This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
Rules and Regulations Federal Register
55431
Vol. 73, No. 187
Thursday, September 25, 2008
1 See 73 FR 35337.
2 Note that this paragraph is not intended to
provide an exclusive list of permissible activities
for banks involved in financial education programs.
3 See 12 U.S.C. 1828(d)(1).
4 See 12 U.S.C. 1813(o).
5 See 12 CFR 303.41. If, however, the messenger
service is established or operated by a non-affiliated
third party, it generally does not constitute a branch
for purposes of Section 18(d) and FDIC regulations.
This interpretation is consistent with a plain
reading of Section 18(d)(1), and with the decision
in Cades v. H & R Block, where Justice Butzner,
writing for the Fourth Circuit, explained that
‘‘courts apply a two-part test to decide whether a
bank is operating a branch office. First, the court
determines whether [the] branch is established and
operated by the bank. * * *’’ See 43 F.3d 869, 814
(4th Cir. 1994), citing Independent Bankers Ass’n of
New York v. Marine Midland Bank, 757 F.2d 453,
456–63 (2d Cir 1985); Independent Bankers Ass’n
of America v. Smith, 534 F.2d, 921, 951–52 (D.C.
Cir. 1976). See also First National Bank in Plant
City v. Dickinson, 396 U.S. 122, 137 n. 10 (1970).
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 303
RIN 3064–AD28
Financial Education Programs That
Include the Provision of Bank Products
and Services
AGENCY: Federal Deposit Insurance
Corporation.
ACTION: Final rule.
SUMMARY: The Federal Deposit
Insurance Corporation (FDIC) is
amending its regulations to permit state
nonmember banks to participate or
assist in certain financial education
programs conducted on school premises
where, in connection with the program,
deposits are received, checks are paid,
or money is lent, without the need to
submit a branch application to, and
receive prior approval from, the FDIC.
However, any state nonmember bank
that desires to engage in such financial
education programs must satisfy certain
conditions in order for the exemption to
apply.
DATES: The final rule is effective on
September 25, 2008.
FOR FURTHER INFORMATION CONTACT:
Donald R. Hamm, Section Chief, Risk
Management and Applications Section,
(202) 898–3528, Division of Supervision
and Consumer Protection; or Mark L.
Handzlik, Senior Attorney, (202) 898–
3990, or Robert C. Fick, Counsel, (202)
898–8962, Supervision Branch, Legal
Division, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
1. Background
The FDIC recognizes the importance
of financial education programs,
particularly for those individuals who
have little or no experience using bank-
provided services. Such programs
generally contribute to the financial
stability of individuals, families, and
communities. Accordingly, the FDIC
supports the ongoing efforts of state
nonmember banks to enhance financial
literacy, and continues to encourage
institutions to collaborate with other
members of the community to deliver
financial education.
On June 23, 2008, the FDIC published
in the Federal Register an interim final
rule and request for comment titled,
Financial Education Programs that
Include the Provision of Bank Products
and Services (the ‘‘Interim Rule’’).1 The
FDIC issued the Interim Rule in
response to a number of inquiries as to
whether the definition of branch
includes a school or school facility
where a state nonmember bank
participates or assists in a financial
education program for the benefit of
students. Generally, through such
programs, students are trained in
various banking functions and personal
financial management. A bank
employee may serve as an advisor to the
students and assist faculty in
developing a financial education
curriculum.
In some instances, students provide
limited banking services to other
students, faculty, and parents directly at
the school, on either a part-time basis or
designated school days. A bank engaged
in such a program could train students
in bank operations and provide general
supervision over the program and the
provision of banking services. These
services could include opening deposit
accounts at the bank for students,
faculty and parents, and receiving
deposits for credit to such accounts. The
participating bank may also pick up and
deliver to its main office or a branch any
funds received by the students in
connection with the program.2
Section 18(d)(1) of the Federal
Deposit Insurance Act (FDI Act)
generally provides that no state
nonmember bank shall establish or
operate a new domestic branch without
the prior written consent of the FDIC.3
Under the FDI Act, the term domestic
branch generally is defined to include
any branch bank, branch office, branch
agency, additional office or any branch
place of business located in any State or
U.S. territory at which deposits are
received or checks paid or money lent
(each a core-banking function).4 The
FDIC has determined by regulation that
a messenger service that is established
and operated by a state nonmember
bank, which performs one of the core-
banking functions, is a branch and
requires a prior approval pursuant to
these statutory provisions.5 However,
under certain circumstances, a bank’s
participation in a financial education
program conducted on school premises
differs from a bank messenger service in
that any core-banking function provided
in connection with such program is (i)
provided at the discretion of the school;
(ii) not provided to the general public;
and (iii) conducted and designed
primarily for financial education
purposes. Moreover, participating in a
financial education program differs from
establishing a branch because, generally,
with respect to such a program, the
facility where banking services are
provided is established by the school.
The Interim Rule generally exempts
from the definition of branch any
participation by a state nonmember
bank in a financial education program
that is operated on school premises or
a facility used by a school, where, in
connection with the program, deposits
are received, checks are paid, or money
is lent, subject to certain conditions.
The principal purpose of the financial
education program must be educational,
and not designed for the purpose of
profit-making. Further, any banking
services provided in connection with
the program must be provided at the
discretion of the school. Finally, the
program must be conducted in a safe
VerDate Aug<31>2005 15:11 Sep 24, 2008 Jkt 214001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\25SER1.SGM 25SER1
erowe on PROD1PC64 with RULES
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
Rules and Regulations Federal Register
55431
Vol. 73, No. 187
Thursday, September 25, 2008
1 See 73 FR 35337.
2 Note that this paragraph is not intended to
provide an exclusive list of permissible activities
for banks involved in financial education programs.
3 See 12 U.S.C. 1828(d)(1).
4 See 12 U.S.C. 1813(o).
5 See 12 CFR 303.41. If, however, the messenger
service is established or operated by a non-affiliated
third party, it generally does not constitute a branch
for purposes of Section 18(d) and FDIC regulations.
This interpretation is consistent with a plain
reading of Section 18(d)(1), and with the decision
in Cades v. H & R Block, where Justice Butzner,
writing for the Fourth Circuit, explained that
‘‘courts apply a two-part test to decide whether a
bank is operating a branch office. First, the court
determines whether [the] branch is established and
operated by the bank. * * *’’ See 43 F.3d 869, 814
(4th Cir. 1994), citing Independent Bankers Ass’n of
New York v. Marine Midland Bank, 757 F.2d 453,
456–63 (2d Cir 1985); Independent Bankers Ass’n
of America v. Smith, 534 F.2d, 921, 951–52 (D.C.
Cir. 1976). See also First National Bank in Plant
City v. Dickinson, 396 U.S. 122, 137 n. 10 (1970).
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 303
RIN 3064–AD28
Financial Education Programs That
Include the Provision of Bank Products
and Services
AGENCY: Federal Deposit Insurance
Corporation.
ACTION: Final rule.
SUMMARY: The Federal Deposit
Insurance Corporation (FDIC) is
amending its regulations to permit state
nonmember banks to participate or
assist in certain financial education
programs conducted on school premises
where, in connection with the program,
deposits are received, checks are paid,
or money is lent, without the need to
submit a branch application to, and
receive prior approval from, the FDIC.
However, any state nonmember bank
that desires to engage in such financial
education programs must satisfy certain
conditions in order for the exemption to
apply.
DATES: The final rule is effective on
September 25, 2008.
FOR FURTHER INFORMATION CONTACT:
Donald R. Hamm, Section Chief, Risk
Management and Applications Section,
(202) 898–3528, Division of Supervision
and Consumer Protection; or Mark L.
Handzlik, Senior Attorney, (202) 898–
3990, or Robert C. Fick, Counsel, (202)
898–8962, Supervision Branch, Legal
Division, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
1. Background
The FDIC recognizes the importance
of financial education programs,
particularly for those individuals who
have little or no experience using bank-
provided services. Such programs
generally contribute to the financial
stability of individuals, families, and
communities. Accordingly, the FDIC
supports the ongoing efforts of state
nonmember banks to enhance financial
literacy, and continues to encourage
institutions to collaborate with other
members of the community to deliver
financial education.
On June 23, 2008, the FDIC published
in the Federal Register an interim final
rule and request for comment titled,
Financial Education Programs that
Include the Provision of Bank Products
and Services (the ‘‘Interim Rule’’).1 The
FDIC issued the Interim Rule in
response to a number of inquiries as to
whether the definition of branch
includes a school or school facility
where a state nonmember bank
participates or assists in a financial
education program for the benefit of
students. Generally, through such
programs, students are trained in
various banking functions and personal
financial management. A bank
employee may serve as an advisor to the
students and assist faculty in
developing a financial education
curriculum.
In some instances, students provide
limited banking services to other
students, faculty, and parents directly at
the school, on either a part-time basis or
designated school days. A bank engaged
in such a program could train students
in bank operations and provide general
supervision over the program and the
provision of banking services. These
services could include opening deposit
accounts at the bank for students,
faculty and parents, and receiving
deposits for credit to such accounts. The
participating bank may also pick up and
deliver to its main office or a branch any
funds received by the students in
connection with the program.2
Section 18(d)(1) of the Federal
Deposit Insurance Act (FDI Act)
generally provides that no state
nonmember bank shall establish or
operate a new domestic branch without
the prior written consent of the FDIC.3
Under the FDI Act, the term domestic
branch generally is defined to include
any branch bank, branch office, branch
agency, additional office or any branch
place of business located in any State or
U.S. territory at which deposits are
received or checks paid or money lent
(each a core-banking function).4 The
FDIC has determined by regulation that
a messenger service that is established
and operated by a state nonmember
bank, which performs one of the core-
banking functions, is a branch and
requires a prior approval pursuant to
these statutory provisions.5 However,
under certain circumstances, a bank’s
participation in a financial education
program conducted on school premises
differs from a bank messenger service in
that any core-banking function provided
in connection with such program is (i)
provided at the discretion of the school;
(ii) not provided to the general public;
and (iii) conducted and designed
primarily for financial education
purposes. Moreover, participating in a
financial education program differs from
establishing a branch because, generally,
with respect to such a program, the
facility where banking services are
provided is established by the school.
The Interim Rule generally exempts
from the definition of branch any
participation by a state nonmember
bank in a financial education program
that is operated on school premises or
a facility used by a school, where, in
connection with the program, deposits
are received, checks are paid, or money
is lent, subject to certain conditions.
The principal purpose of the financial
education program must be educational,
and not designed for the purpose of
profit-making. Further, any banking
services provided in connection with
the program must be provided at the
discretion of the school. Finally, the
program must be conducted in a safe
VerDate Aug<31>2005 15:11 Sep 24, 2008 Jkt 214001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\25SER1.SGM 25SER1
erowe on PROD1PC64 with RULES
55432 Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Rules and Regulations
6 This exemption is consistent with a regulation
promulgated by the Office of the Comptroller of the
Currency in 2001 which exempts from the
definition of branch a national bank’s participation
in a financial literacy program conducted on school
premises. 12 CFR 7.1021.
7 See 5 U.S.C. 553(d).
8 See 5 U.S.C. 603(a).
9 See 5 U.S.C. 604.
10 44 U.S.C. 3501 et seq.
and sound manner and comply with
applicable law.
The FDIC received three comments on
the Interim Rule from trade- and
research-based organizations. Generally,
the commenters supported the Interim
Rule, and lauded the FDIC for
recognizing the importance of financial
education programs, particularly for
those individuals with little or no
experience using bank-provided
services. The commenters expressed no
concerns regarding the Interim Rule,
and they proposed no substantive or
technical revisions. However, the FDIC
has made a technical, nonsubstantive
change to paragraph (a) of 12 CFR
303.41, which involved moving the
reference to the financial education
program exception provided in 12 CFR
303.46 to the sentence that lists the
other exceptions to the definition of
branch. Except for this change, the final
rule is identical to the Interim Rule.
2. Final Rule
The final rule excludes from the
definition of branch any financial
education program operated on school
premises or a facility used by a school,
where, in connection with the program,
deposits are received, checks are paid,
or money is lent, subject to certain
conditions.6 As provided in this rule,
the principal purpose of the program
must be financial education, and not for
the purpose of profit-making. Further,
any banking services provided in
connection with the program must be
provided at the discretion of the school.
The FDIC expects that such services
would be limited in nature; available
only to students, parents, and faculty;
and accessible on a part-time basis or
designated school days. The program
must be conducted in a safe and sound
manner and comply with applicable
law.
Regulatory Analysis and Procedure
A. Administrative Procedure Act
Section 553(d) of the Administrative
Procedure Act (APA) requires the FDIC
to publish a substantive rule at least 30
days before its effective date unless,
under subsection (d)(1), the rule
establishes or recognizes an exemption
or relieves a restriction.7 This final rule
establishes an exemption from the
definition of branch provided in 12 CFR
part 303, subpart C, which has the effect
of permitting state nonmember banks to
participate in certain financial
education programs conducted on
school premises without having to
submit a branch application to, and
receive prior approval from, the FDIC.
Therefore, the FDIC is not required to
publish this final rule in the Federal
Register at least 30 days before its
effective date.
B. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA)
requires an agency that is issuing a
proposed rule to prepare and make
available for public comment an initial
regulatory flexibility analysis that
describes the impact of a proposed rule
on small entities.8 Because this
rulemaking does not involve the
issuance of a notice of proposed
rulemaking, the requirements of the
RFA for a final regulatory flexibility
analysis do not apply.9
C. Paperwork Reduction Act
The FDIC has determined that this
final rule does not involve a collection
of information pursuant to the
provisions of the Paperwork Reduction
Act of 1995.10
List of Subjects in 12 CFR Part 303
Banks, Banking, State nonmember
banks, Filing procedures, Establishment
and relocation of domestic branches and
offices, Financial education programs.
Authority and Issuance
■ For the reasons set forth in the
preamble, part 303 of chapter III of title
12 of the Code of Federal Regulations is
amended 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, 1823, 1819 (Seventh and Tenth), 1820,
1823, 1828, 1831a, 1831e, 1831o, 1831p–1,
1831w, 1835a, 1843(1), 3104, 3105, 3108,
3207, 15 U.S.C. 1601–1607.2.
■ 2. In § 303.41, revise paragraph (a) to
read as follows:
§ 303.41 Definitions.
* * * * *
(a) Branch, except as provided in this
paragraph, includes any branch bank,
branch office, additional office, or any
branch place of business located in any
State of the United States or in any
territory of the United States, Puerto
Rico, Guam, American Samoa, the Trust
Territory of the Pacific Islands, the
Virgin Islands, and the Northern
Mariana Islands at which deposits are
received or checks paid or money lent.
A branch does not include an automated
teller machine, an automated loan
machine, a remote service unit, or a
facility described in section 303.46. The
term branch also includes the following:
* * * * *
■ 3. A new § 303.46 is added to subpart
C to read as follows:
§ 303.46 Financial Education Programs
that Include the Provision of Bank Products
and Services.
No branch application or prior
approval is required in order for a state
nonmember bank to participate in one
or more financial education programs
that involve receiving deposits, paying
withdrawals, or lending money if:
(a) Such service or services are
provided on school premises, or a
facility used by the school;
(b) Such service or services are
provided at the discretion of the school;
(c) The principal purpose of each
program is financial education. For
example, the principal purpose of a
program would be considered to be
financial education if the program is
designed to teach students the
principles of personal financial
management, banking operations, or the
benefits of saving for the future, and is
not designed for the purpose of profit-
making; and
(d) Each program is conducted in a
manner that is consistent with safe and
sound banking practices and complies
with applicable law.
By Order of the Board of Directors.
Dated at Washington, DC, the 18th day of
September, 2008.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E8–22326 Filed 9–24–08; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 303, 308, and 309
RIN 3064–AD25
Deposit Insurance Requirements After
Certain Conversions; Definition of
‘‘Corporate Reorganization;’’ Optional
Conversions (‘‘Oakar Transactions’’);
Additional Grounds for Disapproval of
Changes in Control; and Disclosure of
Certain Supervisory Information
AGENCY: Federal Deposit Insurance
Corporation.
ACTION: Final rule.
VerDate Aug<31>2005 15:11 Sep 24, 2008 Jkt 214001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\25SER1.SGM 25SER1
erowe on PROD1PC64 with RULES
6 This exemption is consistent with a regulation
promulgated by the Office of the Comptroller of the
Currency in 2001 which exempts from the
definition of branch a national bank’s participation
in a financial literacy program conducted on school
premises. 12 CFR 7.1021.
7 See 5 U.S.C. 553(d).
8 See 5 U.S.C. 603(a).
9 See 5 U.S.C. 604.
10 44 U.S.C. 3501 et seq.
and sound manner and comply with
applicable law.
The FDIC received three comments on
the Interim Rule from trade- and
research-based organizations. Generally,
the commenters supported the Interim
Rule, and lauded the FDIC for
recognizing the importance of financial
education programs, particularly for
those individuals with little or no
experience using bank-provided
services. The commenters expressed no
concerns regarding the Interim Rule,
and they proposed no substantive or
technical revisions. However, the FDIC
has made a technical, nonsubstantive
change to paragraph (a) of 12 CFR
303.41, which involved moving the
reference to the financial education
program exception provided in 12 CFR
303.46 to the sentence that lists the
other exceptions to the definition of
branch. Except for this change, the final
rule is identical to the Interim Rule.
2. Final Rule
The final rule excludes from the
definition of branch any financial
education program operated on school
premises or a facility used by a school,
where, in connection with the program,
deposits are received, checks are paid,
or money is lent, subject to certain
conditions.6 As provided in this rule,
the principal purpose of the program
must be financial education, and not for
the purpose of profit-making. Further,
any banking services provided in
connection with the program must be
provided at the discretion of the school.
The FDIC expects that such services
would be limited in nature; available
only to students, parents, and faculty;
and accessible on a part-time basis or
designated school days. The program
must be conducted in a safe and sound
manner and comply with applicable
law.
Regulatory Analysis and Procedure
A. Administrative Procedure Act
Section 553(d) of the Administrative
Procedure Act (APA) requires the FDIC
to publish a substantive rule at least 30
days before its effective date unless,
under subsection (d)(1), the rule
establishes or recognizes an exemption
or relieves a restriction.7 This final rule
establishes an exemption from the
definition of branch provided in 12 CFR
part 303, subpart C, which has the effect
of permitting state nonmember banks to
participate in certain financial
education programs conducted on
school premises without having to
submit a branch application to, and
receive prior approval from, the FDIC.
Therefore, the FDIC is not required to
publish this final rule in the Federal
Register at least 30 days before its
effective date.
B. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA)
requires an agency that is issuing a
proposed rule to prepare and make
available for public comment an initial
regulatory flexibility analysis that
describes the impact of a proposed rule
on small entities.8 Because this
rulemaking does not involve the
issuance of a notice of proposed
rulemaking, the requirements of the
RFA for a final regulatory flexibility
analysis do not apply.9
C. Paperwork Reduction Act
The FDIC has determined that this
final rule does not involve a collection
of information pursuant to the
provisions of the Paperwork Reduction
Act of 1995.10
List of Subjects in 12 CFR Part 303
Banks, Banking, State nonmember
banks, Filing procedures, Establishment
and relocation of domestic branches and
offices, Financial education programs.
Authority and Issuance
■ For the reasons set forth in the
preamble, part 303 of chapter III of title
12 of the Code of Federal Regulations is
amended 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, 1823, 1819 (Seventh and Tenth), 1820,
1823, 1828, 1831a, 1831e, 1831o, 1831p–1,
1831w, 1835a, 1843(1), 3104, 3105, 3108,
3207, 15 U.S.C. 1601–1607.2.
■ 2. In § 303.41, revise paragraph (a) to
read as follows:
§ 303.41 Definitions.
* * * * *
(a) Branch, except as provided in this
paragraph, includes any branch bank,
branch office, additional office, or any
branch place of business located in any
State of the United States or in any
territory of the United States, Puerto
Rico, Guam, American Samoa, the Trust
Territory of the Pacific Islands, the
Virgin Islands, and the Northern
Mariana Islands at which deposits are
received or checks paid or money lent.
A branch does not include an automated
teller machine, an automated loan
machine, a remote service unit, or a
facility described in section 303.46. The
term branch also includes the following:
* * * * *
■ 3. A new § 303.46 is added to subpart
C to read as follows:
§ 303.46 Financial Education Programs
that Include the Provision of Bank Products
and Services.
No branch application or prior
approval is required in order for a state
nonmember bank to participate in one
or more financial education programs
that involve receiving deposits, paying
withdrawals, or lending money if:
(a) Such service or services are
provided on school premises, or a
facility used by the school;
(b) Such service or services are
provided at the discretion of the school;
(c) The principal purpose of each
program is financial education. For
example, the principal purpose of a
program would be considered to be
financial education if the program is
designed to teach students the
principles of personal financial
management, banking operations, or the
benefits of saving for the future, and is
not designed for the purpose of profit-
making; and
(d) Each program is conducted in a
manner that is consistent with safe and
sound banking practices and complies
with applicable law.
By Order of the Board of Directors.
Dated at Washington, DC, the 18th day of
September, 2008.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E8–22326 Filed 9–24–08; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 303, 308, and 309
RIN 3064–AD25
Deposit Insurance Requirements After
Certain Conversions; Definition of
‘‘Corporate Reorganization;’’ Optional
Conversions (‘‘Oakar Transactions’’);
Additional Grounds for Disapproval of
Changes in Control; and Disclosure of
Certain Supervisory Information
AGENCY: Federal Deposit Insurance
Corporation.
ACTION: Final rule.
VerDate Aug<31>2005 15:11 Sep 24, 2008 Jkt 214001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\25SER1.SGM 25SER1
erowe on PROD1PC64 with RULES