Federal Register / Vol. 74, No. 48 / Friday, March 13, 2009 / Proposed Rules 10843 

Partial Final Decision: Issued 

September 15, 2005; published 

September 21, 2005 (70 FR 55458). 

Partial Final Rule: Issued October 7, 

2005; published October 12, 2005 (70 

FR 59221). 

Preliminary Statement 

A public hearing was held upon 

proposed amendments to the marketing 

agreements and orders regulating the 

handling of milk in the Appalachian 

and Southeast marketing areas. The 

hearing was held, pursuant to the 

provisions of the Agricultural Marketing 

Agreement Act of 1937, as amended (7 

U.S.C. 601–674), and the applicable 

rules of practice and procedure 

governing the formulation of marketing 

agreements and marketing orders (7 CFR 

part 900), at Atlanta, Georgia, on 

February 23–26, 2004, pursuant to a 

notice of hearing issued January 16, 

2004, and published in the Federal 

Register on January 20, 2004 (69 FR 

3278). 

Producer-Handler Provisions 

This action terminates the rulemaking 

proceeding concerning proposed 

amendments to the producer-handler 

provisions of the Appalachian and 

Southeast orders. A proposal published 

in the hearing notice as Proposal 7 

sought to apply the Appalachian and 

Southeast orders’ pooling and pricing 

provisions to producer-handlers with 

fluid route disposition in excess of 3 

million pounds per month. A second 

proposal, published in the hearing 

notice as Proposal 8, sought to allow 

producer-handlers to purchase up to 10 

percent of the producer’s monthly milk 

production during December through 

May and 30 percent during June through 

November from other sources. 

The Appalachian and the Southeast 

milk orders provide identical 

definitions that describe and define a 

category of handlers known as 

producer-handlers. Both orders require 

producer-handlers to operate their 

businesses at their own enterprise and 

risk, meaning that the care and 

management of the dairy animals and 

other resources necessary for the 

production, processing, and distribution 

of fluid milk products are the sole 

responsibility of the handler. 

The Appalachian and Southeast 

orders prohibit producer-handlers from 

purchasing any amount of supplemental 

milk from pool sources or from any 

other source. Producer-handlers bear the 

entire burden of balancing their own 

milk production. Any fluctuation in a 

producer-handler’s daily and seasonal 

milk needs must be met through their 

own farm production and any excess 

milk supplies must be disposed of at 

their own expense. 

Producer-handlers are exempt from 

the pooling and pricing provisions of 

the Appalachian and Southeast orders. 

Exemption from the pooling and pricing 

provisions of the orders means that the 

minimum class prices established under 

the orders that handlers must pay for 

milk are not applicable to producerhandlers, and producer-handlers receive 

no minimum price protection for their 

milk production not disposed of for 

fluid uses. 

While producer-handlers are exempt 

from the pooling and pricing provisions 

of the Appalachian and Southeast 

orders, they are required to submit 

reports to the Market Administrator who 

monitors producer-handler operations 

to ensure that they are in compliance 

with the conditions for such exemption 

status. 

The Secretary is in the process of 

receiving proposals to initiate a new 

rulemaking proceeding to consider the 

elimination of the producer-handler 

provision in all Federal milk marketing 

orders. Two such proposals have been 

received and the Secretary has invited 

the submission of additional proposals. 

Such proposals must be received by 

Dairy Programs by March 16, 2009. (See 

Dairy Programs Web site at http:// 

www.ams.usda.gov/dairy.) 

Given this development and the 

substance of the two proposals 

considered herein, the review of the 

producer-handler exemption under all 

Federal milk marketing orders would be 

a more comprehensive review. 

Therefore, the Secretary has determined 

that this rulemaking proceeding should 

be terminated. 

Termination of Proceeding 

In view of the foregoing, it is hereby 

determined that the proceeding with 

respect to proposed amendments to the 

Appalachian and Southeast orders 

regarding the regulation of producerhandlers should be and is hereby 

terminated. 

List of Subjects in 7 CFR Parts 1005 and 

1007 

Milk marketing orders. 

The authority citation for 7 CFR Parts 

1005 and 1007 continues to read as 

follows: 

Authority: 7 U.S.C. 601–674, and 7253. 

Dated: March 9, 2009. 

Robert C. Keeney, 

Acting Associate Administrator. 

[FR Doc. E9–5414 Filed 3–12–09; 8:45 am] 

BILLING CODE 3410–02–P 

FEDERAL TRADE COMMISSION 

16 CFR Part 320 

RIN 3084-AA99 

Disclosures for Non-Federally Insured 

Depository Institutions under the 

Federal Deposit Insurance Corporation 

Improvement Act (FDICIA) 

AGENCY: Federal Trade Commission 

(FTC or Commission). 

ACTION: Supplemental notice of 

proposed rulemaking; request for public 

comment. 

SUMMARY: The Federal Deposit 

Insurance Corporation Improvement Act 

of 1991 (FDICIA) directs the 

Commission to prescribe the manner 

and content of certain mandatory 

disclosures for depository institutions 

that lack federal deposit insurance. On 

March 16, 2005, the Commission 

published a notice of proposed 

rulemaking (NPRM) seeking comment 

on disclosure rules for such institutions. 

Subsequently, Congress passed the 

Financial Services Regulatory Relief Act 

of 2006 (FSRRA), which amended 

FDICIA’s requirements. To ensure that 

the FTC’s requirements are consistent 

with the FSRRA amendments, the 

Commission is seeking comment on 

conforming changes to the proposed 

Rule. 

DATES: Written comments must be 

received on or before June 5, 2009. 

ADDRESSES: Interested parties are 

invited to submit written comments 

electronically or in paper form. 

Comments should refer to 

‘‘Supplemental Proposed Rule for 

FDICIA Disclosures, Matter No. 

R411014’’ to facilitate the organization 

of comments. Please note that comments 

will be placed on the public record of 

this proceeding—including on the 

publicly accessible FTC website, at 

(http://www.ftc.gov/os/ 

publiccomments.shtm) — and therefore 

should not include any sensitive or 

confidential information. In particular, 

comments should not include any 

sensitive personal information, such as 

an individual’s Social Security Number; 

date of birth; driver’s license number or 

other state identification number, or 

foreign country equivalent; passport 

number; financial account number; or 

credit or debit card number. Comments 

also should not include any sensitive 

health information, such as medical 

records or other individually 

identifiable health information. In 

addition, comments should not include 

any ‘‘[t]rade secrets and commercial or 

financial information obtained from a 


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10844 Federal Register / Vol. 74, No. 48 / Friday, March 13, 2009 / Proposed Rules 

1 FTC Rule 4.2(d), 16 CFR 4.2(d). The comment 

must be accompanied by an explicit request for 

confidential treatment, including the factual and 

legal basis for the request, and must identify the 

specific portions of the comment to be withheld 

from the public record. The request will be granted 

or denied by the Commission’s General Counsel, 

consistent with applicable law and the public 

interest. See FTC Rule 4.9(c), 16 CFR 4.9(c). 

2 See (http://www.ftc.gov/os/comments/FDICIA/ 

index.shtm). 

3 On October 3, 2008, the enactment of the 

Emergency Economic Stabilization Act of 2008 

temporarily raised the basic limit on federal deposit 

insurance coverage from $100,000 to $250,000 per 

depositor. The legislation provides that the basic 

deposit insurance limit will return to $100,000 after 

December 31, 2009. 

4 See 12 CFR Part 328 and 12 CFR Part 740. 

5 According to the U.S. Government 

Accountability Office (GAO), eight states have 

credit unions that purchase private deposit 

insurance in lieu of federal insurance. Other states 

either require federal insurance or allow private 

insurance but do not have any privately insured 

credit unions. GAO also identified two institutions 

that have no federal or private insurance. ‘‘Federal 

Deposit Insurance Act: FTC Best Among Candidates 

to Enforce Consumer Protection Provisions,’’ GAO03-971 (Aug. 2003), 6-7. In addition, the 

Commission understands that there are a small 

number of state banks and savings associations that 

do not have federal deposit insurance. 

6 ‘‘Depository institutions’’ lacking federal 

insurance include credit unions, banks, and savings 

associations that are not either: a) insured 

depository institutions as defined under the FDIA; 

or b) insured credit unions as defined in Section 

101 of the Federal Credit Union Act (FCUA) (12 

U.S.C. 1752). The FDIA defines ‘‘insured depository 

person and privileged or confidential 

. . .,’’ as provided in Section 6(f) of the 

FTC Act, 15 U.S.C. 46(f), and 

Commission Rule 4.10(a)(2), 16 CFR 

4.10(a)(2). Comments containing 

material for which confidential 

treatment is requested must be filed in 

paper form, must be clearly labeled 

‘‘Confidential,’’ and must comply with 

FTC Rule 4.9(c).1

Because paper mail addressed to the 

FTC is subject to delay due to 

heightened security screening, please 

consider submitting your comments in 

electronic form. Comments filed in 

electronic form should be submitted by 

using the following weblink: (https:// 

secure.commentworks.com/ftcfdiciasupp) (and following the 

instructions on the web-based form). To 

ensure that the Commission considers 

an electronic comment, you must file it 

on the web-based form at the weblink 

(https://secure.commentworks.com/ftcfdiciasupp). If this Notice appears at 

(http://www.regulations.gov/search/ 

index.jsp), you may also file an 

electronic comment through that 

website. The Commission will consider 

all comments that regulations.gov 

forwards to it. You may also visit the 

FTC website at http://www.ftc.gov to 

read the Notice and the news release 

describing it. 

A comment filed in paper form 

should include the ‘‘Supplemental 

Proposed Rule for FDICIA Disclosures, 

Matter No. R411014’’ reference both in 

the text and on the envelope, and 

should be mailed or delivered to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

Room H-135 (Annex A), 600 

Pennsylvania Avenue, N.W., 

Washington, D.C. 20580. The FTC is 

requesting that any comment filed in 

paper form be sent by courier or 

overnight service, if possible, because 

U.S. postal mail in the Washington area 

and at the Commission is subject to 

delay due to heightened security 

precautions. 

The FTC Act and other laws the 

Commission administers permit the 

collection of public comments to 

consider and use in this proceeding as 

appropriate. The Commission will 

consider all timely and responsive 

public comments that it receives, 

whether filed in paper or electronic 

form. Comments received will be 

available to the public on the FTC 

website, to the extent practicable, at 

(http://www.ftc.gov/os/ 

publiccomments.shtm). As a matter of 

discretion, the Commission makes every 

effort to remove home contact 

information for individuals from the 

public comments it receives before 

placing those comments on the FTC 

website. More information, including 

routine uses permitted by the Privacy 

Act, may be found in the FTC’s privacy 

policy, at (http://www.ftc.gov/ftc/ 

privacy.shtm). 

FOR FURTHER INFORMATION CONTACT: 

Hampton Newsome, (202) 326-2889, 

Attorney, Division of Enforcement, 

Bureau of Consumer Protection, Federal 

Trade Commission, 600 Pennsylvania 

Avenue, N.W., Washington, D.C. 20580. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In 1991, as part of the Federal Deposit 

Insurance Corporation Improvement Act 

(FDICIA), Congress directed the 

Commission to prescribe certain 

disclosures for depository institutions 

lacking federal deposit insurance. 

Although FDICIA was enacted in 1991, 

Congress prohibited the FTC from 

spending resources on FDICIA’s 

disclosure requirements until 2003. 

After Congress lifted that ban, the 

Commission published proposed 

disclosures consistent with FDICIA’s 

statutory directives (70 FR 12823 

(March 16, 2005)). In response, many 

commenters raised concerns with the 

proposal.2 Thereafter, Congress passed 

the Financial Services Regulatory Relief 

Act of 2006 (FSRRA) (Pub. L. 109-351) 

amending FDICIA. The FSRRA 

amendments addressed almost all of the 

concerns raised by commenters with the 

FTC’s proposed Rule. 

While the FSRRA amendments 

contained some modifications to the 

requirements, they did not alter 

significantly the basic statutory 

obligations for affected institutions. It is 

important to note that FDICIA’s 

disclosure requirements apply 

regardless of the status of FTC’s 

regulations in this area. Accordingly, 

institutions lacking federal deposit 

insurance must comply with the law’s 

disclosure requirements now. 

To conform with the FSRRA 

amendments, the Commission now 

publishes revised proposed Rule 

provisions. Section II of this Notice 

describes these proposed provisions in 

detail. Before addressing the FTC’s 

proposed Rule provisions, the following 

discussion provides background about 

federal deposit insurance, institutions 

that lack such insurance, statutory 

disclosure requirements for such 

institutions, the FTC’s role in this area, 

and the changes to the law effected by 

the FSRRA amendments. 

Under existing law, all federallychartered and most state-chartered 

depository institutions must have 

federal deposit insurance. Federal 

deposit insurance funds currently 

guarantee all deposits at federally 

insured institutions up to and including 

$250,000 per depositor.3 Federally 

insured banks and credit unions must 

display signs disclosing this guarantee 

at each station or window where 

insured deposits are normally received 

in the depository institution’s principal 

place of business and in all its 

branches.4

Although the vast majority of 

depository institutions have federal 

deposit insurance, there are some 

exceptions. For example, the Puerto 

Rican government provides deposit 

insurance for non-federal credit unions 

located in Puerto Rico. In addition, 

approximately 200 state-chartered credit 

unions in approximately eight states do 

not have federal deposit insurance, and 

seek to protect their customers through 

private deposit insurance.5

In response to incidents affecting the 

safety of deposits at certain financial 

institutions lacking federal deposit 

insurance, Congress amended the 

Federal Deposit Insurance Act (FDIA) in 

1991 adding Section 43 (12 U.S.C. 

1831t), which imposes several 

requirements on non-federally insured 

institutions6 and private deposit 


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Federal Register / Vol. 74, No. 48 / Friday, March 13, 2009 / Proposed Rules 10845 

institution’’ as any bank or savings association the 

deposits of which are insured by the FDIC pursuant 

to this chapter (12 U.S.C. 1813(c)). The FCUA 

defines ‘‘insured credit union’’ to mean ‘‘any credit 

union the member accounts of which are insured 

by the National Credit Union Administration.’’ (12 

U.S.C. 1752). 

7 Congress passed these amendments as part of 

FDICIA. See Pub. L. No. 102-242, 105 Stat. 2236 

(1991) (Section 151 of FDICIA, Subtitle F of Title 

1, S. 543). Section 43 was initially designated as 

Section 40 of the FDIA. See also S. Rep. No. 167, 

102 Cong., 1st Sess., at 61 (1992). 

8 The definition of ‘‘depository institution’’ in 

Section 43(f)(2) also includes any entity that, as 

determined by the FTC, engages in the business of 

receiving deposits and could reasonably be 

mistaken for a depository institution by the entity’s 

current or prospective customers (i.e., ‘‘look-alike’’ 

institutions). The Commission has not identified 

any ‘‘look-alike’’ institutions to date and does not 

plan to address the issue in this proceeding. If, in 

the future, the Commission or commenters identify 

‘‘look-alike’’ institutions of concern that are not 

subject to existing legal requirements, the FTC may 

consider whether to develop requirements for such 

entities. 

9 12 U.S.C. 1831t(b). 

10 Making Appropriations for Agriculture, Rural 

Development, Food and Drug Administration, and 

Related Agencies, for the Fiscal Year Ending 

September 30, 2004, and for Other Purposes, H.R. 

Conf. Rep. No. 108-401, Cong., 1st Sess., at 88 

(2003). 

11 The acknowledgments and notices must 

indicate that the institution is not federally insured 

and that the federal government does not guarantee 

that depositors will recover their money if the 

institution fails (see Section 43(b)(3)). 

12 The ‘‘shut-down’’ provision, formerly Section 

43(e), prohibited depository institutions lacking 

federal deposit insurance from using the mails or 

other instrumentalities of interstate commerce to 

facilitate depository activities unless the 

appropriate state supervisor had determined that 

the institution met eligibility requirements for such 

insurance. 

insurers.7 In general, Section 43(b), as 

amended by FSRRA, mandates that 

depository institutions lacking federal 

deposit insurance provide certain 

disclosures to consumers.8 Specifically, 

in all periodic statements, signature 

cards, passbooks, and share certificates, 

the institution must disclose that it does 

not have federal deposit insurance and 

that, if the institution fails, the federal 

government does not guarantee that 

depositors will get their money back 

(hereinafter ‘‘required long disclosure’’). 

Moreover, in most advertising and at 

deposit windows, principal places of 

business, and branches, the institution 

must disclose that it is not federally 

insured (hereinafter ‘‘required short 

disclosure’’).9

For many years after FDICIA’s 

passage, Congress prohibited the 

Commission from using FTC resources 

to enforce the law’s requirements. In 

2003, Congress lifted this prohibition for 

certain provisions of FDICIA, including 

the disclosure provisions of Section 

43.10 Subsequently, the Commission 

published an NPRM seeking comments 

on its proposed implementation of 

Section 43 (70 FR 12823 (March 16, 

2005)). In response, the Commission 

received numerous comments raising 

serious concerns with the proposal, and, 

therefore, indirectly with Section 43. In 

October 2006, Congress substantially 

addressed these concerns by amending 

Section 43 as part of FSRRA. These new 

amendments rendered significant 

portions of the Commission’s proposed 

Rule obsolete. 

Accordingly, the Commission now 

proposes modifications to its proposed 

Rule and seeks comments on these 

changes. The FSRRA amendments did 

not alter the basic content of the 

required disclosures. Section 43 

continues to require depository 

institutions lacking federal deposit 

insurance affirmatively to disclose that 

fact to their depositors or members. (12 

U.S.C. 1831t(b)). The FSRRA 

amendments did, however, amend the 

law to: (1) significantly alter Section 

43(b)(3) (12 U.S.C. 1831t(b)(3)), which 

requires institutions to obtain signed 

acknowledgments from depositors 

related to the lack of federal deposit 

insurance; (2) establish specific 

exemptions to the advertising disclosure 

requirements; (3) modify the 

requirements for disclosures on periodic 

statements and account records and at 

depository locations; and (4) limit some 

of the FTC’s authority under the law 

and provide state regulators with 

specific enforcement authority. These 

four changes are discussed in detail as 

follows. 

First, the FSRRA amendments 

significantly change the signed 

acknowledgement requirements of the 

law, an issue of concern to many 

commenters. Specifically, the 

amendments allow institutions under 

certain circumstances to provide notice 

to depositors in lieu of obtaining signed 

acknowledgments.11 For example, the 

law previously required institutions to 

obtain signed acknowledgments from all 

customers who became depositors after 

1994. Under the amended law, 

institutions must obtain signed 

acknowledgments from anyone who 

becomes a depositor after the effective 

date of FSRRA (October 13, 2006), 

except for those who become depositors 

through the conversion of a federally 

insured institution to a non-federally 

insured institution or through the 

merger of a federally insured institution 

with a non-federally insured institution. 

For depositors obtained through a 

conversion or merger after October 13, 

2006, the institution may obtain the 

depositor’s signed acknowledgement, or 

make an attempt to obtain such an 

acknowledgment, by sending the 

consumer a card with the required long 

disclosure, a signature line, and 

instructions for returning the card to the 

institution. For current depositors (i.e., 

those who became depositors before 

October 13, 2006 and have not 

submitted an acknowledgement), the 

institution either must obtain a signed 

acknowledgement, or make two 

attempts to obtain such a signed 

acknowledgement, by transmitting the 

above described card to the depositor. 

Second, the FSRRA amendments 

contain specific exemptions to the law’s 

disclosure requirements for advertising. 

In particular, the required short 

disclosure (that the institution is not 

federally insured) need not appear in 

any ‘‘sign, document, or other item that 

contains the name of the depository 

institution, its logo, or its contact 

information, but only if the sign, 

document, or item does not include any 

information about the institution’s 

products or services or information 

otherwise promoting the institution.’’ 

The law also exempts from the 

disclosure requirement ‘‘[s]mall 

utilitarian items [e.g., common pens and 

key chains] that do not mention deposit 

products or insurance if inclusion of the 

notice would be impractical.’’ (12 U.S.C. 

1831t(b)(2)(B)). 

Third, the FSRRA amendments alter 

the disclosure requirements for periodic 

statements, account records, and 

depository locations. Before the 

amendments, Section 43(b)(1) required 

the long disclosure on ‘‘all periodic 

statements of account, on each signature 

card, and on each passbook, certificate 

of deposit, or similar instrument 

evidencing a deposit.’’ The amended 

provision eliminates the reference to 

‘‘similar instrument evidencing a 

deposit’’ and replaces it with ‘‘share 

certificate.’’ In addition, before the 

FSRRA amendments, the statute 

required such notices ‘‘at each place 

where deposits are normally received.’’ 

The FSRRA amendments changed the 

law to require affected institutions to 

clearly and conspicuously disclose that 

the institution is not federally insured 

‘‘at each station or window place where 

deposits are normally received, its 

principal place of business and all its 

branches where it accepts deposits or 

opens accounts (excluding automated 

teller machines or point of sale 

terminals), and on its main Internet page 

. . . .’’ (12 U.S.C. 1831t(b)(2)(A)). 

Finally, the FSRRA amendments 

eliminate the ‘‘shut-down’’ provision of 

the law12 and limit the FTC’s authority 


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13 12 U.S.C. 1831t(c) & (d). 14 The Commission does not propose to revise 

Sections 320.1 (Scope); 320.2 (Definitions); 320.6 

(Exception for Certain Depository Institutions); and 

320.7 (Enforcement) of the 2005 proposed Rule. 15 These particular FSRRA amendments, 

summarized in Section I of this Notice, and the 

revised proposed Rule provisions that relate to 

them, are straightforward and do not warrant 

additional discussion here. 

16 See, e.g., California and Nevada Credit Union 

League (#128); Greater Cincinnati Credit Union 

(#81); and Elkhart County Bureau Credit Union 

(#123). See (http://www.ftc.gov/os/comments/ 

FDICIA/index.shtm). 17 North Shore Gas Credit Union (#105) and 

America’s Community Bankers (#130). 18 NCUA defines ‘‘service facility’’ as a place 

where shares are accepted for members’ accounts, 

loan applications are accepted, or loans are 

disbursed. See, e.g., 71 FR 36667 (June 28, 2006). 

19 See 70 FR 12823, 12825 (March 16, 2005). The 

statute indicates that the FTC should not consider 

‘‘money received in connection with any draft or 

similar instrument issued to transmit money’’ to be 

a deposit for the purposes of this exemption. 

to the promulgation of regulations and 

the enforcement of the law’s disclosure 

requirements (12 U.S.C. 1831t(b), (c), & 

(e)). The amendments also provide state 

regulators with broad authority to 

enforce all provisions of Section 43, as 

amended (see 13 U.S.C. 1831(f)(2)). 

II. Proposed Amendments and 

Comment Analysis 

The disclosure requirements in 

Section 43, as amended by FSRRA, 

currently apply to covered institutions. 

As directed by Section 43,13 however, 

the Commission plans to issue 

regulations that track those statutory 

disclosure requirements. As part of that 

effort and to conform the proposed Rule 

to the FSRRA amendments, we seek 

comment on changes to the proposed 

Rule published on March 16, 2005 (70 

FR 12823).14 Specifically, the changes 

address disclosure requirements for 

periodic statements and account 

records, advertising, and locations that 

receive deposits; signed 

acknowledgment requirements; and an 

exception to these requirements for 

certain depository institutions. Three 

sections of the revised proposed Rule 

simply adopt FSRRA’s new provisions 

relating to signed acknowledgments 

(Section 320.5); the specific advertising 

disclosure exemptions (Section 320.4); 

and the disclosure requirements 

applicable to periodic statements and 

account records and depository 

locations (Sections 320.3 and 320.4).15

There are, however, a few rule revisions 

that require further explanation, 

specifically, which depository locations 

are covered by the Rule, the proposed 

exceptions for institutions not receiving 

retail deposits, and the format and size 

requirements for disclosures. 

A. Depository Locations - ATMs, Service 

Centers, and Shared Facilities 

Issue and Comments: The 

Commission’s 2005 proposed Rule 

would have required disclosures 

regarding the lack of federal deposit 

insurance at each location ‘‘where the 

depository institution’s account funds 

or deposits are normally received 

including, but not limited to, its 

principal place of business, its branches, 

its automated teller machines, and 

credit union centers, service centers, or 

branches servicing more than one credit 

union or institution.’’ Many credit 

unions commented that the disclosures 

should not be required at shared 

facilities and service centers. They 

explained that, among other things, 

postings required by the National Credit 

Union Administration (NCUA) alert 

consumers that some participating 

institutions are federally insured and 

that others are not (presumably because 

the absence of NCUA postings for a 

particular institution will imply that the 

institution lacks federal insurance).16

Additionally, American Share Insurance 

(ASI) (#146)) suggested that the FTC 

may not have jurisdiction over the 

shared facilities because some of these 

facilities are housed in federally insured 

institutions and are not owned or 

operated by the privately insured 

institutions subject to FDICIA’s 

disclosure requirements. On the other 

hand, some comments17 urged the 

Commission to require signage at shared 

branch locations disclosing the names of 

all non-federally insured institutions 

operating on the premises. Finally, the 

American Bankers Association (#2) 

urged the FTC to adopt the definition of 

service facility in NCUA’s regulations, 

presumably to provide consistency in 

the application of the disclosure 

requirements.18

Discussion: Pursuant to the FSRRA 

amendments, the revised proposed Rule 

(Section 320.4) would require covered 

depository institutions to place the short 

disclosure ‘‘at each station or window 

where deposits are normally received, 

its principal place of business and all its 

branches where it accepts deposits or 

opens accounts (excluding automated 

teller machines or point of sale 

terminals), and on its main Internet page 

. . . .’’ This proposed provision simply 

restates the language of Section 43, as 

amended. Accordingly, the revised 

proposed Rule would require 

disclosures at credit union centers and 

service centers to the extent they 

contain stations or windows ‘‘where 

deposits are normally received.’’ The 

statutory language does not give the FTC 

the flexibility to exempt such locations 

from the requirement to disclose that 

the institution is not federally insured. 

We do not expect that such a disclosure 

at shared facilities would cause 

confusion or contradict existing 

disclosures required by the NCUA. To 

the contrary, it would appear the 

FDICIA disclosure, coupled with the 

NCUA disclosures, would help to clarify 

which participating institutions are 

federally insured and which are not. In 

addition, the fact that the shared facility 

itself may not be owned by the 

uninsured or privately insured 

institution or may not be subject to FTC 

jurisdiction does not control the ability 

of the institution itself to ensure that the 

disclosures are made. For example, 

depository institutions could arrange for 

the posting of the required disclosure 

through their contract with the shared 

facility. 

B. Exceptions For Institutions Not 

Receiving Retail Deposits 

Issue: Section 43(d) of the FDIA 

(‘‘Exceptions for institutions not 

receiving retail deposits’’) provided the 

Commission with discretion to except 

certain institutions from the disclosure 

requirements, specifically, depository 

institutions that do not receive initial 

deposits of less than $100,000 from 

individuals who are citizens or 

residents of the U.S. (other ‘‘than money 

received in connection with any draft or 

similar instrument issued to transmit 

money’’). The Commission’s 2005 

proposed Rule contained such an 

exception.19 In proposing the provision, 

the Commission reasoned that 

customers of institutions that handle 

only initial deposits of $100,000 or more 

are sufficiently sophisticated that they 

do not need the same disclosures as 

other customers. 

Comments: In response to the 

Commission’s 2005 proposed Rule, the 

National Association of Federal Credit 

Unions (NAFCU) (#121) and the Greater 

Cincinnati Credit Union (#81) opposed 

the proposed exception. According to 

NAFCU, some customers with initial 

deposits over the standard maximum 

insurance amount at federal credit 

unions do not understand how their 

funds are insured. Also, NAFCU 

expressed concern that consumers 

making an initial deposit of more than 

$100,000 at institutions covered by the 

exception may mistakenly assume that 

the first $100,000 is federally insured. 

Conversely, the Navy Federal Credit 

Union (#83) supported the proposed 

exception. 

Finally, the Comptroller of the 

Currency (OCC) (#201) urged the 

Commission to except from the 

disclosure requirements uninsured 


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Federal Register / Vol. 74, No. 48 / Friday, March 13, 2009 / Proposed Rules 10847 

20 OCC also indicated that national trust banks do 

not meet the definition of depository institution in 

the proposed Rule because they do not ‘‘receive or 

hold’’ deposits and that such institutions would fall 

under the FTC’s proposed exceptions for certain 

depository institutions that do not receive initial 

deposits of less than $100,000. 21 Public Law 109-173 (Feb. 26, 2006). The statute 

now reads: ‘‘The Federal Trade Commission may, 

by regulation or order, make exceptions to 

subsection (b) of this section for any depository 

institution that, within the United States, does not 

receive initial deposits of less than an amount equal 

to the standard maximum deposit insurance 

amount from individuals who are citizens or 

residents of the United States, other than money 

received in connection with any draft or similar 

instrument issued to transmit money.’’ 12 U.S.C. 

1831t. 22 Based on information provided by OCC in its 

comment, uninsured national trust banks would not 

have to follow the disclosure requirements because 

they fall under the FTC’s proposed exception (i.e., 

they ‘‘do not receive initial deposits of less than the 

standard maximum deposit insurance amount’’). 

23 For general guidance on clear and conspicuous 

disclosures, see, e.g., ‘‘Dot Com Disclosures: 

Information about Online Advertising,’’ Federal 

Trade Commission, (http://www.ftc.gov/bcp/ 

conline/pubs/buspubs/dotcom/). 24 5 CFR 1320.3(c)(2). 

federally-chartered branches of foreign 

banks in the U.S. and uninsured 

national trust banks. The OCC explained 

that the proposed disclosure 

requirements substantially overlap with 

existing FDIC and OCC disclosure 

regulations for Federal branches of 

foreign banks and that Congress 

‘‘evidenced no focused or express 

concern’’ about such institutions.20

Discussion: In 2006, Congress 

amended the exception language in the 

statute by changing the threshold from 

‘‘$100,000’’ to ‘‘an amount equal to the 

standard maximum deposit insurance 

amount.’’21 The Commission’s new 

proposal tracks the 2006 amendment 

and identifies the threshold as the 

‘‘standard maximum insurance 

amount.’’ The proposed Rule also 

defines that term to mean the maximum 

amount of deposit insurance as 

determined under Section 11(a)(1) of the 

Federal Deposit Insurance Act (12 

U.S.C. 1821(a)(1)). As discussed earlier, 

the threshold is currently set at 

$250,000. 

Because the few comments received 

were not in agreement on the exception 

issue, the Commission seeks further 

comment on whether such an exception 

is appropriate. Among other things, we 

are interested in information about 

whether persons who make deposits of 

more than the standard maximum 

deposit insurance amount understand 

the insurance coverage associated with 

their deposit. 

With regard to OCC’s concerns about 

Federal branches of foreign banks, we 

have identified no specific basis in the 

statute to except institutions that 

otherwise meet the definition of a 

depository institution ‘‘lacking Federal 

deposit insurance’’ as established by 

Congress in Section 43(e)(3) (12 U.S.C. 

1831t(e)(3)) other than the non-retail 

deposit exception proposed at § 320.6.22

C. Format and Type Size Requirements 

Issue and Discussion: Consistent with 

the FSRRA amendments, Section 

320.4(b) of the proposed Rule directs 

institutions to present the required 

disclosures ‘‘in such format and in such 

type size and manner as to be simple 

and easy to understand.’’ The 

Commission has considered proposing 

prescriptive requirements to implement 

this provision such as specific rules for 

disclosure location and font size. Given 

the likely variation in the types and 

sizes of advertisements, however, the 

development of useful, comprehensive, 

prescriptive requirements appears 

unworkable. In addition, prescriptive 

requirements would deny institutions 

the flexibility to make disclosures in the 

most effective and efficient way.23

Finally, prescriptive requirements could 

result in depository institutions 

incurring greater costs than necessary to 

make effective disclosures. Therefore, 

the Commission is not proposing 

prescriptive requirements related to the 

size and format of the required 

disclosures. 

III. Invitation to Comment 

The Commission seeks comments on 

all aspects of the supplemental notice of 

proposed rulemaking. All comments 

should be filed as prescribed in the 

‘‘ADDRESSES’’ section above, and must 

be received on or before June 5, 2009. 

In addition to the questions and 

requests for comment found throughout 

this Notice, we also ask that 

commenters address the following 

questions: 

(1) What costs or burdens, or other 

impacts, do the proposed requirements 

create, and on whom? What evidence 

supports the asserted costs, burdens, or 

other impacts? Please submit any such 

evidence. 

(2) What modifications, if any, 

consistent with current law, should the 

Commission make to the proposed 

requirements to increase their benefits 

to consumers? 

(a) What evidence supports your 

proposed modifications? Please submit 

any such evidence. 

(b) How would these modifications 

affect the costs and benefits of the 

proposed requirements for consumers? 

(c) How would these modifications 

affect the costs and benefits of the 

proposed requirements for businesses, 

and in particular, small businesses? 

(3) What modifications, if any, should 

be made to the proposed requirements 

to decrease their burdens on businesses? 

(a) What evidence supports your 

proposed modifications? Please submit 

any such evidence. 

(b) How would these modifications 

affect the costs and benefits of the 

proposed requirements for consumers? 

(c) How would these modifications 

affect the costs and benefits of the 

proposed requirements for businesses, 

and in particular, small businesses? 

IV. Paperwork Reduction Act 

The proposed disclosures and written 

acknowledgment statements do not 

constitute a ‘‘collection of information’’ 

under the Paperwork Reduction Act of 

1995 (44 U.S.C. 3501-3520) because they 

are a ‘‘public disclosure of information 

originally supplied by the government 

to the recipient for the purpose of 

disclosure to the public’’ as indicated in 

Office of Management and Budget 

regulations.24

V. Regulatory Flexibility Act 

For information regarding the 

Commission’s Initial Regulatory 

Flexibility Analysis (IRFA) prepared 

pursuant to the Regulatory Flexibility 

Act (RFA), 5 U.S.C. 601-612, 

commenters should refer to the 

Commission’s March 16, 2005 NPRM 

(70 FR 12823). 

VI. Communications by Outside Parties 

to Commissioners or Their Advisors 

Written communications and 

summaries or transcripts of oral 

communications respecting the merits 

of this proceeding from any outside 

party to any Commissioner or 

Commissioner’s advisor will be placed 

on the public record. See 16 CFR 

1.26(b)(4). 

VII. Proposed Rule Language 

List of Subjects in 16 CFR Part 320 

Credit unions, Depository institutions, 

Federal Deposit Insurance Act, Federal 

Trade Commission Act, and Federal 

deposit insurance. 

■ For the reasons stated in the preamble, 

the Federal Trade Commission proposes 

to add Part 320 to 16 CFR chapter I, 

subchapter C as set forth below: 

PART 320—DISCLOSURE 

REQUIREMENTS FOR DEPOSITORY 

INSTITUTIONS LACKING FEDERAL 

DEPOSIT INSURANCE 

320.1 Scope 

320.2 Definitions 

320.3 Disclosures in periodic statements 

and account records 


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320.4 Disclosures in advertising and on the 

premises 

320.5 Disclosure acknowledgment 

320.6 Exception for certain depository 

institutions 

320.7 Enforcement 

Authority: 12 U.S.C. 1831t; 15 U.S.C. 41 et 

seq. 

§ 320.1 Scope. 

This part applies to all depository 

institutions lacking federal deposit 

insurance. It requires the disclosure of 

certain insurance-related information in 

periodic statements, account records, 

locations where deposits are normally 

received, and advertising. This part also 

requires such depository institutions to 

obtain a written acknowledgment from 

depositors regarding the institution’s 

lack of federal deposit insurance. 

§ 320.2 Definitions. 

(a) Lacking federal deposit insurance 

means the depository institution is not 

an insured depository institution as 

defined in 12 U.S.C. 1813(c)(2), or is not 

an insured credit union as defined in 

Section 101 of the Federal Credit Union 

Act, 12 U.S.C. 1752. 

(b) Depository institution means any 

bank or savings association as defined 

under 12 U.S.C. 1813, or any credit 

union organized and operated according 

to the laws of any State, the District of 

Columbia, the several territories and 

possessions of the United States, the 

Panama Canal Zone, or the 

Commonwealth of Puerto Rico, which 

laws provide for the organization of 

credit unions similar in principle and 

objectives to federal credit unions. 

(c) Standard maximum deposit 

insurance amount means the maximum 

amount of deposit insurance as 

determined under Section 11(a)(1) of the 

Federal Deposit Insurance Act (12 

U.S.C. § 1821(a)(1)). 

§ 320.3 Disclosures in periodic statements 

and account records. 

Depository institutions lacking federal 

deposit insurance must include in all 

periodic statements of account, on each 

signature card, and on each passbook, 

certificate of deposit, or share certificate 

a notice disclosing clearly and 

conspicuously that the institution is not 

federally insured, and that if the 

institution fails, the Federal 

Government does not guarantee that 

depositors will get back their money. 

For example, a notice would comply 

with the requirement if it conspicuously 

stated the following: ‘‘[Institution’s 

name] is not federally insured. If it fails, 

the Federal Government does not 

guarantee that you will get your money 

back.’’ The disclosures required by this 

section must be clear and conspicuous 

and presented in such format and in 

such type size and manner as to be 

simple and easy to understand. 

§ 320.4 Disclosures in advertising and on 

the premises. 

(a) Required Disclosures. Depository 

institutions lacking federal deposit 

insurance must include clearly and 

conspicuously a notice disclosing that 

the institution is not federally insured: 

(1) At each station or window where 

deposits are normally received, its 

principal place of business and all its 

branches where it accepts deposits or 

opens accounts (excluding automated 

teller machines or point of sale 

terminals), and on its main Internet 

page; and 

(2) In all advertisements except as 

provided in subsection (c). 

(b) Format and Type Size. The 

disclosures required by this section 

must be clear and conspicuous and 

presented in such format and in such 

type size and manner as to be simple 

and easy to understand. 

(c) Exceptions. The following need 

not include a notice that the institution 

is not federally insured: 

(1) Any sign, document, or other item 

that contains the name of the depository 

institution, its logo, or its contact 

information, but only if the sign, 

document, or item does not include any 

information about the institution’s 

products or services or information 

otherwise promoting the institution; and 

(2) Small utilitarian items that do not 

mention deposit products or insurance 

if inclusion of the notice would be 

impractical. 

§ 320.5 Disclosure acknowledgment. 

(a) New Depositors Obtained Other 

Than Through a Conversion or Merger. 

With respect to any depositor who was 

not a depositor at the depository 

institution before October 13, 2006, and 

who is not a depositor as described in 

paragraph (b) of this section, any 

depository institution lacking federal 

deposit insurance may receive any 

deposit for the account of such 

depositor only if the institution has 

obtained the depositor’s signed written 

acknowledgement that: 

(1) The institution is not federally 

insured; and 

(2) If the institution fails, the Federal 

Government does not guarantee that the 

depositor will get back the depositor’s 

money. 

(b) New Depositors Obtained Through 

a Conversion or Merger. With respect to 

a depositor at a federally insured 

depository institution that converts to, 

or merges into, a depository institution 

lacking federal insurance after October 

13, 2006, any depository institution 

lacking federal deposit insurance may 

receive any deposit for the account of 

such depositor only if: 

(1) The institution has obtained the 

depositor’s signed written 

acknowledgement described in 

paragraph (a) of this section; or 

(2) The institution makes an attempt, 

sent by mail no later than 45 days after 

the effective date of the conversion or 

merger, to obtain the acknowledgment. 

In making such an attempt, the 

institution must transmit to each 

depositor who has not signed and 

returned a written acknowledgement 

described in paragraph (a) of this 

section: 

(i) A conspicuous card containing the 

information described in paragraphs 

(a)(1) and (a)(2) of this section, and a 

line for the signature of the depositor; 

and 

(ii) Accompanying materials 

requesting the depositor to sign the 

card, and return the signed card to the 

institution. 

(c) Current Depositors. Any 

depository institution lacking federal 

deposit insurance may receive any 

deposit after October 13, 2006 for the 

account of any depositor who was a 

depositor on that date only if: 

(1) The depositor has signed a written 

acknowledgement described in 

paragraph (a) of this section; or 

(2) The institution has transmitted to 

each depositor who was a depositor 

before October 13, 2006, and has not 

signed a written acknowledgement 

described in paragraph (a) of this 

section: 

(i) A conspicuous card containing the 

information described in paragraphs 

(a)(1) and (a)(2) of this section, and a 

line for the signature of the depositor; 

and 

(ii) Accompanying materials 

requesting that the depositor sign the 

card, and return the signed card to the 

institution. 

Note to paragraph (c): The institution 

must make the transmission described 

in paragraph (c)(2) of this section via 

mail not later than three months after 

October 13, 2006 and must make a 

second identical transmission via mail 

not less than 30 days, and not more than 

three months, after the first transmission 

to the depositor in accordance with 

paragraph (c)(2), if the institution has 

not, by the date of such mailing, 

received from the depositor a card 

referred to in paragraph (c)(1) of this 

section which has been signed by the 

depositor. 

(d) Format and Type Size. The 

disclosures required by this section 

must be clear and conspicuous and 


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presented in such format and in such 

type size and manner as to be simple 

and easy to understand. 

§ 320.6 Exception for certain depository 

institutions. 

The requirements of this part do not 

apply to any depository institution 

lacking federal deposit insurance and 

located within the United States that 

does not receive initial deposits of less 

than an amount equal to the standard 

maximum deposit insurance amount 

from individuals who are citizens or 

residents of the United States, other 

than money received in connection with 

any draft or similar instrument issued to 

transmit money. 

§ 320.7 Enforcement. 

Compliance with the requirements of 

this part shall be enforced under the 

Federal Trade Commission Act, 15 

U.S.C. 41 et seq. 

By direction of the Commission. 

Donald S. Clark, 

Secretary, 

[FR Doc. E9–5305 Filed 3–12–09: 8:45 am] 

BILLING CODE 6750–01–S 

DEPARTMENT OF HOMELAND 

SECURITY 

Bureau of Customs and Border 

Protection 

DEPARTMENT OF THE TREASURY 

19 CFR Part 10 

[USCBP–2008–0105] 

RIN 1505–AC07 

Cost or Value of Foreign Repairs, 

Alterations, or Processing 

AGENCIES: Customs and Border 

Protection, Department of Homeland 

Security; Department of the Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document proposes to 

amend the U.S. Customs and Border 

Protection (CBP) Regulations to exclude 

from the dutiable value of repairs, 

alterations, or processing performed 

abroad on articles exported from the 

United States and returned under 

subheading 9802.00.40, 9802.00.50, or 

9802.00.60, Harmonized Tariff Schedule 

of the United States (HTSUS), the value 

of U.S.-origin parts used in the foreign 

repairs, alterations, or processing. The 

proposed changes would provide an 

incentive to use U.S.-origin parts in the 

foreign repairs, alterations, or 

processing of articles entered under the 

above-referenced HTSUS provisions. 

DATES: Comments must be received on 

or before May 12, 2009. 

ADDRESSES: You may submit comments, 

identified by docket number, by one of 

the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments 

via docket number USCBP–2008–0105. 

• Mail: Trade and Commercial 

Regulations Branch, Regulations and 

Rulings, Office of International Trade, 

U.S. Customs and Border Protection, 

799 9th Street, NW. (Mint Annex), 

Washington, DC 20229. 

Instructions: All submissions received 

must include the agency name and 

docket number for this rulemaking. All 

comments received will be posted 

without change to http:// 

www.regulations.gov, including any 

personal information provided. For 

detailed instructions on submitting 

comments and additional information 

on the rulemaking process, see the 

‘‘Public Participation’’ heading of the 

SUPPLEMENTARY INFORMATION section of 

this document. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov. Submitted 

comments may be inspected during 

regular business days between the hours 

of 9 a.m. and 4:30 p.m. at the Trade and 

Commercial Regulations Branch, 

Regulations and Rulings, Office of 

International Trade, U.S. Customs and 

Border Protection, 799 9th Street, NW., 

5th Floor, Washington, DC. 

Arrangements to inspect submitted 

comments should be made in advance 

by calling Mr. Joseph Clark at (202) 325– 

0118. 

FOR FURTHER INFORMATION CONTACT: 

Monika Brenner, Regulations and 

Rulings, Office of International Trade, 

202–325–0038. 

SUPPLEMENTARY INFORMATION: 

Public Participation 

Interested persons are invited to 

participate in this rulemaking by 

submitting written data, views, or 

arguments on all aspects of the 

proposed rule. CBP also invites 

comments that relate to the economic, 

environmental, or federalism effects that 

might result from this proposed rule. 

Comments that will provide the most 

assistance to CBP will reference a 

specific portion of the proposed rule, 

explain the reason for any 

recommended change, and include data, 

information, or authority that support 

such recommended change. See 

ADDRESSES above for information on 

how to submit comments. 

Background 

Subheadings 9802.00.40 and 

9802.00.50, HTSUS, provide a partial 

duty exemption for articles returned to 

the United States after having been 

exported to be advanced in value or 

improved in condition by repairs or 

alterations. Subheading 9802.00.40 

encompasses articles repaired or altered 

abroad pursuant to a warranty, while 

subheading 9802.00.50 encompasses 

articles repaired or altered abroad other 

than pursuant to a warranty. Articles 

entitled to classification under these 

tariff provisions are assessed duty based 

upon the value of the repairs or 

alterations. 

Subheading 9802.00.60, HTSUS, 

provides a partial duty exemption for 

articles of metal manufactured in the 

United States that are exported for 

further processing and then returned to 

the United States for further processing. 

Articles entitled to classification under 

this tariff provision are assessed duty 

based upon the value of the processing 

performed outside the United States. 

U.S. Note 3(a), subchapter II, Chapter 

98, HTSUS, states, in pertinent part, that 

for purposes of subheadings 9802.00.40, 

9802.00.50, and 9802.00.60, HTSUS, the 

‘‘value of repairs, alterations, processing 

or other change in condition outside the 

United States’’ is the cost to the 

importer of such change, or if no charge 

is made, the value of such change. 

Section 10.8 of the CBP regulations (19 

CFR 10.8), which implements 

subheadings 9802.00.40 and 9802.00.50, 

provides in paragraph (d) that the ‘‘cost 

or value of repairs or alterations’’ is 

limited to the cost or value of the repairs 

or alterations actually performed 

abroad, which will include all domestic 

and foreign articles furnished for the 

repairs or alterations, but will not 

include any of the expenses incurred in 

this country whether by way of 

engineering costs, preparation of plans 

or specifications, furnishing of tools or 

equipment for doing the repairs or 

alterations abroad, or otherwise. 

Similarly, § 10.9 of the CBP 

regulations (19 CFR 10.9(d)), which 

implements subheading 9802.00.60, 

provides in paragraph (d) that the ‘‘cost 

or value of processing’’ is limited to the 

cost or value of the processing actually 

performed abroad, which will include 

all domestic and foreign articles used in 

the processing, but will not include the 

exported U.S. metal article or any of the 

expenses incurred in this country 

whether by way of engineering costs, 

preparation of plans or specifications, 

furnishing of tools or equipment for 

doing the processing abroad, or 

otherwise. 


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