3170-0062 Reg I Supporting Statement 30day OMB

30-day Federal Register Notice Version

BUREAU OF CONSUMER FINANCIAL PROTECTION
PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST
SUPPORTING STATEMENT PART A
REGULATION I: DISCLOSURE REQUIREMENTS FOR DEPOSITORY
INSTITUTIONS LACKING FEDERAL DEPOSIT INSURANCE (12 CFR 1009)
(OMB CONTROL NUMBER: 3170-0062)

OMB TERMS OF CLEARANCE: Not applicable. The Office of Management and Budget
(OMB) provided no terms of clearance when it last approved the information collections
contained in 12 CFR 1009 and assigned OMB control number 3170-0062. See OMB Notice of
action dated August 2, 2016.
ABSTRACT: This Rule applies to all depository institutions lacking Federal deposit insurance.
It requires the disclosure of certain insurance-related information in periodic statements, account
records, locations where deposits are normally received, and advertising. This part also requires
such depository institutions to obtain a written acknowledgment from depositors regarding the
institution’s lack of Federal deposit insurance.
JUSTIFICATION
Circumstances Necessitating the Data Collection:
Section 43(b)-(f) of the Federal Deposit Insurance Act (FDIA) of 1950 (Pub.L. 81–797), requires
that depository institutions lacking Federal deposit insurance make certain insurance-related
disclosures in periodic statements, account records, locations where deposits are normally
received, and advertising. The FDIA also requires such depository institutions to obtain a
written acknowledgment from depositors regarding the institution’s lack of Federal deposit
insurance. Prior to July 21, 2011, the FDIA required that the Federal Trade Commission
(Commission), by regulation or order, prescribe the manner and content of these disclosures. The
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Public Law
111-203, amended a number of consumer financial protection laws, including the FDIA. In
addition to various substantive amendments, the Dodd-Frank Act transferred rulemaking
authority for implementing the disclosure requirements for depository institutions lacking
Federal deposit insurance, as described above, to the Bureau, effective July 21, 2011. These
requirements are implemented by the Bureau’s Regulation I, codified at 12 CFR 1009.
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Section 1009.3 requires any depository institution (defined as any bank or savings association, as
defined by 12 U.S.C. section 1813, or any credit union organized and operated according to the
laws of any state, the District of Columbia, the several territories and possessions of the United
States, the Panama Canal Zone, or the Commonwealth of Puerto Rico, which laws provide for
the organization of credit unions similar in principle and objectives to Federal credit unions) that
lacks Federal deposit insurance to disclose that the institution is not Federally insured, and that if
the institution fails, the Federal government does not guarantee that depositors will get back their
money, in all periodic statements of account, on each signature card, and on each passbook,
certificate of deposit, or share certificate.
Section 1009.4 requires any depository institution that lacks Federal deposit insurance to disclose
its lack of insurance to customers in the following locations:
(1) At each station or window where deposits are normally received, its principal place of
business and all its branches where it accepts deposits or opens accounts (excluding automated
teller machines or point of sale terminals), and on its main internet page; and
(2) In all advertisements.
In addition, section 1009.5 requires the institution to obtain from all depositors (except as
described below) a signed document acknowledging:
(1) The institution is not federally insured; and
(2) If the institution fails, the Federal Government does not guarantee that the depositor will
get back the depositor’s money.
For new depositors obtained as a result of a conversion or merger and for depositors who were
depositors before October 13, 2006, section 1009.5 provides that the institution may either:
(1) Obtain a signed document as described above; or
(2) Send to the depositor a conspicuous card stating that the institution is not federally
insured and if the institution fails the Federal Government does not guarantee that the depositor
will get back the depositor’s money, including a line for the signature of the depositor, and
including accompanying materials requesting that the depositor sign the card and return the
signed card to the institution.
2. Use of the Information:
The information required to be disclosed by this regulation is used by consumers to make
informed decisions about where to deposit their money and the risks they may incur by
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depositing money with institutions lacking Federal deposit insurance. The signed
acknowledgement requirement further serves to ensure that consumers are aware of the risks
they may incur by depositing money with institutions lacking Federal deposit insurance and are
able to make informed decisions about where to deposit their money, and in addition allows
institutions to show they have made the required disclosures to consumers and that consumers
are on notice regarding the lack of Federal deposit insurance.
3. Use of Information Technology:
The regulation requires that the covered institution make the required disclosures on its main
internet page as well as in all advertising in whatever format. Certain of the required disclosures
may be provided in electronic form, subject to compliance with the consumer consent and other
applicable provisions of the Electronic Signatures in Global and National Commerce Act (ESIGN Act). Pub.L. 106–229.
4. Efforts to Identify Duplication:
This requirement is unique to the requirements of Regulation I. Therefore, the request does not
duplicate an existing collection of information contained in any regulatory or statutory
requirement administered by the Bureau.
5. Efforts to Minimize Burdens on Small Entities:
This requirement imposes the minimum burden necessary to implement Regulation I, and the
Bureau believes the requirements impose only a minor burden, if any, on all covered institutions,
including small entities.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
The Bureau does not collect any information from the covered entities, and to the extent the rule
requires the covered entities to collect a signed acknowledgement from their customers, the rule
requires the information be collected only once from each new or existing customer of the
institution.
7. Circumstances Requiring Special Information Collection
There are no special circumstances. The collection of information is conducted in a manner
consistent with the guidelines in 5 CFR 1320.5(d)(2).
8. Consultation Outside the Agency
In accordance with 5 CFR 1320.8(d)(1), the Bureau published a notice in the Federal Register
allowing the public 60 days to comment on this collection of information, and received no
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comments. Further, and in accordance with 5 CFR 1320.5(a)(1)(iv), the Bureau also published a
notice in the Federal Register allowing the public 30 days to comment on the submission of this
information collection request to OMB.
9. Payments or Gifts to Respondents
Not applicable. The information collection does not provide for making payments or gifts to
respondents.
10. Assurances of Confidentiality
Because this collection of information does not involve the collection of information from or
about individuals, the Privacy Act of 1974, as amended, 5 U.S.C. section 552a, is not implicated.
Therefore, no privacy impact assessment has been conducted nor has the Bureau published a
Systems of Records Notice relative to this collection of information.
11. Justification for Sensitive Questions
Not applicable. The collection of information does not impact individuals and does not
collect information that would be considered private.
12. Estimated Burden of Information Collection
The vast majority of depository institutions are insured by the Federal Deposit Insurance
Corporation (FDIC) or the National Credit Union Share Insurance Fund (NCUSIF). We estimate
that there are 167 depository institutions potentially subject to Regulation I, and thus required to
provide the above noted disclosures in their advertising and obtain written acknowledgement of
the institution’s lack of federal insurance for their accounts. The Bureau also estimates that
approximately one depository institution will convert from federal insurance to non-federal
insurance per year, and will incur one-time costs to provide disclosures on their premises,
account statements, and other documents specified above. This depository institution will also
incur a one-time cost to attempt to receive written acknowledgement from its current
accountholders.
The Bureau generally shares burden with other federal regulators who have enforcement
authority over the same entities. Very few entities are required to comply with the disclosure
requirements of Regulation I. Thus, for convenience, the Bureau allocates to itself all burden
associated with Regulation I. 1 This burden is as follows:
See 12 CFR 1009.7 (“Compliance with the requirements of this part shall be enforced under the Consumer
Financial Protection Act of 2010, Public Law 111-203, title X, 124 Stat. 1955, by the Bureau of Consumer Financial
Protection, subject to subtitle B of the Consumer Financial Protection Act of 2010, and under the Federal Trade
Commission Act, 15 U.S.C. 41 et seq, by the Federal Trade Commission.”). In a recent report on private deposit
insurance, the GAO noted, “CFPB and the Federal Trade Commission (FTC) are the federal entities responsible for
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Information Collection
Requirement
Costs of Operating
Advertising Disclosures
Obtaining & Maintaining a
signed acknowledgement
Consumer reviewing and
signing
acknowledgement
Costs of Federal to NonFederal Conversion
Posting of Disclosures on
the Premises
Formatting Account
Statement and other
Document Disclosures
Mailing Attempt to Obtain
Member
Acknowledgement
Consumer reviewing and
signing
acknowledgement
Total

No. of
Respondents

Annual
Frequency

Annual
Responses

Average
Response
Time (hrs.)

Annual
Burden
Hours

Hourly
Rate 2

Annual
Labor
Costs 3

167 4

0.3 5

50

1.00

50

$34.86

$1,700

167

300 6

50,100

0.04

2,000

$34.86

$70,000

167

300

50,100

0.04

2,000

n/a

n/a

12

1

12

8.00

96

$34.86

$3,300

12

1

12

8.00

96

$34.86

$3,300

12

1

12

8.00

96

$34.86

$3,300

1

6779 7

6,779

0.04

271

n/a

n/a

167

107,066

4,609

$81.600

13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
There should be minimal annualized costs to keep the required acknowledgement forms on file
and insert the necessary language into all advertisements. Covered entities will incur a small
material cost to obtain the written disclosures. Depository institutions who convert from federal
insurance to non-federal insurance will incur costs to mail disclosures with return postage for
acknowledgements. It is the Bureau’s understanding that the only private insurer of depository
institutions provides disclosure signage for its customers. Therefore, there will be minimal costs
to depository institutions who convert to private insurance to develop and display disclosures on
their premises. If an institution instead converts to another form of insurance, such as state
enforcing these requirements” (Private Deposit Insurance: Credit Unions Largely Complied with Disclosure Rules,
but Rules Should Be Clarified, GAO-17-259, page 6, available at https://www.gao.gov/products/GAO-17-259).
2
Bureau of Labor Statistics May 2018 Occupational Employment and Wage Estimates
http://www.bls.gov/oes/current/oes_nat.htm#13-0000 mean hourly wage for Compliance Officers (13-1041)
3
Labor costs are rounded to the nearest hundred dollars (if less than $10,000) and nearest thousand dollars (if
greater than $10,000).
4
The number of respondents is calculated at end of year 2018 using bank and credit union call report data.
5
Represents the average annual number of advertising campaigns at non-federally insured depository institutions.
6
Represents the average annual member growth of non-federally insured depository institutions.
7
Represents the average number of accountholders at depository institutions that have converted from federal to
private insurance over the last three years.
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insurance, that institution would incur minimal costs to display disclosures on its premises.
Accordingly, the Bureau estimates the burden as follows:
Description of Costs
Costs of Operating
Material Cost of Written Disclosure
Costs of Federal to Non-Federal
Conversion
Material and Postage Cost of
Acknowledgement Mailing
Total

No. of
Respondents

Annual
Frequency

Annual
Responses

Unit Cost

Annual
Burden

167

300

50,100

$0.01

$501

12

1

12

$3,390

$40,680

167

50,112

$41,181

14. Estimated Cost to the Federal Government
The Bureau does not incur any new or unique costs as a result of this information collection.
15. Program Changes or Adjustments
Total Annual Burden
Requested
Current OMB
Inventory
Difference (+/-)
Program Change
Discretionary
New Statute
Violation
Adjustment

Total
Respondents

Annual
Responses

Burden Hours

Cost Burden (O & M)

167

107,066

4.609

41,181

136

87,430

3,652

4,212

31

19,636

957

36,969

31

19,636

957

36,969

An overall increase in the number of respondents, due jointly to new uninsured institutions
joining the market as well as institutions converting from federal to non-federal insurance,
accounts for the adjustments seen above. No programmatic changes occurred with this
information collection.
16. Plans for Tabulation, Statistical Analysis, and Publication
Not applicable. The information will not be published.
17. Display of Expiration Date
There are currently no forms or other instruments associated with this information collection on
which to display the OMB-assigned expiration date. The OMB number and expiration date will
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be displayed on the Federal government’s electronic PRA docket at www.reginfo.gov.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements of 5
CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an exemption
to these certification requirements.
PART B – COLLECTIONS OF INFORMATION USING STATISTICAL METHODS
Not applicable. The information collections contained in 12 CFR 1009 do not involve the use of
statistical methods.
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