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Federal Register / Vol. 76, No. 137 / Monday, July 18, 2011 / Rules and Regulations 42015

CATTLE AND CALVES 1—Continued

State/unit 1,000 head Directors

Total ...... 550 ......

35. Mid-Atlantic ...... 1 Maryland ...... 192 ...... West ...... 400 ......

Total ...... 592 ......

36. Southeast ...... 3 Alabama ...... 1,253 ...... Georgia ...... 1,100 ...... South Carolina ...... 385 ......

Total ...... 2,738 ......

37. Southwest ...... 6 California ...... 5,283 ...... Nevada ...... 450 ......

Total ...... 5,733 ......

38. Importer 2 ...... 6,887 7 1 2008, 2009, and 2010 average of January 1 cattle inventory data. 2 2007, 2008, and 2009 average of annual import data.

* * * * * Dodd-Frank Act’s repeal of Section as it may deem necessary to effectuate Dated: July 12, 2011. 19(i). The final rule also repeals the the purposes of this section and prevent Rayne Pegg, Board’s published interpretation of evasions thereof. * * *’’ The Board and removes references to promulgated Regulation Q on August Administrator, Agricultural Marketing Service. Regulation Q found in the Board’s other 29, 1933 to implement Section 19(i) of regulations, interpretations, and the Act. Section 627 of the Dodd-Frank [FR Doc. 2011–17885 Filed 7–15–11; 8:45 am] commentary. Act repeals Section 19(i) of the Act in BILLING CODE P its entirety, effective July 21, 2011. DATES: Effective Date: July 21, 2011. FOR FURTHER INFORMATION CONTACT: II. Request for Public Comment SYSTEM Sophia H. Allison, Senior Counsel (202/ On April 14, 2011, the Board 452–3565), Legal Division, or Joshua S. published in the Federal Register a 12 CFR Parts 204, 217, and 230 Louria, Financial Analyst (202/263– request for comment on its proposal to 4885), Division of Monetary Affairs; for repeal Regulation Q effective July 21, Regulations D, Q, and DD users of Telecommunications Device for 2011 (76 FR 20892, Apr. 14, 2011). In [Docket No. R–1413] the Deaf (TDD) only, contact (202/263– its request for comment, the Board also 4869); Board of Governors of the Federal sought comment on all aspects of the RIN 7100–AD 72 Reserve System, 20th and C Streets, proposal, and also sought comment on NW., Washington, DC 20551. Prohibition Against Payment of four specific issues related to the Interest on Demand Deposits SUPPLEMENTARY INFORMATION: proposal: 1. Does the repeal of Regulation Q I. Prohibition Against Payment of AGENCY: Board of Governors of the have significant implications for the Interest on Demand Deposits Federal Reserve System (Board) balance sheets and income of depository ACTION: Final rule. Section 19(i) of the Federal Reserve institutions? What are the anticipated Act (‘‘Act’’) (12 U.S.C. 371a) generally effects on bank profits, on the allocation SUMMARY: The Board is publishing a provides that no member bank ‘‘shall, of deposit liabilities among product final rule repealing Regulation Q, directly or indirectly, by any device offerings, and on the rates offered and Prohibition Against Payment of Interest whatsoever, pay any interest on any fees assessed on demand deposits, on Demand Deposits, effective July 21, deposit which is payable on demand. sweep accounts, and compensating 2011. Regulation Q was promulgated to * * *’’ Section 19(i) was added to the balance arrangements? implement the statutory prohibition Act by Section 11 of the Banking Act of 2. Does the repeal of Regulation Q against payment of interest on demand 1933 (48 Stat. 162, 181). Section 324 of have any implications for short-term deposits by institutions that are member the (49 Stat. 684, funding markets such as the overnight banks of the Federal Reserve System set 714) amended Section 19(a) of the Act market and Eurodollar forth in Section 19(i) of the Federal to authorize the Board, ‘‘for the markets, or for institutions such as Reserve Act (‘‘Act’’). Section 627 of the purposes of this section, to define the institution-only market mutual Dodd-Frank Reform and terms ‘demand deposits’, ‘gross demand funds that are active investors in short- Consumer Protection Act (‘‘Dodd-Frank deposits,’ ‘deposits payable on demand’ term funding markets? Act’’) repeals Section 19(i) of the [and] to determine what shall be 3. Is the repeal of Regulation Q likely Federal Reserve Act effective July 21, deemed to be a payment of interest, and to result in strong demand for interest- 2011. The final rule implements the to prescribe such rules and regulations bearing demand deposits?

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4. Does the repeal of Regulation Q products and rates structures,’’ and that lend this money back into the local have any implications for competitive they would have ‘‘another option in market at competitive rates to promote burden on smaller depository terms of liquidity.’’ This commenter local lending for housing, consumer institutions? expected demand for interest-bearing lending and small business lending. The comment period closed on May demand deposits to increase after the Commenters argued that smaller 16, 2011. repeal. institutions, as they lose their demand One bank commented in support of III. Public Comments deposit base, would have to access other the proposal because ‘‘price controls short-term funding sources, which a. Summary should not be the subject of government would increase costs in those markets. The Board received a total of 62 regulation.’’ This commenter suggested Commenters also argued that the repeal comments on the proposed rule. Of that the repeal would enable the bank to would increase the concentration of these, 45 comments were received from compete for corporate demand deposits financial assets in the banking sector as 40 banks,1 6 comments were received without having to sweep them into funds move out of investments such as from trade associations, 4 comments other off-balance-sheet investments. money market mutual funds into were received from other types of Another bank commented favorably on interest-bearing demand deposits, entities, and 7 comments were received the repeal, arguing that Regulation Q making nonbank money markets less from individuals. Of the comments ‘‘has been pretty much hollowed out liquid, less robust, less efficient, and received on the proposed rule, 6 and therefore rendered irrelevant more expensive. One commenter further comments were in favor of the proposed through the years.’’ argued that the outflow of funds from rule, 54 comments were opposed to the c. Comments Opposed to the Proposed money market mutual funds into proposed rule, and 2 comments neither Rule interest-bearing demand deposits would supported nor opposed the proposed damage the commercial paper market, Most of the comments received rule but commented on other aspects of since money market mutual funds are opposed the repeal of Regulation Q. the proposal. A number of commenters major purchasers of commercial paper. Several commenters indicated that they specifically addressed one or more of Another commenter argued that the believe that the repeal would have the four specific questions the Board repeal would harm the market for ‘‘devastating’’ effects on smaller and asked in the proposed rule separately municipal bonds, because community community banks. Commenters also from their general comments on the banks would be no longer able to buy indicated that they expect many proposed rule. fixed-rate bank-qualified municipal detrimental effects for institutions from bonds. b. Comments in Favor of the Proposed the repeal, including increased cost of Several commenters stated that they Rule funding, the addition of increased expect larger and ‘‘too big to fail’’ banks, One financial group expressed interest rate risk to institution balance which they believe already have a support for the proposed rule, stating sheets, increased expenses, decreased competitive advantage, to draw that the commenter looked forward to a net interest margins, decreased earnings, commercial demand depositors away fair and competitive market that is no decreased profits, and the ‘‘potential to from smaller and community banks longer manipulated through regulation place many banks in a liability sensitive with expensive marketing programs and by lobbyists for money market funds position.’’ Commenters also expected offers of higher interest rates with which and large banks. Another commenter, an detrimental effects for institutions’ smaller institutions cannot compete. individual, opined that the proposal customers, including decreased credit Some commenters asserted that these ‘‘repeals an arbitrary and basically non- availability, increased costs of credit, customers, once drawn away to larger functioning rule’’ and would ‘‘allow and increased fees and costs of services. banks, will suffer decreases in service more transparency and competition in A number of commenters argued that levels compared to what they received this arena’’ that ‘‘will force banks to the repeal comes at a time when the from smaller banks because the business innovate and to lower costs.’’ This banking industry in general, and the model of smaller banks focuses on commenter asserted that the repeal community banking industry in relationships and service levels. One would ‘‘lead to more simplicity in particular, is already stressed and facing commenter asserted that the repeal of deposit offerings and to less rationale challenges to continued viability and Regulation Q would not enable smaller for current workarounds’’ such as NOW profitability, as well as increased and community banks to compete with accounts. regulatory burden, particularly with larger institutions because, according to A trade association commented that new interchange fee regulations. Some the commenter, community banks the repeal could result in a more stable commenters contended that there is mostly compete with one another and source of capital for banks and provide currently little demand for loans, and not with larger institutions. Other financial professionals with another that without loan demand the increased commenters asserted that troubled competitive investment alternative. This cost of funds represented by paying banks would be likely to try to ‘‘buy’’ commenter also opined that taxes on interest on demand deposits would demand deposits by offering interest paid would increase revenues result in decreased income. One unsustainably high interest rates, for the U.S. Treasury, and asserted that commenter argued that the payment of placing the banking system at risk for ‘‘there inherently will be new economic interest on balances maintained in more bank failures and increasing costs dynamics that must be considered when accounts at Federal Reserve Banks is not to the FDIC’s bank insurance fund. One negotiating fees and rates.’’ This sufficient to offset the cost of paying commenter argued that large banks that commenter further asserted that this interest on demand deposits. are funded with off-balance-sheet would ‘‘force financial professionals A number of commenters asserted sources in order to avoid FDIC and corporate treasurers to consider that the interest-free demand deposit insurance premiums would see the how to effectively rebalance their base is the primary franchise builder for repeal as a way to ‘‘buy’’ domestic deposit portfolios in light of the new community banks and the largest source deposits, ‘‘robbing’’ local communities of fixed-rate funding. One commenter of needed capital. 1 More than one person from the same institution argued that such deposits ‘‘are the Some commenters asserted that the submitted comments in some cases. lifeblood of community banks’’ who movement of funds from non-interest-

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bearing demand deposits into interest- that repeals the statutory prohibition the cost of funds ‘‘will be considerably bearing demand deposits would take against payment of interest on demand less than consumer core deposits,’’ and such deposits outside of the unlimited deposits), and some contended that the that ‘‘in spite of the cannibalization of FDIC insurance coverage currently Board simply should retain or reinstate some current deposits’’ the net effect available for non-interest-bearing Regulation Q. One commenter, noting would be beneficial. This commenter transaction accounts. One commenter that the Board would no longer have also asserted that ‘‘we will no longer argued that the unlimited insurance for statutory authority to retain Regulation have to pay vendors for sweeps’’ and such accounts created moral hazard by Q after July 21, 2011, asserted that the that customers would be able to choose reducing depositor incentives to Board nevertheless has the authority to between receiving earnings credits and monitor institutions and by encouraging issue a policy statement prohibiting the direct payments of interest. This institutions to engage in riskier behavior payment of interest on demand deposits commenter further asserted that there secure in the knowledge that their until the banking agencies studied the would be no impact on that institution’s demand depositors will not move. This safety and soundness implications of fees but that the repeal would enable commenter argued that the repeal of the repeal and determined that it was smaller institutions to compete with Regulation Q will increase these risks safe and sound to permit payment of because depositors could move freely such interest. Another commenter larger institutions for ‘‘large balance from interest-bearing to non-interest- argued that the repeal of Regulation Q clients’’ because previously ‘‘large bearing demand deposits in times of would create systemic risk and that the balance clients’’ always had sufficient stress, thereby creating effective Board should use its systemic risk earnings credits to offset fees and the unlimited insurance on all demand authority under the Dodd-Frank Act to large institutions holding those balances deposits. prevent the repeal from taking effect. were able to use in-house sweeps Several commenters argued that the Another commenter suggested a two- programs. Smaller institutions, effects of the repeal may be less visible stage process, repealing the regulation according to this commenter, were not in a low interest rate environment but in the first phase, and then starting a able to price competitively for such would be more pronounced as interest second phase of twelve to eighteen programs because of the vendor costs for rates begin to rise. Some commenters months within which the existing sweeps programs, ‘‘the ‘Too Big To Fail’ argued that the repeal would threaten interpretations of Regulation Q would concept’’ and the fact that earnings the viability of many institutions in a remain in effect to give the FDIC the credits are not valuable beyond what rising rate environment. Another opportunity to consider whether to can be used to pay for fees. commenter argued that the effect would adopt some or all of them. A trade association commented that be magnified by the combination of A few commenters argued that, the anticipated effects of the repeal on rising interest rates and the expiration of instead of repealing Regulation Q, the the FDIC’s program of unlimited Board should amend Regulation D to bank profits, allocation of deposit insurance for non-interest-bearing provide for a non-reservable interest- liabilities, and rates offered is closely transaction accounts in 2012. bearing ‘‘money market deposit tied to the bank’s local market and Some comments opposed to the account’’ that would allow up to interest rate environment. Specifically, repeal asserted that the provision that twenty-four preauthorized or automatic this association commented that in became Section 627 of the Dodd-Frank transfers per month. Commenters also small markets with little competition for Act was inserted into the bill late in the asserted that funds moving into interest- deposits, banks may elect neither to pay process, and was not debated or heard bearing demand deposits from non- interest nor to offer earnings credits in the House or Senate Committees. A reservable deposits such as time following the repeal. This commenter few commenters questioned the stated deposits, or from other non-deposit asserted that many banks in markets rationale for interest on demand sources would be subject to a reserve with high competition for deposits deposits as benefitting small businesses. requirement of up to ten percent, which believed that the cost difference These commenters asserted that a they stated would reduce the typical small business maintains on between paying direct interest or availability of such funds for lending or average about $10,000 in a demand offering an interest substitute would not other investment. deposit, which even at a two percent be significant in a low interest rate interest rate would still earn the small d. Comments Addressing Four Specific environment. This commenter asserted business only $200 in one year. One of Questions Raised in the Proposed Rule that, in a high interest rate environment, these commenters asserted that banks banks will be under increased pressure 1. Does the repeal of Regulation Q have would have to increase fees to make up to offer interest which would result in significant implications for the balance for the increased cost associated with higher costs of funds and decreased net sheets and income of depository paying interest on demand deposits, interest margins. This commenter also eroding the $200-per-year figure to institutions? What are the anticipated asserted that ‘‘the banking industry’s effects on bank profits, on the allocation approximately $100 per year. This best defense against interest rates of deposit liabilities among product commenter argued that $100 or $200 per spiraling to exceptionally high and year was not sufficient to permit such offerings, and on the rates offered and fees assessed on demand deposits, unsustainable levels are more account businesses to grow or create jobs. options, including interest, earnings Several commenters argued that the sweep accounts, and compensating balance arrangements? credits, premiums, bonuses, and hybrid Board should not repeal Regulation Q, accounts.’’ This commenter further or should delay the effective date of the A financial group commented that the asserted that the effect of the repeal on repeal until studies of the impact of the ‘‘playing field will be leveled between correspondent banks should be repeal, including safety and soundness big banks and community banks’’ and negligible. effects, could be conducted and that the proposed rule would ‘‘provide considered. Some commenters an opportunity to pursue large balance suggested that the Board advocate before commercial clients that in the past the Congress for a repeal of Section 627 would not consider a smaller of the Dodd-Frank Act (the provision institution.’’ This group commented that

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2. Does the repeal of Regulation Q have institutions that have a better track an environment, all short-term money any implications for short-term funding record of serving the communities in market rates are near zero, suggesting markets such as the overnight federal which they operate than larger that even for those institutions that funds market and Eurodollar markets, or institutions do. chose to pay interest on demand for institutions such as institution-only A trade association commented that deposits, the rate paid will likely also be money market mutual funds that are the repeal would increase competition close to zero. Near-zero money market active investors in short-term funding for typically high-balance business rates will likely continue for an markets? accounts and that costs of funds would extended period, so depository increase as such accounts become more institutions and their customers should A financial group commented that difficult to attract and more expensive be able to adjust in a gradual and ‘‘[a]ny changes would be limited’’ and to retain. This commenter asserted that orderly manner to the new environment. would have no long-term effects on such troubled financial institutions needing Similarly, it would be contrary to the markets. This group commented that liquidity or deposits will aggressively purpose of Regulation D to define off-balance-sheet sweeps would be market exceptionally high interest rates ‘‘savings deposit’’ to include an account moved back on balance sheet and that which may place community banks at a from which up to 24 convenient ‘‘deposits for the first time will actually disadvantage. This commenter also transfers or withdrawals per month are have market competition which will be asserted that the repeal would improve permitted, as some commenters good for the company, good for the parity between FDIC-insured requested. The Board is required by bank, consumers, and overall good for institutions and credit unions in a high Section 19(b) of the Act to impose the market.’’ This commenter also interest rate environment because credit reserve requirements on transaction asserted that ‘‘[t]he only complainers unions ‘‘pay interest on business accounts. Section 19(b)(1)(C) of the Act will be those that monopolize the checking and are moving aggressively defines ‘‘transaction account’’ as a business today due to regulation, but into the small business-banking niche.’’ deposit or account on which the they will adjust [by] either paying more The commenter further asserted that the depositor is permitted ‘‘to make or [downsizing].’’ repeal ‘‘may assist banks of all sizes and withdrawals by negotiable or A bank commented that the demand charter types to attract funds previously transferrable instrument, payment for short-term funding markets will placed outside of the traditional banking orders of withdrawal, telephone likely increase, which will increase cost system’’ and that this ‘‘reintermediation transfers, or other similar items for the of accessing those markets which will of corporate money will be more purpose of making payments or increase bank borrowing costs and have noticeable when interest rates increase.’’ transfers to third persons or others.’’ 2 a negative impact on profitability. Section 19 was intended to distinguish e. Responses to the Public Comments 3. Is the repeal of Regulation Q likely to transaction accounts, which are Many of the comments opposed to the result in strong demand for interest- reservable, from savings deposits, which repeal of Regulation Q suggested bearing demand deposits? are not reservable. Allowing 24 implicitly or explicitly that the Board convenient transfers per month would A financial group commented that the should not repeal Regulation Q or allow such transfers every business day repeal of Regulation Q is likely to result should delay the repeal of Regulation Q. of the month, and allow a savings in strong demand for interest-bearing As stated in the Board’s Notice of deposit to function in a manner demand deposits and that ‘‘this is very Proposed Rulemaking, however, the indistinguishable from a transaction good for the bank and the business Board will no longer have the authority account. clients’’ and that they expect to see to retain Regulation Q after July 21, ‘‘significant growth in this product 2011. Accordingly, the Board does not IV. Final Regulatory Flexibility category in number of accounts and have the discretion to retain the Analysis balances.’’ regulation, nor does the Board have the In accordance with Section 3(a) of the authority to postpone the effective date Regulatory Flexibility Act, 5 U.S.C. 601 4. Does the repeal of Regulation Q have of the repeal beyond July 21, 2011. et seq. (RFA), the Board is conducting any implications for competitive burden While the Board may use its safety and this final regulatory flexibility analysis on smaller depository institutions? soundness authority to regulate interest incorporating comments received Many of the comments described paid by the smaller group of state- during the public comment period. An above discussed the implications of the chartered member banks (but not all initial regulatory flexibility analysis was repeal of Regulation Q for competitive member banks, as under Regulation Q), included in the Board’s notice of burden on smaller depository the implementation of Section 627 of proposed rulemaking in accordance institutions. A financial group the Dodd-Frank Act does not appear to with Section 3(a) of the RFA. In its commented that the repeal of Regulation present issues of systemic risk or safety notice of proposed rulemaking, the Q would not have any implications ‘‘to and soundness. In particular, the ability Board requested comments on all any significant degree’’ for competitive to pay interest on demand deposits aspects of the proposal, and specifically burden on smaller depository should enhance clarity in the market for requested comment on whether the institutions and that the repeal transaction accounts and potentially repeal of Regulation Q pursuant to ‘‘provides the best opportunity we have eliminate many of the complicated Section 627 of the Dodd-Frank Act seen in decades to pursue business procedures implemented by depository would have any implications for clients.’’ This commenter asserted that institutions to pay implicit interest on competitive burden on smaller only the smaller institutions that would demand deposits. Interest-bearing depository institutions. be negatively affected by the repeal ‘‘are demand deposits could attract funds 1. Statement of the need for and the those very small institutions in non- from other areas of the financial system objectives of the final rule. The Board is competitive markets which have and increase the funding possibilities of repealing Regulation Q, which benefitted having no large banks the banking sector. Additionally, the implements the statutory prohibition set compete for funds.’’ A bank contended repeal of Regulation Q will become forth in Section 19(i) of the Act, that the repeal of Regulation Q will add effective during a period of to the profitability challenges of smaller exceptionally low interest rates. In such 2 12 U.S.C. 461(b)(1)(C).

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effective July 21, 2011. The repeal recordkeeping, and other compliance Section 553(d)(3) of the APA for implements Section 627 of the Dodd- requirements for member banks. publication of the final rule on a date Frank Act, which repeals Section 19(i) 5. Steps taken to minimize the that is less than 30 days before the of the Act effective July 21, 2011. economic impact on small entities; effective date. Publication of the final Accordingly, the repeal of Regulation Q significant alternatives. No significant rule in this time frame will not impose effective July 21, 2011, is mandatory. alternatives to the final rule were a burden on anyone, since all persons 2. Summary of significant issues suggested that could be accomplished subject to Regulation Q have been on raised by public comments in response without Congressional action. Although notice since passage of the Dodd-Frank to the Board’s IRFA, the Board’s some commenters suggested that the Act nearly a year ago that Regulation Q assessment of such issues, and a Board issue a policy statement delaying would be repealed effective July 21, statement of any changes made as a the implementation of the statutory 2011. In addition, the Board’s request result of such comments. As noted in repeal, the Board does not believe that for comment published in the Federal the SUPPLEMENTARY INFORMATION, a it has the authority to extend the Register on April 14 provided majority of commenters asserted that the statutory effective date through a policy additional notice, over three months final rule would have numerous statement that would contravert the prior to the effective date, that the rule deleterious effects on small member clear Congressional intent to repeal the would be repealed. The Board does not banks. As also noted in the prohibition against the payment of have the legal authority to extend the SUPPLEMENTARY INFORMATION, however, interest on demand deposits effective effective date beyond July 21, 2011, the legal authority pursuant to which July 21, 2011. because the law pursuant to which the the Board promulgated Regulation Q V. Paperwork Reduction Act Analysis Board promulgated the rule will cease to will cease to exist on July 21, 2011. exist on that date. Accordingly, the Accordingly, the Board does not have In accordance with the Paperwork Board finds good cause for not delaying Reduction Act (PRA) of 1995 (44 U.S.C. the discretion to retain the regulation the effective date of the final rule. beyond July 21, 2011, nor does the 3506; 5 CFR 1320 Appendix A.1), the Board have the authority to postpone Board reviewed the final rule under the List of Subjects authority delegated to the Board by the the effective date of the repeal beyond 12 CFR Part 204 that date. As further noted in the Office of Management and Budget SUPPLEMENTARY INFORMATION, the Board (OMB). No collections of information Banks, Banking, Reporting and does not believe that the final rule pursuant to the PRA are contained in recordkeeping requirements. presents issues of systemic risk or safety the final rule; however, there will be 12 CFR Part 217 and soundness sufficient to warrant clarifications to the instructions of action by the Board on those bases. several regulatory reporting Banks, Banking, Reporting and Accordingly, the Board made no requirements. The Board estimates that recordkeeping requirements. changes in the final rule as a result of the clarifications would have a 12 CFR Part 230 the analysis of the public comments. negligible effect on the burden estimates 3. Description of and estimate of for the existing regulatory reporting Advertising, Banks, Banking, small entities affected by the final rule. information collections. Consumer protection, Reporting and The final rule will affect all national recordkeeping requirements, Truth in VI. Administrative Procedure Act banks and all state-chartered member savings. banks. Those institutions may choose The Administrative Procedure Act For the reasons set forth in the after July 21, 2011 to pay interest on (‘‘APA’’) generally requires federal preamble, under the authority of section demand deposits that they hold for their agencies to publish a final rule at least 627 of Public Law 111–203, 124 Stat. customers. A financial institution is 30 days before the effective date thereof. 1376 (July 21, 2010), the Board is generally considered ‘‘small’’ if it has 5 U.S.C. 553. The APA also provides amending 12 CFR parts 204, 217, and assets of $175 million or less.3 There are exceptions under which an agency may 230 to read as follows: currently approximately 2,956 member publish a final rule with an effective banks (national banks and state- date that is less than 30 days from the PART 204—RESERVE chartered member banks) that have date of publication of the final rule. REQUIREMENTS OF DEPOSITORY assets of $175 million or less. These Specifically, the APA provides a INSTITUTIONS institutions are not required to offer substantive rule may be published on a ■ 1. The authority citation for part 204 demand deposits to their customers or date that is less than 30 days before its is amended to read as follows: to pay interest on those deposits. The effective date where the rule ‘‘grants or Board expects the final rule to have a recognizes an exemption or relieves a Authority: 12 U.S.C. 248(a), 248(c), 461, positive impact on all such entities restriction,’’ or where the agency finds 601, 611, and 3105. because it eliminates an obsolete good cause that is published in the final ■ 2. In § 204.10, paragraph (c) is revised regulatory provision and because it rule. 5 U.S.C. 553(d)(2)–(3). to read as follows: provides member banks with the option The repeal of Regulation Q of offering interest-bearing demand implements the repeal of Section 19(i) § 204.10 Payment of interest on balances. deposits following the repeal of of the Federal Reserve Act, effective July * * * * * Regulation Q. 21, 2011, pursuant to Section 627 of the (c) Pass-through balances. A pass- 4. Projected reporting, recordkeeping, Dodd-Frank Act. The repeal relieves a through correspondent that is an eligible and other compliance requirements. restriction by repealing the prohibition institution may pass back to its The Board believes that the final rule against payment of interest on demand respondent interest paid on balances will not have any impact on reporting, deposits by member banks. As such, the held on behalf of that respondent. In the final rule is exempt under Section case of balances held by a pass-through 3 U.S. Small Business Administration, Table of 553(d)(2) of the APA from the correspondent that is not an eligible Small Business Size Standards Matched to North requirement of publication not less than institution, a Reserve Bank shall pay American Industry Classification System Codes, available at http://www.sba.gov/sites/default/files/ 30 days before the effective date. The interest only on the required reserve Size_Standards_Table.pdf. Board also finds good cause under balances held on behalf of one or more

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respondents, and the correspondent DEPARTMENT OF TRANSPORTATION for practices, methods, and procedures shall pass back to its respondents the Administrator finds necessary for interest paid on balances in the Federal Aviation Administration safety in air commerce, including correspondent’s account. minimum safety standards for aircraft 14 CFR Part 33 * * * * * engines. This final rule is within the [Docket No. FAA–2010–0398; Amendment scope of that authority because it PART 217—PROHIBITION AGAINST No. 33–31] updates existing regulations for rotor overspeed for aircraft turbine engines. PAYMENT OF INTEREST ON DEMAND RIN 2120–AJ62 DEPOSITS (REGULATION Q)— Background [REMOVED AND RESERVED] Airworthiness Standards; Rotor Overspeed Requirements Part 33 of Title 14, Code of Federal Regulations, prescribes airworthiness ■ 3. Part 217 is removed and reserved. AGENCY: Federal Aviation standards for original and amended type PART 230—TRUTH IN SAVINGS Administration (FAA), DOT. certificates for aircraft engines. The (REGULATION DD) ACTION: Final rule. European Aviation Safety Agency (EASA) Certification Specification— SUMMARY: This rule will amend the Engines (CS–E) prescribes ■ 4. The authority citation for part 230 aircraft turbine engine rotor overspeed corresponding airworthiness standards continues to read as follows: type certification standards. This action to certify aircraft engines in Europe. Authority: 12 U.S.C. 4301 et seq. establishes uniform rotor overspeed While part 33 and the CS–E are similar, design and test requirements for aircraft they differ in several respects. These Supplement I to Part 230—Official Staff engines and turbochargers certificated differences may result in added costs, Interpretations by the FAA and the European Aviation delays, and time required for Safety Agency (EASA). The rule also certification. This rule will harmonize ■ 5. In Supplement I to Part 230: establishes uniform standards for the applicable U.S. and EASA standards ■ A. Under Section 230.2—Definitions, design and testing of engine rotor parts and clarify existing overspeed paragraph (n) Interest, is revised. in the and in Europe, requirements for aircraft turbine engine ■ B. Under Section 230.7—Payment of eliminating the need to comply with rotor parts. two differing sets of requirements. interest, subsection (a)(1) Permissible Summary of the NPRM methods, the introductory text of DATES: This amendment becomes paragraph (5) is revised. effective September 16, 2011. The FAA published a notice of FOR FURTHER INFORMATION CONTACT: proposed rulemaking (NPRM) on April The revisions read as follows: For technical questions concerning this final 26, 2010 (75 FR 21523). The proposed Supplement I to Part 230—Official Staff rule, contact Tim Mouzakis, Engine and changes establish a uniform certification Interpretations Propeller Directorate Standards Staff, basis for aircraft turbine engine rotor ANE–111, Engine and Propeller parts between the FAA and EASA. The * * * * * Directorate, Federal Aviation proposal discussed requiring that rotor Section 230.2 Definitions. Administration, 12 New England parts be designed with a safety margin * * * * * Executive Park, Burlington, large enough that the parts have an Massachusetts 01803–5299; telephone overspeed capability that exceeds the (n) Interest (781) 238–7114; fax (781) 238–7199; e- engine’s certified operating conditions, 1. Relation to bonuses. Bonuses are not mail [email protected]. For including overspeed conditions which interest for purposes of this regulation. legal questions concerning this final can occur in the event of a failure of * * * * * rule contact Vincent Bennett, ANE–7, another engine component and/or Office of Regional Counsel, Federal system malfunction. For failures that Section 230.7 Payment of interest. Aviation Administration, 12 New may result in an overspeed, the proposal (a)(1) Permissible methods England Executive Park, Burlington, limited rotor growth to that which Massachusetts 01803–5299; telephone would not lead to a hazardous condition * * * * * (781) 238–7044; fax (781) 238–7055; e- as defined in § 33.75. The comment 5. Maturity of time accounts. Institutions mail [email protected]. period for the NPRM closed on July 26, are not required to pay interest after time 2010. accounts mature. Examples include: SUPPLEMENTARY INFORMATION: * * * * * Authority for This Rulemaking Summary of the Final Rule By order of the Board of Governors of the The FAA’s authority to issue rules There are minor differences between Federal Reserve System, July 12, 2011. regarding aviation safety is found in the proposal and this final rule. Sections Jennifer J. Johnson, Title 49 of the United States Code. 33.27(c) and (g) were changed in Subtitle I, Section 106 describes the response to comments and our review of Secretary of the Board. authority of the FAA Administrator. the proposal. This rule harmonizes rotor [FR Doc. 2011–17886 Filed 7–15–11; 8:45 am] Subtitle VII, Aviation Programs, overspeed requirements found in part BILLING CODE 6210–01–P describes in more detail the scope of the 33 with EASA CS–E 840, Rotor agency’s authority. Integrity. We are issuing this rulemaking under Summary of Comments the authority described in Subtitle VII, Part A, Subpart III, Section 44701, The FAA received comments from ‘‘General requirements.’’ Under that Rolls-Royce, General Electric Aviation, section, the FAA is charged with Turbomeca, Pratt and Whitney, and promoting safe flight of civil aircraft in General Aviation Manufacturers air commerce by prescribing regulations Association (GAMA). The commenters

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