[Federal Register Volume 70, Number 200 (Tuesday, October 18, 2005)]
[Rules and Regulations]
[Pages 60420-60422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-20768]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 333

RIN 3064-AC94


Extension of Corporate Powers

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Interpretive rule; request for comments.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending 
an interpretative rule (12 CFR 333.101(b)) which states that insured 
State nonmember banks not exercising trust powers may offer self-
directed traditional Individual Retirement and Keogh Plan accounts 
without the prior written consent of the FDIC. As amended, the 
interpretive ruling is expanded to expressly cover Coverdell Education 
Savings Accounts, Roth

[[Page 60421]]

Individual Retirement Accounts, Health Savings Accounts, and other 
similar accounts.

DATES: These amendments are effective October 18, 2005. Submit comments 
on or before January 17, 2006.

ADDRESSES: Interested parties are invited to submit written comments to 
the FDIC by any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Agency Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow the instructions for submitting comments 
on the FDIC Web site.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#ceada1a3a3aba0babd8ea8aaa7ade0a9a1b8"><span class="__cf_email__" data-cfemail="8fece0e2e2eae1fbfccfe9ebe6eca1e8e0f9">[email protected]</span></a>. Include ``Part 333--Extension 
of Corporate Powers'' in the subject line of the message.
    <bullet> Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th 
Street, NW., Washington, DC 20429.
    <bullet> Hand Delivery/Courier: Comments may be hand-delivered to 
the guard station located at the rear of the FDIC's 550 17th Street 
building (accessible from F Street) on business days between 7 a.m. and 
5 p.m.
    Instructions: All submissions received must include the agency name 
and use the title ``Part 333--Extension of Corporate Powers.'' All 
comments will be posted without change to http://www.fdic.gov/regulations/laws/federal/propose.html, including any personal 
information provided. Comments may be inspected and photocopied in the 
FDIC Public Information Center, Room 100, 801 17th Street, NW., 
Washington, DC, between 9 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Anthony J. DiMilo, Examination 
Specialist, Division of Supervision and Consumer Protection, (202) 898-
7496, or Benjamin W. McDonough, Attorney, Legal Division, (202) 898-
7411, Federal Deposit Insurance Corporation, 550 17th St., NW., 
Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 333.2 of the FDIC's regulations (12 CFR 333.2) prohibits an 
insured nonmember bank from changing the general character of its 
business without the prior written consent of the FDIC. In general, 
exercising trust powers constitutes a change in the general character 
of the business of an insured nonmember bank that requires the prior 
written consent of the FDIC. FDIC interpretive rule at 12 CFR 
333.101(b) (section 333.101(b)) makes clear, however, that an insured 
nonmember bank that does not have authority to exercise trust powers 
may act as trustee or custodian of specific retirement accounts so long 
as the bank does not exercise investment discretion or provide any 
investment advice with respect to the accounts. (50 FR 10754).
    Prior to the issuance of amendments to section 333.101(b) in 1985, 
this interpretive rule stated that insured nonmember banks could act as 
trustee or custodian of Individual Retirement Accounts established 
pursuant to the Employee Retirement Income Security Act of 1974 (ERISA) 
\1\ and Self-Employed Retirement Plans established pursuant to the 
Self-Employed Individuals Retirement Act of 1962 \2\ (traditional IRAs 
and Keogh Plan accounts). However, a bank taking advantage of section 
333.101(b) was permitted to invest the funds held in these accounts 
only in its own time or savings deposits. (41 FR 2375). The 1985 
amendments revised section 333.101(b) to state that FDIC-regulated 
banks not exercising trust powers could offer self-directed traditional 
IRAs and Keogh Plan accounts where the customer could direct the bank 
to invest the funds from such plans in assets other than the bank's own 
deposits ``at the direction of the customer provided the bank does not 
exercise any investment discretion or provided [sic] any investment 
advice with respect to such account assets.'' (50 FR 10754).
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    \1\ See 26 U.S.C. 408.
    \2\ See 26 U.S.C. 401.
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    Since 1985, Congress has introduced new accounts with tax-incentive 
features analogous to traditional IRAs and Keogh Plan accounts. These 
other accounts include: Coverdell Education Savings Accounts \3\ and 
Roth Individual Retirement Accounts,\4\ both established pursuant to 
the Taxpayer Relief Act of 1997, and Health Savings Accounts,\5\ 
established pursuant to the Medicare Prescription Drug Improvement, and 
Modernization Act of 2003. Accordingly, the FDIC is amending section 
333.101(b) to reflect the creation of these new accounts and to make 
clear in the text of section 333.101(b) that ``other similar accounts'' 
with tax-incentive features may be offered by banks that lack authority 
to exercise trust powers.\6\ The primary purpose of these amendments is 
to formally recognize the existence of these new accounts, which did 
not exist when the FDIC last amended section 333.101(b) in 1985.
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    \3\ See 26 U.S.C. 530.
    \4\ See 26 U.S.C. 408A.
    \5\ See 26 U.S.C. 223.
    \6\ Currently, national banks without fiduciary powers may act 
as custodian, but not as trustee, of retirement accounts. See 12 CFR 
9.3. Institutions regulated by the Office of Thrift Supervision 
(OTS) may act as trustee or custodian of traditional IRAs and Keogh 
Plan accounts without the prior approval of the OTS. 12 CFR 550.580.
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    The revision to section 333.101(b) retains the requirements that 
the bank's duties be custodial or ministerial, and that the acceptance 
of such accounts without trust powers be consistent with the applicable 
state law.\7\
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    \7\ These amendments to section 333.101(b) will not impact the 
FDIC's supervision of the trust and custodial activities of insured 
nonmember banks, including the trust and fiduciary services such 
banks provide to accounts with tax-incentive features. The FDIC will 
continue to supervise the trust and fiduciary activities of insured 
nonmember banks through regular examinations to ensure that banks 
comply with their fiduciary obligations to customers in accordance 
with applicable State and Federal law.
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    The revision also makes some minor technical amendments to the 
regulatory text to correct typographical errors in section 333.101(b).

II. Request for Comments

    These amendments to part 333 will be effective upon publication. 
However, the FDIC is interested in receiving any comments that may 
improve the implementation of the rule. The FDIC therefore requests 
comments on all aspects of this interpretive rule. The FDIC is 
especially interested in learning whether there are other accounts that 
it would be appropriate to include expressly within the scope of the 
rule, and conversely, whether it would be appropriate to exclude any 
facially similar accounts from the scope of the rule. The FDIC will 
accept comments for 90 days from the date of publication.

III. Regulatory Analysis

a. Administrative Procedure Act

    Public Comment Waiver and Effective Date. Pursuant to the 
Administrative Procedure Act, 5 U.S.C. 553(b) (``APA''), the FDIC is 
issuing this interpretation without prior notice and comment. Section 
553(b) of Title 5, U.S. Code, does not apply to interpretive rules. The 
amendments to section 333.101(b) of the FDIC's regulations relate 
solely to an interpretive rule, and the Board of Directors of the FDIC 
has found that, because the primary purpose of the amendments is to 
formally recognize the creation of new accounts, notice and comment 
would be unnecessary. Moreover, pursuant to the APA, 5 U.S.C. 553(d), 
interpretive rules do not require thirty days prior notice before they 
may become effective; therefore, because section 333.101(b) is an 
interpretive

[[Page 60422]]

rule, the amendments to it may have immediate effect.

b. Paperwork Reduction Act

    The amendment to section 333.101(b) will not entail any new 
collections of information. Therefore, the Paperwork Reduction Act is 
not applicable.

c. Regulatory Flexibility Act

    A regulatory flexibility analysis is required only when an agency 
must publish a notice of proposed rulemaking (5 U.S.C. 603, 604). 
Because the FDIC is revising an interpretive rule without notice and 
comment, no regulatory flexibility analysis is required.

d. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 
801 et seq.) (SBREFA) provides generally for agencies to report rules 
to Congress and for Congress to review these rules. Unless covered by 
an exception in SBREFA (5 U.S.C. 804(3)), the reporting requirement is 
triggered in instances where the FDIC issues a rule as defined by the 
APA. Because the FDIC is issuing an interpretive rule, which is not 
covered by one of the exceptions in SBREFA, the FDIC will file the 
reports required by SBREFA.

List of Subjects in 12 CFR Part 333

    Bank, Banking, State nonmember banks, Trusts and trustees.

0
For the reasons set forth in this preamble, the Board of Directors of 
the Federal Deposit Insurance Corporation hereby amends part 333 to 
Title 12 of the Code of Federal Regulations as follows:

PART 333--EXTENSION OF CORPORATE POWERS

0
1. The authority citation for part 333 continues to read as follows:

    Authority: 12 U.S.C. 1816, 1818, 1819 (``Seventh'', ``Eighth'' 
and ``Tenth''), 1828, 1828(m), 1831p-1(c).


0
2. Section 333.101 is amended by revising paragraph (b) to read as 
follows:


Sec.  333.101  Prior consent not required.

* * * * *
    (b) An insured State nonmember bank, not exercising trust powers, 
may act as trustee or custodian of Individual Retirement Accounts 
established pursuant to the Employee Retirement Income Security Act of 
1974 (26 U.S.C. 408), Self-Employed Retirement Plans established 
pursuant to the Self-Employed Individuals Retirement Act of 1962 (26 
U.S.C. 401), Roth Individual Retirement Accounts and Coverdell 
Education Savings Accounts established pursuant to the Taxpayer Relief 
Act of 1997 (26 U.S.C. 408A and 530 respectively), Health Savings 
Accounts established pursuant to the Medicare Prescription Drug 
Improvement, and Modernization Act of 2003 (26 U.S.C. 223), and other 
similar accounts without the prior written consent of the Corporation 
provided:
    (1) The bank's duties as trustee or custodian are essentially 
custodial or ministerial in nature,
    (2) The bank is required to invest the funds from such plans only
    (i) In its own time or savings deposits, or
    (ii) In any other assets at the direction of the customer, provided 
the bank does not exercise any investment discretion or provide any 
investment advice with respect to such account assets, and
    (3) The bank's acceptance of such accounts without trust powers is 
not contrary to applicable State law.

    Dated at Washington, DC, this 6th day of October, 2005.

    By order of the Board of Directors.
Robert E. Feldman,
Executive Secretary, Federal Deposit Insurance Corporation.
[FR Doc. 05-20768 Filed 10-17-05; 8:45 am]
BILLING CODE 6714-01-P


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