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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6141The FDIC would have 90 days afterthe report date (currently the end of acalendar quarter) as of which theapplicable quarterly ConsolidatedReport of Condition and Income orThrift Financial Report (financialreports) of affiliated BIF-member andSAIF-member depository institutionsmust be filed in which to notify theinstitutions of the FDIC’s determinationand the intended imposition of theentrance and exit fees. The depositoryinstitutions would then have 30 daysfrom the date of the FDIC’s notificationto provide to the FDIC information andmaterials to demonstrate that theincrease in BIF-assessable deposits wasattributable to factors other than depositshifting encouraged or facilitated by thedepository institutions or their holdingcompany. Mergers, acquisitions andchanges in market conditions would beamong the types of factors that may besufficient to rebut the presumption ofintentional deposit shifting.The FDIC would review the materialsand information submitted, consult withthe institutions’ primary federalregulator(s) (if other than the FDIC),determine whether the entrance and exitfees should be imposed and, within 60days of receiving the institutions’materials and information, notify theinstitutions of the FDIC’s determination.If the determination is that fees must bepaid, then the institutions would berequired to remit payment to the FDICwithin 15 days of the notice. Theinstitutions then would have 30 daysafter such payment is made to appealthe determination to the FDIC.The details of the procedures forsubmitting materials and information toattempt to rebut the presumption ofdeposit shifting would be provided inwriting to depository institutions whenthey are informed of the FDIC’sintention to impose such fees.D. Effective DateThe FDIC’s review of financial reportsfor purposes of the possible impositionof entrance and exit fees under theproposed rule would begin with thereports filed as of the end of the first fullquarter following the effective date ofthe final rule on deposit shifting.Concurrent with this rulemaking effort,the FDIC is considering what, if any,action it should take to impose thedeposit shifting statute for the periodbetween the enactment date of thedeposit shifting statute (i.e., September30, 1996) and the effective date of thefinal rule on deposit shifting. Any suchaction would be on a case-by-case basisin consultation with the institutions’primary federal regulator(s), if otherthan the FDIC.E. Rationale for the Proposed RuleThe FDIC believes, preliminarily, thatthe proposed rule is the most effectivemeans of enforcing the requirements ofthe deposit shifting statute withoutimposing an undue burden ondepository institutions. A regulationattempting to restrict and controldepository institutions’ conduct andactivities, including advertising, wouldbe difficult to design, implement andenforce. Moreover, such restrictions andcontrols might impose a significantregulatory burden on the industry. Inaddition, FDIC efforts to control andrestrict advertising by depositoryinstitutions might raise FirstAmendment commercial free speechissues.The FDIC believes, preliminarily, thatthe approach used in the proposed rulestrikes the proper balance of enforcingthe law and limiting the regulatoryburden on depository institutions.II. Request for Public CommentThe FDIC is hereby requestingcomment during a 60-day commentperiod on all aspects of this proposedrule. Specifically, comments arerequested on alternate means ofimplementing and enforcing the depositshifting statute. For example, could andshould the statute be applied on a caseby-casebasis without an implementingregulation? And, if applied on a case-bycasebasis, what factors should beconsidered in determining whetherprohibited deposit shifting hasoccurred? More specifically, whatdepository institution conduct andactivities should the FDIC interpret asencouraging or facilitating depositshifting?Comments also are specificallyrequested on the meaning of the rule ofconstruction provided in the depositshifting statute that the statute shall notbe construed as prohibiting conduct oractivity ‘‘undertaken in the ordinarycourse of business * * * and * * * notdirected towards the depositors of aninsured depository institution affiliate* * *.’’ The FDIC would have tointerpret that rule of construction inconsidering whether to impose entranceand exit fees upon depositoryinstitutions.III. Paperwork Reduction ActNo collections of informationpursuant to section 3504(h) of thePaperwork Reduction Act of 1980 (44U.S.C. 3501 et seq.) are contained in thisproposed rule. Consequently, noinformation has been submitted to theOffice of Management and Budget forreview.IV. Regulatory Flexibility ActThe FDIC estimates that, currently,there are 135 bank holding companiesand savings and loan holdingcompanies that own both BIF-memberand SAIF-member affiliates. Thoseholding companies, in turn, ownapproximately 870 banks and thrifts, ofwhich about 250 have assets of $100million or less. Based on the FDIC’scalculations and projections, aninsubstantial number of those 250institutions would be subject to therebuttable presumption and otherprovisions of this proposed rule. Thus,the Board hereby certifies that theproposed rule would not have asignificant economic impact on asubstantial number of small entities 3within the meaning of the RegulatoryFlexibility Act (5 U.S.C. 601 et seq.).Therefore, the provisions of that Actregarding an initial and final regulatoryflexibility analysis (Id. at 603 & 604) donot apply here.List of Subjects in 12 CFR Part 312Bank deposit insurance, Savingsassociations.The Board of Directors of the FederalDeposit Insurance Corporation herebyproposes to amend part 312 of title 12of the Code of Federal Regulations asfollows:PART 312—ASSESSMENT OF FEESUPON ENTRANCE TO OR EXIT FROMTHE BANK INSURANCE FUND OR THESAVINGS ASSOCIATION INSURANCEFUND AND TREATMENT OFAPPLICATIONS AND NOTICES ANDTHE IMPOSITION OF ENTRANCE ANDEXIT FEES IN CONNECTION WITHDEPOSIT SHIFTING1. The part heading of Part 312 isrevised to read as set forth above.2. The authority citation for Part 312is revised to read as follows:Authority: 12 U.S.C. 1815(d), 1819.3. Section 312.11 is added to read asfollows:§ 312.11 Deposit shifting.(a) Purpose and scope. The purpose ofthis section is to implement section2703(d) of Public Law 104–208 whichbecame effective on September 30, 1996(110 Stat. 3009 et seq.). This sectionapplies to all insured depository3 The definition of ‘‘small business entity’’ derivesfrom the definition of a ‘‘small business concern.’’Part 121 of the Small Business Administration’srules and regulations (13 CFR part 121) providesthat any national bank or commercial bank, savingsassociation, or credit union with assets of $100million or less qualifies as a small businessconcern.