97-8124. Deposits and Electronic Banking  

  • [Federal Register Volume 62, Number 63 (Wednesday, April 2, 1997)]
    [Proposed Rules]
    [Pages 15626-15635]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-8124]
    
    
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    DEPARTMENT OF THE TREASURY
    
    Office of Thrift Supervision
    
    12 CFR Parts 545, 556, 557, 561, 563, and 563g
    
    [97-27]
    RIN 1550-AB00
    
    
    Deposits and Electronic Banking
    
    AGENCY: Office of Thrift Supervision, Treasury.
    
    ACTION: Notice of proposed rulemaking and advance notice of proposed 
    rulemaking.
    
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    SUMMARY: The Office of Thrift Supervision (OTS) is proposing to 
    substantially streamline its deposit-related regulations. This Notice 
    of Proposed Rulemaking (NPR) follows a detailed staff review of 
    pertinent regulations and policy statements in the Code of Federal 
    Regulations (CFR) to determine whether each provision is necessary, 
    imposes the least possible burden consistent with safety and soundness, 
    and is clearly written. Today's proposal is issued pursuant to the 
    Regulatory Reinvention Initiative of the Vice-President's National 
    Performance Review and section 303 of the Community Development and 
    Regulatory Improvement Act of 1994.
    
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        In addition, OTS is publishing an advance notice of proposed 
    rulemaking (ANPR) seeking comment on OTS electronic banking 
    regulations. OTS is concerned that its current electronic banking 
    regulations do not adequately address advances in technology and may 
    impede prudent innovation by federal savings associations.
    
    DATES: Comments must be received on or before June 2, 1997.
    
    ADDRESSES: Send comments to Manager, Dissemination Branch, Records 
    Management and Information Policy, Office of Thrift Supervision, 1700 G 
    Street, NW., Washington, DC 20552, Attention Docket No. 97-27. These 
    submissions may be hand-delivered to 1700 G. Street, NW., from 9:00 
    a.m. to 5:00 p.m. on business days; they may be sent by facsimile 
    transmission to FAX Number (202) 906-7755; or by e-mail: 
    public.info@ots.treas.gov. Comments will be available for inspection at 
    1700 G Street, NW., from 9:00 a.m. until 4:00 p.m. on business days.
    
    FOR FURTHER INFORMATION CONTACT: For Deposits: Edward J. O'Connell, 
    III, Project Manager, (202) 906-5694, Supervision Policy; or Richard 
    Blanks, Counsel (Banking and Finance), (202) 906-7037; or Karen 
    Osterloh, Assistant Chief Counsel, (202) 906-6639. For Electronic 
    Banking: Paul Glenn, Special Counsel, Chief Counsel's Office, (202) 
    906-6203, or Paul Robin, Program Analyst, Compliance Policy, (202) 906-
    6648, Office of Thrift Supervision, 1700 G Street NW., Washington, DC 
    20552.
    
    SUPPLEMENTARY INFORMATION:
    
    Table of Contents
    
    I. Background of the Proposal and Advance Notice of Proposed 
    Rulemaking
    II. Notice of Proposed Rulemaking: Deposits
        A. Objectives
        B. Historical Overview
        C. Proposed Disposition of Deposit-Related Regulations
        D. Proposed New Part 557
    III. Advance Notice of Proposed Rulemaking: Electronic Banking
        A. Electronic Banking Facilities and Data Processing
        B. Other Issues
    IV. Request for Comments
    V. Paperwork Reduction Act of 1995
    VI. Executive Order 12866
    VII. Regulatory Flexibility Act Analysis
    VIII. Unfunded Mandates Act of 1995
    
    I. Background of the Proposal and Advance Notice of Proposed Rulemaking
    
        In a comprehensive review of the agency's regulations in the spring 
    of 1995, OTS identified numerous obsolete or redundant regulations that 
    could be quickly repealed. OTS also identified several key regulatory 
    areas for a more intensive, systematic regulatory burden review. The 
    first areas reviewed--lending and investment authority, subsidiaries 
    and equity investments, corporate governance, conflicts of interest, 
    corporate opportunity and hazard insurance--were selected because they 
    have a significant impact on thrift operations, and had not been 
    developed on an interagency basis or been comprehensively reviewed for 
    many years. OTS has issued comprehensive final regulations on all of 
    these areas.\1\
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        \1\ 61 FR 50951 (September 30, 1996) (Lending and Investment); 
    61 FR 66561 (December 18, 1996) (Subsidiaries and Equity 
    Investments); 61 FR 60173 (November 27, 1996) (Conflicts of 
    Interest, Corporate Opportunity and Hazard Insurance); 61 FR 64007 
    (December 3, 1996) (Corporate Governance).
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        Today's proposal is the first in the next phase of OTS's review of 
    its regulations. It follows an intensive review of OTS's deposit-
    related regulations and policy statements. In developing this proposal, 
    OTS considered the relevant regulations, agency guidance, legal 
    interpretations, and requirements of the other federal banking 
    agencies. Like other OTS regulatory reinvention efforts, this proposal 
    was prepared in consultation with those who use these regulations on a 
    daily basis, including OTS regional examination staff.
        OTS is also seeking public input on a related area of its 
    regulations that has had an increasing impact on thrift operations, but 
    has not been recently amended--electronic banking. OTS has three 
    regulations affecting electronic banking. These include: 12 CFR 545.138 
    (Data processing services); 545.141 (Remote service units); and 545.142 
    (Home banking services). After reviewing these electronic banking 
    regulations, OTS has decided to solicit public comment through an ANPR 
    before determining what regulatory amendments may be appropriate. OTS 
    is concerned that these regulations may not appropriately address 
    electronic banking services under emerging technologies.
    
    II. Notice of Proposed Rulemaking: Deposits
    
    A. Objectives
    
        The overarching goal of OTS's reinvention initiative is to reduce 
    regulatory burden on savings associations to the greatest extent 
    possible, consistent with statutory requirements and safety and 
    soundness. In the context of deposit-related regulations, we believe 
    that maximum burden reduction can be achieved by pursuing the following 
    objectives.
        First, we are attempting to eliminate duplication and overlap from 
    OTS regulations. Several OTS deposit-related regulations address areas 
    that are covered by Regulations D and DD of the Federal Reserve Board. 
    These regulations apply to all depository institutions, including 
    savings associations. Regulation D (Reserve Requirements of Depository 
    Institutions) 2 contains comprehensive deposit definitions. 
    Further, Regulation DD (Truth in Savings) 3 applies to all 
    depository institutions except credit unions.4 This approach has 
    two benefits--the elimination of regulations from the CFR and reduced 
    confusion for savings associations.
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        \2\ 12 CFR Part 204 (1996).
        \3\ 12 CFR Part 230 (1996).
        \4\ 12 CFR Part 707 contains separate Truth in Savings 
    regulations applicable to credit unions.
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        Second, as part of its reinvention effort, OTS is endeavoring to 
    eliminate regulations that are outdated or micromanage thrift 
    operations. For example, OTS proposes to replace several specific 
    deposit-related recordkeeping requirements with a general recordkeeping 
    regulation that is tied more closely to safety and soundness. This 
    approach, which parallels recent changes in OTS's loan documentation 
    regulation, will help savings associations take better advantage of 
    technological advances.5
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        \5\ 61 FR 50951, 50982 (to be codified at 12 CFR 560.170).
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        Third, OTS wants to remove regulations that merely restate existing 
    statutory authority. It has been the long-standing position of OTS and 
    its predecessor agency, the Federal Home Loan Bank Board (FHLBB), that 
    specific regulations are not required to permit federal savings 
    associations to engage in activities authorized by the Home Owner's 
    Loan Act (HOLA).6 Rather, the role of OTS regulations should be to 
    impose necessary conditions or limitations on those statutorily 
    authorized activities. Section 5(b) of the HOLA states that a federal 
    savings association may raise funds through a variety of types of 
    accounts, ``[s]ubject to the terms of its charter and regulations of 
    the Director [of OTS].'' 7 Either the association's charter or OTS 
    regulations may set out the rights afforded accountholders. Thus, 
    unless OTS regulations or the institution's charter restrict the type 
    of accounts a federal savings association may offer, an association may 
    offer whatever types of statutorily authorized accounts it deems 
    appropriate.
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        \6\  12 U.S.C. 1461-1470.
        \7\ 12 U.S.C. 1464(b).
    
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    [[Page 15628]]
    
        Fourth, OTS believes that it should maintain a clear and consistent 
    position on the preemptive effect of federal regulation on the deposit-
    related activities of savings associations. It is particularly 
    necessary to reiterate this position as existing regulations are 
    restructured, amended, converted into guidance, or deleted. OTS has 
    long held that, with certain narrow exceptions, state laws or 
    regulations that purport to affect the deposit activities of federal 
    savings associations are preempted.8 Preemption in this area is 
    essential to OTS's regulation of the operations of federal savings 
    associations because deposit taking is one of the most important 
    functions of a savings association. None of the changes discussed today 
    should be construed as evidencing an intent by OTS to change this long-
    held position. Whether OTS retains a specific regulation addressing a 
    particular aspect of deposit taking or deletes the provision to 
    streamline its regulations and reduce regulatory burden, the agency 
    intends to occupy the entire field of deposit regulation for federal 
    savings associations.
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        \8\ See OTS Op. Chief Counsel (October 11, 1991).
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        This approach is consistent with court decisions that provide that 
    OTS has authority over federal thrifts from their ``cradle to [their] 
    corporate grave.'' 9
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        \9\ Fidelity Federal Savings and Loan Ass'n v. del la Cuesta, 
    458 U.S. 141, 145, quoting California v. Coast Federal Savings and 
    Loan Ass'n, 98 F. Supp. 311, 316 (S.D. Cal. 1951).
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        This proposed rule includes a general deposit preemption provision. 
    This provision restates long-standing preemption principles applicable 
    to federal savings associations, as developed in a long line of court 
    cases and legal opinions by OTS and the FHLBB. The agency hopes that 
    the increased clarity and specificity of the proposal will reduce 
    confusion and the need for frequent preemption inquiries in the future.
        Finally, OTS is removing certain regulations and policy statements 
    that merely reiterate universally recognized deposit-related incidental 
    powers of federal savings associations, such as the ability to use 
    insured banks as collecting and paying agents and the ability to 
    provide ``deposit assurance'' on certain direct deposits.
        With these goals in mind, all OTS deposit-related regulations will 
    be consolidated, streamlined, and moved into a new part 557. This 
    action will make the deposit-related regulations easier to locate and 
    follow.
    
    B. Historical Overview
    
        Since enactment of the HOLA, federal savings associations have been 
    authorized to raise funds through a variety of accounts, and to issue 
    passbooks, certificates, or other evidence of accounts.10 In 1982, 
    the Garn-St Germain Depository Institutions Act (DIA) expanded this 
    authority to permit federal thrifts to accept demand accounts.11
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        \10\ 12 U.S.C. 1464(b).
        \11\ Pub. L. 97-320, 96 Stat. 1469 (October 15, 1982).
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        Historically, the FHLBB, through its regulations, affirmatively 
    approved specific deposit-related activities. This approach has shifted 
    in recent years as a result of changes in the applicable statutes and 
    advances in business and technology. Now thrifts may undertake any 
    activity permitted by statute, unless a regulation limits or restricts 
    the authority. Accordingly, it is no longer necessary to retain 
    regulations specifically approving deposit-related activities.
        Additionally, many of the deposit-related regulations originated 
    with the FHLBB, in its capacity as the operating head of the former 
    Federal Savings and Loan Insurance Corporation (FSLIC), which insured 
    thrift deposits. Since OTS is not the insurer of thrift deposits, these 
    regulations are no longer needed.
        Finally, certain FHLBB-era regulations have now been superseded by 
    more recent statutes, such as the Truth in Savings Act,12 and by 
    Federal Reserve Board regulations applicable to all insured 
    institutions. Consequently, many of the policy and legal reasons for 
    certain regulations no longer exist.
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        \12\ 12 U.S.C. 4301 et seq.
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    C. Proposed Disposition of Deposit-Related Regulations
    
    Part 545  Operations (Federal Savings Associations)
    Section 545.10  Savings Deposits or Shares
        Section 545.10 states that OTS approves savings deposits or shares 
    that comply with the provisions of subsection (b) of section five of 
    title III of the Financial Institutions Reform, Recovery, and 
    Enforcement Act of 1989 (``FIRREA'') 13 (12 U.S.C. 1464(b)), the 
    federal savings association's charter, and OTS rules and regulations 
    relating to the type, form, return, and maturity of deposits or shares. 
    OTS proposes to delete this paragraph. OTS ``approval'' of deposits or 
    shares is not required by 12 U.S.C. 1464(b), which authorizes federal 
    savings associations to raise funds through various types of accounts 
    and issue evidence of such accounts.
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        \13\ Pub. Law 101-73, 103 Stat. 183 (August 9, 1989).
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    Section 545.11  Issuance of Accounts
        Section 545.11(a) requires a federal savings association to obtain 
    and maintain FDIC insurance prior to doing business. OTS proposes to 
    delete this subsection and rely on the statutory requirement that 
    federal savings associations must obtain and maintain FDIC insurance. 
    See 12 U.S.C. 1462(4), 1818(a)(1).
        Section 545.11(b) provides that federal savings associations may 
    issue accounts as defined in Sec. 561.2. OTS proposes to replace the 
    detail of this subsection with a more general statement of authority in 
    new Part 557.
        Section 545.11(c) sets forth the status and priority of savings 
    deposits and accounts in the event of a liquidation, dissolution or 
    winding up of the association. OTS proposes to delete this subsection 
    because these priorities are set forth by statute. See 12 U.S.C. 
    1821(d)(11) and 1464(b)(1)(B).
    Section 545.12  Demand Deposit Accounts
        Section 545.12(a) states that a federal savings association may 
    accept demand deposit accounts from any person. OTS proposes to delete 
    this subsection because 12 U.S.C. 1464(b)(1)(A) contains the authority 
    for issuance of demand deposit accounts.
        Section 545.12(b) prohibits a federal savings association from 
    paying interest on a demand deposit. OTS proposes to delete this 
    subsection because 12 U.S.C. 1464(b)(1)(B)(i) contains this 
    prohibition. This section also provides that finders' fees offered in 
    accordance with 12 CFR 561.16(b) are not payments of interest. OTS 
    proposes to transfer the finders' fee exception to the Thrift 
    Activities Handbook.
        Section 545.12(c) indicates that demand deposit accounts include 
    only those accounts that are payable on demand within the meaning of 12 
    CFR 563.6. This provision is unnecessary in light of the deletion of 
    paragraphs (a) and (b). For guidance in interpreting 12 U.S.C. 
    1464(b)(1)(A) and (b)(1)(B)(1), institutions should refer to the 
    definition of demand deposit contained in Regulation D.14
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        \14\ This proposal does not address deposit-related definitions 
    currently contained in OTS regulations. OTS is planning a 
    comprehensive review of all regulatory definitions later this year.
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    Section 545.13  Account Records
        Section 545.13(a) states that a federal savings association must 
    comply with Secs. 563.1 and 563.170(c)(8), and that accounts must be 
    evidenced by a written agreement with transactions confirmed by 
    issuance of a receipt or
    
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    advice. OTS proposes to delete this subsection. The cross-references 
    are no longer appropriate because Sec. 563.1, which formerly dealt with 
    forms of accounts, was amended in 1992 to refer to a de novo savings 
    association's charters and by-laws, 15 and Sec. 563.170(c)(8) has 
    been recently removed. 16 The term ``advice'' is no longer a part 
    of transactional terminology. Moreover, OTS would replace the specific 
    recordkeeping requirements for written agreements and receipts by a 
    more general recordkeeping regulation in new Part 557. Nothing in this 
    proposed revision would prohibit a savings association from the normal 
    business practice of providing receipts for transactions. However, the 
    proposed change may allow federal savings associations to take better 
    advantage of technological and marketplace advances in telephonic and 
    electronic banking.
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        \15\ 57 FR 14344 (Apr. 20, 1992).
        \16\ 61 FR 50951 (September 30, 1996).
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        Section 545.13(b)(1) provides that a federal savings association 
    may treat the holder of record of an account as the owner, regardless 
    of any notice to the contrary, until the account is transferred on the 
    federal association's books. Under this section, accounts are only 
    transferable on the association's books on proper application by the 
    transferee and acceptance of the transferee as accountholder on terms 
    approved by the board of directors. OTS proposes to modify and 
    incorporate this subsection into new Part 557.
        Under Sec. 545.13(b)(2), a federal savings association may issue 
    negotiable certificate accounts in bearer form without recording 
    ownership on the books of the federal savings association. OTS proposes 
    to replace this subsection with the more general recordkeeping 
    requirement in new Part 557. We note that the FDIC has a regulation 
    concerning negotiable certificates of deposits where the depository 
    institution has defaulted. If any deposit obligation of an insured 
    institution is evidenced by a negotiable instrument, the FDIC will 
    recognize the owner as if that person's name were on the records of the 
    institution if the instrument was negotiated to such owner prior to the 
    date of default of the institution. See 12 CFR 330.4(b)(4) (1996).
        Section 545.13(c) recites authority for federal savings 
    associations to use insured banks as collecting and paying agents for 
    its accounts. OTS proposes to delete this subsection because these 
    incidental powers are uniformly recognized and do not need to be 
    codified in regulatory text.
    Section 545.14  Determination and Distribution of Earnings
        Under Sec. 545.14(a), a federal savings association may issue 
    savings accounts earning interest at different rates of return. These 
    rates may be fixed at the time the account is issued or may vary on any 
    basis specified at the time the deposit is accepted, subject to 12 CFR 
    563.10. OTS proposes to incorporate this subsection in new Part 557.
        Section 545.14(b) states that a federal savings association may 
    distribute earnings on savings accounts as provided in its charter and 
    bylaws and the terms of the account. OTS proposes to incorporate this 
    subsection into new Part 557.
        Section 545.14(c) prohibits the distribution of earnings on share 
    accounts until the federal savings association has provided for the 
    payment of expenses and for the pro rata portion of credits to 
    reserves, as required by the federal savings association's charter and 
    12 CFR Part 567. The term ``reserve credits'' is an archaic reference 
    to the transfer of a portion of net income to a restricted capital 
    account. Charters for mutual share institutions had required this 
    transfer. OTS proposes to delete this subsection because modern federal 
    charters no longer provide for mutual share institutions.
    Part 556  Statements of Policy
    Section 556.12  Deposit Assurance of Direct Deposit of Social Security 
    Payments
        This Statement of Policy states that the implied powers of a 
    federal savings association include the provision of ``deposit 
    assurance'' in connection with the Social Security Administration's 
    direct deposit program. A federal savings association provides deposit 
    assurance when it credits a social security beneficiary's account with 
    payment on its due date, whether or not the payment has been received 
    by the association.
        The Statement of Policy advises federal savings associations to 
    implement safeguards and controls to address the risks of the program. 
    The policy statement further notes that Regulation E (Electronic Fund 
    Transfers) 17 applies to the program.
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        \17\ 12 CFR Part 205 (1996).
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        OTS proposes to delete this Statement of Policy because insured 
    depository institutions universally provide deposit assurance of social 
    security payments. OTS will consider whether handbook guidance would be 
    useful to reiterate the need for adequate institutional safeguards and 
    controls and the applicability of Regulation E.
    Part 563  Operations
    Section 563.2  Simple Form of Certificate; Passbooks
        Section 563.2 sets forth the requirements for a simple form of 
    certificate account. A mutual savings association may issue a simple 
    form of savings or investment certificate or a passbook if, in 
    accordance with State law, the association's charter, constitution, or 
    bylaws includes a clear provision indicating that: (i) All shareholders 
    are members and share equally in earnings and in assets pro rata to 
    paid-in value, plus credited dividends; and (ii) the savings 
    association may not charge any fee for the privilege of becoming, 
    remaining, or ceasing to be a member of the savings association. This 
    simple form is not required to contain any membership certificate or 
    any statement of the dividend, withdrawal, or other rights of members.
        OTS proposes to delete this section because it is outdated. Savings 
    associations will continue to be subject to the disclosure requirements 
    of Regulation DD.
    Section 563.3  Long Form of Membership Certificate
        Under Sec. 563.3, a savings association must include certain 
    specified statements in all share, membership, deposit certificates, 
    passbook, or other instrument evidencing a withdrawal instrument that: 
    (i) Pay a different rate of dividends or interest to different classes 
    of shares or securities; (ii) prefer any one or more classes of shares 
    or securities; or (iii) charge any fee for the privilege of becoming, 
    remaining, or ceasing to be a saver or investor in the savings 
    association.
        Like Sec. 563.2, this section is outdated and unnecessary in light 
    of the disclosure requirements in Regulation DD. Accordingly, OTS 
    proposes to delete this provision.
    Section 563.6  Payment of Accounts on Demand
        Section 563.6 prohibits a savings association from issuing any 
    account, or advertising or representing that it will pay holders of its 
    accounts, on demand. Demand accounts, tax and loan accounts, note 
    accounts, and United States Treasury general accounts are not subject 
    to this prohibition. This section also sets forth various definitions 
    of the term ``accounts payable on demand.''
        OTS proposes to delete this section and instead rely on the 
    disclosure requirements applicable under
    
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    Regulation DD, and on statutory provisions authorizing savings 
    associations to issue demand deposits (12 U.S.C. 1464(b)(1)(A)(i)) and 
    prohibiting the payment of interest on demand deposits (12 U.S.C. 
    1464(b)(1)(B)(i)). These statutory provisions should be interpreted in 
    a manner that is consistent with the definition of demand deposit 
    contained in Regulation D.
    Section 563.7  Fixed-Term Accounts (Certificate Accounts)
        Under Sec. 563.7(a), a savings association may offer certificate 
    accounts in such form as the board of directors of the savings 
    association may authorize by resolution. Further, with respect to any 
    time deposit, a savings association may impose a penalty for early 
    withdrawal.
        Section 563.7(b) authorizes a savings association to pay earnings 
    on a certificate account at a rate, or anticipated rate of return, 
    determined when the deposit is accepted. The rate may be fixed or be 
    based on a schedule, index, or formula specified at the time the 
    account is accepted.
        Section 563.7(c) prohibits an association from accepting a fixed-
    term account for a term of less than seven days. This paragraph also 
    prohibits an institution from issuing any certificate account unless 
    the association has complied with the chartering provisions of 
    Sec. 563.1.
        Section 563.7(d) states that a certificate may prohibit withdrawal 
    prior to maturity except in the cases of death or incompetence.
        OTS proposes to modify this section. While the provisions of 
    paragraph (b) would be retained in the new regulation at Sec. 557.3, 
    the remainder of this section would be deleted to avoid duplication and 
    redundancy. Institutions issuing such certificate accounts must comply 
    with the disclosure requirements contained in Regulation DD and should 
    rely on the definitions applicable to such accounts contained in 
    Regulation D.
    Section 563.9  Eurodollar Deposits
        This regulation addresses the issuance of Eurodollar deposits. When 
    this provision was added, FHLBB regulations on pooled accounts and 
    other restrictions did not apply to Eurodollar deposits. These 
    restrictions have been removed for all accounts. OTS, therefore, 
    proposes to delete this section because it is no longer necessary. This 
    approach is consistent with the regulations of the other banking 
    regulators which do not specifically address regulatory treatment of 
    Eurodollar deposits.
    Section 563.10  Earnings-Based Accounts
        Section 563.10 provides extensive definitions and limitations 
    regarding earnings-based accounts. In an earnings-based account, the 
    payment of interest is determined by reference to an index based upon 
    the profitability, earnings, cash flow, appreciation, or return on 
    assets owned by, or under the control of, the savings association.
        OTS proposes to delete this section because it is unnecessary and 
    duplicative of disclosure requirements contained in Regulation DD.
    
    D. Proposed New Part 557
    
        OTS proposes to adopt a new Part 557 that will ultimately include 
    all of the agency's deposit-related regulations. The agency believes 
    that this organization will make its relevant deposit-related 
    regulations easier to locate. The proposed deposit-related regulation 
    is discussed below.
    Section 557.1  General Authority (Proposed)
        This proposed section states that new Part 557 is issued under OTS 
    general rulemaking and supervisory authority under the HOLA. The 
    proposed section also cites the general authority for federal savings 
    associations' deposit-related activities. It states that a federal 
    savings association may raise funds through deposits and issue evidence 
    of such accounts as authorized under section 5(b) of the HOLA, the 
    savings association's charter, and regulations issued by OTS.
    Section 557.2  Applicability of Law (Proposed)
        As discussed in Section II.A. above, deposit-related activities are 
    core activities in which federal savings associations engage. Federal 
    preemption of state laws purporting to affect deposit-related 
    activities is critical to the agency's mandate under HOLA sections 4(a) 
    and 5(a) to provide for the safe and sound operation of federal savings 
    associations in accordance with the best practices of thrift 
    institutions in the United States.
        This proposed section sets forth OTS's long-standing position on 
    the federal preemption of state laws purporting to affect the deposit-
    related activities of federal savings associations. This position has 
    been developed in caselaw and legal opinions by OTS and its 
    predecessor, the FHLBB, and is currently reflected in Sec. 545.2. 
    Because the deposit-related activities regulations will be moved from 
    Part 545 and, thus, separated from Sec. 545.2, OTS proposes to include 
    new Sec. 557.2 to confirm and carry forward its existing preemption 
    position. The agency believes that the increased clarity and 
    specificity of Sec. 557.2 will reduce confusion and the need for 
    frequent preemption inquiries in the future.
        The proposed section on preemption has three paragraphs. Paragraph 
    (a) explicitly states the agency's intent to occupy the field of 
    deposit-related activities for federal thrifts and articulates the 
    statutory and regulatory basis for this preemption. Paragraph (b) 
    contains a list of examples of preempted state laws, drawn from case 
    law and OTS precedent. This paragraph emphasizes that the list is not 
    intended to be exhaustive. Paragraph (c) describes certain types of 
    state laws that OTS does not intend to preempt. These categories 
    include: contract and commercial law, tort law, and criminal law. Such 
    laws will not be preempted to the extent that they only incidentally 
    affect the deposit-related activities of federal savings associations 
    or are otherwise consistent with the purpose of paragraph (a).
        When analyzing the status of state laws under new Sec. 557.2, the 
    first step will be to determine whether the type of law in question is 
    listed among the illustrative examples of preempted state laws under 
    paragraph (b). If so, the analysis will end there; the law is 
    preempted. If the law is not covered by paragraph (b), the next 
    question is whether the law affects deposit-related activities. If it 
    does, then, in accordance with paragraph (a), 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 the types of 
    state laws that are not preempted, as described in paragraph (c). For 
    these purposes, paragraph (c) is intended to be interpreted narrowly. 
    Any doubt should be resolved in favor of preemption.
    Section 557.3  Interest and Earnings (Proposed)
        This proposed section states that a savings association may pay 
    interest on a savings account at a rate or anticipated rate of return 
    determined when the account is accepted, as provided in its charter and 
    bylaws and the terms of the account. The rate or anticipated rate on a 
    savings account may be fixed, or may vary according to a schedule, 
    index, or formula specified when an account is accepted.
    Section 557.4  Account Records (Proposed)
        This proposed section replaces the specific recordkeeping 
    requirements of the existing regulations with more general 
    requirements. This section states
    
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    that each savings association should establish and maintain deposit 
    documentation practices and records that demonstrate appropriate 
    administration and monitoring of its deposit-related activities. A 
    savings association's records should include adequate evidence of the 
    ownership, balances, and transactions involving the account. Further, 
    the proposed section provides that a federal savings association may 
    treat the holder of record of an account as the owner, regardless of 
    any notice to the contrary, until the account is transferred on the 
    association's records.
    
    III. Advance Notice of Proposed Rulemaking: Electronic Banking
    
        OTS seeks comments on whether its regulations are sufficiently 
    flexible to permit federal savings associations to engage in 
    appropriate electronic banking activities, consistent with safety and 
    soundness, the Truth in Lending Act,18 Regulation E, and other 
    relevant statutes and regulations. OTS has received numerous inquiries 
    on electronic banking issues. For example, federal savings associations 
    have asked whether they may provide banking services over the Internet, 
    whether they may open accounts or issue loans from machines in remote 
    locations, what steps must an association operating on the Internet 
    take to comply with the Community Reinvestment Act (CRA), and whether 
    savings associations may open accounts on the Internet for depositors 
    living abroad.
    ---------------------------------------------------------------------------
    
        \18\ 15 U.S.C. 1601 et seq.
    ---------------------------------------------------------------------------
    
        This advance notice of proposed rulemaking requests comments on: 
    (1) Electronic banking facilities and data processing activities; and 
    (2) more general issues relating to electronic banking.
    
    A. Electronic Banking Facilities and Data Processing
    
        Three OTS regulations affect a thrift's ability to engage in 
    electronic banking activities. Two of these regulations describe the 
    types of facilities through which federal thrifts may deliver services 
    to their customers. 12 CFR 545.141 (Remote service units); 545.142 
    (Home banking services). The third regulation, the data processing 
    regulation, 12 CFR 545.138, provides the general authority to engage in 
    certain electronic banking activities. To the extent that these 
    regulations do not reflect current activities and technologies, OTS is 
    interested in how the regulations might be updated. Each area of 
    concern is discussed more fully below.
    Facilities
        OTS regulations permit a federal savings association to deliver 
    services to customers at various kinds of facilities. These include: 
    home offices, branches, agency offices, data processing or 
    administrative offices, remote service units (RSUs), and home banking. 
    Recently, OTS has been asked to address whether an automated loan 
    machine (ALM) is a branch office or some other type of facility. This 
    issue has raised more general questions about how the agency should 
    treat new electronic technologies.
        Several associations have informed OTS that they plan to establish 
    networks of ALMs located away from their home or branch offices. Each 
    ALM would permit a customer to apply for a consumer loan up to a 
    specific limit by entering certain information by keypad into a machine 
    resembling an automated teller machine (ATM). This information would be 
    transferred immediately by wire to the institution's main-frame 
    computer. The main-frame computer would analyze the information under a 
    credit-scoring program, and would check the information electronically 
    with credit-reporting bureaus. If the information meets the credit-
    scoring criteria, the computer program would approve the loan. The ALM 
    then would print out a cashier's check and appropriate loan disclosure 
    forms. Under the proposals outlined to OTS, the loan would not be 
    treated as closed until the check was endorsed and presented to the 
    institution for payment. If the loan were disapproved by the computer 
    program, the ALM would print out all necessary denial disclosures. The 
    process is expected to take about ten minutes.
        This procedure raises the question whether each ALM is a branch. 
    This is significant because the rules governing the establishment and 
    operation of a branch or an RSU are different. An ALM might appear to 
    meet the definition of a ``remote service unit'' at 12 CFR 545.141(a), 
    except that the regulation expressly prohibits an RSU from 
    ``establish[ing] a loan account.'' 12 CFR 545.141(b). A facility not 
    covered by the RSU regulation or other specific classification is, by 
    default, a branch. See 12 CFR 545.92(a).
        The prohibition against establishing a loan account at an RSU 
    appears to date from a judicial decision over twenty years ago. 
    Bloomfield Fed. Sav. & Loan Ass'n. v. American Community Stores Corp., 
    396 F. Supp. 384 (D. Neb. 1975). In Bloomfield, the plaintiff 
    challenged the establishment of ATMs by a federal thrift by asserting 
    that the thrift had failed to comply with the FHLBB's procedures for 
    opening new branches. The court noted that the FHLBB held broad 
    authority to define a branch, but had limited this definition to a 
    full-time and permanent office at which any business of a thrift may be 
    transacted. Since the FHLBB's regulations stated that an RSU could 
    engage in specific activities and these activities did not include 
    opening savings accounts or originating, processing, or approving 
    loans, the court concluded that the planned ATMs (which were part of an 
    RSU pilot project) were not branches. Therefore, the thrift did not 
    have to comply with the branching procedures.
        In 1981, the FHLBB simplified the RSU regulation by deleting 
    enumerated activities for RSUs. In its place, the FHLBB added an 
    explicit statement that an RSU could not be used to open a savings 
    account or establish a loan account. See 46 FR 8440 (1981). This 
    statement is found in current OTS regulations at 12 CFR 545.141(b). 
    Bloomfield suggests that OTS would have to revise its regulations 
    governing branches and other facilities to broaden the RSU regulation. 
    OTS solicits comment on whether such revisions would be appropriate.
        A review of the facility regulations also may be appropriate in the 
    home banking context. Currently, it is not clear whether a full range 
    of banking services may be offered under the home banking services 
    regulation. 12 CFR 545.142. This regulation was drafted when home 
    banking was limited to monitoring balances, transferring funds between 
    accounts at the same institution, and directing payments from an 
    existing checking account in lieu of sending checks by mail. Because a 
    thrift's role in these activities was strictly clerical, the definition 
    of home banking services was limited to ``the transfer of funds of 
    financial information'' and ``the performance of other transactions 
    initiated by the customer.'' 12 CFR 545.142.
        It is not clear whether Sec. 545.142 would cover the opening of new 
    accounts or the processing of credit applications. The phrase 
    ``transactions initiated by a customer'' might encompass these new 
    services, but the common meaning of that phrase may limit it to 
    transactions involving existing accounts. With technological advances 
    making it feasible for thrifts to make risk-based decisions on an 
    electronic basis (e.g., credit scoring), OTS solicits comment on the 
    appropriate scope of the home banking services definition.
        Accordingly, OTS solicits comments on whether the definitions of 
    RSUs and
    
    [[Page 15632]]
    
    home banking services are sufficient to encompass the full range of 
    electronic banking activity. In this regard, we note that federal 
    savings associations have specific statutory authority to establish 
    RSUs as provided in OTS regulations pursuant to 12 U.S.C. 
    1464(b)(1)(F).19 OTS is also interested in whether that statutory 
    language raises particular issues for the industry. OTS anticipates 
    that these comments will help the agency to better understand industry 
    and customer expectations concerning the nature of such facilities.
    ---------------------------------------------------------------------------
    
        \19\ We note that banks previously had to file branch 
    applications before establishing ATMs and remote service units. 
    Section 2205 of the Economic Growth and Regulatory Paperwork 
    Reduction Act of 1996 (Title II of Pub. L. 104-208) eliminated that 
    requirement.
    ---------------------------------------------------------------------------
    
    Permissible Activities
        OTS also solicits comment on whether its current regulations 
    authorizing data processing activities permit a federal savings 
    association to optimize the latest technology. The data processing 
    activities of federal savings associations are covered by 12 CFR 
    545.138. This regulation was issued when data processing was limited to 
    the non-discretionary functions of processing and storing data. Today, 
    a financial institution can make risk-based decisions solely through 
    electronic means. Accordingly, it may be appropriate for OTS to revise 
    this regulation. In addition, the current OTS data processing 
    regulation limits the ability of a federal savings association to sell 
    or market services, software, and excess capacity. All of these 
    restrictions may not be necessary, especially since the comparable 
    interpretative ruling for national banks is less restrictive. See 61 FR 
    4849, at 4853 (February 9, 1996).
        Data Processing. Under the current data processing regulation, the 
    processing of data generally encompasses a record-keeping, rather than 
    a risk assessment, function. This restrictive view presents 
    difficulties in applying the OTS regulation to thrifts utilizing the 
    emerging technologies.
        This limited view of data processing originated in 1965 in the 
    FHLBB regulation that first authorized federal thrifts to engage in 
    data processing services. In that regulation, the FHLBB defined ``data 
    processing services'' as ``the maintenance of bookkeeping, accounting, 
    or other records primarily by mechanical or electronic methods.'' See 
    12 CFR 545.14-2 (1966) (emphasis added). This view of data processing 
    as an electronic form of recordkeeping continues, despite substantial 
    revisions to the data processing regulation in 1983. These 1983 
    revisions expanded the kinds of data that could be processed to include 
    data that involved ``financial, economic, or related to thrift, home 
    financing, or the activities of depository institutions.'' 20 The 
    FHLBB did not, however, expand the definition of ``processing'' because 
    technological improvements had not made it possible to make risk-based 
    decisions entirely through electronic means. The current OTS data 
    processing regulation is substantially the same as the 1983 FHLBB rule.
    ---------------------------------------------------------------------------
    
        \20\ 48 FR 7831 (1983).
    ---------------------------------------------------------------------------
    
        In a recent review of its related data processing provisions, the 
    OCC concluded that its use of the term ``data processing'' failed to 
    capture the potential of electronic banking. Recognizing that 
    individual banks ``are engaging, and will engage, in an increasing 
    range of activities through electronic means and facilities beyond 
    simply `data processing','' the OCC deleted that term from its 
    interpretative ruling. Instead, the OCC interpretative ruling refers to 
    ``electronic means and facilities.'' 21 This term clearly will 
    encompass new technology that enables a depository institution to make 
    risk-based judgments electronically.
    ---------------------------------------------------------------------------
    
        \21\ 61 FR at 4853, 4865 (February 9, 1996) (to be codified at 
    12 CFR 7.1019).
    ---------------------------------------------------------------------------
    
        Sales of Facilities and Software. The OTS data processing 
    regulation provides federal savings associations with authority to 
    provide data processing and data transmission services, to sell by-
    products incident to those services, and to sell excess capacity. Each 
    authority is subject to significant constraints. Several of these 
    constraints do not apply to national banks.
        The authority to provide data processing and data transmission 
    services is found at Sec. 545.138(b). Under this provision, a federal 
    savings association may perform all processing functions on data 
    submitted by a purchaser. This authority, however, is subject to data 
    and customer restrictions. For example, the data to be processed must 
    be ``financial, economic, or related to thrift, home financing, or the 
    activities of depository institutions.'' 12 CFR 545.138(b)(1). In 
    addition, the thrift must provide services primarily for itself, other 
    depository institutions, parents or subsidiaries of depository 
    institutions, or customers of the thrift. Sales of such services to 
    others may not exceed half of the total data processing services 
    provided by the thrift. See 12 CFR 545.138(b)(2).
        Incident to its data processing authority, a federal thrift may 
    also sell ``by-products'' of data processing--typically software. 12 
    CFR 545.138(c)(1). Again, this authority is subject to certain 
    restrictions. For example, the software must be originally developed 
    for the thrift's own use, and the by-products may not be substantially 
    enhanced for purposes of marketing.
        Finally, the thrift may sell its excess capacity. In connection 
    with such sales, the thrift may only furnish access to facilities and 
    provide necessary operating personnel. The association may not 
    artificially create excess capacity by acquiring equipment or 
    facilities whose capacity is substantially greater than that necessary 
    to accommodate the thrift's present or expected future needs for 
    providing permissible data processing services. 12 CFR 545.138(c)(2).
        By contrast, national banks have broader authority to sell 
    electronic services, products, and excess capacity. The recently 
    promulgated OCC interpretative ruling for national banks provides:
    
        A national bank may perform, provide, or deliver through 
    electronic means and facilities any activity, function, product, or 
    service that it is otherwise authorized to perform, provide, or 
    deliver. A national bank may also, in order to optimize the use of 
    the bank's resources, market and sell to third parties electronic 
    capacities acquired or developed by the bank in good faith for 
    banking purposes.22
    
        \22\ 61 FR 4865 (to be codified at 12 CFR 7.1019).
    ---------------------------------------------------------------------------
    
        With respect to the provision of data processing or electronic 
    services, a national bank has fewer customer restrictions.23 As 
    noted above, a federal thrift may only sell such services to other 
    depository institutions, parents or subsidiaries of depository 
    institutions, or its loan or deposit customers. The OCC interpretative 
    ruling also does not expressly restrict the types of data that may be 
    processed, although the limitation to services that a bank ``is 
    otherwise authorized to perform'' may have an effect that is similar to 
    OTS restrictions.
    ---------------------------------------------------------------------------
    
        \23\ The OCC also recently has opined that a national bank may, 
    as an action incidental to the business of banking, sell Internet 
    access to non-customers. See OCC Legal Op. (August 19, 1996).
    ---------------------------------------------------------------------------
    
        Software sales by national banks are permissible if the software is 
    ``acquired or developed * * * in good faith for banking purposes.'' 
    24 This is more expansive than the comparable authority for 
    federal savings associations in two respects. First, the national 
    bank's software must be developed ``in good faith for banking 
    purposes,'' rather than for the bank's own use. Second, nothing 
    prohibits a national bank from substantially enhancing its software for 
    marketing
    
    [[Page 15633]]
    
    purposes, provided the software retains its banking purpose.
    ---------------------------------------------------------------------------
    
        \24\ 61 FR 4865 (to be codified at 12 CFR 7.1019).
    ---------------------------------------------------------------------------
    
        National banks also appear to have broader authority to sell excess 
    capacity. Unlike thrifts, banks are not limited to providing only 
    access and operating personnel. In addition, the OCC interpretative 
    ruling does not prohibit a national bank from creating excess capacity 
    for the purpose of selling it.
        Because the OCC's data processing interpretative ruling is 
    substantially more expansive than OTS's regulation, OTS seeks comment 
    on whether it should amend its data processing regulation to contain 
    similar provisions.
    
    Other Issues
    
    Stored-Value Cards
        OTS also requests comment on the appropriate regulatory response to 
    stored-value cards. These devices provide for the storage and transfer 
    of money on credit-card-like devices featuring a magnetic strip or 
    embedded computer chip. The systems created to handle these cards, and 
    the legal obligations that attach to the issuers, users, and others may 
    vary in different situations. OTS regulations are silent on stored-
    value technology.25
    ---------------------------------------------------------------------------
    
        \25\ OTS has concluded that, pursuant to the incidental powers 
    doctrine, an association may market and sell one type of stored-
    value card. OTS Op. Chief Counsel (August 21, 1996) (prepaid 
    telephone cards).
    ---------------------------------------------------------------------------
    
        These cards currently are the subject of analysis at the other 
    banking agencies. The Federal Reserve Board is assessing the 
    application of Regulation E to stored-value cards.26 The Federal 
    Deposit Insurance Corporation has released a legal opinion addressing 
    whether the funds underlying a stored-value card are an insured 
    deposit,27 and has held a public hearing on other questions 
    concerning stored-value cards and electronic banking.28 The OCC 
    has recently issued guidance on the risks associated with stored-value 
    cards.29
    ---------------------------------------------------------------------------
    
        \26\ See 61 FR 19696 (May 2, 1996).
        \27\ See FDIC Gen Counsel Op. No. 8, 61 FR 40490 (Aug. 2, 1996).
        \28\ See 61 FR 40494 (Aug. 2, 1996).
        \29\ See OCC Bulletin No. 96-48 (Sept. 10, 1996).
    ---------------------------------------------------------------------------
    
        Stored-value cards present a variety of issues. While OTS would 
    like to receive comment on all aspects of this technology, commenters 
    are requested to address the following questions: How extensively will 
    the industry use stored-value cards? Do certain kinds of stored-value 
    programs present greater safety and soundness concerns than others? Do 
    stored-value cards present special issues that OTS should consider in 
    examining the liabilities of a savings association? What kind of OTS 
    guidance, if any, is appropriate for the industry?
    Community Reinvestment Act
        The ``borderless'' nature of electronic banking will also affect 
    thrift responsibilities under the CRA, which encourages regulated 
    financial institutions to help meet the credit needs of the local 
    community in which they are chartered, consistent with safety and 
    soundness. Comments are requested on all aspects of this issue, 
    including the following questions. If a savings institution uses 
    electronic banking as its sole method of customer contact and solicits 
    deposits and loans throughout the United States, in what community is 
    it chartered to do business for CRA purposes? If an institution has 
    brick and mortar branches but also conducts a significant portion of 
    its business electronically with customers beyond the jurisdiction of 
    the branches, how should its community be defined? Should an 
    institution's community under CRA be defined by the location of its 
    customers, its offices, or both? How does an institution demonstrate 
    that it is serving the credit needs of a widely dispersed customer base 
    or when there is little or no geographic proximity between its deposit 
    customers and its loan customers?
    Additional Issues for Comment
        OTS does not wish to limit comment to the above-cited issues and 
    regulations. Rather, OTS welcomes all comments regarding any aspect of 
    electronic banking, including the following:
        (1) What OTS regulations should be eliminated or modified because 
    they impede the use of safe and sound electronic technology?
        (2) Should OTS impose any restrictions or requirements on banking 
    operations offered over the Internet? For example, should OTS mandate a 
    specific level of encryption, or should OTS rely on general safety and 
    soundness principles to govern a safe system of operation?
        (3) Should OTS-regulated institutions be permitted to open customer 
    accounts over the Internet for individuals residing outside the United 
    States or transfer funds over the Internet for account-holders to bank 
    accounts outside the United States? What other restrictions should be 
    imposed?
        (4) What new technologies are being developed for electronic 
    banking and how will these technologies impact the regulation of 
    savings institutions?
        (5) Should OTS address consumer protection rules in addition to the 
    CRA in connection with a rulemaking on electronic banking?
    
    IV. Request for Comments
    
        OTS invites comment on all aspects of the proposal as well as 
    specific comments on the proposed changes. Additionally, OTS seeks 
    comments on all aspects of the ANPR.
    
    V. Paperwork Reduction Act of 1995
    
        The OTS invites comments on:
        Whether the proposed collection of information contained in this 
    notice of proposed rulemaking is necessary for the proper performance 
    of the agency's functions, including whether the information has 
    practical utility;
        The accuracy of the agency's estimate of the burden of the proposed 
    information collection;
        Ways to enhance the quality, utility, and clarity of the 
    information to be collected; and
        Ways to minimize the burden of the information collection including 
    the use of automated collection techniques or other forms of 
    information technology.
        Respondents/recordkeepers are not required to respond to this 
    collection of information unless it displays a currently valid OMB 
    control number.
        The reporting and recordkeeping requirements contained in this 
    notice of proposed rulemaking have been submitted to the Office of 
    Management and Budget for review in accordance with the Paperwork 
    Reduction Act of 1995 (44 U.S.C. 3507(d)). 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, NW., Washington, D.C. 20552.
        The recordkeeping requirements contained in this notice of proposed 
    rulemaking are found at 12 CFR 557.4. 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. The information is needed by 
    the OTS in order to supervise savings associations and develop 
    regulatory policy. The likely respondents/recordkeepers are OTS-
    regulated savings associations.
        Estimated number of respondents/recordkeepers: 1,343.
        Estimated average annual burden hours per recordkeeper/respondent: 
    1484.
        Estimated total annual reporting/recordkeeping burden: 1,993,459.6.
        Start-up costs to respondents/recordkeepers: None.
        Records are to be maintained for the period of time the account is 
    open, plus three years.
    
    [[Page 15634]]
    
    VI. Executive Order 12866
    
        The Director of OTS has determined that this proposed rule does not 
    constitute a ``significant regulatory action'' for the purposes of 
    Executive Order 12866.
    
    VII. Regulatory Flexibility Act Analysis
    
        Pursuant to section 605(b) of the Regulatory Flexibility Act, OTS 
    certifies that this proposed rule will not have a significant impact on 
    a substantial number of small entities. The proposal does not impose 
    any additional burdens or requirements upon small entities and lowers 
    several paperwork and other burdens on all savings associations.
    
    VIII. Unfunded Mandates Act of 1995
    
        Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
    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. As discussed in the preamble, 
    this proposed rule reduces regulatory burden. OTS has determined that 
    the proposed 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.
    
    List of Subjects
    
    12 CFR Part 545
    
        Accounting, Consumer protection, Credit, Electronic funds 
    transfers, Investments, Reporting and recordkeeping requirements, 
    Savings Associations.
    
    12 CFR Parts 556 and 561
    
        Savings associations.
    
    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 proposes to 
    amend 12 CFR chapter V as follows:
    
    PART 545--OPERATIONS
    
        1. 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]
    
        2. Sections 545.10, 545.11, 545.12, 545.13, and 545.14 are removed.
    
    PART 556--STATEMENTS OF POLICY
    
        3. The authority 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]
    
        4. Section 556.12 is removed.
        5. Part 557 is added to read as follows:
    
    PART 557--DEPOSITS
    
    Sec.
    557.1  General.
    557.2  Applicability of law.
    557.3  Interest and earnings.
    557.4  Account records.
    
        Authority: 12 U.S.C. 1462a, 1463, 1464.
    
    
    Sec. 557.1  General.
    
        (a) Authority and Scope. This part is issued by OTS under its 
    general rulemaking and supervisory authority under the Home Owners' 
    Loan Act, 12 U.S.C. 1462 et seq.
        (b) Deposit Powers. A federal savings association may raise funds 
    through accounts and may issue evidence of such accounts as authorized 
    by section 5(b)(1) of the HOLA (12 U.S.C. 1464(b)(1)), the terms of its 
    charter, and OTS regulations.
    
    
    Sec. 557.2  Applicability of law.
    
        (a) Occupation of Field. Pursuant to sections 4(a) and 5(a) of the 
    HOLA, 12 U.S.C. 1463(a), 1464(a), OTS is authorized to promulgate 
    regulations that preempt state laws affecting the operations of federal 
    savings associations when deemed appropriate: to facilitate the safe 
    and sound operation of federal savings associations, to enable federal 
    savings associations to conduct their operations in accordance with the 
    best practices of thrift institutions in the United States, or to 
    further other purposes of the HOLA. To enhance safety and soundness and 
    to enable federal savings associations to conduct their operations in 
    accordance with best practices and without undue regulatory duplication 
    and burden, OTS hereby occupies the entire field of deposit-related 
    regulations for federal savings associations. OTS intends to give the 
    federal savings associations maximum flexibility to exercise their 
    deposit-related powers in accordance with a uniform federal scheme of 
    regulation. Accordingly, federal savings associations may exercise 
    their deposit-related powers as authorized under federal law, including 
    this part, without regard to state laws purporting to regulate or 
    otherwise effect their deposit activities, except to the extent 
    provided in paragraph (c) of this section. For purposes of this 
    section, ``state law'' includes any state statute, regulation, ruling, 
    order, or judicial decision.
        (b) Illustrative Examples. The types of state laws preempted by 
    paragraph (a) of this section include, without limitation, state laws 
    purporting to impose requirements regarding:
        (1) Abandoned and dormant accounts;
        (2) Checking accounts;
        (3) Disclosure requirements;
        (4) Funds availability;
        (5) Order of withdrawal from savings accounts;
        (6) Service charges and fees, including dishonored checks; and
        (7) Special purpose savings services.
        (c) State laws that are not preempted. State laws of the following 
    types are not preempted to the extent that they only incidentally 
    affect the deposit-related activities of federal savings associations 
    or are otherwise consistent with the purposes of paragraph (a) of this 
    section:
        (1) Contract and commercial law;
        (2) Tort law;
        (3) Criminal law; and
        (4) Any other law that OTS, upon review, finds:
        (i) Furthers a vital state interest; and
        (ii) Either has only an incidental effect on deposit-related 
    activities or is not otherwise contrary to the purposes expressed in 
    paragraph (a) of this section.
    
    
    Sec. 557.3  Interest and earnings.
    
        A federal savings association may pay interest on a savings 
    account, whether in the form of a deposit or share, at a rate or 
    anticipated rate of return determined at the time that the account is 
    accepted, as provided in its charter and bylaws and the terms of the 
    account. The rate or anticipated rate on a savings account either may 
    be fixed or may vary according to a schedule, index, or formula 
    specified at the time that an account is accepted.
    
    [[Page 15635]]
    
    Sec. 557.4  Account records.
    
        (a) Each savings association should establish and maintain deposit 
    documentation practices and records that demonstrate appropriate 
    administration and monitoring of deposit-related activities. The 
    savings association's records should include adequate evidence of 
    ownership, balances, and all transactions involving the account.
        (b) A federal savings association may treat the holder of record of 
    an account as the owner, regardless of any notice to the contrary, 
    until the account is transferred on the association's records.
    
    PART 561--DEFINITIONS
    
        6. The authority citation for part 561 continues to read as 
    follows:
    
        Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.
    
    
    Sec. 561.42  [Amended]
    
        7. Section 561.42 is amended by removing the phrase ``Secs. 563.6 
    and 561.16.''
    
    PART 563--OPERATIONS
    
        8. The authority citation for part 563 continues to read as 
    follows:
    
        Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
    1817, 1828, 3806.
    
    
    Secs. 563.2-563.3, 563.6-563.10   [Removed]
    
        9. Sections 563.2, 563.3, 563.6, 563.7, 563.9, and 563.10 are 
    removed.
    
    
    Sec. 563g.1  [Amended]
    
        10. Section 563g.1 is amended by removing the last sentence of 
    paragraph (a)(13).
    
        Dated: March 24, 1997.
    
        By the Office of Thrift Supervision.
    Nicolas P. Retsinas,
    Director.
    [FR Doc. 97-8124 Filed 4-1-97; 8:45 am]
    BILLING CODE 6720-01-P
    
    
    

Document Information

Published:
04/02/1997
Department:
Thrift Supervision Office
Entry Type:
Proposed Rule
Action:
Notice of proposed rulemaking and advance notice of proposed rulemaking.
Document Number:
97-8124
Dates:
Comments must be received on or before June 2, 1997.
Pages:
15626-15635 (10 pages)
Docket Numbers:
97-27
RINs:
1550-AB00: Electronic Operations
RIN Links:
https://www.federalregister.gov/regulations/1550-AB00/electronic-operations
PDF File:
97-8124.pdf
CFR: (8)
12 CFR 556.12
12 CFR 557.1
12 CFR 557.2
12 CFR 557.3
12 CFR 557.4
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