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FEDERAL RESERVE BANK OF DALLAS DALLAS. TEXAS 75222 Circular No. 81-246 December 30, 1981 FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Proposed Amendments to the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRIRCA) TO ALL MEMBER BANKS AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The Federal Financial Institutions Examination Council announced that is has recommended to the five Federal agencies represented on the Council approval of a series of proposed amendments to the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRIRCA). Agency action is requested by December 18, 1981. Printed on the following pages is a copy of the Federal Financial Institutions Examination Council's press release dated December 3, 1981, and a copy of an analysis of all of the Council's proposed amendments to FIRIRCA. Questions concerning the proposed amendments should be directed to the Legal Department of this Bank, Extension 6171. Additional copies of this circular will be furnished upon request to the Department of Communications, Financial and Community Affairs, Ext. 6289. Sincerely yours, William H. Wallace First Vice President Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank; 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Federal Rnancial-Iflstittttions Examination Council, Washington, D.C. 20219 Press Release For immediate r e l e a s e Decemember 3 , 1981 Chairman J. Charles Pa rte e o f t h e Federal F i n a n c ia l I n s t i t u t i o n s Examination Council today announced t h a t the Council has recommended t o th e f i v e Federal a g e n c i e s r e p r e s e n te d on t h e Council approval o f a s e r i e s o f proposed amendments t o th e F in a n cia l I n s t i t u t i o n s Regu latory and I n t e r e s t Rate Control Act o f 1978 (FIRIRCA). The Council asked f o r agency a c t i o n on i t s p rop osa ls by December 18. Follo w in g a c t i o n by th e a g e n c i e s th e Council w i l l tra n s m it the p rop osals to Congress on b e h a l f o f approving a g e n c i e s . Chairman P a r te e , a member o f t h e Federal Reserve Board, s a i d in a l e t t e r informing i n t e r e s t e d members o f Congress o f t h e C o u n c i l ' s recommendations t o t h e a g e n c i e s t h a t th e p ro p o sa ls are "designed t o s t r e n g t h e n and improve the e f f i c i e n c y o f Federal s u p e r v i s i o n o f f i n a n c i a l i n s t i t u t i o n s and reduce th e burden on r e g u l a t e d i n s t i t u t i o n s . " Mr. Pa rte e noted t h a t although ever y proposal was not unanimously supported in t h e C o u n cil, each had been i n d i v i d u a l l y approved by a m a jo rity o f th e members o f t h e Counci l. An a n a l y s i s o f a l l o f t h e C o u n c i l ' s proposed amendments t o FIRIRCA, s e t t i n g f o r t h th e amendment proposed, t h e p r o v i s i o n o f c u rre n t law i t would amend and th e C o u n c i l ' s reason s f o r s u g g e s t i n g r e v i s i o n i s a t t a c h e d . Attachment Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, National Credit Union Administration, Office of the Comptroller of the Currency FINANCIAL INSTITUTIONS REGULATORY ACT AMENDMENTS OF 1981 SECTION-BY-SECTION ANALYSIS I. T i t l e I - S u pe rv isory A u th o r it y Over D ep ository I n s t i t u t i o n s S e c t i o n 1 0 1 : amends S e c t i o n 5 2 3 9 ( b )( 1 ) o f t h e Revised S t a t u t e s to pro vid e t h a t v i o l a t i o n o f any o f th e p r o v i s i o n s o f th e f i r s t s e c t i o n o f th e Act o f September 28, 1962, which i s th e s t a t u t e g r a n tin g t r u s t powers t o National banks, would s u b j e c t t 2 v i o l a t i n g bank or o f f i c e r to t h e c i v i l money p e n a lt y p r o v i s i o n o f S e c t i o n 5239(b ). Current S t a t u t e : The O f f i c e o f th e Comptroller o f the Currency has c i v i l money p e n a lt y a u t h o r i t y with r e s p e c t t o any v i o l a t i o n o f th e National Banking Act. National bank t r u s t powers, however, d e r i v e not from th e National Banking Act, but from P u b lic Law 87-7222 enacted September 28, 1962, and a r e , t h e r e f o r e , not s u b j e c t t o e x i s t i n g agency c i v i l money p en a lty a u t h o r i t y . Amendment: The Council recommends expansion o f th e C o m p tro ller 's a u t h o r i t y to impose c i v i l money p en a lty remedies f o r v i o l a t i o n s o f t h e a g e n c y ' s t r u s t r e g u l a t i o n s . This amendment would e l i m i n a t e an apparent lo o p h o le in the a g en cy 's o v e r a l l enforcement a u t h o r i t y . S e c t i o n 1 0 2 : amends S e c t i o n 2 2 ( h ) ( 2 ) o f th e Federal Reserve Act by d e l e t i n g th e e x p l i c i t $25,000 l i m i t on loan s t o i n s i d e r s and s u b s t i t u t i n g in l i e u t h e r e o f a u t h o r i t y f o r th e f i n a n c i a l r e g u l a t o r y a g e n c i e s to s e t a l i m i t based on cu rrent economic c o n d i t i o n s a f t e r c o n s u l t a t i o n with t h e Examination Council. Current S t a t u t e : S e c t i o n 104 o f FIRIRCA - F in a n cia l I n s t i t u t i o n s Regulatory and I n t e r e s t Rate Control Act o f 1978 (P.L. 9 5 -6 3 0 )( 9 2 S t a t . 3641) - amended th e Federal Reserve Act t o , among o t h e r t h i n g s , r e q u ir e p r i o r approval by a m a jo r ity o f th e bank's board o f d i r e c t o r s o f any l o a n , l i n e o f c r e d i t or e x t e n s i o n o f c r e d i t t o an e x e c u t i v e o f f i c e r , d i r e c t o r or p r in c i p a l shar eh old er or i n t e r e s t s o f such persons which exceed $ 2 5,000 . Amendment: The FIRIRCA t e c h n i c a l amendments forwarded to Congress in March, 1981, would modify t h i s p r o v i s i o n by a llo w in g p r i o r approval by a loan or e x e c u t i v e committee o f t h e bank's board o f d i r e c t o r s . The Council now s u g g e s t s t h a t th e $25,000 l i m i t i s too low and w i l l become i n c r e a s i n g l y o b s o l e t e over tim e. There i s a p e r c e iv e d need f o r a f l e x i b l e l i m i t which can be a d justed p e r i o d i c a l l y as c o n d i t i o n s change. The Council recommends to th e Congress t h a t th e Council be g iv e n a u t h o r i t y t o make recommendations to the banking a g e n c i e s on a p p ro p ria t e l i m i t a t i o n s . The Council i s not recommending a s p e c i f i c l i m i t a t i o n a t t h i s tim e; however, c o n s i d e r a t i o n w i l l be giv en to a l i m i t based on a p ercentage o f bank c a p i t a l ( e . g . , two p e r ce n t) or a f i x e d amount ( e . g . , $ 1 0 0 , 0 0 0 ) , whichever i s g r e a t e r . A f i n a l d eterm ination o f an ap p rop ria te l i m i t would be made a t a l a t e r d a t e , assuming th e recommended amendment i s en acted . - 2 S e c t i o n 1 0 3 : amends S e c t i o n 22(h) o f th e Federal Reserve Act by d e l e t i n g paragraph (4 ) which c u r r e n t l y s t a t e s t h a t no member bank may pay an o v e r d r a f t on an account o f an e x e c u t i v e o f f i c e r or d i r e c t o r o f t h a t bank. Current S t a t u t e : S e c t i o n 104 o f FIRIRCA amended th e Federal Reserve Act t o , p r o h i b i t among o t h e r t h i n g s , banks from paying o v e r d r a f t s o f e x e c u t i v e o f f i c e r s and d i r e c t o r s . Amendment: The Council recommends e l i m i n a t i o n o f t h i s p r o h i b i t i o n . Overdrafts o f e x e c u t i v e o f f i c e r s and d i r e c t o r s can be addressed and s c r u t i n i z e d in the general c o n t e x t o f a n a ly z in g i n s i d e r t r a n s a c t i o n s f o r p r e f e r e n t i a l treatm ent. This approach w i l l p l a c e a f f e c t e d i n s i d e r s on an equal f o o t i n g with o th e r bank customers who have o v e r d r a f t p r i v i l e g e s . The a g e n c i e s b e l i e v e t h a t they have s u f f i c i e n t t o o l s t o c o r r e c t abuses in t h i s ar ea. S e c t i o n 1 04: amends th e enforcement p r o v i s i o n s o f each o f the e i g h t consumer s t a t u t e s l i s t e d below to provid e the f i v e a g e n c i e s r ep re se n te d on the Council w it h a u t h o r i t y t o impose c i v i l money p e n a l t i e s o f up to $1 ,000 per day f o r v i o l a t i o n s o f t h e s e s t a t u t e s . This s e c t i o n c o n t a in s e i g h t s e p a r a te amendments, one f o r each consumer s t a t u t e . The consumer s t a t u t e s t h a t th e Council recommends be amended t o allo w c i v i l money p e n a lt y remedies are the Consumer C r e d it P r o t e c t i o n A ct, the Home Mortgage D i s c l o s u r e A ct, the Federal Trade Commission A c t , th e Fair Housing A ct, th e National Flood Insurance Act o f 1968, th e Flood D i s a s t e r P r o te c t i o n Act o f 1973, th e Real E s t a t e S e t t l e m e n t Procedures A c t, and the Right to F i n a n c ia l Pr iv acy Act. The Council b e l i e v e s t h a t adding c i v i l money p e n a lt y a u t h o r i t y to the e x i s t i n g enforcement t o o l s t h e a g e n c i e s have with regard to th e consumer laws w i l l p rovid e a g r e a t e r d egree o f f l e x i b i l i t y t o f a s h i o n remedies ap p rop ria te to each s u p e r v is o r y s i t u a t i o n . S e c t i o n 1 0 5 : amends S e c t i o n 22(g) o f th e Federal Reserve Act by r e p l a c in g th e cu r r e n t $ 1 0,000 l i m i t on "other" lo ans by member banks ( i . e . , o th e r than real e s t a t e and ed u catio n loan s) t o e x e c u t i v e o f f i c e r s with a u t h o r i t y f o r the f i n a n c i a l r e g u l a t o r y a g e n c i e s to s e t an a p p rop ria te l i m i t based on cu rre nt c o n d i t i o n s a f t e r c o n s u l t a t i o n with t h e Examination Council. Current S t a t u t e : S e c t i o n 22(g) o f th e Federal Reserve Act s e t s l i m i t s on mortgage loan s ( $ 6 0 , 0 0 0 ) , ed u ca tion al lo an s ( $ 2 0 ,0 0 0 ) and o th er loan s ( $ 1 0 ,0 0 0 ) t o e x e c u t i v e o f f i c e r s o f member banks. Amendment: The FIRIRCA t e c h n i c a l amendments p r e v i o u s l y s e n t to Congress proposed e l i m i n a t i o n o f l i m i t s on mortgage and ed u ca tio n a l l o a n s , but r e t a i n e d th e l i m i t on o t h e r l o a n s . The Council b e l i e v e s t h a t th e $10,000 l i m i t i s too r i g i d and t h a t a mechanism should be f ashion ed to a d j u s t th e l i m i t a t i o n as circu m stan ce s warrant. The Council recommends e l i m i n a t i n g th e s t a t u t o r y l i m i t and r e q u e s t s th e a u t h o r i t y t o make recommendations to th e a f f e c t e d a g e n c ie s on th e a p p r o p r ia te l i m i t f o r o th e r lo an s t o e x e c u t i v e o f f i c e r s o f member banks. - 3 I I . T i t l e II - Correspondent Accounts S e c t i o n 2 0 1 : amends S e c t i o n 1 0 6 ( b ) ( 2 ) o f th e Bank Holding Company Act by d e l e t i n g s u b s e c t i o n (G) which c u r r e n t l y c o n t a in s an e x t e n s i v e r e p o r tin g requirement t h a t i s not j u s t i f i e d by th e l i m i t e d b e n e f i t s i t p rovid es t o s u p e r v is o r y a u t h o r i t i e s . Current S t a t u t e : T i t l e VIII o f FIRIRCA added t o th e Bank Holding Company Act S e c t i o n 1 0 6 ( b ) ( 2 ) , s u b s e c t i o n (G) which p rovid es f o r a comprehensive r e p o r t i n g system o f loan s t o i n s i d e r s from another bank where t h e i n s i d e r ' s bank m ain tain s a correspondent banking r e l a t i o n s h i p . The r e p o r t cover s e x e c u t i v e o f f i c e r s , p r i n c i p a l sh ar eh o ld ers and r e l a t e d i n t e r e s t s o f t h o s e persons and r e q u ir e s in form a tion on t h e maximum balance o f a loan during a calen d ar y e a r , t h e b ala n ce as o f t e n days p r i o r t o r e p o r t d ate (year-e n d ) as w ell as the o r i g i n a l amount, m atu rity d a t e , payment term s, i n t e r e s t r a t e , d e s c r i p t i o n o f c o l l a t e r a l , i f any, and any unusual terms. The r e p o r t must be f i l e d with th e i n s i d e r ' s bank and r e t a i n e d f o r examiner review . Amendment: The Council recommends e l i m i n a t i o n o f t h i s r e p o r ti n g requirement. The c o s t s o f preparing t h e s e r e p o r ts are not j u s t i f i e d by th e b e n e f i t s accruin g t o t h e s u p e r v is o r y a u t h o r i t i e s in i d e n t i f y i n g i n s t a n c e s o f abuse. The Council b e l i e v e s t h a t t h i s m atter i s b e s t handled through th e examination p r o c e s s . If t h i s amendment i s adopted and t h e r e s t r i c t i o n s on exchanging examination i n f o r mation among the a g e n c i e s are r e l a x e d ( s e e s u g g e ste d amendment under T i t l e XI Right to F i n a n c ia l P r i v a c y ) , i t i s b e l i e v e d t h a t a s u b s t i t u t e system can be d e v is e d t o r e p o r t q u e s t i o n a b l e t r a n s a c t i o n s , perhaps on an e x c e p t i o n b a s i s , among th e banking a g e n c i e s f o r f o ll o w -u p a t r e g u l a r ex am inations. S e c t i o n 2 0 2 : f u r t h e r amends S e c t i o n 1 0 6 ( b ) ( 2 ) o f th e Bank Holding Company Act by adding a new s u b s e c t i o n (G) t o d e f i n e th e term "bank" as used throughout paragraph (2) t o in c l u d e mutual s a v in g s banks as w ell as commercial banks. Current S t a t u t e : T i t l e VIII o f FIRIRCA added S e c t i o n 1 0 6 ( b ) ( 2 ) to th e Bank Holding Company Act. This s e c t i o n , in p a r t , p r o h i b i t s the g ra n tin g o f p r e f e r e n t i a l loan s t o e x e c u t i v e o f f i c e r s , d i r e c t o r s and p r i n c i p a l sh ar eh old ers o f banks t h a t main tain corr es pondent accounts with th e le n d in g bank. The d e f i n i t i o n o f bank f o r th e purposes o f S e c t i o n 106(b) c u r r e n t l y in c l u d e s o n ly i n s t i t u t i o n s t h a t a c c e p t d e p o s i t s and grant commercial l o a n s . Thus, many mutual s a v in g s banks ar e excluded from coverage. Amendment: The Council recommends exten d in g th e p r o h i b i t i o n s o f paragraph (2) t o in c l u d e mutual s a v in g s banks. I t i s b e l i e v e d t h a t th e p o t e n t i a l e x i s t s f o r e x e c u t i v e o f f i c e r s and/o r t r u s t e e s o f mutual s a v in g s banks t o p la c e funds with a corr es ponden t bank in exchange f o r p r e f e r e n t i a l lo a n s . The Council does not p e r c e i v e any sound p o l i c y reason f o r ex clu d in g mutual s a v in g s banks from c o v e r a g e , g iv e n th e f a c t t h a t a l l o th e r banking i n s t i t u t i o n s are cover ed. - 4 S e c t i o n s 203 through 2 0 6 : amend s u b s e c t i o n s ( A ), ( B ) , (C ), and ( D ), r e s p e c t i v e l y , o f S e c t i o n 1 0 6 ( b ) ( 2 ) o f t h e Bank Holding Company Act t o extend th e p r o h i b i t i o n s o f t h o s e s u b s e c t i o n s t o c over th e " r e la te d i n t e r e s t s " o f d i r e c t o r s , e x e c u t i v e o f f i c e r s , and p r i n c i p a l sh a r e h o ld e r s as w ell as t h o s e persons t h e m s e lv e s . Current S t a t u t e : T i t l e VIII o f FIRIRCA added S e c t i o n 1 0 6 ( b ) ( 2 ) t o t h e Bank Holding Company A ct. Th is s e c t i o n c u r r e n t l y p r o h i b i t s th e g r a n tin g o f p r e f e r e n t i a l l o a n s o n ly t o i n d i v i d u a l e x e c u t i v e o f f i c e r s , d i r e c t o r s and p r i n c i p a l shareh old ers o f o t h e r banks which m ain tain corr es ponden t b ala n ces with the le n d in g bank. Amendment: The Council recommends expansion o f t h e s e p r o h i b i t i o n s t o in c l u d e r e l a t e d i n t e r e s t s o f e x e c u t i v e o f f i c e r s , d i r e c t o r s and p r i n c i p a l s h a r e h o ld e r s . The c u r r e n t p r o h i b i t i o n i s a s y m etric a l t o th e e x t e n t t h a t i t omits coverage o f insider in te r e sts . I t i s b e l i e v e d the e x i s t i n g p r o h i b i t i o n has served a u s e fu l purp ose, but should be s tr en g th en ed by c l o s i n g t h i s apparent l o o p h o le in the law. Although i n s t a n c e s o f a b u siv e conduct in g ran tin g p r e f e r e n t i a l lo ans to i n t e r e s t s o f i n s i d e r s have been encountered i n f r e q u e n t l y , th e Council p e r c e i v e s a c l e a r p o t e n t i a l f o r t h i s type o f a c t i v i t y . I t i s a l s o b e l i e v e d th e proposed amendment would pro vid e th e c a p a b i l i t y to more e f f e c t i v e l y deal with the p r a c t i c e when i t i s en cou n tered , p a r t i c u l a r l y s i n c e the le nd ing bank would be s u b j e c t to c i v i l money p e n a l t i e s f o r v i o l a t i o n s . III. T i t l e I I I - D i s c l o s u r e o f Material Facts S e c t i o n 3 0 1 : d e l e t e s s u b s e c t i o n (k) o f S e c t i o n 7 o f th e Federal D e p o sit Insurance Act which c u r r e n t l y r e q u ir e s annual d i s c l o s u r e s o f a bank's p r in c i p a l s t o c k h o l d e r s , and o f e x t e n s i o n s o f c r e d i t by th e bank or i t s correspondents to such s t o c k h o l d e r s and e x e c u t i v e o f f i c e s o f th e bank. Current S t a t u t e : T i t l e IX o f FIRIRCA amended S e c t i o n 7 o f t h e Federal D ep osit Insurance Act by adding s u b s e c t i o n ( k ) . This s u b s e c t i o n r e q u ir e s banks to make an annual r e p o r t o f a l l p r i n c i p a l s t o c k h o l d e r s o f record and o f c e r t a i n loan s to e x e c u t i v e o f f i c e r s and p r i n c i p a l s h a r eh o ld ers and r e l a t e d i n t e r e s t s o f t h o se persons t o t h e s u p e r v is o r y a g e n c i e s . The r e p o rt must be a v a i l a b l e f o r p u b lic i n s p e c t i o n . In 1979 th e s u p e r v is o r y a g e n c i e s i s s u e d a standard d i s c l o s u r e form (Form FFIEC 003) t o meet t h e s e req uir em en ts. The rep o r t FFIEC 003 r e q u ir e s the bank t o l i s t i t s p r i n c i p a l s h a r e h o l d e r s , th e name o f each e x e c u t i v e o f f i c e r and p r i n c i p a l s h a r eh o ld er who was ind ebted t o th e bank during a calen d ar year t o g e t h e r with t h e maximum ag g r e g a te amount o f in d eb tn es s o u t sta n d in g during th e y e a r , and a l i s t o f each e x e c u t i v e o f f i c e r and p r in c i p a l s h ar eh old er indebted t o a correspondent bank during th e y e a r and th e maximum ag g r e g a te amount o f such d eb ts o u t s t a n d i n g . The Regional O f f i c e s / D i s t r i c t Banks keep f i l e s o f t h e s e reports fo r public in sp ectio n . - 5 Amendment: The Council recommends e l i m i n a t i o n o f t h i s r e p o r t i n g requirement on th e grounds t h a t t h e c o s t s o f preparing th e r e p o r t are not j u s t i f i e d by th e b e n e f i t s f o r s u p e r v is o r y and p u b l ic d i s c l o s u r e purp oses. Review o f i n s i d e r lo an s i s a r o u t i n e p r a c t i c e a t a l l examinations and th e r e p o r t required by S e c t i o n 7(k) i s n ot c o n s id ere d n e c e s s a r y t o accomplish t h i s t a s k . The number o f p u b l i c r e q u e s t s f o r t h e r e p o r t a t th e a g e n c i e s ' Regional O f f i c e s / D i s t r i c t Banks has been minimal. IV. T i t l e IV - Right to F i n a n c i a l Pr iv acy S e c t i o n 4 0 1 : amends S e c t i o n 1113 (" E xceptio ns") o f th e Right t o Fin an cial Pr iv acy Act by adding a new s u b s e c t i o n (k) t o pro vid e t h a t , o t h e r p r o v i s i o n s o f th e s t a t u t e n o t w i t h s t a n d in g , th e exchange o f f i n a n c i a l records or inform ation regarding f i n a n c i a l i n s t i t u t i o n s i s permitted among and between th e f i v e member s u p e r v is o r y a g e n c i e s o f t h e Federal F i n a n c i a l I n s t i t u t i o n s Examination C ouncil. Current S t a t u t e : There i s some c o n f u s i o n as to whether T i t l e XI o f FIRIRCA ("Right t o F in a n cia l P r iv acy Act o f 1978") a ll o w s t h e exchange o f r e p o r t s o n ly among t h o s e s u p e r v is o r y a g e n c i e s which have a u t h o r i t y t o examine th e f i n a n c i a l c o n d i t i o n or b u s i n e s s o p e r a t i o n s o f t h e i n s t i t u t i o n . Those a g e n c i e s t h a t b e l i e v e such a r e s t r i c t i o n i s required w i l l exchange r e p o r t s with t h o s e a g e n c i e s t h a t do not have a u t h o r i t y t o examine t h e i n s t i t u t i o n on ly a f t e r d e l e t i n g the names o f bank customers or a l t e r n a t i v e l y , by p rovid ing n o t i c e t o named customers t h a t such in form ation has been r e l e a s e d . Amendment: The Council recommends c l a r i f i c a t i o n o f t h e s t a t u t e so t h e r e i s no doubt t h a t t h e Rig ht t o F i n a n c ia l Priv acy Act does not i n h i b i t the p r e e x i s t i n g d i s c r e t i o n a r y a u t h o r i t y o f t h e member a g e n c i e s t o d i s c l o s e r e p o r t s to each o t h e r and to s p e c i f i c a l l y r e c o g n i z e th e r i g h t t o exchange such in form ation between t h e member a g e n c i e s . The c o n f u s i o n as to th e p r o h i b i t i o n o f such exchanges a d v e r s e l y a f f e c t s s u p e r v is o r y e f f o r t s by l i m i t i n g th e flo w o f in form ation t h a t i s u se fu l f o r e f f i c i e n t s u p e r v i s i o n . I t c r e a t e s an admin i s t r a t i v e burden to th e e x t e n t t h a t customer informati on must be d e l e t e d from examination r e p o r t s . Given th e customary c o n f i d e n t i a l treatm ent accorded to examination r e p o r ts by th e a g e n c i e s co ncerned, t h i s r e s t r i c t i o n i s con sid ere d u nnecessa ry in ord er to p r o t e c t consumer p r iv a c y . V. T i t l e V - M i s c e ll a n e o u s Amendments S e c t i o n 5 0 1 : amends th e v a rio u s s t a t u t e s c o n t a in in g agency a u t h o r i t y to impose c i v i l money p e n a l t i e s to extend the period during which an appeal may be f i l e d from te n t o twenty d a y s, and to begin counting t h e appeal period from th e d a te th e order i s served . - 6 Pursuant t o T i t l e I o f FIRIRCA, t h e v a rio u s s t a t u t o r y s e c t i o n s d e a l i n g w ith i m p o s it io n o f c i v i l money p e n a l t i e s g e n e r a l l y pro vid e t h a t an appeal t o an order must be f i l e d with th e U.S. Court o f Appeals w i t h i n te n days from th e d a te o f such ord er. The Council b e l i e v e s t h e s e s e c t i o n s should be amended t o read w i t h i n twenty days a f t e r s e r v i c e o f t h e o rd er. This amendment i s d es ign ed t o provid e s u f f i c i e n t time f o r ap p ea lin g a c i v i l money p e n a l t y . As c u r r e n t l y c o n s t r u c t e d , th e s t a t u t o r y timeframe f o r a p p e a li n g a c i v i l money p e n a lt y i s extrem ely t i g h t , p a r t i c u l a r l y i f a d e l a y in th e s e r v i c e and/o r r e c e i p t o f th e order o c c u r s . S e c t i o n 5 0 2 : amends S e c t i o n 8 (q ) o f th e Federal D e p o s i t Insurance Act by d e l e t i n g th e requirement t h a t "the assuming or r e s u l t i n g bank s h a l l g i v e n o t i c e o f such assumption t o each o f th e d e p o s i t o r s o f th e bank whose l i a b i l i t i e s as so assumed w i t h i n 30 days a f t e r such assumption t a k e s e f f e c t , " whenever one insured bank assumes the l i a b i l i t i e s o f another insured bank by way o f merger, c o n s o l i d a t i o n , assumption or c o n t r a c t . This i s p r im a r ily an i s s u e i n v o l v i n g the FDIC. Under S e c t i o n 8 ( q ) o f th e FDIC A c t, t h e r e s u l t i n g bank must g i v e n o t i c e o f an assumption w it h in 30 days a f t e r such assumption tak es e f f e c t . Furn ishing n o t i c e to d e p o s i t o r s i s d esign ed t o a d v i s e a d e p o s i t o r who may have more than $100,000 on account i n t h e combined banks t h a t s e p a r a t e in su ran ce o f d e p o s i t s in th e assumed bank w i l l c o n t in u e f o r s i x months a f t e r th e assumption tak es e f f e c t o r , in t h e c a s e o f a tim e d e p o s i t with a m a tu rity o f g r e a t e r than s i x months, the e a r l i e s t m a tu rity d a te a f t e r th e six-month p e r io d . Council recommends e l i m i n a t i o n o f t h i s requirement. S e c t i o n 8 ( q ) o f the FDIC Act appears t o be burdensome and u n necessary. P r io r to the enactment o f FIRIRCA, n o t i f i c a t i o n o f d e p o s i t o r s in th e c a s e o f a merger or a con s o l i d a t i o n was not r e q u ir e d , with no apparent adverse e f f e c t . Providing s e p a r a t e in su ran ce f o r a s p e c i f i c period o f time appears to be a v a l i d and n e c e s s a r y p r o v i s i o n , but th e requirement t h a t th e bank n o t i f y every d e p o s i t o r i s deemed e x c e s s i v e . Banks in v o lv e d in mer ger-type t r a n s a c t i o n s n o t i f y d e p o s i t o r s o f t h e t r a n s a c t i o n as a matter o f r o u t i n e p u b l ic r e l a t i o n s , and a law t o r e q u ir e t h i s appears unnecessa ry. S e c t i o n 50 3 : amends S e c t i o n 1 0 2 ( f ) o f t h e Federal C red it Union Act t o provide t h a t a u d i t s o f th e National C r e d it Union A d m in is tr a tio n by th e General Accounting O f f i c e w i l l be conducted on a f i s c a l y e a r b a s i s rath e r than a ca len d a r y e a r b a s i s . The General Accounting O f f i c e has re q u ested t h i s amendment in order t o f a c i l i t a t e i t s a u d i t s o f th e National C red it Union A d m i n i s tr a t io n , s i n c e th e A d m i n i s t r a t io n 's f i s c a l y e a r does not correspond t o th e calen d ar y e a r . The Council concurs with GAO's recommendation.