Press Releases FDIC Looks
to Modernize the Way it Determines Uninsured Deposits at Large Banks
Issues an Advance Notice of Proposed Rulemaking for a 90-Day Comment Period
FOR IMMEDIATE RELEASE December
Contact: David Barr (202-898-6992)
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC)
has begun to solicit comments on the best way to improve the process of determining
the insurance status of depositors of larger institutions in the event of
a failure. For purposes of the advance notice of proposed rulemaking (ANPR),
a large institution would have more than 250,000 in deposit accounts and $2
billion in domestic deposits. Currently, 145 institutions out of the more
than 8,800 insured by the FDIC meet the criteria.
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 FDIC's near 75-year history, consolidation
in the industry has resulted in larger, more geographically diverse and
complex institutions. Because of these recent changes in the industry,
the FDIC is
seeking to update and modernize the deposit claims process, not any perceived
or imminent problems facing any of these institutions.
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 in on July 27, 2001,
for Superior Bank, FSB, Hinsdale, Illinois, with about 90,000 deposit accounts.
Today, some of the larger banks have in excess of 40 million deposit accounts.
The ANPR lists three options for comment, but also solicits other means
by which the FDIC can meet the same goals. Three options are:
Option 1 – would
require a large institution to integrate into its deposit systems the
following capabilities and take the following
actions: the ability to automatically place provisional holds on a percentage
large deposits; provide the FDIC with deposit data in a standard format
to include a unique depositor ID and the insurance category for each
account (currently these two data items are not available at institutions.);
and based on the insurance determination results, the ability to automatically
remove provisional holds and debit accounts for the uninsured portion
Option 2 – is the same as Option 1, but would not require a unique
depositor ID nor the account insurance category. In other words, the
set would include only data that institutions currently possess.
Option 3 – would only apply to the largest 10-20 institutions and would
require them to know the insurance status of each depositor and be able
to debit uninsured funds subject to loss in the event of failure.
Comments will be accepted for 90 days after publication in the Federal
Register. The ANPR is available on the FDIC 's Web site at www.fdic.gov.
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Congress created the Federal Deposit Insurance Corporation in 1933
to restore public confidence in the nation's banking system. The FDIC
deposits at the nation's 8,854 banks and savings associations and it
promotes the safety and soundness of these institutions by identifying,
and addressing risks to which they are exposed. The FDIC receives no
federal tax dollars —insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet
at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html)
and may also be obtained through the FDIC's Public Information Center (877-275-3342
or (703) 562-2200). PR-122-2005