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Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Rules and Regulations
By order of the Board of Governors of the
Federal Reserve System, October 31, 2007.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E7–21700 Filed 11–8–07; 8:45 am]
BILLING CODE 6210–01–P

FEDERAL RESERVE SYSTEM
12 CFR Part 230
[Regulation DD; Docket No. R–1285]

Truth in Savings
Board of Governors of the
Federal Reserve System.
ACTION: Final rule; official staff
interpretation.

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AGENCY:

SUMMARY: The Board is amending
Regulation DD, which implements the
Truth in Savings Act, and the official
staff commentary to the regulation, to
withdraw portions of the interim final
rules for the electronic delivery of
disclosures issued March 30, 2001. The
interim final rules addressed the timing
and delivery of electronic disclosures,
consistent with the requirements of the
Electronic Signatures in Global and
National Commerce Act (E-Sign Act).
Because compliance with the 2001
interim final rules has not been
mandatory, withdrawal of these
provisions from the Code of Federal
Regulations reduces confusion about the
status of the provisions and simplifies
the regulation.
In addition, the Board is adopting
final amendments to Regulation DD to
provide guidance on the electronic
delivery of disclosures. For example, the
final rules provide that when a deposit
account advertisement is accessed by a
consumer in electronic form,
disclosures may be provided to the
consumer in electronic form in the
advertisement without regard to the
consumer consent and other provisions
of the E-Sign Act. Similar final rules are
being adopted under other consumer
fair lending and financial services
regulations administered by the Board.
DATES: The final rule is effective
December 10, 2007. The mandatory
compliance date is October 1, 2008.
FOR FURTHER INFORMATION CONTACT: John
C. Wood, Counsel, Division of
Consumer and Community Affairs, at
(202) 452–2412 or (202) 452–3667. For
users of Telecommunications Device for
the Deaf (TDD) only, contact (202) 263–
4869.
SUPPLEMENTARY INFORMATION:

I. Statutory Background
The purpose of the Truth in Savings
Act (TISA), 12 U.S.C. 4301 et seq., is to

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enable consumers to make informed
decisions about accounts at depository
institutions. The act requires depository
institutions to disclose yields, fees, and
other terms concerning deposit accounts
to consumers at account opening, upon
request, when changes in terms occur,
and in periodic statements. It also
includes rules about advertising for
deposit accounts. The Board’s
Regulation DD (12 CFR part 230)
implements the act. Credit unions are
governed by a substantially similar
regulation issued by the National Credit
Union Administration. TISA and
Regulation DD require a number of
disclosures to be provided in writing.
The Electronic Signatures in Global
and National Commerce Act (the E-Sign
Act), 15 U.S.C. 7001 et seq., was enacted
in 2000. The E-Sign Act provides that
electronic documents and electronic
signatures have the same validity as
paper documents and handwritten
signatures. The E-Sign Act contains
special rules for the use of electronic
disclosures in consumer transactions.
Under the E-Sign Act, consumer
disclosures required by other laws or
regulations to be provided or made
available in writing may be provided or
made available, as applicable, in
electronic form if the consumer
affirmatively consents after receiving a
notice that contains certain information
specified in the statute, and if certain
other conditions are met.
The E-Sign Act, including the special
consumer notice and consent
provisions, became effective October 1,
2000, and did not require implementing
regulations. Thus, depository
institutions are currently permitted to
provide in electronic form any
disclosures that are required to be
provided or made available to the
consumer in writing under Regulation
DD if the consumer affirmatively
consents to receipt of electronic
disclosures in the manner required by
section 101(c) of the E-Sign Act.
II. Board Proposals and Interim Rules
Regarding Electronic Disclosures
On April 4, 2001, the Board published
for comment interim final rules to
establish uniform standards for the
electronic delivery of disclosures
required under Regulation DD (66 FR
17,795). Similar interim final rules for
Regulations B, E, M, and Z,
(implementing the Equal Credit
Opportunity Act, the Electronic Fund
Transfer Act, the Consumer Leasing Act,
and the Truth in Lending Act,
respectively) were published on March
30, 2001 (66 FR 17,322 and 66 FR
17,329) (Regulations M and Z,
respectively) and April 4, 2001 (66 FR

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17,779 and 66 FR 17,786) (Regulations
B and E, respectively). Each of the
interim final rules incorporated, but did
not interpret, the requirements of the ESign Act. Depository institutions,
creditors, and other persons, as
applicable, generally were required to
obtain consumers’ affirmative consent to
provide disclosures electronically,
consistent with the requirements of the
E-Sign Act. The interim final rules also
incorporated many of the provisions
that were part of earlier regulatory
proposals issued by the Board regarding
electronic disclosures.1
Under the 2001 interim final rules,
disclosures could be sent to an e-mail
address designated by the consumer, or
could be made available at another
location, such as an Internet Web site.
If the disclosures were not sent by email, institutions would have to provide
a notice to consumers (typically by email) alerting them to the availability of
the disclosures. Disclosures posted on a
Web site would have to be available for
at least 90 days to allow consumers
adequate time to access and retain the
information. Institutions also would be
required to make a good faith attempt to
redeliver electronic disclosures that
were returned undelivered, using the
address information available in their
files.
Commenters on the interim final rules
identified significant operational and
information security concerns with
respect to the requirement to send the
disclosure or an alert notice to an e-mail
address designated by the consumer.
For example, commenters stated that
some consumers who choose to receive
electronic disclosures do not have email addresses or may not want
personal financial information sent to
them by e-mail. Commenters also noted
that e-mail is not a secure medium for
delivering confidential information and
that consumers’ e-mail addresses
frequently change. The commenters also
opposed the requirement for redelivery
in the event a disclosure was returned
undelivered. In addition, many
commenters asserted that making the
disclosures available for at least 90 days,
as required by the interim final rule,
1 On May 2, 1996, the Board proposed to amend
Regulation E to permit financial institutions to
provide disclosures by sending them electronically
(61 FR 19696). Based on comments received, in
1998 the Board published an interim rule
permitting the electronic delivery of disclosures
under Regulation E (63 FR 14,528, March 25, 1998)
and similar proposals under Regulations B, M, Z,
and DD (63 FR 14,552, 14,538, 14,548, and 14,533,
respectively, March 25, 1998). Based on comments
received on the 1998 proposals, in 1999 the Board
published revised proposals under Regulations B, E,
M, Z, and DD (64 FR 49688, 49699, 49713, 49722
and 49740, respectively, September 14, 1999).

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would increase costs and would not be
necessary for consumer protection.
In August 2001, in response to
comments received, the Board lifted the
previously established October 1, 2001
mandatory compliance date for all of the
interim final rules. (66 FR 41439,
August 8, 2001.) Thus, institutions are
not required to comply with the interim
final rules. Since that time, the Board
had not taken further action with
respect to the interim final rules on
electronic disclosures in order to allow
electronic commerce, including
electronic disclosure practices, to
continue to develop without regulatory
intervention and to allow the Board to
gather further information about such
practices.
In April 2007, the Board proposed to
amend Regulation DD and the official
staff commentary by (1) withdrawing
portions of the 2001 interim final rule
that restate or cross-reference provisions
of the E-Sign Act and accordingly are
unnecessary; (2) withdrawing other
portions of the interim final rule that the
Board now believes may impose undue
burdens on electronic banking and
commerce and may be unnecessary for
consumer protection; and (3) retaining
the substance of certain provisions of
the interim final rule that provide
regulatory relief or guidance regarding
electronic disclosures. (72 FR 21155,
April 30, 2007.) Similar amendments
were also proposed by the Board under
Regulations B, E, M, and Z (72 FR
21125, 72 FR 21131, 72 FR 21135, and
72 FR 21141, respectively).
III. Summary of the Final Rule
The Board received about 20
comments on the April 2007 proposal,
primarily from depository institutions
and their representatives. Most of the
financial industry commenters generally
supported the proposal, although some
provided suggestions for clarifications
or changes to particular elements of the
proposal. A comment letter was also
submitted on behalf of four consumer
groups. The consumer group
commenters suggested a number of
changes to strengthen consumer
protections. The comments are
discussed in more detail in the Sectionby-Section Analysis below.
For the reasons discussed below, the
Board is now adopting amendments to
Regulation DD in final form, largely as
proposed in April 2007. As stated in the
proposal, because compliance with the
2001 interim final rules has not been
mandatory, the final rule will reduce
confusion about the status of the
electronic disclosure provisions and
simplify the regulation. The Board is
also adopting certain provisions that are

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identical or similar to provisions in the
2001 interim rules in order to enhance
the ability of consumers to shop for
deposit account products online,
minimize the information-gathering
burdens on consumers, and provide
guidance or eliminate a substantial
burden on the use of electronic
disclosures, as discussed further below.
Since 2001, industry and consumers
have gained considerable experience
with electronic disclosures. During that
period, the Board has received no
indication that consumers have been
harmed by the fact that compliance with
the interim final rules is not mandatory.
The Board also has reconsidered certain
aspects of the interim final rules, such
as sending disclosures by e-mail, in
light of concerns about data security,
identity theft, and ‘‘phishing’’ (i.e.,
prompting consumers to reveal
confidential personal or financial
information through fraudulent e-mail
requests that appear to originate from a
depository institution, government
agency, or other trusted entity) that have
become more pronounced since 2001.
Finally, the Board is eliminating certain
aspects of the 2001 interim final rule,
such as provisions regarding the
availability and retention of electronic
disclosures, as unnecessary in light of
current industry practices.
The 2001 interim final rule allowed
depository institutions to provide
certain disclosures to consumers
electronically without regard to the
consumer consent or other provisions of
the E-Sign Act. These included
disclosures in connection with
advertisements and disclosures about
deposit accounts that are provided upon
a consumer’s request. The Board
reasoned that these disclosures, which
would be available to the general public
while shopping for deposit products,
did not ‘‘relate to a transaction,’’ which
is a prerequisite for triggering the E-Sign
consumer consent provisions, and thus
were not subject to the consent
provisions. Some commenters on the
interim final rules agreed with the result
but did not agree with the Board’s
rationale.
In the April 2007 proposal, the Board
stated that, upon further consideration,
it did not believe it was necessary to
determine whether or not these
disclosures are related to a transaction.
Instead, pursuant to the Board’s
authority under section 269 of TISA, as
well as under section 104(d) of the ESign Act,2 the Board proposed to specify
2 Section 269 of TISA provides that regulations
prescribed by the Board under TISA ‘‘may provide
for such adjustments and exceptions * * * as, in
the judgment of the Board, are necessary or proper

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the circumstances under which certain
disclosures may be provided to a
consumer in electronic form, rather than
in writing as generally required by
Regulation DD, without obtaining the
consumer’s consent under section
101(c) of the E-Sign Act.
Commenters supported the Board’s
approach with regard to this issue. This
final rule adopts the approach in the
April 2007 proposal. The Board
continues to believe that depository
institutions should not be required to
obtain the consumer’s consent in order
to provide advertising disclosures to the
consumer in electronic form if the
consumer accesses an advertisement
containing those disclosures in
electronic form, such as at an Internet
Web site. Similarly, the Board continues
to believe that institutions should not be
required to follow the E-Sign consent
requirements in order to respond to a
consumer’s request for account
disclosures (although under the final
rule, the institution could provide the
disclosures in electronic form only if the
consumer agrees).
The Board believes that when viewing
online deposit product advertising,
consumers would not be harmed if the
E-Sign consent procedures do not apply
and would obtain significant benefits by
having timely access to advertising
disclosures in electronic form. The
Board also believes that consumers’
ability to shop for deposit accounts
online and compare the terms of various
offers could be substantially diminished
if consumers had to consent in
accordance with the E-Sign Act in order
to access advertisements that must be
accompanied by disclosures, or in order
to obtain account disclosures upon
request. Applying the consumer consent
provisions of the E-Sign Act to these
disclosures could impose substantial
burdens on electronic commerce and
make it more difficult for consumers to
gather information and shop for deposit
accounts.
At the same time, the Board
recognizes that consumers who shop or
apply for deposit accounts online may
to carry out the purposes of [TISA], * * * or to
facilitate compliance with the requirements of
[TISA].’’ Section 104(d) of the E-Sign Act authorizes
federal agencies to adopt exemptions for specified
categories of disclosures from the E-Sign notice and
consent requirements, ‘‘if such exemption is
necessary to eliminate a substantial burden on
electronic commerce and will not increase the
material risk of harm to consumers.’’ For the
reasons stated in this Federal Register notice, the
Board believes that these criteria are met in the case
of the advertising disclosures and the disclosures
provided to a consumer upon request. In addition,
the Board believes TISA section 269 authorizes the
Board to permit institutions to provide disclosures
electronically, rather than in paper form,
independent of the E-Sign Act.

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Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Rules and Regulations
not want to receive other disclosures
electronically. Therefore, with respect to
account-opening disclosures, periodic
statements, and change-in-terms notices,
depository institutions are required to
obtain the consumer’s consent, in
accordance with the E-Sign Act, to
provide such disclosures in electronic
form, or else provide written
disclosures.
Finally, as proposed, certain
provisions that restate or cross-reference
the E-Sign Act’s general rules regarding
electronic disclosures (including the
consumer consent provisions) are being
deleted as unnecessary, because the ESign Act is a self-effectuating statute.
The revisions to Regulation DD and the
official staff commentary are described
more fully below in the Section-bySection Analysis.
IV. Section-by-Section Analysis

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12 CFR Part 230 (Regulation DD)
Section 230.3 General Disclosure
Requirements
Section 230.3(a) prescribes the form of
disclosures required for deposit
accounts, and generally requires
depository institutions to provide the
disclosures in writing and in a form that
the consumer may keep. As proposed,
the Board is revising § 230.3(a) to clarify
that institutions may provide
disclosures to consumers in electronic
form, subject to compliance with the
consumer consent and other applicable
provisions of the E-Sign Act. Some
institutions may provide disclosures to
consumers both in paper and electronic
form and rely on the paper form of the
disclosures to satisfy their compliance
obligations. For those institutions, the
duplicate electronic form of the
disclosures may be provided to
consumers without regard to the
consumer consent or other provisions of
the E-Sign Act because the electronic
form of the disclosure is not used to
satisfy the regulation’s disclosure
requirements.
Section 230.3(a) is also revised, as
proposed, to provide that the
disclosures required by §§ 230.4(a)(2)
(disclosures provided upon request) and
230.8 (advertising) may be provided to
the consumer in electronic form, under
the circumstances set forth in those
sections, without regard to the
consumer consent or other provisions of
the E-Sign Act. Commenters supported
this aspect of the proposal.
Section 230.8 requires that if certain
information is stated in a deposit
account advertisement, or if an
advertisement promotes the payment of
overdrafts, the advertisement must also
include specified disclosures. The

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Board believes that, for a deposit
account advertisement accessed by the
consumer in electronic form, permitting
institutions to provide the required
disclosures in electronic form without
regard to the consumer consent and
other provisions of the E-Sign Act will
eliminate a potential significant burden
on electronic commerce without
increasing the risk of harm to
consumers. This approach will facilitate
shopping for deposit products by
enabling consumers to receive
important disclosures at the same time
they access an advertisement without
first having to provide consent in
accordance with the requirements of the
E-Sign Act. Requiring consumers to
follow the consent procedures set forth
in the E-Sign Act in order to access an
online advertisement is potentially
burdensome and could discourage
consumers from shopping for deposit
products online. Moreover, because
these consumers are viewing the
advertisement online, there appears to
be little, if any, risk that the consumer
will be unable to view the disclosures
online as well.
Similarly, § 230.4(a)(2) requires that
depository institutions provide
disclosures, setting forth account terms
and conditions, to consumers upon
request. If a consumer is not present at
the depository institution and requests
the account disclosures, it would appear
unnecessary and burdensome to require
the consumer to go through the E-Sign
consent procedures before the request
could be satisfied, as long as the
consumer agrees that the disclosures
can be provided electronically.
Applying the E-Sign consent procedures
in this context could discourage
consumers from requesting account
disclosures.
Section 230.3(g) in the 2001 interim
final rule refers to § 230.10, the section
of the interim final rule setting forth
general rules for electronic disclosures.
Because the Board is deleting § 230.10,
as discussed further below, § 230.3(g) is
also deleted, as proposed.
Section 230.4 Account Disclosures
Depository institutions generally must
provide account-opening disclosures to
consumers before an account is opened
or a service is provided. Depository
institutions may delay delivering the
disclosures if the consumer is not
present at the institution when the
account is opened (or service is
provided). Section 230.4(a)(1) provides
that in such cases, account-opening
disclosures must be mailed or delivered
within ten business days. The rationale
underlying the ten-day delay is that the
institution cannot provide written

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disclosures when, for example, an
account is opened by telephone. The
2001 interim final rule provided that
depository institutions opening
accounts by electronic communication
(for example, on the Internet) may not
delay providing disclosures under
§ 230.4(a)(1). The difficulties in
providing disclosures for accounts
opened by mail or telephone do not
exist for requests to open accounts
received by electronic communication
using visual text. Thus, the 2001 interim
final rule required that disclosures must
be provided before accounts are opened
using electronic communication. New
paragraph (ii) was added to § 230.4(a)(1)
to effectuate this requirement. In the
April 2007 proposal, the Board stated
that it continued to believe that the
rationale underlying § 230.4(a)(1)(ii) was
valid, and accordingly proposed to
retain the new provision.
Several commenters requested that
the regulation allow delayed disclosures
in a number of situations involving the
use of electronic means to open an
account. Commenters noted, for
example, that small hand-held
electronic devices, such as Internetenabled cellphones or personal digital
assistants, may not be well suited to
displaying or retaining disclosures.
Commenters argued, therefore, that
institutions should be permitted to open
an account electronically and mail
paper disclosures to the consumer
within ten business days, rather than
providing electronic disclosures that the
consumer might view using a small
hand-held device. Some commenters
suggested that the delayed disclosure
provision should apply to other
situations as well, such as ‘‘enhanced
ATMs’’ and computers not owned by
the consumer (e.g., a computer in an
employer’s office or a public library).
However, it does not appear that at
present, use of such devices for
financial transactions has advanced to
the point where the relief suggested by
the commenters is necessary to avoid
burdens on electronic commerce.
Therefore, § 230.4(a)(1)(ii) is retained in
the final rule with minor wording
changes.
As noted above, depository
institutions must also provide account
disclosures to a consumer upon request.
Section 230.4(a)(2)(i) provides that if a
consumer is not present at the
institution when a request for account
disclosures is made, the institution must
mail or deliver the disclosures within a
reasonable time after the institution
receives the request; ten days is deemed
to be a reasonable time. The 2001
interim final rule revised § 230.4(a)(2)(i)
to allow institutions to mail or deliver

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disclosures either in paper form or
electronically to consumers who are not
present at the institution when they
make their request. Under the 2001
interim final rule, to provide the
requested disclosures electronically, the
institution must send the disclosures to
the consumer’s e-mail address, or send
a notice alerting the consumer to the
location of the disclosures, such as on
the institution’s Internet Web site. The
interim rule revised comment 4(a)(2)(i)–
3 and added comment 4(a)(2)(i)–4 to
provide guidance.
In the April 2007 proposal, the Board
proposed to retain the changes made to
§ 230.4(a)(2)(i) and the accompanying
commentary by the interim final rule,
with some revisions for clarification and
to provide greater flexibility for both
institutions and consumers (in
particular, by not requiring that e-mail
be used to provide the disclosures
electronically). The Board stated that it
continued to believe that if the
consumer is not present at the
institution when requesting disclosures,
it is appropriate to allow institutions to
respond to requests by electronic means
(without following the E-Sign consent
provisions, as discussed above under
§ 230.3) provided the consumer agrees.
A few commenters suggested that the
last sentence in proposed revised
comment 4(a)(2)(i)–4, which states that
the regulation ‘‘does not require an
institution to provide, nor a consumer to
agree to receive, disclosures in
electronic form,’’ should be eliminated
as unnecessary. The Board believes,
however, that the sentence is
appropriate because it clarifies that
institutions are required to provide
account disclosures in paper form if a
consumer requests that they be provided
in paper form. However, in the final rule
language has been added to the sentence
to make clear that the sentence applies
only to disclosures provided upon
request under § 230.4(a)(2). An
institution would not be prohibited
from offering accounts online that use
only electronic disclosures at accountopening and for periodic statements,
provided the consumer consents in
accordance with the E-Sign Act.
Accordingly, the revisions made to
§ 230.4(a)(2)(i) and the accompanying
commentary are adopted as proposed,
with the minor wording changes noted.
Section 230.8 Advertising
Section 230.8 contains requirements
for advertisements for deposit accounts,
including the requirement that if an
advertisement includes certain ‘‘trigger
terms’’ (such as a bonus or the annual
percentage yield), the advertisement
must also include certain disclosures.

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The Board proposed to add new
comment 8(a)–11, to clarify that if a
consumer accesses an advertisement for
deposit accounts in electronic form,
such as on a home computer, the
disclosures required on or with the
advertisement must be provided to the
consumer in electronic form on or with
the advertisement. The proposed
comment also clarified that if a
consumer receives a written
advertisement in the mail, the required
disclosures must be provided in paper
form on or with the advertisement (and
not, for example, by including a
reference in the advertisement to the
Web site where the disclosures are
located). Commenters did not address
this aspect of the proposal.
In the final regulation, new comment
8(a)–11 is not being adopted. Section
230.8 requires that if an advertisement
includes trigger terms, the
advertisement itself must ‘‘state’’ the
required disclosures ‘‘clearly and
conspicuously.’’ Therefore, under the
existing regulation, providing paper
disclosures for an advertisement in
electronic form, or vice versa, would not
comply because the disclosures would
not be stated in the advertisement itself.
Comment 8(a)–9, as added by the
interim final rule, provides that in an
electronic advertisement, the required
disclosures need not be shown on each
page where a ‘‘trigger term’’ appears, as
long as each such page includes a crossreference to the page where the required
disclosures appear. For example, if a
‘‘trigger term’’ appears on a particular
web page, the additional disclosures
may appear on another web page if there
is a clear reference to that page (which
may be accomplished, for example, by
including a link). In April 2007, the
Board proposed to retain this comment.
Commenters did not address this issue.
The final rule retains the comment as
proposed.
In April the Board also proposed to
add new comment 8(a)–12 to clarify that
the rules regarding advertising
disclosures provided in electronic form
also apply to the disclosures described
in § 230.11(b), which are incorporated
by reference in § 230.8(f). Commenters
did not address this issue; the comment
is adopted as proposed (and
renumbered as comment 8(a)–11).
Section 230.8(b) permits institutions
to state an interest rate in addition to the
APY, as long as the rate is stated in
conjunction with, but not more
conspicuously than, the APY. In the
2001 interim final rule, comment 8(b)–
4 was added to state that in an
advertisement using electronic
communication, the consumer must be
able to view both rates simultaneously,

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and that this requirement is not satisfied
if the consumer can view the APY only
by use of a link that takes the consumer
to another web location. In the April
2007 proposal, the Board proposed to
delete comment 8(b)–4 as unnecessary,
because the requirement to state the
simple annual rate or periodic rate in
conjunction with, and not more
conspicuously than, the APY, continues
to apply to electronic advertisements no
less than to advertisements in other
media. In the supplementary
information, the Board stated that
requiring the consumer to scroll to
another part of the page, or access a
link, in order to view the APY would
likely not satisfy this requirement.
Some commenters were concerned by
the foregoing discussion in the April
2007 proposal, and contended that in
the case of small hand-held electronic
devices that a consumer might use to
view a deposit account advertisement,
the small size of the screen might
necessitate scrolling or the use of links
for viewing the APY. Commenters also
said the proposal was confusing in that
comment 8(b)–4, stating that the use of
links would not comply, was proposed
to be deleted, yet the supplementary
information appeared to impose the
same restriction.
Comment 8(b)–4 is being deleted as
proposed. As stated in the proposal, the
regulatory requirement is to state the
interest rate in conjunction with, but not
more conspicuously than, the APY, and
this rule applies in the electronic
context as well. However, the Board
believes that the rule can be applied
with some degree of flexibility, to
account for variations in devices
consumers may use to view electronic
advertisements. Therefore, the use of
scrolling or links would not necessarily
fail to comply with the regulation in all
cases; however, institutions should
ensure that electronic advertisements
comply with the equal conspicuousness
requirement.
Section 230.8(e) exempts from some
disclosure requirements advertisements
made through broadcast or electronic
media, such as television and radio or
outdoor billboards. The interim final
rule added comment 8(e)(1)(i)–1 to
provide that this exemption would not
apply to advertisements using electronic
communication, such as Internet
advertisements, which do not have the
same time and space constraints as
radio or television advertisements. In
April, the Board proposed to retain
comment 8(e)(1)(i)–1 with minor
wording changes. Commenters did not
address this issue. The Board continues
to believe that space constraints for
advertisements on Internet Web sites are

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not significantly different from those for
a print advertisement (a newspaper, for
example). Accordingly, comment
8(e)(1)(i)–1 is adopted as proposed.
Section 230.10 Electronic
Communication
Section 230.10 was added by the 2001
interim final rule to address the general
requirements for electronic
communications. In the April 2007
proposal, the Board proposed to delete
§ 230.10 from Regulation DD and the
accompanying sections of the staff
commentary. Depository institution
commenters largely supported the
proposed deletion, and § 230.10 and the
accompanying commentary are deleted
in the final rule.
In the interim rule, § 230.10(a) defines
the term ‘‘electronic communication’’ to
mean a message transmitted
electronically that can be displayed on
equipment as visual text, such as a
message displayed on a personal
computer monitor screen. The deletion
of § 230.10(a) does not change
applicable legal requirements under the
E-Sign Act.
Sections 230.10 (b) and (c)
incorporate by reference provisions of
the E-Sign Act, such as the provision
allowing disclosures to be provided in
electronic form and the requirement to
obtain the consumer’s affirmative
consent before providing disclosures in
electronic form. The deletion of these
provisions has no impact on the general
applicability of the E-Sign Act to
Regulation DD disclosures. Section
230.10(f) was added in the interim final
rule to clarify that persons, other than
depository institutions, that are required
to comply with Regulation DD may use
electronic disclosures. This provision is
unnecessary because the E-Sign Act is a
self-effectuating statute and permits any
person to use electronic records subject
to the conditions set forth in the Act.
Sections 230.10 (d) and (e) address
specific timing and delivery
requirements for electronic disclosures
under Regulation DD, such as the
requirement to send disclosures to a
consumer’s e-mail address (or post the
disclosures on a Web site and send a
notice alerting the consumer to the
disclosures). The Board stated in the
proposal that it no longer believed that
these additional provisions were
necessary or appropriate. The Board
noted that electronic disclosures have
evolved since 2001, as industry and
consumers have gained experience with
them, and also noted concerns about email related to data security, identity
theft, and phishing.
The consumer group commenters
urged the Board to require the use of e-

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mail to provide required disclosures in
electronic form, arguing that e-mail is
the only reliable way to ensure that
consumers are able to actually access,
receive, and retain disclosures. The
consumer groups also disagreed with
the statement that concerns relating to
phishing, identity theft, and data
security are a valid reason for not
requiring the use of e-mail, noting that
phishing involves gathering information
from the consumer, while disclosures
would be provided to the consumer, and
need not include sensitive information.
While the consumer’s receipt of an email message that is actually from the
consumer’s depository institution
would not in general pose a security
risk, consumers might ignore or delete
e-mails from depository institutions
(real or purported), in order to avoid
falling victim to fraud schemes. Thus,
disclosures sent by consumers’
depository institutions may not receive
the attention they should. Consequently,
some depository institutions may be
reluctant to communicate by e-mail. To
the extent consumers are instructed not
to ignore electronic mail messages from
their depository institutions, the risk of
consumers being victimized by
fraudulent e-mail might be increased. In
any event, the Board believes it is
preferable not to mandate the use of any
particular means of electronic delivery
of disclosures, but instead to allow
flexibility for institutions to use
whatever method may be best suited to
particular types of disclosure (for
example, account-opening, periodic
statements, or change in terms).
With regard to the requirement to
attempt to redeliver returned electronic
disclosures, institutions would be
required to search their files for an
additional e-mail address to use, and
might be required to use a postal mail
address for redelivery if no additional email address was available. As stated in
the April 2007 proposal, the Board
continues to believe that both
requirements would likely be unduly
burdensome.
Under the April 2007 proposed rule,
the requirement in the 2001 interim
final rule for institutions to maintain
disclosures posted on a Web site for at
least 90 days would be deleted.
Depository institution commenters
supported the proposed deletion;
consumer group commenters expressed
concern about its impact on consumers.
As stated in the proposal, based on a
review of industry practices, it appears
that many institutions maintain
disclosures posted on an Internet Web
site for several months, and, in a
number of cases, for more than a year.
For example, it appears that institutions

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that offer online periodic statements to
consumers typically make those
statements available without charge for
six months or longer in electronic form.
This practice has developed even
though Regulation DD does not
currently require institutions to
maintain disclosures for any specific
period of time. In addition, the Board
continues to believe that an appropriate
time period consumers may want
electronic disclosures to be available
may vary depending upon the type of
disclosure, and is reluctant to establish
specific time periods that would vary
depending on the disclosures, which
would increase the compliance burden.
Therefore, the 90-day retention
provision is deleted as proposed.
Nevertheless, while the Board is not
requiring disclosures to be maintained
on an Internet Web site for any specific
time period, the general requirements of
Regulation DD continue to apply to
electronic disclosures, such as the
requirement to provide disclosures to
consumers at certain specified times
and in a form that the consumer may
keep. The Board expects institutions to
maintain disclosures on Web sites for a
reasonable period of time (which may
vary depending upon the particular
disclosure) so that consumers have an
opportunity to access, view, and retain
the disclosures. As stated in the April
2007 proposal, the Board will monitor
institutions’ electronic disclosure
practices with regard to the ability of
consumers to retain Regulation DD
disclosures and would consider further
revisions to the regulation to address
this issue if necessary.
V. Other Issues Raised by Commenters
Clear and Conspicuous Disclosures
An issue raised in the comments on
the April 2007 proposal related to small
hand-held electronic devices through
which consumers may conduct financial
transactions using the Internet or other
electronic means (for example, personal
digital assistants, Internet-enabled
cellphones, and similar devices). One
commenter requested clarification on
whether institutions would be deemed
to comply with the requirement to
provide disclosures in a clear and
conspicuous form, even when the
consumer views them on a small screen
of a hand-held electronic device. The
commenter noted that the institution
has no control over what devices
consumers choose to use, for example,
to view disclosures on a Web page. The
Board believes that disclosures comply
with the ‘‘clear and conspicuous’’
requirement as long as they are
provided in a manner such that they

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would be clear and conspicuous when
viewed on a typical home personal
computer monitor.

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Retainable Form
Several industry commenters
requested guidance on how institutions
can be sure of meeting the requirement
to provide disclosures in a form that the
consumer can keep. Commenters noted
that some of the disclosures that are
exempted from the E-Sign requirements
regarding notice and consent are
nevertheless required to be given in
retainable form (for example, account
disclosures provided upon request
under § 230.4(a)(2)). Commenters
pointed out that the E-Sign Act requires,
with regard to consumer disclosures
generally, that an institution disclose
‘‘the hardware and software
requirements for access to and retention
of the electronic records’’ and that the
consumer consent to electronic
disclosures ‘‘in a manner that
reasonably demonstrates that the
consumer can access’’ the disclosures
electronically. A commenter noted that
if the E-Sign procedures are followed,
an institution has some degree of
comfort that the retainability
requirement has been met; however,
with regard to disclosures that are
exempted from the E-Sign notice and
consent provisions (such as those under
§ 230.4(a)(2)), it is not clear how the
institution can demonstrate compliance
with the retainability requirement.
The consumer group commenters
were concerned about retainability of
disclosures in light of the deletion of the
requirement to maintain disclosures on
a Web site for at least 90 days. They
urged that the final regulations require
that disclosures be delivered in a format
that is both downloadable and printable.
The Board believes that institutions
satisfy the requirement for providing
electronic disclosures in a form the
consumer can retain if they are provided
in a standard electronic format that can
be downloaded and saved or printed on
a typical home personal computer.
Typically, any document that can be
downloaded by the consumer can also
be printed. The Board will, however,
monitor institutions’ practices to
evaluate whether further guidance is
needed on this issue. In a situation
where the consumer is provided
electronic disclosures through
equipment under the institution’s
control—such as a terminal or kiosk in
the institution’s offices—the institution
could, for example, provide a printer
that automatically prints the
disclosures.

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Expansion of Exception From E-Sign
Notice and Consent Requirements
One commenter suggested that the
Board adopt additional exemptions from
the E-Sign notice and consent
requirements. For example, if a
consumer opened a deposit account
online, the commenter suggested that
the institution should be able to provide
the account-opening disclosures online
under § 230.4(a)(1) (in addition to the
advertising-related disclosures, and
disclosures provided upon request,
already permitted under this final rule)
without notice and consent under the ESign Act. The commenter argued that,
since Internet commerce has expanded
greatly over the past few years, when
consumers choose to conduct financial
transactions online, they presume that
they will receive any related disclosures
online as well. The Board believes that,
at this time, there is insufficient
evidence that the consent requirements
are a burden on electronic commerce in
this situation; and that consumers who
shop for deposit products online may
not necessarily want to receive accountopening disclosures online.
VI. Use of ‘‘Plain Language’’
Section 722 of the Gramm-LeachBliley Act of 1999 requires the Board to
use ‘‘plain language’’ in all proposed
and final rules published after January
1, 2000. In the proposal, the Board
invited comments on whether the
proposed rules are clearly stated and
effectively organized, and how the
Board might make the proposed text
easier to understand. No comments
were received on ‘‘plain language’’
issues involving Regulation DD.
VII. Final Regulatory Flexibility
Analysis
The Board prepared an initial
regulatory flexibility analysis as
required by the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.) (RFA) in
connection with the April 2007
proposal. The Board received no
comments on its initial regulatory
flexibility analysis.
The RFA generally requires an agency
to perform an assessment of the impact
a rule is expected to have on small
entities. However, under section 605(b)
of the RFA, 5 U.S.C. 605(b), the
regulatory flexibility analysis otherwise
required under section 604 of the RFA
is not required if an agency certifies,
along with a statement providing the
factual basis for such certification, that
the rule will not have a significant
economic impact on a substantial
number of small entities. Based on its
analysis and for the reasons stated

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below, the Board certifies that the rule
will not have a significant economic
impact on a substantial number of small
entities.
1. Statement of the need for, and
objectives of, the final rule. The Board
is adopting revisions to Regulation DD
to withdraw the 2001 interim final rule
on electronic communication and to
allow depository institutions to provide
certain disclosures to consumers in
electronic form on or with an
advertisement that is accessed by the
consumer in electronic form, or if the
consumer requests the disclosure,
without regard to the consumer consent
and other provisions of the E-Sign Act.
The Board is also clarifying that other
Regulation DD disclosures may be
provided to consumers in electronic
form in accordance with the consumer
consent and other applicable provisions
of the E-Sign Act.
TISA was enacted to enhance
economic stabilization, improve
competition between depository
institutions, and strengthen the ability
of consumers to make informed
decisions regarding deposit accounts. 12
U.S.C. 4301. It is the purpose of TISA
to require the clear and uniform
disclosure of rates of interest payable on
deposit accounts and the fees that are
assessable against deposit accounts, so
that consumers can make a meaningful
comparison between the competing
claims of institutions. TISA authorizes
the Board to prescribe regulations to
carry out the purposes of the statute. 12
U.S.C. 4308. The Act expressly states
that the Board’s regulations may contain
‘‘such classifications, differentiations, or
other provisions, * * * , as in the
judgment of the Board, are necessary or
proper to carry out the purposes of [the
Act], to prevent circumvention or
evasion of [the Act], or to facilitate
compliance with [the Act].’’ 12 U.S.C.
4308(a). The Board believes that the
revisions to Regulation DD discussed
above are within Congress’s broad grant
of authority to the Board to adopt
provisions that carry out the purposes of
the statute. These revisions facilitate
informed decisions about deposit
accounts by consumers in
circumstances where a consumer
accesses a deposit account
advertisement, or requests deposit
account disclosures, in electronic form.
2. Issues raised by comments in
response to the initial regulatory
flexibility analysis. In accordance with
section 603(a) of the RFA, the Board
conducted an initial regulatory
flexibility analysis in connection with
the proposed rule. The Board did not
receive any comments on its initial
regulatory flexibility analysis.

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3. Small entities affected by the final
rule. The ability to provide advertising
disclosures in electronic form on or
with an advertisement that is accessed
by the consumer in electronic form, or
to provide disclosures in electronic form
if requested to do so by the consumer,
applies to all depository institutions,
regardless of their size. Accordingly, the
final rule would reduce burden and
compliance costs for small entities by
providing relief, to the extent the E-Sign
Act applies in these circumstances. The
number of small entities affected by this
final rule is unknown.
4. Other federal rules. The Board
believes no federal rules duplicate,
overlap, or conflict with the final
revisions to Regulation DD.
5. Significant alternatives to the
proposed revisions. The Board solicited
comment on any significant alternatives
that could provide additional ways to
reduce regulatory burden associated
with the proposed rule. Commenters did
not suggest any significant alternatives
to the proposed rule.
VIII. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995 (PRA) (44 U.S.C.
3506; 5 CFR Part 1320 Appendix A.1),
the Board reviewed the rule under the
authority delegated to the Board by the
Office of Management and Budget
(OMB). The collection of information
that is subject to the PRA by this final
rulemaking is found in 12 CFR Part 230.
The Federal Reserve may not conduct or
sponsor, and an organization is not
required to respond to, this information
collection unless it displays a currently
valid OMB control number. The OMB
control number is 7100–0271.
Section 269 of the Truth in Savings
Act (TISA) (12 U.S.C. 4308) authorizes
the Board to issue regulations to carry
out the provisions of TISA. TISA and
Regulation DD require depository
institutions to disclose yields, fees, and
other terms concerning deposit accounts
to consumers at account opening, upon
request, and when changes in terms
occur. Depository institutions that
provide periodic statements are required
to include information about fees
imposed, interest earned, and the
annual percentage yield earned during
those statement periods. The act and
regulation mandate the methods by
which institutions determine the
account balance on which interest is
calculated. They also contain rules
about advertising deposit accounts. To
ease the compliance cost (particularly
for small entities), model clauses and
sample forms are appended to the
regulation. Depository institutions are
required to retain evidence of

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compliance for twenty-four months, but
the regulation does not specify types of
records that must be retained. This
information collection is mandatory.
Since the Federal Reserve does not
collect any information, no issue of
confidentiality arises.
Regulation DD applies to all
depository institutions except credit
unions. Credit unions are covered by a
substantially similar rule issued by the
National Credit Union Administration.
The Federal Reserve accounts for the
paperwork burden associated with
Regulation DD only for Federal Reservesupervised institutions. Federal Reserve
supervised institutions are defined by
Regulation DD as: State member banks,
branches and agencies of foreign banks
(other than federal branches, federal
agencies, and insured state branches of
foreign banks), commercial lending
companies owned or controlled by
foreign banks, and organizations
operating under section 25 or 25A of the
Federal Reserve Act. Other federal
agencies account for the paperwork
burden imposed on the depository
institutions for which they have
administrative enforcement authority.
The annual burden is estimated to be
232,443 hours for 1,172 Federal
Reserve-supervised institutions that are
deemed respondents for purposes of the
PRA. As mentioned in the Preamble, on
April 30, 2007, a notice of proposed
rulemaking was published in the
Federal Register (72 FR 21155). No
comments specifically addressing the
burden estimate were received.
The Federal Reserve has a continuing
interest in the public’s opinions of our
collections of information. At any time,
comments regarding the burden
estimate, or any other aspect of this
collection of information, including
suggestions for reducing the burden,
may be sent to: Secretary, Board of
Governors of the Federal Reserve
System, 20th and C Streets, NW.,
Washington, DC 20551; and to the
Office of Management and Budget,
Paperwork Reduction Project (7100–
0199), Washington, DC 20503.
List of Subjects in 12 CFR Part 230
Advertising, Banks, banking,
Consumer protection, Federal Reserve
System, Reporting and record keeping
requirements, Truth in Savings.
■ For the reasons set forth in the
preamble, the Board amends 12 CFR
part 230 as set forth below:
PART 230—TRUTH IN SAVINGS
(REGULATION DD)
1. The authority citation for part 230
continues to read as follows:

■

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Authority: 12 U.S.C. 4301 et seq.

2. Section 230.3 is amended by
revising paragraph (a), to read as
follows, and removing paragraph (g):

■

§ 230.3

General disclosure requirements.

(a) Form. Depository institutions shall
make the disclosures required by
§§ 230.4 through 230.6 of this part, as
applicable, clearly and conspicuously,
in writing, and in a form the consumer
may keep. The disclosures required by
this part may be provided to the
consumer in electronic form, subject to
compliance with the consumer consent
and other applicable provisions of the
Electronic Signatures in Global and
National Commerce Act (E-Sign Act) (15
U.S.C. 7001 et seq.). The disclosures
required by §§ 230.4(a)(2) and 230.8
may be provided to the consumer in
electronic form without regard to the
consumer consent or other provisions of
the E-Sign Act in the circumstances set
forth in those sections. Disclosures for
each account offered by an institution
may be presented separately or
combined with disclosures for the
institution’s other accounts, as long as it
is clear which disclosures are applicable
to the consumer’s account.
*
*
*
*
*
■ 3. Section 230.4 is amended by
republishing paragraph (a)(1)(i) and
revising paragraphs (a)(1)(ii) and
(a)(2)(i), to read as follows:
§ 230.4

Account disclosures.

(a) Delivery of account disclosures—
(1) Account opening. (i) General. A
depository institution shall provide
account disclosures to a consumer
before an account is opened or a service
is provided, whichever is earlier. An
institution is deemed to have provided
a service when a fee required to be
disclosed is assessed. Except as
provided in paragraph (a)(1)(ii) of this
section, if the consumer is not present
at the institution when the account is
opened or the service is provided and
has not already received the disclosures,
the institution shall mail or deliver the
disclosures no later than 10 business
days after the account is opened or the
service is provided, whichever is earlier.
(ii) Timing of electronic disclosures. If
a consumer who is not present at the
institution uses electronic means (for
example, an Internet Web site) to open
an account or request a service, the
disclosures required under paragraph
(a)(1) of this section must be provided
before the account is opened or the
service is provided.
(2) Requests. (i) A depository
institution shall provide account
disclosures to a consumer upon request.
If a consumer who is not present at the

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institution makes a request, the
institution shall mail or deliver the
disclosures within a reasonable time
after it receives the request and may
provide the disclosures in paper form,
or electronically if the consumer agrees.
*
*
*
*
*

percentage yield) the advertisement must
clearly refer the consumer to the location
where the additional required information
begins. For example, an advertisement that
includes a bonus or annual percentage yield
may be accompanied by a link that directly
takes the consumer to the additional
information.

§ 230.10

*

[Removed]

4. Section 230.10 is removed and
reserved.
■ 5. In Supplement I to Part 230, the
following amendments are made:
■ a. In Section 230.4—Account
disclosures, under (a)(2)(i), paragraphs
3. and 4. are revised.
■ b. In Section 230.8—Advertising,
under (a) Misleading or inaccurate
advertisements, paragraph 9. is revised
and new paragraph 11. is added.
■ c. In Section 230.8—Advertising,
under (b) Permissible rates, paragraph 4.
is removed.
■ d. In Section 230.8—Advertising,
under (e)(1)(i), paragraph 1. is revised.
■ e. Section 230.10—Electronic
Communication is removed and
reserved.
The amendments read as follows:
■

Supplement I to Part 230—Official Staff
Interpretations
*

*

*

*

*

*

*

*

*

*

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*

*

*

*

*

*

*

*

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*

9. Electronic advertising. If an electronic
advertisement (such as an advertisement
appearing on an Internet Web site) displays
a triggering term (such as a bonus or annual

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*

*

*

*

*

(e) Exemption for certain advertisements
(e)(1) Certain media
(e)(1)(i)
1. Internet advertisements. The exemption
for advertisements made through broadcast
or electronic media does not extend to
advertisements posted on the Internet or sent
by e-mail.

*

*

*

*

*

By order of the Board of Governors of the
Federal Reserve System, October 31, 2007.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E7–21701 Filed 11–8–07; 8:45 am]
BILLING CODE 6210–01–P

[Release No. SAB 109]

Section 230.8—Advertising
(a) Misleading or Inaccurate Advertisements

*

*

17 CFR Part 211

3. Timing for response. Ten business days
is a reasonable time for responding to
requests for account information that
consumers do not make in person, including
requests made by electronic means (such as
by electronic mail).
4. Use of electronic means. If a consumer
who is not present at the institution makes
a request for account disclosures, including
a request made by telephone, e-mail, or via
the institution’s Web site, the institution may
send the disclosures in paper form or, if the
consumer agrees, may provide the
disclosures electronically, such as to an email address that the consumer provides for
that purpose, or on the institution’s Web site,
without regard to the consumer consent or
other provisions of the E-Sign Act. The
regulation does not require an institution to
provide, nor a consumer to agree to receive,
the disclosures required by § 230.4(a)(2) in
electronic form.

*

*

SECURITIES AND EXCHANGE
COMMISSION

(a)(2) Requests
(a)(2)(i)

*

*

*

Section 230.4—Account Disclosures
(a) Delivery of Account Disclosures

*

*

11. Additional disclosures in connection
with the payment of overdrafts. The rule in
§ 230.3(a), providing that disclosures
required by § 230.8 may be provided to the
consumer in electronic form without regard
to E-Sign Act requirements, applies to the
disclosures described in § 230.11(b), which
are incorporated by reference in § 230.8(f).

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Staff Accounting Bulletin No. 109
Securities and Exchange
Commission.
ACTION: Publication of staff accounting
bulletin.
AGENCY:

SUMMARY: This staff accounting bulletin
(‘‘SAB’’) expresses the views of the staff
regarding written loan commitments
that are accounted for at fair value
through earnings under generally
accepted accounting principles. SAB
No. 105, Application of Accounting
Principles to Loan Commitments (‘‘SAB
105’’), provided the views of the staff
regarding derivative loan commitments
that are accounted for at fair value
through earnings pursuant to Statement
of Financial Accounting Standards No.
133, Accounting for Derivative
Instruments and Hedging Activities.
SAB 105 stated that in measuring the
fair value of a derivative loan
commitment, the staff believed it would
be inappropriate to incorporate the
expected net future cash flows related to
the associated servicing of the loan. This
SAB supersedes SAB 105 and expresses

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the current view of the staff that,
consistent with the guidance in
Statement of Financial Accounting
Standards No. 156, Accounting for
Servicing of Financial Assets, and
Statement of Financial Accounting
Standards No. 159, The Fair Value
Option for Financial Assets and
Financial Liabilities, the expected net
future cash flows related to the
associated servicing of the loan should
be included in the measurement of all
written loan commitments that are
accounted for at fair value through
earnings. SAB 105 also indicated that
the staff believed that internallydeveloped intangible assets (such as
customer relationship intangible assets)
should not be recorded as part of the fair
value of a derivative loan commitment.
This SAB retains that staff view and
broadens its application to all written
loan commitments that are accounted
for at fair value through earnings.
The staff expects registrants to apply
the views in Question 1 of SAB 109 on
a prospective basis to derivative loan
commitments issued or modified in
fiscal quarters beginning after December
15, 2007.
DATES: November 5, 2007.
FOR FURTHER INFORMATION CONTACT:
Ashley W. Carpenter, Office of the Chief
Accountant (202) 551–5300 or Craig C.
Olinger, Division of Corporation
Finance (202) 551–3400, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The
statements in staff accounting bulletins
are not rules or interpretations of the
Commission, nor are they published as
bearing the Commission’s official
approval. They represent interpretations
and practices followed by the Division
of Corporation Finance and the Office of
the Chief Accountant in administering
the disclosure requirements of the
Federal securities laws.
Dated: November 5, 2007.
Florence E. Harmon,
Deputy Secretary.

PART 211—[AMENDED]
Accordingly, Part 211 of Title 17 of
the Code of Federal Regulations is
amended by adding Staff Accounting
Bulletin No. 109 to the table found in
Subpart B.

■

Staff Accounting Bulletin No. 109
■ The staff hereby amends and replaces
Section DD of Topic 5, Miscellaneous
Accounting, of the Staff Accounting
Bulletin Series. Topic 5: DD (as
amended) expresses the views of the
staff regarding written loan

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