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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6143a.m. and 5:00 p.m. [Fax number: (202)898–3838; Internet address:comments@fdic.gov]. Comments will beavailable for inspection at the FDIC’sReading Room, Room 7118, 550 17thStreet, N.W., Washington, D.C. between9:00 a.m. and 4:30 p.m. on businessdays.FOR FURTHER INFORMATION CONTACT:Marc J. Goldstrom, Counsel, LegalDivision, Federal Deposit InsuranceCorporation, Washington, D. C. 20429,telephone (202) 898–8807; Robert W.Walsh, Manager, Policy and ProgramDevelopment, Division of Supervision,Federal Deposit Insurance Corporation,Washington, D.C. 20429, telephone(202) 898–6911.SUPPLEMENTARY INFORMATION:A. Need for the Proposed RuleThe FDIC is issuing this proposed rulein response to two initiatives. Section303 of the Riegle CommunityDevelopment and RegulatoryImprovement Act of 1994 (CDRIA), Pub.L. 103–325, 108 Stat. 2160 (Sept. 23,1994), requires that each federal bankingagency, consistent with the principles ofsafety and soundness, statutory law andpolicy, and the public interest, conducta review of the regulations and writtenpolicies of that agency to, among otherthings: streamline and modify thoseregulations and policies, and removeinconsistencies and outmoded andduplicative requirements. In addition,the FDIC has voluntarily committeditself to review its regulations on a 5-year cycle. See Development andReview of FDIC Rules and Regulations,2 FED. DEPOSIT INS. CORP., LAW,REGULATIONS, RELATED ACTS 5057(1984).As a result of its review of part 328,and as described herein, the FDIC hasdetermined that certain aspects of theregulation may be streamlined, anotheraspect of the regulation treats banks andsavings associations differently andaccordingly should be modified toachieve consistent treatment, anotheraspect of the regulation should bemodified to prohibit the use of theofficial advertising statement withrespect to the advertisement ofnondeposit investment products andsimilar nondeposit products, and a finalaspect of the regulation should clarifywhich FDIC officials are authorized toapprove the translation of the officialadvertising statement. In accordancewith section 303 of CDRIA, the FDICbelieves that this proposal is consistentwith the principles of safety andsoundness, statutory law and policy,and the public interest.B. The Current Rule and the Proposal1. SignsPart 328 contains requirements for thedesign and display of the official banksign of the FDIC. Only insured banksmay use the official bank sign. 12 U.S.C.1828(a). 12 CFR 328.2(a).Part 328 also contains requirementsfor the design and display of the officialsavings association sign. Insured savingsassociations must use the officialsavings association sign, and may notuse the official bank sign. Id. § 328.4(a)and (e). Insured banks may use eithersign at their option. Id. § 328.2(a).The two sets of requirements arevirtually identical. The FDIC proposesto combine them into one.Part 328 speaks of ‘‘automatic servicefacilities’’ in some places, and of‘‘remote service facilities’’ in otherplaces. The two phrases have the samemeaning within part 328, however. TheFDIC proposes to use the phrase‘‘remote service facility’’ in each place.Part 328 contains an outdatedreference to a date in 1989. The FDICproposes to delete it.2. Advertising(a) Proposal To Extend OfficialAdvertising Statement Requirement toSavings AssociationsPart 328 requires insured banks toinclude the official advertisingstatement in all their advertisements(with certain exceptions). Id. § 328.3(a).The basic form of the statement is‘‘Member of the Federal DepositInsurance Corporation’’, which may beshortened to ‘‘Member FDIC’’. Id.§ 328.3(b). There is no equivalentrequirement for insured savingsassociations.In light of the inconsistent treatmentof banks and savings associations, theFDIC proposes to require savingsassociations to use the official statementin advertisements. The effect of thisproposal is that all insured depositoryinstitutions would be required toinclude the statement in theiradvertisements.The FDIC insures both banks andsavings associations to the same extent.See 12 U.S.C. 1811, 1813(c). There is nocompelling justification for applying therule to banks and not savingsassociations. Inconsistent treatment ofbanks and savings associations on thismatter only tends to confuse consumersas to whether the institution’s depositsare insured by the FDIC. We are of theview that a consistent and uniform ruleapplicable to both banks and savingsassociations will best serve the interestsof the public and the protection of theinsurance funds.The proposed rule is premised on thebelief that if all insured institutions arerequired to use the official advertisingstatement, consumers are more likely torecognize the absence of federal depositinsurance in advertisements by non-FDIC insured entities and can betterdistinguish insured depositoryinstitutions from non-insured entities.In today’s environment with many nonbanksproviding banking type services itis more important than ever thatconsumers have a method ofrecognizing insured depositoryinstitutions. Recognition of FDICinsurance is particularly needed inelectronic media such as the Internetwhere advertisements may originatefrom outside the United States or fromnonbank entities.Alternatively, the FDIC could achieveconsistent treatment of banks andsavings associations by eliminating therequirement that insured banks use theofficial statement in advertisements.The effect of such a proposal would bethat all insured depository institutionswould be permitted (but not required) toinclude such a statement if they see fit.In support of such a proposal, onecould argue that, as a general matter, itis no longer necessary to require banksto use the official statement in theiradvertising. Statutory and regulatoryprovisions requiring banks to use thestatement were enacted in 1935 1 , a timewhen the FDIC was new and unfamiliar.Moreover, having endured the worstfinancial crisis in the nation’s history, itwas necessary to restore publicconfidence in the banking system. Overthe years, as a result of the use of theofficial statement and other measures,banks and FDIC insurance have becomeintertwined in consumers’ minds.Indeed, thrift customers arguably areaware of federal deposit insurance, eventhough there is no requirement thatthrifts use the official statement in theiradvertisements.Depository institutions and federaldeposit insurance may be sointerconnected that, as discussed below,many consumers erroneously assumethat all bank products or services areFDIC insured. Accordingly, a rulerequiring all institutions to use theofficial advertising statement may not1 The statutory provision was originally enactedin the Banking Act of 1935. Sec. 101 (v)(2), BankingAct of 1935, ch. 614, 49 Stat. 684, 701 (1935). Threemonths later, the FDIC promulgated a regulationwhich, among other things, required banks to usethe official statement in advertisements. SeeRegulation III, section 3, FDIC Annual Report 92(1935). The statutory requirement for the officialstatement in advertising was repealed in 1989. SeeFinancial Institutions Reform, Recovery andEnforcement Act of 1989 (‘‘FIRREA’’), Pub. L. 101–73, sec. 221, 103 Stat. 183, 266 (Aug. 9, 1989).