Source: https://www.federalregister.gov/documents/2001/09/05/01-22172/financial-institutions-on-dod-installations
Timestamp: 2017-10-17 08:15:59
Document Index: 343860681

Matched Legal Cases: ['arts 230', 'ART 231', 'arts 230', 'art 230', 'art 230', 'art 231', '§\u2009231']

A Rule by the Defense Department on 09/05/2001
66 FR 46372
46372-46374 (3 pages)
01-22172
II. Comments, and Changes to, the Proposed Rule
A. Section 230.4(a)(7)(i)
B. Section 230.4(a)(3)(iv)
IV. Public Law 96-354, Regulatory Flexibility Act (5 U.S.C. 601)
V. Public Law 96-511, Paperwork Reduction Act (44 U.S.C. Chapter 35)
VI. Section 202, Public Law 104-4, “Unfunded Mandates Reform Act”
VII. Executive Order 13132, “Federalism”
List of Subjects in 32 CFR Parts 230 and 231a
PART 231a—[REMOVED]
https://www.federalregister.gov/d/01-22172 https://www.federalregister.gov/d/01-22172
This final rule removes regulations on “Procedures governing Banking Offices on DoD Installations” and revises regulations on “Financial Institutions on DoD Installations.” This rule is being promulgated to provide administrative guidelines for the operation of banks and credit unions on domestic and overseas installations of the Department of Defense and addresses areas such as the solicitation for such services, the types of services and the logistics support provided.
T. Summers, 703-602-0299.
Stateside military banking began in 1941 when the Department realized that financial services were urgently needed by military and civilian personnel on domestic installations. To address this need, the Department permitted installation commanders to negotiate with nearby local banks to establish branches on their installation. Today, there are over 230 domestic installations that have either a bank or credit union or both. To ensure consistency between installations in the level, cost and types of financial services offered, the Department established regulations in parts 230 and 231 to govern the operation and oversight of these institutions. These regulations limit the number of financial institutions that may operate on an installation to one bank and one credit union (with a grandfather provision). The regulations require full and open competition for a full spectrum of banking services (to include electronic banking services). Policy guidance relating to the military banking program, by regulation, is the responsibility of the Under Secretary of Defense (Comptroller) while operational guidance rests with the Defense Finance and Accounting Service (DFAS). To ensure financial services are available on our overseas installations, the Department operates the overseas military banking program. The DFAS has been assigned the program office responsibilities for this effort, which is provided under contract by a domestic financial institution. In FY 2000, the overseas military banking program contractor operated 110 banking offices and over 250 automated teller machines in 10 foreign countries. Overseas military banks support DoD personnel and their families, disbursing officers, appropriated fund activities (such as the Defense Commissary Agency) and nonappropriated fund activities (such as the Army and Air Force Exchange Service).
The Department of Defense published the proposed rule on August 11, 1999 (64 FR 43856). Over 240 comments from 55 entities were received in response to the publication of the previously published proposed rule. The majority of the comments on Part 230 of the proposed rule focused on two areas: (1) Prohibiting the assessment of automated teller machine (ATM) surcharging and (2) the establishment of a ceiling for other fees and charges. These comments and their disposition are specifically addressed below. The remainder of the comments were either administrative in nature or suggested that additional clarification was needed in certain areas. None of these resulted in any significant changes to the proposed rule.
This section of the previously published proposed rule would have required that on-base ATM service offered by financial institutions operating on domestic installations and domestic credit unions operating on DoD installations overseas be provided without surcharge. Forty-nine of the fifty-five entities providing comments objected to this limitation. While being sympathetic to the Department's interest in shielding lower income military members and civilian employees from ATM fees, the comments essentially reflected the belief that the freedom from any regulatory constraints relating to a surcharge fee structure should be permitted to create an environment by which the “economics of the marketplace” determine the level of any surcharges that an institution might consider levying. In this regard, such factors as operational expense structures, ATM usage factors and the convenience factor should be the litmus test of the extent to which surcharges, if any, should be imposed by the financial institution installing the ATM. It was also noted that ATM surcharges typically are incurred by noncustomers, i.e., by persons who have chosen to use a particular financial institution's ATM, but have chosen not to establish an account relationship with that institution. Thus, the incurring of ATM surcharges is voluntary and an individual can readily avoid surcharges by either establishing a deposit account with that institution or by only using the ATMs of the individual's existing depositary institution. Those entities providing comments on this section made a number of compelling arguments to retain the existing requirement that requires the banking liaison officer (BLO) and credit union liaison officer (CULO) annually review service charges and fees (to include surcharges on ATM transactions). As a result, this section has been deleted in its entirety.
This section of the previously published proposed rule would have required that retail fees and services for products (to include related minimum balance requirements for noninterest checking, Negotiable Order of Withdrawal (NOW) and savings accounts) offered by financial institutions operating on DoD installations shall not exceed 110 percent of the industry-wide averages for banks in the “Annual Report to Congress on Retail Fees and Services of Depository Institutions,” published by the Board of Governors of the Federal Reserve System. In its comments, the National Association of Federal Credit Unions (NAFCU) took exception to the 110 percent limitation citing that a credit union's fee structure is designed to allow credit unions to provide members with convenient and efficient services, as well as, a good return on their ownership interest. The Department has reviewed the concerns expressed and, based on its review, has removed the 110 percent ceiling requirement.
It has been determined that 32 CFR part 230 is not a significant regulatory action. The rule does not:
(1) Have an annual effect to the economy of $100 million or more or adversely affect in a material way the Start Printed Page 46373economy; a section of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities;
It has been certified that this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities. This rule is being promulgated to provide administrative guidelines for the operation of banks and credit unions on domestic and overseas installations of the Department of Defense and address areas such as the solicitation for such services, the types of services and the logistics support provided.
It has been certified that this part does not impose any reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995.
It has been certified that the rule does not involve a Federal mandate that may result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more and that such rulemaking will not significantly or uniquely affect small governments.
It has been certified that the rule does not have federalism implications. The rules do not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government.
Authority: 10 U.S.C. 136
(iii) Retail banking operations shall not be performed by any DoD Component. Solicitations for such services shall be issued, or proposals accepted, only in accordance with the policies identified in this part. The DoD Components shall rely on commercially available sources in accordance with DoD Directive 4100.15.[1]
(4) Installation commanders shall not seek the provision of financial services from any entity other than the on-base banking office or credit union. The Director, DFAS, with the concurrence of the Under Secretary of Defense Start Printed Page 46374(Comptroller) (USD(C)), may approve exceptions to this policy.
By the authority of 10 U.S.C. 301, 32 CFR part 231a is removed.
1. See footnote 1 to § 231.1(a).
[FR Doc. 01-22172 Filed 9-4-01; 8:45 am]