Temporary Unlimited FDIC Coverage for Noninterest-Bearing Transaction Accounts (Including IOLTA Accounts)
Frequently Asked Questions Regarding Sections 343 and 627 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
Please note that the temporary unlimited deposit insurance coverage for noninterest-bearing transaction accounts provided by Section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act expired on December 31, 2012. Accordingly, many of the following questions and answers concerning Section 343 have been rendered moot as of January 1, 2013. For more information, see Expiration of Temporary Unlimited Coverage for Noninterest-Bearing Transaction Accounts.
Section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("DFA") provides temporary unlimited deposit insurance coverage for noninterest-bearing transaction accounts at all FDIC-insured depository institutions (the "Dodd-Frank Deposit Insurance Provision"). The FDIC has added section 12 C.F.R. § 330.16 and amended certain other provisions of the deposit insurance regulations to implement the Dodd-Frank Deposit Insurance Provision. The new and revised rules are discussed in Financial Institution Letter FIL-76-2010 issued November 9, 2010, and in Financial Institution Letter FIL-2-2011 issued January 21, 2011.
Section 627 of the DFA, which became effective July 21, 2011, repeals the statutory prohibition against the payment of interest on demand deposit accounts ("DDAs"). To make FDIC regulations consistent with Section 627, on July 6, 2011 the FDIC Board of Directors issued a new final rule (76 Federal Register 41392) rescinding 12 C.F.R. Part 329, the regulations that had prohibited the payment of interest on DDAs. Two provisions from Part 329 have been retained and moved to 12 C.F.R. Part 330. One is the definition of "interest" which is now found at 12 C.F.R. § 330.1(k). The other retained provision, relating to "premiums" and certain payments which are not deemed "interest," is now section 12 C.F.R. § 330.101.
Below are frequently asked questions and answers concerning Sections 343 and 627 of the DFA and the related FDIC regulations.