FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 330

RIN 3064AB28

Deposit Insurance Coverage

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Proposed rule.

SUMMARY: The FDIC is proposing to amend its deposit insurance regulations to
require that: Upon request, an insured depository institution disclose in
writing to existing and prospective depositors of employee benefit plan funds
certain capital information, including its current Prompt Corrective Action
(PCA) capital category and whether employee benefit plan deposits would be
eligible for "pass-through'' insurance coverage; upon opening an account
comprised of employee benefit plan funds, an insured depository institution
disclose in writing its PCA capital category and whether the deposits are
eligible for "pass-through'' deposit insurance coverage; upon a reduction in
its capital category from "well capitalized'' to "adequately capitalized'' an
insured depository institution disclose to all its employee benefit plan
depositors the institution's new PCA capital category and whether new,
rolled-over or renewed employee benefit plan deposits are eligible for
"pass-through'' insurance coverage; and an insured depository institution
disclose in writing to employee benefit plan depositors when new, rolled-over
or renewed employee benefit plan deposits will not be eligible for
"pass-through'' deposit insurance coverage.

The FDIC also is proposing two technical amendments to its insurance
regulations that are unrelated to the proposed amendments concerning
"pass-through'' insurance coverage. The technical amendments involve the
insurance rules for joint accounts and accounts for which an insured
depository institution is acting as a fiduciary.

The intended effects of the proposed rule on "pass-through'' deposit insurance
are to reduce the uncertainty about whether employee benefit plan deposits are
eligible for "pass-through'' deposit insurance coverage and to require insured
depository institutions to provide timely disclosure to employee benefit plan
depositors when "pass-through'' deposit insurance coverage is no longer
available. The two technical amendments are intended to clarify the insurance
rules involving joint accounts and accounts for which an insured depository
institution is acting as a fiduciary.

DATES: Written comments must be received by the FDIC on or before February 7,
1994.

ADDRESSES: Written comments should 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 F400, 1776 F
Street, NW., Washington, DC 20429, on business days between 8:30 a.m. and 5
p.m. (FAX number: (202) 8983838). Comments will be available for inspection
in room 7118, 550 - 17th Street, N.W., Washington, D.C. between 9 a.m. and
4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Daniel M. Gautsch, Examination Specialist,
Division of Supervision (202/8986912) or Joseph A. DiNuzzo, Counsel, Legal
Division (202/8987349), Federal Deposit Insurance Corporation, Washington,
DC, 20429.

SUPPLEMENTARY INFORMATION:

Background

Section 311 of the Federal Deposit Insurance Corporation Improvement Act of
1991 (Pub. L. 102242, 105 Stat. 2236) (FDICIA) amended various provisions of
the Federal Deposit Insurance Act (FDI Act) governing deposit insurance
coverage. The FDIC Board of Directors (Board) recently revised the FDIC's
insurance regulations to incorporate the amendments made by section 311 of
FDICIA to the FDI Act (58 FR 29952 (May 25, 1993)). In particular,  330.12 of
the FDIC's regulations (12 CFR 330.12) was substantially revised to reflect
the new limitations imposed by section 311 of FDICIA affecting the
"pass-through'' deposit insurance provided for employee benefit accounts. (The
expression "pass-through'' insurance means that the insurance coverage passes
through to each owner/beneficiary of the applicable deposit.) As required by
section 311 of FDICIA, under the revised insurance rules, whether or not an
employee benefit plan deposit is entitled to "pass-through'' deposit insurance
coverage is based, in part, upon the capital status of an insured depository
institution at the time the deposit is accepted.

      Specifically,  330.12(b) provides that employee benefit plan deposits
are entitled to "pass-through'' insurance coverage only if made in insured
institutions that can accept brokered deposits (pursuant to section 29 of the
FDI Act, 12 U.S.C. 1831f) at the time they accept the employee benefit plan
deposits. Section 29 of the FDI Act prohibits insured depository institutions
that are not "well capitalized'', institutions that are "adequately
capitalized'' but have not obtained a waiver from the FDIC and
"undercapitalized'' institutions (or institutions in worse capital categories)
from accepting brokered deposits.1  A brokered deposit is defined in  337.6
of the FDIC's regulations (12 CFR 337.6) as any deposit that is obtained,
directly or indirectly, from or through the mediation or assistance of a
deposit broker.2 

1 "Well capitalized'' insured institutions can, in certain circumstances,
avoid a lapse in eligibility for "pass-through'' insurance of employee benefit
plan deposits, should the institution's PCA capital category be reduced to
"adequately capitalized'', by applying to the appropriate FDIC Division of
Supervision Regional Office for an advance waiver solely for the purpose of
continuing "pass-through'' deposit insurance coverage.

2 The FDIC recently amended the capital categories in  337.6 to conform to
the PCA capital category definitions in 12 CFR part 325, subpart B. 58 FR
54932 (Oct. 25, 1993).

The revised  330.12(b) reiterates an additional provision in section 311 of
FDICIA providing that, even if an insured institution cannot accept brokered
deposits, employee benefit plan deposits are eligible for "pass-through''
insurance if, at the time the deposit is accepted: (1) The institution meets
each applicable capital standard; and (2) the depositor receives a written
statement from the institution that such deposits are eligible for insurance
coverage on a "pass-through'' basis. This provision applies only to
"adequately capitalized'' institutions that have not obtained a brokered
deposits waiver from the FDIC and those that have been denied a waiver.

Need for the Proposed Rule

Section 330.12(b) permits but does not require an insured institution to
disclose to existing or prospective depositors its capital levels or its PCA
capital category.3  The FDIC has received numerous comments from various
sources on the difficulty of obtaining public information on an insured
institution's capital levels and on its current PCA capital category. In
response to those comments, the FDIC has indicated that FDIC regulations do
not prohibit state nonmember banks from disclosing, upon request, their
capital levels or PCA capital category to depositors and has encouraged
employee benefit plan sponsors and administrators to obtain capital
information directly from insured depository institutions. 58 FR 29954 (May
25, 1993).

3 For the respective federal banking regulator's PCA regulations, see 12 CFR
parts 308 and 325 (FDIC), 12 CFR parts 208 and 263 (Board of Governors of the
Federal Reserve System), 12 CFR parts 6 and 19 (Office of the Comptroller of
the Currency) and 12 CFR part 565 (Office of Thrift Supervision).

Although, as indicated above, insured institutions generally are not
prohibited from disclosing capital information to existing and prospective
depositors, there is no regulatory requirement that an insured institution
disclose this information.4  There also is no requirement that when an
insured institution's capital category changes (so that new employee benefit
plan deposits are not eligible for "pass-through'' insurance coverage) that it
disclose this fact to existing and prospective employee benefit plan
depositors.

4 Moreover, the FDIC received a number of comments on its proposal to revise
the deposit insurance rules (57 FR 49027, October 29, 1992) indicating that
some employee benefit plan administrators find it necessary to independently
verify the capital status of an insured institution in order to satisfy their
fiduciary obligations.

Currently there are several sources from which an individual can obtain
information about the capital status of an insured institution. Quarterly
Consolidated Reports of Condition and Income (Call Reports) and Thrift
Financial Reports (TFRs) are available, upon request at a nominal charge, from
the FDIC or the institution's primary federal regulator. Uniform Bank
Performance Reports (UBPRs), which compare individual institutions to their
peer groups, and other reports are available from the Federal Financial
Institutions Examination Council. In addition, financial data on banks and
thrifts are available from state and federal banking regulators and private
rating services. Many of these reports provide various ratios used to
determine an institution's capital category; however, they may not be adequate
for determining whether "pass-through'' insurance coverage is available for
deposits placed at an institution.

One problem is that only fairly sophisticated financial managers are likely to
be able to ascertain an institution's capital category from these reports.

      The reports also may not meet the "time of acceptance'' requirement
contained in the law.5  In addition, the reports do not indicate
institutions that have obtained a brokered deposit waiver from the FDIC or
that are adequately capitalized but either have not applied for a brokered
deposit waiver from the FDIC or have been denied such a waiver. Moreover, they
do not indicate whether an institution has an enforcement action or capital
directive outstanding thereby excluding it from the "well capitalized''
capital category.

5 Under the PCA regulations, an institution is deemed to be in a particular
capital category when its Call Report or TFR is due. It remains in that
capital category until the next Call Report or TFR is due unless and until:
(1) The institution receives an intervening report of examination which causes
the institution to be in a different capital category; or (2) a material event
occurs which causes the institution to be in a lower capital category (and it
is confirmed by the institution's primary federal regulator); or (3) the
institution receives a written notice from its primary federal regulator that
it has been reclassified.

Because an institution's capital category is not necessarily held constant for
an entire quarter, due to the potential for intervening material events noted
above, employee benefit plan administrators theoretically will still have to
ascertain the capital category of an institution on a daily basis.

Also, there can be a considerable lapse of time between the day each
institution submits its Call Report or TFR and the date the information
becomes available to the public. Call Reports and TFRs include only the raw
financial data from which a depositor, if sophisticated enough, could
calculate an institution's estimated capital ratios and then, at best, only
estimate its PCA capital category.

The Proposed Rule

The proposed revisions would require that:

1. Upon request (and within two business days after receipt of such request),
an insured depository institution provide written notice to any existing or
prospective depositor of employee benefit plan funds of the institution's
leverage ratio, Tier 1 risked-based capital ratio, total risk-based capital
ratio, PCA capital category and whether or not, in the opinion of the
institution, employee benefit plan deposits made with the institution would be
entitled to "pass-through'' insurance coverage under  330.12 (a) and (b) of
the FDIC's regulations (12 CFR 330.12 (a) and (b)). Under  330.12 (a) and
(b), "pass-through'' insurance shall not be provided if, at the time an
employee benefit plan deposit is accepted, the institution may not accept
brokered deposits pursuant to section 29 of the FDI Act unless, at the time
the deposit is accepted: (1) The institution meets each applicable capital
standard; and (2) the depositor receives a written statement from the
institution indicating that such deposits are eligible for insurance coverage
on a "pass-through'' basis.6 

6 The recordkeeping requirements of  330.4 of the FDIC's regulations also
would have to be satisfied. 12 CFR 330.12(a) & 330.4.

2. Upon the opening of any account comprised of employee benefit plan funds,
an insured depository institution provide written notice to the depositor of
the institution's PCA capital category and whether or not such deposits are
eligible for "pass-through'' insurance coverage;

3. Within two business days after an insured depository institution's PCA
capital category changes from "well capitalized'' to "adequately
capitalized'', the institution provide written notice to all depositors of
employee benefit plan funds of the institution's PCA capital category and
whether or not new, rolled-over or renewed employee benefit plan deposits
would be eligible for "pass-through'' insurance coverage under  330.12 (a)
and (b); and

4. Within two business days after an insured depository institution's PCA
capital category changes to a category below "adequately capitalized'', the
institution provide written notice to all depositors of employee benefit plan
funds indicating that new, rolled-over or renewed deposits of employee benefit
plan funds made on or after the date the institution's PCA capital category
changed to a category below adequately capitalized will not be eligible for
"pass-through'' insurance coverage.

An institution's capital levels and PCA capital category are based on the
capital and PCA regulations issued by the institution's primary federal
regulator.7 

7 See footnote 3, above, for the applicable CFR citations.

      The proposed rule is aimed at requiring the applicable disclosures at
the most critical times when an employee benefit plan depositor needs to know
whether "pass-through'' insurance is available: When opening an account and
when new, rolled-over or renewed employee benefit plan deposits are no longer
eligible for "pass-through'' coverage. Thus, an insured depository institution
would be required to disclose its PCA capital category and whether employee
benefit plan deposits would be eligible for "pass-through'' deposit insurance
coverage at the time an employee benefit account is opened and within two
business days after its PCA capital category changes from "well capitalized''
to "adequately capitalized''.

In addition, an institution would have to notify all employee benefit
depositors within two business days after its PCA capital category changes to
a category below "adequately capitalized'' and to inform the depositors that
new, rolled-over or renewed employee benefit plan deposits would not be
insured on a "pass-through'' basis, unless and until the institution's PCA
capital category improved and the other applicable requirements were
satisfied.

The proposed rule also would require an insured depository institution to
provide to all existing and prospective employee benefit plan depositors, upon
request, the institution's capital levels, PCA capital category and whether
employee benefit plan deposits would be eligible for "pass-through'' insurance
coverage. Inasmuch as it requires disclosure of an institution's capital
levels, this provision goes beyond the other disclosure requirements of the
proposed rule. The FDIC believes such information should be made available to
provide existing and prospective employee benefit plan depositors with
meaningful, objective information on an institution's capital condition. The
capital ratios disclosed to a depositor should be the most recent information
available, but need not be as of the date of the deposit. Obtaining this
additional information could prove beneficial in determining whether to
establish or continue a deposit relationship with the institution. As noted
above, sufficient current financial information on an institution's capital
levels may otherwise not be available.

The proposed rule would require notification to existing employee benefit plan
depositors of a reduction in an institution's PCA capital category within two
business days of such reduction.8  Because a reduction in a depository
institution's PCA capital category may mean that new, rolled-over or renewed
employee benefit plan deposits might not be eligible for "pass-through''
insurance coverage, the FDIC believes this relatively short two-day time frame
is necessary and appropriate. Adopting a longer time frame may increase an
employee benefit plan depositor's uninsured exposure. This is an issue on
which the FDIC specifically requests comment, particularly as to the
feasibility of compliance and other alternatives. The FDIC also expressly
solicits comment on whether the proposed disclosures should be required when
an institution's capital category has changed from "well capitalized'' to
"adequately capitalized'' but the institution has obtained a brokered deposits
waiver and, thus, there would be no change in the eligibility of employee
benefit plan deposits for "pass-through'' coverage.

8 See footnote 5, above, on how an institutions's PCA capital category may
change.

Assuming such notice is required, specific comment is also requested on
whether the final rule should include a specific notice that institutions
would have to provide employee benefit plan depositors when an institution's
PCA category changes from "well capitalized'' to "adequately capitalized''.
One type of notice could read:

On [date] [name of institution]'s Prompt Corrective Action (PCA) capital
category changed from "Well Capitalized'' to "Adequately Capitalized''.
[Because of] [or] [Despite] this change in [name of institution]'s PCA capital
category, any employee benefit plan deposits placed, rolled-over or renewed
with [name of institution] after [date] will [NOT] [or] [continue to] be
eligible for "pass-through'' deposit insurance coverage under  330.12 of the
FDIC's regulations. [This unavailability of "pass-through'' insurance coverage
will continue until the institution's PCA capital category improves and the
other applicable requirements are satisfied.]

      A sample disclosure also could be required if an institution's PCA
capital category changed to a level below "adequately capitalized''. It could
read as follows:

On [date] [name of institution]'s Prompt Corrective Action (PCA) capital
category changed from [previous PCA category] to [current PCA capital
category]. Because of this change in [name of institution]'s PCA capital
category, any employee benefit plan deposits placed, rolled-over or renewed
with [name of institution] after [date] will NOT be eligible for
"pass-through'' deposit insurance coverage under  330.12 of the FDIC's
regulations. This unavailability of "pass- through'' insurance coverage will
continue until the institution's PCA capital category improves and the other
applicable requirements are satisfied.

The FDIC also specifically requests comment on the form of disclosure; for
example: Whether the required disclosures should have to be in a separate
mailing; whether a written acknowledgement from the intended recipient of the
disclosure should be required; whether the disclosure should be required to be
prominent and conspicuous (for example, requiring bold type); whether the
disclosure should be part of the deposit agreement; whether other related
information may be disclosed; and on any other aspects of the notification
requirements.

The proposed rule would dramatically increase the chance that prospective and
existing employee benefit plan depositors are provided with the information
necessary to make an informed decision about where to place their funds. The
proposed rule, however, would not bind the FDIC, in its deposit insurance
determinations, to the information provided by the insured institution to
depositors on the eligibility of employee benefit plan deposits for
"pass-through'' insurance coverage. The FDIC is not responsible for a
depository institution's failure to provide the required notices to depositors
or for erroneous information provided by insured institutions, intentionally
or otherwise.

If the proposed rule is adopted, however, it is intended that compliance be
monitored by the institution's primary federal regulator during the course of
examinations. Violations of the regulatory requirements would be subject to
the full array of enforcement sanctions (including the imposition of civil
money penalties) contained in section 8 of the FDI Act, 12 U.S.C. 1818. In
this connection, the FDIC requests specific comment on whether a free-standing
enforcement and/or penalty provision should be included in  330.12 as part of
the proposed rule.

Minimal Regulatory Burden

It is the FDIC's overall intention to balance the undesirability of imposing
regulatory requirements on insured institutions with the importance of
providing timely notice to existing and prospective employee benefit plan
depositors of the extent of "pass-through'' insurance coverage on their
deposits. Only institutions that accept employee benefit plan deposits would
be subject to the proposed rule. Moreover, based on the most recent Call
Report and TFR information (as of June 30, 1993), only 370 insured
institutions reported data indicating a PCA capital category of "adequately
capitalized''. This represents approximately 2.7 percent of the 13,006 insured
institutions reporting. In addition, more than 96 percent of all FDIC-insured
institutions were "well capitalized'' and, thus, employee benefit plan
deposits placed with these institutions would be eligible for "pass-through''
insurance.

The FDIC does not believe that it would be burdensome for an affected insured
institution to disclose its PCA capital category because under existing rules
an institution must know its individual PCA capital category in order to
determine whether it is subject to certain statutorily mandated restrictions.
Moreover, this information would greatly assist small, unsophisticated
employee benefit plan depositors in making informed decisions about where to
place their funds.

      In addition, for purposes of the proposed rule, generally, the FDIC
would deem an employee benefit plan depositor and a prospective employee
benefit plan depositor to be the administrator or manager of the plan assets.
The required information and notices, therefore, would have to be provided to
such person, not to each participant in the plan.

The FDIC has consulted with the other federal regulators on the proposed rule
and intends to continue to work with the other regulators to assure, among
other things, consistent and minimally burdensome implementation of the final
rule, if adopted.

Technical Amendments to Part 330 Unrelated to the Proposed Amendments to 
330.12

The FDIC also is proposing two technical amendments to its insurance
regulations that are unrelated to the proposed amendments to  330.12. The
first would clarify the meaning of  330.7(c) of the FDIC's regulations (12
CFR 330.7(c)) concerning joint accounts. That provision specifies the
requirements an account must meet to qualify for separate insurance coverage
as a joint account. Section 330.7(c) exempts certain types of accounts,
including certificates of deposit, from the general requirement that each
co-owner sign a signature card, but the regulation states that "all such
deposit accounts must, in fact, be jointly owned''. Some courts, contrary to
the FDIC's longstanding interpretation, have interpreted the quoted language
to require the FDIC to consider state law and evidence outside of the deposit
account records of the insured institution to contradict otherwise unambiguous
deposit account records, in connection with claims that what appear to be
joint accounts are in fact individually owned accounts.

The proposed amendment would clarify that an account holder seeking to prove
that what appears to be a joint account is actually an account held in a right
and capacity other than joint ownership (for example, as an individual
account) must satisfy the requirements of  330.4(a) of the FDIC's regulations
(12 CFR 330.4(a)) on the recognition of deposit ownership. Section 330.4(a)
provides, in part, that, if the FDIC determines that the deposit account
records of an insured depository institution are clear and unambiguous, no
other records shall be considered as to the manner in which those funds are
owned. Section 330.5(a) of the FDIC's regulations (12 CFR 330.5(a)) already
explicitly addresses the situation where more than one natural person has the
right to withdraw funds from an account. The proposed amendment applies to
situations involving deposits which appear to be jointly owned but are claimed
to be held in other rights and capacities.

      Section 330.6(a) of the FDIC's regulations (Id. at 330.6(a)), which
addresses the insurance coverage of agency or fiduciary type accounts,
currently indicates that funds deposited by an insured depository institution
acting in a fiduciary capacity are governed by  330.10 of the insurance
regulations. The second technical revision is a proposed amendment to 
330.6(a) to clarify that, starting December 19, 1993,  330.10 will govern
only when an insured depository institution is acting as a trustee of an
irrevocable trust. As noted above, in May 1993 the FDIC amended  330.10,
along with several other sections of the insurance regulations, to implement
revisions to the insurance rules made by section 311 of FDICIA (58 FR 29952
(May 25, 1993)). One of those required revisions limits, effective December
19, 1993, the separate insurance (provided for in  330.10) applicable to
accounts held by insured depository institutions in fiduciary capacities. The
proposed technical amendment would simply cross-reference in  330.6(a) the
revision already made to  330.10.

Request for Public Comment

The Board hereby requests comment on all aspects of the proposed rule,
particularly those specifically mentioned above. The Board also solicits
comment on whether the capital levels and PCA capital category of an
institution should be made a general disclosure requirement in, for example,
Call Reports. In this way, existing and prospective employee benefit plan
depositors and other interested parties would be able to obtain an official,
publicly available financial statement on the institution which clearly
indicates this vital information. As noted above, this information is not
currently available in any public document. Interested persons are invited to
submit written comment during a 60-day comment period.

Paperwork Reduction Act

The proposed rule is intended to reduce uncertainty about whether employee
benefit plan deposits are eligible for "pass-through'' insurance coverage and
to require depository institutions to provide timely disclosure to employee
benefit plan depositors when "pass-through'' deposit insurance coverage is no
longer available. No collections of information pursuant to the Paperwork
Reduction Act are contained in the proposed rule. Consequently, no information
has been submitted to the Office of Management and Budget for review.

Regulatory Flexibility Act

The proposed rule would not have a significant impact on a substantial number
of small businesses within the meaning of the Regulatory Flexibility Act (5
U.S.C. 601 et seq). Accordingly, the Act's requirements relating to an initial
and final regulatory flexibility analysis are not applicable.

List of Subjects in 12 CFR Part 330

Bank deposit insurance, Banks, banking, Savings and loan associations, Trusts
and trustees.

The Board of Directors of the Federal Deposit Insurance Corporation hereby
proposes to amend part 330 of title 12 of the Code of Federal Regulations as
follows:

PART 330 DEPOSIT INSURANCE COVERAGE

1. The authority citation for Part 330 continues to read as follows:

Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818(q), 1819(Tenth), 1820(f),
1821(a), 1822(c).

2. Section 330.6 is amended by revising the last sentence of paragraph (a) to
read as follows:

 330.6 Accounts held by an agent, nominee, guardian, custodian or
conservator.

(a) * * * When such funds are deposited by an insured depository institution
acting as a trustee of an irrevocable trust, the insurance coverage shall be
governed by the provisions of  330.10 of this part.

                                  * * * * *

3. Section 330.7 is amended by revising paragraph (c) to read as follows:

 330.7 Joint ownership accounts.

                                  * * * * *

(c) Qualifying joint accounts. (1) A joint deposit account shall be deemed to
be a qualifying joint account, for purposes of this section, only if:

(i) All co-owners of the funds in the account are natural persons; and

(ii) Each co-owner has personally signed a deposit account signature card; and

(iii) Each co-owner possesses withdrawal rights on the same basis.

(2) The requirement of paragraph (c)(1)(ii) of this section shall not apply to
certificates of deposit, to any deposit obligation evidenced by a negotiable
instrument, or to any account maintained by an agent, nominee, guardian,
custodian or conservator on behalf of two or more persons.

(3) All deposit accounts that satisfy the criteria in paragraph (c)(1) of this
section (including those that come within the exception provided for in
paragraph (c)(2) of this section) shall be presumed to be jointly owned
unless, in accordance with the provisions of  330.4(a) of this part, the
deposit account records of the insured depository institution clearly
indicate, to the satisfaction of the FDIC, that the account is owned in some
other right or capacity. The signatures of two or more persons on the deposit
account signature card or the names of two or more persons on a certificate of
deposit or other deposit instrument shall be conclusive evidence that the
account is a joint account unless the signature card, the certificate of
deposit or other deposit instrument clearly states, to the satisfaction of the
FDIC, that there is a contrary ownership capacity.

                                  * * * * *

4. Section 330.12 is amended by adding a new paragraph (h) to read as follows:

 330.12 Retirement and other employee benefit plan accounts.

                                  * * * * *

      (h) Disclosure of capital status. (1) Disclosure upon request. An
insured depository institution shall, upon request, provide written notice to
any existing or prospective depositor of employee benefit plan funds of the
institution's leverage ratio, Tier 1 risk-based capital ratio, total
risk-based capital ratio and prompt corrective action (PCA) capital category,
all as defined in the regulations of the institution's primary federal
regulator, and whether or not employee benefit plan deposits made with the
institution would be eligible for "pass-through'' insurance coverage under
paragraphs (a) and (b) of this section. Such notice shall be provided to the
depositor within two business days after receipt of the request for
disclosure.

(2) Disclosure upon opening of account. An insured depository institution
shall, upon the opening of any account comprised of employee benefit plan
funds, provide written notice to the depositor of the institution's PCA
capital category and whether or not such deposits are eligible for
"pass-through'' insurance coverage.

(3) Disclosure by adequately capitalized institutions. Whenever an insured
depository institution receives notice or is deemed to have notice (under the
PCA regulations issued by the institution's appropriate federal banking
agency, as defined in section 3(q) of the Act (12 U.S.C. 1813(q)) that its PCA
capital category has been reduced from "Well Capitalized'' to "Adequately
Capitalized'', the institution shall provide written notice to all depositors
of employee benefit plan funds of the institution's new PCA capital category
and whether or not new, rolled-over or renewed employee benefit plan deposits
would be eligible for "pass-through'' insurance coverage under paragraphs (a)
and (b) of this section. Such notice shall be provided within two business
days after the institution receives notice or is deemed to have notice of such
a reduction in its PCA capital category.

(4) Disclosure by undercapitalized institutions. Whenever an insured
depository institution receives notice or is deemed to have notice (under the
PCA regulations issued by the institution's appropriate federal banking
agency, as defined in section 3(q) of the Act (12 U.S.C. 1813(q)) that its PCA
capital category has been reduced from either "Well Capitalized'' or
"Adequately Capitalized'' to a category below "Adequately Capitalized'', it
shall provide written notice to all existing depositors of employee benefit
plan funds of its new PCA capital category and that new, rolled-over or
renewed deposits of employee benefit plan funds made on or after the date the
institution's capital category was reduced to a category below adequately
capitalized would not be eligible for "pass-through'' insurance coverage. Such
written notice shall be provided within two business days after the
institution receives notice or is deemed to have notice of such a reduction in
its PCA capital category.

(5) Definition of "employee benefit plan''. For purposes of this paragraph,
the term employee benefit plan has the same meaning as provided under
paragraph (g)(1) of this section but also includes any eligible deferred
compensation plans described in section 457 of the Internal Revenue Code of
1986.

By order of the Board of Directors.

Dated at Washington, DC, this 30th day of November, 1993.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Deputy Executive Secretary.

[FR Doc. 9329877 Filed 12793; 8:45 am]

BILLING CODE 671401P
