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Entries in FDIC Insurance (4)


No More Unlimited Insurance for Noninterest-Bearing Transaction Accounts

The FDIC has issued a notice reminding FDIC-insured depository institutions that, absent a change in law by January 1, 2012, the FDIC’s temporary unlimited insurance coverage for noninterest-bearing transaction accounts (“NIBTAs”) will expire December 31, 2012.  The temporary unlimited insurance coverage program was promulgated by the Dodd-Frank Act.  Lawyer Trust Accounts (“IOLTAs”) are among the accounts affected. 

Beginning January 1, 2013, NIBTAs will be aggregated with other account deposits for purposes of the standard $250,000 limit on deposit insurance coverage.  The FDIC is encouraging insured institutions to do the following in preparation for the change: (i) provide adequate advance notice to NIBTA account holders of the scheduled change (a sample notice is provided); (ii) remove notices regarding the unlimited insurance coverage by January 2, 2013; and (iii) review any account agreements and disclosures affected by the change and make appropriate modifications.


FDIC Cautions Against Charging Customers an “FDIC Fee”

The FDIC recently issued a Financial Institution Letter, FIL-33-2012, cautioning insured banks with respect to customers fees specifically intended to cover the cost of FDIC deposit insurance.  The FDIC has received complaints from bank customers who have been charged “FDIC fees” or similarly-described fees.  Some customers have been advised by their bank to contact the FDIC directly if they have questions regarding these fees.

Due to the FDIC’s use of risk-based pricing for deposit insurance, the FDIC cautions against charging a fee that could used to determine a bank’s confidential supervisory information (such as its deposit insurance assessment risk assignment).  The FDIC also cautions that suggesting the FDIC requires banks to charge a fee to cover deposit insurance is inaccurate and potentially misleading.  FDIC fees not reasonably related to the proportional cost of deposit insurance allocable to a customer may also be misleading.

The letter discourages banks from identifying specific fees as “FDIC fees,” “deposit insurance fees,” or similarly described fees, and from referring customers to the FDIC for an explanation.  Prior advisory opinions issued by the FDIC on such fees, which pre-date the FDIC’s use of risk-based pricing, were withdrawn and superseded by the Letter.


FDIC to Host Series of Free Teleconferences on Important Regulatory Matters

The FDIC plans to host a series of free teleconferences, including a conference on Mortgage Loan Originator compensation, a conference on the topic of deposit insurance coverage, and a full-day conference on the role that community banks play in the economy and their unique challenges and opportunities.

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IOLTA Accounts Now Covered Under TAGP

The FDIC has issued a final rule that will revise the definition of “noninterest-bearing transaction account” to include Lawyer Trust Accounts (IOLTAs) under the Dodd-Frank Act.  Thus, IOLTAs will receive the same unlimited deposit insurance coverage that other noninterest-bearing transaction accounts receive under the FDIC’s Transaction Account Guarantee Program (TAGP).  Banks participating in TAGP are encouraged, but not required, to notify account holders that their IOLTAs will be fully insured through December 31, 2012.  Based on the original definition of noninterest-bearing transaction accounts under Dodd-Frank (which did not include IOLTAs), the FDIC required participating banks to notify account holders that their IOLTAs would no longer receive unlimited coverage after December 31, 2011.  A description of the final rule and a sample notice can be found here: