Proposed Rule Requiring Certain Bank Staff to Complete FDIC-Provided Training on Deposit Insurance Coverage

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January 24, 2011

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 330

RIN _______

Amendments to Deposit Insurance Regulations: Deposit Insurance Coverage

Training; SMDIA Notification

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking with request for comments.

SUMMARY:

The FDIC is proposing a rule that would promote public confidence in federal deposit

insurance by providing depositors with improved access to accurate information about

FDIC insurance coverage of their accounts at insured depository institutions (IDIs). The

proposed rule would accomplish this goal in three ways. First, it would require certain

IDI personnel to complete FDIC-provided training on the fundamentals of FDIC deposit

insurance coverage. These IDI personnel would include any employee with authority to

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open deposit accounts and/or respond to customer questions about FDIC insurance

coverage (hereafter “employees”).

Second, the proposed rule would require IDIs to implement procedures so that

employees, when opening a new deposit account, inquire whether the customer has an

ownership interest in any other account at the IDI and, if so, whether the customer’s

aggregate ownership interest in deposit accounts, including the new account, exceeds the

Standard Maximum Deposit Insurance Amount (“SMDIA”). If this is the case, then the

IDI employee would be required to provide the customer with a copy of the FDIC’s

publication, Deposit Insurance Summary. The proposed rule would apply to deposit

accounts opened in person at the IDI, by telephone, mail, and via the Internet or other

technology. Third, the rule would require IDIs to provide a link to the FDIC’s Electronic

Deposit Insurance Estimator (“EDIE”) on any website the IDI maintains for use by

deposit customers.

DATES: Written comments must be received by the FDIC no later than [insert date 60

days after publication in the Federal Register]

erson at the IDI, by telephone, mail, and via the Internet or other

technology. Third, the rule would require IDIs to provide a link to the FDIC’s Electronic

Deposit Insurance Estimator (“EDIE”) on any website the IDI maintains for use by

deposit customers.

DATES: Written comments must be received by the FDIC no later than [insert date 60

days after publication in the Federal Register].

ADDRESSES: Interested parties are invited to submit written comments to the FDIC by

any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the

instructions for submitting comments.

• Agency Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html.

Follow the instructions for submitting comments.

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• E-mail: comments@fdic.gov. Include RIN # ______ in the subject line of the

message.

• Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal

Deposit Insurance Corporation, 550 17th Street, NW, Washington, DC 20429.

• Hand Delivery/Courier: Comments may be hand-delivered to the guard station

located at the rear of the FDIC’s 550 17th Street building (accessible from F Street) on

business days between 7 a.m. and 5 p.m.

Instructions: All submissions must include the agency name and use the title

“Part 330—Deposit Insurance Education.” All comments received will be posted

generally without change to http://www.fdic.gov/regulations/laws/federal/propose.html,

including any personal information provided. Paper copies of public comments may be

ordered from the Public Information Center by telephone at (877) 275-3342 or (703) 562-

2200.

FOR FURTHER INFORMATION CONTACT: Martin W. Becker, Senior Consumer

Affairs Specialist, Deposit Insurance Section, Division of Supervision and Consumer

Protection, (202) 898-6644, mbecker@fdic.gov; or Catherine A. Ribnick, Counsel, Legal

Division, (202) 898-6803,cribnick@fdic.gov; Federal Deposit Insurance Corporation,

550 17th Street, NW, Washington, DC 20429

) 275-3342 or (703) 562-

2200.

FOR FURTHER INFORMATION CONTACT: Martin W. Becker, Senior Consumer

Affairs Specialist, Deposit Insurance Section, Division of Supervision and Consumer

Protection, (202) 898-6644, mbecker@fdic.gov; or Catherine A. Ribnick, Counsel, Legal

Division, (202) 898-6803,cribnick@fdic.gov; Federal Deposit Insurance Corporation,

550 17th Street, NW, Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Insured Depository Institution Employee Education on Deposit Insurance

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FDIC regulations currently do not require employees at IDIs to be trained in the basic

principles of FDIC deposit insurance coverage or to assist customers in ascertaining

whether their deposits are fully covered by federal deposit insurance. The FDIC receives

tens of thousands of telephone calls, emails and correspondence annually from depositors

and IDI employees seeking information and advice about FDIC deposit insurance

coverage. These inquiries reveal that many depositors do not know whether their

deposits are fully insured and that bank employees often are unfamiliar with the scope of

deposit insurance coverage. In addition, the FDIC regularly receives complaints from

IDI customers, asserting that their banks were unable to answer their deposit insurance

questions or, in some cases, may have provided inaccurate deposit insurance guidance.

The FDIC is concerned that these situations could cause financial harm to depositors and

have the potential to undermine customer confidence in depository institutions and the

federal deposit insurance system.

To address the issues described above, the FDIC is proposing to add a new section to its

insurance regulations, which appear at 12 CFR Part 330. This new section would

establish three new requirements for IDIs

these situations could cause financial harm to depositors and

have the potential to undermine customer confidence in depository institutions and the

federal deposit insurance system.

To address the issues described above, the FDIC is proposing to add a new section to its

insurance regulations, which appear at 12 CFR Part 330. This new section would

establish three new requirements for IDIs.

First, IDIs would be required to have employees with the authority to open deposit

accounts and/or respond to customer questions about FDIC deposit insurance coverage

complete a computer-based instructional (“CBI”) program provided to IDIs by the FDIC.

This program would provide users with an introduction to FDIC deposit insurance

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coverage, with specific focus on the general principles of insurance coverage and the

rules and requirements for the account ownership categories. It would also introduce

users to the information resources available from the FDIC, including EDIE, deposit

insurance guides and on-demand videos. Further, this self-paced training module would

include frequent knowledge checks to help the user evaluate his or her understanding of

the information presented.

This self-administered training program would require less than two hours for most

employees to complete. All employees would be required to complete the training once

in every 12-month period. Each new employee with the duties previously described

would be required to take the training within 30 days of commencing employment.

Current employees at the time of the effective date of the final rule would be required to

take the training within 60 days of the effective date.

Further, IDIs are encouraged to provide additional training, using a range of media, to

help employees understand the FDIC’s deposit insurance rules

usly described

would be required to take the training within 30 days of commencing employment.

Current employees at the time of the effective date of the final rule would be required to

take the training within 60 days of the effective date.

Further, IDIs are encouraged to provide additional training, using a range of media, to

help employees understand the FDIC’s deposit insurance rules. The FDIC provides

multiple, cost-free training resources on the deposit insurance rules to the industry, for

use on a voluntary basis, including in-person training sessions, written materials, videos,

EDIE and telephone seminars presented by FDIC personnel.

Second, IDIs would be required to institute procedures ensuring that, regardless of the

manner in which a customer opens a new account, the employee opening the account

must inquire as to the existence of other deposit accounts at the same IDI and whether the

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aggregated account balance exceeds the SMDIA, currently $250,000. Thus, for an

account opened in person or by telephone, the employee opening the account would ask

the customer whether the customer maintains any other accounts at the IDI (including

accounts opened at other IDI branch locations) and, if so, whether the combined balances

of all the accounts exceed the SMDIA. If the response is in the affirmative, the IDI

employee would provide the customer with a copy of the FDIC’s Deposit Insurance

Summary publication. In the case of deposit accounts opened by mail, via the Internet or

by means of other technology, these inquiries can be included in the paper or electronic

application form, with a link to the Deposit Insurance Summary publication supplied.

The rule would not require an IDI to provide counsel or advice to the customer regarding

how to structure multiple deposit accounts to maximize deposit insurance coverage

posit accounts opened by mail, via the Internet or

by means of other technology, these inquiries can be included in the paper or electronic

application form, with a link to the Deposit Insurance Summary publication supplied.

The rule would not require an IDI to provide counsel or advice to the customer regarding

how to structure multiple deposit accounts to maximize deposit insurance coverage.

The rule would apply to all types of deposit accounts opened by a customer, with the

exception of pass-through accounts as to which the IDI does not, in the normal course of

business, keep records of the beneficial owners. The rule would not impose a deposit

insurance training requirement on third parties (e.g., deposit brokers or affinity groups)

that directly or indirectly promote the deposit of funds in a specified IDI. However, the

FDIC makes ample deposit insurance resources publically available, and the Corporation

urges any entity that encourages or facilitates the placement of deposits in IDIs to provide

appropriate information in response to client inquiries regarding FDIC deposit insurance

coverage.

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Third, the proposed rule would require an IDI to provide a link to EDIE on any website it

maintains for use by customers. IDIs can link to EDIE, at no cost, in two ways — via

Online EDIE or Brandable EDIE. Online EDIE is available directly from the FDIC’s

website at www.fdic.gov/edie. With Online EDIE, IDIs link to the application, which

resides on the FDIC's website, and IDI customers are then taken from the IDI’s website

to the FDIC’s website. Brandable EDIE, which can be accessed free from FDIC

Connect, allows an IDI to customize and integrate the EDIE application into the IDI’s

own website, so customers can access EDIE without leaving the IDI's website.

II. Regulatory Burden on Insured Depository Institutions

The FDIC believes the implementation of this rule would not impose a significant

regulatory burden on the industry

. Brandable EDIE, which can be accessed free from FDIC

Connect, allows an IDI to customize and integrate the EDIE application into the IDI’s

own website, so customers can access EDIE without leaving the IDI's website.

II. Regulatory Burden on Insured Depository Institutions

The FDIC believes the implementation of this rule would not impose a significant

regulatory burden on the industry. The proposed rule is circumscribed and modest in its

requirements. First, IDI employees with authority to open accounts and/or respond to a

customer’s deposit insurance question would be required to complete a short training

program annually. The training program would be provided to IDIs by the FDIC at no

cost. Second, when opening a new account, employees would simply inquire 1) whether

the customer has other deposits at the same IDI and 2) whether such deposits, including

the new account, exceed the SMDIA. The rule would not require IDI employees to

advise customers on how to maximize deposit insurance coverage. The proposed rule

would require IDI employees to provide the customer with the FDIC’s publication,

Deposit Insurance Summary. Lastly, the rule would require an IDI to maintain a link to

EDIE on its website.

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The Corporation believes it is reasonable to expect employees at IDIs to have sufficient

familiarity with basic rules for federal deposit insurance coverage so employees can

provide accurate information to customers who wish to confirm their deposit insurance

coverage. To the extent that compliance with the proposed rule imposes an obligation on

the industry, it must be weighed against the benefit to depositors by reinforcing their

confidence in federal deposit insurance and preventing unnecessary financial losses to

customers if their IDI should fail.

III. Request for Comments

The FDIC requests comment on all aspects of the proposed rule, including cost,

regulatory burden and benefits to consumers

rule imposes an obligation on

the industry, it must be weighed against the benefit to depositors by reinforcing their

confidence in federal deposit insurance and preventing unnecessary financial losses to

customers if their IDI should fail.

III. Request for Comments

The FDIC requests comment on all aspects of the proposed rule, including cost,

regulatory burden and benefits to consumers. In particular, the FDIC seeks comments

with respect to the following questions:

• Does the proposed rule strike the right balance between meeting depositors’

need for accurate deposit insurance information and the potential cost to and regulatory

burden on IDIs?

• Is the scope of the proposed rule appropriate? In its present form, the rule

would require training for all IDI employees with authority to open accounts and/or

respond to customers’ inquiries on deposit insurance coverage. Should the training

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extend to all IDI employees who work in bank retail offices, not just the employees with

these specific responsibilities?

• The rule would require IDI employees to inquire whether the customer has an

ownership interest in any other deposit accounts at the IDI and, if so, whether the

customer’s total ownership interest in deposit accounts, including the new account,

exceeds the Standard Maximum Deposit Insurance Amount. Should the inquiry only

apply to aggregated deposits that exceed the SMDIA of $250,000 or to aggregated

deposits that may approach the SMDIA? And if so, what dollar amount or percentage of

the SMDIA should trigger the obligation to provide depositors with the FDIC’s Deposit

Insurance Summary publication?

• In addition to requiring IDIs to make EDIE available on their websites, should

the FDIC require IDIs to maintain, in their retail office lobbies, a dedicated computer

terminal containing the EDIE application, which all customers could use on their own, or

with assistance from IDI employees, to generate reports on the customer’s deposit

insurance coverage?

nsurance Summary publication?

• In addition to requiring IDIs to make EDIE available on their websites, should

the FDIC require IDIs to maintain, in their retail office lobbies, a dedicated computer

terminal containing the EDIE application, which all customers could use on their own, or

with assistance from IDI employees, to generate reports on the customer’s deposit

insurance coverage?

• In addition to requiring IDIs to provide the FDIC’s Deposit Insurance Summary

publication to depositors whose combined deposits at the IDI exceed the SMDIA, should

IDIs be required to make this publication available in their retail office lobbies so all

depositors have access to this important information?

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• Should the CBI software program include a feature that would allow IDIs to

confirm that training has been completed by covered employees?

IV. Regulatory Analysis and Procedure

A. 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. We invite your comments on

how to make this proposal easier to understand. For example, have we organized the

material to suit your needs? If not, how could this material be better organized? Are the

requirements in the proposed regulation clearly stated? If not, how could the regulation

be more clearly stated?  Does the proposed regulation contain language or jargon that is

not clear? If so, which language requires clarification?  Would a different format

(grouping and order of sections, use of headings, paragraphing) make the regulation

easier to understand? If so, what changes to the format would make the regulation easier

to understand? What else could we do to make the regulation easier to understand?

B

sed regulation contain language or jargon that is

not clear? If so, which language requires clarification?  Would a different format

(grouping and order of sections, use of headings, paragraphing) make the regulation

easier to understand? If so, what changes to the format would make the regulation easier

to understand? What else could we do to make the regulation easier to understand?

B. Paperwork Reduction Act

Request for Comment on Proposed Information Collection

In accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C.

Ch. 3501 et seq.), the FDIC may not conduct or sponsor, and the respondent is not

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required to respond to, an information collection unless it displays a currently valid

Office of Management and Budget (OMB) control number.

The proposed rule requires IDIs to implement procedures so that, whenever a customer

opens a new deposit account at an insured depository institution, the employee opening

the account shall inquire whether the customer has an ownership interest in any other

accounts at the IDI and, if so, whether the customer’s aggregate ownership interest in

deposit accounts, including the new account, exceeds the Standard Maximum Deposit

Insurance Amount. If the customer responds affirmatively, then the IDI employee shall

provide the customer with the FDIC’s publication, Deposit Insurance Summary. Since

this is an FDIC-prepared publication, there is no paperwork burden involved. In the case

of deposit accounts opened by mail or via the Internet or other technology, the

publication can be provided in paper form or through a link to the electronic version.

Commenters may submit comments on aspects of this notice that may affect reporting

and disclosure requirements to the addresses listed in the ADDRESSES section of this

NPR. Paperwork Burden comments should reference “Part 330—Deposit Insurance

Education, OMB Control No. 3064-NEW.”

C

hnology, the

publication can be provided in paper form or through a link to the electronic version.

Commenters may submit comments on aspects of this notice that may affect reporting

and disclosure requirements to the addresses listed in the ADDRESSES section of this

NPR. Paperwork Burden comments should reference “Part 330—Deposit Insurance

Education, OMB Control No. 3064-NEW.”

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (“RFA”) requires a federal agency publishing a notice of

proposed rulemaking to prepare and make available for public comment an initial

regulatory flexibility analysis that describes the impact of the proposed rule on small

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entities. 5 U.S.C. 603(a). Pursuant to regulations issued by the Small Business

Administration (13 CFR 121.201), a “small entity” includes a bank holding company,

commercial bank or savings association with assets of $175 million or less (collectively,

small banking organizations). The RFA provides that an agency is not required to

prepare and publish a regulatory flexibility analysis if the agency certifies that the

proposed rule would not have a significant impact on a substantial number of small

entities. 5 U.S.C. 605(b). Pursuant to section 605(b) of the RFA, the FDIC certifies that

the proposed rule would not have a significant economic impact on a substantial number

of small entities.

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 meaning 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. 268).

List of Subjects in 12 CFR Part 330

Bank deposit insurance, Banks, banking, Reporting and recordkeeping requirements,

Savings and loan associations, Trusts and trustees.

the meaning 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. 268).

List of Subjects in 12 CFR Part 330

Bank deposit insurance, Banks, banking, Reporting and recordkeeping requirements,

Savings and loan associations, Trusts and trustees.

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For the reasons set forth in the preamble, the Board of Directors of the Federal Deposit

Insurance Corporation proposes to amend part 330 of Title 12 of the Code of Federal

Regulations as follows:

1. The authority citation for part 330 would continue to read as follows:

Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818(q), 1819(Tenth), 1820(g), 1821(a).

2. New § 330.17 would be added to read as follows:

§ 330.17 Deposit Insurance Training

(a)

Purpose. The purpose of this section is to maintain confidence in federally

insured depository institutions and to protect depositors by requiring insured

depository institution employees with authority to open accounts and/or respond

to customer inquiries regarding deposit insurance coverage (“employees”), to

complete training on basic deposit insurance principles once in any twelve

month period. New employees must complete the training within 30 days of

commencing employment. Current employees are required to complete the

training within 60 days of the effective date of the final rule.

(b)

Applicability. The requirements in this section shall apply to all insured

depository institution employees who have the authority to open accounts

and/or respond to customer inquiries regarding deposit insurance coverage.

(c)

Procedure.

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(1) Insured Depository Institution Personnel Education.

red to complete the

training within 60 days of the effective date of the final rule.

(b)

Applicability. The requirements in this section shall apply to all insured

depository institution employees who have the authority to open accounts

and/or respond to customer inquiries regarding deposit insurance coverage.

(c)

Procedure.

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(1) Insured Depository Institution Personnel Education.

(i) Training. An insured depository institution must require each

employee with the authority to open accounts and/or respond to

customer inquiries regarding deposit insurance coverage to complete

basic deposit insurance training annually, using an FDIC-provided

training module. Each new employee with the authority to open

accounts and/or respond to customer inquiries regarding deposit

insurance coverage must be required to undergo such training within 30

days of commencing employment.

(ii) Training Materials. The FDIC will provide the training module in the

form of a self-administered computer-based instructional program.

(2)

Ascertaining Insured Status. An insured depository institution must

implement procedures so that, whenever a customer opens a new deposit

account at an insured depository institution, the employee opening the account

shall inquire whether the customer has an ownership interest in any other

accounts at the IDI and, if so, whether the customer’s aggregate ownership

interest in deposit accounts, including the new account, exceeds the Standard

Maximum Deposit Insurance Amount. If the customer responds affirmatively,

then the IDI employee shall provide the customer with the FDIC’s Deposit

Insurance Summary publication In the case of deposit accounts opened by mail

or via the Internet or other technology, these inquiries can be included in the

paper or electronic application form, with the link to the Deposit Insurance

Summary publication provided.

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mount. If the customer responds affirmatively,

then the IDI employee shall provide the customer with the FDIC’s Deposit

Insurance Summary publication In the case of deposit accounts opened by mail

or via the Internet or other technology, these inquiries can be included in the

paper or electronic application form, with the link to the Deposit Insurance

Summary publication provided.

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(d) Definitons

(1) Account shall mean a deposit account at a depository institution that is held

by or offered to a customer. It includes time, demand, savings, and negotiable order

of withdrawal accounts. The term does not include a fiduciary account as to which

the insured depository institution does not, in the normal course of business, keep

records of beneficial owners of the deposits in the account.

(2) New Account shall mean any deposit account at an insured depository

institution to which the insured depository institution assigns a unique identifier that

serves to distinguish the account from other, existing accounts at the depository

institution.

Dated at Washington, D.C., this XX day of XXXXXXX, 20--.

Authorized to be published in the Federal Register by Order of the Board of Directors of

the Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.