January 17, 2006

Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429

Attention: Comment/Legal ESS

Re: Extension of Corporate Powers
70 FR 60420 (October 18, 2005)

Dear Sir or Madam:

America’s Community Bankers (“ACB”)¹ is pleased to comment on the Federal Deposit Insurance Corporation’s (“FDIC”) amendment to its interpretive rule section 333.101(b) that permits an insured nonmember bank to act as trustee or custodian, without investment discretion or investment advice, of certain specified tax-incentive retirement accounts.² The amendment to the interpretative rule would expand the list of the specific types of tax-incentive accounts that an insured nonmember bank may offer to customers.

ACB believes that the FDIC’s action is a logical extension of its interpretive rule and that it is good public policy to encourage individuals to save and participate in tax-incentive programs created by Congress.

Background and Position

The FDIC’s regulations prohibit an insured nonmember bank from exercising trust powers unless the bank receives prior written consent of the FDIC. The FDIC adopted an interpretive rule³ that permits insured nonmember banks to act as trustee or custodian of specific retirement accounts so long as the bank does not exercise investment discretion or provide investment advice with respect to the accounts. Currently, nonmember banks may act as trustee or custodian of self directed traditional Individual Retirement Accounts (“IRA”) and Self-Employed Retirement Plans (“Keogh Plans”). The amendment to the interpretive rule would expand the list of the type of accounts to include Coverdell Education Savings Accounts, Roth Individual Retirement Accounts, Health Savings Accounts, as well as other similar accounts. The bank’s duties as regards to these accounts would continue to be custodial or ministerial.

We are pleased that the FDIC has recognized that since the adoption of the interpretive rule in 1985, Congress has created new accounts with tax-incentive features similar to IRAs and Keoghs but for different purposes and with different tax-incentive features. These accounts are the Coverdell Education Savings Accounts, Roth Individual Retirement Accounts and Health Savings Accounts. The purpose of these accounts is to save for qualified education expenses, save for retirement with non-taxable earnings and no distribution requirement, and save for qualified medical and health expenses, respectively. We strongly support permitting nonmember banks to act for these additional accounts, even if they do not exercise general trust powers.

We also strongly support changing the interpretive rule to include “other similar accounts” with tax-incentive features. The addition of this language would clarify the types of accounts that would fall within the scope of the rule without the necessity of further amendment.

Thank you for the opportunity to comment on this matter. Should you have any questions, please contact the undersigned at 202-857-3186 or [email protected].

Sincerely,



Sharon H. Lachman
Regulatory Counsel

¹ America”s Community Bankers is the member driven national trade association representing community banks that pursue progressive, entrepreneurial and service-oriented strategies to benefit their customers and communities. To learn more about ACB, visit www.AmericasCommunityBankers.com.
²70 Fed. Reg. 60420 (October 18, 2005).
³ 12 CFR 333.101(b).