Federal Register: RULES Bank activities and operations: [12 CFR Part 7]

DEPARTMENT OF THE TREASURY

CFR Citation: 12 CFR Part 7

Docket ID: [Docket No. 02-07]

RIN ID: RIN 1557-AB76

NOTICE: RULES

ACTION: Bank activities and operations:

DOCUMENT ACTION: Final rule.

SUBJECT CATEGORY: Electronic Activities

EFFECTIVE DATES: Section 7.5010 shall take effect on July 1, 2002. All other sections of this final rule shall take effect on June 17, 2002.

DOCUMENT SUMMARY: The Office of the Comptroller of the Currency (OCC) is amending its regulations in order to facilitate national banks' ability to conduct business using electronic technologies, consistent with safety and soundness. This final rule groups together new and revised regulations addressing: national banks' exercise of their Federally authorized powers through electronic means; the location, for purposes of the Federal banking laws, of a national bank that engages in activities through electronic means; and the disclosures required when a national bank provides its customers with access to other service providers through hyperlinks in the bank's website or other shared electronic ``space.''

SUMMARY: Electronic banking,

SUPPLEMENTAL INFORMATION

On July 2, 2001, the OCC published a notice of proposed rulemaking (NPRM) in the Federal Register requesting comments on a proposal to update our regulations to reflect national banks' use of new technologies and to provide simpler, clearer guidance to national banks engaging in electronic activities.\1\ The proposal codified several positions that the OCC has taken previously in published interpretive letters to national banks. The proposal also created a new subpart E to part 7 of the OCC's regulations to house these and other OCC provisions related to the conduct of national bank activities through electronic means.\2\
\1\66 FR 34855 (July 2, 2001).
\2\The OCC notes that it has established a website that contains information relating to electronic banking activities. See http:// www.occ.treas.gov/netbank/netbank.htm. This site includes a listing of opinions, approval letters, supervisory guidance, and other issuances on this subject and provides links to many of the documents listed in this preamble.

Our proposal was the result of a focused review of our regulations with the goal of revising them in ways that would facilitate national banks' use of technology, consistent with safety and soundness. We initiated this review by publishing an advance notice of proposed rulemaking (ANPR).\3\ We developed the proposed rule, in large part, on the comments received on this ANPR.
\3\65 FR 4895 (Feb. 2, 2000).

Description of Proposal, Comments Received, and Final Rule

The OCC received 22 comment letters on the proposal.\4\ These comments include 10 from national banks, bank subsidiaries, and bank holding companies; 5 from financial services trade associations; 4 from credit card banks or lenders; 1 from a State regulatory group; and 2 from other interested parties. The majority of commenters supported adoption of an electronic banking regulation in the form we proposed. \4\The OCC received four other letters commenting on a study of banking regulations regarding the online delivery of financial services conducted by the Federal banking agencies pursuant to section 729 of the GrammLeachBliley Act, Pub. L. 106102, 113 Stat. 1338, 1476 (Nov. 12, 1999) (``GLBA''), codified at 12 U.S.C. 4801.

Some commenters, however, suggested modifications or articulated concerns with certain aspects of this proposal. In light of these comments, we have modified certain provisions of the proposed rule. The most significant comments, and our responses, are discussed in the following sectionbysection analysis. As in the preamble to the proposal, this sectionbysection description is divided into three categories: national bank powers; ``location'' with respect to the conduct of electronic activities; and, safety and soundness requirements for shared electronic ``space.''
A. National Bank Powers

1. National Bank Finder Authority (Revised Sec. 7.1002)

As we described in the proposal, the OCC has long permitted a national bank to act as a finder to bring together buyers and sellers of financial and nonfinancial products and services. Under our current rules, a national bank acting as a finder may identify potential parties, make inquiries as to interest, introduce or arrange meetings of interested parties, and otherwise bring parties together for a transaction that the parties themselves negotiate and consummate.\5\ Recently, national banks have used the finder authority to engage in new activities made possible by technological developments, especially the Internet.\6\
\5\See 12 CFR 7.1002.
\6\See OCC Conditional Approval No. 369 (Feb. 25, 2000) (national bank may host a virtual mall consisting of a web page with links to thirdparty merchants arranged according to product or service offered; OCC Interpretive Letter No. 875, reprinted in [Current Transfer Binder] Fed. Banking L. Rep. (CCH) para. 81369 (Oct. 31, 1999) (the components of Internet services package that involve hosting of commercial web sites, registering merchants with search engines and obtaining URLs, and electronic storage and retrieval of the data set for a merchant's online catalog are permissible finders activities authorized for national banks pursuant to 12 U.S.C. 24(Seventh)); OCC Conditional Approval No. 221 (Dec. 4, 1996) (national banks, in the exercise of their finder authority, may establish hyperlinks between their home pages and the Internet pages of thirdparty providers so that bank customers will be able to access those nonbank web sites from the bank site); Letter from Julie L. Williams, Chief Counsel (Oct. 2, 1996) (unpublished) (national bank as finder may use electronic means to facilitate contacts between thirdparty providers and potential buyers); OCC Interpretive Letter No. 611, reprinted in [19921993 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 83,449 (Nov. 23, 1992) (national bank linking nonbank service providers to its communications platform of smart phone banking services is within its authority as a finder ``in bringing together a buyer and seller;'' national banks may act as finders by providing to their customers links to nonbanking, thirdparty vendors' Internet web sites); OCC Interpretive Letter No. 516, reprinted in [19901991 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 83,220 (July 12, 1990) (national banks as finder may provide electronic
communications channels for persons participating in securities transactions).

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Section 7.1002 of the OCC's rules addresses national banks' finder authority. The proposal sought comment on several changes to that provision. First, the proposal stated that it is part of the business of banking for a national bank to engage in finder activities, codifying the position the OCC has taken in various interpretive letters.\7\
\7\See, e.g., OCC Interpretive Letter No. 824, reprinted in [19971998 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 81,273 (Feb. 27, 1998) (determining, in the context of insurance
activities, that the ``finder function is an activity authorized for national banks under 12 U.S.C. 24(Seventh) as part of the business of banking.''). The OCC makes this determination pursuant to its authority under section 24(Seventh) to authorize activities as part of the business of banking. NationsBank of North Carolina v. Variable Annuity Life Insurance Co., 513 U.S. 251, 258 n.2 (1995) (VALIC) (``We expressly hold that the ``business of banking'' is not limited to the enumerated powers in [section] 24 Seventh and that the Comptroller therefore has discretion to authorize activities beyond those specifically enumerated.''). In VALIC, the Court noted that the Comptroller's exercise of discretion is subject to a reasonableness standard. Id. It is clear that our determination that finder activities are part of the business of banking satisfies this standard. See Norwest Bank Minnesota, N.A. v. Sween Corp., 118 F.3d 1255, 1260 (8th Cir. 1997) (determining that finder activities were authorized for a national bank because ``allowing banks to use their expertise as an intermediary effectuating transactions between parties facilitates the flow of money and credit through the economy.''). The Sween court did not distinguish between activities that are ``part of'' the business of banking and those that are ``incidental to'' that business, relying, instead, on the preVALIC formulation of the analysis as whether an activity is ``closely related to an express power and is useful in carrying out the business of banking.'' Id. at 1260 (quoting First Nat. Bank of Eastern Arkansas v. Taylor, 907 F.2d 775, 778 (8th Cir. 1990)). The court's conclusions are nonetheless clear that finder activities are authorized pursuant to 12 U.S.C. 24(Seventh) and that the
Comptroller's determination to that effect, embodied in the OCC's regulations, was a reasonable construction of the statute.

Second, the proposal added a number of specific examples illustrating the range of finder activities the OCC has authorized to date. The preamble to the proposal made clear that this list was illustrative and not exclusive, and that the OCC may find new activities to be authorized under the finder authority that are not specifically enumerated in the regulation.

Finally, the proposed rule modified the statement in the current rule that the authority to act as a finder does not enable a national bank to engage in activities that would characterize the bank as a broker under Federal law that are not otherwise permissible for national banks.\8\ We proposed this modification because the concept of what constitutes acting as a broker is changing in response to technology and is expanding for purposes of some regulatory requirements that are unrelated to the authority of national banks to conduct the activity.\9\ As we said in the proposal, however, this modification does not affect whether activities regulated as brokerage under State law are permissible for a national bank.
\8\The prior rule contained the express statement that acting as a finder does not include activities that would characterize the bank as a broker under applicable Federal law.
\9\See, e.g., ``SEC Redefines What Triggers B/D Registration,'' VII Compliance Rep. 1 (Apr. 10, 2000); and ``Online Brokerage: Keeping Apace of Cyberspace,'' Report of Laura S. Unger,
Commissioner, U.S. Securities and Exchange Commission 98106 (Nov. 1999).

We received a number of comments on proposed Sec. 7.1002. Some of these comments urged the OCC to include additional activities in the illustrative list of those permissible for a national bank acting as finder. For example, one commenter requested that the OCC authorize national banks, acting as finders, to participate in negotiations, negotiate on behalf of parties to a transaction, and bind parties to a transaction so long as the bank itself is not a party and obligated as a principal. Another commenter requested that the OCC endorse a broad role of banks as electronic agents.

After carefully reviewing these comments, we have declined to make changes to the extent suggested.\10\ Rather, we will consider these, and similar expanded types of finder activities, on a casebycase basis for the time being.
\10\We note, however, a bank may accept an offer without first communicating the offer to the actual party to the transaction if that party has given direction to the bank to accept offers that meet predetermined criteria. In that case, the bank is
communicating offers and acceptances because it has been directed to make an acceptance by its client.

We have, however, modified the proposal to clarify certain other aspects of the finder authority that do not cause a national bank to be a participant in the transaction. Thus, the final rule provides that a national bank may act as an intermediary between interested parties and establish rules of general applicability governing the use and operation of the finder service.

In response to a commenter's suggestion, we have also changed the reference ``buyers and sellers'' in Sec. 7.1002 to ``interested parties to a transaction'' so that the rule recognizes that national banks can bring together different types of parties to a transaction in addition to buyers and sellers. This commenter noted in particular that in the Internet environment, there may be many parties to a transaction beyond the buyer and seller, such as service providers, consultants, software developers, and regulatory authorities. We agree with this observation. We also note that the definition of buyers and sellers includes analogous parties, such as lessors and lessees. In addition, as the scope of permissible finder activities is not dependent on the nature of goods or services sold, national banks can act as finder with respect to nonfinancial products and services.\11\ We also have removed the word ``service'' in Sec. 7.1002 to clarify that national banks acting as a finder may make communications concerning a third party's provision of both products and services.
\11\See OCC Corporate Decision No. 9760 (July 1, 1997).

The preamble to the proposed rule stated that the examples of permissible national bank finder activities were illustrative and not exclusive, and that the OCC may find new activities to be authorized under the finder authority that are not included in the examples. A number of commenters requested that we amend the regulatory text itself to state that these examples are not exhaustive. We agree that making this statement in the text of the regulation itself will remove any ambiguity on this point. Therefore, the final rule includes language indicating that permissible finder activities are not limited to those listed as examples in the regulation.
2. Electronic Banking BScope (new Subpart E and Sec. 7.5000)

The proposal created a new Subpart E of part 7, so that regulations pertaining to electronic activities would appear in one place. Proposed Sec. 7.5000 described the purpose of Subpart E, which addresses national banks' use of electronic technology to deliver products and services, consistent with safety and soundness. To more accurately reflect the content of this section, we have changed the title of Sec. 7.5000 in the final rule from ``Scope'' to ``Purpose of subpart E.''

The majority of commenters supported the creation of a new, separate subpart for electronic bankingrelated provisions. Although one commenter suggested a regrouping of the provisions in new subpart E, we believe that the organization of the subpart as proposed presents the subject
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matter clearly and concisely. Therefore, we have not altered the arrangement of new Subpart E in the final rule.
3. Electronic Banking Activities That Are Part of, or Incidental to, the Business of Banking (Sec. 7.5001)

In response to new technologies and evolving financial markets, national banks are continually developing new electronicallybased activities and products. Proposed Sec. 7.5001 was designed to assist banks that are contemplating these new electronic activities and products by identifying the factors the OCC uses to determine whether such an activity or product is part of, or incidental to, the business of banking, pursuant to 12 U.S.C. 24(Seventh).

In general, commenters supported the approach taken by this section. However, a few commenters noted specific issues with the section as drafted. These issues are discussed below.

Purpose. Proposed Sec. 7.5001(a) provided the purpose of the new section and described the general parameters of national banks' ability to engage in electronic activities.\12\ It expressly set out the OCC's authority to impose conditions on the exercise of newly authorized activities if necessary to ensure that the activities are conducted safely and soundly and in accordance with applicable law and supervisory policies. We received no comments on this portion of proposed Sec. 7.5001(a), and therefore have adopted it, with changes to improve clarity.
\12\Paragraph (a) of Sec. 7.5001 of the proposed rule has been recodified as paragraphs (a) and (b) of Sec. 7.5001 in the final rule.

Proposed Sec. 7.5001(a) also stated that State law applies to a national bank's conduct of electronic activities to the extent such law would apply if the activity were conducted by the bank through traditional means. A few commenters suggested modifications to this statement. However, because Sec. 7.5002 of the proposed rule contains the same applicability of State law provision, we have deleted this provision in Sec. 7.5001 as redundant and unnecessary. These comments, therefore, are described in the discussion of Sec. 7.5002, below.

Activities that are part of the business of banking. Proposed Sec. 7.5001(b) provided that an electronic activity is authorized for national banks as part of the business of banking if the activity is permitted under 12 U.S.C. 24(Seventh) or other statutory authority applicable to national banks, or otherwise constitutes part of the business of banking. The proposal set forth four factors the OCC considers in determining whether an electronic activity is part of the business of banking.\13\
\13\The final rule recodifies these factors as

Sec. 7.5001(c)(1).

The first factor is whether the electronic activity is functionally equivalent to, or a logical outgrowth of, a recognized banking activity. As indicated in the preamble to the proposed rule, this factor is based on judicial precedents approving activities that traditionally have been performed by banks, that are functionally similar to recognized banking activities, or that represent advances in recognized banking practices.\14\ We received no comments objecting to, or requesting modifications of, this factor. Therefore, we are adopting this factor as proposed.
\14\See, e.g., M & M Leasing Corp. v. Seattle First Nat'l Bank, 563 F.2d 1377 (9th Cir. 1977), cert. denied, 436 U.S. 956 (1978) (national bank leasing of personal property permissible because it was functionally interchangeable with loaning money on personal security and therefore incidental to the express power of loaning money on personal security); and VALIC, 513 U.S. at 25960 (national bank annuity sales are permissible because they are functionally similar to other financial investment products banks have long been authorized to sell).

The second factor in proposed Sec. 7.5001(b) is whether the proposed activity strengthens the bank by benefiting its customers or its business. Courts have long recognized that national banks' ability to serve the needs of their customers by offering appropriate products and services is crucial to their capability to compete successfully. Courts have also approved many activities on the basis that they benefit a bank's customers or the bank's business itself.\15\ Examples of the types of activities the OCC would look to include those where the activity increases service, convenience, or options for bank customers or lowers the cost to banks of providing a product or service. We also received no comments objecting to, or requesting modifications of, this factor. The final rule therefore adopts this factor as proposed.
\15\See Merchants' Bank v. State Bank, 77 U.S. (10 Wall.) 604, 648 (1870) (``The practice of certifying checks has grown out of the business needs of the country.''). See also Clement National Bank v. Vermont, 231 U.S. 120, 140 (1913) (``the bank should be free to make * * * reasonable [depositors'] agreements, and thus promote the convenience of its business. * * *'').

The third factor in proposed Sec. 7.5001(b) is whether the activity presents the types of risk that banks are experienced in managing. One commenter requested that the OCC change this factor instead to whether the activity ``involves risk that can be sufficiently assessed and managed by the bank.'' This suggested modification appears substantially identical to the proposal in practical effect. Since we have utilized the proposed factorwhether the activity presents the types of risks that banks are experienced in managingin interpretive letters issued prior to this proposal,\16\ we have decided to adopt the third factor as proposed.
\16\See Merchants' Bank, 77 U.S. at 648 (``A bank incurs no greater risk in certifying a check than in giving a certificate of deposit.''); M & M Leasing, 563 F.2d at 1383 (leasing personal property functionally equivalent to secured lending because the risks to the bank of such leasing were essentially the same as if the bank had made secured loans to buyers of the same property). See also Decision of the Comptroller of the Currency on the Operating Subsidiary Application by Zions First National Bank, Salt Lake City, Utah, OCC Conditional Approval No. 267, reprinted in [19971998 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 81,256 (Jan. 12, 1998) at 13 (acting as a certification authority involves core competencies of national banks and thus entails risks similar to those that banks are already expert in handling).

Finally, the fourth proposed factor recognized the relevance of State law in the analysis the OCC conducts when it receives requests regarding the permissibility of new electronic activities for national banks. Since the statutory reference to the ``business of banking'' does not imply that there are two distinct businesses of bankingone for Federallychartered and another for Statechartered banks activities that are recognized as permissible for State banks are at least a relevant factor in determining whether an electronic activity is part of the business of banking.\17\ We received no comments or requests for modification on this factor. The final rule clarifies that the activities encompassed by this factor include activities authorized for a Statechartered bank expressly by State law or otherwise. \17\The U.S. Supreme Court has relied upon the permissibility of an activity for State banks as a factor in the analysis of permissible national bank powers. See Colorado Nat'l Bank v. Bedford, 310 U.S. 41 (1940), in which the Court, concluding that national banks had the authority to conduct a safedeposit business, stated that ``State banks, quite usually, are given the power to conduct a safedeposit business. We agree with the appellant bank that such a generally adopted method of safeguarding valuables must be considered a banking function authorized by Congress.'' Id. at 4950.

The preamble to the proposed rule stated that a proposed activity does not necessarily have to satisfy all of these four factors in order to be permissible. One or more of these factors may be sufficient, depending on the specific facts and circumstances presented. One commenter requested that, in addition to the preamble, the regulatory text include the statement that an activity does not need to meet all of the listed factors to be permissible. In response,
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we have added a statement explaining that the weight given a particular factor depends on the facts and circumstances.

Finally, we have modified the first sentence of proposed Sec. 7.5001(b) by deleting the phrase ``or is otherwise part of the business of banking.'' That phrase is unnecessary in light of the statement elsewhere in this subsection that an activity is authorized for national banks as part of the business of banking if the activity is described in section 24 (Seventh).

Electronic activities that are incidental to the business of banking. Consistent with judicial precedent,\18\ proposed
Sec. 7.5001(c) provided that an activity is incidental to the business of banking if it is convenient or useful to an activity that is specifically authorized for national banks or to an activity that is otherwise part of the business of banking. Relying on these same precedents, proposed Sec. 7.5001(c) distilled and set forth in two factors the elements the OCC considers in determining whether an activity is convenient or useful to the business of banking.\19\ \18\See Arnold Tours, Inc. v. Camp, 472 F.2d 427, 432 (1st Cir. 1972), which held that a national bank's activity is authorized as an incidental power if ``it is convenient or useful in connection with the performance of one of the bank's established activities pursuant to [the five] express powers'' enumerated in 12 U.S.C. 24(Seventh); Franklin Nat. Bank v. New York, 347 U.S. 373 (1954); Wyman v. Wallace, 201 U.S. 230 (1906); and First Nat'l Bank of Charlotte v. National Exch. Bank of Baltimore, 92 U.S. 122 (1875). \19\The final rule recodifies these factors as

Sec. 7.5001(d)(1).

The first factor is whether the activity facilitates the production or delivery of a bank's products or services, enhances the bank's ability to sell or market its products or services, or improves the effectiveness or efficiency of the bank's operations in light of risks presented, innovations, strategies, techniques, and new technologies for producing financial products and services. In applying this factor, the OCC has determined that the provision of certain electronic products and services is permissible, as incidental to the business of banking, when needed to package successfully or promote other banking services.\20\ We also have recognized a category of incidental activities based on the operation of the bank itself as a business concern. Banking activities that fall in this category may include hiring employees, issuing stock to raise capital, owning or renting equipment, borrowing money for operations, purchasing the assets and assuming the liabilities of other financial institutions, and operating through optimal corporate structures, such as subsidiary corporations or joint ventures. Various Federal statutes have implicitly recognized national banks' authority to perform the activities necessary to conduct their business.\21\ In each case, the statutes presume the existence of corporate power to conduct the bank's business under 12 U.S.C. 24(Seventh).
\20\See OCC Interpretive Letter No. 754, reprinted in [199697 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 81118 (Nov. 6, 1996) (national bank operating subsidiary may sell general purpose computer hardware to other financial institutions as part of larger product or service when necessary, convenient, or useful to bank permissible activities).
\21\For example, Federal laws refer to limits on persons who can serve as bank employees, to the permissible disposition of bank stock, and to the existence of bank subsidiaries. See, e.g., 12 U.S.C. 78 (defining persons ineligible to be bank employees); 12 U.S.C. 83 (limiting national bank's purchase of its own stock); 12 U.S.C. 24(Seventh) (limiting presupposed authority of national bank to own a subsidiary engaged in the safe deposit business; 12 U.S.C. 371d (1994) (defining ``affiliates'' to include subsidiaries owned by national banks); GLBA section 121 (defining ``financial subsidiary'' as a subsidiary ``other than'' a subsidiary that conducts bankpermissible activities under the same terms and conditions that apply to the parent bank or a subsidiary expressly authorized by Federal statute).

We noted in the preamble to the proposed rule that the authority of banks to deliver and sell products and services or improve the effectiveness of their operations must be viewed in light of innovations, strategies, techniques and new technologies for marketing financial products and services. These grants of power must be given a broad and flexible interpretation to allow national banks to utilize modern methods and meet modern needs.\22\ The proposal noted that market and technological changes that will affect the banking industry will shape the OCC's future determinations of whether an activity is incidental to the business of banking.
\22\In VALIC, the Supreme Court recognized that the concepts of the ``business of banking'' and of activities ``incidental'' to that business must be sufficiently flexible to accommodate the constant evolution of banking services. See VALIC, 513 U.S. at 259260. See also M & M Leasing, 563 F.2d at 1382 (noting that ``commentators uniformly have recognized that the National Bank Act did not freeze the practices of national banks in their nineteenth century forms. * * * [W]e believe the powers of national banks must be construed so as to permit the use of new ways of conducting the very old business of banking.'').

The second factor listed in proposed Sec. 7.5001(c) is whether the activity enables the bank to profitably use capacity acquired for its banking operations or otherwise avoid economic waste or loss. For example, it is well settled that a nonbanking activity can be incidental when it enables a bank to realize gain or avoid loss from activities that are part of, or necessary to, its banking business. Federal statutes and case law also recognize national banks' need to optimize the value of bank property by authorizing banks to sell excess space or capacity in that property.\23\ Section 7.5004, which pertains to excess capacity, is a specific application of this general principle in the electronic context.
\23\See 12 U.S.C. 24 (Seventh) and 29; Perth Amboy National Bank v. Brodsky, 207 F. Supp. 785, 788 (S.D.N.Y. 1962) (``It is clear beyond cavil that the statute [12 U.S.C. 29] permits a national bank to lease or construct a building, in good faith, for banking purposes, even though it intends to occupy only a part thereof and to rent out a large part of the building to others.'').

We received no specific comments on these factors and have therefore retained them both in the final rule. We have, however, modified the second factor by removing the word ``profitably'' to conform this factor to the excess capacity doctrine set forth in Sec. 7.5004.

As with determinations regarding whether an activity is part of the business of banking, specific facts may implicate one or both of these factors, and the activity need not satisfy each factor to be permissible as incidental to that business. At the request of a commenter, the OCC has added a clarification of this point, in Sec. 7.5001(d)(2) of the final rule.

Two commenters discussed the effect of this new Sec. 7.5001 on the application process the OCC uses to determine whether national banks and their operating subsidiaries may engage in new activities, set forth in 12 CFR part 5. One commenter requested more specificity on the use of the factors relevant to determining whether an activity is incidental to banking and asked that the OCC clarify whether it expects banks to include these factors in applications to offer new electronic services. This commenter also asked whether the OCC intends to alter or streamline this application process in light of the factors listed in Sec. 7.5001.

We do not believe that substantive changes to the application process in part 5 are necessary at this time based on this codification of the factors the OCC examines when determining whether an activity is authorized pursuant to 12 U.S.C. 24(Seventh). These factors are derived from OCC opinion letters, which explain them in sufficient detail that additional guidance is not needed in the rule. A bank that wishes us to consider whether a proposed activity is permissible pursuant to 12 U.S.C. 24(Seventh) should describe in its filing how its proposed activity meets one or more of these factors. If it subsequently appears that technical changes to the application
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or notice process are desirable, we will initiate a separate rulemaking proposing those changes.

Another commenter suggested that the OCC establish an ``optional, expedited notice procedure for new activities as a way of enabling banks to bring products to market quickly within the umbrella of OCC deference.'' We believe, however, that the OCC's current processes are sufficiently flexible to allow national banks to offer new electronic products and services expeditiously, consistent with safety and soundness considerations. In general, national banks are not required to notify or obtain OCC approval to engage in permissible activities within the bank. In addition, national banks may already offer many permissible electronic products or services through an operating or financial subsidiary without filing a notice or application with the OCC. (For new activities to be performed in an operating or financial subsidiary, the afterthefact notice or application provisions of 12 CFR part 5 apply.) As indicated in the discussion above, the factors set forth in Sec. 7.5001 will assist banks in their determination as to whether a new activity is permissible. A bank that is uncertain about the permissibility of a new activity may request an interpretive opinion from the OCC.
4. Furnishing of Products or Services by Electronic Means and Facilities (Sec. 7.5002)

The OCC's rules currently provide that a national bank may perform, provide, or deliver through electronic means and facilities any function, product, or service that it is otherwise authorized to perform, provide or deliver.\24\ This socalled ``transparency doctrine'' is a key provision for national banks engaging in electronic activities because it calls for the OCC to look through the means by which the product is delivered and focus instead on the authority of the national bank to offer the underlying product or service. \24\See 12 CFR 7.1019.

We have relied on this transparency doctrine to approve a number of technologybased activities, such as web site hosting and the operation of a ``virtual mall,'' that are otherwise permissible under a national bank's finder authority. Similarly, we have approved electronic bill presentment activities because billing and collecting services are permissible for national banks.\25\
\25\See OCC Conditional Approval No. 369 (Feb. 25, 2000) (national bank may host a virtual mall consisting of a web page with links to thirdparty merchants arranged according to product or service offered); OCC Conditional Approval No. 304 (Mar. 5, 1999) (electronic bill presentment is part of the business of banking). See also OCC Conditional Approval No. 220 (Dec. 2, 1996) (the creation, sale, and redemption of electronic stored value in exchange for dollars is part of the business of banking because it is the electronic equivalent of issuing circulating notes or other paperbased payment devices like travelers checks); OCC Conditional Approval No. 267, supra note 16 (a national bank may store electronic encryption keys as an expression of the established safekeeping function of banks).

The proposal moved the transparency rule to Sec. 7.5002 of new subpart E and expanded it to include examples of activities the OCC has found to be permissible. These changes were proposed in order to provide clearer guidance to national banks that wish to engage in new electronic activities.

One commenter requested that we clarify that these examples in Sec. 7.5001 are not exclusive, and that we would consider the authorization of new activities under the transparency doctrine that may not be illustrated through the examples provided. The commenter's suggestion is consistent with the purpose of the provision, and the final rule clarifies that these examples are illustrative, not exclusive.

Other commenters requested that we expand the list of examples in the text of Sec. 7.5002 to include other specific activities. One suggested that this list include the provision of communications services relating to all aspects of transactions between buyers and sellers. This facilitation of communication between interested parties is an inherent part of a bank's finder activities, and therefore may be conducted electronically.\26\ We have therefore amended the regulatory text to include this activity in the list of examples of permissible electronic activities based on the transparency doctrine.
\26\See Letter from Elizabeth H. Corey, Attorney (May 18, 1989) (unpublished); Letter from John M. Miller, Acting Deputy Chief Counsel (July 26, 1977) (unpublished).

Other commenters suggested adding a number of specific activities that the OCC has not yet approved as permissible for national banks. We have not adopted these suggestions. Our experience is that decisions about the permissibility of new electronic activities are best made in the context of specific tests and circumstances that enable us to consider the practical and supervisory effects of, as well as the legal basis for, the determination. We will accordingly continue our practice of casebycase review, followed by codification of key precedents, as appropriate, from time to time. As noted previously, this codification does not serve to limit the activities that may be found to be permissible, and we will continue to review new activities on a case bycase basis.

Consistent with the principle that it is the substance of an activityand not its electronic formthat is key to the determination of whether it is permissible, the final rule provides that when a national bank engages in an electronic activity based on the transparency doctrine, the electronic activity will not be exempt from the regulatory requirements and supervisory guidance, including those prescribed by OCC regulations or contained in other OCC issuances, that would apply if the activity were conducted by nonelectronic means or facilities. This new provision clarifies that national bank activities will continue to be governed by OCC regulatory requirements and supervisory guidance regardless of whether that activity is conducted electronically or by traditional means.

A few commenters suggested modifications in the provision addressing the applicability of State law that appeared at proposed Sec. 7.5002(b), as well as at proposed Sec. 7.5001(a), both provisions being very similar in substance and in wording. One commenter asked that the OCC expressly preempt State laws that purport to regulate activities conducted by electronic means. Another stated that the OCC should require a national bank to comply only with the laws of the jurisdiction from which its electronic products or services are offered. A third commenter asked that we specifically clarify that other preemption rules in Federal law also apply to the electronic banking activities of national banks, such as the preemption rules set forth in the Electronic Signatures in Global and National Commerce Act (ESign).\27\

\27\Pub. L. 106229, 114 Stat. 464 (June 30, 2000).

The final rule contains only one provision on the applicability of State law, now located at Sec. 7.5002(c). This provision has been modified to address certain of the concerns the commenters have raised by clarifying the scope of preemption described in the rule, and to reflect developments in the law pertaining to electronic commerce.

In general, the application of State law to activities conducted by national banks through electronic means presents issues of preemption that are determined under traditional principles of Federal preemption derived from the Supremacy Clause of the United States Constitution\28\ and applicable judicial precedent. The OCC's rulescurrently and as amended by this final rule
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provide that a national bank may conduct by electronic means any function or activity that it is otherwise authorized to conduct. The resolution of any issue about the applicability of State law to an activity that a national bank conducts electronically is, accordingly, governed by the preemption principles that would apply to activities conducted by traditional means.

\28\U.S. Const. art. VI, cl. 2.

However, when the activity is being conducted by electronic means, and thus is potentially geographically boundless, a consideration unique to the purpose and characteristics of the national bank charter becomes an element of this preemption analysis. Through the national bank charter, Congress established a banking system intended to be nationwide in scope, and authorized the creation of national banks, whose powers were intended to be uniform, as established by Federal law, regardless of where in the nation they conducted their business. As the Supreme Court has said:

National banks are instrumentalities of the federal government, created for a public purpose, and as such necessarily subject to the paramount authority of the United States. It follows that an attempt by a state to define their duties, or control the conduct of their affairs is absolutely void, wherever such attempted exercise of authority expressly conflicts with the laws of the United States, and either frustrates the purpose of the national legislation, or impairs the efficiency of these agencies of the federal government to discharge the duties for the performance of which they were created.\29\
\29\Davis v. Elmira Savings Bank, 161 U.S. 275, 283 (1896). See also Marquette Nat. Bank of Minneapolis v. First of Omaha Serv. Corp., 439 U.S. 299, 314315 (1978); First Nat. Bank of San Jose v. California, 262 U.S. 366, 369 (1923) (``[A]ny attempt by a state to define [national banks'] duties or control the conduct of their affairs is void, whenever it conflicts with the laws of the United States or frustrates the purposes of the national legislation, or impairs the efficiency of the bank to discharge the duties for which it was created.'').

This freedom from State control over a national bank's powers protects national banks from conflicting local laws unrelated to the purpose of providing the uniform, nationwide banking system that Congress intended. And, as the Supreme Court also recognized, Congress was concerned not just with the application of certain States' laws to individual national banks, but also with the application of multiple States' standards which would undermine the uniform, national character of the powers of national banks throughout the system. This point was made clearly by the Supreme Court in Easton v. Iowa, 188 U.S. 220 (1903):

That legislation [i.e., legislation creating and regulating national banks] has in view the erection of a system extending throughout the country, and independent, so far as the powers conferred are concerned, of state legislation which, if permitted to be applicable, might impose limitations and restrictions as various and as numerous as the states. * * * [W]e are unable to perceive that Congress intended to leave the field open for the states to attempt to promote the welfare and stability of national banks by direct legislation. If they had such power it would have to be exercised and limited by their own discretion, and confusion would necessarily result from control possessed and exercised by two independent authorities.\30\

\30\Easton, 188 U.S. at 229, 231232 (emphasis added).

Thus, in analyzing the potential for State laws to be applicable to activities conducted by national banks via electronic means, it is also necessary to recognize in the preemption analysis that application of a multiplicity of State requirements in itself is an important factor in the analysis. Particularly where an activity is conducted via electronic means and is potentially accessible to a customer without any necessary connection to where the customer is physically located, application of multiple State law standards to that particular activity conflicts with the uniformity of standards under which national banks were designed to operate. The final rule's provision on the applicability of State law accordingly provides that the applicability of State law to a national bank's conduct of its authorized activities through electronic means and facilities is governed by traditional principles of Federal preemption derived from the Supremacy Clause, and that, therefore, a State law would not be applicable to such activities if the State law stands as an obstacle to the achievement of a Federal objective, namely, the ability of national banks to exercise uniformly their Federally authorized powersin this case, through electronic means or facilities.\31\
\31\Of course, in some instances, Federal law will specify that national banks are to look to State law standards to determine the extent of their power to conduct certain activities (e.g., establishment of intrastate branches, scope of fiduciary powers) or the manner in which a particular power may be exercised (e.g., insurance).

The phrase ``stands as an obstacle'' was used by the Supreme Court in Barnett Bank of Marion County v. Nelson\32\ as one of several formulations reflecting the standard for determining whether a State law is preempted, and we intend the use of this phrase to reflect the full dimensions of the Court's reasoning in that case. Notably, in Barnett, the Supreme Court cited National Bank v. Commonwealth,\33\ a case decided very shortly after the establishment of the national banking system. In that decision, the Court held that the State law in question was not preempted because it did not ``interfere with, or impair [national banks'] efficiency in performing the functions for which they are designed * * *.''\34\ This language was echoed 26 years later in the Court's decision in Davis v. Elmira Savings Bank, where the Court expressly recognized that State law may not ``frustrate the purpose'' of the ``national legislation'' creating the national banking system or ``impair the efficiency'' with which national banks function as the components of a uniform, nationwide banking system.\35\ Clearly, the application of a multiplicity of Statebased standards, each potentially alteringin different waysthe extent and manner in which a national bank may exercise any particular Federally authorized power through electronic means, would stand as an obstacle to achievement of the Federal objective, namely, a uniform, nationwide banking system,\36\ and ``interfere with'' and ``impair'' the efficiency with which national banks are able to perform activities authorized under Federal law\37\ through electronic means and facilities. The final rule contains revisions to appropriately reflect these considerations in determining the applicability of State law.
\32\517 U.S. 25 (1996).
\33\76 U.S. (9 Wall.) 353 (1870).
\34\Id. at 362.
\35\Davis, 161 U.S. at 283, 284. In Davis, the Court held that a New York law purporting to require the receiver of an insolvent national bank to make preferential payment of receivership assets to ``any savings bank'' that had funds on deposit at the failed bank was preempted by the Federal statute requiring pro rata payment of such assets to any creditors who could prove their claims. The Court reasoned that one of the purposes of the ``national legislation'' creating the national banking system was ``to secure . . . a just and equal distribution of the assets of national banks among all unsecured creditors, and to prevent such banks from creating preferences in contemplation of insolvency. This public aim in favor of all the citizens of every state of the Union is manifested by the entire context of the national bank act.'' Id. at 284.
\36\Easton, 188 U.S. at 229, 23132; Davis, 161 U.S. at 28385. \37\National Bank, 76 U.S. (9 Wall.) at 362; Davis, 161 U.S. at 283.
5. Composite Authority to Engage in Electronic Banking Activities (Sec. 7.5003)

We noted in the preamble to proposed Sec. 7.5003 that some electronic banking activities that appear novel may actually be merely a collection of interrelated activities, each of which is permissible under wellsettled authority. Thus, to clarify national banks' authority to conduct this type of composite activity, we proposed to adopt a new Sec. 7.5003, which provides that an electronic
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product or service comprised of several elements or activities is authorized if each of the constituent elements or activities is authorized.

Commenters supported this proposal because it addresses the reality that electronic products and services rarely fit into one specific category of authority. Thus, we are adopting this rule as proposed. 6. Excess Electronic Capacity (Sec. 7.5004)

The proposed rule in Sec. 7.5004 recognized that the OCC has long applied the ``excess capacity'' doctrine to the technology resources of national banks to enable them to avoid waste and deploy those resources efficiently.\38\ While the doctrine originated to allow banks to use excess real property efficiently, it has taken on particular significance as banks conduct more business through developing technologies such as Internet access, software production and distribution, long line telecommunications and data processing equipment, electronic security systems, and call centers.\39\ Accordingly, we proposed to relocate the excess electronic capacity rule from current Sec. 7.1019 to new subpart E and to add specific examples. The final rule adopts this approach, but amends the proposal in response to comments received.
\38\The excess capacity doctrine holds that a bank properly acquiring an asset to conduct its banking business is permitted, under its incidental powers, to make full economic use of the property if using the property solely for banking purposes would leave the property underutilized. See OCC Conditional Approval No. 361 (Mar. 3, 2000).
\39\See OCC Interpretive Letter No. 742, reprinted in [19961997 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 81106 (Aug. 19, 1996); OCC Interpretive Letter No. 677, reprinted in [19941995 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 83,625 (June 28, 1985); Letter from William Glidden (June 6, 1986) (unpublished); Letter from Stephen Brown (Dec. 20, 1989) (unpublished); and OCC Conditional Approval No. 361 (Mar. 3, 2000).

The proposed rule stated that a national bank may acquire or develop excess capacity ``in good faith for banking purposes.'' In applying this test, the OCC and the courts consistently have reviewed a bank's objective business reasons for obtaining the excess capacity. To clarify the appropriate focus of the excess capacity test, and to avoid creating any misperception that the focus is on the subjective intent or mental state of bank management, the final rule states that a national bank may market and sell electronic capacities ``legitimately acquired or developed by the bank for its banking business.'' The ``legitimate'' standard incorporates the requirement that the excess capacity must be acquired in ``good faith'' for banking purposes.\40\ This test recognizes the broad policy of optimization of resources and avoidance of loss or waste. To further clarify how the excess capacity doctrine is to be applied, we have provided specific and nonexclusive examples in the regulation to illustrate when legitimate excess electronic capacity may be acquired.
\40\See OCC Interpretive Letter No. 888, reprinted in [20002001 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 81,407 (Mar. 14, 2000). See also Brown v. Schleier, 118 F. 981 (8th Cir. 1902), aff'd. 194 U.S. 18 (1904).

The final rule also adopts the proposed examples of excess capacity in equipment or facilities of national banks that have been found to have been acquired legitimately for banking purposes. The examples in the final rule are not exclusive, but merely illustrate uses of excess electronic capacity that we have approved. As our approvals to date demonstrate, the determination that a particular acquisition of excess electronic capacity is permissible is factspecific. Accordingly, we encourage banks with questions regarding appropriate uses of excess electronic capacity to consult with the OCC.

In the preamble to the proposed rule, the OCC asked whether the final rule should codify a doctrine closely related to excess capacity: the socalled ``byproduct doctrine.'' Under this authority, a national bank may sell byproducts, such as software, legitimately developed by the bank for or during the performance of its permissible data processing functions. A number of commenters urged the OCC to explicitly codify the byproduct doctrine. They noted that as part of their electronic banking products or internal operations, national banks often internally design and create software or other products that may have broader application. The byproduct doctrine enables national banks to sell such products into the general market and, thus, gain revenue to offset internal development costs.

We have determined that it would be helpful to recodify the by product doctrine in the final rule. Until 1984, the OCC's data processing rule specifically recognized the byproduct doctrine.\41\ Although this language was deleted from the rule in 1984,\42\ it was not done with the intention to change the OCC's position regarding this theory. The 1984 revision was merely a nonsubstantive format change in the rule done largely to avoid potential confusion. The OCC believes that it has now developed a considerable body of precedent on the by product doctrine that will help provide adequate guidance on these issues and reduce the risk of confusion.\43\
\41\See 12 CFR 7.3500 (1983).
\42\See 49 FR 11157 (Mar. 26, 1984).
\43\See, e.g., OCC Interpretive Letter No. 284, reprinted in [19831984 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 85,448 (Mar. 26, 1984); OCC Interpretive Letter No. 449, reprinted in [19881989 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 85,673 (Aug. 23, 1988); and OCC Interpretive Letter No. 677, supra note 53. 7. National Bank Acting as a Digital Certification Authority (Sec. 7.5005)

The OCC has permitted a national bank to act as a certification authority\44\ that issues certificates verifying the identity of the certificate holder to support digital signatures.\45\ Proposed Sec. 7.5005 would codify this position. Comments supported this proposal and it is adopted without significant change in paragraph (a) of Sec. 7.5005.
\44\See OCC Conditional Approval No. 267, supra note 16. \45\Digital signatures are a form of electronic authentication that permit the recipient of an electronic message to verify the sender's identity. In order for a digital signature system to operate successfully, the message recipient must have assurance that the public key used to decode a message is uniquely associated with the sender. One method of providing that assurance is for a trusted thirdparty (called a ``certification authority'') to issue a digital certificate attesting to this association. The certification authority generates and signs digital certificates to verify the identity of the person transmitting a message electronically. The mathematical function the sender uses to encode a message is called the sender's private key. The related function that the recipient of the message uses to decode the message is called the sender's public key. In public key infrastructure (``PKI'') systems based on asymmetric encryption, each private key is uniquely associated with a particular counterparty public key. Thus, if one has assurance that a specific private key is associated with a person and under his or her sole control, any message that can be decoded using that person's public key may be assumed to have been sent by that person.

The preamble to the proposed rule requested comments on whether the final rule should also authorize national banks to issue digital certificates that verify attributes beyond mere identity, i.e., the authority or financial capacity of the certificate holder. We invited comment on the extent to which national banks propose to engage in these activities, how they will be structured, and whether permitting national banks to issue certificates to verify additional attributes beyond identity presents unique risks.

Generally, commenters strongly supported extending the certification authority to attributes beyond identity. Commenters said that verification of certificate holder transaction authority and financial capacities are necessary for banks to be able to effectively market electronic banking services. These commenters noted that national banks have long had experience in certifying the financial capacity of their
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customers. For example, banks issue letters of credit or loan approval letters to give comfort to third parties that the bank customer has the financial capacity to consummate contemplated transactions. Banks also manage and verify account numbers, account balances, and transactions charged to those account numbers. Some commenters requested that the final rule not be limited to a particular list of functions. They noted that the methods and usefulness of certification authority services will continue to evolve. Thus, they urged that the final rule should enhance flexibility so that a certificate can be issued for any purpose where the underlying verification is part of the business of banking. They requested that the final rule list particular attributes, such as financial capacity, as examples of this extended certification authority activity.

However, other commenters urged the OCC to consider the risks that may arise when the new certification activities either are combined with or approximate in function the existing authority for independent undertakings.\46\ The commenters were particularly concerned that any new authority to issue extended certificates relating to financial capacity might raise risks similar to those assumed by banks issuing letters of credit and other independent undertakings.

\46\See 12 CFR 7.1016.

The final rule provides that national banks may issue digital certificates to verify any attribute for which verification is part of or incidental to the business of banking and lists several types of financial capacity as examples of such attributes. This list is intended to be nonexclusive. We will consider what other attributes might be verified in an electronic certificate on a casebycase basis so that the potential risks can be better assessed.

We recognize that the extended authority to issue nonidentity digital certificates presents supervisory issues. We have existing guidance on digital certificates (OCC Bulletin 9920), and intend to update that guidance to address issues arising under the extended authority codified in Sec. 7.5005(b). These issues arise in part because the party issuing the certificate is verifying an attribute such as financial capacitythat can and does change over time.

If a bank were to verify that funds will be available on a certain date in its certificates, the bank would, in effect, be engaging in an electronic independent undertaking. However, the extended certificate authority codified in Sec. 7.5005(b) is distinct from independent undertakings, both analytically and operationally. To facilitate this distinction, the final rule clarifies by examples the types of financial verifications that the OCC intends to authorize in extended certifications. Specifically, the final rule lists examples of permissible financial certifications that involve verification of the following existing facts: (1) Account balance as of a particular date; (2) lines of credit as of a particular date; (3) past performance of customer (like a credit report); and (4) verification of customer relationship as of a particular date. Each of these verifications represents a statement of fact as of a particular current or previous date with respect to the certificate subscriber. Thus, financial certificates do not represent a promise by the certificate authority bank to the relying party that particular funds will be available or advanced for a particular transaction. For this reason, a financial certification is distinguished from an independent undertaking, which is a promise by a bank to make available funds for a particular transaction upon presentation of specified documents. An independent undertaking exposes the issuing bank to credit risk; a properly formulated and limited financial certification does not.

We expect banks issuing financial capacity certificates to take steps appropriate to address the risk that a party receiving a financial certification (the relying party, usually a seller) would assert that the certification is really an implied promise or representation by the issuing bank that funds will be available or advanced to pay for a particular transaction. We expect issuing banks to take appropriate precautions against having their financial certificates construed as implied promises to lend. While other risk controls will be appropriate in particular cases,\47\ the final rule provides that financial capacity certificates must include express disclaimers stating that the bank does not thereby promise or represent that funds will be available or advanced for a particular transaction. \47\For example, the risk of confusion may be particularly great in situations where the bank is issuing a financial certification on the existence of a line of credit. Relying parties might try to assert that this certificate constitutes an implied promise that the verified credit line would be available to fund their specific transaction. Thus, in connection with such certifications, the issuing bank might not only include the disclaimer discussed above but also make available with the digital certificate the terms of the line of credit so that the relying parties may directly assess its availability for their transaction.

If banks take necessary precautions and issue appropriately designed financial certifications, the requirements of Sec. 7.1016 (which are designed predominantly to control credit risk) should not be required as a risk mitigation device. However, if a purported financial capacity certificate did guarantee or promise funds availability, the requirements of Sec. 7.1016 should and will apply. Under the transparency rule in Sec. 7.5002 of the final rule, electronic letters of credit are clearly permissible. However, in contrast to the financial certifications authorized under Sec. 7.5005 of this final rule, electronic letters of credit are subject to Sec. 7.1016 because they are independent undertakings.\48\

\48\See 12 CFR 7.5005(c).

Finally, the proposed rule contemplated that verification will be provided as part of a digital certificate, i.e., the certificate itself would contain the verified information on authority or financial capacity. However, some commenters requested that the final rule also enable banks to issue certificates that interoperate with the bank's internal systems so that the certificate is associated automatically with information in those systems related to the certificate holder. In other words, the verified information would reside not in the certificate, but in bank systems linked to the certificate. The benefit of this approach is that a systemlinked certificate can provide access to information that is updated whenever the bank's systems are updated, whereas information resident on the certificate can become rapidly outdated. Thus, some comments urged that the final rule expressly authorize banks to engage in electronic authentication activities regardless of the particular technology employed.

We agree that there are significant advantages to systemlinked certificates. However, such certificates also present very different risks than the certificatebased PKI systems for which the OCC has issued guidance.\49\ For this reason, the final rule does not contain a general authorization for systemlinked certificates. However, we are prepared to consider on a casebycase basis how national banks may use new technologies and models, beyond PKIbased digital certificates, to provide permissible electronic verification services.
\49\See OCC Bulletin 9920.

8. Data Processing (Sec. 7.5006)

Proposed Sec. 7.5006(a) codified OCC interpretations confirming that a national bank may collect, process,
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transcribe, analyze, and store banking, financial, and economic data for itself and its customers as part of the business of banking.\50\ Commenters were generally supportive of this aspect of the proposed rule and we are adopting it with some changes. Specifically, the final rule provides additional guidance on the scope and range of permissible banking, financial or economic data processing in two ways. First, the final rule clarifies that permissible ``processing'' of eligible data includes provision of data processing services, data transmission services, facilities (including equipment, technology, and personnel), databases and advice. It also includes providing access to such services, facilities, databases and advice. Second, the rule specifies that for purposes of this section, ``economic data'' includes anything of value in banking and financial decisions.\51\
\50\See, e.g., OCC Conditional Approval No. 289 (Oct. 2, 1998); OCC Interpretive Letter No. 805, reprinted in [19971998 Transfer Binder] Fed. Banking L. Rep. (CCH) para. 81,252 (Oct. 9, 1997). A prior OCC interpretive ruling on electronic banking specifically stated that ``as part of the business of banking and incidental thereto, a national bank may collect, transcribe, process, analyze and store for itself and others, banking, financial, or related e

FOR FURTHER INFORMATION CONTACT Heidi M. Thomas, Special Counsel, Legislative and Regulatory Activities, (202) 8745090; James Gillespie, Assistant Chief Counsel, (202) 8745200; or Clifford Wilke, Director, Bank Technology, (202) 8745920.