[Federal Register Volume 74, Number 124 (Tuesday, June 30, 2009)]
[Proposed Rules]
[Pages 31217-31222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-15377]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 370

RIN 3064-AD37


Notice of Proposed Rulemaking Regarding Possible Amendment of the 
Temporary Liquidity Guarantee Program To Extend the Transaction Account 
Guarantee Program With Modified Fee Structure

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is issuing this Notice of Proposed Rulemaking to 
present and request comment on two alternatives for phasing out the 
Transaction Account Guarantee (TAG) component of the Temporary 
Liquidity Guarantee Program (TLGP). Under the first proposed 
alternative, the FDIC's guarantee of deposits held in qualifying 
noninterest-bearing transaction accounts subject to the TAG program 
would continue until December 31, 2009. There would be no modification 
of the existing fee structure or any other change in the FDIC's 
guarantee of noninterest-bearing transaction accounts, as provided for 
in the current regulation.
    Under the second proposed alternative, the TAG program would be 
extended for six months until June 30, 2010. Insured depository 
institutions (IDIs) that are currently participating in the TAG program 
would be provided a single opportunity to opt out of the extended TAG 
program. IDIs that opt

[[Page 31218]]

out of the extended TAG program would be required to update their 
disclosure postings and notices to indicate that they are no longer 
participating in the program.
    Under this proposal, IDIs choosing to participate in the extended 
TAG program, would be subject to increased fees for the FDIC's extended 
guarantee of its qualifying noninterest-bearing transaction accounts. 
Also, IDIs participating in the extended TAG program might be required 
to update their disclosures related to the TAG program.

DATES: Written comments must be received by the FDIC no later than July 
30, 2009.

ADDRESSES: You may submit comments on the Final Rule, by any of the 
following methods:
    <bullet> Agency Web Site: http://www.FDIC.gov/regulations/laws/federal/notices.html. Follow instructions for submitting comments on 
the Agency Web Site.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#9bd8f4f6f6fef5efe8dbdddfd2d8b5fcf4ed"><span class="__cf_email__" data-cfemail="c586aaa8a8a0abb1b68583818c86eba2aab3">[email protected]</span></a>. Include RIN <greek-i>3064-AD37 
on the subject line of the message.
    <bullet> Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
    <bullet> Hand Delivery: Comments may be hand delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street) on business days between 7 a.m. and 5 p.m.
    Instructions: All comments received will be posted generally 
without change to http://www.fdic.gov/regulations/laws/federal/final.html, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Christopher L. Hencke, Counsel, Legal 
Division, (202) 898-8839 or <a href="/cdn-cgi/l/email-protection#f7949f9299949c92b791939e94d9909881"><span class="__cf_email__" data-cfemail="cfaca7aaa1aca4aa8fa9aba6ace1a8a0b9">[email protected]</span></a>; A. Ann Johnson, Counsel, 
Legal Division, (202) 898-3573 or <a href="/cdn-cgi/l/email-protection#6f0e0e050007011c00012f090b060c41080019"><span class="__cf_email__" data-cfemail="f99898939691978a9697b99f9d909ad79e968f">[email protected]</span></a>; Robert C. Fick, 
Counsel, Legal Division, (202) 898-8962 or <a href="/cdn-cgi/l/email-protection#1567737c767e5573717c763b727a63"><span class="__cf_email__" data-cfemail="7c0e1a151f173c1a18151f521b130a">[email protected]</span></a>; Joe DiNuzzo, 
Counsel, Legal Division, (202) 898-7349 or <a href="/cdn-cgi/l/email-protection#b5dfd1dcdbc0cfcfdaf5d3d1dcd69bd2dac3"><span class="__cf_email__" data-cfemail="abc1cfc2c5ded1d1c4ebcdcfc2c885ccc4dd">[email protected]</span></a>; Lisa D. 
Arquette, Associate Director, Division of Supervision and Consumer 
Protection, (202) 898-8633 or <a href="/cdn-cgi/l/email-protection#b5d9d4c7c4c0d0c1c1d0f5d3d1dcd69bd2dac3"><span class="__cf_email__" data-cfemail="a0ccc1d2d1d5c5d4d4c5e0c6c4c9c38ec7cfd6">[email protected]</span></a>; Donna Saulnier, 
Manager, Assessment Policy Section, Division of Finance, (703) 562-6167 
or <a href="/cdn-cgi/l/email-protection#5b3f283a2e3735323e291b3d3f3238753c342d"><span class="__cf_email__" data-cfemail="2a4e594b5f4644434f586a4c4e4349044d455c">[email protected]</span></a>; or Munsell St. Clair, Chief, Bank and Regulatory 
Policy Section, Division of Insurance and Research, (202) 898-8967 or 
<a href="/cdn-cgi/l/email-protection#fd908e899e919c948fbd9b99949ed39a928b"><span class="__cf_email__" data-cfemail="a1ccd2d5c2cdc0c8d3e1c7c5c8c28fc6ced7">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

I. Background

    The FDIC adopted the TLGP in October 2008 following a determination 
of systemic risk by the Secretary of the Treasury (after consultation 
with the President) that was supported by recommendations from the FDIC 
and the Board of Governors of the Federal Reserve System (Federal 
Reserve).\1\ The TLGP is part of a coordinated effort by the FDIC, the 
U.S. Department of the Treasury (Treasury), and the Federal Reserve to 
address unprecedented disruptions in credit markets and the resultant 
inability of financial institutions to fund themselves and make loans 
to creditworthy borrowers.
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    \1\ See Section 13(c)(4)(G) of the Federal Deposit Insurance Act 
(FDI Act), 12 U.S.C. 1823(c)(4)(G). The determination of systemic 
risk authorized the FDIC to take actions to avoid or mitigate 
serious adverse effects on economic conditions or financial 
stability, and the FDIC implemented the TLGP in response.
    Section 9(a) Tenth of the FDI Act, 12 U.S.C. 1819(a)Tenth, 
provides additional authority for the establishment of the TLGP.
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    On October 23, 2008, the FDIC's Board of Directors (Board) 
initially authorized the publication in the Federal Register of an 
interim rule that outlined the parameters of the TLGP.\2\ Designed to 
assist in the stabilization of the nation's financial system, the 
FDIC's TLGP was designed to be a temporary program and is comprised of 
two distinct components: the Debt Guarantee Program (DGP), pursuant to 
which the FDIC guarantees certain senior unsecured debt issued by 
entities participating in the TLGP, and the TAG program, pursuant to 
which the FDIC guarantees all funds held at participating IDIs (beyond 
the standard maximum deposit insurance limit) in qualifying 
noninterest-bearing transaction accounts.
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    \2\ 73 FR 64179 (October 29, 2008). This Interim Rule was 
finalized and a Final Rule was published in the Federal Register on 
November 26, 2008. 73 FR 72244 (November 26, 2008).
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    The DGP generally permitted participating entities to issue FDIC-
guaranteed senior unsecured debt until June 30, 2009, with the FDIC's 
guarantee for such debt to expire on the earlier of the maturity or 
conversion of the debt (for mandatory convertible debt) or June 30, 
2012. On March 17, 2009, to reduce market disruption at the conclusion 
of the debt guarantee component of the TLGP and to facilitate the 
orderly phase-out of the program, the Board adopted an interim rule 
that, among other things, provided for a limited four-month extension 
for the issuance of senior unsecured debt under the DGP.\3\
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    \3\ 74 FR 12078 (March 23, 2009). This Interim Rule was 
finalized and a Final Rule was published in the Federal Register on 
June 3, 2009. 74 FR 26521 (June 3, 2009).
     All IDIs and those other participating entities that issued 
debt under the TLGP on or before April 1, 2009, may participate in 
the extended DGP without application to the FDIC. Other 
participating entities that did not issue FDIC-guaranteed debt by 
April 1, 2009, may apply to participate in the extended DGP. 12 CFR 
370.2(n); 370.3(h)(vi).
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    At the time the TLGP was developed, there was concern that many 
account holders might withdraw their uninsured balances from IDIs. The 
TAG component of the TLGP was designed to improve public confidence and 
encourage depositors to leave these large account balances at IDIs of 
various sizes. Loss of these accounts would have potentially impaired 
the funding structure of the banking institutions that relied on them, 
as well as other institutions that had relationships with these banks.
    The TAG program has been an important source of stability for banks 
with large transaction account balances. Over 7,100 IDIs are 
participating in the TAG program, with an estimated $700 billion of 
deposits in noninterest-bearing transaction accounts (that would not 
otherwise be insured) currently subject to the FDIC's guarantee. 
Although liquidity in financial markets has not returned to pre-crisis 
levels, financial market volatility and risk aversion have moderated 
since the fall of 2008 when the FDIC implemented the TAG program as 
part of the TLGP.
    The TAG program is scheduled to expire on December 31, 2009. As 
with the DGP, the FDIC is committed to providing an orderly phase-out 
of the TAG program for participating IDIs and their depositors. To that 
end, and as discussed in more detail below, the FDIC proposes and 
requests comment on two alternatives for successfully concluding the 
TAG program.

II. Proposed Alternatives for Concluding the Transaction Account 
Guarantee Program

    The FDIC proposes to conclude its guarantee of noninterest-bearing 
transaction accounts under the TAG program using one of the 
alternatives that follow. In general, Alternative A would permit the 
program to expire on December 31, 2009, as provided for in existing 
regulations. Alternative B would extend the TAG program until June 30, 
2010, but the extension would be coupled with increased fees for 
participation and possible new disclosure requirements.

A. Alternative A

    Alternative A would preserve the current regulation regarding the 
duration of the FDIC's guarantee for coverage of deposits in 
noninterest-bearing transaction accounts pursuant to the TAG program. 
Under the current

[[Page 31219]]

regulation, the FDIC's guarantee of noninterest-bearing transaction 
accounts expires on the earlier of the date of opt-out (if an IDI opted 
out of the TAG program) or December 31, 2009.\4\ Any IDI that offers 
noninterest-bearing transaction accounts is required to post a 
conspicuous notice in its lobby, branch(es), and Web site, if 
applicable, that discloses whether the IDI is participating in the TAG 
program.\5\ Disclosures for participating IDIs must contain a statement 
that indicates that all noninterest-bearing transaction accounts are 
fully guaranteed by the FDIC.\6\ In addition, even those IDIs that are 
not participating in the TAG program are required to disclose that 
deposits in noninterest-bearing transaction accounts continue to be 
insured for up to $250,000, pursuant to the FDIC's general deposit 
insurance rules.\7\ At this time, IDIs participating in the TAG program 
pay quarterly an annualized 10 basis point assessment on any deposit 
amounts that exceed the existing deposit insurance limit.\8\
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    \4\ 12 CFR 370.4(a).
    \5\ 12 CFR 370.5(h)(5).
    \6\ Id.
    \7\ Id.
    \8\ 12 CFR 370.7(c).
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B. Alternative B

    Under the proposed Alternative B, the TAG program would be extended 
through June 30, 2010, six months beyond the current expiration date of 
December 31, 2009. The extended guarantee would apply only to 
noninterest-bearing transaction accounts maintained at IDIs that do not 
opt out of the extended TAG program, as discussed below. If an IDI that 
is currently participating in the program opts out, the FDIC's 
guarantee would expire as scheduled on December 31, 2009.
Increased Fees for Participation in the Extended TAG Program
    If the TAG program is extended, the FDIC expects to increase fees 
to support its continued guarantee. The cost of providing guarantees 
for noninterest-bearing transaction accounts at failed IDIs since the 
inception of the TAG program already has exceeded projected total TAG 
program revenue through the end of December 2009. The FDIC projects 
additional failures of IDIs through the end of the year that will 
result in overall TAG losses that are expected to considerably exceed 
revenues. (Revenues generated from fees associated with the DGP are 
expected to cover TAG losses as well as losses incurred by the FDIC 
under the DGP.) In an effort to balance the income generated from TAG 
fees with potential losses associated with the TAG program, during the 
extension period, the FDIC proposes to charge an annualized rate of 25 
basis points (rather than the current 10 basis points) on deposits in 
noninterest-bearing transaction accounts. The fee would continue to be 
collected quarterly in the same manner as provided for in existing 
regulations.
Limited Opportunity To Opt Out of Extended TAG Program
    Because of the increase in fees and the other regulatory 
modifications associated with an extension of the TAG program, the FDIC 
proposes to offer participating IDIs a single opportunity to opt out of 
the TAG extension. An IDI that wishes to opt out of the TAG extension 
would be required to provide the FDIC with notice of its intent to opt 
out by submitting an e-mail with the subject line ``TLGP Election Form 
Opt Out Requested--Cert No. XXXXX'' to <a href="/cdn-cgi/l/email-protection#4e2a2d2f3d0e282a272d60292138"><span class="__cf_email__" data-cfemail="26424547556640424f4508414950">[email protected]</span></a>. The e-mail would 
be required to include the following information: Name of the IDI; FDIC 
certificate number; City, State, and zip code for the IDI; contact name 
and contact information (telephone number and e-mail address); a 
concise statement that the IDI would like to opt out of the TAG program 
effective January 1, 2010; and confirmation that, no later than 
November 15, 2009, the IDI will post a notice in the lobby of its main 
office, each domestic branch, and if it offers Internet deposit 
services, on its Web site, clearly indicating that funds held in 
noninterest-bearing transaction accounts that are in excess of the 
standard maximum deposit insurance amount will not be guaranteed under 
the TAG program after December 31, 2009.
    Once this information has been received and processed, FDIC staff 
would contact the IDI to confirm the IDI's opt out decision. At this 
time, FDIC staff also would be able to provide a PDF document of the 
IDI's Election Form that would indicate the IDI's opt out decision 
regarding the TAG program (available for download via FDICconnect).
Disclosure Requirements
    Under regulations governing the TAG program, each IDI that offers 
noninterest-bearing transaction accounts is required to post a 
prominent notice in the lobby of its main office, in each domestic 
branch and, if it offers Internet deposit services, on its Web site 
clearly indicating whether the institution is participating in the TAG 
program.\9\ If an IDI is participating in the TAG program, the notice 
must state that funds held in noninterest-bearing transaction accounts 
at the institution are guaranteed in full by the FDIC. Although 
existing regulations do not require specific language to appear in 
disclosures regarding the TAG program, the notices must be provided in 
simple, readily understandable text. Also, if the IDI uses sweep 
arrangements or takes other actions that result in funds being 
transferred or reclassified to an account that is not guaranteed under 
the TAG program, the IDI must disclose those actions to the affected 
customers and clearly advise them, in writing, that such actions will 
void the FDIC's guarantee as to the swept, transferred, or reclassified 
funds.\10\ Existing regulations provide sample disclosures for IDIs 
that participate and for those that do not participate in the TAG 
program.
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    \9\ 12 CFR 370.5(h)(5).
    \10\ Id.
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    If the expiration date of the TAG program is extended, 
participating IDIs that do not opt out of the extended TAG program may 
be required to amend these disclosures. The current TAG program 
disclosure postings and notices would suffice, as long as those notices 
continue to be accurate and, in particular, do not indicate that the 
FDIC's guarantee will apply only through December 31, 2009. Disclosures 
that indicate that the FDIC's guarantee under the TAG program will 
terminate on December 31, 2009, would have to be updated to reference 
June 30, 2010, as the extended termination date. Also, on or before 
November 15, 2009, participating IDIs that opt out of the extended TAG 
program would be required to update their disclosures to inform 
customers and depositors that, beginning on January 1, 2010, they will 
no longer participate in the TAG program and the deposits in 
noninterest-bearing transaction accounts will no longer be guaranteed 
in full by the FDIC.

III. Request for Comments

    The FDIC requests comments on every aspect of this notice and 
particularly asks commenters to indicate a preference for Alternative A 
or Alternative B (or some other alternative) as a means of providing an 
orderly phase out of the FDIC's TAG program.
    In addition, the FDIC requests comment on the following questions:
    <bullet> If the TAG program is extended, is six months an 
appropriate time for the extension? If not, what would be considered an 
appropriate extension

[[Page 31220]]

period for the TAG program? Please provide reasons to support your 
comment.
    <bullet> When the TAG program was modified to include an FDIC-
guarantee for NOW accounts, the FDIC's guarantee extended only to those 
NOW accounts with interest rates no higher than 0.50 percent. The 
interest rate limitation placed on such accounts was comparable to the 
average effective Federal funds rates and significantly below the one 
month CD rates and money market fund rates. The NOW interest rate 
limitation for purposes of the TAG program is now almost three times 
the Federal funds rate, double the one month CD rate, and comparable to 
the average money market deposit account rate.
    Should the FDIC reduce the maximum interest rate for NOW accounts 
that qualify for the FDIC's guarantee under the TAG program? For 
example, would placing an interest rate limit on NOW accounts of no 
higher than 0.25 percent be appropriate? If not, what would be 
considered an appropriate interest rate limitation for NOW accounts? 
Please provide reasons to support your comment.
    <bullet> In order to balance the income generated from TAG fees 
with potential losses associated with the TAG program, during the 
extension period the FDIC has proposed to charge an annualized rate of 
25 basis points (rather than the current 10 basis points) on deposits 
in noninterest-bearing transaction accounts. Is this increase in fees 
appropriate? If not, what fee should be charged by the FDIC to cover 
potential losses caused by an extension of the TAG program? Please 
provide reasons to support your comment.

IV. Regulatory Analysis and Procedure

A. Regulatory Flexibility Act

    In accordance with section 3(a) of the Regulatory Flexibility Act 
(RFA), 5 U.S.C. 603(a), the FDIC must publish an initial regulatory 
flexibility analysis with this proposed rulemaking or certify that the 
proposed rule, if adopted, will not have a significant economic impact 
on a substantial number of small entities. For purposes of the RFA 
analysis or certification, financial institutions with total assets of 
$175 million or less are considered to be ``small entities.'' The FDIC 
hereby certifies pursuant to 5 U.S.C. 605(b) that the Alternative B of 
the proposed rule, if adopted, will not have a significant economic 
impact on a substantial number of small entities. (Alternative A, as 
described in the proposed rule, represents no change from the FDIC's 
existing regulation. As such, Alternative A is not likely to have a 
significant economic impact on a substantial number of small entities.)
    Currently 7,107 IDIs participate in the TAG program, of which 
approximately 3,744, or 52.7 percent are small entities. Within the 
universe of small institutions, 1,072, or 28.6 percent did not have TAG 
eligible deposits as of the March 2009 Report of Condition and Income 
for banks and the Thrift Financial Report for thrifts (collectively, 
``March 2009 Call Reports''); thus, they were not required to pay the 
10 basis point fee currently assessed for participation in the TAG 
program. Assuming these IDIs do not change circumstances and do not opt 
out as provided in Alternative B, there would be no impact on this 
group if the proposed fee increase contained in Alternative B were 
adopted. As to the remaining 2,672 small entities that had TAG eligible 
deposits as of the March 2009 Call Reports, they would have the 
opportunity to opt out of the extended TAG program if Alternative B 
were adopted. However, assuming these 2,672 small entities remain in 
the TAG program if Alternative B is adopted, the FDIC asserts that 
Alternative B described in the proposed rulemaking could have some 
impact on a substantial number of them that remain participants in the 
TAG program during the extension period.
    Nevertheless, the FDIC has determined that, were Alternative B of 
the proposed rule to be adopted, the economic impact on small entities 
will not be significant for the following reasons. With respect to the 
fee increase from 10 basis points to 25 basis points if Alternative B 
were adopted, based on figures from the March 2009 Call Reports, the 
average fee increase for IDIs participating in the extended TAG program 
would be $2,200 annually, representing 0.8 percent of the average net 
operating income before taxes. In addition, because Alternative B 
proposed only a six-month extension, the actual average fee would be 
less than the annualized projection. Moreover, the FDIC asserts that 
the economic benefit of the six-month extension of Alternative B would 
outweigh the increased fee associated with participation in that the 
small entities would benefit from the extended time period within which 
to phase out the TAG program as financial markets continue to 
stabilize.
    With respect to amending the disclosures related to the TAG program 
if Alternative B is adopted, the FDIC asserts that the economic impact 
on all small entities participating in the program (regardless of 
whether they pay a fee) would be de minimus in nature and would be 
outweighed by the economic benefit of the six-month extension.
    Accordingly, if adopted in final form, neither Alternate A nor 
Alternate B of the proposed rule would have a significant economic 
impact on a substantial number of small entities.

B. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), an agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless it 
displays a currently valid OMB control number. Alternative B of the 
Notice of Proposed Rulemaking contains reporting and disclosure 
requirements that, if adopted, would revise an existing OMB-approved 
information collection, entitled the ``Temporary Liquidity Guarantee 
Program'' (OMB No. 3064-0166). Specifically, section 370.5(c)(2) allows 
IDIs participating in the TAG program on October 31, 2009, to opt out 
of the program effective January 1, 2010. In addition, section 
370.5(g)(2)(vi) requires institutions that opt out of the TAG program 
to disclose to customers that funds in excess of the standard maximum 
deposit insurance amount will no longer be guaranteed under the TAG 
program after December 31, 2009. The estimated burden for the reporting 
and disclosure requirements, as set forth in the Notice of Proposed 
Rulemaking, is as follows:
    Title: Temporary Liquidity Guarantee Program.
    OMB Number: 3064-0166.
    Affected public: Participating IDIs--7,109.
    Estimated Number of Respondents:

Opt out of TAG program/Disclosure to customers of discontinuation of 
TAG program guarantee--3,555.
Disclosure to customers of TAG program guarantee extension--3,554.

    Frequency of Response:

Opt out of TAG program/Disclosure to customers of discontinuation of 
TAG program guarantee--once.
Disclosure to customers of TAG program guarantee extension--once.

    Average Time per Response:

Opt out of TAG program/Disclosure to customers of discontinuation of 
TAG program guarantee--1 hour.
Disclosure to customers of TAG program guarantee extension--1 hour.

    Estimated Annual Burden:

Opt out of TAG program/Disclosure to customers of discontinuation of 
TAG program guarantee--3,555 hours.

[[Page 31221]]

    Disclosure to customers of TAG program guarantee extension--3554 
hours.

    Current annual burden--382,214 hours.
    Total new burden--7,109 hours
    Total annual burden--389,323 hours.
    The FDIC is requesting comment on the proposed new TLGP-related 
information collection. The FDIC is also giving notice that the 
proposed collection of information has been submitted to OMB for review 
and approval. Comments are invited on: (1) Whether this collection of 
information is necessary for the proper performance of the FDIC's 
functions, including whether the information has practical utility; (2) 
the accuracy of the estimates of the burden of the information 
collection, including the validity of the methodologies and assumptions 
used; (3) ways to enhance the quality, utility, and clarity of the 
information to be collected; and (4) ways to minimize the burden of the 
information collection on respondents, including through the use of 
automated collection techniques or other forms of information 
technology. Interested parties are invited to submit written comments 
on the estimated burden for opt-out of the TAG program and disclosures 
to customers of discontinuation of TAG program guarantees by any of the 
following methods:
    <bullet> http://www.FDIC.gov/regulations/laws/federal/propose.html.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="0d6e6260606863797e4d6b69646e236a627b">[email protected]</a>. Include the name and number of 
the collection in the subject line of the message.
    <bullet> Mail: Leneta Gregorie (202-898-3719), Counsel, Federal 
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 
20429.
    <bullet> Hand Delivery: Comments may be hand-delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street), on business days between 7 a.m. and 5 p.m.

A copy of the comment may also be submitted to the OMB Desk Officer for 
the FDIC, Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Room 3208, 
Washington, DC 20503. All comments should refer to the name and number 
of the collection.

C. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113 
Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies 
to use plain language in all proposed and final rules published after 
January 1, 2000. The FDIC invites your comments on how to make this 
proposed regulation easier to understand. For example:
    <bullet> Has the FDIC organized the material to suit your needs? If 
not, how could this material be better organized?
    <bullet> Are the requirements in the proposed regulation clearly 
stated? If not, how could the proposed regulation be more clearly 
stated?
    <bullet> Does the proposed regulation contain language or jargon 
that is not clear? If so, which language requires clarification?
    <bullet> Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the proposed regulation easier to 
understand? If so, what changes to the format would make the proposed 
regulation easier to understand?
    <bullet> What else could the FDIC do to make the proposed 
regulation easier to understand?

D. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The FDIC has determined that the proposed rule will not affect 
family well-being within the measure of section 654 of the Treasury and 
General Government Appropriations Act, enacted as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act of 1999 
(Pub. L. 105-277, 112 Stat. 2681).

List of Subjects in 12 CFR Part 370

    Banks, Banking, Bank deposit insurance, Holding companies, National 
banks, Reporting and recordkeeping requirements, Savings associations.

    For the reasons discussed in the preamble, the Federal Deposit 
Insurance Corporation proposes to amend part 370 of chapter III of 
Title 12 of the Code of Federal Regulations as follows:

PART 370--TEMPORARY LIQUIDITY GUARANTEE PROGRAM

    1. The authority citation for part 370 continues to read as 
follows:

    Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818, 
1819(a)(Tenth), 1820(f), 1821(a), 1821(c), 1821(d), 1823(c)(4).

    2. Amend Sec.  370.2 as follows:
    a. Revise paragraph (g); and
    b. Revise paragraph (h)(4); to read as follows:


Sec.  370.2  Definitions.

* * * * *
    (g) Participating entity. The term ``participating entity'' means 
with respect to each of the debt guarantee program and the transaction 
account guarantee program,
    (1) An eligible entity that became an eligible entity on or before 
December 5, 2008 and that has not opted out, or
    (2) An entity that becomes an eligible entity after December 5, 
2008, and that the FDIC has allowed to participate in the program, 
except that a participating entity that opts out of the transaction 
account guarantee program in accordance with Sec.  370.5(c)(2) ceases 
to be a participating entity in the transaction account guarantee 
program effective on January 1, 2010.
    (h) * * *
    (4) Notwithstanding paragraph (h)(3) of this section, a NOW account 
with an interest rate above 0.50 percent as of November 21, 2008, may 
be treated as a noninterest-bearing transaction account for purposes of 
this part, if the insured depository institution at which the account 
is held reduces the interest rate on that account to 0.50 percent or 
lower before January 1, 2009, and commits to maintain that interest 
rate at no more than 0.50 percent at all times during the period in 
which the institution is participating in the transaction account 
guarantee program.
* * * * *
    3. Amend Sec.  370.4 by revising paragraph (a) to read as follows:


Sec.  370.4  Transaction Account Guarantee Program.

    (a) In addition to the coverage afforded to depositors under 12 CFR 
Part 330, a depositor's funds in a noninterest-bearing transaction 
account maintained at a participating entity that is an insured 
depository institution are guaranteed in full (irrespective of the 
standard maximum deposit insurance amount defined in 12 CFR 330.1(n)) 
from October 14, 2008 through:
    (1) The date of opt-out, in the case of an entity that opted out 
prior to December 5, 2008;
    (2) December 31, 2009, in the case of an entity that opts out 
effective on January 1, 2010; or
    (3) June 30, 2010, in the case of an entity that does not opt out.
* * * * *
    4. Amend Sec.  370.5 as follows:
    a. Revise paragraph (c);
    b. Revise paragraph (g); and
    c. Revise paragraph (h)(5), to read as follows:


Sec.  370.5  Participation.

* * * * *
    (c) Opt-out and opt-in options.
    (1) From October 14, 2008 through December 5, 2008, each eligible 
entity is a participating entity in both the debt

[[Page 31222]]

guarantee program and the transaction account guarantee program, unless 
the entity opts out. No later than 11:59 p.m., Eastern Standard Time, 
December 5, 2008, each eligible entity must inform the FDIC if it 
desires to opt out of the debt guarantee program or the transaction 
account guarantee program, or both. Failure to opt out by 11:59 p.m., 
Eastern Standard Time, December 5, 2008 constitutes a decision to 
continue in the program after that date. Prior to December 5, 2008 an 
eligible entity may opt in to either or both programs by informing the 
FDIC that it will not opt out of either or both programs.
    (2) Any insured depository institution that is participating in the 
transaction account guarantee program may elect to opt out of such 
program effective on January 1, 2010. Any such an election to opt out 
must be made in accordance with the procedures set forth in paragraph 
(g)(2) of this section. An election to opt out once made is 
irrevocable.
* * * * *
    (g) Procedures for opting out.
    (1) Except as provided in paragraph (g)(2) of this section, the 
FDIC will provide procedures for opting out and for making an 
affirmative decision to opt in using FDIC's secure e-business Web site, 
FDICconnect. Entities that are not insured depository institutions will 
select and solely use an affiliated insured depository institution to 
submit their opt-out election or their affirmative decision to opt in.
    (2) Pursuant to paragraph (c)(2) of this section a participating 
entity may opt out of the transaction account guarantee program by 
submitting to the FDIC on or before 11:59 p.m. EDST on October 31, 2009 
an e-mail conveying the entity's election to opt out. The subject line 
of the e-mail must include: ``TLGP Election to Opt Out--Cert. No. ----
---- .'' The e-mail must be addressed to <a href="/cdn-cgi/l/email-protection#2a4e494b596a4c4e4349044d455c"><span class="__cf_email__" data-cfemail="85e1e6e4f6c5e3e1ece6abe2eaf3">[email protected]</span></a> and must include 
the following:
    (i) Institution Name;
    (ii) FDIC Certificate number;
    (iii) City, State, ZIP;
    (iv) Name, Telephone Number and E-mail Address of a Contact Person;
    (v) A statement that the institution is opting out of the 
transaction account guarantee program effective January 1, 2010; and
    (vi) Confirmation that no later than November 15, 2009 the 
institution will post a prominent notice in the lobby of its main 
office, each domestic branch and, if it offers Internet deposit 
services, on its Web site clearly indicating that funds held in non-
interest bearing transaction accounts that are in excess of the 
standard maximum deposit insurance amount will not be guaranteed under 
the transaction account guarantee program after December 31, 2009.
    (h) * * *
    (5) Each insured depository institution that offers noninterest-
bearing transaction accounts must post a prominent notice in the lobby 
of its main office, each domestic branch and, if it offers Internet 
deposit services, on its Web site clearly indicating whether the 
institution is participating in the transaction account guarantee 
program. If the institution is participating in the transaction account 
guarantee program, the notice must state that funds held in 
noninterest-bearing transactions accounts at the entity are guaranteed 
in full by the FDIC.
    (i) These disclosures must be provided in simple, readily 
understandable text. Sample disclosures are as follows:

For Participating Institutions

    [Institution Name] is participating in the FDIC's Transaction 
Account Guarantee Program. Under that program, through June 30, 
2010, all noninterest-bearing transaction accounts are fully 
guaranteed by the FDIC for the entire amount in the account. 
Coverage under the Transaction Account Guarantee Program is in 
addition to and separate from the coverage available under the 
FDIC's general deposit insurance rules.

For Non-Participating Institutions

    [Institution Name] has chosen not to participate in the FDIC's 
Transaction Account Guarantee Program. Customers of [Institution 
Name] with noninterest-bearing transaction accounts will continue to 
be insured for up to $250,000 under the FDIC's general deposit 
insurance rules.

    (ii) If the institution uses sweep arrangements or takes other 
actions that result in funds being transferred or reclassified to an 
account that is not guaranteed under the transaction account guarantee 
program, for example, an interest-bearing account, the institution must 
disclose those actions to the affected customers and clearly advise 
them, in writing, that such actions will void the FDIC's guarantee with 
respect to the swept, transferred, or reclassified funds.
* * * * *
    5. Amend Sec.  370.7 by revising paragraph (c) to read as follows:


Sec.  370.7  Assessments for the Transaction Account Guarantee Program.

* * * * *
    (c) Amount of assessment.
    (1) Except as provided in paragraph (c)(2) of this section any 
eligible entity that does not opt out of the transaction account 
guarantee program shall pay quarterly an annualized 10 basis point 
assessment on any deposit amounts exceeding the existing deposit 
insurance limit of $250,000, as reported on its quarterly Consolidated 
Reports of Condition and Income, Thrift Financial Report, or Report of 
Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks 
(each, a ``Call Report'') in any noninterest-bearing transaction 
accounts (as defined in Sec.  370.2(h)), including any such amounts 
swept from a noninterest bearing transaction account into a noninterest 
bearing savings deposit account as provided in Sec.  370.4(c).
    (2) Beginning on January 1, 2010, a participating entity that does 
not opt out of the transaction account guarantee program in accordance 
with Sec.  370.5(c)(2) shall pay quarterly an annualized 25 basis point 
assessment on any deposit amounts exceeding the existing deposit 
insurance limit of $250,000, as reported on its quarterly Call Report 
in any noninterest-bearing transaction accounts (as defined in Sec.  
370.2(h)), including any such amounts swept from a noninterest bearing 
transaction account into a noninterest bearing savings deposit account 
as provided in Sec.  370.4(c).
    (3) The assessments provided in this paragraph (c) shall be in 
addition to an institution's risk-based assessment imposed under Part 
327.
* * * * *

    By order of the Board of Directors.

    Dated at Washington, DC, this 23rd day of June, 2009.

Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E9-15377 Filed 6-29-09; 8:45 am]
BILLING CODE 6714-01-P


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