FDICIA 6(b) SS FIN_mtd

Supporting Statement for a Paperwork Reduction Act
Submission to OMB
Proposed Data Collection on FDICIA Compliance
(OMB Control No. 3084-NEW)
1. & 2. Necessity for Information Collection and How the Data Will Be Used
In 1991, Congress enacted section 43 of FDICIA (12 U.S.C. 1831t) in response to
incidents affecting the safety of deposits in certain financial institutions.1 The law imposes
several requirements on non-federally insured institutions. Among other things, it mandates,
under 12 U.S.C. 1831t(b), that depository institutions lacking federal deposit insurance disclose
to consumers, in periodic statements, signature cards, passbooks, certificate of deposit, and
advertising that the institution does not have federal deposit insurance and that, if the institution
fails, the federal government does not guarantee that depositors will get their money back.
Pursuant to 12 U.S.C. 1831t(f), the Commission has authority to enforce the disclosure
requirements under the FTC Act (15 U.S.C. 41 et seq.).
Until 2003, the Commission’s appropriations authority prohibited the use of FTC
resources to enforce those requirements.2 In 2005, the Commission sought public comment on
proposed rules implementing the statutory disclosure requirements.3 In 2006, before the
Commission issued a final rule, Congress passed substantial amendments to the existing
requirements as part of the Financial Services Regulatory Relief Act of 2006 (FSRRA) (Pub. L.
109-351). The Commission thus sought public comment on proposed regulations that would be
consistent with the FSRRA amendments,4 and is currently in the process of developing those
regulations. Institutions lacking federal deposit insurance, however, must comply with these
statutory provisions regardless of the status of FTC's regulations in this area.
Under existing law, all federally chartered and most state chartered depository
institutions have federal deposit insurance. Federal deposit insurance provides a government
guarantee of up to $250,000 per depositor in most cases. Pursuant to Federal Deposit Insurance
Corporation and National Credit Union Administration requirements, federally insured banks
and credit unions must display signs that depositors are federally insured.5 Although most
depository institutions have federal deposit insurance, there are some exceptions. For instance,
there are more than a hundred and fifty state-chartered credit unions in nine states that do not

1

See Pub. L. No. 102-242, 105 Stat. 2236.

2

Making Appropriations for Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies, for the Fiscal Year Ending September 30, 2004, and for Other Purposes, H.R.
Conf. Rep. No. 108-401, 108th Cong., 1st Sess., at 88 (2003).

3

See 70 FR 12823 (Mar. 16, 2005).

4

See 74 FR 18043 (Mar. 13, 2009).

5

See 12 CFR Parts 328 and 740.

have federal deposit insurance.6 The credit unions in these states generally obtain private deposit
insurance in lieu of federal insurance to protect members’ accounts.
The FTC has the authority to compel production of data and information from depository
institutions lacking federal deposit insurance under Section 6(b) of the FTC Act, 15 U.S.C.
§ 46(b). The Commission intends to send these Orders to all such institutions known to it in
states that allow non-federally insured institutions.7 The responses will help the Commission
determine whether covered entities are complying with the disclosure requirements in 12 U.S.C.
§ 1831t(b).
3.

Information Technology

Consistent with the aims of the Government Paperwork Elimination Act, 44 U.S.C. 3504
note, the proposed collection will allow institutions to submit their responses in electronic format.
4.

Efforts to Identify Duplication/Availability of Similar Information

Though state agencies may review compliance with these disclosure requirements in their
financial reviews of these institutions, it is unlikely that they also collect the underlying
information. Accordingly, the FTC proposes to do so in order to ensure that institutions are
complying with existing requirements.
5.

Efforts to Minimize Small Organization Burden

The Orders will minimize the amount of information institutions will have to provide (e.g.,
limiting the applicable time period for advertisements to three months) but, at the same time,
ensure that the FTC will have the information necessary to determine whether each Order recipient
is complying with the law.
6.

Consequences to Federal Program and Policy Activities/Obstacles to Reducing
Burden

If this information is not collected, the FTC will lack information to ensure that institutions

6

According to the U.S. Government Accountability Office, in 2003, eight states had credit unions
that purchase private deposit insurance instead of federal insurance. Since that time, at least one
additional state has allowed credit unions to use private deposit insurance. Other states either
require federal insurance or allow private insurance but do not have any privately insured credit
unions. “Federal Deposit Insurance Act: FTC Best Among Candidates to Enforce Consumer
Protection Provisions,” GAO-03-971 (Aug. 2003), at 7. Puerto Rican credit unions operate under
a Puerto Rican government-backed deposit insurance system.
7

State-chartered credit unions lacking federal deposit insurance will likely be the recipients. The
FTC also may seek information from some institutions covered by the Puerto Rican government
deposit insurance system.

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are complying with FDICIA’s requirements. Collecting the information though on-site inspections
at the institution may reduce slightly the burden of producing the required information, but would
add other burdens associated with an on-site visit (e.g., officers meeting with FTC personnel) and
increase substantially the cost to the Government.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

The proposed collection of information is consistent with all applicable guidelines
contained in 5 C.F.R. § 1320.5(d)(2).
8.

Public Comments/Consultation Outside the Agency

In determining the information to collect, the Commission published a notice seeking
comments. See 74 Fed. Reg. 33442 (July 13, 2009). No comments were received. Pursuant to
OMB regulations, 5 CFR Part 1320, that implement the PRA, the Commission is providing a
second opportunity for public comment.
9.

Payments or Gifts to Respondents

Not applicable.
10. & 11.

Assurances of Confidentiality/Matters of a Sensitive Nature

The Orders will not seek any information about the identity of individual consumers.
Moreover, all documents and information provided in response to compulsory process, including
through special orders authorized by Section 6(b) of the FTC Act, are exempt from public
disclosure under Section 21(f) of the Federal Trade Commission Act, 15 U.S.C. § 57b-2(f), and
Exemption 3 of the Freedom of Information Act, 5 U.S.C. § 552(b)(3). In addition, to the extent
applicable, section 6(f) of the FTC Act, 15 U.S.C. 46(f), bars the Commission from publicly
disclosing trade secrets or confidential commercial or financial information it receives from
persons pursuant to, among other methods, special orders authorized by Section 6(b) of the FTC
Act. Such information also would be exempt from disclosure under Exemption (4) of the Freedom
of Information Act, 5 U.S.C. 552(b)(4). Finally, under Section 21(c) of the FTC Act, 15 U.S.C.
57b-2(c), a person who designates a submission as confidential is entitled to 10 days’ advance
notice of any anticipated public disclosure by the Commission, assuming that the Commission has
determined that the information does not, in fact, constitute 6(f) material. Although materials
covered under one or more of these various sections are protected by stringent confidentiality
constraints, the FTC Act and the Commission's rules authorize disclosure in limited circumstances
(e.g., official requests by Congress, requests from other agencies for law enforcement purposes,
and administrative or judicial proceedings). Even in those limited contexts, however, the
Commission's rules may afford protections to the submitter, such as advance notice to seek a
protective order in litigation. See 15 U.S.C. 57b-2; 16 CFR 4.9-4.11.
12.

Estimated Annual Hours Burden and Associated Labor Cost

Based upon its knowledge of the industry, FTC staff estimates that, on average, the time
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required to gather, organize, format, and produce the information sought will average 8 hours per
response. Thus, assuming up to 200 recipients of the information Orders, the total burden would
be approximately 1,600 hours.
It is difficult to calculate with precision the labor costs associated with this data production,
as they entail varying compensation levels of management and/or support staff among companies
of different sizes. Managerial, legal, and clerical personnel may be involved in the information
collection process. The FTC staff has assumed, conservatively, that managerial personnel and
legal counsel will handle all of the tasks involved in gathering and producing responsive
information, and has applied an average hourly wage of managerial time of $58.12 (4 hours per
entity) and an average hourly wage of legal staff time of $40.87 (4 hours per entity).8 Thus,
cumulatively, estimated labor costs for collecting and providing the information will be $79,192
(($58.12 x 800 hours) + ($40.87 x 800 hours)). The actual cost may be lower to the extent clerical
personnel handle some of the tasks.
13.

Annual Capital or Other Non-labor Costs

Staff anticipates that industry members maintain most, if not all, of the material sought in
the orders in the normal course of business because they must disclose the information to
customers under existing law. Moreover, to the extent that information sought is not generated in
the normal course of business, any associated non-labor cost should be de minimis.
14.

Estimate of Cost to Federal Government

The total cost to the Federal Government for the information collection will be
approximately $5,000. This estimate includes the costs incurred by agency personnel in processing
the orders and reviewing responses. The cost of FTC staff time is necessarily an estimate because
several components to this calculation may vary, including the number of staff involved and the
actual amount of time required. Clerical and other support services and costs of conducting the
study are included in this estimate.
15.

Program Changes or Adjustments

This is a one-time collection; the incremental PRA burden attributable to it, as noted above,
is an estimated 1,600 hours.
16.

Plans for Tabulation and Publication

Because this information will involve questions of law enforcement, the FTC does not plan

8

Hourly wages are averages based on mean hourly wages shown in
http://www.bls.gov/oes/2008/may/naics4_551100.htm#b11-0000 (May 2008 “National
Industry-Specific Occupational Employment and Wage Estimates”) for sales and marketing
managers and legal occupations (lawyers, paralegals, and other legal support), respectively.

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to publish this material.
17.

Display of Expiration Date for OMB Approval

Not applicable.
18.

Exceptions to Certification

Not applicable.

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