Large-Bank Deposit Insurance Determination Modernization Proposal, 73652-73663 [05-23986]
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Federal Register / Vol. 70, No. 238 / Tuesday, December 13, 2005 / Proposed Rules
any other administrative law judge
employed under this subpart and 5
U.S.C. 3105.
(g) A senior law judge is paid the rate
of basic pay for the pay level at which
the position has been classified. If the
position is classified at pay level AL–3,
the senior administrative law judge is
paid the lowest rate of basic pay in AL–
3 that equals or exceeds the highest
previous rate of basic pay attained by
the individual as an administrative law
judge immediately before retirement, up
to the maximum rate F.
§ 930.210
Reduction in force.
(a) Retention preference regulations.
Except as modified by this section, the
reduction in force regulations in part
351 of this chapter apply to
administrative law judges.
(b) Determination of retention
standing. In determining retention
standing in a reduction in force, each
agency lists its administrative law
judges by group and subgroups
according to tenure of employment,
veterans’ preference, and service date as
outlined in part 351 of this chapter.
Because administrative law judges are
not given performance ratings (see
§ 930.206), the provisions in part 351 of
this chapter referring to the effect of
performance ratings on retention
standing are not applicable to
administrative law judges.
(c) Placement assistance. (1) An
administrative law judge who is reached
in an agency’s reduction in force and
receives a notification of separation is
eligible for placement assistance under
the agency’s reemployment priority list
established and maintained in
accordance with subpart B of part 330
of this chapter.
(2) An administrative law judge who
is reached by an agency in a reduction
in force and who is notified of being
separated, furloughed for more than 30
days, or demoted, is entitled to have his
or her name placed on OPM’s
administrative law judge priority
referral list for the level in which last
served and for all lower levels.
(i) To have his or her name placed on
the OPM priority referral list, a
displaced administrative law judge must
provide OPM with a request for priority
referral placement, a resume or
equivalent, and a copy of the reduction
in force notice at any time after the
receipt of the specific reduction in force
notice, but not later than 90 days after
the date of separation, furlough for more
than 30 days, or demotion.
(ii) Eligibility on the OPM priority
referral list expires 2 years after the
effective date of the reduction in force
action.
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(iii) Referral and selection of
administrative law judges are made
without regard to selective certification
or special qualification procedures.
(iv) Termination of eligibility on the
OPM priority referral list takes place
when an administrative law judge
submits a written request to terminate
eligibility, accepts a permanent full-time
administrative law judge position, or
declines one full-time employment offer
as an administrative law judge at or
above the level held when reached for
reduction in force at geographic
locations previously indicated as
acceptable.
(3) With OPM’s prior approval, when
there is no administrative law judge
available on the agency’s reemployment
priority list, an agency may fill a vacant
administrative law judge position
through any of the following methods:
(i) OPM’s administrative law judge
priority referral list;
(ii) Reassignment from within the
agency; or
(iii) Competitive examining,
promotion, transfer, or reinstatement
procedures; provided that the proposed
candidate possesses experience and
qualifications superior to an available
displaced administrative law judge(s) on
OPM’s priority referral list.
§ 930.211 Actions against administrative
law judges.
(a) Procedures. An agency may
remove, suspend, reduce in level,
reduce in pay, or furlough for 30 days
or less an administrative law judge only
for good cause established and
determined by the Merit Systems
Protection Board on the record and after
opportunity for a hearing before the
Board as prescribed in 5 U.S.C. 7521
and 5 CFR part 1201. Procedures for
adverse actions by agencies under part
752 of this chapter do not apply to
actions against administrative law
judges.
(b) Status during removal
proceedings. In exceptional cases when
there are circumstances in which the
retention of an administrative law judge
in his or her position, pending
adjudication of the existence of good
cause for his or her removal, is
detrimental to the interests of the
Federal Government, the agency may:
(1) Assign the administrative law
judge to duties consistent with his or
her normal duties in which these
conditions would not exist;
(2) Place the administrative law judge
on leave with his or her consent;
(3) Carry the administrative law judge
on annual leave, sick leave, leave
without pay, or absence without leave,
as appropriate, if he or she is voluntarily
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absent for reasons not originating with
the agency; or
(4) If the alternatives in paragraphs
(b)(1) through (b)(3) of this section are
not available, the agency may consider
placing the administrative law judge in
a paid non-duty or administrative leave
status.
(c) Exceptions from procedures. The
procedures in paragraphs (a) and (b) of
this section do not apply:
(1) In making dismissals or taking
other actions under 5 CFR parts 5 and
731;
(2) In making dismissals or other
actions made by agencies in the interest
of national security under 5 U.S.C. 7532;
(3) To reduction in force actions taken
by agencies under 5 U.S.C. 3502; or
(4) In any action initiated by the
Office of Special Counsel under 5 U.S.C.
1215.
[FR Doc. 05–23930 Filed 12–12–05; 8:45 am]
BILLING CODE 6325–39–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Chapter III
RIN 3064–AC98
Large-Bank Deposit Insurance
Determination Modernization Proposal
Federal Deposit Insurance
Corporation (‘‘FDIC’’).
ACTION: Advance notice of proposed
rulemaking.
AGENCY:
SUMMARY: In view of the significant
industry consolidation in recent years,
the FDIC is exploring new methods to
modernize its deposit insurance
determination process, whereby the
insurance status of each depositor is
determined in the event of failure.
Procedures currently used by the FDIC
to determine deposit insurance coverage
may result in unacceptable delays if
used for an FDIC-insured institution
with a large number of deposit accounts.
In developing a new system to
determine insurance coverage, the
FDIC’s goals are to minimize disruption
to depositors and communities, and
maximize recoveries for the deposit
insurance fund in the event one of the
largest insured institutions should fail.
The FDIC is seeking comment on the
best means to accomplish these
objectives, and is offering three possible
options for comment. The focus of this
Advance Notice of Proposed
Rulemaking (‘‘ANPR’’) is on FDICinsured institutions with the largest
number of deposit accounts, currently
expected to include only the 145
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insured institutions with total number
of deposit accounts over 250,000 and
total domestic deposits of at least $2
billion (‘‘Covered institutions’’). None of
these options require that insured
institutions transmit deposit data to the
FDIC unless the institution is in danger
of failing.
DATES: Comments must be submitted on
or before March 13, 2006.
ADDRESSES: You may submit comments
by any of the following methods:
• Agency Web site: https://
www.FDIC.gov/regulations/laws/
federal/propose.html. Follow the
instructions for submitting comments.
• E-mail: comments@FDIC.gov.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street, NW.,
Washington, DC 20429.
• Hand Delivered/Courier: The guard
station at the rear of the 550 17th Street
Building (located on F Street), on
business days between 7 a.m. and 5 p.m.
• Public Inspection: Comments may
be inspected and photocopied in the
FDIC Public Information Center, Room
100, 801 17th Street, NW., Washington,
DC, between 9 a.m. and 4:30 p.m. on
business days.
• Internet Posting: Comments
received will be posted without change
to https://www.FDIC.gov/regulations/
laws/federal/propose.html, including
any personal information provided.
FOR FURTHER INFORMATION CONTACT:
James Marino, Project Manager, Division
of Resolutions and Receiverships, (202)
898–7151 or jmarino@fdic.gov or
Christopher Hencke, Counsel, Legal
Division, (202) 898–8839 or
chencke@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
The FDIC seeks comment on the best
way to improve the deposit insurance
determination process. Three options
are presented for comment.
• Option 1 would require Covered
institutions to have installed on their
computer systems a routine that, in the
event of failure, would automatically
place a temporary hold on a portion of
the balances in large deposit accounts.
The percentage hold amount would be
determined by the FDIC at the time of
failure, depending mainly on estimated
losses to uninsured depositors. These
holds would be placed immediately
prior to the institution reopening for
business as a bridge bank, generally
expected to be the next business day.
The institution also would need to be
able to automatically remove these
holds and debit the account, if
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necessary, depending on the results of
the FDIC’s insurance determination. The
insurance determination would be
facilitated by the institution providing
the FDIC, in the event of failure, with
depositor data (name, address, tax
identification number, etc.) in a
standard format, including a unique
identifier for each depositor and the
insurance category of each account.
• Option 2 is similar to Option 1,
except the standard data set would
include only information the institution
currently possesses. This option would
not require a unique identity for each
depositor or that the institution supply
the insurance category for each account.
• Option 3 would require that, in
addition to Option 1 or Option 2, the
largest 10 or 20 Covered institutions (in
terms of the number of deposit
accounts) know the insurance status of
their depositors at any given point in
time and have the capability to
automate the placement of hard holds
and debit uninsured funds as specified
by the FDIC upon failure.
The FDIC is interested in improving
its ability to make insurance
determinations in the insured
institutions with the largest number of
deposit accounts, which currently
would include insured institutions with
over 250,000 deposit accounts and total
domestic deposits over $2 billion. As of
June 30, 2005 that would include 145
institutions.
Historically the FDIC has taken
responsibility for making an insurance
determination at the time of failure
based on the failed institution’s records.
A precise deposit insurance
determination requires a specialty
system to analyze depositor data and
apply the insurance rules. Under
current law an insured depository
institution is not required to calculate
by depositor the amount of funds
exceeding the $100,000 insurance limit
(by depositor and insurance category).
As part of its normal practice, the
FDIC obtains depositor data only at the
time an insured institution is in danger
of failing. These data are received in the
weeks or months prior to failure, and
are obtained for the sole purpose of
determining the insurance status of
individual depositors and estimating the
total amount of insured funds in the
institution. The receipt of such
depositor data is necessary for the FDIC
to carry out its insurance function. The
options provided in this ANPR do not
alter the FDIC policy regarding the
receipt of depositor information in
preparation for the resolution of a
failing insured institution. The FDIC is
aware of the potential privacy issues
surrounding the holding of depositor
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information and has in place strict
safeguards to protect these data.
The FDIC operates under a mandate
when handling a failing institution to
structure the least costly of all possible
resolution transactions,1 except in the
event of systemic risk 2 and even in
those cases the FDIC must conserve
costs. Since the introduction of the
systemic risk exception in 1991 no
exceptions to the least-cost requirement
have been granted. The FDIC’s least-cost
requirement was intended to reduce
resolution cost and instill a greater
degree of market discipline by requiring
that losses be borne by uninsured
depositors and non-deposit creditors.
The FDIC’s claims process clearly plays
a central role in this area.
When an insured institution fails the
FDIC may pay insured depositors up to
the insurance limit (a ‘‘pay-off’’) or the
FDIC may sell the failed institution to
another FDIC-insured institution (a
‘‘purchase and assumption
transaction’’). Another option is to
establish a bridge bank 3 or a
conservatorship and transfer deposits to
that institution. Preservation of the
deposit franchise of a failed institution
is an important facet of minimizing
resolution costs. As a consequence, the
FDIC is most likely to use a bridge bank
structure in the resolution of a Covered
institution, although a pay-off or a
purchase and assumption transaction
remain possibilities. Establishing a
bridge bank should contribute greatly to
customer retention and minimize
potential operational difficulties, which
will enhance the sales premium when
the bridge bank is privatized as part of
the final resolution transaction.4
The FDIC also has a legal mandate to
pay insured deposits ‘‘as soon as
possible’’ 5 after an institution’s closure.
Although the FDIC has no statutory
requirement to provide access to
insured deposits within a specified time
1 Section 13(c)(4)(A)(ii) of the Federal Deposit
Insurance Act (‘‘FDI Act’’), 12 U.S.C.
1823(c)(4)(A)(ii).
2 Section 13(c)(4)(G)(i) of the FDI Act, 12 U.S.C.
1823(c)(4)(G)(i).
3 A bridge bank is a national bank chartered for
the purpose of temporarily carrying on the banking
operations of a failed institution until a permanent
solution can be crafted. See 12 U.S.C. 1821(n). The
FDIC’s bridge bank authority applies only to the
failure of a bank. In the event of the failure of an
insured savings association the FDIC could seek a
federal thrift charter that would be operated as a
conservatorship. As with a bridge bank, the new
thrift institution would be a temporary mechanism
to facilitate a permanent resolution structure.
4 Bovenzi, John F., ‘‘An FDIC Approach to
Resolving a Large Bank,’’ Financial Market Behavior
and Appropriate Regulation Over the Business
Cycle, Chicago: Federal Reserve Bank of Chicago,
May 2002, pages 56–61.
5 Section 11(f)(1) of the FDI Act, 12 U.S.C.
1821(f)(1).
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after failure it places a high priority on
providing access to deposits promptly
to:
• Maintain public confidence in the
banking industry and the FDIC.
• Provide the best possible service to
insured depositors by minimizing
uncertainty about their status and
avoiding costly disruptions such as
returned checks and a limit on their
ability to meet financial obligations.
• Mitigate the spillover effects of a
failure, which may include risks to the
payments system, problems stemming
from depositor illiquidity and a
substantial reduction in credit
availability. For large failures the
potential spillover effects can be
magnified, underscoring the importance
of a rapid resolution. Effectively
addressing spillover effects minimizes
the likelihood of systemic risk.
• Retain, where feasible, the franchise
value of the failed institution (and thus
minimize the FDIC’s resolution costs).
Historically, most insured institution
closures have occurred on a Thursday or
Friday. In recent years, the FDIC has
made funds available to the majority of
depositors by the next business day,
usually the Monday following a Friday
closing.
All of the insured institution failures
of the past 10 years have been of modest
size, the largest being Superior Bank,
FSB with total deposits at the time of
closure of about $2 billion and roughly
90,000 deposit accounts. This failure
pattern does not overshadow the FDIC’s
mandate to handle the failure of an
insured institution of any size.
Continued industry consolidation has
caused the FDIC to reexamine its
approach to conducting a deposit
insurance determination, including the
adoption of new technologies and
business processes that could greatly
increase the efficiency and timeliness of
resolving a failed institution and getting
depositors access to their funds.
Industry consolidation raises practical
concerns about the FDIC’s current
business model for conducting a deposit
insurance determination. Larger
institutions—especially those initiating
recent merger activity—are considerably
more complex, have more deposit
accounts, greater geographic dispersion,
more diversity of systems and data
consistency issues arising from mergers
than has been the case historically.
Implications of industry consolidation
over the past 10 years can be seen in the
following table. Should such trends
continue, deposits will become even
more concentrated in the foreseeable
future.
TABLE 1.—TOP TEN INSTITUTIONS, BY NUMBER OF DEPOSIT ACCOUNTS
[In millions]
Rank
1995
2000
2005
1 ...............................................................................................................................................................
2 ...............................................................................................................................................................
3 ...............................................................................................................................................................
4 ...............................................................................................................................................................
5 ...............................................................................................................................................................
6 ...............................................................................................................................................................
7 ...............................................................................................................................................................
8 ...............................................................................................................................................................
9 ...............................................................................................................................................................
10 .............................................................................................................................................................
11.0
6.5
3.8
3.6
3.5
3.3
3.3
3.2
3.1
3.0
36.4
10.9
9.0
7.9
7.8
7.2
6.5
5.5
5.1
5.0
47.8
29.1
22.7
17.4
16.3
10.3
9.0
8.7
6.1
5.0
Total ..................................................................................................................................................
44.3
101.3
172.5
Source: FDIC.
This ANPR discusses regulatory
options for a new business model for
insurance determinations where
Covered institutions would be required
to facilitate the calculation of the
insurance coverage of deposit accounts.
Prior to developing the options
discussed below and as part of its
ongoing work to improve the efficiency
of the claims process, the FDIC held
meetings with senior examiners from
the FDIC and other Federal banking
agencies. Further, the FDIC solicited
advice and opinions from the staff of
four large insured depository
institutions and a deposit servicer of
large institutions.
After the basic options discussed in
this ANPR were developed the FDIC
held meetings with four large providers
of deposit software or servicing to
Covered institutions. During these
meetings FDIC staff presented the
options along with substantial
background on its insurance
determination process and the
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objectives of the current claims
modernization process. The deposit
software vendors/servicers were asked
to consider the feasibility of the options,
including potential costs. Each vendor
expressed a strong preference among
these options for Option 2 (described in
more detail below). The FDIC’s
impression from these meetings was
that Option 2 could be incorporated into
the vendor’s deposit systems. Based on
discussions with these vendors, staff of
the FDIC believes the costs for Option
2 likely would be fairly modest.
These vendor visits were followed by
meetings with the other Federal banking
agencies: The Board of Governors of the
Federal Reserve, the Office of the
Comptroller of the Currency and the
Office of Thrift Supervision. Visits also
were made to several banking trade
organizations to discuss the options and
solicit feedback. Lastly, the options
were presented for comment to the four
large insured depository institutions
visited earlier in the process.
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The options outlined here cannot be
implemented without some regulatory
and financial burden. The FDIC is
seeking to minimize these costs while at
the same time ensuring that it can
effectively carry out its mandates to
make insured funds available quickly to
depositors and provide a least-cost
resolution for Covered institutions. The
FDIC would like comment on the
potential industry costs and feasibility
of implementing the options (described
below in more detail). The FDIC also is
interested in comments on whether
there are other ways to accomplish its
goals that might be more effective or less
costly or burdensome. In other words,
what approach or combination of
approaches (which may include new
alternatives) most effectively meets this
cost/benefit tradeoff?
Implementation of these or similar
options will require that the FDIC
amend its regulations. If changes in the
regulations are proposed, the FDIC will
publish a Notice of Proposed
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Rulemaking and afford the opportunity
for additional public comment before
any final decision is made.
II. Background
FDIC Insurance Coverage
The basic insurance limit is $100,000
per depositor, per insured institution.
Depositors eligible to receive insurance
coverage include natural persons, legal
entities such as corporations,
partnerships and unincorporated
associations, and public units.
Insurance coverage is based on the
concept of ownership rights and
capacities. Deposits maintained by a
person or entity in different ownership
rights and capacities at one institution
are separately insured up to the
insurance limit. Deposits maintained in
the same ownership rights and
capacities are added together to
determine the insurance coverage. The
FDIC’s rules and regulations for deposit
insurance coverage describe the
categories of ownership rights and
capacities eligible for separate insurance
coverage. FDIC refers to these as
‘‘ownership categories’’ (see Appendix
A for a description of the primary
ownership categories).6
All types of deposits (for example,
checking accounts, savings accounts,
certificates of deposit, interest checks
and cashier’s checks 7) that a depositor
has at an institution in the same
ownership category are added together
before the FDIC applies the insurance
limit for that category. A depositor
cannot increase insurance coverage by
dividing funds into different accounts in
the same ownership category at the
same institution. Similarly, in the case
of joint accounts, using different coowner Social Security numbers on
different accounts does not increase
insurance coverage. In a deposit
insurance determination, the FDIC relies
upon the deposit account records of the
failed institution to determine the
ownership of an account and thus the
amount of insurance coverage available.
Current Deposit Insurance
Determination Process
Background. The deposit insurance
determination process has several steps.
Each step varies in time and complexity,
6 See also Financial Institution Employee’s Guide
to Deposit Insurance, Federal Deposit Insurance
Corporation, 2004. This publication as well as
additional information on insurance coverage is
available at https://www.fdic.gov/deposit/deposits/
index.html.
7 Cashiers’ checks, money orders, officers’ checks,
interest checks, loan checks or expense checks
constitute official items. Official items are included
in the deposit insurance determination only if they
are drawn on the failed bank.
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depending on the institution’s
characteristics (primarily the number of
deposit accounts and deposit systems).
Closing out the day’s business.
Generally, on the day of an institution’s
failure, all of the day’s check processing
and deposit transactions are completed
(not including the overdraft decisionmaking process that occurs the
following morning). The length of this
process can vary across institutions. For
larger institutions this process can run
into the early morning hours possibly
ending at 4 a.m. or later.
Obtain deposit data. A data file is
obtained from the institution or its
servicer. Obtaining usable requisite data
from the institution or its servicer
frequently is a time-consuming process.
The FDIC will provide the institution or
its servicer with a standard data request.
The standard data request requires the
institution to provide approximately 45
data fields for each deposit account
along with electronic copies of trial
balances and deposit application
reconciliations. FDIC technical staff
works with the insured institution until
the standard data set requirements are
met and the files transmitted to the
FDIC can be processed properly.
Generally, the FDIC has at least 30
days advance warning to plan and
prepare for failures. Data are requested
in advance to ensure delivery
capabilities, prove the balancing and
reconciliation processes and make
certain all required fields have been
included. In instances in the past, where
a large depository institution
experienced financial difficulties,
liquidity pressures forced the closing of
the institution before it became capital
insolvent. As a consequence, the FDIC
is concerned that lengthy advanced
warning and early access may not be
possible or practical for a Covered
institution that becomes financially
troubled. More limited access combined
with complexities inherent in largeinstitution deposit systems—including
multiple deposit systems and significant
data volumes—could materially delay
the process of obtaining data necessary
to conduct a deposit insurance
determination.
Process deposit data. Data are
received and validated (including
reconciliation to the actual trial
balance). Using its Receivership
Liability System (‘‘RLS’’) the FDIC
determines which accounts are fully
insured, which are definitely uninsured
and which are possibly uninsured
(pending the collection of further
information). The RLS automatically
groups accounts based on the estimated
ownership category and the name(s),
address, and tax identification number
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for each account. This process is part of
the insurance determination performed
on the depositor data received from a
failed institution.
FDIC holds/debits based on insurance
determination results. Accounts
definitely uninsured are debited for the
uninsured amount. Holds are placed on
accounts that are deemed potentially
uninsured for amounts over the
insurance limit and the account owner
is contacted. If additional information is
required from the depositor, a meeting
is scheduled. These meetings afford the
opportunity to collect information
necessary to finalize the insurance
determination on the possibly
uninsured depositors.
The typical institution resolved by the
FDIC does not have the capability to
post a large volume of holds
electronically by batch. In these cases
holds are placed manually usually
through the on-line system. In two
failures in the recent past the FDIC has
had the ability to work with
programmers prior to the closing to
create an automated method. This
required a significant amount of time
and availability of staff prior to the
failure. Automatically processing a large
number of holds at closing without prefailure preparations and testing may
result in significant operational
difficulties during and after opening the
new institution for business. In one
instance the FDIC discovered after the
fact that the programmed holds could
not be removed by tellers under the
direction of FDIC staff. These holds
could only be removed by another
program that ran in batch mode. This
caused a delay in releasing funds to
insured customers.
FDIC System Upgrades
As part of its claims process review,
the FDIC will streamline the business
processes it uses to facilitate a deposit
insurance determination. This will
involve developing a new deposit
insurance claims processing system
incorporating more advanced
technologies to enhance automation.
These changes will improve the FDIC’s
ability to process efficiently a large
number of accounts and provide timely
customer support to uninsured
depositors. In the case of a Covered
institution that is in danger of failing,
enhancements to the FDIC’s claims
system would be complemented by the
options proposed in this ANPR. In
particular, the FDIC is focusing on the
collection and validation of deposit data
and the capability of automatically
debiting or placing holds on uninsured
or potentially uninsured accounts.
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The Banking Landscape From the
Claims Perspective
Industry segmentation. Insured
depository institutions can be divided
into two general categories, depending
on the unique issues posed during a
potential resolution. The single most
important facet determining the
complexity of the claims process is the
number of deposit accounts, although
suggest the need for different claims
approaches and methodologies.
Complexity: Large institutions
typically have more accounts and more
complex deposit systems. With Covered
institutions the speed of the claims
process could be greatly enhanced by
the FDIC obtaining a timely data
download and improving the capability
to automatically post holds or debit
uninsured funds.
the volume of daily transactions also
can be important. For the purpose of
claims process planning the FDIC has
divided the industry into two segments
as shown in Table 2.
This segmentation does not result in
two homogenous groups. There are
profound differences among institutions
in each group. From the deposit claims
perspective the varying characteristics
of Covered and Excluded institutions
TABLE 2.—INDUSTRY SEGMENTATION.
Percent of
total
Number
Total
domestic
deposit
(billions)
Percent of
total
Segment
Definition
Covered ....................................................
145
1.6
$3,982
67.1
Excluded .........................................
Total number of deposit accounts over
250,000 and total domestic deposits
over $2 billion.
All insured institutions not covered ..........
8,735
98.4
1,950
32.9
Total ...................................................
...................................................................
8,880
100.0
5,932
100.0
Source: FDIC.
Note: Data are as of June 30, 2005.
Resolution structure: The resolution
of a Covered institution is likely to
unfold differently compared to one of
smaller size. These differences generally
relate to the expected nature of the
failure. In today’s environment a
critically undercapitalized institution
will receive a supervisory letter
indicating it has 90 days to improve its
capital position, otherwise it will be
closed (capital insolvency). If the
institution’s capital level is not
improved during this time, a failure will
occur, typically on a Friday. This
process affords the FDIC substantial
advance warning and the opportunity to
prepare by obtaining deposit data up to
90 days in advance of failure and by
having the opportunity to work with the
failing institution’s information
technology staff.
Covered institutions are more likely to
fail due to liquidity reasons prior to
becoming critically undercapitalized
(liquidity insolvency). Most likely, this
will be a less orderly event. Institutions
more susceptible to a liquidity
insolvency pose greater problems for the
FDIC. Such institutions have a less
predictable failure date; the failure
could occur on any day of the week; and
pre-failure access to the institution may
be limited because the institution’s
insolvency is difficult to anticipate.
Covered insured depository
institutions present unique challenges
in the event of failure. For the smaller,
less-complex Covered institutions these
challenges may be only modest; for the
larger, more complex members of the
group they are more severe. The FDIC is
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concerned about both the size and
complexity of the deposit operations of
Covered institutions and the speed at
which a claims process must be
conducted to make funds available
quickly to depositors and maximize the
institution’s franchise value.
III. Proposed Deposit Insurance
Determination Timeline
General Process
This ANPR presents three options for
discussion. Each of these options would
require modifications to the deposit
systems of Covered institutions to
facilitate the insurance determination
process. The third option would require
the larger Covered institutions to
determine the insurance status of each
depositor. In this case the FDIC would
rely upon institution-generated results
in the event of failure. Alternatively, the
first two options imply a process similar
to that currently undertaken by the
FDIC, but with important distinctions.
The general timeline of the insurance
determination process under Options 1
and 2 is outlined below.
Step 1. The institution is closed,
typically at the end of the business day.
Step 2. The institution’s nightly
deposit cycle is completed, a process
which may run into the early morning
hours. This process posts the day’s
deposit transactions, ending with the
account balance used for deposit
insurance purposes.
Step 3. After the nightly deposit cycle
is processed and the ending balance
obtained for each account, the insured
institution’s deposit system would post
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what the FDIC is calling a ‘‘provisional
hold’’ on certain large deposit accounts.
The capability to post provisional holds
is not a current feature of deposit
processing systems and would have to
be specifically created for this purpose.
The provisional hold is a calculated
amount based on the account type and
balance. Accounts below a certain
threshold (for example, $50,000) would
be exempt from a provisional hold.
Based upon an initial analysis of
potential losses from the failed
institution, a specified percent (for
example, 10 percent) of each account
above this size threshold would be
subject to a provisional hold. The actual
threshold account size and hold
percentage would be provided by the
FDIC the night the institution is closed,
based primarily on estimated institution
losses. The threshold size and hold
percentage may vary by account type
(for example, demand and NOW
accounts, savings deposits, time
deposits and IRAs). Once the financial
institution calculates the provisional
hold amounts, holds must be placed on
each affected account. The Hold Code
legend should read ‘‘FDIC Provisional
Hold.’’ The provisional holds would
remain in place until the insurance
determination results are determined by
the FDIC. The FDIC provisional holds
would be removed en masse once
insurance determinations have been
made by the FDIC. The FDIC will direct
the institution’s Operations/IT staff to
reverse all provisional holds. It is
anticipated this will be done by using
the original provisional holds file and
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changing it to reverse the provisional
holds. The FDIC provisional holds
should be of a nature that they can be
overridden only by IT personnel at the
direction of the FDIC if the need arises
that individual provisional holds must
be removed prior to the en masse
removal.
Step 4. After the provisional holds are
in place the institution (most likely a
bridge bank) is ready to open for
business. Posting of provisional holds
must occur prior to the start of the
business day following failure and
appear on hold reports and the on-line
system. The ‘‘available balance’’ must
show the customer balance after the
provisional hold has been posted.
Step 5. The Covered institution also
must have the capability to generate a
standard data set of deposit account
fields necessary for the FDIC to conduct
the deposit insurance determination.
Except as discussed below for Option 1,
the standard data set would be
comprised of information the bank
already has on hand. Principal balances,
accrued interest, and record counts
captured as part of this process must be
reconciled to the institution’s actual
trial balance reports or summary totals
reports. A mechanism would need to be
in place to transmit these data quickly
to the FDIC or its designated processing
vendor.
Step 6. Upon receipt of the
institution’s standard data set the FDIC
will process the information to
determine the insurance status of each
account. The FDIC will generate one of
three possible outcomes for each
account.
1. Account is fully insured: remove
the provisional hold. No further action
is required.
2. Account is definitely uninsured:
remove the provisional hold and debit
the account in the amount specified by
the FDIC.
3. Account is possibly uninsured but
further information is required by the
FDIC to make the final determination:
remove the provisional hold and place
a regular bank hold 8 in the amount
specified by the FDIC.9
8 Bank holds should have a legend stating ‘‘FDIC
Hold’’ and are placed for an unlimited number of
days.
9 Certain trust accounts and accounts eligible for
pass-through coverage will require additional
information to determine insurance status. The
FDIC must obtain this information from the
depositor. This process may take several weeks in
the case of a relatively large Covered institution.
The bank hold with the ‘‘FDIC Hold’’ legend will
remain in place until results are obtained. The
results of the insurance determination on these
accounts will be passed to the institution (bridge
bank or assuming institution) as they become
available. When these accounts are processed, the
deposit insurance determination will be complete.
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The FDIC intends to forward
insurance results to be incorporated into
the institution’s deposit systems as soon
as possible, perhaps as quickly as the
day following the receipt of the standard
data set. The results will dictate debits
and holds to be placed by batch in an
automated fashion on deposit accounts.
The processing stream would be as
follows: FDIC will notify Operations/IT
that results are available. This
notification will trigger a process
whereby all provisional holds are
removed en masse using the original file
to create the removal transactions. After
provisional holds have been removed
debit transactions and bank holds will
be placed on accounts as determined in
the process described above in items 1
through 3.
Provisional Holds
The steps described above would
require new features for the deposit
systems of Covered institutions. These
features are: (1) The creation of a
standard data set reconciled to the
institution’s actual trial balance; (2) the
calculation of provisional holds on the
basis of FDIC-specified criteria and
placement of provisional holds after the
regular deposit processing is complete
for the day; (3) the capability to remove
the provisional holds en masse and (4)
the ability to place bank holds by batch,
electronically.
Since provisional holds enhance the
FDIC’s ability to open a bridge bank
quickly, it substantially increases the
potential resale value of the institution.
These holds are necessary to stop the
potential outflow of uninsured funds
subject to risk during the first business
day(s) of the bridge bank’s operations.
At the same time depositors are
provided access to the majority of their
funds.
Potential difficulties could arise from
provisional holds, including
acceleration in the number of returned
items. There is a tradeoff between
holding uninsured funds potentially
subject to loss and quickly making
funds available to depositors. The FDIC
must strike a balance in this decisionmaking process. As a part of this
balance, the FDIC could require that the
percentage of the provisional hold differ
between account type.
Historically losses on large insured
institutions have been lower as a
percent of assets compared to the
smaller, more typical failure. Large
institutions also tend to hold more
subordinated debt and other general
creditor claims compared to smaller
institutions. These facts suggest the
possibility that the provisional hold
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percentage will be fairly modest in the
failure of most Covered institutions.
IV. Options
The FDIC has preliminarily identified
three options, each of which is
discussed below. The FDIC invites
comments on these options, as well as
other suggestions to achieve the
objectives identified in this document.
In addition, the FDIC seeks comments
on several related issues. These options
are being considered only for Covered
institutions.
The definition of a Covered
institution is being actively considered.
At this point the definition includes
insured institutions with at least
250,000 deposit accounts and more than
$2 billion in domestic deposits. These
thresholds are subject to further
research and consideration. A limited
number of large insured institutions
(total assets over $20 billion) would not
fall under this definition because they
have fewer than 250,000 deposit
accounts. Inclusion of these institutions
in the definition of ‘‘Covered’’ is being
considered. Further, a multi-bank
holding company could have at least
one Covered institution while other
members do not meet the definition.
Consideration is being given to defining
as Covered other members of a multibank holding company as long as at
least one of its members meets the size
thresholds listed above.10
Option 1
Option 1 would require each Covered
institution (except those to which
Option 3 would apply) to have in place
on an ongoing basis the ability to:
• Identify the owner(s) of each
account by using a unique identifier.
• Identify the deposit insurance
ownership category of each deposit
account.
• Supply to the FDIC a standard data
set mapped and formatted to FDIC
specifications and reconciled to the
institution’s actual trial balance. (See
Appendix B for a preliminary list of
data to be included in the standard data
set.)
• Calculate and place provisional
holds automatically according to the
FDIC’s specifications at the end of
processing on any given business day.
• Remove provisional holds
automatically according to the FDIC’s
specifications at the end of processing
on any given business day.
10 Some members of a multi-bank holding
company hold only a limited number of deposit
accounts, perhaps dictating exclusion from the
definition of covered.
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• Add and remove automatically the
FDIC-supplied holds/debits on an asneeded basis.
To ensure compliance the FDIC
would test periodically a Covered
institution’s ability to produce the
required processes.11 The testing
process would focus on data quality and
accuracy, the ability to produce quickly
a standard data set meeting the FDIC’s
criteria, the ability to effectively submit
data and the viability of the hold
processes. The FDIC recognizes the
sensitivity of depositor data and the
privacy issues that may arise. The FDIC
believes it is possible to conduct an
effective testing process while on-site,
without the need for sensitive depositor
data to leave the institution’s premises.
As each covered institution’s system
would be tested periodically, the FDIC
should be able to rely upon the unique
owner identifier and the insurance
category of each account. Reliance upon
these data would accelerate the
insurance determination process.
Without these data the FDIC would have
to identify account owners and each
account’s insurance category based
primarily on the name and address
fields and tax identification numbers, as
is the case with the current process.
The FDIC would require certain fields
from the customer information file
(‘‘CIF’’) system such as CIF number,
name, address, taxpayer identification
number and certain fields from the
deposit system such as account number,
account name, address, and principal
balance. The data from the CIF file and
the deposit systems must be linked.
These data elements will be used to
determine account owners and to
perform insurance determinations. It is
proposed that Covered institutions have
the data elements mapped and
formatted to the FDIC specifications and
available to run on short notice. Further,
the Covered institutions would have
available a method to reconcile the file
to actual trial balances to ensure all
deposit accounts were captured. Proof
of reconciliation would be required.
One of the elements of the standard
data set (as set forth in Appendix B) is
‘‘product type.’’ In connection with this
element, an insured depository
institution must identify ‘‘accounts
owned by bank’’ or ‘‘bank-owned
accounts.’’ This term means an account
that does not qualify as a ‘‘deposit’’
account as defined in the Federal
Deposit Insurance Act. See 12 U.S.C.
1813(l). For example, a depository
institution might establish an account
11 Options 2 and 3 also would involve a testing
process to determine the overall quality of the
results.
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reflecting the collection of loan
payments from borrowers. These
collected funds represent income. They
do not represent insured ‘‘deposits’’
because the depository institution is not
obligated to make repayment. All such
‘‘bank-owned accounts’’ must be
identified in the standard data set.
The volume of data to be provided in
deposit/CIF files of Covered institutions
can create time delays. In the event a
Covered institution is viewed as in
danger of failing, the institution would
be required to quickly send or transmit
data to secure FDIC sites.
Questions. What would be the overall
cost to a Covered institution for
developing the capability to
automatically post provisional holds,
remove provisional holds and
automatically process account debits
and holds based on the insurance
determination results? What would be
the overall cost to a Covered institution
for developing the capability to produce
a formatted standard data file, link CIF
files to deposit files and prepare
balancing and reconciliation schedules?
How expensive would it be for Covered
institutions to supply a unique
identifier for each depositor? What
would be the cost of supplying the
insurance category for each account?
How reliable would be the data
identifying each depositor and account
insurance category? Would Covered
institutions have difficulty supplying
reliable data for any of the items listed
in Appendix B, such as for bank owned
accounts? If so, which ones? Are
Covered institutions able to identify
account owners (as opposed to trustees,
managers, beneficiaries, etc.) from their
files?
The deposit systems on many Covered
institutions use software purchased
from a small group of vendors. To what
extent would vendor-based software
changes help mitigate the overall
implementation costs of this program?
Could a vendor develop the standard
data set and program to pull the data
into the specified format for multiple
institutions or does each institution
have unique details that would prevent
this from occurring?
Some Covered institutions may use a
servicer to process deposit accounts,
and some Covered institutions may
share the same deposit servicer. To what
extent would implementation changes
made by the servicer mitigate the costs
of this program?
To meet the proposed standard data
set requirement, institutions may have
to link records from the CIF and the
deposit systems or provide the key or
linking elements so data from the CIF
can be linked to individual account
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owners. This would be more complex
than a standard data set that only
included items from the deposit
systems, but it would yield substantial
benefits to the FDIC. Once the systems
had been developed and tested, how
much longer would it take for an
institution to prepare a standard data set
that included CIF and deposit system
items, compared to one that included
only deposit system items?
The FDIC would require transmitted
deposit balances to reconcile to the
actual trial balance, both balance dollar
amounts and the record count. How
does reconciliation affect timeliness?
Can the process be developed in
advance and automated?
What is the most effective way of
transmitting data to the FDIC?
Option 2
Option 2 would require each Covered
institution to have in place on an
ongoing basis the ability to:
• Supply to the FDIC a standard data
set mapped and formatted to FDIC
specifications and reconciled to the
institution’s actual trial balance. (See
Appendix B for a preliminary list of
data to be included in the standard data
set.)
• Calculate and place provisional
holds automatically according to the
FDIC’s specifications at the end of
processing on any given business day.
• Remove provisional holds
automatically according to the FDIC’s
specifications at the end of processing
on any given business day.
• Add and remove automatically the
FDIC-supplied holds/debits on an asneeded basis.
The primary difference between
Options 1 and 2 rests with the omission
in Option 2 of the requirements to
supply a unique identifier for each
depositor and identify the insurance
category of each deposit account. The
data elements included in the standard
data set also may vary somewhat from
those in Appendix B.
Question: What is the likely cost of
Option 2? What are the potential cost
savings to Covered institutions from
Option 2 compared to Option 1? Are
there any likely operational difficulties
in implementing Option 2?
Option 3
Option 3 would require the very
largest of the Covered institutions to
know the insurance status of deposit
accounts at any given point in time.12
12 This requirement would not include deposit
accounts for which the Covered institution does not
ordinarily possess the information to make the
determination, such as accounts with pass-through
coverage (brokered deposit accounts and trust
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Upon failure, the institution must be
able to place debits/holds automatically
for uninsured deposits in an amount
specified by the FDIC, so that the
institution can be operational the
following business day. The FDIC is
considering this option only for the
largest 10 or 20 Covered institutions
while, if used, the remaining Covered
institutions would meet requirements
similar to those outlined under Options
1 or 2. Limiting the scope of this option
to the largest Covered institutions
would help mitigate implementation
costs as well as speed the insurance
determination process for the largest,
most complex of the Covered
institutions.
This option would be more expensive
for Covered institutions than Options 1
or 2, but it could yield additional
benefits. Depositors could benefit from
the institutions’ ability to provide
information about insurance status. If an
institution were to fail, this option
provides that the insurance status of
most depositors would be known at the
point of failure. As a consequence, some
depositors could receive a larger portion
of their funds more quickly under this
option compared to the provisional hold
process contemplated in Options 1 and
2.
As with Options 1 and 2, the FDIC
would test the accuracy of systems put
in place if this Option is adopted. Under
these circumstances the FDIC should be
able to rely upon the results generated
by the insured institution for the initial
deposit insurance determination.
Questions. How expensive would this
option be compared to Options 1 or 2?
73659
Do the additional benefits merit the
additional cost? Are there other reasons
why this approach should be preferred
or rejected? How extensive would the
FDIC audit have to be to determine
whether institutions are correctly
calculating insurance coverage?
Other Potential Options
The FDIC invites comments on all
aspects of this proposal. In addition, the
FDIC solicits suggestions on alternative
means of meeting the objective of
conducting a timely insurance
determination on Covered insured
institutions.
Question. Is there a different approach
that would accomplish the same
objective at a lower financial and
regulatory cost?
APPENDIX A.—PRIMARY FDIC DEPOSIT INSURANCE CATEGORIES
Insurance category
Description
1. Single Ownership .............
Funds owned by a natural person including those held by an agent or custodian, sole proprietorship accounts
and accounts that fail to qualify in any other category below. Coverage extends to $100,000 per depositor.
Accounts jointly owned as joint tenants with the right of survivorship, as tenants in common or as tenants by the
entirety. Coverage extends to $100,000 per co-owner.
• The account title generally must be in the form of a joint account (‘‘Jane Smith & John Smith’’).
• Each of the co-owners must sign the account signature card. (This requirement has exceptions, including certificates of deposit.)
• The withdrawal rights of the co-owners must be equal.
Accounts whereby the owner evidences an intention that upon his or her death the funds shall belong to one or
more qualifying beneficiaries. For each owner, coverage extends to $100,000 per beneficiary.
• The title of the account must include ‘‘POD’’ (payable-on-death) or ‘‘trust’’ or some similar term.
• The beneficiaries must be specifically named in the account records. (This requirement applies to informal
‘‘POD’’ accounts but does not apply to formal ‘‘living trust’’ accounts.)
• The beneficiaries must be the owner’s spouse, children, grandchildren, parents or siblings.
Accounts established pursuant to an irrevocable trust agreement. Coverage extends to $100,000 per beneficiary.
• The account records must indicate that the funds are held by the trustee pursuant to a fiduciary relationship.
• The account must be supported by a valid irrevocable trust agreement.
• Under the trust agreement, the grantor of the trust must retain no interest in the trust funds.
• For ‘‘per beneficiary’’ coverage, the interest of the beneficiary must be ‘‘non-contingent.’’
Individual retirement accounts under 26 U.S.C. § Retirement 408(a), eligible deferred compensation plans under
26 U.S.C. § 457, self-directed individual account plans under 29 U.S.C. § 1002 and self-directed Keogh plans
under 26 U.S.C. § 401(d). Coverage extends to $100,000 per owner or participant.
• The account records must indicate that the account is a retirement account.
• The account must be an actual retirement account under the cited sections of the Tax Code.
Accounts of a corporation, partnership or unincorporated association. Coverage extends to Unincorporated
$100,000 per entity.
• The account records must indicate that the entity is the owner of the funds or that the nominal accountholder is
merely an agent or custodian (with the entity’s ownership interest reflected by the custodian’s records).
• The entity must be engaged in an ‘‘independent activity.’’
• The entity must not be a sole proprietorship (which is treated as a single ownership account).
Deposits of an employee benefit plan as defined at 29 U.S.C. 1002, including any plan described at 26 U.S.C.
401(d), and also deposits of an eligible deferred compensation plan described at 26 U.S.C. 457. Coverage extends to $100,000 per participant.
• The account records must indicate that the funds are held by the plan administrator pursuant to a fiduciary relationship.
• The account must be supported by a valid employee benefit plan agreement.
• For ‘‘per participant’’ coverage:
Æ The interests of the participants must be ascertainable and non-contingent.
Æ The institution must have been well capitalized (or adequately capitalized in some cases) when the initial and
subsequent deposits were made.
2. Joint Ownership ...............
3. Revocable Trust ...............
4. Irrevocable Trust ..............
5. Self-Directed Retirement ..
6. Corporation, Partnership
or Unincorporated Association.
7. Employee Benefit Plan ....
accounts, for example) and certain informal trust
accounts (also referred to as either ‘‘payable-on-
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death’’ or ‘‘in-trust-for’’ accounts) where
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information on beneficiaries may be necessary for
the determination.
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APPENDIX A.—PRIMARY FDIC DEPOSIT INSURANCE CATEGORIES—Continued
Insurance category
Description
8. Public Unit ........................
Funds of ‘‘public units’’ or ‘‘political subdivisions’’ thereof. Coverage extends to $100,000 for interest bearing deposits and $100,000 for non interest bearing deposits for each official custodian of the public unit or subdivision.
• For separate coverage for the non interest bearing deposits, the insured financial institution must be located
(including branch locations) in the same state as the public unit.
• The account records must indicate that the funds are held by the custodian in a custodial capacity.
• For ‘‘per custodian’’ coverage, the custodian must be a separate ‘‘official custodian.’’
• For ‘‘per subdivision’’ coverage, the governmental entity must be a separate ‘‘political subdivision.’’
Appendix B. Data Elements Included in
the Standard Data Set
This appendix presents a standard
data request containing proposed data
fields to be used by the FDIC to
determine the insured status of each
account. The proposed file is divided
into four record types: Header, Deposit,
Hold, and Customer. It would be
preferred that all data are included in
one file but, if necessary due to system
constraints, multiple files might be
used. For identification purposes the
Header record in each file must be
created. If data or information are not
maintained or do not apply, a null value
in the appropriate field should be
indicated.
The following is a list of the data
fields proposed to be included in the
file with explanations of the data being
requested. The fields are listed in the
order they would appear in the file.
Header Record
The Header Record provides
information specific to the institution,
the effective date of the data and the
date and time the file was created. The
Header Record must be at the beginning
of each file if multiple files are
submitted.
Field name
FDIC field description
1. HD_Record_ID .................
1. HD_Acct_Numb ................
1. HD_File_Date ...................
Record ID Enter ‘‘1’’ in this field.
Header Account Number Enter ‘‘0000000000000000’’ in this field.
File Date—This field identifies the ‘‘as-of-date’’ of the file. Enter the effective date of the data being supplied in
this request. Must be entered in MMDDYYYY format.
Financial Institution Name—Enter the institution’s name as it appears on the FDIC Certificate.
Financial Institution Number—Enter the institution’s FDIC certificate/institution number.
Date & Time Created—Enter the date and time in MMDDYYYYHHmmSS format.
1. HD_FI_Name ....................
1. HD_FI_Number ................
1. HD_Dt_Created ................
Deposit Record
The Deposit Record provides
information specific to deposit account
balances and account data. Fields 14–27
relate to the account name and address
information. Some systems provide for
separate fields for account title/name,
address, city, state, ZIP, and country, all
of which are parsed out. Other systems
may simply provide multiple lines for
name, address, city, state, ZIP, with no
distinction. Populate fields that best fit
system data—either fields 14–21 or
fields 22–27.
Field name
FDIC field description
0. DP_Record_ID .................
0. DP_Acct_Numb ................
0. DP_Acct_Numb_ID ...........
Record ID—Enter ‘‘2’’ in this field.
Account Number—The unique number assigned by the institution to this account.
Account Number ID—Account number field that further identifies the account. May be used to identify separate
deposits tied to this account where there are different processing parameters, i.e. interest rates, maturity dates,
but all owners are the same.
Tax ID—Provide the tax ID number maintained on the account. For consumer accounts, typically, this would be
the primary account holder’s Social Security number. For business accounts it would be the Federal tax identification number.
Tax ID Code—This field should identify the type of the tax ID number. Valid values are:
• S = Social Security number.
• T = Federal tax identification number.
• O = Other.
Branch—This field should identify the branch associated with the account. It may be where the account was originally opened.
Cost Center—Identifier used for organization reporting or ownership of the account. It may be the same as the
Branch number.
Customer Owner Indicator—This field is used to identify the type of ownership. This information will assist the
FDIC to further categorize the account into the FDIC insurance categories. Valid values are:
• S = Single or primary owner
• J = Joint or secondary owner (also include DBA’s in this code)
• T = Trust account
• P = Partnership account
• C = Corporation.
• B = Brokered deposits
• O = Other
0. DP_Tax_ID .......................
0. DP_Tax_Code ..................
0. DP_Branch .......................
0. DP_Cost_Center ..............
0. DP_Owner_Ind .................
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Field name
FDIC field description
0. DP_Prod_Type .................
Product Type—This field is used to identify the type of the product from a customer perspective. This information
will assist the FDIC to properly categorize the account into the FDIC insurance categories. Valid values in the
field are:
• CON = Personal or consumer accounts.
• BUS = Business.
• NPR = Non-profit accounts.
• GOV = Accounts held by government entities (city, state, political subdivisions).
• FIN = Accounts held by other financial institutions.
• INT = Internal accounts or bank-owned accounts.
• OTH = Other.
Product Category—This is a broad classification of products and accounts. Valid values in the field are:
• DDA = Non-interest bearing checking accounts.
• NOW = Interest bearing checking accounts.
• MMA = Money market accounts.
• SAV = Savings accounts and money market savings accounts. This includes any interest bearing accounts
with regulated withdrawal requirements.
• CDS = Time deposit accounts and certificate of deposit accounts. Include any accounts with specified maturity
dates that may or may not be renewable.
• REP = Repurchase agreements. Include any accounts supported by an agreement to repurchase the deposit
at a specified date and interest rate, and is secured by designated securities owned by the institution.
• IRA = Individual retirement accounts.
• OTH = Other.
Retirement Indicator—This field is used to identify whether the account is considered any type of retirement product. Valid values are:
• Y = Yes, the account is a retirement account.
• N = No, the account is not a retirement account.
Status Code—Include only the following status or condition of the account. Valid values are:
• O = Open.
• C = Closed.
• D = Dormant.
• I = Inactive
Short Name—This field will assist in creating an alpha list of accounts. The format preference for personal accounts is last name or partial last name followed by first name. For business accounts enter the name of the
account. Variances to this should be explained in a Mapping document. If a similar field does not exist, create
a ‘‘Short Name’’ by concatenating data using related fields.
Account Title Line 1—Two lines (fields 14 & 15) are provided to enter account styling or titling of the account.
These data will be used to identify the owners of the account.
Account Title Line 2—Additional account title line.
Address Line 1—Two lines (fields 16 & 17) are provided to enter the street, PO box, suite number, etc. of the address.
Address Line 2—Additional address line.
City—Enter the city associated with the mailing address.
State—Enter the state abbreviation associated with the mailing address.
ZIP—This field allows for the ZIP+4 code associated with the mailing address.
Country—This field should identify the country associated with the mailing address. Provide the name of the
country or the standard country code.
Name or Address Line 1—Six lines (fields 22–27) are provided to enter the name and/or the account mailing address if your system does not distinguish particular address lines.
Name & Address Line 2—Additional name and/or address line.
Name & Address Line 3—Additional address line.
Name & Address Line 4—Additional address line.
Name & Address Line 5—Additional address line.
Name & Address Line 6—Additional address line.
Current Balance—This amount represents the current balance in the account at the end of business on the effective date of this file. This balance should not be reduced by float or holds. For CDs and time deposits, it should
reflect the principal balance plus any interest paid and available for withdrawal that is not already included in
the principal. The total of all Current Balances in this file should reconcile to the total liabilities on the financial
institutions general ledger.
Interest Rate—The current interest rate in effect for interest bearing accounts.
Basis Days—Indicates the basis on which interest is to be paid. Valid values are:
• 1 = 30/360.
• 2 = 30/365.
• 3 = 365/365 (actual/actual).
Interest Type—Indicates the type of interest to be paid. Valid values are:
• S = Simple.
• D = Daily compounding.
• C = Continuous compounding.
• O = Other.
Interest Rate Daily Factor—This field should reflect the daily interest rate factor for generating interest.
Accrued Interest—This amount should reflect the amount of interest that has been earned but not yet paid to the
account as of the date of the file.
Date Last Interest Paid—This should indicate the date thru which interest was last paid to the account. Must be
entered in MMDDYYYY format.
0. DP_Prod_Cat ...................
0. DP_Ret_Ind ......................
0. DP_Stat_Code ..................
0. DP_Short_Name ..............
0.DP_Acct_Title_1 ................
0. DP_Acct_Title_2 ...............
0. DP_Address_Line_1 .........
0.
0.
0.
0.
0.
DP_Address_Line_1 .........
DP_City ............................
DP_State ..........................
DP_ZIP .............................
DP_Country ......................
0. DP_NA_Line_1 .................
0.
0.
0.
0.
0.
0.
DP_NA_Line_2 .................
DP_NA_Line_3 .................
DP_NA_Line_4 .................
DP_NA_Line_5 .................
DP_NA_Line_6 .................
DP_Cur_Bal ......................
0. DP_Int_Rate .....................
0. DP_Bas_Days ..................
0. DP_Int_Type .....................
0. DP_Int_Factor ..................
0. DP_Acc_Int .......................
0. DP_Lst_Int_Pd ..................
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Field name
FDIC field description
0. DP_Int_Pd_YTD ...............
Interest Paid YTD—The amount of interest that has been paid to the account this year. Must be entered in
MMDDYYYY format.
Date Next Maturity—For CD and time deposit accounts, this is the next date the account is to mature. For nonrenewing CDs that have matured and are waiting to be redeemed this date may be in the past. Must be entered in MMDDYYYY format.
Reserve Account Indicator—Identifies accounts with a reserve or overdraft protection feature tied to this account
and is not identified by another account number or identifier. It is not an Overdraft Limit that allows the deposit
account to be overdrawn. Rather, it is considered a ‘‘loan’’ to be advanced to the account in the event of an
overdraft.
Reserve Account Outstanding Balance—Provide the outstanding balance of a reserve or overdraft protection feature. This balance is not reflected in the accounts deposit current balance. This is not an Overdraft Limit. Rather, in the event that proceeds are advanced to cover an overdraft, the balance that remains outstanding to be
paid back to the account. This balance may include a finance charge.
Date Last Deposit—This date should reflect the last deposit transaction posted to the account. For example, a
deposit that included checks and/or cash. Must be entered in MMDDYYYY format.
Account Open Date—This date should reflect the date the account was opened. If the account had previously
been closed and re-opened, this should reflect the most recent re-opened date. Must be entered in
MMDDYYYY format.
0. DP_Nxt_Mat .....................
0. DP_Res_Acct_Ind ............
0. DP_Res_Out_Bal .............
0. DP_Lst_Deposit ................
0. DP_Open_Dt ....................
Hold Record
The Hold Record provides
information related to any holds on an
account. If an account has more than
one hold, additional Hold Records may
be provided.
Field name
FDIC field description
2. HD_Record_ID ........................
2. HD_Acct_Numb .......................
Record ID—Enter ‘‘3’’ in this field.
Account Number—The account number associated with the hold. This should be the same as the account
number in Deposit Record field #2.
Hold Amount—Dollar amount of the hold.
Hold Reason—Reason for the hold. Valid values are:
LN = Loan collateral hold.
UC = Uncollected funds hold.
OT = Other—bank defined.
Hold Description—Description of the hold available on the system.
Hold Days—The Number of days the hold was/is intended. May be used instead of an expiration date.
Hold Start Date—The date the hold was initiated. Must be entered in MMDDYYYY format.
Hold Expiration Date—The date the hold is to expire. Must be entered in MMDDYYYY format. May be used
instead of number of hold days.
2. HD_Hold_Amt ..........................
2. HD_Hold_Reason ....................
2.
2.
2.
8.
HD_Hold_Desc ........................
HD_Hold_Days ........................
HD_Hold_Start_Dt ...................
HD_Hold_Exp_Dt .....................
Customer Record
The Customer Record provides
information related to each customer
associated with an account. Therefore,
multiple customer records associated
with each deposit account number
found in the Deposit Record should be
indicated.
Fields 8–11 relate to the customer
name. Some systems provide for
separate fields for account name: ‘‘last
name’’ and ‘‘first name’’ for personal
accounts or ‘‘company name’’ for
business accounts, all of which are
parsed out. Other systems simply
provide one line for a name. Populate
fields that best fit system data.
Fields 12–17 relate to customer
address information. Some systems
provide for separate fields for address,
city, state, ZIP, and country, all of
which are parsed out. Other systems
may simply provide multiple lines for
name, address, city, state, ZIP, with no
distinction. Fields 14–18 are provided if
your systems do not distinguish
between the different elements
associated with a name and address.
Populate fields that best fit system
data—either fields 12–17 or fields 14–
18.
Field name
FDIC field description
1. CS_Record_ID .................
2. CS_Acct_Numb ................
Record ID—Enter ‘‘4’’ in this field.
Account Number—The deposit account number. Should be the same as the account number in Deposit Record
field #2.
Customer Number—The number assigned to the customer in the customer information system.
Customer Tax ID Number—Provide the tax ID number on record for the customer.
Customer Tax ID Code—This field should identify the type of the tax ID number of the customer. Valid values
are:
• S = Social Security number.
• T = Federal tax identification number.
• F = Foreign accounts.
• O = Other.
3. CS_Cust_Numb ................
4. CS_Tax_ID .......................
5. CS_Tax_Code ..................
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Field name
FDIC field description
6. CS_Rel_Code ...................
Relationship Code—This code indicates how the customer is related to the account. Valid values are:
• P = Primary owner.
• S = Secondary owner.
• B = Beneficiary.
• T = Trustee.
• O = Other.
• U = Unknown.
Beneficiary Type Code—If the customer is considered a beneficiary, enter the type of account associated with
this customer. This includes beneficiaries on retirement accounts, trust accounts, minor accounts, and payableon-death accounts. Valid values are:
• I = IRA.
• T = Trust—irrevocable.
• R = Trust—revocable.
• M = Uniform gift to minor.
• P = Payable on death.
• O = Other.
Customer Name—The name of the customer. Provide in the Mapping document the typical format the bank practices for business customers and personal/individual customers; i.e., last name first, first name last.
Customer Last Name—The last name of the individual/personal customer.
Customer First Name—The first name of the individual/personal customer.
Customer Company Name—The company name of the business customer.
Address Line 1—Two lines (fields 10 & 11) are provided to enter the street, P.O. box, suite number, etc. of the
address.
Address Line 2—Additional address field.
City—Enter the city associated with the mailing address of the customer.
State—Enter the state abbreviation associated with the mailing address of the customer.
ZIP—This field allows for the ZIP+4 code associated with the mailing address of the customer.
Country—This field should identify the country associated with the mailing address. Provide the name of the
country or the standard country code.
Customer Name & Address Line 1—The name and/or address of the customer.
Customer Name & Address Line 2—Additional name and/or address line.
Customer Name & Address Line 3—Additional address line.
Customer Name & Address Line 4—Additional address line.
Customer Name & Address Line 5—Additional address line.
Customer Birth Date—The birth date on record for the customer. Must be entered in MMDDYYYY format.
Telephone Number—The telephone number on record for the customer.
Customer Email Address—The email address on record for the customer.
7. CS_Bene_Code ................
8. CS_Name .........................
9. CS_Last_Name ................
10. CS_First_Name ..............
11. CS_Comp_Name ...........
0. CS_Address_1 .................
0.
0.
0.
0.
0.
CS_Address_2 .................
CS_City ............................
CS_State ..........................
CS_ZIP .............................
CS_Country ......................
0.
0.
0.
0.
0.
0.
0.
0.
CS_NA_Line_1 .................
CS_NA_Line_2 .................
CS_NA_Line_3 .................
CS_NA_Line_4 .................
CS_NA_Line_5 .................
CS_Birth_Dt ......................
CS_Telephone Customer
CS_Email .........................
*
*
*
*
*
Dated at Washington, DC, this 5th day of
December, 2005.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 05–23986 Filed 12–12–05; 8:45 am]
BILLING CODE 6714–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2005–23282; Directorate
Identifier 2005–NM–210–AD]
RIN 2120–AA64
Airworthiness Directives; Boeing
Model 757–200 and –300 Series
Airplanes
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We must receive comments on
this proposed AD by January 27, 2006.
ADDRESSES: Use one of the following
addresses to submit comments on this
proposed AD.
• DOT Docket Web site: Go to
https://dms.dot.gov and follow the
DATES:
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
SUMMARY: The FAA proposes to adopt a
new airworthiness directive (AD) for
certain Boeing Model 757–200 and –300
series airplanes. This proposed AD
would require installing clamps on
certain end caps of the overhead
distribution ducts, and doing other
specified and related investigative
actions as necessary. This proposed AD
results from finding that the end caps of
the overhead distribution ducts for the
air conditioning system were not
bonded to the ducts with an adhesive.
We are proposing this AD to detect and
correct loosened end caps, which could
change the air flow balance in the
airplane. During a smoke event in the
cargo or main electronics compartments,
the incorrect balance of air flow could
change the smoke clearance air capacity
and result in smoke and toxic fumes
penetrating the flight deck and main
cabin.
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instructions for sending your comments
electronically.
• Government-wide rulemaking Web
site: Go to https://www.regulations.gov
and follow the instructions for sending
your comments electronically.
• Mail: Docket Management Facility,
U.S. Department of Transportation, 400
Seventh Street SW., Nassif Building,
room PL–401, Washington, DC 20590.
• Fax: (202) 493–2251.
• Hand Delivery: Room PL–401 on
the plaza level of the Nassif Building,
400 Seventh Street, SW., Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
Contact Boeing Commercial
Airplanes, P.O. Box 3707, Seattle,
Washington 98124–2207, for the service
information identified in this proposed
AD.
FOR FURTHER INFORMATION CONTACT:
Barbara Mudrovich, Aerospace
Engineer, Cabin Safety and
Environmental Systems Branch, ANM–
150S, FAA, Seattle Aircraft Certification
Office, 1601 Lind Avenue, SW., Renton,
Washington 98055–4056; telephone
(425) 917–6477; fax (425) 917–6590.
SUPPLEMENTARY INFORMATION:
E:\FR\FM\13DEP1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 238 (Tuesday, December 13, 2005)]
[Proposed Rules]
[Pages 73652-73663]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-23986]
=======================================================================
-----------------------------------------------------------------------
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Chapter III
RIN 3064-AC98
Large-Bank Deposit Insurance Determination Modernization Proposal
AGENCY: Federal Deposit Insurance Corporation (``FDIC'').
ACTION: Advance notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: In view of the significant industry consolidation in recent
years, the FDIC is exploring new methods to modernize its deposit
insurance determination process, whereby the insurance status of each
depositor is determined in the event of failure. Procedures currently
used by the FDIC to determine deposit insurance coverage may result in
unacceptable delays if used for an FDIC-insured institution with a
large number of deposit accounts. In developing a new system to
determine insurance coverage, the FDIC's goals are to minimize
disruption to depositors and communities, and maximize recoveries for
the deposit insurance fund in the event one of the largest insured
institutions should fail. The FDIC is seeking comment on the best means
to accomplish these objectives, and is offering three possible options
for comment. The focus of this Advance Notice of Proposed Rulemaking
(``ANPR'') is on FDIC-insured institutions with the largest number of
deposit accounts, currently expected to include only the 145
[[Page 73653]]
insured institutions with total number of deposit accounts over 250,000
and total domestic deposits of at least $2 billion (``Covered
institutions''). None of these options require that insured
institutions transmit deposit data to the FDIC unless the institution
is in danger of failing.
DATES: Comments must be submitted on or before March 13, 2006.
ADDRESSES: You may submit comments by any of the following methods:
Agency Web site: https://www.FDIC.gov/regulations/laws/
federal/propose.html. Follow the instructions for submitting comments.
E-mail: comments@FDIC.gov.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
Hand Delivered/Courier: The guard station at the rear of
the 550 17th Street Building (located on F Street), on business days
between 7 a.m. and 5 p.m.
Public Inspection: Comments may be inspected and
photocopied in the FDIC Public Information Center, Room 100, 801 17th
Street, NW., Washington, DC, between 9 a.m. and 4:30 p.m. on business
days.
Internet Posting: Comments received will be posted without
change to https://www.FDIC.gov/regulations/laws/federal/propose.html,
including any personal information provided.
FOR FURTHER INFORMATION CONTACT: James Marino, Project Manager,
Division of Resolutions and Receiverships, (202) 898-7151 or
jmarino@fdic.gov or Christopher Hencke, Counsel, Legal Division, (202)
898-8839 or chencke@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
The FDIC seeks comment on the best way to improve the deposit
insurance determination process. Three options are presented for
comment.
Option 1 would require Covered institutions to have
installed on their computer systems a routine that, in the event of
failure, would automatically place a temporary hold on a portion of the
balances in large deposit accounts. The percentage hold amount would be
determined by the FDIC at the time of failure, depending mainly on
estimated losses to uninsured depositors. These holds would be placed
immediately prior to the institution reopening for business as a bridge
bank, generally expected to be the next business day. The institution
also would need to be able to automatically remove these holds and
debit the account, if necessary, depending on the results of the FDIC's
insurance determination. The insurance determination would be
facilitated by the institution providing the FDIC, in the event of
failure, with depositor data (name, address, tax identification number,
etc.) in a standard format, including a unique identifier for each
depositor and the insurance category of each account.
Option 2 is similar to Option 1, except the standard data
set would include only information the institution currently possesses.
This option would not require a unique identity for each depositor or
that the institution supply the insurance category for each account.
Option 3 would require that, in addition to Option 1 or
Option 2, the largest 10 or 20 Covered institutions (in terms of the
number of deposit accounts) know the insurance status of their
depositors at any given point in time and have the capability to
automate the placement of hard holds and debit uninsured funds as
specified by the FDIC upon failure.
The FDIC is interested in improving its ability to make insurance
determinations in the insured institutions with the largest number of
deposit accounts, which currently would include insured institutions
with over 250,000 deposit accounts and total domestic deposits over $2
billion. As of June 30, 2005 that would include 145 institutions.
Historically the FDIC has taken responsibility for making an
insurance determination at the time of failure based on the failed
institution's records. A precise deposit insurance determination
requires a specialty system to analyze depositor data and apply the
insurance rules. Under current law an insured depository institution is
not required to calculate by depositor the amount of funds exceeding
the $100,000 insurance limit (by depositor and insurance category).
As part of its normal practice, the FDIC obtains depositor data
only at the time an insured institution is in danger of failing. These
data are received in the weeks or months prior to failure, and are
obtained for the sole purpose of determining the insurance status of
individual depositors and estimating the total amount of insured funds
in the institution. The receipt of such depositor data is necessary for
the FDIC to carry out its insurance function. The options provided in
this ANPR do not alter the FDIC policy regarding the receipt of
depositor information in preparation for the resolution of a failing
insured institution. The FDIC is aware of the potential privacy issues
surrounding the holding of depositor information and has in place
strict safeguards to protect these data.
The FDIC operates under a mandate when handling a failing
institution to structure the least costly of all possible resolution
transactions,\1\ except in the event of systemic risk \2\ and even in
those cases the FDIC must conserve costs. Since the introduction of the
systemic risk exception in 1991 no exceptions to the least-cost
requirement have been granted. The FDIC's least-cost requirement was
intended to reduce resolution cost and instill a greater degree of
market discipline by requiring that losses be borne by uninsured
depositors and non-deposit creditors. The FDIC's claims process clearly
plays a central role in this area.
---------------------------------------------------------------------------
\1\ Section 13(c)(4)(A)(ii) of the Federal Deposit Insurance Act
(``FDI Act''), 12 U.S.C. 1823(c)(4)(A)(ii).
\2\ Section 13(c)(4)(G)(i) of the FDI Act, 12 U.S.C.
1823(c)(4)(G)(i).
---------------------------------------------------------------------------
When an insured institution fails the FDIC may pay insured
depositors up to the insurance limit (a ``pay-off'') or the FDIC may
sell the failed institution to another FDIC-insured institution (a
``purchase and assumption transaction''). Another option is to
establish a bridge bank \3\ or a conservatorship and transfer deposits
to that institution. Preservation of the deposit franchise of a failed
institution is an important facet of minimizing resolution costs. As a
consequence, the FDIC is most likely to use a bridge bank structure in
the resolution of a Covered institution, although a pay-off or a
purchase and assumption transaction remain possibilities. Establishing
a bridge bank should contribute greatly to customer retention and
minimize potential operational difficulties, which will enhance the
sales premium when the bridge bank is privatized as part of the final
resolution transaction.\4\
---------------------------------------------------------------------------
\3\ A bridge bank is a national bank chartered for the purpose
of temporarily carrying on the banking operations of a failed
institution until a permanent solution can be crafted. See 12 U.S.C.
1821(n). The FDIC's bridge bank authority applies only to the
failure of a bank. In the event of the failure of an insured savings
association the FDIC could seek a federal thrift charter that would
be operated as a conservatorship. As with a bridge bank, the new
thrift institution would be a temporary mechanism to facilitate a
permanent resolution structure.
\4\ Bovenzi, John F., ``An FDIC Approach to Resolving a Large
Bank,'' Financial Market Behavior and Appropriate Regulation Over
the Business Cycle, Chicago: Federal Reserve Bank of Chicago, May
2002, pages 56-61.
---------------------------------------------------------------------------
The FDIC also has a legal mandate to pay insured deposits ``as soon
as possible'' \5\ after an institution's closure. Although the FDIC has
no statutory requirement to provide access to insured deposits within a
specified time
[[Page 73654]]
after failure it places a high priority on providing access to deposits
promptly to:
---------------------------------------------------------------------------
\5\ Section 11(f)(1) of the FDI Act, 12 U.S.C. 1821(f)(1).
---------------------------------------------------------------------------
Maintain public confidence in the banking industry and the
FDIC.
Provide the best possible service to insured depositors by
minimizing uncertainty about their status and avoiding costly
disruptions such as returned checks and a limit on their ability to
meet financial obligations.
Mitigate the spillover effects of a failure, which may
include risks to the payments system, problems stemming from depositor
illiquidity and a substantial reduction in credit availability. For
large failures the potential spillover effects can be magnified,
underscoring the importance of a rapid resolution. Effectively
addressing spillover effects minimizes the likelihood of systemic risk.
Retain, where feasible, the franchise value of the failed
institution (and thus minimize the FDIC's resolution costs).
Historically, most insured institution closures have occurred on a
Thursday or Friday. In recent years, the FDIC has made funds available
to the majority of depositors by the next business day, usually the
Monday following a Friday closing.
All of the insured institution failures of the past 10 years have
been of modest size, the largest being Superior Bank, FSB with total
deposits at the time of closure of about $2 billion and roughly 90,000
deposit accounts. This failure pattern does not overshadow the FDIC's
mandate to handle the failure of an insured institution of any size.
Continued industry consolidation has caused the FDIC to reexamine its
approach to conducting a deposit insurance determination, including the
adoption of new technologies and business processes that could greatly
increase the efficiency and timeliness of resolving a failed
institution and getting depositors access to their funds.
Industry consolidation raises practical concerns about the FDIC's
current business model for conducting a deposit insurance
determination. Larger institutions--especially those initiating recent
merger activity--are considerably more complex, have more deposit
accounts, greater geographic dispersion, more diversity of systems and
data consistency issues arising from mergers than has been the case
historically. Implications of industry consolidation over the past 10
years can be seen in the following table. Should such trends continue,
deposits will become even more concentrated in the foreseeable future.
Table 1.--Top Ten Institutions, by Number of Deposit Accounts
[In millions]
------------------------------------------------------------------------
Rank 1995 2000 2005
------------------------------------------------------------------------
1................................ 11.0 36.4 47.8
2................................ 6.5 10.9 29.1
3................................ 3.8 9.0 22.7
4................................ 3.6 7.9 17.4
5................................ 3.5 7.8 16.3
6................................ 3.3 7.2 10.3
7................................ 3.3 6.5 9.0
8................................ 3.2 5.5 8.7
9................................ 3.1 5.1 6.1
10............................... 3.0 5.0 5.0
----------------------------------
Total........................ 44.3 101.3 172.5
------------------------------------------------------------------------
Source: FDIC.
This ANPR discusses regulatory options for a new business model for
insurance determinations where Covered institutions would be required
to facilitate the calculation of the insurance coverage of deposit
accounts. Prior to developing the options discussed below and as part
of its ongoing work to improve the efficiency of the claims process,
the FDIC held meetings with senior examiners from the FDIC and other
Federal banking agencies. Further, the FDIC solicited advice and
opinions from the staff of four large insured depository institutions
and a deposit servicer of large institutions.
After the basic options discussed in this ANPR were developed the
FDIC held meetings with four large providers of deposit software or
servicing to Covered institutions. During these meetings FDIC staff
presented the options along with substantial background on its
insurance determination process and the objectives of the current
claims modernization process. The deposit software vendors/servicers
were asked to consider the feasibility of the options, including
potential costs. Each vendor expressed a strong preference among these
options for Option 2 (described in more detail below). The FDIC's
impression from these meetings was that Option 2 could be incorporated
into the vendor's deposit systems. Based on discussions with these
vendors, staff of the FDIC believes the costs for Option 2 likely would
be fairly modest.
These vendor visits were followed by meetings with the other
Federal banking agencies: The Board of Governors of the Federal
Reserve, the Office of the Comptroller of the Currency and the Office
of Thrift Supervision. Visits also were made to several banking trade
organizations to discuss the options and solicit feedback. Lastly, the
options were presented for comment to the four large insured depository
institutions visited earlier in the process.
The options outlined here cannot be implemented without some
regulatory and financial burden. The FDIC is seeking to minimize these
costs while at the same time ensuring that it can effectively carry out
its mandates to make insured funds available quickly to depositors and
provide a least-cost resolution for Covered institutions. The FDIC
would like comment on the potential industry costs and feasibility of
implementing the options (described below in more detail). The FDIC
also is interested in comments on whether there are other ways to
accomplish its goals that might be more effective or less costly or
burdensome. In other words, what approach or combination of approaches
(which may include new alternatives) most effectively meets this cost/
benefit tradeoff?
Implementation of these or similar options will require that the
FDIC amend its regulations. If changes in the regulations are proposed,
the FDIC will publish a Notice of Proposed
[[Page 73655]]
Rulemaking and afford the opportunity for additional public comment
before any final decision is made.
II. Background
FDIC Insurance Coverage
The basic insurance limit is $100,000 per depositor, per insured
institution. Depositors eligible to receive insurance coverage include
natural persons, legal entities such as corporations, partnerships and
unincorporated associations, and public units. Insurance coverage is
based on the concept of ownership rights and capacities. Deposits
maintained by a person or entity in different ownership rights and
capacities at one institution are separately insured up to the
insurance limit. Deposits maintained in the same ownership rights and
capacities are added together to determine the insurance coverage. The
FDIC's rules and regulations for deposit insurance coverage describe
the categories of ownership rights and capacities eligible for separate
insurance coverage. FDIC refers to these as ``ownership categories''
(see Appendix A for a description of the primary ownership
categories).\6\
---------------------------------------------------------------------------
\6\ See also Financial Institution Employee's Guide to Deposit
Insurance, Federal Deposit Insurance Corporation, 2004. This
publication as well as additional information on insurance coverage
is available at https://www.fdic.gov/deposit/deposits/.
---------------------------------------------------------------------------
All types of deposits (for example, checking accounts, savings
accounts, certificates of deposit, interest checks and cashier's checks
\7\) that a depositor has at an institution in the same ownership
category are added together before the FDIC applies the insurance limit
for that category. A depositor cannot increase insurance coverage by
dividing funds into different accounts in the same ownership category
at the same institution. Similarly, in the case of joint accounts,
using different co-owner Social Security numbers on different accounts
does not increase insurance coverage. In a deposit insurance
determination, the FDIC relies upon the deposit account records of the
failed institution to determine the ownership of an account and thus
the amount of insurance coverage available.
---------------------------------------------------------------------------
\7\ Cashiers' checks, money orders, officers' checks, interest
checks, loan checks or expense checks constitute official items.
Official items are included in the deposit insurance determination
only if they are drawn on the failed bank.
---------------------------------------------------------------------------
Current Deposit Insurance Determination Process
Background. The deposit insurance determination process has several
steps. Each step varies in time and complexity, depending on the
institution's characteristics (primarily the number of deposit accounts
and deposit systems).
Closing out the day's business. Generally, on the day of an
institution's failure, all of the day's check processing and deposit
transactions are completed (not including the overdraft decision-making
process that occurs the following morning). The length of this process
can vary across institutions. For larger institutions this process can
run into the early morning hours possibly ending at 4 a.m. or later.
Obtain deposit data. A data file is obtained from the institution
or its servicer. Obtaining usable requisite data from the institution
or its servicer frequently is a time-consuming process. The FDIC will
provide the institution or its servicer with a standard data request.
The standard data request requires the institution to provide
approximately 45 data fields for each deposit account along with
electronic copies of trial balances and deposit application
reconciliations. FDIC technical staff works with the insured
institution until the standard data set requirements are met and the
files transmitted to the FDIC can be processed properly.
Generally, the FDIC has at least 30 days advance warning to plan
and prepare for failures. Data are requested in advance to ensure
delivery capabilities, prove the balancing and reconciliation processes
and make certain all required fields have been included. In instances
in the past, where a large depository institution experienced financial
difficulties, liquidity pressures forced the closing of the institution
before it became capital insolvent. As a consequence, the FDIC is
concerned that lengthy advanced warning and early access may not be
possible or practical for a Covered institution that becomes
financially troubled. More limited access combined with complexities
inherent in large-institution deposit systems--including multiple
deposit systems and significant data volumes--could materially delay
the process of obtaining data necessary to conduct a deposit insurance
determination.
Process deposit data. Data are received and validated (including
reconciliation to the actual trial balance). Using its Receivership
Liability System (``RLS'') the FDIC determines which accounts are fully
insured, which are definitely uninsured and which are possibly
uninsured (pending the collection of further information). The RLS
automatically groups accounts based on the estimated ownership category
and the name(s), address, and tax identification number for each
account. This process is part of the insurance determination performed
on the depositor data received from a failed institution.
FDIC holds/debits based on insurance determination results.
Accounts definitely uninsured are debited for the uninsured amount.
Holds are placed on accounts that are deemed potentially uninsured for
amounts over the insurance limit and the account owner is contacted. If
additional information is required from the depositor, a meeting is
scheduled. These meetings afford the opportunity to collect information
necessary to finalize the insurance determination on the possibly
uninsured depositors.
The typical institution resolved by the FDIC does not have the
capability to post a large volume of holds electronically by batch. In
these cases holds are placed manually usually through the on-line
system. In two failures in the recent past the FDIC has had the ability
to work with programmers prior to the closing to create an automated
method. This required a significant amount of time and availability of
staff prior to the failure. Automatically processing a large number of
holds at closing without pre-failure preparations and testing may
result in significant operational difficulties during and after opening
the new institution for business. In one instance the FDIC discovered
after the fact that the programmed holds could not be removed by
tellers under the direction of FDIC staff. These holds could only be
removed by another program that ran in batch mode. This caused a delay
in releasing funds to insured customers.
FDIC System Upgrades
As part of its claims process review, the FDIC will streamline the
business processes it uses to facilitate a deposit insurance
determination. This will involve developing a new deposit insurance
claims processing system incorporating more advanced technologies to
enhance automation. These changes will improve the FDIC's ability to
process efficiently a large number of accounts and provide timely
customer support to uninsured depositors. In the case of a Covered
institution that is in danger of failing, enhancements to the FDIC's
claims system would be complemented by the options proposed in this
ANPR. In particular, the FDIC is focusing on the collection and
validation of deposit data and the capability of automatically debiting
or placing holds on uninsured or potentially uninsured accounts.
[[Page 73656]]
The Banking Landscape From the Claims Perspective
Industry segmentation. Insured depository institutions can be
divided into two general categories, depending on the unique issues
posed during a potential resolution. The single most important facet
determining the complexity of the claims process is the number of
deposit accounts, although the volume of daily transactions also can be
important. For the purpose of claims process planning the FDIC has
divided the industry into two segments as shown in Table 2.
This segmentation does not result in two homogenous groups. There
are profound differences among institutions in each group. From the
deposit claims perspective the varying characteristics of Covered and
Excluded institutions suggest the need for different claims approaches
and methodologies.
Complexity: Large institutions typically have more accounts and
more complex deposit systems. With Covered institutions the speed of
the claims process could be greatly enhanced by the FDIC obtaining a
timely data download and improving the capability to automatically post
holds or debit uninsured funds.
Table 2.--Industry Segmentation.
----------------------------------------------------------------------------------------------------------------
Total
Percent of domestic Percent of
Segment Definition Number total deposit total
(billions)
----------------------------------------------------------------------------------------------------------------
Covered............................. Total number of 145 1.6 $3,982 67.1
deposit accounts over
250,000 and total
domestic deposits
over $2 billion.
Excluded...................... All insured 8,735 98.4 1,950 32.9
institutions not
covered.
-------------------------------------
Total........................... ...................... 8,880 100.0 5,932 100.0
----------------------------------------------------------------------------------------------------------------
Source: FDIC.
Note: Data are as of June 30, 2005.
Resolution structure: The resolution of a Covered institution is
likely to unfold differently compared to one of smaller size. These
differences generally relate to the expected nature of the failure. In
today's environment a critically undercapitalized institution will
receive a supervisory letter indicating it has 90 days to improve its
capital position, otherwise it will be closed (capital insolvency). If
the institution's capital level is not improved during this time, a
failure will occur, typically on a Friday. This process affords the
FDIC substantial advance warning and the opportunity to prepare by
obtaining deposit data up to 90 days in advance of failure and by
having the opportunity to work with the failing institution's
information technology staff.
Covered institutions are more likely to fail due to liquidity
reasons prior to becoming critically undercapitalized (liquidity
insolvency). Most likely, this will be a less orderly event.
Institutions more susceptible to a liquidity insolvency pose greater
problems for the FDIC. Such institutions have a less predictable
failure date; the failure could occur on any day of the week; and pre-
failure access to the institution may be limited because the
institution's insolvency is difficult to anticipate.
Covered insured depository institutions present unique challenges
in the event of failure. For the smaller, less-complex Covered
institutions these challenges may be only modest; for the larger, more
complex members of the group they are more severe. The FDIC is
concerned about both the size and complexity of the deposit operations
of Covered institutions and the speed at which a claims process must be
conducted to make funds available quickly to depositors and maximize
the institution's franchise value.
III. Proposed Deposit Insurance Determination Timeline
General Process
This ANPR presents three options for discussion. Each of these
options would require modifications to the deposit systems of Covered
institutions to facilitate the insurance determination process. The
third option would require the larger Covered institutions to determine
the insurance status of each depositor. In this case the FDIC would
rely upon institution-generated results in the event of failure.
Alternatively, the first two options imply a process similar to that
currently undertaken by the FDIC, but with important distinctions. The
general timeline of the insurance determination process under Options 1
and 2 is outlined below.
Step 1. The institution is closed, typically at the end of the
business day.
Step 2. The institution's nightly deposit cycle is completed, a
process which may run into the early morning hours. This process posts
the day's deposit transactions, ending with the account balance used
for deposit insurance purposes.
Step 3. After the nightly deposit cycle is processed and the ending
balance obtained for each account, the insured institution's deposit
system would post what the FDIC is calling a ``provisional hold'' on
certain large deposit accounts. The capability to post provisional
holds is not a current feature of deposit processing systems and would
have to be specifically created for this purpose. The provisional hold
is a calculated amount based on the account type and balance. Accounts
below a certain threshold (for example, $50,000) would be exempt from a
provisional hold. Based upon an initial analysis of potential losses
from the failed institution, a specified percent (for example, 10
percent) of each account above this size threshold would be subject to
a provisional hold. The actual threshold account size and hold
percentage would be provided by the FDIC the night the institution is
closed, based primarily on estimated institution losses. The threshold
size and hold percentage may vary by account type (for example, demand
and NOW accounts, savings deposits, time deposits and IRAs). Once the
financial institution calculates the provisional hold amounts, holds
must be placed on each affected account. The Hold Code legend should
read ``FDIC Provisional Hold.'' The provisional holds would remain in
place until the insurance determination results are determined by the
FDIC. The FDIC provisional holds would be removed en masse once
insurance determinations have been made by the FDIC. The FDIC will
direct the institution's Operations/IT staff to reverse all provisional
holds. It is anticipated this will be done by using the original
provisional holds file and
[[Page 73657]]
changing it to reverse the provisional holds. The FDIC provisional
holds should be of a nature that they can be overridden only by IT
personnel at the direction of the FDIC if the need arises that
individual provisional holds must be removed prior to the en masse
removal.
Step 4. After the provisional holds are in place the institution
(most likely a bridge bank) is ready to open for business. Posting of
provisional holds must occur prior to the start of the business day
following failure and appear on hold reports and the on-line system.
The ``available balance'' must show the customer balance after the
provisional hold has been posted.
Step 5. The Covered institution also must have the capability to
generate a standard data set of deposit account fields necessary for
the FDIC to conduct the deposit insurance determination. Except as
discussed below for Option 1, the standard data set would be comprised
of information the bank already has on hand. Principal balances,
accrued interest, and record counts captured as part of this process
must be reconciled to the institution's actual trial balance reports or
summary totals reports. A mechanism would need to be in place to
transmit these data quickly to the FDIC or its designated processing
vendor.
Step 6. Upon receipt of the institution's standard data set the
FDIC will process the information to determine the insurance status of
each account. The FDIC will generate one of three possible outcomes for
each account.
1. Account is fully insured: remove the provisional hold. No
further action is required.
2. Account is definitely uninsured: remove the provisional hold and
debit the account in the amount specified by the FDIC.
3. Account is possibly uninsured but further information is
required by the FDIC to make the final determination: remove the
provisional hold and place a regular bank hold \8\ in the amount
specified by the FDIC.\9\
---------------------------------------------------------------------------
\8\ Bank holds should have a legend stating ``FDIC Hold'' and
are placed for an unlimited number of days.
\9\ Certain trust accounts and accounts eligible for pass-
through coverage will require additional information to determine
insurance status. The FDIC must obtain this information from the
depositor. This process may take several weeks in the case of a
relatively large Covered institution. The bank hold with the ``FDIC
Hold'' legend will remain in place until results are obtained. The
results of the insurance determination on these accounts will be
passed to the institution (bridge bank or assuming institution) as
they become available. When these accounts are processed, the
deposit insurance determination will be complete.
---------------------------------------------------------------------------
The FDIC intends to forward insurance results to be incorporated
into the institution's deposit systems as soon as possible, perhaps as
quickly as the day following the receipt of the standard data set. The
results will dictate debits and holds to be placed by batch in an
automated fashion on deposit accounts. The processing stream would be
as follows: FDIC will notify Operations/IT that results are available.
This notification will trigger a process whereby all provisional holds
are removed en masse using the original file to create the removal
transactions. After provisional holds have been removed debit
transactions and bank holds will be placed on accounts as determined in
the process described above in items 1 through 3.
Provisional Holds
The steps described above would require new features for the
deposit systems of Covered institutions. These features are: (1) The
creation of a standard data set reconciled to the institution's actual
trial balance; (2) the calculation of provisional holds on the basis of
FDIC-specified criteria and placement of provisional holds after the
regular deposit processing is complete for the day; (3) the capability
to remove the provisional holds en masse and (4) the ability to place
bank holds by batch, electronically.
Since provisional holds enhance the FDIC's ability to open a bridge
bank quickly, it substantially increases the potential resale value of
the institution. These holds are necessary to stop the potential
outflow of uninsured funds subject to risk during the first business
day(s) of the bridge bank's operations. At the same time depositors are
provided access to the majority of their funds.
Potential difficulties could arise from provisional holds,
including acceleration in the number of returned items. There is a
tradeoff between holding uninsured funds potentially subject to loss
and quickly making funds available to depositors. The FDIC must strike
a balance in this decision-making process. As a part of this balance,
the FDIC could require that the percentage of the provisional hold
differ between account type.
Historically losses on large insured institutions have been lower
as a percent of assets compared to the smaller, more typical failure.
Large institutions also tend to hold more subordinated debt and other
general creditor claims compared to smaller institutions. These facts
suggest the possibility that the provisional hold percentage will be
fairly modest in the failure of most Covered institutions.
IV. Options
The FDIC has preliminarily identified three options, each of which
is discussed below. The FDIC invites comments on these options, as well
as other suggestions to achieve the objectives identified in this
document. In addition, the FDIC seeks comments on several related
issues. These options are being considered only for Covered
institutions.
The definition of a Covered institution is being actively
considered. At this point the definition includes insured institutions
with at least 250,000 deposit accounts and more than $2 billion in
domestic deposits. These thresholds are subject to further research and
consideration. A limited number of large insured institutions (total
assets over $20 billion) would not fall under this definition because
they have fewer than 250,000 deposit accounts. Inclusion of these
institutions in the definition of ``Covered'' is being considered.
Further, a multi-bank holding company could have at least one Covered
institution while other members do not meet the definition.
Consideration is being given to defining as Covered other members of a
multi-bank holding company as long as at least one of its members meets
the size thresholds listed above.\10\
---------------------------------------------------------------------------
\10\ Some members of a multi-bank holding company hold only a
limited number of deposit accounts, perhaps dictating exclusion from
the definition of covered.
---------------------------------------------------------------------------
Option 1
Option 1 would require each Covered institution (except those to
which Option 3 would apply) to have in place on an ongoing basis the
ability to:
Identify the owner(s) of each account by using a unique
identifier.
Identify the deposit insurance ownership category of each
deposit account.
Supply to the FDIC a standard data set mapped and
formatted to FDIC specifications and reconciled to the institution's
actual trial balance. (See Appendix B for a preliminary list of data to
be included in the standard data set.)
Calculate and place provisional holds automatically
according to the FDIC's specifications at the end of processing on any
given business day.
Remove provisional holds automatically according to the
FDIC's specifications at the end of processing on any given business
day.
[[Page 73658]]
Add and remove automatically the FDIC-supplied holds/
debits on an as-needed basis.
To ensure compliance the FDIC would test periodically a Covered
institution's ability to produce the required processes.\11\ The
testing process would focus on data quality and accuracy, the ability
to produce quickly a standard data set meeting the FDIC's criteria, the
ability to effectively submit data and the viability of the hold
processes. The FDIC recognizes the sensitivity of depositor data and
the privacy issues that may arise. The FDIC believes it is possible to
conduct an effective testing process while on-site, without the need
for sensitive depositor data to leave the institution's premises.
---------------------------------------------------------------------------
\11\ Options 2 and 3 also would involve a testing process to
determine the overall quality of the results.
---------------------------------------------------------------------------
As each covered institution's system would be tested periodically,
the FDIC should be able to rely upon the unique owner identifier and
the insurance category of each account. Reliance upon these data would
accelerate the insurance determination process. Without these data the
FDIC would have to identify account owners and each account's insurance
category based primarily on the name and address fields and tax
identification numbers, as is the case with the current process.
The FDIC would require certain fields from the customer information
file (``CIF'') system such as CIF number, name, address, taxpayer
identification number and certain fields from the deposit system such
as account number, account name, address, and principal balance. The
data from the CIF file and the deposit systems must be linked. These
data elements will be used to determine account owners and to perform
insurance determinations. It is proposed that Covered institutions have
the data elements mapped and formatted to the FDIC specifications and
available to run on short notice. Further, the Covered institutions
would have available a method to reconcile the file to actual trial
balances to ensure all deposit accounts were captured. Proof of
reconciliation would be required.
One of the elements of the standard data set (as set forth in
Appendix B) is ``product type.'' In connection with this element, an
insured depository institution must identify ``accounts owned by bank''
or ``bank-owned accounts.'' This term means an account that does not
qualify as a ``deposit'' account as defined in the Federal Deposit
Insurance Act. See 12 U.S.C. 1813(l). For example, a depository
institution might establish an account reflecting the collection of
loan payments from borrowers. These collected funds represent income.
They do not represent insured ``deposits'' because the depository
institution is not obligated to make repayment. All such ``bank-owned
accounts'' must be identified in the standard data set.
The volume of data to be provided in deposit/CIF files of Covered
institutions can create time delays. In the event a Covered institution
is viewed as in danger of failing, the institution would be required to
quickly send or transmit data to secure FDIC sites.
Questions. What would be the overall cost to a Covered institution
for developing the capability to automatically post provisional holds,
remove provisional holds and automatically process account debits and
holds based on the insurance determination results? What would be the
overall cost to a Covered institution for developing the capability to
produce a formatted standard data file, link CIF files to deposit files
and prepare balancing and reconciliation schedules? How expensive would
it be for Covered institutions to supply a unique identifier for each
depositor? What would be the cost of supplying the insurance category
for each account? How reliable would be the data identifying each
depositor and account insurance category? Would Covered institutions
have difficulty supplying reliable data for any of the items listed in
Appendix B, such as for bank owned accounts? If so, which ones? Are
Covered institutions able to identify account owners (as opposed to
trustees, managers, beneficiaries, etc.) from their files?
The deposit systems on many Covered institutions use software
purchased from a small group of vendors. To what extent would vendor-
based software changes help mitigate the overall implementation costs
of this program? Could a vendor develop the standard data set and
program to pull the data into the specified format for multiple
institutions or does each institution have unique details that would
prevent this from occurring?
Some Covered institutions may use a servicer to process deposit
accounts, and some Covered institutions may share the same deposit
servicer. To what extent would implementation changes made by the
servicer mitigate the costs of this program?
To meet the proposed standard data set requirement, institutions
may have to link records from the CIF and the deposit systems or
provide the key or linking elements so data from the CIF can be linked
to individual account owners. This would be more complex than a
standard data set that only included items from the deposit systems,
but it would yield substantial benefits to the FDIC. Once the systems
had been developed and tested, how much longer would it take for an
institution to prepare a standard data set that included CIF and
deposit system items, compared to one that included only deposit system
items?
The FDIC would require transmitted deposit balances to reconcile to
the actual trial balance, both balance dollar amounts and the record
count. How does reconciliation affect timeliness? Can the process be
developed in advance and automated?
What is the most effective way of transmitting data to the FDIC?
Option 2
Option 2 would require each Covered institution to have in place on
an ongoing basis the ability to:
Supply to the FDIC a standard data set mapped and
formatted to FDIC specifications and reconciled to the institution's
actual trial balance. (See Appendix B for a preliminary list of data to
be included in the standard data set.)
Calculate and place provisional holds automatically
according to the FDIC's specifications at the end of processing on any
given business day.
Remove provisional holds automatically according to the
FDIC's specifications at the end of processing on any given business
day.
Add and remove automatically the FDIC-supplied holds/
debits on an as-needed basis.
The primary difference between Options 1 and 2 rests with the
omission in Option 2 of the requirements to supply a unique identifier
for each depositor and identify the insurance category of each deposit
account. The data elements included in the standard data set also may
vary somewhat from those in Appendix B.
Question: What is the likely cost of Option 2? What are the
potential cost savings to Covered institutions from Option 2 compared
to Option 1? Are there any likely operational difficulties in
implementing Option 2?
Option 3
Option 3 would require the very largest of the Covered institutions
to know the insurance status of deposit accounts at any given point in
time.\12\
[[Page 73659]]
Upon failure, the institution must be able to place debits/holds
automatically for uninsured deposits in an amount specified by the
FDIC, so that the institution can be operational the following business
day. The FDIC is considering this option only for the largest 10 or 20
Covered institutions while, if used, the remaining Covered institutions
would meet requirements similar to those outlined under Options 1 or 2.
Limiting the scope of this option to the largest Covered institutions
would help mitigate implementation costs as well as speed the insurance
determination process for the largest, most complex of the Covered
institutions.
---------------------------------------------------------------------------
\12\ This requirement would not include deposit accounts for
which the Covered institution does not ordinarily possess the
information to make the determination, such as accounts with pass-
through coverage (brokered deposit accounts and trust accounts, for
example) and certain informal trust accounts (also referred to as
either ``payable-on-death'' or ``in-trust-for'' accounts) where
information on beneficiaries may be necessary for the determination.
---------------------------------------------------------------------------
This option would be more expensive for Covered institutions than
Options 1 or 2, but it could yield additional benefits. Depositors
could benefit from the institutions' ability to provide information
about insurance status. If an institution were to fail, this option
provides that the insurance status of most depositors would be known at
the point of failure. As a consequence, some depositors could receive a
larger portion of their funds more quickly under this option compared
to the provisional hold process contemplated in Options 1 and 2.
As with Options 1 and 2, the FDIC would test the accuracy of
systems put in place if this Option is adopted. Under these
circumstances the FDIC should be able to rely upon the results
generated by the insured institution for the initial deposit insurance
determination.
Questions. How expensive would this option be compared to Options 1
or 2? Do the additional benefits merit the additional cost? Are there
other reasons why this approach should be preferred or rejected? How
extensive would the FDIC audit have to be to determine whether
institutions are correctly calculating insurance coverage?
Other Potential Options
The FDIC invites comments on all aspects of this proposal. In
addition, the FDIC solicits suggestions on alternative means of meeting
the objective of conducting a timely insurance determination on Covered
insured institutions.
Question. Is there a different approach that would accomplish the
same objective at a lower financial and regulatory cost?
Appendix A.--Primary FDIC Deposit Insurance Categories
------------------------------------------------------------------------
Insurance category Description
------------------------------------------------------------------------
1. Single Ownership.......... Funds owned by a natural person including
those held by an agent or custodian,
sole proprietorship accounts and
accounts that fail to qualify in any
other category below. Coverage extends
to $100,000 per depositor.
2. Joint Ownership........... Accounts jointly owned as joint tenants
with the right of survivorship, as
tenants in common or as tenants by the
entirety. Coverage extends to $100,000
per co-owner.
The account title generally must
be in the form of a joint account
(``Jane Smith & John Smith'').
Each of the co-owners must sign
the account signature card. (This
requirement has exceptions, including
certificates of deposit.)
The withdrawal rights of the co-
owners must be equal.
3. Revocable Trust........... Accounts whereby the owner evidences an
intention that upon his or her death the
funds shall belong to one or more
qualifying beneficiaries. For each
owner, coverage extends to $100,000 per
beneficiary.
The title of the account must
include ``POD'' (payable-on-death) or
``trust'' or some similar term.
The beneficiaries must be
specifically named in the account
records. (This requirement applies to
informal ``POD'' accounts but does not
apply to formal ``living trust''
accounts.)
The beneficiaries must be the
owner's spouse, children, grandchildren,
parents or siblings.
4. Irrevocable Trust......... Accounts established pursuant to an
irrevocable trust agreement. Coverage
extends to $100,000 per beneficiary.
The account records must
indicate that the funds are held by the
trustee pursuant to a fiduciary
relationship.
The account must be supported by
a valid irrevocable trust agreement.
Under the trust agreement, the
grantor of the trust must retain no
interest in the trust funds.
For ``per beneficiary''
coverage, the interest of the
beneficiary must be ``non-contingent.''
5. Self-Directed Retirement.. Individual retirement accounts under 26
U.S.C. Sec. Retirement 408(a),
eligible deferred compensation plans
under 26 U.S.C. Sec. 457, self-
directed individual account plans under
29 U.S.C. Sec. 1002 and self-directed
Keogh plans under 26 U.S.C. Sec.
401(d). Coverage extends to $100,000 per
owner or participant.
The account records must
indicate that the account is a
retirement account.
The account must be an actual
retirement account under the cited
sections of the Tax Code.
6. Corporation, Partnership Accounts of a corporation, partnership or
or Unincorporated unincorporated association. Coverage
Association. extends to Unincorporated $100,000 per
entity.
The account records must
indicate that the entity is the owner of
the funds or that the nominal
accountholder is merely an agent or
custodian (with the entity's ownership
interest reflected by the custodian's
records).
The entity must be engaged in an
``independent activity.''
The entity must not be a sole
proprietorship (which is treated as a
single ownership account).
7. Employee Benefit Plan..... Deposits of an employee benefit plan as
defined at 29 U.S.C. 1002, including any
plan described at 26 U.S.C. 401(d), and
also deposits of an eligible deferred
compensation plan described at 26 U.S.C.
457. Coverage extends to $100,000 per
participant.
The account records must
indicate that the funds are held by the
plan administrator pursuant to a
fiduciary relationship.
The account must be supported by
a valid employee benefit plan agreement.
For ``per participant''
coverage:
[cir] The interests of the participants
must be ascertainable and non-
contingent.
[cir] The institution must have been well
capitalized (or adequately capitalized
in some cases) when the initial and
subsequent deposits were made.
[[Page 73660]]
8. Public Unit............... Funds of ``public units'' or ``political
subdivisions'' thereof. Coverage extends
to $100,000 for interest bearing
deposits and $100,000 for non interest
bearing deposits for each official
custodian of the public unit or
subdivision.
For separate coverage for the
non interest bearing deposits, the
insured financial institution must be
located (including branch locations) in
the same state as the public unit.
The account records must
indicate that the funds are held by the
custodian in a custodial capacity.
For ``per custodian'' coverage,
the custodian must be a separate
``official custodian.''
For ``per subdivision''
coverage, the governmental entity must
be a separate ``political subdivision.''
------------------------------------------------------------------------
Appendix B. Data Elements Included in the Standard Data Set
This appendix presents a standard data request containing proposed
data fields to be used by the FDIC to determine the insured status of
each account. The proposed file is divided into four record types:
Header, Deposit, Hold, and Customer. It would be preferred that all
data are included in one file but, if necessary due to system
constraints, multiple files might be used. For identification purposes
the Header record in each file must be created. If data or information
are not maintained or do not apply, a null value in the appropriate
field should be indicated.
The following is a list of the data fields proposed to be included
in the file with explanations of the data being requested. The fields
are listed in the order they would appear in the file.
Header Record
The Header Record provides information specific to the institution,
the effective date of the data and the date and time the file was
created. The Header Record must be at the beginning of each file if
multiple files are submitted.
------------------------------------------------------------------------
Field name FDIC field description
------------------------------------------------------------------------
1. HD--Record--ID............ Record ID Enter ``1'' in this field.
1. HD--Acct--Numb............ Header Account Number Enter
``0000000000000000'' in this field.
1. HD--File--Date............ File Date--This field identifies the ``as-
of-date'' of the file. Enter the
effective date of the data being
supplied in this request. Must be
entered in MMDDYYYY format.
1. HD--FI--Name.............. Financial Institution Name--Enter the
institution's name as it appears on the
FDIC Certificate.
1. HD--FI--Number............ Financial Institution Number--Enter the
institution's FDIC certificate/
institution number.
1. HD--Dt--Created........... Date & Time Created--Enter the date and
time in MMDDYYYYHHmmSS format.
------------------------------------------------------------------------
Deposit Record
The Deposit Record provides information specific to deposit account
balances and account data. Fields 14-27 relate to the account name and
address information. Some systems provide for separate fields for
account title/name, address, city, state, ZIP, and country, all of
which are parsed out. Other systems may simply provide multiple lines
for name, address, city, state, ZIP, with no distinction. Populate
fields that best fit system data--either fields 14-21 or fields 22-27.
------------------------------------------------------------------------
Field name FDIC field description
------------------------------------------------------------------------
0. DP--Record--ID............ Record ID--Enter ``2'' in this field.
0. DP--Acct--Numb............ Account Number--The unique number
assigned by the institution to this
account.
0. DP--Acct-- Numb--ID....... Account Number ID--Account number field
that further identifies the account. May
be used to identify separate deposits
tied to this account where there are
different processing parameters, i.e.
interest rates, maturity dates, but all
owners are the same.
0. DP--Tax--ID............... Tax ID--Provide the tax ID number
maintained on the account. For consumer
accounts, typically, this would be the
primary account holder's Social Security
number. For business accounts it would
be the Federal tax identification
number.
0. DP--Tax-- Code............ Tax ID Code--This field should identify
the type of the tax ID number. Valid
values are:
S = Social Security number.
T = Federal tax identification
number.
O = Other.
0. DP--Branch................ Branch--This field should identify the
branch associated with the account. It
may be where the account was originally
opened.
0. DP--Cost --Center......... Cost Center--Identifier used for
organization reporting or ownership of
the account. It may be the same as the
Branch number.
0. DP--Owner --Ind........... Customer Owner Indicator--This field is
used to identify the type of ownership.
This information will assist the FDIC to
further categorize the account into the
FDIC insurance categories. Valid values
are:
S = Single or primary owner
J = Joint or secondary owner
(also include DBA's in this code)
T = Trust account
P = Partnership account
C = Corporation.
B = Brokered deposits
O = Other
[[Page 73661]]
0. DP--Prod --Type........... Product Type--This field is used to
