Assessments

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 327

RIN 3064-AB35

Assessments

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Board of Directors (Board) of the Federal Deposit

Insurance Corporation (FDIC) proposes to amend its regulations

governing computation of an institution's assessment base to provide

for the subtraction of certain liabilities arising under depository

institution investment contracts. The subject liabilities are those not

treated as insured deposits under section 11(a)(8) of the Federal

Deposit Insurance Act (FDI Act). Under the proposal, these liabilities

would be excluded from the deposit base on which deposit insurance

premiums are assessed, thereby reducing assessment payments for

affected institutions. The purpose of the amendment is to give effect,

by regulation, to apparent congressional intent.

DATES: Written comments must be received by the FDIC on or before March

31, 1994.

ADDRESSES: Written comments shall be addressed to the Office of the

Executive Secretary, Federal Deposit Insurance Corporation, 550 17th

Street, NW., Washington, DC, 20429. Comments may be hand-delivered to

room F-400, 1776 F Street, NW., Washington, DC 20429, on business days

between 8:30 a.m. and 5 p.m. (FAX number: (202) 898-3838). Comments

will be available for inspection in room 7118, 550 17th Street, NW.,

Washington, DC, between 9 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: William Farrell, Chief, Assessments

Management Section, Division of Finance, (703) 516-5546; or Gerald J.

Gervino, Senior Attorney, (202) 898-3723; Federal Deposit Insurance

Corporation, Washington, DC 20429.

SUPPLEMENTARY INFORMATION: Prior to December 1993, liabilities arising

under bank or thrift investment contracts (BICs) that qualified as

deposits under section 3(l) of the FDI Act, 12 U.S.C. 1813(l), were

insured in accordance with the statutory and regulatory provisions

governing federal deposit insurance coverage. Similarly, BIC

liabilities that qualified as deposits were included in an

institution's deposit base for the purpose of calculating the

institution's deposit insurance premiums.

Effective December 19, 1993, a new section 11(a)(8) was added to

the FDI Act by section 311(a)(1) of the Federal Deposit Insurance

Corporation Improvement Act of 1991 (FDICIA). Under this new provision,

codified at 12 U.S.C. 1821(a)(8), liabilities arising under certain

depository institution investment contracts are no longer treated as

insured deposits.

A companion provision to the new section 11(a)(8) was a new

subparagraph (D) added to section 7(b)(6) of the FDI Act by section

311(a)(2) of FDICIA, which also became effective December 19, 1993.

Section 7(b)(6)(D) excluded from an institution's insurance assessment

base any liability of the institution not treated as an insured deposit

pursuant to section 11(a)(8).

Although section 11(a)(8) continues in force, its companion

provision does not. Section 7(b)(6), as amended effective December 19,

1993, was superseded as of January 1, 1994, by a totally revised

version of section 7(b) that provides for a risk-based assessment

system. The existing section 7(b), 12 U.S.C. 1817(b), as amended by

section 302(a) of FDICIA, omits all provisions of the superseded

section 7(b) that dealt with the computation of an institution's

deposit insurance assessment base. Under the existing provisions,

definition of the assessment base is to be determined by the FDIC.

The FDIC believes that it is appropriate and desirable to give

continued effect, by regulation, to the intent of Congress, as

reflected in superseded section 7(b)(6), that investment-contract

liabilities not treated as insured deposits under section 11(a)(8) of

the FDI Act should be excluded from the universe of deposits on which

insurance assessments are paid. The proposed amendment would maintain

the balance we believe Congress intended in enacting the former section

7(b)(6) as a companion to section 11(a)(8).

Accordingly, the Board proposes to amend its assessments regulation

to exclude from an institution's assessment base, as computed under

part 327.4, those investment contract liabilities not treated as

insured deposits under section 11(a)(8) of the FDI Act.

The Board hereby requests comments on the proposed amendment.

Interested persons are invited to submit written comment during a 30-

day comment period.

Paperwork Reduction Act

No collections of information pursuant to section 3504(h) of the

Paperwork Reduction Act (44 U.S.C. 3501 et seq.) are contained in the

proposed rule. Consequently, no information has been submitted to the

Office of Management and Budget for review.

Regulatory Flexibility Act

The Board hereby certifies that the proposed rule would not have a

significant economic impact on a substantial number of small entities

within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.). It would not impose burdens on depository institutions of any

size and would not have the type of economic impact addressed by the

Act.

List of Subjects in 12 CFR Part 327

Assessments, Bank deposit insurance, Financing Corporation, Savings

associations.

For the reasons stated in the preamble, the Board proposes to amend

12 CFR part 327 as follows:

1. The authority citation for part 327 continues to read as

follows:

Authority: 12 U.S.C. 1441, 1441b, 1817-1819.

2. Section 327.4 is amended by removing the period at the end of

paragraph (b)(2)(iv)(B) and adding a semicolon in lieu thereof, and by

adding paragraph (b)(2)(v) to read as follows:

Sec. 327.4 Average assessment base.

* * * * *

(b) * * *

(2) * * *

(v) Liabilities arising from a depository institution investment

contract that are not treated as insured deposits under section

11(a)(8) of Federal Deposit Insurance Act (12 U.S.C. 1821(a)(8)).

* * * * *

By order of the Board of Directors.

Dated at Washington, DC, this 22nd day of February, 1994.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Acting Executive Secretary.

[FR Doc. 94-4527 Filed 2-28-94; 8:45 am]

BILLING CODE 6714-01-P