured status of nondeposit 
investment products, such as mutual funds, and other similar nondeposit 
products. Conversely, there are other alternatives which may be more 
effective at alleviating customer confusion. For example, it could be 
argued that the proposal to require the use of the official statement 
(or similar statement) in advertisements concerning both types of 
products will further confuse consumers as to the insured and non-
insured status of the products involved. Accordingly, not requiring, or 
prohibiting, the use of the official statement (or similar statement) 
in advertisements containing information on both types of products may 
be more effective at minimizing customer confusion. The FDIC invites 
comment on the rule as proposed in paragraph (d), the alternatives 
discussed herein, or any other possible approach. In addition we invite 
comment on the related issue of the increased burden to insured 
depository institutions that the proposed rule or the alternatives 
would entail, versus the potential benefits to be achieved.
    Another alternative to minimize customer confusion as to the 
insured or non-insured status of the various products offered by 
insured depository institutions is to require insured depository 
institutions to make certain disclosures when they advertise nondeposit 
investment products, such as mutual funds. Specifically, insured 
depository institutions would be required to disclose that such 
products are: not insured by the FDIC; not deposits or other 
obligations of, or guaranteed by, the depository institution; and 
subject to investment risk, including possible loss of the principal 
amount invested.
    These disclosure requirements would not impose a new obligation on 
insured depository institutions. In fact, these provisions are 
contained in the Federal banking agencies' ``Interagency Statement on 
Retail Sales of Nondeposit Investment Products''. Financial Institution 
Letter FIL 9-94 dated February 17, 1994 (the ``Interagency 
Statement''). Among other things the Interagency Statement provides 
that insured depository institutions should make the aforementioned 
disclosures in all of their advertising and promotional materials with 
respect to the retail sale of nondeposit investment products.
    It may be desirable to include these provisions in part 328 in 
light of the recent FDIC study which showed more than a fourth of the 
institutions surveyed are still failing to make basic disclosures 
required under the Interagency Statement. <SUP>3 By including the 
advertising disclosure provisions in part 328, such provisions would be 
of greater weight and enforceability.
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    \3\ ``Survey of Nondeposit Investment Sales at FDIC-Insured 
Institutions'', prepared for the FDIC by Market Trends, Inc., dated 
May 5, 1996.
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    The FDIC invites comment as to whether codifying these disclosure 
provisions in part 328 will more effectively minimize customer 
confusion with respect to the insured or non-insured status of the 
various

[[Page 6145]]

products offered by insured depository institutions. In addition, we 
invite comment on the related issue of any possible increased burden to 
insured depository institutions that such provisions would entail 
versus the potential benefits to be achieved.
(c) Proposals Enhance Safety and Soundness of Insured Depository 
Institutions and Consumer Protection
    In testimony before the U.S. House of Representatives' Subcommittee 
on Financial Institutions and Consumer Credit <SUP>4 the Chairman of 
the Board of Directors of the FDIC indicated that in conducting its 
review of regulations pursuant to section 303 of CDRIA, the FDIC would 
consider, among other things, whether the regulations are necessary to 
ensure a safe and sound banking system and whether the regulations can 
be justified on strong public policy grounds related to consumer 
protection. The FDIC believes that the proposed rule meets these 
criteria. It is intended to promote stability and confidence in the 
banking system and to minimize the possibility of customer confusion 
with respect to whether they are dealing with an FDIC insured 
institution and whether the advertised product is insured by the FDIC.
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    \4\ Also reported in 60 FR 62345 (December 6, 1995).
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(d) Statutory Authority
    The FDIC has the statutory authority to, by regulation, require all 
insured depository institutions to use the official statement in 
advertising and to prohibit its use in the advertisement of nondeposit 
investment products. Section 9 of the FDIA authorizes the FDIC to 
prescribe ``such rules and regulations as it may deem necessary to 
carry out the provisions of [the FDIA] or of any other law which it has 
the responsibility of administering or enforcing''. 12 U.S.C. 1819(a) 
Tenth. The Supreme Court has stated that ``[w]here the empowering 
provision of a statute states simply that the agency may `make * * * 
such rules and regulations as may be necessary to carry out the 
provisions of this Act,' * * * the validity of the regulation will be 
sustained so long as it is `reasonably related to the purposes of the 
enabling legislation' ''. Mourning v. Family Publications Service, 
Inc., 411 U.S. 356, 369 (1973) (quoting Thorp v. Housing Authority of 
the City of Durham, 393 U.S. 268, 280-281 (1969)). Congress, in 
creating the FDIC, sought to instill public confidence in the banking 
system, promote safe and sound banking practices, eliminate runs on 
banks by depositors, and safeguard deposits. See FDIC v. Allen, 584 F. 
Supp. 386, 397 (E.D. Tenn. 1984); Doherty v. United States, 94 F.2d 
495, 497 (8th Cir. 1938); Weir v. United States, 92 F.2d 634, 636 (7th 
Cir. 1937). The proposed rule seeks to promote stability and confidence 
in the banking system and avoid runs on banks by depositors. It is 
therefore reasonably related to the enabling legislation. Similarly, in 
promoting the aforementioned goals, the use or non-use of the official 
statement is related to the safety and soundness of insured depository 
institutions and is therefore subject to regulation under section 8(a) 
of the FDIA, 12 U.S.C. 1818(a), and section 9(a) of the FDIA, 12 U.S.C. 
1819(a) Tenth. See also FDIC v. Sumner Fin. Corp., 451 F.2d 898, 903 
(``the FDIC has the power to make such rules as are reasonable and 
necessary to effectuate the purposes of the act'').
(e) Clarification of Delegated Authority
    Part 328 provides that the non-English equivalent of the official 
advertising statement may be used in any advertisement, provided, that 
the translation has had the prior written approval of the Corporation. 
12 CFR 328.3(e). The proposed rule clarifies that the Director, 
Division of Compliance and Consumer Affairs; the Deputy Director, 
Division of Compliance and Consumer Affairs; and any Regional Director, 
Division of Compliance and Consumer Affairs, may provide such approval 
on behalf of the FDIC.

C. Request for Comment--Electronic Banking Issues

    In recent years, new and innovative media by which insured 
depository institutions may market their products and transact business 
have developed. Such media include computer networks such as the 
Internet. Many financial institutions have established ``world wide web 
sites'' <SUP>5 by which customers may obtain information about an 
institution and, in certain cases, transact business with the 
institution. This recent proliferation of world wide web sites gives 
rise to certain issues concerning whether and under what circumstances 
part 328 should apply with respect to the Internet or other computer 
networks. The FDIC is not currently proposing any changes to the rule 
to address explicit questions arising out of this new technology. 
However, these issues are discussed below and the FDIC is also 
soliciting comment for the purpose of gathering information from the 
public on such issues.
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    \5\ The FDIC is aware of over 200 insured depository 
institutions that have a presence on the Internet.
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    Neither the proposed or existing rule define the term 
``advertisement''. The staff is of the view that such term as used in 
the proposed and existing rule is not limited to television, radio, or 
print advertisements. Rather, such term would include, but not be 
limited to, advertisements transmitted via computer networks such as 
the Internet. Consumers using the Internet may typically view any one 
of an institution's web pages <SUP>6 directly, or may enter the 
institution's top level or ``home page''. The staff is of the view that 
every institution's home page is to some extent an advertisement and 
accordingly should contain the official statement to the extent 
required by the rule. <SUP>7 Whether subsidiary web pages contain 
advertisements will vary depending upon the content of the information 
within the particular web page. The staff is of the view that each such 
subsidiary web page that contains an advertisement should include the 
official statement, unless such advertisement is subject to one of the 
exceptions in Sec. 328.3(c).
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    \6\ Web pages vary in length and may in certain cases encompass 
several computer screens of information.
    \7\ The staff's view is with respect to part 328 only. We do not 
express an opinion as to whether institutions' home pages are 
advertisements for other purposes. Furthermore, staff's views on 
this matter would not preclude an institution from demonstrating 
that its home page does not contain an advertisement for purposes of 
part 328.
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    The FDIC also seeks comment on whether and under what circumstances 
it should require insured depository institutions to utilize the 
electronic equivalent of the official bank or savings association sign 
in their world wide web sites. Should such determination be different 
with respect to world wide web sites at which business may be 
transacted as opposed to sites where only information is conveyed?

D. Paperwork Reduction Act

    The proposed rule would not constitute a ``collection of 
information'' within the meaning of section 3502(3) of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Accordingly, the 
procedural and analytical requirements prescribed by that Act do not 
apply to the proposed rule.

E. Regulatory Flexibility Act

    Compliance with the proposed rule takes only nominal advertising 
space or time and does not add significantly to the cost of 
advertisement. Insured banks have complied with the identical 
requirement for over sixty years without significant expense. 
Accordingly, the

[[Page 6146]]

Board hereby certifies that the proposed rule would not have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.). The provisions of the Regulatory Flexibility Act relating to an 
initial and final regulatory flexibility analysis (5 U.S.C. 603 and 
604) are not applicable.

List of Subjects in 12 CFR Part 328

    Advertising, Bank deposit insurance, Savings associations, Signs 
and symbols.

    For the reasons stated in the preamble, the Board of Directors of 
the FDIC proposes to amend 12 CFR part 328 as follows:

PART 328--ADVERTISEMENT OF MEMBERSHIP

    1. The authority citation for part 328 is revised to read as 
follows:

    Authority: 12 U.S.C. 1818(a), 1819, 1828(a).

    2. Section 328.0 is revised to read as follows:


Sec. 328.0  Scope.

    This part 328 describes the official bank sign and the official 
savings association sign, and prescribes their use by insured 
depository institutions. It also prescribes the official advertising 
statement insured depository institutions must include in certain 
advertisements. Finally, it prohibits the use of the official 
advertising statement and similar statements in advertisements 
concerning nondeposit investment products. For purposes of this part 
328, the term ``insured depository institution'' includes insured 
branches of a foreign bank. Insured depository institutions which 
maintain offices that are not insured in foreign countries are not 
required to include the advertising statement in advertisements 
published in foreign countries.
    3. Section 328.2 is revised to read as follows:


Sec. 328.2  Procurement and display of official signs.

    (a) Display--(1) Official sign. Each insured depository institution 
shall continuously display its official sign at the locations specified 
in paragraph (a)(2)(i) of this section, as follows:
    (i) Insured banks. At the option of the insured bank, its official 
sign is either the official bank sign or the official savings 
association sign.
    (ii) Insured savings associations. Insured savings associations 
shall display the official savings association sign as provided herein. 
An insured savings association shall not display the official bank sign 
at its principal place of business or at any of its branches.
    (2) Locations--(i) Required locations. Except as provided in 
paragraph (a)(2)(ii) of this section, an insured depository institution 
shall display its official sign at each station or window where insured 
deposits are usually and normally received in the depository 
institution's principal place of business and in all its branches.
    (ii) Other locations--(A) Within the institution. An insured 
depository institution may display its official sign in other locations 
within the insured depository institution in other sizes, colors, or 
materials.
    (B) Other facilities. An insured depository institution is 
permitted, but is not required, to display its official sign on remote 
service facilities including automated teller machines, cash dispensing 
machines, point-of-sale terminals, and other electronic facilities 
where deposits are received. If an insured depository institution 
displays its official sign at a remote service facility, and if there 
are any noninsured institutions that share in the remote service 
facility, any insured depository institution that displays its official 
sign must clearly show that the sign refers only to a designated 
insured depository institution(s).
    (3) Newly insured institutions--(i) Initial grace period. A 
depository institution becoming an insured depository institution shall 
not be required to display its official sign until twenty-one (21) days 
after its first day of operation as an insured depository institution.
    (ii) Early display permitted. An insured depository institution may 
display its official sign prior to the date display is required.
    (b) Obtaining signs--(1) Procurement from the FDIC--(i) Cost; 
design. An insured depository institution may procure the appropriate 
official signs from the Corporation for official use at no charge.
    (ii) Order blanks. The Corporation shall, upon request, furnish an 
order blank to an insured depository institution for use in procuring 
official signs.
    (iii) Safe harbor rule. Any insured depository institution which 
promptly, after the receipt of an order blank, fills it in, executes 
it, and properly directs and forwards it to the Federal Deposit 
Insurance Corporation, Washington, D.C. 20429, shall not be deemed to 
have violated this section on account of not displaying an official 
sign, or signs, unless the insured depository institution shall omit to 
display such official sign or signs after receipt thereof.
    (2) Procurement from other sources. Insured depository institutions 
may procure official signs or signs reflecting variations in size, 
colors, or materials from commercial suppliers.
    (c) Receipt of deposits at same teller's station or window as 
noninsured institution. An insured depository institution may not 
receive deposits at any teller's station or window where any noninsured 
institution receives deposits or similar liabilities, except a remote 
service facility as defined in Sec. 303.0(b)(18) of this chapter.
    (d) Required changes in signs. The Corporation may require any 
insured depository institution, upon at least 30 days' written notice, 
to change the wording of its official signs in a manner deemed 
necessary for the protection of depositors or others.
    4. Section 328.3 is revised to read as follows:


Sec. 328.3  Official advertising statement and manner of use by insured 
depository institutions.

    (a) Mandatory use. Each insured depository institution shall 
include the official advertising statement, prescribed in paragraph (b) 
of this section, in all of its advertisements except as provided in 
paragraphs (c) and (d) of this section.
    (1) An insured depository institution is not required to include 
the official advertising statement in its advertisements until thirty 
(30) days after its first day of operation as an insured depository 
institution.
    (2) In cases where the Board of Directors of the Federal Deposit 
Insurance Corporation shall find the application to be meritorious, 
that there has been no neglect or willful violation in the observance 
of this section and that undue hardship will result by reason of its 
requirements, the Board of Directors may grant a temporary exemption 
from its provision to a particular depository institution upon its 
written application setting forth the facts. For the procedure to be 
followed in making such application see Sec. 303.8 of this chapter.
    (3) In cases where advertising copy not including the official 
advertising statement is on hand on the date the requirements of this 
section become operative, the insured depository institution may cause 
the official advertising statement to be included by use of a rubber 
stamp or otherwise.
    (4) When a foreign depository institution has both insured and 
noninsured U.S. branches, the depository institution must identify

[[Page 6147]]

which branches are insured and which branches are not insured in all of 
its advertisements requiring the use of the official advertising 
statement.
    (b) Official advertising statement. The official advertising 
statement shall be in substance as follows: ``Member of the Federal 
Deposit Insurance Corporation''. The word ``the'' or the words ``of 
the'' may be omitted. The words ``This bank is a'', ``This savings 
association is a'', ``This savings and loan is a'', or the words ``This 
institution is a'' or the name of the insured depository institution 
followed by the words ``is a'' may be added before the word ``member.'' 
The short title ``Member of FDIC'' or ``Member FDIC'' or a reproduction 
of the ``symbol'' may be used by insured depository institutions at 
their option as the official advertising statement. The official 
advertising statement shall be of such size and print to be clearly 
legible. Where it is desired to use the ``symbol'' of the Corporation 
as the official advertising statement, and the ``symbol'' must be 
reduced to such proportions that the small lines of type and the 
Corporation seal therein are indistinct and illegible, the Corporation 
seal in the letter C and the two lines of small type may be blocked out 
or dropped.
    (c) Types of advertisements which do not require the official 
advertising statement. The following types of advertisements need not 
include the official advertising statement:
    (1) Statements of condition and reports of condition of an insured 
depository institution which are required to be published by state or 
federal law;
    (2) Stationery (except when used for circular letters), envelopes, 
deposit slips, checks, drafts, signature cards, deposit passbooks, 
certificates of deposit, and other similar items;
    (3) Signs or plates in the banking office or attached to the 
building or buildings in which the banking offices are located;
    (4) Listings in directories;
    (5) Advertisements not setting forth the name of the insured 
depository institution;
    (6) Display advertisements in depository institution directory, 
provided the name of the depository institution is listed on any page 
in the directory with a symbol or other descriptive matter indicating 
it is a member of the Federal Deposit Insurance Corporation;
    (7) Joint or group advertisements of banking services where the 
names of insured depository institutions and noninsured institutions 
are listed and form a part of such advertisements;
    (8) Advertisements by radio or television, other than display 
advertisements, which do not exceed thirty (30) seconds in time;
    (9) Advertisements which are of the type or character making it 
impractical to include thereon the official advertising statement 
including, but not limited to, promotional items such as calendars, 
matchbooks, pens, pencils, and key chains;
    (10) Advertisements which contain a statement to the effect that 
the depository institution is a member of the Federal Deposit Insurance 
Corporation, or that the depository institution is insured by the 
Federal Deposit Insurance Corporation, or that its deposits or 
depositors are insured by the Federal Deposit Insurance Corporation to 
the maximum of $100,000 for each depositor;
    (11) Advertisements which do not relate to insured deposit products 
or services.
    (d) Prohibited use. (1) Except as provided in paragraph (d)(2) of 
this section, an insured depository institution may not include the 
official advertising statement or refer to either federal deposit 
insurance or the Federal Deposit Insurance Corporation in any 
advertisement relating to nondeposit investment products or similar 
nondeposit products.
    (2) In advertisements containing information about both insured 
deposits and nondeposit investment products or similar nondeposit 
products, the information concerning insured deposits shall be clearly 
segregated from the information about nondeposit investment products 
(or similar nondeposit products) and shall contain either the official 
statement, or any similar statement, including, but not limited to, 
statements to the effect that the depository institution's deposits or 
depositors are insured by the Federal Deposit Insurance Corporation to 
the maximum of $100,000 for each depositor, or that specific deposit 
products are insured by the Federal Deposit Insurance Corporation.
    (e) Billboard advertisements. Where an insured depository 
institution has billboard advertisements in use as of [the effective 
date of the final rule] which are required to include the official 
advertising statement and the insured depository institution has direct 
control of such advertisements either by possession or under the terms 
of a contract, the institution shall, as soon as it can consistent with 
its contractual obligations, cause the official advertising statement 
to be included therein.
    (f) Official advertising statement in non-English language. The 
non-English equivalent of the official advertising statement may be 
used in any advertisement: Provided, That the translation has had the 
prior written approval of the Corporation. Authority to provide such 
approval on behalf of the Corporation is hereby delegated to the 
Director, Division of Compliance and Consumer Affairs; the Deputy 
Director, Division of Compliance and Consumer Affairs; and each 
Regional Director, Division of Compliance and Consumer Affairs.


Sec. 328.4  [Removed]

    5. Section 328.4 is removed.

    By order of the Board of Directors.

    Dated at Washington, D.C., this 21st day of January, 1997.

Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 97-3319 Filed 2-10-97; 8:45 am]
BILLING CODE 6714-01-P


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