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FIL-70-2001 Attachment

[Federal Register: July 16, 2001 (Volume 66, Number 136)]

[Notices]

[Page 37029-37030]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr16jy01-71]


 

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FEDERAL DEPOSIT INSURANCE CORPORATION


 

 

Request for Comment on Study of Banking Regulations Regarding the

Online Delivery of Banking Services


 

AGENCY: Federal Deposit Insurance Corporation (FDIC).


 

ACTION: Request for comment.


 

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SUMMARY: The FDIC is reviewing its regulations regarding the delivery

of financial services. The purpose of this review is to identify

changes or additions to its regulations that would facilitate the use

of new technologies by financial institutions. This Request for Comment

solicits comment on issues arising from the electronic delivery of

financial products and services.


 

DATES: Comments must be received by September 14, 2001.


 

ADDRESSES: Send written comments to Robert E. Feldman, Executive

Secretary, Attention: Comments/OES, Federal Deposit Insurance

Corporation, 550 17th Street, NW., Washington, DC 20429. Comments may

be hand-delivered to the guard station at the rear of the 550 17th

Street Building (located on F Street), on business days between 7 a.m.

and 5 p.m. (facsimile number (202) 898-3838; Internet address:

comments@fdic.gov mailto:comments@fdic.gov>). Comments may be posted on

the FDIC internet site at http://www.fdic.gov/regulations/laws/federal/

propose.html and may be inspected and photocopied in the FDIC Public

Information Center, Room 100, 801 17th Street, NW., Washington, DC

20429, between 9 a.m. and 4:30 p.m. on business days.


 

FOR FURTHER INFORMATION CONTACT: Jeffrey M. Kopchik, Senior Policy

Analyst, Division of Supervision (202) 898-3872; or Robert A. Patrick,

Counsel, Legal Division (202) 898-3757.


 

SUPPLEMENTARY INFORMATION:


 

Introduction


 

Section 729 of the Gramm-Leach-Bliley Act, Public Law 106-102

(GLBA), requires the FDIC, and other federal bank regulatory agencies,

to review regulations regarding the delivery of financial services and

report to Congress recommendations for adapting existing requirements

to online banking and lending. The purpose of this Request for Comment

is to invite public comment on issues regarding financial institutions'

involvement in electronic banking, before submission of the

Corporation's report to Congress. Public comment will help determine

whether any FDIC regulations should be revised to remove regulatory

impediments to financial institutions' use of new technologies. The

FDIC also would like to know whether it should consider promulgating

regulations that would facilitate financial institutions' use of new

technologies. Based on the comments received, the FDIC, in its report

to Congress, may identify possible revisions or additions to FDIC

regulations or supervisory guidance.


 

Background


 

The application of new technologies to traditional banking products

and services is dramatically altering the ways in which financial

institutions conduct business. Advances in telecommunications provide

financial institutions with faster and more efficient communication and

data transmission. The Internet provides financial institutions with a

vehicle to reach a global market area without an investment in ``brick

and mortar'' offices. Developments in technology are causing financial

institutions to reevaluate existing delivery channels and business

practices, develop new products and services, and serve customers more

efficiently.

Through the issuance of supervisory guidelines such as the

Standards for Safeguarding Customer Information, 12 CFR part 364,

Appendix B (66 FR 8616, Feb. 1, 2001) (FIL 22-2001, March 14, 2001),

the FDIC is working to identify and educate banks about the risks

presented by electronic banking and to ensure that its regulations

appropriately address these risks.\1\

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\1\ The FDIC issued electronic banking examination procedures in

January 1997 and implemented an electronic banking subject matter

expert program in April 1997. The Division of Supervision created an

Electronic Banking Branch to focus attention on electronic banking

supervisory issues in September 2000. In addition, the FDIC has

issued a variety of written guidance concerning risks and

appropriate procedures for electronic banking. See e.g., FIL 81-

2000, Risk Management of Technology Outsourcing (November 29, 2000);

FIL 77-2000, Bank Technology Bulletin, Internet Domain Names

(November 9, 2000); FIL 72-2000, Electronic Signature in Global and

National Commerce Act (November 2, 2000); FIL 67-2000, Security

Monitoring of Computer Networks (October 3, 2000); FIL 63-2000,

Online Banking (September 21, 2000); FIL 131-97, Security Risks

Associated with the Internet (December 18, 1997).

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General Comments


 

Commenters are invited to submit comments and recommendations in

connection with any of the following questions or any other issues

relating to the FDIC's policies or procedures for supervising financial

institutions' use of electronic delivery channels.

Are there specific regulations the FDIC should modify

because they impede the use of a new technology that would allow

financial institutions to offer improved products or services in a more

efficient manner and at a lower cost?

Are there areas where financial institutions would benefit

from additional clarification of rules or guidance concerning the risks

associated with electronic banking activities?

Are there specific areas in which regulatory changes are

needed to enhance consumer acceptance of, confidence in, or access to,

electronic banking?


 

[[Page 37030]]


 

Hyperlinking


 

The Internet has made it possible for financial institutions and

non-financial commercial enterprises to partner in ways that may not be

apparent to customers visiting a web site. For example, a financial

institution's web site may include hyperlinks that transfer the

customer to the web sites of one or more non-financial institutions.

These other web sites may provide non-financial information or sell

non-financial products or services. Sites differ in the degree to which

they inform a person that products or services accessible through the

selection of a hyperlink are, or are not, offered, sponsored, or

endorsed by the bank, which may be confusing to site visitors.

Should the FDIC promulgate a regulation or publish

guidance setting forth standards for state nonmember banks concerning

the use of hyperlinks?

Are there technology solutions to address these issues?


 

Physical Location


 

Internet banking raises issues with respect to how the FDIC should

interpret existing laws and regulations that reference geographic terms

or rely on concepts of physical presence. For example, the definition

of ``branch'' contained in Sec. 303.41(a) of the FDIC's regulations (12

CFR 303.41(a)) assumes the existence of a building permanently or

temporarily located at a specific physical location. It does not

address banking transactions conducted over the Internet where the

consumer and a bank representative do not meet face to face. See 12 CFR

part 303, subpart C.

Does reliance on these terms and concepts create an

impediment to financial institutions conducting operations on the

Internet? If so, how should the FDIC clarify its regulations?

Are there other instances in which online banking or

lending would benefit from a clarification of references to physical

location in FDIC regulations? If so, how should the FDIC address those

instances?


 

Appraisals


 

Certain loans must be supported by written real estate appraisals

performed in accordance with uniform standards, supported by the

presentation and analysis of relevant market information. See 12 CFR

part 323.

Would online lending benefit from any clarification of the

FDIC's application of this regulation in terms of what constitutes a

written appraisal, or the presentation of relevant market information.

If so, what clarifications should the FDIC make to facilitate the use

of appraisals in electronic form?

What types of controls regarding authentication of an

electronic appraisal, certification of the appraiser, or other

standards would be appropriate to assure authenticity and integrity in

connection with filing electronic appraisals?


 

Electronic Signatures


 

The Electronic Signatures in Global and National Commerce Act, 15

U.S.C. 7001, et seq. (E-Sign Act), provides that contracts and

signatures with respect to any transaction affecting interstate

commerce may not be denied validity solely because they are in

electronic form. The E-Sign Act also provides that records of such

contracts may be maintained in electronic form, subject to certain

requirements, i.e., they must accurately reflect the information in the

contract, be accessible to all persons who are entitled to access them,

and be capable of being accurately reproduced for later reference.

Should the FDIC promulgate regulations or publish guidance

setting forth standards for the use of electronic signatures and

records? See 15 U.S.C. 7004.


 

By order of the Board of Directors.


 

Dated at Washington, DC, this 10th day of July, 2001.


 

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 01-17666 Filed 7-13-01; 8:45 am]

BILLING CODE 6714-01-P

Last Updated: March 24, 2024