6142 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules

institutions and depository institution

holding companies.

(b) Applications and notices.

Applications and notices filed by an

insured depository institution, a

proposed or newly organized insured

depository institution or a depository

institution holding company shall be

denied or objected to, respectively, by

the appropriate federal banking agency

if the agency determines, in its

discretion, that the proposed transaction

for which the application or notice is

filed is for the purpose of evading

assessments imposed on the applicable

insured depository institutions with

respect to SAIF-assessable deposits

under section 7(b) of the Act and section

21(f)(2) of the Federal Home Loan Bank

Act (12 U.S.C. 1441(f)(2)).

(c) Imposition of entrance and exit

fees. (1) A depository institution that

encourages or facilitates the shifting of

deposits from SAIF-assessable deposits

to BIF-assessable deposits (as defined in

section 21(k) of the Federal Home Loan

Bank Act (12 U.S.C. 1441(k)) for the

purpose of evading SAIF assessments

shall pay entrance and exit fees, as

provided for in §§ 312.1 through 312.10,

as if such deposit shifting constituted a

‘‘conversion transaction’’ under section

5(d) of the Act (12 U.S.C. 1815(d)).

(2) Subject to the FDIC’s

determination based on the

methodology indicated in paragraph

(c)(3) of this section, an abnormal

increase in a depository institution’s

BIF-assessable deposits and a

commensurate decrease in SAIFassessable deposits of an affiliate of that

depository institution within the same

calendar quarter shall be presumed to be

the result of deposit shifting for the

purpose of evading SAIF assessments.

The entrance and exit fees to be

imposed under paragraph (c)(1) of this

section shall apply to the dollar amount

of the deposits shifted unless, pursuant

to paragraph (c)(5) of this section, the

affiliated depository institutions rebut

the presumption that the increase in

BIF-assessable deposits and the

commensurate decrease in SAIFassessable deposits resulted from

deposit shifting between the affiliated

institutions.

(3) For purposes of this section, the

FDIC shall obtain deposit data from

quarterly Consolidated Reports of

Condition and Income filed by insured

depository institutions with the FDIC

and from Thrift Financial Reports filed

by insured savings associations with the

Office of Thrift Supervision, starting

with the reports filed for the period

ending [on the last day of the first full

calendar quarter after the effective date

of the final rule on deposit shifting].

(4) The FDIC, in its discretion, will

determine whether to presume that the

increase in an institution’s BIFassessable deposits and the

commensurate decrease in the affiliated

institution’s SAIF-assessable deposits

resulted from deposit shifting intended

to evade SAIF assessments by using

statistical averages and trends for the

applicable affiliated depository

institutions and industry averages and

trends, and other information available

to the FDIC. In determining whether to

apply the rebuttable presumption, the

FDIC will consult with the appropriate

federal banking agency(ies) in cases

where the FDIC is not the appropriate

federal banking agency.

(5) A depository institution will be

deemed to have rebutted the

presumption of deposit shifting if it

provides to the FDIC information and

materials that the FDIC, in its discretion,

determines demonstrate that the

increase in BIF-assessable deposits and

the commensurate decrease in SAIFassessable deposits resulted from factors

other than efforts by the depository

institutions or their holding company to

encourage or facilitate the shifting of

deposits for the purpose of evading

SAIF assessments.

(6) The FDIC shall notify, in writing,

the applicable depository institutions of

the intended imposition of entrance and

exit fees within 90 days after the report

date of the Consolidated Reports of

Condition and Thrift Financial Reports

from which the FDIC determines to

apply the rebuttable presumption under

paragraph (c)(4) of this section. The

depository institutions shall have 30

days from the date of issuance of such

notification to provide materials and

information to the FDIC to rebut the

aforementioned presumption. The FDIC

shall within 60 days of the receipt of the

materials and information consult with

the appropriate federal banking

agency(ies), if the FDIC is not the

appropriate federal banking agency, and

determine and notify the depository

institutions whether they must pay

entrance and exit fees for deposit

shifting. If the FDIC indicates in such

notice that the depository institutions

must pay entrance and exit fees, those

fees shall be paid within 15 days of the

receipt of such notice. Within 30 days

of the payment of the fees to the FDIC,

the depository institution(s) may request

a review of the determination by the

FDIC. The details of the procedures for

submitting materials and information to

attempt to rebut the presumption of

deposit shifting will be provided in

writing to the depository institutions as

part of the initial notice of the intended

imposition of entrance and exit fees.

(d) Termination date. The provisions

of this section shall terminate on the

earlier of December 31, 1999 or the date

as of which the last savings association

ceases to exist.

By the order of the Board of Directors.

Dated at Washington, D.C., this 4th day of

February, 1997.

Federal Deposit Insurance Corporation.

Jerry L. Langley,

Executive Secretary.

[FR Doc. 97–3306 Filed 2–10–97; 8:45 am]

BILLING CODE 6714–01–P

12 CFR Part 328

RIN 3064–AB99

Advertisement of Membership

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Notice of proposed rulemaking;

request for comment.

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
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules 6143

1The 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).

a.m. and 5:00 p.m. [Fax number: (202)

898–3838; Internet address:

comments@fdic.gov]. 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. § 328.4(a)

and (e). Insured banks may use either

sign at their option. Id. § 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. § 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.

§ 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 nonFDIC insured entities and can better

distinguish insured depository

institutions from non-insured entities.

In today’s environment with many nonbanks 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 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.

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
6144 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules

2Scott 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).

3 ‘‘Survey of Nondeposit Investment Sales at

FDIC-Insured Institutions’’, prepared for the FDIC

by Market Trends, Inc., dated May 5, 1996.

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. 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.

This proposal is premised on the

belief that it would minimize customer

confusion with respect to the noninsured 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. 3 By including

the advertising disclosure provisions in

part 328, such provisions would be of

greater weight and enforceability.

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
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules 6145

4Also reported in 60 FR 62345 (December 6,

1995).

5The FDIC is aware of over 200 insured

depository institutions that have a presence on the

Internet.

6Web pages vary in length and may in certain

cases encompass several computer screens of

information.

7The 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.

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 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.

(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 nonuse 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’’ 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.

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 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. 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 § 328.3(c).

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
6146 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules

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:

§ 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:

§ 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

§ 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:

§ 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 § 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
Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules 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.

§ 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

SMALL BUSINESS ADMINISTRATION

13 CFR Part 107

Small Business Investment Companies

AGENCY: Small Business Administration.

ACTION: Proposed rule.

SUMMARY: In response to concerns

expressed by a number of small

business investment companies (SBICs),

SBA is proposing to modify the

examination fees charged to SBICs. SBA

believes that the current fee schedule

places a disproportionate burden on

certain classes of licensees (particularly

those with the largest amount of total

assets) and, in some cases, results in fee

assessments that exceed reasonable

charges based on the level of effort and

time associated with the examination

process.

DATES: Comments must be submitted on

or before March 13, 1997.

ADDRESSES: Written comments should

be addressed to Don A. Christensen,

Associate Administrator for Investment,

U.S. Small Business Administration,

409 3rd Street, SW., Suite 6300,

Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT:

Leonard W. Fagan, Investment Division,

at (202) 205–7583.

SUPPLEMENTARY INFORMATION: On

January 31, 1996 the Small Business

Administration (SBA) published final

regulations which, among other things,

increased the examination fees charged

to SBICs. See 61 FR 3177. Fees