19258 Federal Register / Vol. 63, No. 74 / Friday, April 17, 1998 / Notices

1See also section 501 of the Depository

Institutions Deregulation and Monetary Control Act

of 1980 (DIDMCA) (12 U.S.C. 1735f–7a) which

addresses interest rates on certain types of

residential real estate loans, and section 528 of the

DIDMCA (12 U.S.C. 1735f–7a note (Choice of

Highest Applicable Interest Rate)).

2Section 85 also contains several alternative

interest rate formulations which are not relevant to

this opinion.

3See also 12 CFR 7.4001(b) (1997) (National bank

may charge the maximum rate permitted to any

state-chartered or licensed lending institution by

the law of the state where the national bank is

located).

4See 126 Cong. Rec. 30665 (1979) (statements of

Senators Pryor and Bumpers).

not protect users or others against bacteria,

viruses, germs, or other disease organisms.

Always clean and wash this product

thoroughly before and after each use.’’

If applicable, the following statement

may also be used:

‘‘Antibacterial properties will not wash off

and are intended only to protect the

product.’’

All references to ‘‘antibacterial’’

properties and the required qualifying

statements must be located together,

must be printed in type of the same size,

style, and color, and must be given

equal prominence. Moreover, such

references may not be given any greater

prominence than other described

product features.

IV. Public Record and Electronic

Submissions

The official record for this notice, as

well as the public version, has been

established under docket control

number ‘‘OPP–00530’’ (including

comments and data submitted

electronically as described below). A

public version of this record, including

printed, paper versions of electronic

comments, which does not include any

information claimed as CBI, is available

for inspection from 8:30 a.m. to 4 p.m.,

Monday through Friday, excluding legal

holidays. The official record is located

at the Virginia address in

‘‘ADDRESSES’’ at the beginning of this

document.

Electronic comments can be sent

directly to EPA at:

opp-docket@epamail.epa.gov

Electronic comments must be

submitted as an ASCII file avoiding the

use of special characters and any form

of encryption. Comment and data will

also be accepted on disks in

Wordperfect 5.1/6.1 or ASCII file

format. All comments and data in

electronic form must be identified by

the docket control number ‘‘OPP–

00530’’. Electronic comments on this

notice may be filed online at many

Federal Depository Libraries.

V. Schedule for Finalizing the PR

Notice

EPA plans to issue and make effective

the final PR notice as soon as possible.

We anticipate that the guidance will be

made final and effective within the next

6 months.

List of Subjects

Environmental protection,

Antimicrobial pesticides, Treated

articles exemption.

Dated: April 8, 1998.

Marcia E. Mulkey,

Director, Office of Pesticide Programs.

[FR Doc. 98–10227 Filed 4–16–98; 8:45 am]

BILLING CODE 6560–50–F

FEDERAL DEPOSIT INSURANCE

CORPORATION

General Counsel’s Opinion No. 10;

Interest Charges Under Section 27 of

the Federal Deposit Insurance Act

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Notice of General Counsel’s

Opinion No. 10.

SUMMARY: The FDIC’s Legal Division has

received a request for guidance

regarding the types of charges that

constitute ‘‘interest’’ for purposes of

section 27 of the Federal Deposit

Insurance Act. This General Counsel’s

Opinion is being provided for the

benefit of the public, as well as

institutions subject to section 27,

because the statute speaks only in terms

of ‘‘interest’’ but does not define the

term. It is the Legal Division’s opinion

that the term ‘‘interest,’’ for purposes of

section 27, includes those charges that

a national bank is authorized to charge

as interest under section 85 of the

National Bank Act (NBA).

FOR FURTHER INFORMATION CONTACT:

Barbara I. Taft, Assistant General

Counsel, (202) 898–6830 or Rodney D.

Ray, Counsel, (202) 898–3556, Federal

Deposit Insurance Corporation, Legal

Division, 550 17th Street, N.W.,

Washington, D.C. 20429.

Text of General Counsel’s Opinion

General Counsel’s Opinion No. 10;

Interest Charges Under Section 27 of

The Federal Deposit Insurance Act.

By: William F. Kroener, III, General

Counsel.

Background

Federal statutes establish the

maximum amounts of interest that

insured depository institutions may

charge their customers. The interest

charges are governed by section 85 of

the National Bank Act (NBA) (12 U.S.C.

85) for national banks; section 27 of the

Federal Deposit Insurance Act (FDI Act)

(12 U.S.C. 1831d) for state-chartered

insured depository institutions and

insured branches of foreign banks; and

section 4(g) of the Home Owners’ Loan

Act (HOLA) (12 U.S.C. 1463(g)) for

savings associations.1 Although

contained in different parts of the

United States Code, the latter two

provisions are patterned after section 85

of the NBA and generally authorize

interest to be charged on loans to

customers at the greater of:

(1) A rate not more than one percent

above the discount rate on 90-day

commercial paper in effect at the

Federal Reserve Bank for the federal

reserve district in which the lender is

located; or

(2) At the highest rate allowed by the

laws of the state where the lender is

located.

Congress initially addressed the issue

of the maximum rates of interest that

national banks could charge borrowers

by enacting section 85 of the National

Bank Act. That statute was enacted to

foster a strong national banking system

and protect national banks from

potentially anti-competitive state

legislation. Tiffany v. National Bank of

Missouri, 85 U.S. 409, 412–13 (1873).

Currently, section 85 authorizes

national banks to charge their customers

interest rates allowed by the laws of the

state where the bank is located.2 The

statute has been construed to authorize

national banks to charge interest at rates

authorized by state law for competing

state institutions (the ‘‘most favored

lender doctrine’’). Tiffany, 85 U.S. at

413.3 It also has been construed to

authorize the use of interest rates

authorized by the state where the lender

is located no matter where the borrower

resides. Marquette Nat’l Bank v. First

Omaha Serv. Corp., 439 U.S. 299 (1978).

I. Construction of Section 27

In the high interest rate environment

of the late 1970s Congress recognized

that section 85 of the NBA provided

national banks with a distinct

competitive advantage over statechartered lending institutions, whose

interest rates were constrained by state

laws. 4 To establish competitive equality

between state-chartered banks, savings

associations, and national banks, section

27 was added to the FDI Act by section
Federal Register / Vol. 63, No. 74 / Friday, April 17, 1998 / Notices 19259

5See 126 Cong. Rec. 6900 (1980) (statement of

Sen. Proxmire); 126 Cong. Rec. 6907 (1980)

(statement of Sen. Bumpers).

6 The statutory language contained in section 4(g)

of HOLA was enacted in section 522 of DIDMCA

and was originally codified as section 414 of the

National Housing Act (NHA)(12 U.S.C. 1730g (a)).

The language was later transferred from the NHA

to section 4(g) of HOLA by section 301 of the

Financial Institutions Reform, Recovery and

Enforcement Act of 1989 (FIRREA), Pub. L. No.

101–73, 103 Stat. 183, 282 (1989).

7See, OCC Interpretive Letter No. 670, February

17, 1995, reprinted in [1994–1995 Decisions] Fed.

Banking L. Rep. (CCH) P 83618.

521 of the Depository Institutions

Deregulation and Monetary Control Act

of 1980 (DIDMCA), Pub. L. 96–221, 94

Stat. 132 (1980). Section 27 was

intended to give state-chartered banks

the benefit of section 85 and

purposefully engrafted, at several

points, language from the NBA. 5

Greenwood Trust Co. v. Commonwealth

of Massachusetts, 971 F.2d 818, 826 (1st

Cir.), cert. denied, 506 U.S. 1052 (1993).

Because similar language and

concepts appear in both statutes they

frequently have been cited and

discussed together in court opinions

and construed in pari materia. See e.g.,

Greenwood Trust, 971 F.2d at 827; Hill

v. Chemical Bank, 799 F. Supp. 948, 953

(D. Minn. 1992); Stoorman v.

Greenwood Trust Co., 908 P.2d 133, 135

(Colo.), cert. denied, 116 S.Ct. 2498

(1996); Copeland v. MBNA America

Bank, N.A., 907 P.2d 87, 93 (Colo.), cert.

denied, 116 S.Ct. 2498 (1996); Hunter v.

Greenwood Trust Co., 272 N.J. Super.

526, 532–38, 640 A.2d 855 (N.J. Super.

1994), reinstated, 146 N.J. 65, 679 A.2d

652 (N.J. 1996). The FDIC’s practice also

has been to construe the two provisions

similarly. See FDIC Advisory Opinion

No. 81–3, February 3, 1981, reprinted in

[1988–1989 Transfer Binder] Fed.

Banking L. Rep. (CCH) P 81,006 (statechartered banks have the same ‘‘most

favored lender’’ status under section 27

as national banks have under section 85

of the NBA); FDIC Advisory Opinion

No. 81–7, March 17, 1981, reprinted in

[1988–1989 Transfer Binder] Fed.

Banking L. Rep. (CCH) P 81,008 (statechartered banks have the same right to

export interest rates under section 27 as

national banks have under section 85 of

the NBA).

II. Charges Constituting Interest

While neither section 85 nor section

27 defines what charges constitute

‘‘interest,’’ court decisions have not

limited the scope of the term solely to

a state’s numerical percentage rate, but

have broadly construed the term to

include various other types of credit

charges. See e.g., Smiley v. Citibank

(South Dakota), N.A., 116 S.Ct. 1730,

1734 (1996) (deferring to the Office of

the Comptroller of the Currency’s (OCC)

regulation interpreting ‘‘interest,’’ for

purposes of section 85, as including

payments compensating a creditor for

making a loan, extending a line of

credit, or any default or breach by a

borrower of a condition upon which

credit was extended, but excluding

other types of payments, such as,

payments to reimburse a creditor for

loan processing fees, collateral

insurance, or appraisal fees); Greenwood

Trust, 971 F.2d at 824 (late payment fees

and kindred charges may constitute

‘‘interest’’ under section 27); Fisher v.

First Nat’l Bank of Omaha, 548 F.2d

255, 258–61 (8th Cir. 1977) (cash

advance fees); Watson v. First Union

Nat’l Bank, 837 F. Supp. 146, 150

(D.S.C. 1993) (overlimit fees); Tikkanen

v. Citibank (South Dakota) N.A., 801 F.

Supp. 270, 278–79 (D. Minn. 1992) (late

payment, over the limit fees, and similar

charges); Hill, 799 F. Supp. at 954 (over

the limit fees); Stoorman, 908 P.2d at

136 (late payment fees); Copeland, 907

P.2d at 94 (late payment fees); Sherman

v. Citibank (South Dakota), N.A., 272

N.J. Super. 435, 640 A.2d 325 (N.J.

Super. 1994), reinstated, 146 N.J. 65,

679 A.2d 652 (N.J. 1996) (late payment

fees); Hunter, 272 N.J. Super. at 537 (late

payment fees).

III. Other Agency Interpretations

The OCC has defined ‘‘interest’’ for

purposes of the NBA by interpretive

ruling as follows: ‘‘The term ‘interest’ as

used in 12 U.S.C. 85 includes any

payment compensating a creditor or

prospective creditor for an extension of

credit, making available of a line of

credit, or any default or breach by a

borrower of a condition upon which

credit was extended. It includes, among

other things, the following fees

connected with credit extension or

availability: numerical periodic rates,

late fees, not sufficient funds (NSF) fees,

overlimit fees, annual fees, cash

advance fees, and membership fees. It

does not ordinarily include appraisal

fees, premiums and commissions

attributable to insurance guaranteeing

repayment of any extension of credit,

finders’ fees, fees for document

preparation or notarization, or fees

incurred to obtain credit reports.’’ 12

CFR 7.4001(a) (1997). Virtually the same

definition also has been adopted by the

Office of Thrift Supervision in

connection with section 4(g) of the

HOLA for savings associations. 6 See 12

CFR 560.110 (1997).

Although the OCC’s interpretive

ruling was only recently published in

the Code of Federal Regulations, the

ruling is consistent with the OCC’s

earlier legal interpretation of the term 7

and the United States Supreme Court

has determined that it constitutes a

reasonable interpretation of the statute.

Smiley, 116 S.Ct. at 1736.

Conclusion

Section 27 and section 85 of the NBA

have been and should be, in the Legal

Division’s opinion, construed in pari

materia because section 27 is patterned

after section 85 and the provisions

embody similar terms and concepts.

Congress also clearly intended to

establish competitive equality between

state-chartered lending institutions and

national banks with regard to interest

rates by enacting section 27. In addition,

the OCC and OTS have adopted similar

regulatory definitions of ‘‘interest’’ for

purposes of section 85 of the NBA and

section 4(g) of HOLA, respectively.

Therefore, it is the Legal Division’s

opinion that the term ‘‘interest’’, for

purposes of section 27, includes those

charges that a national bank is

authorized to charge under section 85 of

the NBA. See 12 CFR 7.4001(a) (1997).

Authorized to be published in the Federal

Register by Order of the Board of Directors,

dated at Washington, D.C., this 24th day of

March, 1998.

Federal Deposit Insurance Corporation.

James D. LaPierre,

Deputy Executive Secretary.

[FR Doc. 98–10181 Filed 4–16–98; 8:45 am]

BILLING CODE 6714–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

Sunshine Act

Pursuant to the provisions of the

‘‘Government in the Sunshine Act’’ (5

U.S.C. 552b), notice is hereby given that

at 10:07 a.m. on Tuesday, April 14,

1998, the Board of Directors of the

Federal Deposit Insurance Corporation

met in closed session to consider

matters relating to the Corporation’s

corporate and supervisory activities.

In calling the meeting, the Board

determined, on motion of Director

Joseph H. Neely (Appointive), seconded

by Director Julie Williams (Acting

Comptroller of the Currency), concurred

by Director Ellen S. Seidman (Director,

Office of Thrift Supervision), and Acting

Chairman Andrew C. Hove, Jr., that

Corporation business required its

consideration of the matters on less than

seven days’ notice to the public; that no

earlier notice of the meeting was

practicable; that the public interest did