06-3721. Revisions To Reflect the Merger of the Bank Insurance Fund and the Savings Association Insurance Fund

AGENCY:

Federal Deposit Insurance Corporation (FDIC).

ACTION:

Final rule.

SUMMARY:

The FDIC is amending its regulations to reflect the recent merger of the Bank Insurance Fund and the Savings Association Insurance Fund, forming the Deposit Insurance Fund. The merger of the two deposit insurance funds was required by the Federal Deposit Insurance Reform Act of 2005 and was effectuated by the FDIC as of March 31, 2006. All revisions to the FDIC's regulations made by the final rule are conforming changes necessitated by the funds merger.

DATES:

Effective Date: The final rule is effective on April 21, 2006.

FOR FURTHER INFORMATION CONTACT:

Joseph A. DiNuzzo, Counsel, [phone], Legal Division, Federal Deposit Insurance Corporation, Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Background

Section 2102 of the Federal Deposit Insurance Reform Act of 2005 (“Reform Act”) (Pub. L. 109-171, 120 Stat. 9) required that the FDIC merge the Bank Insurance Fund (“BIF”) and Savings Association Insurance Fund (“SAIF”) into the Deposit Insurance Fund (“DIF”) effective no later than July 1, 2006. The FDIC effectuated the funds merger as of March 31, 2006. As a result of the funds merger, the BIF and SAIF were abolished. Section 8 of the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 (Pub. L. 109-173, 119 Stat. 3601) (“Amendments Act”) made numerous technical and conforming amendments to the FDI Act relating to the merger of BIF and SAIF into the DIF.

The final rule revises the FDIC's regulations to reflect the funds merger and the elimination of BIF and SAIF. The majority of revisions are comprised of replacing references to BIF and SAIF with DIF. Other changes eliminate provisions dealing with fund conversions and entrance and exit fees previously required when an institution converted from one fund to the other.

Neither the recent legislation nor the funds merger will affect the authority of the Financing Corporation (“FICO”) to impose and collect, with approval of the FDIC, assessments for anticipated payments, issuance costs and custodial fees on obligations issued by the FICO.^[1]

II. The Final Rule

The following is a section-by-section discussion of the final rule revisions to the FDIC's regulations.

Part 303—Filing Procedures

The final rule: (1) Eliminates the defined term “optional conversion (Oakar transaction)” in section 303.61(d) because, with the elimination of BIF and SAIF and the formation of the DIF, fund conversions are now obsolete; (2) excludes “deposit insurance fund conversions” from the transactions listed in section 303.62 requiring prior FDIC approval; (3) replaces “federal deposit insurance funds” in section 303.162 with “Deposit Insurance Fund'; (4) replaces “Bank Insurance Fund” in section 303.187(a)(2)(vi) with “Deposit Insurance Fund'; (5) replaces “Bank Insurance Fund (BIF) or the Savings Association Insurance Fund (SAIF)” with “Deposit Insurance Fund” in section 303.245(a); and (6) eliminates section 303.246, entitled “Insurance Fund Conversions.”

Part 308—Rules of Practice and Procedure

The final rule revises section 308.111(f) by replacing “the Bank Insurance Fund or the Savings Association Insurance Fund” with “the Deposit Insurance Fund.”

Part 312—Assessment of Fees Upon Entrance to or Exit From the Bank Insurance Fund or the Savings Association Insurance Fund

The final rule deletes this entire part because the funds merger has made fund conversions and the accompanying entrance and exit fees obsolete. Also, Section 8(a)(4) of the Amendments Act expressly provides that any funds held in the SAIF exit fee reserve account provided for in section 312.5(e) be deposited into the general fund of the DIF. This action was effectuated upon the merger of the funds.

Part 327—Assessments

As a result of the Reform Act, the FDIC is in the process of revamping its risk-based assessment system. Technical changes to part 327 involving the funds merger will be made as part of the FDIC's future rulemaking to implement the substantive overhaul of the assessment system. Section 2109 of the Reform Act specifies that, during the interim period between the time of the funds merger and the effective date of new assessment regulations, the existing assessment regulations shall apply to all DIF members, even though they may refer to BIF members or SAIF members.

Part 336—FDIC Employees

The final rule revises section 336.3(f) by replacing “Bank Insurance Fund, the Savings Association Insurance Fund” with “Deposit Insurance Fund, the former Bank Insurance Fund, the former Savings Association Insurance Fund.”

Part 347—International Banking

The final rule revises section 347.202(u) by replacing “Bank Insurance Fund” with “Deposit Insurance Fund.” Sections 347.209(a) and 347.209(b)(3) are revised by replacing “deposit insurance fund” in each place it appears with “Deposit Insurance Fund.” Also, in section 347.212(b) “affected deposit insurance fund” is replaced by “Deposit Insurance Fund.”

Part 348—Management Official Interlocks

The final rule revises a cross-reference citation in section 348.6(d).

Part 357—Determination of Economically Depressed Regions

The final rule revises section 357.1(a) by replacing “Savings Association Insurance Fund members” with “insured savings associations.”

Part 362—Activities of Insured State Banks and Insured Savings Association

Part 362 is revised: in section 362.1(d) by replacing “deposit insurance funds” with “Deposit Insurance Fund”; in section 362.2(p) by replacing “deposit insurance fund” with “Deposit Insurance Fund” and replacing “any insurance fund” with “the Deposit Insurance Fund”; in section 362.3(a)(2)(iii)(A)(2) by replacing “appropriate deposit insurance fund” with “Deposit Insurance Fund” in section 362.3(b)(2)(i) by replacing “affected deposit insurance fund” and “deposit insurance funds” with “Deposit Insurance Fund”; in section 362.3(b)(2)(iii)(A) and (B) by replacing references to “deposit insurance funds” with “Deposit Insurance Fund”; in section 362.4(b)(1) by replacing “affected deposit insurance fund” with “Deposit Insurance Fund”; in sections 362.4(b)(3), 362.4(b)(5), 362.4(b)(6), 362.4(b)(7) and 362.9(c) by replacing “deposit insurance funds” with “Deposit Insurance Fund”; and in sections 362.11 and 362.12 by replacing all references to “affected deposit insurance fund” with “Deposit Insurance Fund” and by replacing all references to “deposit insurance funds” with “Deposit Insurance Fund.”

Part 363—Annual Independent Audits and Reporting Requirements

Part 363 is revised by replacing “affected deposit insurance fund” in section 363.1(b)(3) with “Deposit Insurance Fund.”

Part 364—Standards for Safety and Soundness

Part 364 (Appendix A I. vi) is revised by replacing “deposit insurance funds” with “Deposit Insurance Fund.”

Part 366—Minimum Standards of Integrity and Fitness for an FDIC Contractor

Section 366.3(d) and 366.5 are revised by replacing all references to “a federal deposit insurance fund” with “the Deposit Insurance Fund (or any predecessor deposit insurance fund).”

Part 367—Suspension and Exclusion of Contractors and Termination of Contracts

Section 367.2(s)(1) is revised by replacing “Bank Insurance Fund (BIF), the Savings Association Insurance Fund (SAIF)” with “the former Bank Insurance Fund (BIF), the former Savings Association Insurance Fund (SAIF) or the Deposit Insurance Fund”. Section 367.2(s)(3) is revised by replacing “or the BIF, the SAIF” with “or the former BIF, the former SAIF, the Deposit Insurance Fund.” Section 367.6(d) is revised by replacing “Federal deposit insurance funds” with “the Deposit Insurance Fund (or any predecessor deposit insurance fund).”

III. Waiver of APA Requirements

The revisions to the FDIC's regulations made by the final rule are all technical, conforming and non-discretionary changes required by the Reform Act and the Amendments Act incident to the merger of BIF and SAIF and the formation of the DIF. Thus, the FDIC Board of Directors has determined that the public notice and participation that ordinarily would be required by the Administrative Procedure Act (5 U.S.C. 553) before a regulation may take effect are unnecessary and that good cause exists for an exception to the customary 30-day delayed effective date.

IV. Paperwork Reduction Act

The final rule will not create or modify any collections of information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). Consequently, no information has been submitted to the Office of Management and Budget for review.

V. Regulatory Flexibility Act

A regulatory flexibility analysis is required only when an agency must publish a notice of proposed rulemaking (5 U.S.C. 603, 604). Because the revisions to the FDIC's regulations are published in final form without a notice of proposed rulemaking, no regulatory flexibility analysis is required.

VI. The Treasury and General Government Appropriations Act, 1999—Assessment of Federal Regulations and Policies on Families

The FDIC has determined that the final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 2681).

VII. Small Business Regulatory Enforcement Fairness Act

The Office of Management and Budget has determined that the final rule is not a “major rule” within the meaning of the relevant sections of the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA”) (5 U.S.C. 801 et seq.). As required by SBREFA, the FDIC will file the appropriate reports with Congress and the General Accounting Office so that the final rule may be reviewed.

List of Subjects

12 CFR Part 303

• Administrative practice procedure
• Bank deposit insurance
• Banks, banking
• Reporting and recordkeeping requirements
• Savings associations

12 CFR Part 308

• Administrative practice and procedure
• Bank deposit insurance
• Banks, banking
• Claims
• Crime
• Equal access to justice
• Fraud
• Investigations
• Lawyers
• Penalties

12 CFR Part 312

• Bank deposit insurance
• Savings associations

12 CFR Part 336

• Conflict of interest

12 CFR Part 347

• Authority delegations (Government agencies)
• Bank deposit insurance
• Banks, banking
• Credit
• Foreign banking
• Investments
• Reporting and recordkeeping requirements
• United States investments abroad

12 CFR Part 348

• Antitrust, banks, banking, holding companies

12 CFR Part 357

• Savings associations

12 CFR Part 362

• Administrative practice and procedure
• Authority delegations (Government Agencies)
• Bank deposit insurance
• Banks, banking
• Investments
• Reporting and recordkeeping requirements

12 CFR Part 363

• Accounting
• Administrative practice and procedure
• Banks, banking
• Reporting and recordkeeping requirements

12 CFR Part 364

• Administrative practice and procedure
• Bank deposit insurance
• Reporting and recordkeeping requirements

12 CFR Part 366

• Conflict of interests
• Government contracts
• Reporting and recordkeeping requirements

12 CFR Part 367

• Administrative practice and procedure
• Conflict of interests
• Government contracts

For the reasons stated above, the Board of Directors of the Federal Deposit Insurance Corporation hereby amends chapter III of title 12 of the Code of Federal Regulations as follows:

PART 303—FILING PROCEDURES

1. The authority citation for part 303 continues to read as follows:

Authority: 12 U.S.C. 378, 1813, 1815, 1817, 1818, 1819, (Seventh and Tenth), 1820, 1823, 1828, 1831a, 1831e, 1831o, 1831p-1, 1831w, 1835a, 1843(l), 3104, 3105, 3108, 3207; 15 U.S.C. 1601-1607.

§ 303.61

[Amended]

2. Section 303.61 paragraph (d) is removed and paragraph (e) is redesignated as (d).

§ 303.62

[Amended]

3. Section 303.62 paragraph (b)(3) is removed and paragraphs (b)(4), (b)(5) and (b)(6) are redesignated, respectively, as (b)(3), (b)(4) and (b)(5).

§ 303.162

[Amended]

4. Section 303.162 (b) is amended by removing “federal deposit insurance funds” and adding in its place “Deposit Insurance Fund”.

§ 303.187

[Amended]

5. Section 303.187 (a)(2)(vi) is amended by removing “Bank Insurance Fund” and adding in its place “Deposit Insurance Fund”.

§ 303.245

[Amended]

6. Section 303.245(a) is amended by removing “Bank Insurance Fund (BIF) or the Savings Association Insurance Fund (SAIF)” and adding in its place “Deposit Insurance Fund”.

§ 303.246

[Removed]; §§ 303.247, 303.248, 303.249, 303.250, 303.251 and 303.252 [Redesignated]

7. Section 303.246 is removed and sections 303.247, 303.248, 303.249, 303.250, 303.251 and 303.252 are redesignated, respectively, as sections 303.246, 303.247, 3030.248, 303.249, 303.250 and 303.251.

PART 308—RULES OF PRACTICE AND PROCEDURE

8. The authority citation continues to read as follows:

Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505, 1815(e), 1817, 1818, 1820, 1828, 1829, 1829b, 1831i, 1831m(g)(4), 1831o, 1831p-1, 1832(c), 1884(b), 1972, 3102, 3108(a), 3349, 3909, 4717; 15 U.S.C. 78(h) and (i), 78o-4(c), 78o-5, 78q-1, 78s, 78u, 78u-2, 78u-3, and 78w, 6801(b), 6805(b)(1); 28 U.S.C. 2461 note; 31 U.S.C. 330, 5321; 42 U.S.C. 4012a; Sec. 3100(s), Pub. L. 104-134, 110 Stat. 1321-358.

§ 308.111

[Amended]

9. Section 308.111(f) is amended by removing “Bank Insurance Fund or the Savings Association Insurance Fund” and adding in its place “Deposit Insurance Fund”.

PART 312—[REMOVED]

10. Under section 8 of the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 ( Pub. L. 109-173), amend 12 CFR chapter III by removing part 312.

PART 336—FDIC EMPLOYEES

11. The authority citation continues to read as follows:

Authority: 5 U.S.C. 7301; 12 U.S.C. 1819(a).

12. Section 336.3(f) is revised to read as follows:

§ 336.3

Definitions.

* * * * *

(f) Federal deposit insurance fund means the Deposit Insurance Fund, the former Bank Insurance Fund, the former Savings Association Insurance Fund, the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Trust, or the funds formerly maintained by the Resolution Trust Corporation (RTC), or their successors, for the benefit of insured depositors.

* * * * *

PART 347—INTERNATIONAL BANKING

13. The authority citation continues to read as follows:

Authority: 12 U.S.C. 1813, 1815, 1817, 1819, 1820, 1828, 3103, 3104, 3105, 3108, 3109; Title IX, Pub. L. 98-181, 97 Stat. 1153.

§ 347.202

[Amended]

14. Section 347.202(u) is amended by removing “Bank Insurance Fund” and adding in its place “Deposit Insurance Fund”.

§ 347.209

[Amended]

15. Section 347.209(a) and (b)(3) are amended by removing “deposit insurance fund” in each place it appears and adding in its place “Deposit Insurance Fund'.

§ 347.212

[Amended]

16. Section 347.212(b) is amended by removing “affected deposit insurance fund” and adding in its place “Deposit Insurance Fund”.

PART 348—MANAGEMENT OFFICIAL INTERLOCKS

17. The authority citation continues to read as follows:

Authority: 12 U.S.C. 3207, 12 U.S.C. 1823(k).

§ 348.6

[Amended]

18. Section 348.6(d) is amended by removing “ 12 CFR 303.250” and adding in its place “12 CFR 303.249”.

PART 357—DETERMINATION OF ECONOMICALLY DEPRESSED REGIONS

19. The authority citation continues to read as follows:

Authority: 12 U.S.C. 1819(k)(5).

§ 357.1

[Amended]

20. Section 357.1(a) is amended by removing “Savings Association Insurance Fund members” and adding in its place “insured savings associations”.

PART 362—ACTIVITIES OF INSURED STATE BANKS AND INSURED SAVINGS ASSOCIATIONS

21. The authority citation continues to read as follows:

Authority: 12 U.S.C. 1816, 1818, 1819(a)(Tenth), 1828(j), 1828(m), 1828a, 1831e, 1831w, 1843(l).

§ 362.1

[Amended]

22. Section 362.1(d) is amended by removing “deposit insurance funds” and adding in its place “Deposit Insurance Fund”.

§ 362.2

[Amended]

23. Section 362.2(p) is amended by removing “deposit insurance fund” and adding in its place “Deposit Insurance Fund” and removing “any insurance fund” and adding in its place “the Deposit Insurance Fund”.

§ 362.3

[Amended]

24. Section 362.3 is amended as follows:

A. Paragraph (a)(2)(iii)(A)(2) is amended by removing “appropriate deposit insurance fund” and adding in its place “Deposit Insurance Fund”.

B. Paragraph (b)(2)(i) is amended by removing “affected deposit insurance fund” and adding in its place “Deposit Insurance Fund” and by removing “deposit insurance funds” and adding in its place “Deposit Insurance Fund”.

C. Paragraphs (b)(2)(iii)(A) and (B) are amended by removing “deposit insurance funds” in both places it appears and adding in each place “Deposit Insurance Fund”.

§ 362.4

[Amended]

25. Section 362.4 is amended as follows:

A. Paragraph (b)(1) is amended by removing “affected deposit insurance fund” and adding in its place “Deposit Insurance Fund” and by removing “deposit insurance funds” and adding in its place “Deposit Insurance Fund”.

B. Paragraphs (b)(3), (b)(5), (b)(6), and (b)(7) are amended by removing “deposit insurance funds” in each place it appears and adding in each such place “Deposit Insurance Fund”.

§ 362.9

[Amended]

26. Section 362.9(c) is amended by removing “deposit insurance funds” and adding in its place “Deposit Insurance Fund”.

§ 362.11

[Amended]

27-28. Section 362.11 is amended by removing “affected deposit insurance fund” each place it appears and adding in each such place “Deposit Insurance Fund” and by removing “deposit insurance funds” each place it appears and adding in each such place “Deposit Insurance Fund”.

§ 362.12

[Amended]

29. Section 362.12 is amended by removing “affected deposit insurance fund” each place it appears and adding in each such place “Deposit Insurance Fund” and by removing “deposit insurance funds” each place it appears and adding in each such place “Deposit Insurance Fund”.

PART 363—ANNUAL INDEPENDENT AUDITS AND REPORTING REQUIREMENTS

30. The authority citation continues to read as follows:

Authority: 12 U.S.C. 1831m.

§ 363.1

[Amended]

31. Section 363.1(b)(3) is amended by removing “affected deposit insurance fund” and adding in its place “Deposit Insurance Fund”.

PART 364—STANDARDS FOR SAFETY AND SOUNDNESS

32. The authority citation continues to read as follows:

Authority: 12 U.S.C. 1818 and 1819 (Tenth); 15 U.S.C. 1681b, 1681s, and 1681w.

Appendix A to Part 364 [Amended]

33. Appendix A I. vi, is amended by removing “deposit insurance funds” and adding in its place “Deposit Insurance Fund”.

PART 366—MINIMUM STANDARDS OF INTEGRITY AND FITNESS FOR AN FDIC CONTRACTOR

34. The authority citation continues to read as follows:

Authority: Section 9 (Tenth) of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 1819 (Tenth); sections 12(f)(3) and (4) of the FDI Act, 12 U.S.C. 1822(f)(3) and (4); and section 19 of Pub. L. 103-204, 107 Stat. 2369.

§ 366.3

[Amended]

35. Section 366.3(d) is amended by removing “a federal deposit insurance fund” and adding in its place “the Deposit Insurance Fund (or any predecessor deposit insurance fund)”.

§ 366.5

[Amended]

36. Section 366.5 introductory text is amended by removing “a federal deposit insurance fund” and adding in its place “the Deposit Insurance Fund (or any predecessor deposit insurance fund)”.

PART 367—SUSPENSION AND EXCLUSION OF CONTRACTOR AND TERMINATION OF CONTRACTS

37. The authority citation continues to read as follows:

Authority: 12 U.S.C. 1822(f)(4) and (5).

§ 367.2

[Amended]

38. Amend § 367.2 as follows:

A. Paragraph (s)(1) is amended by removing “Bank Insurance Fund (BIF), the Savings Association Insurance Fund (SAIF)” and adding in its place “former Bank Insurance Fund (BIF), the former Savings Association Insurance Fund (SAIF) or the Deposit Insurance Fund”.

B. Paragraph (s)(3) is amended by removing “or the BIF, the SAIF” and adding in its place “or the former BIF, the former SAIF, the Deposit Insurance Fund”.

§ 367.6

[Amended]

39. Section 367.6(d) is amended by removing “Federal deposit insurance funds” and adding in its place “Deposit Insurance Fund (or any predecessor deposit insurance fund)”.

By order of the Board of Directors.

Dated at Washington DC, this 4th day of April, 2006.

Federal Deposit Insurance Corporation.

Valerie J. Best,

Assistant Executive Secretary.

Footnotes

1.  FICO is a mixed-ownership government corporation created in 1987 to recapitalize the Federal Savings and Loan Insurance Corporation (“FSLIC”) by issuing bonds to purchase capital stock or capital certificates issued by the FSLIC. FICO issued 30-year non-callable bonds of approximately $8.2 billion that mature in 2017 through 2019. Competitive Equality Banking Act, Public Law 100-86, Title III, amending section 21 of the Federal Home Loan Bank Act, 12 U.S.C. 1441.