6139Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules
1 Although currently the range of risk-based
assessments for BIF-assessable and SAIF-assessable
deposits is the same, a higher assessment payable
to the Financing Corporation must be paid on SAIF-
assessable deposits. Thus, the overall assessment is
higher for SAIF-assessable deposits than for BIF-
assessable deposits.
regulation is reopened until March 13,
1997.
DATES: Comments must be received by
March 13, 1997.
ADDRESSES: Interested persons are
invited to submit written comments
concerning this proposal. Comments
must be sent in triplicate to the Docket
Clerk, Fruit and Vegetable Division,
AMS, USDA, room 2525–S, P.O. Box
96456, Washington, DC 20090–6456,
Fax Number (202) 720–5698. All
comments should reference the docket
number and the date and page number
of this issue of the Federal Register and
will be available for public inspection in
the Office of the Docket Clerk during
regular business hours.
FOR FURTHER INFORMATION CONTACT: Tom
Tichenor, Marketing Order
Administration Branch, F&V, AMS,
USDA, room 2525–S, P.O. Box 96456,
Washington, DC 20090–6456: telephone:
(202) 720–6862. Small businesses may
request information on compliance with
this proposed regulation by contacting:
Jay Guerber, Marketing Order
Information Branch, Fruit and Vegetable
Division, AMS, USDA, P.O. Box 96456,
room 2525–S, Washington, DC 20090–
6456; telephone: (202) 720–2491; Fax
number: (202) 720–5698.
SUPPLEMENTARY INFORMATION: A
proposed rule was issued on December
23, 1996, and published in the Federal
Register (61 FR 67499). The proposed
rule would: (1) Remove banana/
fingerling potatoes from provisions of
the potato import regulation (import
regulation) and; (2) reclassify potatoes
used to make fresh potato salad as
potatoes for processing. The comment
period ended January 22, 1997.
The National Potato Council (Council)
requested that additional time be
provided for interested persons to
analyze the proposed rule. The Council
stated that members of the industry
need additional time to review all
available information before making
final comments on the proposed rule.
Reopening the comment period to
March 13, 1997, would allow the
Council and other interested persons
more time to review the proposed rule,
perform a more complete analysis, and
submit any written comments.
This delay should not substantially
add to the time required to complete
this rulemaking action. Accordingly, the
period in which to file written
comments is reopened until March 13,
1997. This notice is issued pursuant to
the Agricultural Marketing Agreement
Act of 1937.
Authority: 7 U.S.C. 601–674.
Dated: February 5, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97–3285 Filed 2–10–97; 8:45 am]
BILLING CODE 3410–02–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 312
RIN 3064–AC01
Prevention of Deposit Shifting
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Proposed rule.
SUMMARY: The proposed rule would
implement a new statute to prevent the
shifting of deposits insured under the
Savings Association Insurance Fund
(SAIF) to deposits insured under the
Bank Insurance Fund (BIF) for the
purpose of evading the assessment rates
applicable to SAIF deposits.
DATES: Written comments must be
received by the FDIC on or before April
14, 1997.
ADDRESSES: Written comments are to be
addressed to the Office of the Executive
Secretary, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429. Comments may
be hand-delivered to Room F–402, 1776
F Street, NW., Washington, DC 20429,
on business days between 8:30 a.m. and
5 p.m. (FAX number: (202) 898–3838;
Internet address: comments@FDIC.gov).
Comments will be available for
inspection in the FDIC Public
Information Center, room 100, 801 17th
Street, NW., Washington, DC, between
9:00 a.m. and 5:00 p.m. on business
days.
FOR FURTHER INFORMATION CONTACT:
Joseph A. DiNuzzo, Counsel, (202) 898–
7349; Richard J. Osterman, Senior
Counsel, (202) 898–3523, Legal
Division; or George Hanc, Associate
Director, Division of Research and
Statistics, (202) 898-8719, Federal
Deposit Insurance Corporation,
Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. The Proposed Rule
A. The Funds Act and the Deposit
Shifting Statute
The Deposit Insurance Funds Act of
1996 (Funds Act) was enacted as part of
the Economic Growth and Regulatory
Paperwork Reduction Act of 1996,
Public Law 104–208, 110 Stat. 3009 et
seq., sections 2701–2711, and became
effective September 30, 1996. The
Funds Act provides for the
capitalization of the SAIF through a
special assessment on all depository
institutions that hold SAIF-assessable
deposits. Pursuant to this requirement,
the FDIC recently issued a final rule
imposing a special assessment on
institutions holding SAIF-assessable
deposits in an amount sufficient to
increase the SAIF reserve ratio (SAIF
reserve ratio) to the designated reserve
ratio (DRR) of 1.25 percent as of October
1, 1996. 61 FR 53834 (Oct. 16, 1996), to
be codified at 12 CFR 327.41.
Another provision of the Funds Act,
entitled ‘‘Prohibition on Deposit
Shifting’’ (deposit shifting statute),
requires the Comptroller of the
Currency, the Board of Directors of the
FDIC, the Board of Governors of the
Federal Reserve System, and the
Director of the Office of Thrift
Supervision (federal banking agencies)
to take ‘‘appropriate actions’’ to prevent
insured depository institutions and
holding companies from ‘‘facilitating or
encouraging’’ the shifting of deposits
from SAIF-assessable deposits to BIF-
assessable deposits for the purpose of
evading the assessments applicable to
SAIF-assessable deposits.1 Funds Act,
section 2703(d). The ‘‘appropriate
actions’’ suggested in the deposit
shifting statute are: denial of
applications, enforcement actions and
the imposition of entrance and exit fees.
The statute also specifies that its
provisions shall not be construed to
prohibit conduct or activity by any
insured depository institution that is
undertaken in the ‘‘ordinary course of
business’’ and is not directed towards
depositors of an insured depository
institution affiliate of the insured
institution.
The statute authorizes the FDIC to
issue regulations, including regulations
defining terms used in the statute, to
prevent the shifting of deposits. The
deposit shifting statute terminates on
the earlier of December 31, 1999, or the
date on which the last savings
association ceases to exist.
B. Need for a Regulation on Deposit
Shifting
The issuance of a regulation would
provide guidance to the industry on the
meaning and impact of the deposit
shifting statute. This is particularly
important in light of the relationship of
the deposit shifting statute to section
1 Although currently the range of risk-based
assessments for BIF-assessable and SAIF-assessable
deposits is the same, a higher assessment payable
to the Financing Corporation must be paid on SAIF-
assessable deposits. Thus, the overall assessment is
higher for SAIF-assessable deposits than for BIF-
assessable deposits.
regulation is reopened until March 13,
1997.
DATES: Comments must be received by
March 13, 1997.
ADDRESSES: Interested persons are
invited to submit written comments
concerning this proposal. Comments
must be sent in triplicate to the Docket
Clerk, Fruit and Vegetable Division,
AMS, USDA, room 2525–S, P.O. Box
96456, Washington, DC 20090–6456,
Fax Number (202) 720–5698. All
comments should reference the docket
number and the date and page number
of this issue of the Federal Register and
will be available for public inspection in
the Office of the Docket Clerk during
regular business hours.
FOR FURTHER INFORMATION CONTACT: Tom
Tichenor, Marketing Order
Administration Branch, F&V, AMS,
USDA, room 2525–S, P.O. Box 96456,
Washington, DC 20090–6456: telephone:
(202) 720–6862. Small businesses may
request information on compliance with
this proposed regulation by contacting:
Jay Guerber, Marketing Order
Information Branch, Fruit and Vegetable
Division, AMS, USDA, P.O. Box 96456,
room 2525–S, Washington, DC 20090–
6456; telephone: (202) 720–2491; Fax
number: (202) 720–5698.
SUPPLEMENTARY INFORMATION: A
proposed rule was issued on December
23, 1996, and published in the Federal
Register (61 FR 67499). The proposed
rule would: (1) Remove banana/
fingerling potatoes from provisions of
the potato import regulation (import
regulation) and; (2) reclassify potatoes
used to make fresh potato salad as
potatoes for processing. The comment
period ended January 22, 1997.
The National Potato Council (Council)
requested that additional time be
provided for interested persons to
analyze the proposed rule. The Council
stated that members of the industry
need additional time to review all
available information before making
final comments on the proposed rule.
Reopening the comment period to
March 13, 1997, would allow the
Council and other interested persons
more time to review the proposed rule,
perform a more complete analysis, and
submit any written comments.
This delay should not substantially
add to the time required to complete
this rulemaking action. Accordingly, the
period in which to file written
comments is reopened until March 13,
1997. This notice is issued pursuant to
the Agricultural Marketing Agreement
Act of 1937.
Authority: 7 U.S.C. 601–674.
Dated: February 5, 1997.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97–3285 Filed 2–10–97; 8:45 am]
BILLING CODE 3410–02–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 312
RIN 3064–AC01
Prevention of Deposit Shifting
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Proposed rule.
SUMMARY: The proposed rule would
implement a new statute to prevent the
shifting of deposits insured under the
Savings Association Insurance Fund
(SAIF) to deposits insured under the
Bank Insurance Fund (BIF) for the
purpose of evading the assessment rates
applicable to SAIF deposits.
DATES: Written comments must be
received by the FDIC on or before April
14, 1997.
ADDRESSES: Written comments are to be
addressed to the Office of the Executive
Secretary, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429. Comments may
be hand-delivered to Room F–402, 1776
F Street, NW., Washington, DC 20429,
on business days between 8:30 a.m. and
5 p.m. (FAX number: (202) 898–3838;
Internet address: comments@FDIC.gov).
Comments will be available for
inspection in the FDIC Public
Information Center, room 100, 801 17th
Street, NW., Washington, DC, between
9:00 a.m. and 5:00 p.m. on business
days.
FOR FURTHER INFORMATION CONTACT:
Joseph A. DiNuzzo, Counsel, (202) 898–
7349; Richard J. Osterman, Senior
Counsel, (202) 898–3523, Legal
Division; or George Hanc, Associate
Director, Division of Research and
Statistics, (202) 898-8719, Federal
Deposit Insurance Corporation,
Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. The Proposed Rule
A. The Funds Act and the Deposit
Shifting Statute
The Deposit Insurance Funds Act of
1996 (Funds Act) was enacted as part of
the Economic Growth and Regulatory
Paperwork Reduction Act of 1996,
Public Law 104–208, 110 Stat. 3009 et
seq., sections 2701–2711, and became
effective September 30, 1996. The
Funds Act provides for the
capitalization of the SAIF through a
special assessment on all depository
institutions that hold SAIF-assessable
deposits. Pursuant to this requirement,
the FDIC recently issued a final rule
imposing a special assessment on
institutions holding SAIF-assessable
deposits in an amount sufficient to
increase the SAIF reserve ratio (SAIF
reserve ratio) to the designated reserve
ratio (DRR) of 1.25 percent as of October
1, 1996. 61 FR 53834 (Oct. 16, 1996), to
be codified at 12 CFR 327.41.
Another provision of the Funds Act,
entitled ‘‘Prohibition on Deposit
Shifting’’ (deposit shifting statute),
requires the Comptroller of the
Currency, the Board of Directors of the
FDIC, the Board of Governors of the
Federal Reserve System, and the
Director of the Office of Thrift
Supervision (federal banking agencies)
to take ‘‘appropriate actions’’ to prevent
insured depository institutions and
holding companies from ‘‘facilitating or
encouraging’’ the shifting of deposits
from SAIF-assessable deposits to BIF-
assessable deposits for the purpose of
evading the assessments applicable to
SAIF-assessable deposits.1 Funds Act,
section 2703(d). The ‘‘appropriate
actions’’ suggested in the deposit
shifting statute are: denial of
applications, enforcement actions and
the imposition of entrance and exit fees.
The statute also specifies that its
provisions shall not be construed to
prohibit conduct or activity by any
insured depository institution that is
undertaken in the ‘‘ordinary course of
business’’ and is not directed towards
depositors of an insured depository
institution affiliate of the insured
institution.
The statute authorizes the FDIC to
issue regulations, including regulations
defining terms used in the statute, to
prevent the shifting of deposits. The
deposit shifting statute terminates on
the earlier of December 31, 1999, or the
date on which the last savings
association ceases to exist.
B. Need for a Regulation on Deposit
Shifting
The issuance of a regulation would
provide guidance to the industry on the
meaning and impact of the deposit
shifting statute. This is particularly
important in light of the relationship of
the deposit shifting statute to section
6140 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules
2 To determine whether a holding company
should be subject to further scrutiny under the
proposed rule, the FDIC would compute an average
ratio of BIF-insured deposits to total deposits for all
non-Oakar affiliates of the holding company as of
the fourth quarter of 1994. This value would be
computed as the average ratio of BIF-insured
deposits for the period from the third quarter of
1989 to the fourth quarter of 1994, or the average
ratio of BIF-insured deposits from the last quarter
that the holding company acquired or sold a non-
Oakar affiliate through the fourth quarter of 1994.
The average ratio would then be subtracted from the
ratio of BIF-insured deposits to total deposits in
each quarter of 1995 and subsequent years to yield
an adjusted BIF-insured deposit ratio. The adjusted
ratio for each holding company would be divided
by the standard deviation of adjusted ratios of BIF-
insured deposits for all holding companies for the
entire period beginning with the first quarter of
1995. The resulting value is compared with the
value 1.65. If it exceeds 1.65, and assuming that the
adjusted ratio is a normal random variable, there
would be less than a 5 percent chance that the
change in the BIF-insured deposit ratio is a random
event. Holding companies for which the adjusted
ratio of BIF-insured deposits divided by the
standard deviation of adjusted ratios for all holding
companies after 1994 exceeded 1.65 would be
subject to further scrutiny under the proposed rule.
5(d)(2) of the FDI Act (12 U.S.C.
1815(d))(section 5(d)(2)).
Section 5(d)(2) applies to conversions
of depository institutions from one
deposit insurance fund to the other. In
relevant part, it provides that: (1)
Institutions may not engage in a
‘‘conversion transaction’’ without the
FDIC’s prior approval; and (2)
institutions that engage in an insurance-
fund conversion must pay prescribed
entrance and exit fees. Until recently,
with certain specified exceptions,
depository institutions were prohibited
by section 5(d)(2) from engaging in
conversion transactions. 12 U.S.C.
1815(d)(2)(A)(ii). The statute specified,
however, that the ‘‘conversion
moratorium’’ would expire when SAIF
reached or exceeded its DRR. Because
SAIF recently reached its DRR, the
conversion moratorium no longer
applies; therefore, an institution may
convert from one fund to another as
long as the FDIC approves the
conversion and the institution pays the
prescribed entrance and exit fees.
The requirement in section 5(d)(2)
that converting institutions pay entrance
and exit fees underscores the need to
impose entrance and exit fees under the
deposit migration statute: If insured
depository institutions were permitted
to shift deposits from a SAIF-insured
institution to a BIF-insured institution
outside the scope of section 5(d)(2),
then—but for the existence of the
deposit shifting statute—they would be
able to evade the entrance and exit fees
imposed by section 5(d)(2) for such fund
conversions. The FDIC interprets the
deposit shifting statute, therefore, in
part, to be intended to preserve the
integrity of the fee-payment
requirements in section 5(d)(2). Indeed,
as indicated above, the deposit shifting
statue specifies that one of the
‘‘appropriate actions’’ the agencies may
take to prevent deposit shifting is the
‘‘imposition of entrance and exit fees as
if such transaction qualified as a
conversion transaction pursuant to
section 5(d).’’
C. Explanation of the Proposed Rule
The proposed rule is intended to
interpret and implement the deposit
shifting statute. The proposed rule
consists of two basic provisions. The
first would reiterate the requirement in
the deposit shifting statute that the
federal banking agencies deny
applications and object to notices filed
with them by depository institutions or
depository institution holding
companies if the agency determines that
the transaction for which the
application or notice is filed is for the
purpose of evading assessments
imposed on insured depository
institutions with respect to SAIF-
assessable deposits. The second
provision of the proposed rule would
establish a presumption under which
entrance and exit fees would be
imposed upon depository institutions
for deposits that are shifted from SAIF-
assessable deposits to BIF-assessable
deposits within the contemplation of
the deposit shifting statute.
1. Applications
As noted, the proposed rule reiterates
the statutory requirement that the
federal banking agencies deny
applications or object to notices if the
transaction for which the application or
notice is filed is for the purpose of
evading SAIF assessments. The
proposed regulation is drafted to
encompass any type of application or
notice that might involve deposit
shifting. It is anticipated that the
respective agency would determine the
purpose of the application or notice
from the materials submitted by the
depository institution or holding
company. For example, certain types of
applications require the filing of a
business plan which describes the
corporate strategy for and objective of
the proposed transaction. If the agency’s
review of the business plan indicates
that the purpose of a proposed
transaction is to shift deposits in order
to evade SAIF assessments, then the
agency would deny the application. If a
business plan is not required to be filed
with an application that might raise a
concern about deposit shifting, then the
reviewing agency would otherwise
determine, based on a review of the
materials provided with the application
and other available information,
whether the underlying purpose of the
application is to shift deposits within
the contemplation of the deposit
shifting statute. All such application
determinations would be made on a
case-by-case basis within the agency’s
discretion. It is also likely that the
agencies would condition application
approvals on compliance with the
requirements of the deposit shifting
statute.
2. Entrance and Exit Fees for Deposit
Shifting
The proposed rule would establish a
presumption under which entrance and
exit fees would be imposed upon
depository institutions that engage in
deposit shifting for the purpose of
evading SAIF assessments. The amounts
of the entrance and exit fees would be
those prescribed in part 312 of the
FDIC’s regulations (12 CFR part 312).
Under the proposed rule the FDIC
would use a rebuttable-presumption
approach to determine whether
depository institutions have engaged in
deposit shifting and, therefore, must pay
entrance and exit fees. To implement
this approach the FDIC would identify
all bank holding companies and savings
and loan holding companies with both
BIF- and SAIF-member subsidiaries and
determine each holding company’s
aggregate average percentage of BIF and
SAIF deposits for a period of time prior
to the enactment of the deposit shifting
statute on September 30, 1996. The
FDIC would then compare that average
to the percentage of each such holding
company’s BIF and SAIF deposits for
each quarter subsequent to the
enactment of the deposit shifting
statute. The FDIC would determine
whether any increase in the holding
company’s percentage of BIF deposits
and decrease in its percentage of SAIF
deposits exceeded a normal range
relative to the holding company’s
historical average and industry averages.
If the FDIC determines, on a holding-
company-by-holding-company basis,
that a BIF-insured institution’s increase
in BIF-assessable deposits and decrease
in SAIF-assessable deposits is above the
normal range and is not attributable to
factors other than deposit shifting, then,
after consulting with each institution’s
primary federal regulator (where the
FDIC is not the institution’s primary
federal regulator) the FDIC would apply
the rebuttable presumption that the
increase in BIF-assessable deposits
resulted from deposit shifting
encouraged or facilitated by the
applicable depository institutions or
their holding company for the purpose
of evading SAIF assessments.2
2 To determine whether a holding company
should be subject to further scrutiny under the
proposed rule, the FDIC would compute an average
ratio of BIF-insured deposits to total deposits for all
non-Oakar affiliates of the holding company as of
the fourth quarter of 1994. This value would be
computed as the average ratio of BIF-insured
deposits for the period from the third quarter of
1989 to the fourth quarter of 1994, or the average
ratio of BIF-insured deposits from the last quarter
that the holding company acquired or sold a non-
Oakar affiliate through the fourth quarter of 1994.
The average ratio would then be subtracted from the
ratio of BIF-insured deposits to total deposits in
each quarter of 1995 and subsequent years to yield
an adjusted BIF-insured deposit ratio. The adjusted
ratio for each holding company would be divided
by the standard deviation of adjusted ratios of BIF-
insured deposits for all holding companies for the
entire period beginning with the first quarter of
1995. The resulting value is compared with the
value 1.65. If it exceeds 1.65, and assuming that the
adjusted ratio is a normal random variable, there
would be less than a 5 percent chance that the
change in the BIF-insured deposit ratio is a random
event. Holding companies for which the adjusted
ratio of BIF-insured deposits divided by the
standard deviation of adjusted ratios for all holding
companies after 1994 exceeded 1.65 would be
subject to further scrutiny under the proposed rule.
5(d)(2) of the FDI Act (12 U.S.C.
1815(d))(section 5(d)(2)).
Section 5(d)(2) applies to conversions
of depository institutions from one
deposit insurance fund to the other. In
relevant part, it provides that: (1)
Institutions may not engage in a
‘‘conversion transaction’’ without the
FDIC’s prior approval; and (2)
institutions that engage in an insurance-
fund conversion must pay prescribed
entrance and exit fees. Until recently,
with certain specified exceptions,
depository institutions were prohibited
by section 5(d)(2) from engaging in
conversion transactions. 12 U.S.C.
1815(d)(2)(A)(ii). The statute specified,
however, that the ‘‘conversion
moratorium’’ would expire when SAIF
reached or exceeded its DRR. Because
SAIF recently reached its DRR, the
conversion moratorium no longer
applies; therefore, an institution may
convert from one fund to another as
long as the FDIC approves the
conversion and the institution pays the
prescribed entrance and exit fees.
The requirement in section 5(d)(2)
that converting institutions pay entrance
and exit fees underscores the need to
impose entrance and exit fees under the
deposit migration statute: If insured
depository institutions were permitted
to shift deposits from a SAIF-insured
institution to a BIF-insured institution
outside the scope of section 5(d)(2),
then—but for the existence of the
deposit shifting statute—they would be
able to evade the entrance and exit fees
imposed by section 5(d)(2) for such fund
conversions. The FDIC interprets the
deposit shifting statute, therefore, in
part, to be intended to preserve the
integrity of the fee-payment
requirements in section 5(d)(2). Indeed,
as indicated above, the deposit shifting
statue specifies that one of the
‘‘appropriate actions’’ the agencies may
take to prevent deposit shifting is the
‘‘imposition of entrance and exit fees as
if such transaction qualified as a
conversion transaction pursuant to
section 5(d).’’
C. Explanation of the Proposed Rule
The proposed rule is intended to
interpret and implement the deposit
shifting statute. The proposed rule
consists of two basic provisions. The
first would reiterate the requirement in
the deposit shifting statute that the
federal banking agencies deny
applications and object to notices filed
with them by depository institutions or
depository institution holding
companies if the agency determines that
the transaction for which the
application or notice is filed is for the
purpose of evading assessments
imposed on insured depository
institutions with respect to SAIF-
assessable deposits. The second
provision of the proposed rule would
establish a presumption under which
entrance and exit fees would be
imposed upon depository institutions
for deposits that are shifted from SAIF-
assessable deposits to BIF-assessable
deposits within the contemplation of
the deposit shifting statute.
1. Applications
As noted, the proposed rule reiterates
the statutory requirement that the
federal banking agencies deny
applications or object to notices if the
transaction for which the application or
notice is filed is for the purpose of
evading SAIF assessments. The
proposed regulation is drafted to
encompass any type of application or
notice that might involve deposit
shifting. It is anticipated that the
respective agency would determine the
purpose of the application or notice
from the materials submitted by the
depository institution or holding
company. For example, certain types of
applications require the filing of a
business plan which describes the
corporate strategy for and objective of
the proposed transaction. If the agency’s
review of the business plan indicates
that the purpose of a proposed
transaction is to shift deposits in order
to evade SAIF assessments, then the
agency would deny the application. If a
business plan is not required to be filed
with an application that might raise a
concern about deposit shifting, then the
reviewing agency would otherwise
determine, based on a review of the
materials provided with the application
and other available information,
whether the underlying purpose of the
application is to shift deposits within
the contemplation of the deposit
shifting statute. All such application
determinations would be made on a
case-by-case basis within the agency’s
discretion. It is also likely that the
agencies would condition application
approvals on compliance with the
requirements of the deposit shifting
statute.
2. Entrance and Exit Fees for Deposit
Shifting
The proposed rule would establish a
presumption under which entrance and
exit fees would be imposed upon
depository institutions that engage in
deposit shifting for the purpose of
evading SAIF assessments. The amounts
of the entrance and exit fees would be
those prescribed in part 312 of the
FDIC’s regulations (12 CFR part 312).
Under the proposed rule the FDIC
would use a rebuttable-presumption
approach to determine whether
depository institutions have engaged in
deposit shifting and, therefore, must pay
entrance and exit fees. To implement
this approach the FDIC would identify
all bank holding companies and savings
and loan holding companies with both
BIF- and SAIF-member subsidiaries and
determine each holding company’s
aggregate average percentage of BIF and
SAIF deposits for a period of time prior
to the enactment of the deposit shifting
statute on September 30, 1996. The
FDIC would then compare that average
to the percentage of each such holding
company’s BIF and SAIF deposits for
each quarter subsequent to the
enactment of the deposit shifting
statute. The FDIC would determine
whether any increase in the holding
company’s percentage of BIF deposits
and decrease in its percentage of SAIF
deposits exceeded a normal range
relative to the holding company’s
historical average and industry averages.
If the FDIC determines, on a holding-
company-by-holding-company basis,
that a BIF-insured institution’s increase
in BIF-assessable deposits and decrease
in SAIF-assessable deposits is above the
normal range and is not attributable to
factors other than deposit shifting, then,
after consulting with each institution’s
primary federal regulator (where the
FDIC is not the institution’s primary
federal regulator) the FDIC would apply
the rebuttable presumption that the
increase in BIF-assessable deposits
resulted from deposit shifting
encouraged or facilitated by the
applicable depository institutions or
their holding company for the purpose
of evading SAIF assessments.2