Deposits
Federal RegisterOct 22, 1997
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DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 506, 545, 556, 557, 561, 563, 563g
[No. 97-108]
RIN 1550-AB00
Deposits
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Final rule.
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SUMMARY: The Office of Thrift Supervision (OTS) is issuing a final rule
streamlining its deposit-related regulations. The final rule will
eliminate duplicative, overlapping, and outdated regulations, and those
that micromanage savings associations. The final rule also codifies the
OTS position on federal preemption of state laws affecting deposit-
related activities.
EFFECTIVE DATE: January 1, 1998.
FOR FURTHER INFORMATION CONTACT: Edward J. O'Connell, III, Project
Manager, (202) 906-5694, Supervision Policy; Robyn H. Dennis, Manager,
Thrift Policy, (202) 906-5751; Christine Harrington, Counsel (Banking
and Finance), (202) 906-7957; or Karen Osterloh, Assistant Chief
Counsel, (202) 906-6639, Regulations and Legislation Division, Chief
Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW.,
Washington, D.C. 20552.
SUPPLEMENTARY INFORMATION:
I. Background of the Proposal
OTS published a notice of proposed rulemaking (NPR) on April 2,
1997 proposing to amend its deposit-related regulations.\1\
The NPR proposed to streamline the regulations by eliminating
duplicative, overlapping, and outdated regulations, and those that
micromanage savings associations. Additionally, OTS sought to codify
its long-standing position on federal preemption of state laws
affecting deposit-related activities. Finally, OTS proposed to remove
regulations that merely restate existing statutory authority or
universally recognized incidental deposit-related powers.
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\\1\\ 62 FR 15626 (April 2, 1997). (Notice of Proposed
Rulemaking on Deposits and Advance Notice of Proposed Rulemaking on
Electronic Banking). OTS has separately published a proposed rule on
Electronic Banking. 62 FR 51817 (October 3, 1997).
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With these goals in mind, OTS proposed to consolidate all remaining
deposit-related regulations in a new part 557. OTS predicted that this
change would make deposit-related regulations easier to locate and
follow. OTS issued the NPR pursuant to the Regulatory Reinvention
Initiative of the Vice President's National Performance Review and
section 303 of the Riegle Community Development and Regulatory
Improvement Act of 1994.
II. General Discussion of the Comments
Eight commenters responded to the NPR including five federal thrift
institutions and three trade associations. The commenters generally
supported the proposal to remove unnecessary, duplicative, or outdated
regulations. They specifically endorsed the removal of OTS regulations
duplicating areas covered by the Federal Reserve Board's (FRB)
Regulation D and Regulation DD.\2\ Commenters also generally
endorsed the proposed consolidation of the remaining deposit-related
regulations at new part 557. Comments addressing specific regulations
are discussed in the section-by-section analysis below.
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\\2\\ Regulation D addresses the Reserve Requirements of
Depository Institutions. 12 CFR part 204 (1997). Regulation DD
implements the Truth in Savings Act (TISA). 12 CFR part 230 (1997).
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III. Section-by-Section Analysis
A. Disposition of Existing Deposit-Related Regulations
The OTS proposed to delete certain existing regulations, and
consolidate the remaining relevant provisions in a new part. Sections
proposed for deletion included: Sec. 545.10 (Savings Deposits or
Shares); Sec. 545.11 (Issuance of Accounts); Sec. 545.12 (Demand
Deposit Accounts); Sec. 545.13 (Account Records); Sec. 545.14
(Determination and Distribution of Earnings); Sec. 556.12 (Deposit
Assurance of Direct Deposit of Social Security Payments); Sec. 563.2
(Simple Form of Certificate; Passbooks); Sec. 563.3 (Long Form of
Membership Certificate); Sec. 563.6 (Payment of Accounts on Demand);
Sec. 563.7 (Fixed-Term Accounts); Sec. 563.9 (Eurodollar Deposits); and
Sec. 563.10 (Earnings-Based Accounts).
OTS received comments supporting the deletion of most of the cited
sections. These sections are deleted as proposed. Comments opposing the
deletion of specific sections, however, are discussed below. Comments
received on existing provisions that were retained and incorporated
into the new part 557 are discussed in connection with the relevant
section under that part. A derivation chart has been provided at the
end of this preamble.
OTS emphasizes that the changes made in this final rule are not
intended to reduce, in any way, the scope of federal thrifts' authority
to conduct deposit activities.
Section 545.12 Demand Deposit Accounts. Existing Sec. 545.12(b)
prohibits a federal association from paying interest on demand deposits
and specifically states that finders' fees, as defined in
Sec. 561.16(b), are not interest. OTS proposed to delete this paragraph
and to include the finders' fees exception in the Thrift Activities
Handbook (``Handbook''). One commenter supported retaining the finders'
fee provisions in OTS regulations. This commenter argued that the
Handbook would not override the statutory prohibition on interest on
demand deposits at 12 U.S.C. 1464(b)(1)(B)(i), and feared that the
Handbook may not be issued until after the effective date of the new
deposit regulation. Another commenter supported deleting the finders'
fee provision.
OTS regulations at Sec. 561.16 define ``demand accounts'' for the
purposes of 12 U.S.C. 1464(b) and the implementing regulations. This
definition specifically states that fees paid by a savings association
to a person who introduces a depositor to the savings association shall
not be deemed an interest payment, if the fee meets certain criteria.
OTS believes this definition is sufficient to qualify for the statutory
prohibition. Accordingly, the final rule deletes Sec. 545.12(b) as
proposed.
Like section 5 of the HOLA, section 11 of the Banking Act of 1933
(12 U.S.C. 371a) and section 18(g) of the Federal Deposit Insurance Act
(12 U.S.C. 1828(g)) prohibit the payment of interest on demand
deposits. The Federal Reserve Board (FRB) and the Federal Deposit
Insurance Corporation (FDIC)
[[Page 54760]]
have issued regulations implementing this prohibition at 12 CFR part
217 (1997) and 12 CFR part 329 (1997), and have issued interpretive
rules describing when premiums will not be considered to be interest
within the scope of this prohibition. See 12 CFR 217.101 (1997) and 12
CFR 329.103 (1997). These interpretations permit premiums to be paid,
inter alia, if the premium is given only when the depositor opens a new
account, or adds to, or renews an existing account. As a result of this
guidance, FRB- and FDIC-regulated institutions were constrained from
offering incentives to use their products, including the use of new
services such as automated teller machines (ATM) or debit
cards.\3\
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\\3\\ For example, one bank was prevented from offering
incentives to existing demand customers who signed up for an ATM
card because the incentives did not coincide with opening, adding
to, or renewing an account. Similarly, another bank was prevented
from offering incentives to encourage deposit customers to use an
ATM card more than three times per month because premiums from the
use of a debit card, which reduce the amount on deposit, would have
been interest on the deposit under the FRB and FDIC interpretive
guidance.
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To address this issue, FRB and the FDIC recently revised their
interpretive guidance to permit regulated institutions to pay any
premium that is not, directly or indirectly, related to or dependent on
the balance in a demand deposit account and the duration of the account
balance.\4\ While OTS has no interpretive rule specifically
addressing premiums, OTS agrees that premiums under such circumstances
are not interest and will generally follow the FRB and FDIC
interpretations on this point.
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\\4\\ 62 FR 26736 (May 15, 1997); 62 FR 40731 (July 30, 1997).
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Section 556.12 Deposit Assurance of Direct Deposit of Social
Security Payments. The OTS policy statement at Sec. 556.12 states that
a federal association has implied powers to provide deposit assurance
in connection with the Social Security Administration's direct deposit
program. This policy statement also includes advice on safeguards and
controls required to address the risks of the direct deposit program.
OTS proposed to delete the policy statement.
Two commenters supported this deletion, but noted that additional
regulatory guidance would be helpful to address such issues as
safeguards and controls, and compliance with the FRB's Regulation E
(Electronic Funds Transfers).\5\ The OTS Compliance Handbook
addresses Regulation E matters in section 330, Electronic Funds
Transfer. OTS is reviewing whether the issuance of additional guidance
is necessary.
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\\5\\ 12 CFR part 204 (1997).
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Section 563.7 Fixed-Term Accounts (Term Accounts). Existing
Sec. 563.7(d) states that a certificate account may prohibit withdrawal
prior to maturity, except under circumstances set forth in the
certificate. This paragraph further provides that, in case of the
accountholder's death or incompetence, a savings association may not
prohibit early withdrawal and may not impose an early withdrawal
penalty. OTS proposed to delete this paragraph because it duplicates
Regulation D.6
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\6\ 12 CFR 204.2(c)(1) n.1 (1997).
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Two commenters specifically addressed this paragraph. One supported
deletion. The other argued that the section is not duplicative. This
commenter argued that Regulation D neither authorizes an institution to
prohibit early withdrawal nor forbids an institution from prohibiting
early withdrawal. The commenter noted that Sec. 563.7(d) correctly
allows the matter to be addressed by the contract between the savings
association and its depositors.
Unless restricted by statute or regulation, a federal savings
association needs no specific authorization to enter into agreements
establishing maturity dates for accounts and prohibiting early
withdrawal under circumstances specified in those agreements.
Regulation D does, however, limit this broad authority. For example, to
meet the definition of time deposit under Regulation D, an institution
must limit the depositor's right to withdraw his account unless the
deposit is subject to a specified penalty for early
withdrawal.7
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\7\ See 12 CFR 204.2(c)(1) (1997).
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The commenter correctly noted that, unlike existing Sec. 563.7,
Regulation D does not require a savings association to permit early
withdrawal, subject to penalties, upon the death or incompetency of the
accountholder. Rather, Regulation D merely permits the savings
association to take such action under these and other
circumstances.8 However, in the interest of uniformity with
other insured institutions, the OTS had determined that it is not
necessary to impose this additional requirement on federal savings
associations. Therefore, OTS concludes that existing Sec. 563.7 may be
deleted in this final rule.
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\8\ 12 CFR 204.2(c)(1)(i), n.1 (1997).
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Section 563.9 Eurodollar Deposits. Existing Sec. 563.9 addresses
the issuance of Eurodollar deposits. OTS proposed to delete this
provision as unnecessary. Three commenters supported deleting this
provision. One of these commenters, however, suggested that OTS
reiterate, either in a regulation or the preamble, that savings
associations have authority to accept Eurodollar deposits under their
general authority to accept deposits. OTS has deleted this regulation
as proposed, but notes that federal savings associations continue to be
permitted to issue Eurodollar certificates as part of their deposit
activities authorized by the HOLA.9
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\9\ 12 U.S.C. 1464(b)(1)(A).
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B. Proposed Part 557
OTS proposed to adopt a new part 557, which would include all of
the agency's deposit-related regulations. Although OTS proposed part
557 in a traditional format, this final rule uses the plain language
drafting techniques promoted by the Vice President's National
Performance Review Initiative and new guidance in the Federal Register
Document Drafting Handbook (January 1997 edition). The primary goal of
plain language drafting is to make regulations more readily
understandable. Plain language drafting emphasizes informative headings
(often written as a question), non-technical language (including the
use of ``you''), and sentences in the active voice.
Although commenters did not have an opportunity to comment on the
plain language format prior to its use in this final rule, OTS believes
that the benefits of the plain language format justify its use. The
substance of the proposed regulation did not change as a result of the
plain language drafting. OTS welcomes comments on the format and
suggestions on how to improve this format.
Subpart A--General
Section 557.1 What does this part do? New Sec. 557.1 states that
part 557 applies to savings associations' deposit activities.
Specifically, subpart B applies to federal savings associations, while
subpart C applies to both federal and state chartered savings
associations.
Subpart B--Deposit Activities of Federal Savings Associations
Section 557.10 What authorities govern the issuance of deposit
accounts by a federal savings association? Proposed Sec. 557.1 stated
that a federal savings association may raise funds through accounts and
may issue evidence of accounts under section 5(b)(1) of the HOLA, by
the terms of its charter, and by part 557.
OTS received two comments on the proposed section. One commenter
feared that savings association personnel may not realize that
[[Page 54761]]
Regulation D is applicable. This commenter suggested that the final
rule specifically cite Regulation D. OTS believes this suggestion is
helpful and has added a reference to Regulation D and Regulation DD in
the new Sec. 557.10.
Another commenter suggested deleting the reference to authority
granted under the association's charter. The reference to the charter
was included to maintain consistency with section 5(b) of the HOLA
which authorizes a federal savings association to accept deposits
``[s]ubject to the terms of its charter and regulations of the [OTS].''
10 To the extent that the commenter feared that retention of
this reference would require charter amendments whenever a new deposit
product is offered, the OTS notes that charters are broad authorizing
documents that typically do not specifically address unique deposit
products. The model federal stock and mutual charters, for example,
contain no restrictions on permissible deposit products.11
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\10\ 12 U.S.C. 1464(b)(1)(A).
\11\ 12 CFR 552.3 and 544.1 (1997).
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Section 557.11 To what extent does federal law preempt state
deposit-related law? Section 557.11 sets forth OTS's long-standing
position on federal preemption of state laws purporting to affect
deposit-related activities of federal savings associations. It
explicitly states our intent to occupy the entire field of deposit-
related regulations for federal savings associations, and sets forth
the statutory and regulatory bases for preemption. See proposed
Sec. 557.2(a).
One commenter opposed the preemption provision as an infringement
on the dual banking system. OTS disagrees. Deposit-taking is one of the
most important functions of a savings association, and preemption is
essential to OTS regulation of these activities. Section 557.11 merely
restates long-standing preemption principles applicable to federal
savings associations' operations, as developed in a long line of court
cases and legal opinions issued by OTS and the FHLBB.12
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\12\ For a discussion of general preemption principles
applicable to the operations of federal thrifts, see 61 FR 50951 at
50965-50967 (September 30, 1996).
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This final rule should not be construed as evidencing, in any way,
an intent by OTS to change its long-standing position on preemption.
Moreover, whether OTS continues to have a specific regulation
addressing a particular deposit activity or chooses to remove a federal
regulation to streamline its regulations and reduce regulatory burden,
OTS still intends to occupy the entire field of regulation of the
deposit activities of federal savings associations.
One commenter argued that all preemption questions should be
decided on a case-by-case basis, rather than by regulation. Sections
557.11 through 557.13 of the final rule set forth only well-settled
principles of preemption and examples of preempted and non-preempted
state laws. These are derived from statutory and regulatory authority,
as interpreted in case law and prior FHLBB and OTS case-by-case
determinations. While OTS will continue to address new questions by
issuing interpretive guidance on a case-by-case basis, OTS is hopeful
that the increased clarity and specificity of the final rule will
reduce confusion and the need for frequent preemption inquiries to OTS.
Section 557.12 What are some examples of preempted state laws
affecting deposits? Section 557.12 (proposed Sec. 557.2(b)) contains an
illustrative list of preempted state laws. Various commenters suggested
additions to the list of preempted state laws. Some would expand the
list to reference new types of preempted state laws (e.g., state laws
addressing abandoned property, safe deposit boxes, licensing of deposit
operations, and reporting requirements).13
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\13\ Other commenters made suggestions that would merely add
greater specificity to the proposed list of preempted laws.
Commenters suggested adding state laws that address particular
special purpose savings services, specific kinds of service charges
or fees, or particular aspects of state funds availability laws. The
OTS believes that its rule is sufficiently clear, and has not made
these changes.
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Except as discussed below, OTS has not revised Sec. 557.12 to add
new items to the list of preempted state laws. As the section heading
to this final rule emphasizes, the list of preempted state laws is not
intended to be exhaustive. Failure to mention a particular state law
that affects deposit-taking should not be deemed to constitute evidence
of any intent to permit that type of state law to apply.14
As state laws are addressed in future case law and agency opinions, OTS
will consider appropriate revisions to this regulation.
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\14\ To the contrary, the preemption rules are based on the
premise that any state law that affects the deposit activities of
federal thrifts is preempted unless it clearly falls within the
parameters of Sec. 557.13.
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OTS has decided to revise the regulation to include one suggested
addition. On numerous occasions, the OTS, FHLBB and the courts, have
concluded that states may not impose licensing or registration
requirements on federal savings associations.15 Accordingly,
state licensing and registration laws have been added to the list in
Sec. 557.12.
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\15\ See e.g., OTS Op. Chief Counsel. (December 14, 1994) and
opinions and case law cited therein.
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One additional type of state law merits discussion--state escheat
laws. Some commenters argued that escheat laws should be added to the
list of preempted state laws. Other commenters suggested that these
laws should be added to the list of laws that are not preempted. This
agency has concluded in prior opinions that federal law does not
preempt state laws requiring a federal savings association to remit the
balance of an abandoned account to a state at a designated time.
Additionally, the agency has opined that states may review the records
of, or obtain reports from, a federal savings association only in very
limited circumstances, including determining whether the federal
savings association has complied with the escheat law.16 On
the other hand, certain other laws (e.g., state laws prohibiting a
savings association from charging any fees for lack of activity during
the designated escheat period) are subject to preemption.17
Because some aspects of state escheat laws are preempted and other
aspects are not, OTS declines to address these laws in the final
regulation.
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\16\ OTS Op. Chief Counsel (January 18, 1996) at 3; FHLBB Op.
Dep. Chief Counsel (May 24, 1984).
\17\ OTS Op. Chief Counsel (July 8, 1992).
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Section 557.13 What state laws affecting deposits are not
preempted? Section 557.13 describes which state laws are not preempted.
Specifically, this section states that OTS has not preempted certain
types of laws to the extent that the laws only incidentally affect the
deposit-related activities of federal savings associations or are
otherwise consistent with the purposes of Sec. 557.11. State laws that
are not preempted include: Contract and commercial law, tort law, and
criminal law. In addition, OTS will not preempt any other state law if
OTS, upon review, finds that the law furthers a vital state interest
and either has only an incidental effect on deposit-related activities
or is not otherwise contrary to the purposes of Sec. 557.11.
One commenter suggested that OTS should clarify that the phrase
``incidental effect on deposit-related activities'' requires that the
state law must be directed at businesses in general, rather than at
deposit-related activities in particular. Certainly, many state laws
directed at businesses in general will not be preempted.
[[Page 54762]]
However, the focus of this aspect of the preemption inquiry is the
effect of a state law on federal associations, not on how many other
businesses or industries the law may also affect.
Another commenter suggested that OTS should employ a presumption in
favor of preempting state laws. When confronted by interpretative
questions under the final rule, OTS will follow the same analytical
format that it described in the preemption discussion to the recently
issued lending regulation.18 To determine whether a state
law is preempted, the first step is to ascertain whether the law in
question is of the type listed in Sec. 557.12 as an example of
preempted law. If it is, the analysis ends there; the law is preempted.
If the law is not covered by Sec. 557.12, the next question is whether
the law affects deposit-taking. If so, then, in accordance with
Sec. 557.11, the presumption arises that the law is preempted. This
presumption can be reversed only if the law can clearly be shown to fit
within the confines of Sec. 557.13. For these purposes, Sec. 557.13 is
intended to be interpreted narrowly. Any doubt should be resolved in
favor of preemption.
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\18\ See 61 FR 50951, 50966-50967 (September 30, 1996).
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Section 557.14 What interest rate may I pay on savings accounts?
New Sec. 557.14 addresses interest payments on savings accounts. The
proposed rule, entitled ``interest and earnings,'' stated that a
savings association may pay interest on a savings account, whether in
the form of a deposit or share, at any rate or anticipated rate of
return determined when the account is accepted and as provided in the
association's charter and bylaws and the terms of the account. See
proposed Sec. 557.3.
One commenter suggested that the proposed rule should be revised to
delete the outdated term ``share'' and that the title of any new
section should not include the term ``earnings.'' The term ``share'' is
drawn from the HOLA.19 OTS will continue to use this term in
the final regulation to keep the regulation consistent with the
statute. OTS dropped the reference to ``earnings'' since this term is
not used in the regulation text.
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\19\ 12 U.S.C. 1461(b)(1)(A).
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One commenter noted that modern charters and bylaws do not address
interest payments on savings accounts and suggested the final rule on
interest should delete the references to these documents. Again, the
reference to the association's charter is based on the statute, which
authorizes a federal savings association to accept deposits subject to
the terms of its charter.20 In order to maintain consistency
with this statutory authority, this reference is retained. OTS agrees
that the reference to bylaws is unnecessary, and has deleted it from
the final rule.
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\20\ 12 U.S.C. 1464(b)(1)(A).
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Another commenter suggested that the regulation should state that
all interest payments must be consistent with the TISA and Regulation
DD, which implements TISA. This change is unnecessary because OTS has
included a citation to Regulation DD in Sec. 557.10, which addresses
the authorities governing federal savings associations' issuance of
deposit accounts.
One commenter suggested that the proposed rule should be revised to
delete the outdated term ``anticipated rate of return.'' Share type
mutual associations use this term in making earnings distributions to
account holders. Additionally, as discussed under Sec. 557.15, rates
may vary and may not be known with certainty when an account is opened.
OTS believes the term anticipated rate of return is appropriate, and
has retained this term in the final regulation.
The proposed regulation would have allowed federal savings
associations to pay fixed rates on savings accounts, or pay rates that
vary according to a schedule, index, or formula specified when the
account is accepted. See proposed Sec. 557.3.
One commenter was concerned that the proposed text would
unnecessarily disallow ``bump-rate'' certificates of deposit. Bump-rate
accounts provide the depositor with the option of changing the rate
during the certificate's term. OTS did not intend to disallow ``bump-
rates.'' Therefore, the final regulation does not require a federal
association to fix interest rates on savings accounts when it accepts
the accounts. Rather, the final rule requires that the schedule, index,
or formula be specified in the account's terms.
Section 557.15 Who owns a deposit account? Section 557.15 provides
that a federal association may treat the account holder of record as
the owner, regardless of contrary notice, until the account is
transferred on the association's records. See proposed Sec. 557.4(b).
OTS received one comment in support of the proposed rule. Accordingly,
OTS adopts this provision without substantive change.
Subpart C--Deposit Activities of All Savings Associations
Section 557.20 What records should I maintain on deposit
activities? Section 557.20 states that federal and state chartered
savings associations should establish and maintain deposit
documentation practices and records that demonstrate appropriate
administration and monitoring of its deposit-related activities. These
records should adequately evidence ownership, balances, and all
transactions for each account. See proposed Sec. 557.4(a). This section
replaces the more specific deposit recordkeeping requirements contained
in the existing regulations.
One commenter suggested that the recordkeeping requirements should
apply only to federal savings associations. OTS specifically intends
the recordkeeping requirements to apply to both federal and state
chartered savings associations. To make this distinction clear, OTS has
included this provision in subpart C which governs the deposit
activities of all associations.
Another commenter suggested that the regulation should specifically
state that electronic records are acceptable. OTS has recently issued a
proposed regulation addressing the electronic operations of federal
savings associations.21 This regulation would permit federal
savings associations to use electronic means and facilities to perform
any authorized function, including recordkeeping. To clarify that
electronic recordkeeping is available, the final rule states that
savings associations may maintain records in any format consistent with
standard business practices.
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\21\ 62 FR 51817 (October 3, 1997).
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C. Related Regulations
Several commenters addressed regulations that were not covered by
the NPR. For example, one commenter suggested that OTS delete
Sec. 561.28 (a)(2), (a)(3) and (b), which defines money market deposit
accounts. This commenter argued that Sec. 561.28(a)(2)(i) which
authorizes no more than six transfers per calendar month or statement
cycle, prohibits thrifts from offering money market deposit accounts
with debit cards. The commenter believed that this restriction and the
other restrictions at Sec. 561.28 are unnecessary and may be deleted.
The cited restrictions were originally imposed to preserve uniform
treatment of money market accounts between Federal Reserve System
members and insured institutions, 22 and are based on the
definitions contained in the FRB's Regulation D. 23 Even if
the restrictions contained in 12 CFR 561.28 were removed, savings
associations would still be subject to such restrictions by
[[Page 54763]]
Regulation D. Moreover, OTS notes that the FRB recently considered and
rejected a proposal to increase the number of transfers permitted on
corporate money market accounts.
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\22\ 51 FR 10810 at 10812 (March 31, 1986).
\23\ See 12 CFR 204.2(d)(2) (1997).
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While one of the purposes of this rulemaking was to remove OTS
regulations that duplicate areas covered by the FRB's Regulation D, the
regulatory definitions applicable to deposits at 12 CFR parts 541 and
561 were not proposed for revision in the proposed rule. Accordingly,
OTS has left these provisions unchanged. The future regulatory
restructuring rulemaking may review these definitions to determine if
they should be modified or removed.
Several existing OTS regulations contain cross-references to
provisions that are being removed. 24 Consequently,
technical revisions to remove these cross-references are included in
this rule.
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\24\ 12 CFR 561.16, 561.42, 563g.1.
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One commenter suggested that OTS give thrifts parity with national
banks in connection with selling annuities and insurance. Another
commenter suggested that the equal housing lender logo should be
required only for advertisements for residential mortgage loans, rather
than in all advertisements. OTS will review these regulations for
possible revision when they are scheduled for reconsideration.
IV. Executive Order 12866
The Director of OTS has determined that this final rule does not
constitute a ``significant regulatory action'' for the purposes of
Executive Order 12866.
V. Unfunded Mandates Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L.
104-4 (Unfunded Mandates Act), requires that an agency prepare a
budgetary impact statement before promulgating a rule that includes a
federal mandate that may result in expenditure by state, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. This final rule simplifies
existing procedures and reduces regulatory burden. OTS has determined
that the final rule will not result in expenditures by state, local, or
tribal governments or by the private sector of $100 million or more.
Accordingly, this rulemaking is not subject to section 202 of the
Unfunded Mandates Act.
VI. Regulatory Flexibility Act Analysis
Pursuant to section 605(b) of the Regulatory Flexibility Act, OTS
certifies that the final rule does not have a significant impact on a
substantial number of small entities. As discussed in the preamble,
this final rule does not impose any additional burdens or requirements
on small entities. Rather, the final rule reduces several paperwork and
other burdens on all savings associations.
VII. Paperwork Reduction Act
The reporting and recordkeeping requirements contained in this
final rule have been submitted to and approved by the Office of
Management and Budget in accordance with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under OMB control No. 1550-0092. Comments on
all aspects of this information collection should be sent to the Office
of Management and Budget, Paperwork Reduction Project (1550),
Washington, D.C. 20503, with copies to the OTS, 1700 G Street, N.W.,
Washington, D.C. 20552.
The recordkeeping requirements contained in this final rule are
found at 12 CFR 557.20. The reporting requirements are found in the
Federal Reserve Board's Regulation DD, 12 CFR part 230. In part 557,
OTS relies on the disclosure requirements applicable to savings
associations under Regulation DD. OTS needs the information to
supervise savings associations and to develop regulatory policy. The
likely respondents/recordkeepers are OTS-regulated savings
associations.
Records are to be maintained for the period of time the account is
open, plus three years.
Respondents/recordkeepers are not required to respond to this
collection of information unless it displays a currently valid OMB
control number.
VIII. Disposition of Existing Rules
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Original provision New provision Comment
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545.10................................ ......................... Removed.
545.11 (a) & (c)...................... ......................... Removed.
545.11(b)............................. 557.10................... Redesignated/modified.
545.12................................ ......................... Removed.
545.13 (a) & (b)(2)................... 557.20................... Redesignated/modified.
545.13(b)(1).......................... 557.15................... Redesignated/modified.
545.14(a)............................. 557.14................... Redesignated/modified.
545.14(b)............................. 557.14................... Redesignated/modified.
545.14(c)............................. ......................... Removed.
556.12................................ ......................... Removed.
563.2................................. ......................... Removed.
563.3................................. ......................... Removed.
563.6................................. ......................... Removed.
563.7 (a), (c) & (d).................. ......................... Removed.
563.7(b).............................. 557.14................... Redesignated/modified.
563.9................................. ......................... Removed.
563.10................................ ......................... Removed.
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List of Subjects
12 CFR Part 506
Reporting and recordkeeping requirements.
12 CFR Part 545
Accounting, Consumer protection, Credit, Electronic funds
transfers, Investments, Reporting and recordkeeping requirements,
Savings associations.
12 CFR 556 and 561
Savings associations.
[[Page 54764]]
12 CFR Part 557
Consumer protection, Reporting and recordkeeping requirements,
Savings associations.
12 CFR Part 563
Accounting, Advertising, Crime, Currency, Investments, Reporting
and recordkeeping requirements, Savings associations, Securities,
Surety bonds.
12 CFR 563g
Reporting and recordkeeping requirements, Savings associations,
Securities.
Accordingly, the Office of Thrift Supervision hereby amends chapter
V, title 12, as follows:
PART 506--INFORMATION COLLECTION REQUIREMENTS UNDER THE PAPERWORK
REDUCTION ACT
1. The authority citation for part 506 continues to read as
follows:
Authority: 44 U.S.C. 3501 et seq.
2. Section 506.1 is amended by adding one entry to the table in
paragraph (b) in numerical order to read as follows:
Sec. 506.1 OMB control numbers assigned pursuant to the Paperwork
Reduction Act.
* * * * *
(b) Display.
------------------------------------------------------------------------
Current OMB
12 CFR part or section where identified and described control No.
------------------------------------------------------------------------
* * * * *
557.20............................................... 1550-0092
* * * * *
------------------------------------------------------------------------
PART 545--OPERATIONS
3. The authority citation for part 545 continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.
Secs. 545.10--545.14 [Removed]
4. Sections 545.10, 545.11, 545.12, 545.13, and 545.14 are removed.
PART 556--STATEMENTS OF POLICY
5. The authority citation for part 556 continues to read as
follows:
Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1464, 1701j-3; 15 U.S.C.
1693-1693r.
Sec. 556.12 [Removed]
6. Section 556.12 is removed.
7. Part 557 is added to read as follows:
PART 557--DEPOSITS
Subpart A--General
Sec.
557.1 What does this part do?
Subpart B--Deposit Activities of Federal Savings Associations
557.10 What authorities govern the issuance of deposit accounts by
a federal savings association?
557.11 To what extent does federal law preempt state deposit-
related law?
557.12 What are some examples of preempted state laws affecting
deposits?
557.13 What state laws affecting deposits are not preempted?
557.14 What interest rate may I pay on savings accounts?
557.15 Who owns a deposit account?
Subpart C--Deposit Activities of All Savings Associations
557.20 What records should I maintain on deposit activities?
Authority: 12 U.S.C. 1462a, 1463, 1464.
Subpart A--General
Sec. 557.1 What does this part do?
This part applies to the deposit activities of savings
associations. If you are a federal savings association, subpart B of
this part applies to your deposit activities. Subpart C of this part
applies to the deposit activities of all federal and state chartered-
savings associations.
Subpart B--Deposit Activities of Federal Savings Associations
Sec. 557.10 What authorities govern the issuance of deposit accounts
by a federal savings association?
A federal savings association (``you'') may raise funds through
accounts and may issue evidence of accounts under section 5(b)(1) of
the HOLA (12 U.S.C. 1464(b)(1)), your charter, and this part.
Additionally, 12 CFR parts 204 and 230 apply to your deposit
activities.
Sec. 557.11 To what extent does federal law preempt state deposit-
related law?
(a) Under sections 4(a) and 5(b) of the HOLA, 12 U.S.C. 1463(a),
1464(b), OTS is authorized to promulgate regulations that preempt state
laws affecting the operations of federal savings associations when
appropriate to:
(1) Facilitate the safe and sound operations of federal savings
associations;
(2) Enable federal savings associations to operate according to the
best thrift institutions practices in the United States; or
(3) Further other purposes of HOLA.
(b) To further these purposes without undue regulatory duplication
and burden, OTS hereby occupies the entire field of federal savings
associations' deposit-related regulations. OTS intends to give federal
savings associations maximum flexibility to exercise deposit-related
powers according to a uniform federal scheme of regulation. Federal
savings associations may exercise deposit-related powers as authorized
under federal law, including this part, without regard to state laws
purporting to regulate or otherwise effect deposit activities, except
to the extent provided in Sec. 557.13. State law includes any statute,
regulation, ruling, order, or judicial decision.
Sec. 557.12 What are some examples of preempted state laws affecting
deposits?
The OTS preempts state laws that purport to impose requirements
governing the following:
(a) Abandoned and dormant accounts;
(b) Checking accounts;
(c) Disclosure requirements;
(d) Funds availability;
(e) Savings account orders of withdrawal;
(f) Service charges and fees;
(g) State licensing or registration requirements; and
(h) Special purpose savings services.
Sec. 557.13 What state laws affecting deposits are not preempted?
(a) The OTS has not preempted the following types of state law, to
the extent that the law only incidentally affects your deposit-related
activities or is otherwise consistent with the purposes of Sec. 557.11:
(1) Contract and commercial law;
(2) Tort law; and
(3) Criminal law.
(b) The OTS will not preempt any other state law if the OTS, upon
review, finds that the law:
(1) Furthers a vital state interest; and
(2) Either only incidentally affects your deposit-related
activities or is not otherwise contrary to the purposes expressed in
Sec. 557.11.
Sec. 557.14 What interest rate may I pay on savings accounts?
(a) You may pay interest at any rate or anticipated rate of return
on savings accounts, either in deposit or in share form, as provided in
your charter and the account's terms.
(b) You may pay fixed or variable rates. If you pay a variable
rate, you must base it on a schedule, index, or formula that you
specify in the account's terms.
Sec. 557.15 Who owns a deposit account?
You may treat the holder of record as the account owner, even if
you receive contrary notice, until you transfer the account on your
records.
[[Page 54765]]
Subpart C--Deposit Activities of All Savings Associations
Sec. 557.20 What records should I maintain on deposit activities?
All federal and state chartered savings associations (``you'')
should establish and maintain deposit documentation practices and
records that demonstrate that you appropriately administer and monitor
deposit-related activities. Your records should adequately evidence
ownership, balances, and all transactions involving each account. You
may maintain records on deposit activities in any format that is
consistent with standard business practices.
PART 561--DEFINITIONS
8. The authority citation for part 561 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.
Sec. 561.16 [Amended]
9. Section 561.16 is amended, in paragraph (a), by removing the
phrase ``, as provided in Sec. 563.6(b) of this chapter''.
Sec. 561.42 [Amended]
10. Section 561.42 is amended by removing the phrase ``Secs. 563.6
and 561.16'' and adding in its place ``Sec. 561.16''.
PART 563--OPERATIONS
11. The authority citation for part 563 continues to read as
follows:
Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468,
1817, 1820, 1828, 3806; 42 U.S.C. 4106.
Secs. 563.2, 563.3, 563.6, 563.7, 563.9, 563.10 [Removed]
12. Sections 563.2, 563.3, 563.6, 563.7, 563.9, and 563.10 are
removed.
PART 563g--SECURITIES OFFERINGS
13. The authority citation for part 563g continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 78c(b), 78l,
78m, 78n, 78p, 78w.
Sec. 563g.1 [Amended]
14. Section 563g.1 is amended by removing the last sentence of
paragraph (a)(13).
Dated: October 15, 1997.
By the Office of Thrift Supervision.
Nicolas P. Retsinas,
Director.
[FR Doc. 97-27842 Filed 10-21-97; 8:45 am]
BILLING CODE 6720-01-P
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