Summary: | The FDIC is seeking comments on whether and how 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 an institution's failure. Attached is the Advance Notice of Proposed Rulemaking (ANPR). Comments are due by March 13, 2007. |
Highlights:
Continuation of FIL-109-2006
Distribution:
Suggested Routing:
Note:
To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html . Paper copies of FDIC financial institution letters may be obtained from the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562- 2200).
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Financial Institution Letters
FIL-109-2006 December 21, 2006 |
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Large-bank Deposit Insurance Determination Modernization Proposal
The Federal Deposit Insurance Corporation (FDIC) has issued the attached Advance Notice of Proposed Rulemaking (ANPR) to seek comments on proposed improvements to the process of determining the insurance status of depositors of larger institutions in the event of a failure. The FDIC originally solicited comments on this topic in December 2005. Based on its review of the comments, the FDIC has decided to seek additional comments on a new approach. The FDIC's ability to rapidly determine the insured status of deposit accounts is essential to resolving bank failures in the most cost effective and least disruptive fashion. While the banking industry today is healthier than at any point in the nearly 75-year history of the FDIC, consolidation in the industry has resulted in larger, more geographically diverse and complex institutions. Some of these institutions have millions of deposit accounts, far more than any institution that the FDIC has resolved in the past. Because of these recent changes in the industry, the FDIC is seeking to update and modernize the deposit claims process. This is an appropriate time to consider such modernization because there are no perceived or imminent problems facing any of the large institutions. For purposes of the ANPR, a large institution would have more than 250,000 deposit accounts and $2 billion in domestic deposits, or at least $20 billion in total assets and $2 billion in domestic deposits, regardless of the number of deposit accounts. Currently, 159 institutions out of the more than 8,700 insured by the FDIC meet the criteria. The FDIC reviewed and considered the 28 comments received from the first ANPR. Based on its deliberations, the FDIC is soliciting comments on the following proposed new approach, which divides large institutions into two tiers:
The ANPR also requests comment on whether large institutions should be encouraged or required to know the insurance status for each new account opened and/or notify the customer of this status. Further comment is requested on whether a unique depositor identifier and insurance category should be required for new accounts. The last time the FDIC updated its deposit insurance determination process was in 1999. The largest number of deposit accounts in a failed institution where the FDIC had to make an insurance determination was on July 27, 2001, for Superior Bank, FSB, Hinsdale, Illinois, with about 90,000 deposit accounts. Today, some of the larger banks have more than 50 million deposit accounts. Comments on these options must be submitted on or before March 13, 2007.
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Additional Related Topics:
- Deposit Insurance Coverage
- 12 C.F.R. Part 330