E9-26582. Agency Information Collection Activities; Submission for OMB Review; Comment Request

AGENCY:

Federal Trade Commission.

ACTION:

Notice.

SUMMARY:

The FTC is submitting the information collection requirements described below to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act (PRA). Pursuant to the OMB regulations that implement the PRA, the Commission is providing this second opportunity for public comment on proposed Orders that would seek information from depository institutions lacking federal deposit insurance. The Commission plans to use this information to help ensure that such institutions are complying with the disclosure requirements of the Federal Deposit Insurance Corporation Improvement Act (“FDICIA”).

DATES:

Written comments must be received on or before December 4, 2009.

ADDRESSES:

Interested parties are invited to submit written comments electronically or in paper form by following the instructions in the Request for Comments part of the SUPPLEMENTARY INFORMATION section below. Comments in electronic form should be submitted by using the following weblink: (https://public.commentworks.com/​ftc/​fdiciacompliancepra2) (and following the instructions on the web-based form). Comments filed in paper form should be mailed or delivered to the following address: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex J), 600 Pennsylvania Avenue, NW., Washington, DC 20580, in the manner detailed in the SUPPLEMENTARY INFORMATION section below.

FOR FURTHER INFORMATION CONTACT:

Hampton Newsome, [phone], Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Room NJ-2122, 600 Pennsylvania Avenue, NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

Request for Comments

Interested parties are invited to submit written comments electronically or in paper form. Comments should refer to “FDICIA Compliance Monitoring: Paperwork Comment; FTC File No. P094205” to facilitate the organization of comments. Please note that your comment - including your name and your state - will be placed on the public record of this proceeding, including on the publicly accessible FTC website, at (http://www.ftc.gov/​os/​publiccomments.shtm).

Because comments will be made public, they should not include any sensitive personal information, such as any individual’s Social Security Number; date of birth; driver’s license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. Comments also should not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, comments should not include “[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential” as provided in Section 6(f) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing matter for which confidential treatment is requested must be filed in paper form, must be clearly labeled “Confidential,” and must comply with FTC Rule 4.9(c).¹

Because paper mail addressed to the FTC is subject to delay due to heightened security screening, please consider submitting your comments in electronic form. Comments filed in electronic form should be submitted using the following weblink: (https://public.commentworks.com/​ftc/​fdiciacompliancepra2) (and following the instructions on the web-based form). To ensure that the Commission considers an electronic comment, you must file it on the web-based form at the weblink (https://public.commentworks.com/​ftc/​fdiciacompliancepra2). If this Notice appears at (www.regulations.gov/​search/​index.jsp), you may also file an electronic comment through that website. The Commission will consider all comments that regulations.gov forwards to it. You may also visit the FTC Website at (http://www.FTC.gov) to read the Notice and the news release describing it.

A comment filed in paper form should include the “FDICIA Compliance Monitoring: Paperwork Comment; FTC File No. P094205” reference both in the text and on the envelope, and should be mailed or delivered to the following address: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex J), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

All comments should additionally be submitted to: Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for the Federal Trade Commission. Comments should be submitted via facsimile to [phone] because U.S. Postal Mail is subject to lengthy delays due to heightened security precautions.

The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives, whether filed in paper or electronic form. Comments received will be available to the public on the FTC website, to the extent practicable, at (http://www.ftc.gov/​os/​publiccomments.shtm). As a matter of discretion, the FTC makes every effort to remove home contact information for individuals from the public comments it receives before placing those comments on the FTC website. More information, including routine uses permitted by the Privacy Act, may be found in the FTC’s privacy policy, at (http://www.ftc.gov/​ftc/​privacy.htm.)

Background

In 1991, Congress enacted section 43 of FDICIA (12 U.S.C. § 1831t) in response to incidents affecting the safety of deposits in certain financial institutions.² The law imposes several requirements on non-federally insured institutions. Among other things, it mandates, under 12 U.S.C. 1831t(b), that depository institutions lacking federal deposit insurance disclose to consumers in periodic statements, signature cards, passbooks, certificate of deposit, and advertising that the institution does not have federal deposit insurance and that, if the institution fails, the federal government does not guarantee that depositors will get their money back. Pursuant to 12 U.S.C. 1831t(f), the Commission has authority to enforce the disclosure requirements under the FTC Act (15 U.S.C. 41 et seq.).

Until 2003, the Commission’s appropriations authority prohibited the use of FTC resources to enforce those requirements.³ In 2005, the Commission sought public comment on proposed rules implementing the statutory disclosure requirements.⁴ In 2006, before the Commission issued a final rule, Congress passed substantial amendments to the existing requirements as part of the Financial Services Regulatory Relief Act of 2006 (FSRRA) (Pub. L. 109-351). The Commission thus sought public comment on proposed regulations that would be consistent with the FSRRA amendments,⁵ and is currently in the process of developing those regulations. Institutions lacking federal deposit insurance, however, must comply with these statutory provisions regardless of the status of FTC’s regulations in this area.

Under existing law, all federally chartered and most state chartered depository institutions have federal deposit insurance. Federal deposit insurance provides a government guarantee of up to $250,000 per depositor in most cases. Pursuant to Federal Deposit Insurance Corporation and National Credit Union Administration requirements, federally insured banks and credit unions must display signs that depositors are federally insured.⁶ Although most depository institutions have federal deposit insurance, there are some exceptions. For instance, there are more than a hundred and fifty state-chartered credit unions in nine states that do not have federal deposit insurance.⁷ The credit unions in these states generally obtain private deposit insurance in lieu of federal insurance to protect members’ accounts.

On July 13, 2009, the Commission published a notice seeking comments on the proposed collection described here. 74 FR 33442. No comments were received.

Proposed Information Collection Activities

The FTC has the authority to compel production of data and information from depository institutions lacking federal deposit insurance through Orders issued pursuant to Section 6(b) of the FTC Act, 15 U.S.C. 46(b). The Commission intends to send these Orders to all such institutions known to it in states that allow non-federally insured institutions.⁸ The responses will help the Commission determine whether covered entities are complying with the disclosure requirements of 12 U.S.C. 1831t(b).

Under the PRA, 44 U.S.C. Ch. 35, federal agencies must obtain approval from OMB for each “collection of information” they conduct or sponsor. “Collection of information” means identical recordkeeping, disclosure and/or reporting requirements imposed on ten or more members of the public. 44 U.S.C. 3502(3), 5 CFR 1320.3(c). Because the number of entities affected by the Commission’s Orders will exceed that threshold, the Commission is seeking OMB clearance under the PRA. Pursuant to OMB regulations, 5 CFR Part 1320, that implement the PRA, the Commission is providing this second opportunity for public comment.

A. Description of the Collection of Information and Proposed Use

The FTC proposes to seek information from up to two hundred (200) depository institutions lacking federal deposit insurance in the United States (“industry members”).

Information sought⁹ will include, among other things:

• A brief explanation of the steps the institution takes to comply with the requirements of 12 U.S.C. 1831t(b).
• Samples of each non-identical periodic statement of account, signature card, passbook, certificate of deposit, and share certificate disseminated within the previous three months, with any individual consumer names, signatures, addresses, account numbers, or other personally identifying information redacted.
• Information (e.g. photographs) indicating whether the institution posts the disclosure required by 12 U.S.C. 1831t(b)(2) at each station or window where it normally receives deposits, the institution’s principal place of business, and all the institution’s branches where it accepts deposits or opens accounts (excluding automated teller machines and point of sale terminals).
• Samples of all non-identical advertising¹⁰ issued or continued in use within the previous three months.
• Samples of the non-identical cards, forms, or other written materials the institution uses to comply with the signed acknowledgment requirements for new depositors pursuant to 12 U.S.C. 1831t(b)(3) disseminated within the previous three months with any individual consumer names, signatures, addresses, account numbers, or other personally identifying information redacted.¹¹

The Commission will use the collected information in its efforts to ensure that the institutions are complying with the disclosure requirements in 12 U.S.C. 1831t(b).

B. Estimated Hours Burden

Based upon its knowledge of the industry, FTC staff estimates that, on average, the time required to gather, organize, format, and produce such responses will average 8 hours per Order. Thus, assuming up to 200 recipients of the Orders, total burden would be approximately 1,600 hours.

C. Estimated Cost Burden

It is difficult to calculate with precision the labor costs associated with this data production, as they entail varying compensation levels of management and/or support staff among companies of different sizes. Managerial, legal, and clerical personnel may be involved in the information collection process. The FTC staff has assumed, conservatively, that managerial personnel and legal counsel will handle all of the tasks involved in gathering and producing responsive information, and has applied an average hourly wage of managerial time of $58.12 (4 hours per entity) and an average hourly wage of legal staff time of $40.87 (4 hours per entity).¹² Thus, cumulatively, estimated labor costs to comply with the Orders will be $79,192 (($58.12 x 800 hours) + ($40.87 x 800 hours)). The actual cost may be lower to the extent clerical personnel handle some of the tasks.

Staff anticipates that industry members maintain most, if not all, of the material sought in the orders in the normal course of business because they must disclose the information to customers under existing law. Moreover, to the extent that information sought is not generated in the normal course of business, any associated non-labor cost should be de minimis.

Willard K. Tom,

General Counsel.

Footnotes

1. The comment must be accompanied by an explicit request for confidential treatment, including the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. The request will be granted or denied by the Commission’s General Counsel, consistent with applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR 4.9.(c).

2. See Pub. L. No. 102-242, 105 Stat. 2236.

3. Making Appropriations for Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, for the Fiscal Year Ending September 30, 2004, and for Other Purposes, H.R. Conf. Rep. No. 108-401, 108th. Cong., 1st Sess., at 88 (2003).

4. See 70 FR 12823 (Mar. 16, 2005).

5. See 74 FR 18043 (Mar. 13, 2009).

6. See 12 CFR Parts 328 and 740.

7. According to the U.S. Government Accountability Office, in 2003, eight states had credit unions that purchase private deposit insurance instead of federal insurance. Since that time, at least one additional state has allowed credit unions to use private deposit insurance. Other states either require federal insurance or allow private insurance but do not have any privately insured credit unions. “Federal Deposit Insurance Act: FTC Best Among Candidates to Enforce Consumer Protection Provisions,” GAO-03-971 (Aug. 2003), at 7. Puerto Rican credit unions operate under a Puerto Rican government-backed deposit insurance system.

8. State-chartered credit unions lacking federal deposit insurance will likely be the recipients. The FTC also may seek information from some institutions covered by the Puerto Rican government deposit insurance system.

9. The Orders will not seek any information about the identity of individual consumers. Moreover, all documents and information provided in response to compulsory process, including through special orders authorized by Section 6(b) of the FTC Act, are exempt from public disclosure under Section 21(f) of the Federal Trade Commission Act, 15 U.S.C. § 57b-2(f), and Exemption 3 of the Freedom of Information Act, 5 U.S.C. § 552(b)(3). In addition, to the extent applicable, section 6(f) of the FTC Act, 15 U.S.C. 46(f), bars the Commission from publicly disclosing trade secrets or confidential commercial or financial information it receives from persons pursuant to, among other methods, special orders authorized by Section 6(b) of the FTC Act. Such information also would be exempt from disclosure under Exemption (4) of the Freedom of Information Act, 5 U.S.C. 552(b)(4). Finally, under Section 21(c) of the FTC Act, 15 U.S.C. 57b-2(c), a person who designates a submission as confidential is entitled to 10 days’ advance notice of any anticipated public disclosure by the Commission, assuming that the Commission has determined that the information does not, in fact, constitute 6(f) material. Although materials covered under one or more of these various sections are protected by stringent confidentiality constraints, the FTC Act and the Commission’s rules authorize disclosure in limited circumstances (e.g., official requests by Congress, requests from other agencies for law enforcement purposes, and administrative or judicial proceedings). Even in those limited contexts, however, the Commission’s rules may afford protections to the submitter, such as advance notice to seek a protective order in litigation. See 15 U.S.C. 57b-2; 16 CFR 4.9-4.11.

10. As used in these Orders, the term “advertising” means any communication that the institution uses to solicit business including, but not limited to, printed materials, the institution’s main internet page, radio advertisements, video advertisements disseminated via television, the Internet or any other means of online communication, and solicitations conducted via telephone.

11. The documents produced should exclude any information for which prior customer authorization is required under the Right to Financial Privacy Act, 12 U.S.C. 3401, et seq.

12. Hourly wages are averages based on mean hourly wages shown in (http://www.bls.gov/​oes/​2008/​may/​naics4_​551100.htm#b11-0000) (May 2008 “National Industry-Specific Occupational Employment and Wage Estimates”) for sales and marketing managers and legal occupations (lawyers, paralegals, and other legal support), respectively.