Deposit Liabilities, Withdrawal of Proposed Rule

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 354

RIN 3064-AA92

Deposit Liabilities, Withdrawal of Proposed Rule

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Withdrawal of proposed rule.

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SUMMARY: The FDIC is withdrawing a proposal issued in 1988 prescribing

by regulation that certain liabilities of an insured depository

institution are deposit liabilities by general usage. The proposal

would have found that an institution's liability on certain obligations

issued by the institution as a means of obtaining funds constitutes a

deposit liability. The FDIC has decided to withdraw the proposed rule

because an FDIC policy statement recommends withdrawal of proposed

rules that have not been acted upon by the Board of Directors within

nine months.

DATES: This withdrawal of the proposed rule is made on December 27,

1995.

[[Page 66952]]

FOR FURTHER INFORMATION CONTACT: Jamey Basham, Counsel, (202) 898-

7265, Legal Division, FDIC, 550 17th Street, N.W., Washington, D.C.

20429.

SUPPLEMENTARY INFORMATION:

The Proposed Rule

On November 25, 1988, the FDIC published a proposed rule dealing

with the definition of the term ``deposit.'' 1 In that rulemaking,

the FDIC proposed that an insured depository institution's liability on

a promissory note, bond, acknowledgement of advance, or similar

obligation that is issued or undertaken by the institution as a means

of obtaining funds would be a deposit liability. The proposed rule

would have allowed a number of enumerated exceptions to the general

provision.

\1\ 53 FR 47723

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The proposal was issued because the FDIC had become aware over a

period of years that institutions were issuing obligations generically

known as ``deposit notes,'' which typically were general credit

obligations of the institution; were represented to customers as

deposits; were designated as deposits on the issuer's report of

condition; and for which deposit insurance assessments were paid. In

addition, institutions were issuing instruments generally known as

``bank notes,'' which were also general obligations of the institution

but were not otherwise treated as deposits by the institution and may

or may not have contained representations to the customer about the

instruments' deposit status. Although the FDIC believes that many of

these transactions fall within section 3(l)(1) of the Federal Deposit

Insurance Act (Act), 12 U.S.C. 1813(l)(1), defining what constitutes a

``deposit,'' the FDIC proposed to use its authority under section

3(l)(5) of the Act, 12 U.S.C. 1813(l)(5), to determine that certain

liabilities are deposits by general usage.

The Policy Statement

An FDIC Statement of Policy 2 provides that any regulation

upon which final action by the Board of Directors has not been taken

within nine months from the date the regulation was last proposed will

be formally withdrawn. If any proposed regulation is so withdrawn, the

Board of Directors reserves the right to begin the rulemaking process

anew (i.e., republish in the Federal Register, resolicit public

comments, etc.). The FDIC believes that withdrawal of the proposed rule

is appropriate because no action has been taken with respect to the

proposal for over nine months.

\2\ Statement of Policy on Development and Review of FDIC Rules

and Regulations, 44 FR 7288 (May 30, 1979).

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In consideration of the foregoing, the FDIC hereby withdraws

proposed new part 354 of title 12 of the Code of Federal Regulations.

By Order of the Board of Directors.

Dated at Washington, D.C., this 19th day of December, 1995.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Deputy Executive Secretary.

[FR Doc. 95-31261 Filed 12-26-95; 8:45 am]

BILLING CODE 6174-01-P