15626 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules

RESPA. Some asserted that the APR can

be misleading because it assumes the

loan is held to maturity, when most

consumers hold their loans for a much

shorter period. A few commenters

objected to the inclusion in the finance

charge of all the interest that would

accrue over the life of the loan. They

claimed the resulting APR is misleading

because too much interest is included in

the APR and because the interest is not

discounted to its present value.

TILA requires that up to 16 items be

disclosed in addition to the APR and

finance charge. The commenters raised

a number of general concerns about

these other disclosures. Some

questioned the value of certain

disclosures required by the statute,

including the total of payments and the

security interest. Other commenters

recommended modifications to certain

disclosures. For example, creditors must

disclose whether or not a penalty will

be imposed if the obligation is prepaid

in full. Some commenters asserted that

the penalty should be disclosed only if

it might be imposed. Several

commenters recommended that the

payment schedule disclosure be

modified to require only the monthly

payment amount, not the number of

payments and dates too. Other

commenters recommended that the

disclosures concerning the contract

reference, security interest, assumption

policy, required deposit, demand

feature, late payment, and prepayment

penalty be explained in a booklet,

perhaps as part of RESPA’s special

information booklet.

Other commenters noted that recent

legislative changes have given the Board

the authority to exempt certain

transactions from TILA. The legislation

directs the Board, in exercising this

authority, to consider the amount of the

loan, the financial sophistication of the

borrower, and whether the loan is

secured, among other factors. Some

commenters made recommendations on

how to exercise that authority, and

recommended that similar exemptions

be made under RESPA.

A number of commenters

recommended changes to the right of

rescission rules under TILA. They

recommended limiting the types of

transactions that are subject to the right

of rescission and increasing the

circumstances under which a consumer

may waive that right. Some commenters

recommended that creditors be required

to provide a single copy of the notice of

the right to rescind, instead of two

copies as currently required.

A number of commenters

recommended that the ARM disclosures

be simplified. Detailed disclosures for

ARM loans must be provided at

application or before a nonrefundable

fee is paid, whichever is earlier.

Commenters recommended eliminating

the requirement that a creditor provide

a historical example of how rates had

varied in the past. Several commenters

recommended that the Board modify the

requirements so that creditors disclose

the actual terms of the transaction and

the actual contract language.

Commenters also recommended

improvements to the disclosures

required for home-equity lines of credit.

Several consumer group commenters

urged that the disclosures for these

transactions should reflect the

particulars of the transaction and

assume that the maximum amount of

the line of credit is borrowed

immediately, that only the minimum

monthly payments are made, and that

the interest rate will vary as it has in the

past. A number of commenters

recommended that the Board eliminate

the requirement to disclose a historical

example. Commenters also urged the

Board to modify the disclosures for

home-secured loans to facilitate

comparisons between lines of credit and

installment loans by including all fees

in the calculation of the APR.

Commenters identified other minor

adjustments to TILA’s disclosure

requirements. For example, several

commenters recommended that the

Board require creditors to disclose a

simple interest rate in addition to the

APR and an explanation of how the APR

is related to the interest rate. One

commenter recommended that the

Board add an introductory statement to

each disclosure, explaining the purpose

of the disclosure. (The Board notes that

the regulation does not preclude

creditors from providing additional

information, and creditors can currently

make these disclosures, separate from

the required disclosures, if they choose.)

A number of commenters recommended

that the Board provide guidance on the

permissible use of electronic

disclosures. Some commenters

recommended some reorganization of

the required disclosure booklets, and

suggested that the Board and HUD

combine the special information

booklet, the home-equity line of credit

booklet, and adjustable rate mortgage

booklet into one.

Legislative Recommendations

The information required to be

disclosed under RESPA and TILA is

extensive, the concepts disclosed are

complex, and the statutes are written

with different goals in mind. After

consideration of the comments and

further analysis, the Board has

determined that the changes that could

be made to Regulation Z alone would

not achieve the goals the Congress

identified: simplifying and improving

the TILA and RESPA disclosures and

providing a single format that satisfies

the requirements of the two laws.

Improving the TILA and RESPA

disclosures to make them significantly

shorter, easier to understand, and

consistent requires legislative change.

The Board will continue to work with

HUD to develop a set of legislative

recommendations that would promote

streamlined disclosures for transactions

subject to both RESPA and TILA. In

preparing the report, the Board and

HUD will consider the issues raised by

the commenters and take steps to seek

additional public views, such as by

jointly convening a forum or task force.

The public is invited to submit

comments with any further suggestions

they may have for legislative changes.

By order of the Board of Governors of the

Federal Reserve System, March 28, 1997.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 97–8407 Filed 4–1–97; 8:45 am]

BILLING CODE 6210–01–P

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

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

and 563g

[97–27]

RIN 1550–AB00

Deposits and Electronic Banking

AGENCY: Office of Thrift Supervision,

Treasury.

ACTION: Notice of proposed rulemaking

and advance notice of proposed

rulemaking.

SUMMARY: The Office of Thrift

Supervision (OTS) is proposing to

substantially streamline its depositrelated regulations. This Notice of

Proposed Rulemaking (NPR) follows a

detailed staff review of pertinent

regulations and policy statements in the

Code of Federal Regulations (CFR) to

determine whether each provision is

necessary, imposes the least possible

burden consistent with safety and

soundness, and is clearly written.

Today’s proposal is issued pursuant to

the Regulatory Reinvention Initiative of

the Vice-President’s National

Performance Review and section 303 of

the Community Development and

Regulatory Improvement Act of 1994.
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules 15627

1 61 FR 50951 (September 30, 1996) (Lending and

Investment); 61 FR 66561 (December 18, 1996)

(Subsidiaries and Equity Investments); 61 FR 60173

(November 27, 1996) (Conflicts of Interest,

Corporate Opportunity and Hazard Insurance); 61

FR 64007 (December 3, 1996) (Corporate

Governance).

2 12 CFR Part 204 (1996).

3 12 CFR Part 230 (1996).

4 12 CFR Part 707 contains separate Truth in

Savings regulations applicable to credit unions.

5 61 FR 50951, 50982 (to be codified at 12 CFR

560.170).

6 12 U.S.C. 1461–1470.

7 12 U.S.C. 1464(b).

In addition, OTS is publishing an

advance notice of proposed rulemaking

(ANPR) seeking comment on OTS

electronic banking regulations. OTS is

concerned that its current electronic

banking regulations do not adequately

address advances in technology and

may impede prudent innovation by

federal savings associations.

DATES: Comments must be received on

or before June 2, 1997.

ADDRESSES: Send comments to Manager,

Dissemination Branch, Records

Management and Information Policy,

Office of Thrift Supervision, 1700 G

Street, NW., Washington, DC 20552,

Attention Docket No. 97–27. These

submissions may be hand-delivered to

1700 G. Street, NW., from 9:00 a.m. to

5:00 p.m. on business days; they may be

sent by facsimile transmission to FAX

Number (202) 906–7755; or by e-mail:

public.info@ots.treas.gov. Comments

will be available for inspection at 1700

G Street, NW., from 9:00 a.m. until 4:00

p.m. on business days.

FOR FURTHER INFORMATION CONTACT: For

Deposits: Edward J. O’Connell, III,

Project Manager, (202) 906–5694,

Supervision Policy; or Richard Blanks,

Counsel (Banking and Finance), (202)

906–7037; or Karen Osterloh, Assistant

Chief Counsel, (202) 906–6639. For

Electronic Banking: Paul Glenn, Special

Counsel, Chief Counsel’s Office, (202)

906–6203, or Paul Robin, Program

Analyst, Compliance Policy, (202) 906–

6648, Office of Thrift Supervision, 1700

G Street NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background of the Proposal and Advance

Notice of Proposed Rulemaking

II. Notice of Proposed Rulemaking: Deposits

A. Objectives

B. Historical Overview

C. Proposed Disposition of Deposit-Related

Regulations

D. Proposed New Part 557

III. Advance Notice of Proposed Rulemaking:

Electronic Banking

A. Electronic Banking Facilities and Data

Processing

B. Other Issues

IV. Request for Comments

V. Paperwork Reduction Act of 1995

VI. Executive Order 12866

VII. Regulatory Flexibility Act Analysis

VIII. Unfunded Mandates Act of 1995

I. Background of the Proposal and

Advance Notice of Proposed

Rulemaking

In a comprehensive review of the

agency’s regulations in the spring of

1995, OTS identified numerous obsolete

or redundant regulations that could be

quickly repealed. OTS also identified

several key regulatory areas for a more

intensive, systematic regulatory burden

review. The first areas reviewed—

lending and investment authority,

subsidiaries and equity investments,

corporate governance, conflicts of

interest, corporate opportunity and

hazard insurance—were selected

because they have a significant impact

on thrift operations, and had not been

developed on an interagency basis or

been comprehensively reviewed for

many years. OTS has issued

comprehensive final regulations on all

of these areas.1

Today’s proposal is the first in the

next phase of OTS’s review of its

regulations. It follows an intensive

review of OTS’s deposit-related

regulations and policy statements. In

developing this proposal, OTS

considered the relevant regulations,

agency guidance, legal interpretations,

and requirements of the other federal

banking agencies. Like other OTS

regulatory reinvention efforts, this

proposal was prepared in consultation

with those who use these regulations on

a daily basis, including OTS regional

examination staff.

OTS is also seeking public input on

a related area of its regulations that has

had an increasing impact on thrift

operations, but has not been recently

amended—electronic banking. OTS has

three regulations affecting electronic

banking. These include: 12 CFR 545.138

(Data processing services); 545.141

(Remote service units); and 545.142

(Home banking services). After

reviewing these electronic banking

regulations, OTS has decided to solicit

public comment through an ANPR

before determining what regulatory

amendments may be appropriate. OTS

is concerned that these regulations may

not appropriately address electronic

banking services under emerging

technologies.

II. Notice of Proposed Rulemaking:

Deposits

A. Objectives

The overarching goal of OTS’s

reinvention initiative is to reduce

regulatory burden on savings

associations to the greatest extent

possible, consistent with statutory

requirements and safety and soundness.

In the context of deposit-related

regulations, we believe that maximum

burden reduction can be achieved by

pursuing the following objectives.

First, we are attempting to eliminate

duplication and overlap from OTS

regulations. Several OTS deposit-related

regulations address areas that are

covered by Regulations D and DD of the

Federal Reserve Board. These

regulations apply to all depository

institutions, including savings

associations. Regulation D (Reserve

Requirements of Depository

Institutions) 2 contains comprehensive

deposit definitions. Further, Regulation

DD (Truth in Savings) 3 applies to all

depository institutions except credit

unions.4 This approach has two

benefits—the elimination of regulations

from the CFR and reduced confusion for

savings associations.

Second, as part of its reinvention

effort, OTS is endeavoring to eliminate

regulations that are outdated or

micromanage thrift operations. For

example, OTS proposes to replace

several specific deposit-related

recordkeeping requirements with a

general recordkeeping regulation that is

tied more closely to safety and

soundness. This approach, which

parallels recent changes in OTS’s loan

documentation regulation, will help

savings associations take better

advantage of technological advances.5

Third, OTS wants to remove

regulations that merely restate existing

statutory authority. It has been the longstanding position of OTS and its

predecessor agency, the Federal Home

Loan Bank Board (FHLBB), that specific

regulations are not required to permit

federal savings associations to engage in

activities authorized by the Home

Owner’s Loan Act (HOLA).6 Rather, the

role of OTS regulations should be to

impose necessary conditions or

limitations on those statutorily

authorized activities. Section 5(b) of the

HOLA states that a federal savings

association may raise funds through a

variety of types of accounts, ‘‘[s]ubject

to the terms of its charter and

regulations of the Director [of OTS].’’ 7

Either the association’s charter or OTS

regulations may set out the rights

afforded accountholders. Thus, unless

OTS regulations or the institution’s

charter restrict the type of accounts a

federal savings association may offer, an

association may offer whatever types of

statutorily authorized accounts it deems

appropriate.
15628 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules

8See OTS Op. Chief Counsel (October 11, 1991).

9 Fidelity Federal Savings and Loan Ass’n v. del

la Cuesta, 458 U.S. 141, 145, quoting California v.

Coast Federal Savings and Loan Ass’n, 98 F. Supp.

311, 316 (S.D. Cal. 1951).

10 12 U.S.C. 1464(b).

11Pub. L. 97–320, 96 Stat. 1469 (October 15,

1982).

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

13Pub. Law 101–73, 103 Stat. 183 (August 9,

1989).

14This proposal does not address deposit-related

definitions currently contained in OTS regulations.

OTS is planning a comprehensive review of all

regulatory definitions later this year.

Fourth, OTS believes that it should

maintain a clear and consistent position

on the preemptive effect of federal

regulation on the deposit-related

activities of savings associations. It is

particularly necessary to reiterate this

position as existing regulations are

restructured, amended, converted into

guidance, or deleted. OTS has long held

that, with certain narrow exceptions,

state laws or regulations that purport to

affect the deposit activities of federal

savings associations are preempted.8

Preemption in this area is essential to

OTS’s regulation of the operations of

federal savings associations because

deposit taking is one of the most

important functions of a savings

association. None of the changes

discussed today should be construed as

evidencing an intent by OTS to change

this long-held position. Whether OTS

retains a specific regulation addressing

a particular aspect of deposit taking or

deletes the provision to streamline its

regulations and reduce regulatory

burden, the agency intends to occupy

the entire field of deposit regulation for

federal savings associations.

This approach is consistent with court

decisions that provide that OTS has

authority over federal thrifts from their

‘‘cradle to [their] corporate grave.’’ 9

This proposed rule includes a general

deposit preemption provision. This

provision restates long-standing

preemption principles applicable to

federal savings associations, as

developed in a long line of court cases

and legal opinions by OTS and the

FHLBB. The agency hopes that the

increased clarity and specificity of the

proposal will reduce confusion and the

need for frequent preemption inquiries

in the future.

Finally, OTS is removing certain

regulations and policy statements that

merely reiterate universally recognized

deposit-related incidental powers of

federal savings associations, such as the

ability to use insured banks as collecting

and paying agents and the ability to

provide ‘‘deposit assurance’’ on certain

direct deposits.

With these goals in mind, all OTS

deposit-related regulations will be

consolidated, streamlined, and moved

into a new part 557. This action will

make the deposit-related regulations

easier to locate and follow.

B. Historical Overview

Since enactment of the HOLA, federal

savings associations have been

authorized to raise funds through a

variety of accounts, and to issue

passbooks, certificates, or other

evidence of accounts.10 In 1982, the

Garn-St Germain Depository Institutions

Act (DIA) expanded this authority to

permit federal thrifts to accept demand

accounts.11

Historically, the FHLBB, through its

regulations, affirmatively approved

specific deposit-related activities. This

approach has shifted in recent years as

a result of changes in the applicable

statutes and advances in business and

technology. Now thrifts may undertake

any activity permitted by statute, unless

a regulation limits or restricts the

authority. Accordingly, it is no longer

necessary to retain regulations

specifically approving deposit-related

activities.

Additionally, many of the depositrelated regulations originated with the

FHLBB, in its capacity as the operating

head of the former Federal Savings and

Loan Insurance Corporation (FSLIC),

which insured thrift deposits. Since

OTS is not the insurer of thrift deposits,

these regulations are no longer needed.

Finally, certain FHLBB-era

regulations have now been superseded

by more recent statutes, such as the

Truth in Savings Act,12 and by Federal

Reserve Board regulations applicable to

all insured institutions. Consequently,

many of the policy and legal reasons for

certain regulations no longer exist.

C. Proposed Disposition of DepositRelated Regulations

Part 545 Operations (Federal Savings

Associations)

Section 545.10 Savings Deposits or

Shares

Section 545.10 states that OTS

approves savings deposits or shares that

comply with the provisions of

subsection (b) of section five of title III

of the Financial Institutions Reform,

Recovery, and Enforcement Act of 1989

(‘‘FIRREA’’) 13 (12 U.S.C. 1464(b)), the

federal savings association’s charter,

and OTS rules and regulations relating

to the type, form, return, and maturity

of deposits or shares. OTS proposes to

delete this paragraph. OTS ‘‘approval’’

of deposits or shares is not required by

12 U.S.C. 1464(b), which authorizes

federal savings associations to raise

funds through various types of accounts

and issue evidence of such accounts.

Section 545.11 Issuance of Accounts

Section 545.11(a) requires a federal

savings association to obtain and

maintain FDIC insurance prior to doing

business. OTS proposes to delete this

subsection and rely on the statutory

requirement that federal savings

associations must obtain and maintain

FDIC insurance. See 12 U.S.C. 1462(4),

1818(a)(1).

Section 545.11(b) provides that

federal savings associations may issue

accounts as defined in § 561.2. OTS

proposes to replace the detail of this

subsection with a more general

statement of authority in new Part 557.

Section 545.11(c) sets forth the status

and priority of savings deposits and

accounts in the event of a liquidation,

dissolution or winding up of the

association. OTS proposes to delete this

subsection because these priorities are

set forth by statute. See 12 U.S.C.

1821(d)(11) and 1464(b)(1)(B).

Section 545.12 Demand Deposit

Accounts

Section 545.12(a) states that a federal

savings association may accept demand

deposit accounts from any person. OTS

proposes to delete this subsection

because 12 U.S.C. 1464(b)(1)(A)

contains the authority for issuance of

demand deposit accounts.

Section 545.12(b) prohibits a federal

savings association from paying interest

on a demand deposit. OTS proposes to

delete this subsection because 12 U.S.C.

1464(b)(1)(B)(i) contains this

prohibition. This section also provides

that finders’ fees offered in accordance

with 12 CFR 561.16(b) are not payments

of interest. OTS proposes to transfer the

finders’ fee exception to the Thrift

Activities Handbook.

Section 545.12(c) indicates that

demand deposit accounts include only

those accounts that are payable on

demand within the meaning of 12 CFR

563.6. This provision is unnecessary in

light of the deletion of paragraphs (a)

and (b). For guidance in interpreting 12

U.S.C. 1464(b)(1)(A) and (b)(1)(B)(1),

institutions should refer to the

definition of demand deposit contained

in Regulation D.14

Section 545.13 Account Records

Section 545.13(a) states that a federal

savings association must comply with

§§ 563.1 and 563.170(c)(8), and that

accounts must be evidenced by a

written agreement with transactions

confirmed by issuance of a receipt or
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules 15629

15 57 FR 14344 (Apr. 20, 1992).

16 61 FR 50951 (September 30, 1996). 17 12 CFR Part 205 (1996).

advice. OTS proposes to delete this

subsection. The cross-references are no

longer appropriate because § 563.1,

which formerly dealt with forms of

accounts, was amended in 1992 to refer

to a de novo savings association’s

charters and by-laws, 15 and

§ 563.170(c)(8) has been recently

removed. 16 The term ‘‘advice’’ is no

longer a part of transactional

terminology. Moreover, OTS would

replace the specific recordkeeping

requirements for written agreements and

receipts by a more general

recordkeeping regulation in new Part

557. Nothing in this proposed revision

would prohibit a savings association

from the normal business practice of

providing receipts for transactions.

However, the proposed change may

allow federal savings associations to

take better advantage of technological

and marketplace advances in telephonic

and electronic banking.

Section 545.13(b)(1) provides that a

federal savings association may treat the

holder of record of an account as the

owner, regardless of any notice to the

contrary, until the account is transferred

on the federal association’s books.

Under this section, accounts are only

transferable on the association’s books

on proper application by the transferee

and acceptance of the transferee as

accountholder on terms approved by the

board of directors. OTS proposes to

modify and incorporate this subsection

into new Part 557.

Under § 545.13(b)(2), a federal savings

association may issue negotiable

certificate accounts in bearer form

without recording ownership on the

books of the federal savings association.

OTS proposes to replace this subsection

with the more general recordkeeping

requirement in new Part 557. We note

that the FDIC has a regulation

concerning negotiable certificates of

deposits where the depository

institution has defaulted. If any deposit

obligation of an insured institution is

evidenced by a negotiable instrument,

the FDIC will recognize the owner as if

that person’s name were on the records

of the institution if the instrument was

negotiated to such owner prior to the

date of default of the institution. See 12

CFR 330.4(b)(4) (1996).

Section 545.13(c) recites authority for

federal savings associations to use

insured banks as collecting and paying

agents for its accounts. OTS proposes to

delete this subsection because these

incidental powers are uniformly

recognized and do not need to be

codified in regulatory text.

Section 545.14 Determination and

Distribution of Earnings

Under § 545.14(a), a federal savings

association may issue savings accounts

earning interest at different rates of

return. These rates may be fixed at the

time the account is issued or may vary

on any basis specified at the time the

deposit is accepted, subject to 12 CFR

563.10. OTS proposes to incorporate

this subsection in new Part 557.

Section 545.14(b) states that a federal

savings association may distribute

earnings on savings accounts as

provided in its charter and bylaws and

the terms of the account. OTS proposes

to incorporate this subsection into new

Part 557.

Section 545.14(c) prohibits the

distribution of earnings on share

accounts until the federal savings

association has provided for the

payment of expenses and for the pro

rata portion of credits to reserves, as

required by the federal savings

association’s charter and 12 CFR Part

567. The term ‘‘reserve credits’’ is an

archaic reference to the transfer of a

portion of net income to a restricted

capital account. Charters for mutual

share institutions had required this

transfer. OTS proposes to delete this

subsection because modern federal

charters no longer provide for mutual

share institutions.

Part 556 Statements of Policy

Section 556.12 Deposit Assurance of

Direct Deposit of Social Security

Payments

This Statement of Policy states that

the implied powers of a federal savings

association include the provision of

‘‘deposit assurance’’ in connection with

the Social Security Administration’s

direct deposit program. A federal

savings association provides deposit

assurance when it credits a social

security beneficiary’s account with

payment on its due date, whether or not

the payment has been received by the

association.

The Statement of Policy advises

federal savings associations to

implement safeguards and controls to

address the risks of the program. The

policy statement further notes that

Regulation E (Electronic Fund

Transfers) 17 applies to the program.

OTS proposes to delete this Statement

of Policy because insured depository

institutions universally provide deposit

assurance of social security payments.

OTS will consider whether handbook

guidance would be useful to reiterate

the need for adequate institutional

safeguards and controls and the

applicability of Regulation E.

Part 563 Operations

Section 563.2 Simple Form of

Certificate; Passbooks

Section 563.2 sets forth the

requirements for a simple form of

certificate account. A mutual savings

association may issue a simple form of

savings or investment certificate or a

passbook if, in accordance with State

law, the association’s charter,

constitution, or bylaws includes a clear

provision indicating that: (i) All

shareholders are members and share

equally in earnings and in assets pro

rata to paid-in value, plus credited

dividends; and (ii) the savings

association may not charge any fee for

the privilege of becoming, remaining, or

ceasing to be a member of the savings

association. This simple form is not

required to contain any membership

certificate or any statement of the

dividend, withdrawal, or other rights of

members.

OTS proposes to delete this section

because it is outdated. Savings

associations will continue to be subject

to the disclosure requirements of

Regulation DD.

Section 563.3 Long Form of

Membership Certificate

Under § 563.3, a savings association

must include certain specified

statements in all share, membership,

deposit certificates, passbook, or other

instrument evidencing a withdrawal

instrument that: (i) Pay a different rate

of dividends or interest to different

classes of shares or securities; (ii) prefer

any one or more classes of shares or

securities; or (iii) charge any fee for the

privilege of becoming, remaining, or

ceasing to be a saver or investor in the

savings association.

Like § 563.2, this section is outdated

and unnecessary in light of the

disclosure requirements in Regulation

DD. Accordingly, OTS proposes to

delete this provision.

Section 563.6 Payment of Accounts on

Demand

Section 563.6 prohibits a savings

association from issuing any account, or

advertising or representing that it will

pay holders of its accounts, on demand.

Demand accounts, tax and loan

accounts, note accounts, and United

States Treasury general accounts are not

subject to this prohibition. This section

also sets forth various definitions of the

term ‘‘accounts payable on demand.’’

OTS proposes to delete this section

and instead rely on the disclosure

requirements applicable under
15630 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules

Regulation DD, and on statutory

provisions authorizing savings

associations to issue demand deposits

(12 U.S.C. 1464(b)(1)(A)(i)) and

prohibiting the payment of interest on

demand deposits (12 U.S.C.

1464(b)(1)(B)(i)). These statutory

provisions should be interpreted in a

manner that is consistent with the

definition of demand deposit contained

in Regulation D.

Section 563.7 Fixed-Term Accounts

(Certificate Accounts)

Under § 563.7(a), a savings association

may offer certificate accounts in such

form as the board of directors of the

savings association may authorize by

resolution. Further, with respect to any

time deposit, a savings association may

impose a penalty for early withdrawal.

Section 563.7(b) authorizes a savings

association to pay earnings on a

certificate account at a rate, or

anticipated rate of return, determined

when the deposit is accepted. The rate

may be fixed or be based on a schedule,

index, or formula specified at the time

the account is accepted.

Section 563.7(c) prohibits an

association from accepting a fixed-term

account for a term of less than seven

days. This paragraph also prohibits an

institution from issuing any certificate

account unless the association has

complied with the chartering provisions

of § 563.1.

Section 563.7(d) states that a

certificate may prohibit withdrawal

prior to maturity except in the cases of

death or incompetence.

OTS proposes to modify this section.

While the provisions of paragraph (b)

would be retained in the new regulation

at § 557.3, the remainder of this section

would be deleted to avoid duplication

and redundancy. Institutions issuing

such certificate accounts must comply

with the disclosure requirements

contained in Regulation DD and should

rely on the definitions applicable to

such accounts contained in Regulation

D.

Section 563.9 Eurodollar Deposits

This regulation addresses the issuance

of Eurodollar deposits. When this

provision was added, FHLBB

regulations on pooled accounts and

other restrictions did not apply to

Eurodollar deposits. These restrictions

have been removed for all accounts.

OTS, therefore, proposes to delete this

section because it is no longer

necessary. This approach is consistent

with the regulations of the other

banking regulators which do not

specifically address regulatory treatment

of Eurodollar deposits.

Section 563.10 Earnings-Based

Accounts

Section 563.10 provides extensive

definitions and limitations regarding

earnings-based accounts. In an earningsbased account, the payment of interest

is determined by reference to an index

based upon the profitability, earnings,

cash flow, appreciation, or return on

assets owned by, or under the control of,

the savings association.

OTS proposes to delete this section

because it is unnecessary and

duplicative of disclosure requirements

contained in Regulation DD.

D. Proposed New Part 557

OTS proposes to adopt a new Part 557

that will ultimately include all of the

agency’s deposit-related regulations.

The agency believes that this

organization will make its relevant

deposit-related regulations easier to

locate. The proposed deposit-related

regulation is discussed below.

Section 557.1 General Authority

(Proposed)

This proposed section states that new

Part 557 is issued under OTS general

rulemaking and supervisory authority

under the HOLA. The proposed section

also cites the general authority for

federal savings associations’ depositrelated activities. It states that a federal

savings association may raise funds

through deposits and issue evidence of

such accounts as authorized under

section 5(b) of the HOLA, the savings

association’s charter, and regulations

issued by OTS.

Section 557.2 Applicability of Law

(Proposed)

As discussed in Section II.A. above,

deposit-related activities are core

activities in which federal savings

associations engage. Federal preemption

of state laws purporting to affect

deposit-related activities is critical to

the agency’s mandate under HOLA

sections 4(a) and 5(a) to provide for the

safe and sound operation of federal

savings associations in accordance with

the best practices of thrift institutions in

the United States.

This proposed section sets forth

OTS’s long-standing position on the

federal preemption of state laws

purporting to affect the deposit-related

activities of federal savings associations.

This position has been developed in

caselaw and legal opinions by OTS and

its predecessor, the FHLBB, and is

currently reflected in § 545.2. Because

the deposit-related activities regulations

will be moved from Part 545 and, thus,

separated from § 545.2, OTS proposes to

include new § 557.2 to confirm and

carry forward its existing preemption

position. The agency believes that the

increased clarity and specificity of

§ 557.2 will reduce confusion and the

need for frequent preemption inquiries

in the future.

The proposed section on preemption

has three paragraphs. Paragraph (a)

explicitly states the agency’s intent to

occupy the field of deposit-related

activities for federal thrifts and

articulates the statutory and regulatory

basis for this preemption. Paragraph (b)

contains a list of examples of preempted

state laws, drawn from case law and

OTS precedent. This paragraph

emphasizes that the list is not intended

to be exhaustive. Paragraph (c) describes

certain types of state laws that OTS does

not intend to preempt. These categories

include: contract and commercial law,

tort law, and criminal law. Such laws

will not be preempted to the extent that

they only incidentally affect the depositrelated activities of federal savings

associations or are otherwise consistent

with the purpose of paragraph (a).

When analyzing the status of state

laws under new § 557.2, the first step

will be to determine whether the type of

law in question is listed among the

illustrative examples of preempted state

laws under paragraph (b). If so, the

analysis will end there; the law is

preempted. If the law is not covered by

paragraph (b), the next question is

whether the law affects deposit-related

activities. If it does, then, in accordance

with paragraph (a), 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 the types of state laws

that are not preempted, as described in

paragraph (c). For these purposes,

paragraph (c) is intended to be

interpreted narrowly. Any doubt should

be resolved in favor of preemption.

Section 557.3 Interest and Earnings

(Proposed)

This proposed section states that a

savings association may pay interest on

a savings account at a rate or anticipated

rate of return determined when the

account is accepted, as provided in its

charter and bylaws and the terms of the

account. The rate or anticipated rate on

a savings account may be fixed, or may

vary according to a schedule, index, or

formula specified when an account is

accepted.

Section 557.4 Account Records

(Proposed)

This proposed section replaces the

specific recordkeeping requirements of

the existing regulations with more

general requirements. This section states
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules 15631

18 15 U.S.C. 1601 et seq.

that each savings association should

establish and maintain deposit

documentation practices and records

that demonstrate appropriate

administration and monitoring of its

deposit-related activities. A savings

association’s records should include

adequate evidence of the ownership,

balances, and transactions involving the

account. Further, the proposed section

provides that a federal savings

association may treat the holder of

record of an account as the owner,

regardless of any notice to the contrary,

until the account is transferred on the

association’s records.

III. Advance Notice of Proposed

Rulemaking: Electronic Banking

OTS seeks comments on whether its

regulations are sufficiently flexible to

permit federal savings associations to

engage in appropriate electronic

banking activities, consistent with safety

and soundness, the Truth in Lending

Act,18 Regulation E, and other relevant

statutes and regulations. OTS has

received numerous inquiries on

electronic banking issues. For example,

federal savings associations have asked

whether they may provide banking

services over the Internet, whether they

may open accounts or issue loans from

machines in remote locations, what

steps must an association operating on

the Internet take to comply with the

Community Reinvestment Act (CRA),

and whether savings associations may

open accounts on the Internet for

depositors living abroad.

This advance notice of proposed

rulemaking requests comments on: (1)

Electronic banking facilities and data

processing activities; and (2) more

general issues relating to electronic

banking.

A. Electronic Banking Facilities and

Data Processing

Three OTS regulations affect a thrift’s

ability to engage in electronic banking

activities. Two of these regulations

describe the types of facilities through

which federal thrifts may deliver

services to their customers. 12 CFR

545.141 (Remote service units); 545.142

(Home banking services). The third

regulation, the data processing

regulation, 12 CFR 545.138, provides

the general authority to engage in

certain electronic banking activities. To

the extent that these regulations do not

reflect current activities and

technologies, OTS is interested in how

the regulations might be updated. Each

area of concern is discussed more fully

below.

Facilities

OTS regulations permit a federal

savings association to deliver services to

customers at various kinds of facilities.

These include: home offices, branches,

agency offices, data processing or

administrative offices, remote service

units (RSUs), and home banking.

Recently, OTS has been asked to

address whether an automated loan

machine (ALM) is a branch office or

some other type of facility. This issue

has raised more general questions about

how the agency should treat new

electronic technologies.

Several associations have informed

OTS that they plan to establish

networks of ALMs located away from

their home or branch offices. Each ALM

would permit a customer to apply for a

consumer loan up to a specific limit by

entering certain information by keypad

into a machine resembling an automated

teller machine (ATM). This information

would be transferred immediately by

wire to the institution’s main-frame

computer. The main-frame computer

would analyze the information under a

credit-scoring program, and would

check the information electronically

with credit-reporting bureaus. If the

information meets the credit-scoring

criteria, the computer program would

approve the loan. The ALM then would

print out a cashier’s check and

appropriate loan disclosure forms.

Under the proposals outlined to OTS,

the loan would not be treated as closed

until the check was endorsed and

presented to the institution for payment.

If the loan were disapproved by the

computer program, the ALM would

print out all necessary denial

disclosures. The process is expected to

take about ten minutes.

This procedure raises the question

whether each ALM is a branch. This is

significant because the rules governing

the establishment and operation of a

branch or an RSU are different. An ALM

might appear to meet the definition of

a ‘‘remote service unit’’ at 12 CFR

545.141(a), except that the regulation

expressly prohibits an RSU from

‘‘establish[ing] a loan account.’’ 12 CFR

545.141(b). A facility not covered by the

RSU regulation or other specific

classification is, by default, a branch.

See 12 CFR 545.92(a).

The prohibition against establishing a

loan account at an RSU appears to date

from a judicial decision over twenty

years ago. Bloomfield Fed. Sav. & Loan

Ass’n. v. American Community Stores

Corp., 396 F. Supp. 384 (D. Neb. 1975).

In Bloomfield, the plaintiff challenged

the establishment of ATMs by a federal

thrift by asserting that the thrift had

failed to comply with the FHLBB’s

procedures for opening new branches.

The court noted that the FHLBB held

broad authority to define a branch, but

had limited this definition to a full-time

and permanent office at which any

business of a thrift may be transacted.

Since the FHLBB’s regulations stated

that an RSU could engage in specific

activities and these activities did not

include opening savings accounts or

originating, processing, or approving

loans, the court concluded that the

planned ATMs (which were part of an

RSU pilot project) were not branches.

Therefore, the thrift did not have to

comply with the branching procedures.

In 1981, the FHLBB simplified the

RSU regulation by deleting enumerated

activities for RSUs. In its place, the

FHLBB added an explicit statement that

an RSU could not be used to open a

savings account or establish a loan

account. See 46 FR 8440 (1981). This

statement is found in current OTS

regulations at 12 CFR 545.141(b).

Bloomfield suggests that OTS would

have to revise its regulations governing

branches and other facilities to broaden

the RSU regulation. OTS solicits

comment on whether such revisions

would be appropriate.

A review of the facility regulations

also may be appropriate in the home

banking context. Currently, it is not

clear whether a full range of banking

services may be offered under the home

banking services regulation. 12 CFR

545.142. This regulation was drafted

when home banking was limited to

monitoring balances, transferring funds

between accounts at the same

institution, and directing payments from

an existing checking account in lieu of

sending checks by mail. Because a

thrift’s role in these activities was

strictly clerical, the definition of home

banking services was limited to ‘‘the

transfer of funds of financial

information’’ and ‘‘the performance of

other transactions initiated by the

customer.’’ 12 CFR 545.142.

It is not clear whether § 545.142

would cover the opening of new

accounts or the processing of credit

applications. The phrase ‘‘transactions

initiated by a customer’’ might

encompass these new services, but the

common meaning of that phrase may

limit it to transactions involving

existing accounts. With technological

advances making it feasible for thrifts to

make risk-based decisions on an

electronic basis (e.g., credit scoring),

OTS solicits comment on the

appropriate scope of the home banking

services definition.

Accordingly, OTS solicits comments

on whether the definitions of RSUs and
15632 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules

19We note that banks previously had to file

branch applications before establishing ATMs and

remote service units. Section 2205 of the Economic

Growth and Regulatory Paperwork Reduction Act of

1996 (Title II of Pub. L. 104–208) eliminated that

requirement.

20 48 FR 7831 (1983).

21 61 FR at 4853, 4865 (February 9, 1996) (to be

codified at 12 CFR 7.1019).

22 61 FR 4865 (to be codified at 12 CFR 7.1019).

23The OCC also recently has opined that a

national bank may, as an action incidental to the

business of banking, sell Internet access to noncustomers. See OCC Legal Op. (August 19, 1996).

24 61 FR 4865 (to be codified at 12 CFR 7.1019).

home banking services are sufficient to

encompass the full range of electronic

banking activity. In this regard, we note

that federal savings associations have

specific statutory authority to establish

RSUs as provided in OTS regulations

pursuant to 12 U.S.C. 1464(b)(1)(F).19

OTS is also interested in whether that

statutory language raises particular

issues for the industry. OTS anticipates

that these comments will help the

agency to better understand industry

and customer expectations concerning

the nature of such facilities.

Permissible Activities

OTS also solicits comment on

whether its current regulations

authorizing data processing activities

permit a federal savings association to

optimize the latest technology. The data

processing activities of federal savings

associations are covered by 12 CFR

545.138. This regulation was issued

when data processing was limited to the

non-discretionary functions of

processing and storing data. Today, a

financial institution can make riskbased decisions solely through

electronic means. Accordingly, it may

be appropriate for OTS to revise this

regulation. In addition, the current OTS

data processing regulation limits the

ability of a federal savings association to

sell or market services, software, and

excess capacity. All of these restrictions

may not be necessary, especially since

the comparable interpretative ruling for

national banks is less restrictive. See 61

FR 4849, at 4853 (February 9, 1996).

Data Processing. Under the current

data processing regulation, the

processing of data generally

encompasses a record-keeping, rather

than a risk assessment, function. This

restrictive view presents difficulties in

applying the OTS regulation to thrifts

utilizing the emerging technologies.

This limited view of data processing

originated in 1965 in the FHLBB

regulation that first authorized federal

thrifts to engage in data processing

services. In that regulation, the FHLBB

defined ‘‘data processing services’’ as

‘‘the maintenance of bookkeeping,

accounting, or other records primarily

by mechanical or electronic methods.’’

See 12 CFR 545.14–2 (1966) (emphasis

added). This view of data processing as

an electronic form of recordkeeping

continues, despite substantial revisions

to the data processing regulation in

1983. These 1983 revisions expanded

the kinds of data that could be

processed to include data that involved

‘‘financial, economic, or related to thrift,

home financing, or the activities of

depository institutions.’’ 20 The FHLBB

did not, however, expand the definition

of ‘‘processing’’ because technological

improvements had not made it possible

to make risk-based decisions entirely

through electronic means. The current

OTS data processing regulation is

substantially the same as the 1983

FHLBB rule.

In a recent review of its related data

processing provisions, the OCC

concluded that its use of the term ‘‘data

processing’’ failed to capture the

potential of electronic banking.

Recognizing that individual banks ‘‘are

engaging, and will engage, in an

increasing range of activities through

electronic means and facilities beyond

simply ‘data processing’,’’ the OCC

deleted that term from its interpretative

ruling. Instead, the OCC interpretative

ruling refers to ‘‘electronic means and

facilities.’’ 21 This term clearly will

encompass new technology that enables

a depository institution to make riskbased judgments electronically.

Sales of Facilities and Software. The

OTS data processing regulation provides

federal savings associations with

authority to provide data processing and

data transmission services, to sell byproducts incident to those services, and

to sell excess capacity. Each authority is

subject to significant constraints.

Several of these constraints do not apply

to national banks.

The authority to provide data

processing and data transmission

services is found at § 545.138(b). Under

this provision, a federal savings

association may perform all processing

functions on data submitted by a

purchaser. This authority, however, is

subject to data and customer

restrictions. For example, the data to be

processed must be ‘‘financial, economic,

or related to thrift, home financing, or

the activities of depository institutions.’’

12 CFR 545.138(b)(1). In addition, the

thrift must provide services primarily

for itself, other depository institutions,

parents or subsidiaries of depository

institutions, or customers of the thrift.

Sales of such services to others may not

exceed half of the total data processing

services provided by the thrift. See 12

CFR 545.138(b)(2).

Incident to its data processing

authority, a federal thrift may also sell

‘‘by-products’’ of data processing—

typically software. 12 CFR 545.138(c)(1).

Again, this authority is subject to certain

restrictions. For example, the software

must be originally developed for the

thrift’s own use, and the by-products

may not be substantially enhanced for

purposes of marketing.

Finally, the thrift may sell its excess

capacity. In connection with such sales,

the thrift may only furnish access to

facilities and provide necessary

operating personnel. The association

may not artificially create excess

capacity by acquiring equipment or

facilities whose capacity is substantially

greater than that necessary to

accommodate the thrift’s present or

expected future needs for providing

permissible data processing services. 12

CFR 545.138(c)(2).

By contrast, national banks have

broader authority to sell electronic

services, products, and excess capacity.

The recently promulgated OCC

interpretative ruling for national banks

provides:

A national bank may perform, provide, or

deliver through electronic means and

facilities any activity, function, product, or

service that it is otherwise authorized to

perform, provide, or deliver. A national bank

may also, in order to optimize the use of the

bank’s resources, market and sell to third

parties electronic capacities acquired or

developed by the bank in good faith for

banking purposes.22

With respect to the provision of data

processing or electronic services, a

national bank has fewer customer

restrictions.23 As noted above, a federal

thrift may only sell such services to

other depository institutions, parents or

subsidiaries of depository institutions,

or its loan or deposit customers. The

OCC interpretative ruling also does not

expressly restrict the types of data that

may be processed, although the

limitation to services that a bank ‘‘is

otherwise authorized to perform’’ may

have an effect that is similar to OTS

restrictions.

Software sales by national banks are

permissible if the software is ‘‘acquired

or developed * * * in good faith for

banking purposes.’’ 24 This is more

expansive than the comparable

authority for federal savings

associations in two respects. First, the

national bank’s software must be

developed ‘‘in good faith for banking

purposes,’’ rather than for the bank’s

own use. Second, nothing prohibits a

national bank from substantially

enhancing its software for marketing
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules 15633

25OTS has concluded that, pursuant to the

incidental powers doctrine, an association may

market and sell one type of stored-value card. OTS

Op. Chief Counsel (August 21, 1996) (prepaid

telephone cards).

26See 61 FR 19696 (May 2, 1996).

27See FDIC Gen Counsel Op. No. 8, 61 FR 40490

(Aug. 2, 1996).

28See 61 FR 40494 (Aug. 2, 1996).

29See OCC Bulletin No. 96–48 (Sept. 10, 1996).

purposes, provided the software retains

its banking purpose.

National banks also appear to have

broader authority to sell excess capacity.

Unlike thrifts, banks are not limited to

providing only access and operating

personnel. In addition, the OCC

interpretative ruling does not prohibit a

national bank from creating excess

capacity for the purpose of selling it.

Because the OCC’s data processing

interpretative ruling is substantially

more expansive than OTS’s regulation,

OTS seeks comment on whether it

should amend its data processing

regulation to contain similar provisions.

Other Issues

Stored-Value Cards

OTS also requests comment on the

appropriate regulatory response to

stored-value cards. These devices

provide for the storage and transfer of

money on credit-card-like devices

featuring a magnetic strip or embedded

computer chip. The systems created to

handle these cards, and the legal

obligations that attach to the issuers,

users, and others may vary in different

situations. OTS regulations are silent on

stored-value technology.25

These cards currently are the subject

of analysis at the other banking

agencies. The Federal Reserve Board is

assessing the application of Regulation

E to stored-value cards.26 The Federal

Deposit Insurance Corporation has

released a legal opinion addressing

whether the funds underlying a storedvalue card are an insured deposit,27 and

has held a public hearing on other

questions concerning stored-value cards

and electronic banking.28 The OCC has

recently issued guidance on the risks

associated with stored-value cards.29

Stored-value cards present a variety of

issues. While OTS would like to receive

comment on all aspects of this

technology, commenters are requested

to address the following questions: How

extensively will the industry use storedvalue cards? Do certain kinds of storedvalue programs present greater safety

and soundness concerns than others? Do

stored-value cards present special issues

that OTS should consider in examining

the liabilities of a savings association?

What kind of OTS guidance, if any, is

appropriate for the industry?

Community Reinvestment Act

The ‘‘borderless’’ nature of electronic

banking will also affect thrift

responsibilities under the CRA, which

encourages regulated financial

institutions to help meet the credit

needs of the local community in which

they are chartered, consistent with

safety and soundness. Comments are

requested on all aspects of this issue,

including the following questions. If a

savings institution uses electronic

banking as its sole method of customer

contact and solicits deposits and loans

throughout the United States, in what

community is it chartered to do

business for CRA purposes? If an

institution has brick and mortar

branches but also conducts a significant

portion of its business electronically

with customers beyond the jurisdiction

of the branches, how should its

community be defined? Should an

institution’s community under CRA be

defined by the location of its customers,

its offices, or both? How does an

institution demonstrate that it is serving

the credit needs of a widely dispersed

customer base or when there is little or

no geographic proximity between its

deposit customers and its loan

customers?

Additional Issues for Comment

OTS does not wish to limit comment

to the above-cited issues and

regulations. Rather, OTS welcomes all

comments regarding any aspect of

electronic banking, including the

following:

(1) What OTS regulations should be

eliminated or modified because they

impede the use of safe and sound

electronic technology?

(2) Should OTS impose any

restrictions or requirements on banking

operations offered over the Internet? For

example, should OTS mandate a

specific level of encryption, or should

OTS rely on general safety and

soundness principles to govern a safe

system of operation?

(3) Should OTS-regulated institutions

be permitted to open customer accounts

over the Internet for individuals

residing outside the United States or

transfer funds over the Internet for

account-holders to bank accounts

outside the United States? What other

restrictions should be imposed?

(4) What new technologies are being

developed for electronic banking and

how will these technologies impact the

regulation of savings institutions?

(5) Should OTS address consumer

protection rules in addition to the CRA

in connection with a rulemaking on

electronic banking?

IV. Request for Comments

OTS invites comment on all aspects of

the proposal as well as specific

comments on the proposed changes.

Additionally, OTS seeks comments on

all aspects of the ANPR.

V. Paperwork Reduction Act of 1995

The OTS invites comments on:

Whether the proposed collection of

information contained in this notice of

proposed rulemaking is necessary for

the proper performance of the agency’s

functions, including whether the

information has practical utility;

The accuracy of the agency’s estimate

of the burden of the proposed

information collection;

Ways to enhance the quality, utility,

and clarity of the information to be

collected; and

Ways to minimize the burden of the

information collection including the use

of automated collection techniques or

other forms of information technology.

Respondents/recordkeepers are not

required to respond to this collection of

information unless it displays a

currently valid OMB control number.

The reporting and recordkeeping

requirements contained in this notice of

proposed rulemaking have been

submitted to the Office of Management

and Budget for review in accordance

with the Paperwork Reduction Act of

1995 (44 U.S.C. 3507(d)). 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, NW., Washington, D.C. 20552.

The recordkeeping requirements

contained in this notice of proposed

rulemaking are found at 12 CFR 557.4.

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. The information is

needed by the OTS in order to supervise

savings associations and develop

regulatory policy. The likely

respondents/recordkeepers are OTSregulated savings associations.

Estimated number of respondents/

recordkeepers: 1,343.

Estimated average annual burden

hours per recordkeeper/respondent:

1484.

Estimated total annual reporting/

recordkeeping burden: 1,993,459.6.

Start-up costs to respondents/

recordkeepers: None.

Records are to be maintained for the

period of time the account is open, plus

three years.
15634 Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules

VI. Executive Order 12866

The Director of OTS has determined

that this proposed rule does not

constitute a ‘‘significant regulatory

action’’ for the purposes of Executive

Order 12866.

VII. Regulatory Flexibility Act Analysis

Pursuant to section 605(b) of the

Regulatory Flexibility Act, OTS certifies

that this proposed rule will not have a

significant impact on a substantial

number of small entities. The proposal

does not impose any additional burdens

or requirements upon small entities and

lowers several paperwork and other

burdens on all savings associations.

VIII. Unfunded Mandates Act of 1995

Section 202 of the Unfunded

Mandates Reform Act of 1995, Public

Law 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.

As discussed in the preamble, this

proposed rule reduces regulatory

burden. OTS has determined that the

proposed 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.

List of Subjects

12 CFR Part 545

Accounting, Consumer protection,

Credit, Electronic funds transfers,

Investments, Reporting and

recordkeeping requirements, Savings

Associations.

12 CFR Parts 556 and 561

Savings associations.

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 proposes to amend

12 CFR chapter V as follows:

PART 545—OPERATIONS

1. The authority citation for part 545

continues to read as follows:

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

1828.

§§ 545.10–545.14 [Removed]

2. Sections 545.10, 545.11, 545.12,

545.13, and 545.14 are removed.

PART 556—STATEMENTS OF POLICY

3. The authority 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.

§ 556.12 [Removed]

4. Section 556.12 is removed.

5. Part 557 is added to read as follows:

PART 557—DEPOSITS

Sec.

557.1 General.

557.2 Applicability of law.

557.3 Interest and earnings.

557.4 Account records.

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

§ 557.1 General.

(a) Authority and Scope. This part is

issued by OTS under its general

rulemaking and supervisory authority

under the Home Owners’ Loan Act, 12

U.S.C. 1462 et seq.

(b) Deposit Powers. A federal savings

association may raise funds through

accounts and may issue evidence of

such accounts as authorized by section

5(b)(1) of the HOLA (12 U.S.C.

1464(b)(1)), the terms of its charter, and

OTS regulations.

§ 557.2 Applicability of law.

(a) Occupation of Field. Pursuant to

sections 4(a) and 5(a) of the HOLA, 12

U.S.C. 1463(a), 1464(a), OTS is

authorized to promulgate regulations

that preempt state laws affecting the

operations of federal savings

associations when deemed appropriate:

to facilitate the safe and sound

operation of federal savings

associations, to enable federal savings

associations to conduct their operations

in accordance with the best practices of

thrift institutions in the United States,

or to further other purposes of the

HOLA. To enhance safety and

soundness and to enable federal savings

associations to conduct their operations

in accordance with best practices and

without undue regulatory duplication

and burden, OTS hereby occupies the

entire field of deposit-related

regulations for federal savings

associations. OTS intends to give the

federal savings associations maximum

flexibility to exercise their depositrelated powers in accordance with a

uniform federal scheme of regulation.

Accordingly, federal savings

associations may exercise their depositrelated powers as authorized under

federal law, including this part, without

regard to state laws purporting to

regulate or otherwise effect their deposit

activities, except to the extent provided

in paragraph (c) of this section. For

purposes of this section, ‘‘state law’’

includes any state statute, regulation,

ruling, order, or judicial decision.

(b) Illustrative Examples. The types of

state laws preempted by paragraph (a) of

this section include, without limitation,

state laws purporting to impose

requirements regarding:

(1) Abandoned and dormant accounts;

(2) Checking accounts;

(3) Disclosure requirements;

(4) Funds availability;

(5) Order of withdrawal from savings

accounts;

(6) Service charges and fees, including

dishonored checks; and

(7) Special purpose savings services.

(c) State laws that are not preempted.

State laws of the following types are not

preempted to the extent that they only

incidentally affect the deposit-related

activities of federal savings associations

or are otherwise consistent with the

purposes of paragraph (a) of this section:

(1) Contract and commercial law;

(2) Tort law;

(3) Criminal law; and

(4) Any other law that OTS, upon

review, finds:

(i) Furthers a vital state interest; and

(ii) Either has only an incidental effect

on deposit-related activities or is not

otherwise contrary to the purposes

expressed in paragraph (a) of this

section.

§ 557.3 Interest and earnings.

A federal savings association may pay

interest on a savings account, whether

in the form of a deposit or share, at a

rate or anticipated rate of return

determined at the time that the account

is accepted, as provided in its charter

and bylaws and the terms of the

account. The rate or anticipated rate on

a savings account either may be fixed or

may vary according to a schedule,

index, or formula specified at the time

that an account is accepted.
Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Proposed Rules 15635

§ 557.4 Account records.

(a) Each savings association should

establish and maintain deposit

documentation practices and records

that demonstrate appropriate

administration and monitoring of

deposit-related activities. The savings

association’s records should include

adequate evidence of ownership,

balances, and all transactions involving

the account.

(b) A federal savings association may

treat the holder of record of an account

as the owner, regardless of any notice to

the contrary, until the account is

transferred on the association’s records.

PART 561—DEFINITIONS

6. The authority citation for part 561

continues to read as follows:

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

1464, 1467a.

§ 561.42 [Amended]

7. Section 561.42 is amended by

removing the phrase ‘‘§§ 563.6 and

561.16.’’

PART 563—OPERATIONS

8. The authority citation for part 563

continues to read as follows:

Authority: 12 U.S.C. 375b, 1462, 1462a,

1463, 1464, 1467a, 1468, 1817, 1828, 3806.

§§ 563.2–563.3, 563.6–563.10 [Removed]

9. Sections 563.2, 563.3, 563.6, 563.7,

563.9, and 563.10 are removed.

§ 563g.1 [Amended]

10. Section 563g.1 is amended by

removing the last sentence of paragraph

(a)(13).

Dated: March 24, 1997.

By the Office of Thrift Supervision.

Nicolas P. Retsinas,

Director.

[FR Doc. 97–8124 Filed 4–1–97; 8:45 am]

BILLING CODE 6720–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Airspace Docket No. 94–AWA–1]

RIN 2120–AA66

Proposed Modification of the Phoenix

Class B Airspace Area; AZ

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking

(NPRM); reopening of comment period.

SUMMARY: This notice announces the

reopening of the comment period of a

Notice of proposed rulemaking,

Airspace Docket No. 94–AWA–1, which

proposes to modify the Class B airspace

area at Phoenix, AZ. The Notice

provided for a 45-day comment period

which closed on March 21, 1997.

Several airspace user organizations

requested that the comment period be

extended, and stated that the additional

time was necessary to fully analyze the

proposal and prepare comments.

DATES: Comments must be received on

or before May 2, 1997.

ADDRESSES: Send comments on the

proposal in triplicate to the Federal

Aviation Administration, Office of the

Chief Counsel, Attention: Rules Docket,

AGC–200, Airspace Docket No. 94–

AWA–1, 800 Independence Avenue,

SW, Washington, DC 20591. The official

docket may be examined in the Rules

Docket, Office of the Chief Counsel,

Room 916, 800 Independence Avenue,

SW, Washington, DC, weekdays, except

Federal holidays, between 8:30 a.m. and

5:00 p.m. An informal docket may also

be examined during normal business

hours at the office of the Regional Air

Traffic Division.

FOR FURTHER INFORMATION CONTACT: Mr.

William C. Nelson, Airspace and Rules

Division, ATA–400, Office of Air Traffic

Airspace Management, Federal Aviation

Administration, 800 Independence

Avenue, SW, Washington, DC 20591;

telephone: (202) 267–8783.

SUPPLEMENTARY INFORMATION:

Background

Airspace Docket No. 94–AWA–1,

published on February 4, 1997 (62 FR

5188), proposes to modify the Class B

airspace area at Phoenix, AZ.

Specifically, the Notice proposes to

reconfigure several area boundaries;

create new areas; and raise and/or lower

the floors of several of the existing areas.

McDonnell Douglas Helicopter

Systems, the Aircraft Owners and Pilots

Association, the Arizona Pilots

Association, and the Airport Director for

the Falcon Field Airport, Mesa AZ, each

submitted letters to the FAA requesting

45–90 additional days in which to

comment on the Notice. These

organizations cited to the amount of

time that has lapsed since the informal

airspace meeting in July 1993 and the

complexity of the proposal, as a basis

for requesting additional time within

which to file comments.

Reopen Comment Period

The FAA encourages the greatest

possible user participation in the

regulatory process. The FAA is aware

that many general aviation pilots receive

notification of proposed rulemaking

through, and submit comments through,

airspace user organizations. In view of

the complexity of the proposal and of

the amount of time that has lapsed since

the informal airspace meeting in 1993,

the FAA recognizes that the above

mentioned airspace user groups may

need additional time for analysis and

comment. The FAA believes, however,

that an additional 30 days will provide

these airspace user organizations

adequate time in which to process the

information and submit comments.

For the reasons stated above, the FAA

will reopen the comment period on

Airspace Docket No. 94–AWA–1 for an

additional 30-days and comment must

be filed on or before May 2, 1997.

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389; 14 CFR 11.69.

Issued in Washington, DC, on March 25,

1997.

Jeff Griffith,

Program Director for Air Traffic Airspace

Management.

[FR Doc. 97–8277 Filed 4–1–97; 8:45 am]

BILLING CODE 4910–13–P

14 CFR Part 71

[Airspace Docket No. 97–ANM–02]

Proposed Amendment of Class E

Airspace; Alamosa, Colorado

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking

(NPRM).

SUMMARY: This proposed rule would

amend the Alamosa, Colorado, Class E

airspace to accommodate a new

Instrument Landing System (ILS) and

new Global Positioning System (GPS)

Standard Instrument Approach

Procedures (SIAP) to San Luis Valley

Regional/Bergman Field. The area

would be depicted on aeronautical

charts for pilot reference.

DATES: Comments must be received on

or before May 30, 1997.

ADDRESSES: Send comments on the

proposal in triplicate to: Manager,

Operations Branch, ANM–530, Federal

Aviation Administration, Docket No.

97–ANM–02, 1601 Lind Avenue SW,

Renton, Washington 98055–4056.

The official docket may be examined

at the same address.

An informal docket may also be

examined during normal business hours

at the address listed above.

FOR FURTHER INFORMATION CONTACT:

Ted Melland, ANM–532.1, Federal

Aviation Administration, Docket No.

97–ANM–02, 1601 Lind Avenue SW,