Summary: | The FDIC is seeking comment on whether the largest insured depository institutions should be required to modify their deposit systems so that the FDIC may calculate deposit insurance coverage quickly in the event of a failure of one of these institutions. The advance notice of proposed rulemaking (ANPR) is attached. Comments are due by March 13, 2006. |
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Financial Institution Letters
FIL-2-2006 January 10, 2006 |
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Proposal to Modernize Large-Bank Deposit Insurance Determinations
The Federal Deposit Insurance Corporation (FDIC) has issued the attached advance notice of proposed rulemaking (ANPR) seeking comment on whether the largest insured depository institutions should be required to modify their deposit systems so that the FDIC may calculate deposit insurance coverage quickly in the event of failure. As currently structured, this proposal would apply only to insured depository institutions with more than 250,000 deposit accounts and more than $2 billion in domestic deposits. Presently, there are 145 such insured institutions. Upon the failure of an insured depository institution, the FDIC applies the $100,000 insurance limit by aggregating accounts owned by the same depositor in the same ownership category. Examples of ownership categories are single accounts, joint accounts and revocable trust accounts. In determining the identities of depositors and the ownership categories of accounts, the FDIC relies upon the account records, including computer records, of the failed institution. Historically, in paying deposit insurance, the FDIC has made insured funds available to most depositors by the next business day following the institution's failure (usually the Monday following a Friday closing). The ability of the FDIC to rapidly determine the insured status of deposit accounts is essential in resolving failed institutions in the most cost-effective and least disruptive fashion. The FDIC periodically updates the deposit claims process. In response to the growth of large institutions and consolidation in the banking industry, the FDIC is exploring new methods to modernize how it identifies insured deposits in the event of a large-bank failure. Through the ANPR, the FDIC is seeking comment on three options:
Comments on these options must be submitted on or before March 13, 2006.
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Additional Related Topics:
- Deposit Insurance Coverage
- 12 C.F.R. Part 330