Recordkeeping for Timely Deposit Insurance Determination, 14814-14840 [2019-06713]
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Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Proposed Rules
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 370
RIN 3064–AF03
Recordkeeping for Timely Deposit
Insurance Determination
Federal Deposit Insurance
Corporation (FDIC).
ACTION: Notice of proposed rulemaking.
AGENCY:
The FDIC is seeking comment
on a proposed rule that would to make
certain substantive revisions to
‘‘Recordkeeping for Timely Deposit
Insurance Determination,’’ to clarify the
rule’s requirements, better align the
burdens of the rule with its benefits, and
make technical corrections.
DATES: Comments must be received by
May 13, 2019.
ADDRESSES: You may submit comments
on the notice of proposed rulemaking,
identified by RIN number, by any of the
following methods:
• Agency Website: https://
www.FDIC.gov/regulations/laws/federal.
Follow instructions for submitting
comments on the agency website.
• Email: Comments@FDIC.gov.
Include RIN 3064–AF03 in the subject
line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
• Hand Delivery/Courier: Guard
station at the rear of the 550 17th Street
Building (located on F Street) on
business days between 7:00 a.m. and
5:00 p.m.
Public Inspection: All comments
received, including any personal
information provided, will be posted
without change to https://www.fdic.gov/
regulations/laws/federal/.
FOR FURTHER INFORMATION CONTACT:
Marc Steckel, Deputy Director, Division
of Resolutions and Receiverships, (571)
858–8224; Teresa J. Franks, Associate
Director, Division of Resolutions and
Receiverships, (571) 858–8226; Shane
Kiernan, Counsel, Legal Division, (703)
562–2632, skiernan@fdic.gov; Karen L.
Main, Counsel, Legal Division, (703)
562–2079, kamain@fdic.gov; James P.
Sheesley, Counsel, Legal Division, (703)
562–2047; Andrew J. Yu, Senior
Attorney, (703) 562–2784.
SUPPLEMENTARY INFORMATION:
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SUMMARY:
I. Policy Objectives
The policy objective of the proposed
rule is to reduce compliance burdens for
insured depository institutions (IDIs)
covered by the FDIC’s rule entitled
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‘‘Recordkeeping for Timely Deposit
Insurance Determination’’ 1 (part 370 or
the Rule) while continuing to support
the FDIC’s ability to promptly determine
deposit insurance coverage in the event
a covered institution fails. Part 370
requires each IDI with two million or
more deposit accounts (each a covered
institution) to (1) configure its
information technology system (IT
system) to be capable of calculating the
insured and uninsured amount in each
deposit account by right and capacity,
for use by the FDIC in making deposit
insurance determinations in the event of
the institution’s failure, and (2)
maintain complete and accurate
information needed by the FDIC to
determine deposit insurance coverage
with respect to each deposit account,
except as otherwise provided. After the
Rule was adopted and while covered
institutions began preparing to
implement it, the FDIC received
feedback from covered institutions,
industry consultants, information
technology service providers, and agents
placing deposits on behalf of others,
who identified components of the Rule
that are insufficiently clear or unduly
burdensome. The proposed rule
addresses these issues by: Establishing
the option to extend the part 370
compliance date for certain institutions;
simplifying the process for requesting
exception from the Rule’s requirements;
amending the scope of certain
provisions; and making technical
amendments. The proposed
amendments are likely to reduce
compliance burdens for covered
institutions while still ensuring that
covered institutions implement the
recordkeeping and IT system
capabilities needed by the FDIC to make
a timely deposit insurance
determination for an IDI of such size
and scale.
II. Background
In 2016, the FDIC adopted part 370 to
facilitate prompt payments of FDICinsured deposits when large IDIs fail. By
reducing the difficulties that the FDIC
would face in making a prompt deposit
insurance determination at a failed
covered institution, part 370 enhances
the ability of the FDIC to meet its
statutory obligation to pay deposit
insurance ‘‘as soon as possible’’
following failure and to resolve the
covered institution in the manner least
costly to the Deposit Insurance Fund
(DIF).2 Fulfilling these statutory
obligations is essential to the FDIC’s
mission. It also achieves significant
1 12
2 12
PO 00000
CFR part 370.
U.S.C. 1821(f)(1); 12 U.S.C. 1823(c)(4).
Frm 00002
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policy objectives: Maintaining public
confidence in the FDIC and the banking
system; enabling depositors to meet
their financial needs and obligations;
preserving the franchise value of the
failed covered institution and protecting
the DIF by allowing a wider range of
resolution options; and promoting long
term stability in the banking system by
reducing moral hazard. An earlier
regulation, the FDIC’s rule entitled
‘‘Large-Bank Deposit Insurance
Determination Modernization’’ (§ 360.9),
furthered these policy goals at IDIs
having at least $2 billion in domestic
deposits and either 250,000 deposit
accounts, or $20 billion in total assets.3
Part 370 provides the necessary
additional measures required by the
FDIC to ensure prompt and accurate
payment of deposit insurance to
depositors of the larger, more complex
IDIs that qualify as covered institutions.
The FDIC is authorized to prescribe
rules and regulations as it may deem
necessary to carry out the provisions of
the Federal Deposit Insurance Act (FDI
Act).4 To pay deposit insurance, the
FDIC uses a failed IDI’s records to
aggregate the amounts of all deposits
that are maintained by a depositor in the
same right and capacity and then
applies the standard maximum deposit
insurance amount (SMDIA) of
$250,000.5 The FDIC generally relies on
the failed institution’s deposit account
records to identify deposit owners and
the right and capacity in which deposits
are maintained.6 Section 7(a)(9) of the
FDI Act authorizes the FDIC to take
action as necessary to ensure that each
IDI maintains, and the FDIC receives on
a regular basis from such IDI,
information on the total amount of all
insured deposits, preferred deposits,
and uninsured deposits at the
institution.7 The requirements of part
370, obligating covered institutions to
maintain complete and accurate records
regarding the ownership and
insurability of deposits and to have an
IT system that can be used to calculate
deposit insurance coverage in the event
of failure, facilitate the FDIC’s prompt
payment of deposit insurance and
enhance the ability to implement the
least costly resolution of these
institutions.
Part 370 became effective on April 1,
2017, with a compliance date of April
1, 2020, for IDIs that became covered
3 12
CFR 360.9. See 73 FR 41180 (July 17, 2008).
U.S.C. 1819(a) (Tenth), 1820(g),
1821(d)(4)(B)(iv).
5 12 U.S.C. 1821(a)(1)(C), 1821(a)(1)(E).
6 12 U.S.C. 1822(c), 12 CFR 330.5.
7 12 U.S.C. 1817(a)(9).
4 12
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institutions on the effective date.8 The
FDIC has carried out a continuous
outreach program to covered
institutions, trade associations, and
other interested parties since issuing
part 370. The FDIC learned through its
interactions with these parties about
issues and challenges they face in
implementing the capabilities required
by part 370. These include: The need for
additional time to complete this
complex exercise; concerns regarding
the nature of the compliance
certification; the effect of mergers; the
scope of the definition of ‘‘transactional
features’’; and the covered institution’s
ability to certify performance by a third
party with respect to submission of
information to the FDIC within 24 hours
for deposit accounts with transactional
features that are insured on a passthrough basis.
The FDIC acknowledges that the
burden of complying with some of the
requirements of part 370 with regard to
certain types of accounts is not
commensurate with the benefit of
improvements to prompt payment of
deposit insurance and resolvability that
such compliance achieves. Further,
practical difficulties in implementation
justify an extension of the initial
compliance date for those covered
institutions that became covered
institutions on the initial effective date
of the Rule. Accordingly, the FDIC is
issuing this notice of proposed
rulemaking (NPR) to amend part 370
(the proposal, proposed rule, or
proposed amendments) to provide for
elective extension of the compliance
date, revise the treatment of deposits
created by credit balances on debt
accounts, modify the requirements
relating to accounts with transactional
features, change the procedures
regarding exceptions, and clarify
matters relating to certification
requirements. The proposed
amendments would also make certain
technical changes to part 370 and
correct typographical errors. These
proposed amendments would better
align the burdens imposed by part 370
upon covered institutions with the
resultant benefits in terms of
achievement of the FDIC’s statutory
obligations and policy objectives.
III. Discussion of Proposed
Amendments and Request for Comment
A. Summary
The FDIC is undertaking this notice of
proposed rulemaking to amend part 370
in advance of the compliance date for
8 81 FR 87734, 87738 (December 5, 2016); 12 CFR
370.2(d).
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the first covered institutions. The FDIC
is proposing to make extensive changes
to part 370. Therefore, the FDIC is
proposing to revise the text of part 370
in full rather than prepare fragmentary
amendments. The proposal would,
among other things:
• Include an optional one-year
extension of the compliance date upon
notification to the FDIC;
• provide clarifications regarding
certification of compliance under
§ 370.10, and the effect of a change in
law or a merger on compliance;
• provide for voluntary compliance
with part 370;
• revise the actions that must be
taken under § 370.5(a) with respect to
deposit accounts with transactional
features that are insured on a passthrough basis;
• amend the recordkeeping
requirements set forth in § 370.4 for
certain types of deposit relationships;
• clarify the process for exceptions
requested pursuant to § 370.8(b),
provide for published notice of the
FDIC’s responses, and provide that
certain exceptions may be deemed
granted; and
• make corrections and technical and
conforming changes.
date and state the total number of, and
dollar amount of deposits in, deposit
accounts for which the covered
institution expects its IT system would
not be able to calculate deposit
insurance coverage as of the original
April 1, 2020, compliance date. This
information would help the FDIC
understand the extent to which the
covered institution’s capabilities could
be utilized prior to the extended
compliance date should those
capabilities be needed. In connection
with this proposed amendment, the
definition of compliance date in
§ 370.2(d) would also be revised to
reference § 370.6(b).
Questions: The FDIC invites comment
on its proposal to allow insured
depository institutions that became
covered institutions on April 1, 2017, to
extend their compliance date by up to
one year. What are the advantages or
disadvantages of extending the
compliance date? Is this one-year
extension too long or too short? Why?
Should this extension option be
available to all current covered
institutions? What alternatives, if any,
should the FDIC consider?
B. Elective Extension of the Compliance
Date
Section 370.2(d) establishes the initial
compliance date as the date that is three
years following either the effective date
of part 370 or the date on which an IDI
becomes a covered institution,
whichever is later. In order to comply
with part 370, covered institutions must
add a new set of capabilities in their IT
systems and a new level of regularity in
their recordkeeping. Part 370 became
effective on April 1, 2017, so each
insured depository institution that
became a covered institution on that
date has a compliance date of April 1,
2020. The FDIC recognizes that some of
these covered institutions may need
additional time to implement these new
capabilities. The FDIC has determined
that an extension of up to one year
would help these covered institutions
more efficiently focus their efforts on
complying with part 370 rather than on
seeking exceptions to compliance with
part 370. Accordingly, the FDIC
proposes to add a new paragraph (b)(2)
to § 370.6 that would provide covered
institutions that became covered
institutions on the effective date with
the option to extend their April 1, 2020,
compliance date by up to one year (as
late as April 1, 2021) upon notification
to the FDIC. The notification would
need to be provided to the FDIC prior
to the original April 1, 2020, compliance
1. Part 370 Compliance Certification and
Deposit Insurance Summary Report
The proposed amendments to
§ 370.10(a)(1) address the requirements
for the certification of compliance that
a covered institution must submit to the
FDIC upon its initial compliance date
and annually thereafter. The FDIC is
proposing to clarify that the timeframe
within which a covered institution must
implement the capabilities needed to
comply with part 370 and test its IT
system is the ‘‘preceding twelve
months’’ rather than during the
‘‘preceding calendar year.’’ Because a
covered institution’s compliance date
might not coincide with the end of a
calendar year, there was confusion over
whether a covered institution’s self-test
must occur during the calendar year
before a covered institution’s
compliance date even if the compliance
date is in the next calendar year. This
proposed amendment is intended to
clarify that a covered institution must
certify that it has implemented the
capabilities required by part 370 and
has tested those capabilities at least
once during the preceding 12 months.
The FDIC proposes to revise the
testing standard for the certification
from confirmation that a covered
institution has ‘‘successfully tested’’ its
IT system to confirmation that ‘‘testing
indicates that the covered institution is
in compliance . . .’’ because
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C. Compliance
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‘‘successful’’ testing is a subjective
standard. Some covered institutions
have questioned whether testing can be
considered ‘‘successful’’ if they identify
deficiencies in compliance. The
objective of part 370 is for a covered
institution to implement the
recordkeeping and IT system
capabilities that would enable the FDIC
to conduct a deposit insurance
determination for all of a covered
institution’s deposit accounts. To do
this, a covered institution’s IT system
must be capable of calculating deposit
insurance coverage for accounts once all
information needed to do so is available.
The FDIC also proposes to clarify the
standard to which the § 370.10(a)(1)
compliance certification is made by
revising this paragraph to state that the
certification must be made to the best of
the executive’s ‘‘knowledge and belief
after due inquiry.’’ Covered institutions
and their representatives have expressed
concern that the current language could
be viewed as creating a liability
standard by which an executive could
be held liable should the covered
institution experience any deficiency in
compliance. This proposed amendment
would clarify that the executive’s
essential duty is to take reasonable steps
to ensure and verify that the
certification is accurate and complete to
the best of his or her knowledge after
due inquiry.
Questions: The FDIC invites comment
on its proposed amendments to
§ 370.10(a)(1). What level of certainty
should a covered institution’s executive
have that the requirements of part 370
are being met? Are the standards for the
certification clear? Are they
appropriate? If not, why not? What other
changes to this certification requirement
should the FDIC consider making, if
any?
2. Effect of Changes to Law
The FDIC recognizes that future
changes to law could impact a covered
institution’s compliance with the
requirements of part 370 by, among
other things, changing deposit insurance
coverage and related recordkeeping and
calculation requirements. These changes
in law may be made with immediate
effect, yet the covered institutions may
reasonably require time to collect
necessary records and reconfigure their
IT systems to calculate deposit
insurance under the changed laws. The
FDIC is proposing to add a new
paragraph (d) to § 370.10 to address the
effect of changes to law that alter the
availability or calculation of deposit
insurance. This new paragraph (d)
would provide that a covered institution
would not be in violation of part 370 as
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a result of such change in law for such
period as specified by the FDIC
following the effective date of such
change in law. The FDIC would publish
notice of the specified period of time in
the Federal Register.
Questions: The FDIC invites comment
on its proposal to add a new paragraph
(d) to § 370.10 to allow a covered
institution time to consider and address
changes in law that alter the
availability, or calculation of, deposit
insurance and thereby would impact a
covered institution’s compliance with
part 370. Should a minimum period of
time following a change in law be
added? Why? What alternatives, if any,
should the FDIC consider?
3. Effect of Merger Involving a Covered
Institution
Part 370 does not expressly address
mergers. Under the Rule, a covered
institution is required to comply with
the requirements of part 370 on and
after its compliance date without regard
for complications that could be caused
by merger. The covered institution
would need to ensure that it is in
compliance with respect to its newly
acquired deposit accounts and IT
systems unless it had requested and
been granted a time-limited exception
by the FDIC.
The FDIC recognizes that covered
institutions may need time after a
merger to come into compliance with
part 370 again. For that reason, the FDIC
proposes to add a new paragraph (e) to
§ 370.10 to provide a covered institution
with a one-year period following the
effective date of its merger with another
insured depository institution to ensure
that new deposit accounts and IT
systems comply with the requirements
of part 370. This proposed one-year
period would not extend a covered
institution’s preexisting compliance
date; rather, it would provide a one-year
grace period to remedy deficiencies in
compliance resulting from the merger.
In cases where this one-year period is
not sufficient, a covered institution
could request a time-limited exception
for additional time to integrate deposit
accounts or IT systems. To illustrate, if
a covered institution merges with an
insured depository institution that is not
a covered institution, then the covered
institution’s compliance date would not
change, but it would have a one-year
period to bring the deposit accounts
from the merged institution into
compliance with the requirements of
part 370. If two insured depository
institutions, neither a covered
institution, merge to become a covered
institution, then the new covered
institution would be required to comply
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with part 370 by its compliance date
and the one-year grace period provided
under this proposed paragraph would
not be applicable. If two covered
institutions merge, then the one-year
grace period provided under this
proposed paragraph would apply, but
only with respect to instances of noncompliance occurring as the direct
result of the merger.
Questions: The FDIC invites comment
on its proposal to add a new paragraph
(e) to § 370.10 to provide a one-year
grace period for instances of noncompliance following merger. Is a oneyear grace period sufficient? If not, how
much time would be sufficient and why?
Should a grace period be considered for
deposit assumption transactions as
well? What alternatives, if any, should
the FDIC consider?
D. Voluntary Compliance With Part 370
The proposed amendments would
provide a mechanism for voluntary
compliance with part 370, which may
be mutually beneficial to both the FDIC
and certain insured depository
institutions. Part 370 currently defines a
‘‘covered institution’’ as an insured
depository institution that had two
million or more deposit accounts during
the two consecutive quarters preceding
the Rule’s effective date of April 1,
2017, or once it has two million or more
deposit accounts for two consecutive
quarters thereafter. The FDIC proposes
to expand the definition to include any
other insured depository institution that
voluntarily opts into coverage. To do so,
an IDI would deliver written notice to
the FDIC stating that it will voluntarily
comply with the requirements of part
370. Such an insured depository
institution would be considered a
covered institution as of the date on
which the FDIC receives the
notification.
The proposed amendments also
designate a compliance date for insured
depository institutions that voluntarily
become covered institutions pursuant to
the proposed § 370.2(c)(2). The
proposed rule would add a new
paragraph (d)(3) to § 370.2 providing
that the compliance date for such an IDI
would be the date on which the covered
institution submits its first certification
of compliance and deposit insurance
coverage summary report pursuant to
§ 370.10(a). The FDIC recognizes that
while an insured depository institution
could voluntarily become a covered
institution under the proposed
amendments, the FDIC should not
enforce the requirements of the Rule
upon such a covered institution until
after it submits a certification of
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compliance and deposit insurance
coverage report.
As a result of this proposed
amendment, an IDI that is not covered
under part 370 but is covered under
§ 360.9 (a 360.9 institution) could
voluntarily comply with part 370 and be
released from § 360.9, pursuant to
§ 370.8(d), upon submission of the
compliance certification and deposit
insurance summary report to the FDIC
as required under § 370.10(a). A 360.9
institution must continue to comply
with § 360.9 until it meets the
conditions for release. A significant
benefit of this proposed amendment
would be that a banking organization
with one part 370 covered institution
and one 360.9 institution could develop
a single unified deposit recordkeeping
and IT system that would be compliant
with part 370 and no longer have to
maintain a separate, parallel system to
satisfy the requirements of § 360.9.
Questions: The FDIC invites comment
on its proposal to revise § 370.2(c) to
allow an insured depository institution
that does not have two million or more
deposit accounts to voluntarily comply
with part 370. Would insured depository
institutions that are not covered
institutions under part 370 elect to
voluntarily comply? If your banking
organization consists of both a part 370
covered institution and a 360.9
institution, would it consider voluntarily
complying with part 370? What
alternatives, if any, should the FDIC
consider?
E. Transactional Features
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1. Purpose for Identifying Deposit
Accounts With ‘‘Transactional
Features’’
In formulating part 370, the FDIC
recognized that for certain types of
deposit accounts, depositors need daily
access to funds, but deposit insurance
determinations regarding some of these
accounts requires access to records that
an IDI is not required to maintain under
the existing regulatory framework. For
example, deposits may be insured on a
pass-through basis under part 330, with
records maintained outside of the IDI by
an agent or third party authorized to
maintain such records. Creating
appropriate recordkeeping requirements
for those accounts for which the
information need not reside at the
covered institution, and providing for
their timely delivery in a format that
permits the FDIC to use a covered
institution’s IT system to calculate
deposit insurance promptly in the event
of a failure, was a central concern of the
part 370 rulemaking process.
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Originally, in the Advance Notice of
Proposed Rulemaking (ANPR) relating
to part 370,9 the FDIC presented a
potential solution that involved
identifying a large subset of deposits as
‘‘closing night deposits.’’ Under this
approach, the covered institution would
be required to obtain and maintain data
on all closing night deposits at the end
of any business day sufficient to make
deposit insurance determinations on
closing night. Comments to the ANPR
led the FDIC to conclude that there was
no consensus among potential covered
institutions and other interested parties
as to what deposits should be
considered ‘‘closing night deposits.’’
The FDIC proposed, in the Notice of
Proposed Rulemaking for part 370,10
requiring covered institutions to collect
and maintain the necessary depositor
information for all deposit accounts,
with limited exceptions. Commenters
raised concerns about the volume and
nature of data that would be transmitted
nightly under such approach.
In issuing the final rule, the FDIC
adopted a bifurcated approach to
recordkeeping requirements. The FDIC
generally requires that a covered
institution itself maintain the complete
set of information required to allow the
FDIC to promptly determine the deposit
insurance coverage for each deposit
account. But for certain accounts,
including those that may meet the
requirements of §§ 330.5 (Recognition of
deposit ownership and fiduciary
relationship) and 330.7 (Accounts held
by agent, nominee, guardian, custodian
or conservator) and certain trust
accounts, this information may be
maintained off-site and with third
parties rather than at the covered
institution. These accounts are
‘‘alternative recordkeeping’’ accounts
under part 370. The FDIC recognized,
however, that some alternative
recordkeeping accounts may support
depositors’ routine financial needs and
require a prompt deposit insurance
determination to avoid delays in
payment processing should the covered
institution’s deposit operations be
continued by a successor institution.11
The FDIC created a definition of
‘‘transactional features’’ to identify such
accounts and required covered
institutions to certify that, for
9 80
FR 23478 (April 28, 2015).
FR 10026 (February 26, 2016).
11 81 FR 87737, 87740. The successor institution
may be an open institution that acquires these
operations or accepts the transfer of the failed
covered institution’s insured deposit liabilities, or
a bridge bank organized by the FDIC for such
purposes. A failed covered institution’s deposit
operations will not be continued in all potential
resolution scenarios.
10 81
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alternative recordkeeping accounts with
transactional features, the account
holder will submit to the FDIC the
information necessary to complete a
deposit insurance calculation with
regard to the account within 24 hours
following the appointment of the FDIC
as receiver. The FDIC provided a set of
exceptions to this certification
requirement as well.
The proposed amendments would
retain the bifurcated approach to
recordkeeping requirements but change
the definition used to describe accounts
with transactional features, as well as
revise the actions of the covered
institution required with respect to
alternative recordkeeping accounts with
transactional features; the set of
exceptions to the requirements has been
amended as well.
2. Proposed Amendments to the
Definition of ‘‘Transactional Features’’
The proposed amendments would
narrow the definition of transactional
features to focus on accounts capable of
making transfers directly from the
covered institution to third parties by
methods that would necessitate a
prompt insurance determination to
avoid disruptions to payment
processing. Interested parties have
expressed concerns that the current
transactional features definition is overinclusive, capturing accounts for which
the FDIC would not need to make a
deposit insurance determination within
24 hours to achieve its policy goals of
preserving stability and avoiding
disruption to depositors. Under the
existing definition, an account has
transactional features if it can be used
‘‘to make payments or transfers to third
persons or others (including another
account of the depositor or account
holder at the same institution or at a
different institution)’’ by use of any of
a long list of methods. Examples of such
deposit accounts include, but are not
limited to: Deposits placed by third
parties with associated sweep accounts,
whether or not those sweep accounts are
categorized as brokered deposits, and
prepaid accounts.12 The FDIC remains
concerned that if the funds in these
accounts are not accessible on the next
business day after a covered
institution’s failure because the FDIC
cannot complete the deposit insurance
determination, then ‘‘the inability to
access their funds could result in
returned checks and an inability to
handle their day-to-day financial
obligations.’’ 13 This breadth of included
12 81
13 Id.
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transfer methods, together with the
impression that the described set of
transferees is all-inclusive, created the
impression among some interested
parties that the FDIC intended that all
accounts other than some accounts
comprised of time deposits fall into the
transactional features definition.
The FDIC intends that the
transactional features definition itself
capture only the subset of alternative
recordkeeping accounts for which an
insurance determination within 24
hours following its appointment as
receiver is essential to fulfillment of its
policy objectives noted above.
Accordingly, it proposes to amend the
definition to narrow the set of accounts
that are identified as having
transactional features for purposes of
part 370. The proposed amendments
would define transactional features
primarily by reference to the parties
who can receive funds directly from the
account by methods that may not be
reflected in the close-of-business
account balance on the day of initiation
of such transfer. If the account can be
used to make transfers to parties other
than the account holder, the beneficial
owner of the deposits, or the covered
institution itself, by use of a method that
results in the transfer not being reflected
in the close-of-business ledger balance
for the account on the day the transfer
is initiated, it is an account with
transactional features. Generally, under
FDIC rules,14 on the day of failure,
transfers that are included in the closeof-business account balance for an
account will be completed, with funds
transferred out of the account not being
included in the deposit insurance
determination for the account.
Therefore, such transfers will not be
affected by the deposit insurance
determination, and any delay in
completing the deposit insurance
determination for such account will not
create delays in processing payments.
Application of this approach can be
illustrated by two examples. In the first
example, an account that can be used by
the account holder or depositor to
initiate transfers to other parties by
check—a method that may not be
reflected on the day of such transfer is
initiated, even if prior to the cutoff time
for that specific type of transaction—
would be an account with transactional
features under the proposed definition.
This transfer may not be reflected in the
close-of-business ledger balance for the
account when initiated by delivery of
the check to the payee. Under part 370,
the FDIC should receive the information
necessary to complete a deposit
14 See
12 CFR 360.8.
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insurance determination with regard to
such an account within 24 hours
following its appointment as receiver,
providing it the ability to minimize
disruption to payment processing if the
covered institution’s deposit operations
are continued following the resolution.
In the second example, an account that
can only be used to make transfers to
others by wire transfer—a method that
is reflected in the close-of-business
balance for the account if initiated prior
to the cutoff time—is not an account
with transactional features solely as a
result of this transfer capability. The
funds transmitted by a timely initiated
wire are not included in the close-ofbusiness balance for the account, so no
deposit insurance determination with
regard to the account is required in
connection with the processing of that
payment.
The proposed definition of
transactional features contains an
additional provision, intended to
include linked accounts that support
accounts with transactional features.
Under this provision, an account also
has transactional features if
preauthorized or automatic transfer
instructions provide for transfers to an
account with transactional features at
the same institution. These automatic or
preauthorized instructions indicate that
the deposits in such account are integral
to supporting payment processing in the
account with transactional features,
such that completing a deposit
insurance determination in the account
otherwise lacking transactional features
is essential to ensuring continuing
processing of payment instructions at
the account with transactional features.
It is therefore appropriate to subject
such account to the same expectations
regarding timely delivery of the
information needed to conduct a deposit
insurance determination should the
covered institution fail.
Unlike under the current definition,
the capability to make transfers to
another account of the depositor or
account holder at another institution
does not itself result in an account
having transactional features for
purposes of part 370 under the proposed
definition. The prior definition included
such capabilities to capture accounts
associated with brokered sweep
accounts and prepaid account programs
administered by a third party that places
deposits at an IDI on behalf of the
cardholders or other depositors,
regardless of whether such accounts
were traditional transactional accounts,
such as demand deposit accounts, or
money market deposit accounts
(MMDA) or savings accounts not
traditionally considered transactional in
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nature. By including these accounts, the
FDIC sought to enable deposit insurance
determinations within 24 hours
following the FDIC’s appointment based
on its belief that such accounts were
relied upon for transactions and
material delay could undermine public
confidence and be extremely
disruptive.15 In order to achieve this
goal, the final rule required covered
institutions to make certifications,
described below, regarding future
delivery of depositor information by
third parties that are not under the
control of the covered institution or
subject to regulation by the FDIC.
Engagement with deposit brokers,
covered institutions and their
representatives during implementation
suggested that the benefit of these
requirements might be less than
expected, and the burdens of
compliance greater given the wide
variety of account types, third parties,
and arrangements involved.
Many brokered sweep programs and
prepaid card programs operate through
arrangements involving one or more
intermediate or clearing accounts
located at institutions other than the
covered institution. The day-to-day
transactional activity in such programs
can occur in accounts outside of the
covered institution, with the account at
the covered institution being accessed
less frequently. The net activity of all of
the customers in the program
determines whether the periodic
activity in the account at the covered
institution is a deposit or withdrawal.
Covered institutions noted that the other
parties involved in the administration of
such programs, such as the deposit
brokers, broker dealers, program
managers, and administrators, have
ongoing business relationships with the
brokered deposit sweep and prepaid
card customers and with other third
parties involved in processing customer
transactions.
Where customer transactions originate
with an instruction first presented to an
account at an IDI other than the covered
institution, the need to conduct a
deposit insurance determination within
24 hours after the covered institution’s
failure may not exist. According to some
of the covered institutions and other
industry representatives, the net activity
of customers or the schedule for
accessing the account at the covered
institution, may result in no draw on the
account at the covered institution in the
days following failure. Further,
interested parties have stated that
actions by the other parties involved in
the program, such as advancing funds to
15 81
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intermediate accounts during the
pendency of a deposit insurance
determination to preserve customer
relationships, may further ameliorate
any disruption to depositors resulting
from the failure. As a result, requiring
that information needed for deposit
insurance determination be delivered in
such timeframe may be less beneficial
and more burdensome than anticipated.
The proposed definition thus no longer
captures accounts which transfer to
other accounts of the depositors or
account holders at IDIs other than the
covered institution. It is possible that
customers of broker dealers who have
cash management accounts or certain
prepaid cardholders may experience a
delay in their ability to access the funds
in their accounts or that underlie their
cards if the settlement or processing of
their transactions takes place at another
IDI but are funded by deposits held in
the covered institution.
Prepaid cardholders should, however,
have access to the funds loaded on their
cards on the next business day after a
covered institution fails when prepaid
card programs are structured so that the
cardholders’ transactions actually settle
through a deposit account at the covered
institution. Note that the proposed
definition of accounts with
‘‘transactional features’’ includes linked
accounts wholly within the covered
institution, to the extent that those
accounts support an account with
transactional features. Accordingly, a
savings account at the covered
institution that supports, via automatic
or preauthorized instructions, a demand
deposit account at the covered
institution that can be accessed by
prepaid cards or checks—methods that
may not be reflected in the close-ofbusiness ledger balance of the account—
is itself considered an account with
transactional features for purposes of
the proposed definition. Finally, when
the covered institution issues the
prepaid cards and acts as the program
manager of the prepaid account program
(and thus, maintains the requisite
information regarding the prepaid
cardholders), then the prepaid
cardholders would have access to their
funds on the next business day after the
covered institution’s failure.
Questions: The FDIC invites comment
on the proposed definition of
transactional features. Does the
proposed definition improve the
description of such accounts? Is the
focus on whether or not transfers are
reflected in the close-of-business ledger
balance for the account a workable
approach to defining the transfer
capabilities of an account that do not
result in it having transactional
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features? Should other transfers be
included in that category? Is it
reasonable for the FDIC to rely upon the
covered institutions’ and other industry
representatives’ representations
regarding the necessity of funds
availability in these accounts
immediately after failure? Is it possible
for the covered institutions to evaluate
the potential hardship for broker dealer
customers or prepaid cardholders when
the programs are structured so that their
transactions would settle at another IDI?
Should the proposed rule simply remove
the definition of transactional features
and provide that any special
requirements for certain types of deposit
accounts be applicable without regard
for whether the accounts do or do not
have transactional features? What are
the other advantages or disadvantages
of this proposed amendment? What
alternatives, if any, should the FDIC
consider?
3. Actions Required for Certain Deposit
Accounts With Transactional Features
Under § 370.5(a)
As part 370 stands now, for those
deposit accounts that a covered
institution maintains its deposit account
records in accordance with the
alternative recordkeeping requirements
set forth in § 370.4(b)(1) and that also
have transactional features, the covered
institution must certify to the FDIC that
the account holder ‘‘will provide to the
FDIC the information needed . . . to
calculate deposit insurance coverage
. . . within 24 hours after’’ failure.
Covered institutions have expressed
concern that this provision imposes a
duty on a covered institution to control
the actions that an account holder must
take after failure, and that a covered
institution employee who signs the
certification could be liable to the FDIC
if an account holder does not take those
actions. The FDIC designed this
provision with the expectation that
covered institutions would work with
account holders to create a mechanism
by which account holders are able to
provide, upon the covered institution’s
failure, the information necessary for
the covered institution’s IT system to
calculate deposit insurance coverage.
It was not the FDIC’s intent to make
a covered institution or a covered
institution’s employees liable for the
actions, or inactions, of an account
holder. For this reason, the FDIC is
proposing to revise paragraph (a) of
§ 370.5 by removing the certification
requirement and instead requiring
covered institutions to take ‘‘steps
reasonably calculated’’ to ensure that
the account holder would provide to the
FDIC the information needed for the
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FDIC to use a covered institution’s part
370-compliant IT system to accurately
calculate deposit insurance available for
the respective deposit accounts within
24 hours after the failure of the covered
institution. This change should clarify
that the covered institution would be
expected to design and implement in its
IT system the capability to use
information provided by account
holders after the covered institution’s
failure. This change should also clarify
that neither the covered institution nor
its employees would be responsible for
the actions that an account holder does
or does not actually take to supply such
information after the covered
institution’s failure.
Covered institutions would have
discretion to determine the methods by
which this requirement may be
accomplished, but at a minimum ‘‘steps
reasonably calculated’’ would include
having contractual arrangements in
place with account holders that would
obligate those account holders to deliver
information needed for deposit
insurance calculation to the FDIC in a
format compatible with the covered
institution’s IT system immediately
upon the covered institution’s failure
and a disclosure that informs account
holders that their delay in delivery of
information to the FDIC, or submission
in a format that is not compatible with
the covered institution’s IT system,
could result in delayed access to
deposits should the covered institution
fail and the FDIC need to conduct a
deposit insurance determination. This
requirement would apply to any deposit
account for which the details of the
deposit relationship and the interests of
the underlying beneficial owners of the
deposits are not in records maintained
by the covered institution, but in
records maintained by the account
holder or by some person or entity that
has undertaken to maintain such
records for the account holder. There
could be a delay in the availability of
the deposits at the covered institution
because the information needed to
complete the deposit insurance
determination must first be provided by
the account holder. This situation
would apply to any accounts eligible for
pass-through deposit insurance coverage
unless the underlying information
regarding beneficial ownership of
deposits is maintained at the covered
institution.
As a result of the proposed
amendment discussed above, a
conforming amendment would need to
be made to paragraph (c) of § 370.5,
which provides that a covered
institution will not be in violation of
part 370 if the FDIC has granted the
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covered institution relief from the
certification requirement set forth in
§ 370.5(a). The proposed amendment to
§ 370.5(a) would remove the
certification requirement and § 370.5(c)
would no longer be relevant. Therefore,
the FDIC is proposing to remove
paragraph (c) from § 370.5.
Questions: The FDIC invites comment
on its proposal to revise § 370.5(a) to
clarify the actions a covered institution
must take pursuant to that paragraph.
Generally, would a contractual
mechanism between a covered
institution and an account holder that
requires immediate submission of
information needed for deposit
insurance calculation help ensure that
deposit insurance can be determined
quickly for these accounts so that
insured deposits can be made available
as soon as possible? What are the
advantages or disadvantages of adding
this language? Does it provide greater
clarity regarding the requirements and
purpose therefor?
Should this requirement apply to all
alternative recordkeeping accounts or
should it be limited to only those
accounts that meet the revised
definition of transactional features? Is it
more burdensome for covered
institutions and account holders to draw
a distinction between alternative
recordkeeping accounts with
transactional features and those without
than it would be to simply apply the
requirement to all alternative
recordkeeping accounts?
What impediments, if any, prevent a
covered institution from adding
language to certain of its deposit
account agreements to address means
by which an account holder could
submit information to the FDIC after
failure of the covered institution so that
the FDIC, using the capabilities of a
covered institution’s part 370 compliant
IT system, could quickly and accurately
calculate deposit insurance and provide
access to the relevant deposit
account(s)? Would account holders be
more likely to supply information
needed to calculate deposit insurance
coverage in a format compatible with
the covered institution’s IT system
immediately after the covered
institution’s failure if they are
contractually obligated to?
What impediments, if any, prevent a
covered institution from providing
notice to certain account holders that
the account holders’ delay in providing
information to the FDIC after the
covered institution’s failure may delay
access to deposits? Are covered
institutions or their account holders
receptive to the idea of using technology
to expedite the process by which the
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FDIC determines deposit insurance?
What alternatives, if any, should the
FDIC consider if this approach is
unworkable?
4. Exceptions From the Requirements of
§ 370.5(a) for Certain Types of Deposit
Accounts
Currently, § 370.5(b) provides an
enumerated list of accounts that a
covered institution need not address in
order to make the certification required
pursuant to § 370.5(a). The FDIC
proposes to retain this list of excepted
deposit account types to be clear that
covered institutions would not be
required to take the actions prescribed
in revised § 370.5(a) for those types of
accounts. Additionally, the FDIC
proposes to make three revisions to this
list. First, the FDIC is proposing to
expand the exception for mortgage
servicing accounts under § 370.5(b)(1) to
include all deposits in such an account.
Under the Rule, mortgage servicing
accounts are excepted from the
§ 370.5(a) requirement only to the extent
that those accounts are comprised of
principal, interest, taxes, and insurance.
Covered institutions have represented to
the FDIC that deposits for other
purposes, such as reserves, may also be
held in mortgage servicing accounts.
Removing this limitation clarifies that
covered institutions need not take the
actions required under § 370.5(a) with
respect to those accounts.
Second, the FDIC is proposing a
technical amendment to § 370.5(b)(4) to
correct an incorrect cross reference. The
applicable section of the FDIC’s
regulations governing deposit insurance
coverage for deposit accounts held in
connection with an employee benefit
plan is 12 CFR 330.14, not 12 CFR
330.15(f)(2).
Third, the FDIC is proposing to add to
this list deposit accounts maintained by
an account holder for the benefit of
others to the extent that the deposits in
the custodial account are held for: A
formal revocable trust that would be
insured as described in 12 CFR 330.10;
an irrevocable trust that would be
insured as described in 12 CFR 330.12;
or an irrevocable trust that would be
insured as described in 12 CFR 330.13.
The FDIC recognizes that an account
holder that places deposits with a
covered institution on behalf of such a
trust may not be able to immediately
provide to the FDIC all of the
information needed to calculate the total
amount of coverage available for
deposits insured in any one of these
three deposit insurance categories
should the covered institution fail. It
may take some time for an account
holder to obtain such information from
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a trustee, who in turn may need time to
review the relevant trust document and
confirm the status of the trust’s
beneficiaries and the nature of those
beneficiaries’ interests in the assets of
the trust at the time of the covered
institution’s failure. After the
information is submitted by the account
holder, the FDIC will need to review
trust-specific documentation to verify
eligibility for deposit insurance and
calculate the amount of coverage
available. Moreover, including custodial
deposit accounts holding trust deposits
among the list of exceptions set forth in
§ 370.5(b), to the extent that those
accounts are comprised of trust deposits
that would be insured in one of these
three deposit insurance categories,
would be more consistent with the
recordkeeping requirements for trust
accounts set forth in § 370.4(b)(2). This
is the case because deposit accounts for
which a covered institution maintains
its deposit account records in
accordance with § 370.4(b)(2) would be
processed after the information needed
for deposit insurance determination is
provided by the account holder and the
timing for that information submission
is within the account holder’s discretion
and control.
Questions: The FDIC invites comment
on its proposal to revise § 370.5(b) to
add an exception for deposit accounts
with transactional features that are
insured on a pass-through basis, to the
extent that the deposits in that deposit
account are held for the benefit of a
formal revocable trust that would be
insured as described in 12 CFR 330.10,
an irrevocable trust that would be
insured as described in 12 CFR 330.12,
or an irrevocable trust that would be
insured as described in 12 CFR 330.13.
In order to determine whether this
exception would apply, are covered
institutions able to identify the extent to
which such an account is comprised of
deposits that would be insured in one of
the three deposit insurance categories
that provide additional deposit
insurance for trusts? What are the
advantages or disadvantages of this
proposed amendment? Generally, would
delayed access to deposits in these
accounts present hardship to the
account holder or the beneficial
owner(s) of the deposits? What
alternatives, if any, should the FDIC
consider?
Should other types of deposit
accounts be included in the list of
exceptions set forth in § 370.5(b)? Why
should those types of deposit accounts
be excepted? What would be the
consequences of delayed access to the
deposits in those types of deposit
accounts if the account holder does not
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supply information needed for deposit
insurance calculation immediately upon
a covered institution’s failure?
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F. Recordkeeping Requirements
1. Alternative Recordkeeping
Requirements for Certain Trust
Accounts
Part 370 currently provides covered
institutions with the option of meeting
the alternative recordkeeping
requirements set forth in § 370.4(b)(2)
rather than the general recordkeeping
requirements set forth in § 370.4(a) for
certain types of trust deposit accounts.
Specifically, formal revocable trust
deposit accounts that are insured as
described in 12 CFR 330.10 (‘‘REV
accounts,’’ for which the corresponding
right and capacity code is ‘‘REV’’ as set
forth in Appendix A) and irrevocable
trust deposit accounts that are insured
as described in 12 CFR 330.13 (‘‘IRR
accounts,’’ for which the corresponding
right and capacity code is ‘‘IRR’’ as set
forth in Appendix A) are eligible for
alternative recordkeeping under
§ 370.4(b)(2). Covered institutions must
meet the general recordkeeping
requirements set forth in § 370.4(a) with
respect to irrevocable trust deposit
accounts that are insured as described
in 12 CFR 330.12 (‘‘DIT accounts,’’ for
which the corresponding right and
capacity code is ‘‘DIT’’ as set forth in
Appendix A). It is the FDIC’s
expectation that, where a covered
institution is the trustee for an
irrevocable trust, the covered institution
will have the information needed to
calculate the amount of deposit
insurance coverage for such trust’s
deposit account(s) at any given time.
This information would be, among other
things, the identities of trust
beneficiaries and their respective
interests. The FDIC recognizes that the
covered institution as trustee would
need to be able to monitor for changes
in facts that impact deposit insurance
coverage afforded to the trust and
update its deposit account records when
such changes occur in order for the
covered institution’s IT system to
accurately calculate deposit insurance
coverage within the first 24 hours after
failure should the covered institution be
placed in receivership.
Representatives of covered
institutions have explained to FDIC staff
that updating deposit account records
continuously could be overly
burdensome or impracticable in some
cases, and that there may be a
significant lag between the time at
which a change occurs, the time at
which the covered institution as trustee
becomes aware of the change, and the
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time at which the covered institution
can update its deposit account records
accordingly for purposes of part 370.
The FDIC acknowledges that covered
institutions face challenges in meeting
the general recordkeeping requirements
for these accounts but seeks to gain a
better understanding of the
impediments a covered institution faces
in its efforts to update deposit account
records upon changes in facts affecting
deposit insurance coverage for DIT
accounts. The FDIC also seeks to gain a
better understanding of the adverse
impact of delay in the ability to access
and use deposits in a DIT account while
the deposit insurance determination is
pending. The FDIC is proposing to
revise § 370.4(b)(2) to include DIT
accounts as another category of deposit
accounts for which a covered institution
may meet the alternative recordkeeping
requirements rather than the general
recordkeeping requirements should it
find that such change is justified. For
DIT accounts specifically, a covered
institution would not need to maintain
the unique identifier of the grantor(s),
however, because DIT accounts are
insured without regard to the rule for
aggregation by grantor applicable in the
IRR and REV categories for deposit
insurance. To conform with this
proposed amendment, § 370.4 would be
revised by removing paragraph
(a)(1)(iv), which currently requires a
covered institution to maintain in its
deposit account records for each DIT
account the unique identifier for the
trust’s grantor and each trust
beneficiary.
The FDIC is also proposing a
technical amendment to
§ 370.4(b)(2)(iii) to replace the
requirement that a covered institution
maintain in its deposit account records
for certain trust deposit accounts the
corresponding ‘‘pending reason’’ code
from data field 2 of the pending file
format set forth in Appendix B. Instead,
§ 370.4(b)(2)(iii) of the proposed rule
would require covered institutions to
maintain in the respective deposit
account records the corresponding
‘‘right and capacity code’’ from data
field 4 of the pending file format set
forth in Appendix B. Covered
institutions should be able to identify
which of the right and capacity codes
apply for deposit accounts that fall into
this recordkeeping category. This
determination can be made based on the
titling of the deposit account or
documentation maintained in a covered
institution’s deposit account records
concerning the relationship between the
covered institution and the named
account holder.
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Questions: The FDIC invites comment
on its proposal to revise § 370.4(b)(2) to
include irrevocable trust deposit
accounts that are insured as described
in 12 CFR 330.12. What are the
advantages or disadvantages of allowing
a covered institution to maintain in its
deposit account records less than all of
the information needed to calculate
deposit insurance coverage for such
deposit accounts? What impediments
does a covered institution face in its
efforts to update deposit account
records upon a change in facts and
circumstances affecting deposit
insurance coverage for DIT accounts?
Will delayed access to deposits in DIT
accounts present hardship to the
respective trusts while the deposit
insurance determination is pending?
What alternatives, if any, should the
FDIC consider?
Under § 370.4(b)(2)(ii), a covered
institution is required to maintain the
unique identifier of the grantor of a trust
in its deposit account records for certain
trust accounts. Covered institutions
have represented that the identity of a
trust’s grantor is not typically
maintained in an IDI’s records. The
FDIC invites comment on this
requirement. What types of trust
accounts is this the case for? Would it
be difficult for covered institutions to
obtain the grantor’s identity in order to
assign a unique identifier if identifying
information is not maintained in the
deposit account records for certain
types of trust accounts?
2. Recordkeeping Requirements for
Deposits Resulting From Credit
Balances on an Account for Debt Owed
to the Covered Institution
During the FDIC’s outreach calls and
meetings with many covered
institutions, the covered institutions
described many functional and
operational impediments to their ability
to comply with the various
recordkeeping requirements of § 370.4.
Generally, when the covered institution
maintains the requisite depositor
information in its own records to
perform the deposit insurance
calculation, the FDIC would expect the
covered institution to comply with
§ 370.4(a) of the regulation. Other types
of accounts, like agent or fiduciary
accounts (based on pass-through deposit
insurance principles), certain trust
accounts, and official items, have
already been addressed in §§ 370.4(b)
and (c). However, another
recordkeeping problem raised by the
covered institutions occurs when a
borrower of a covered institution has a
credit balance on a debt owed to a
covered institution. For example, if a
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bank customer/credit cardholder has a
positive balance on a credit card
account after returning merchandise and
receiving a credit to the account, then
that credit amount would be recognized
as the customer’s ‘‘deposit’’ at the
covered institution. In accordance with
§ 3(l)(3) of the FDI Act, such an
overpayment on a debt owed to a
covered institution would constitute a
deposit.16 The FDIC must include (and
aggregate, if necessary) such a deposit in
order to perform a deposit insurance
determination in the event of a covered
institution’s failure.
Upon initial review, it would appear
that a covered institution should be able
to comply with the requirements of
§ 370.4(a) because the covered
institution will presumably have in its
IT system(s) all of the relevant
information regarding the depositor
(created by making an overpayment on
his or her outstanding debt with the
covered institution). The problem, as
described to the FDIC by various
covered institutions, is that the requisite
information regarding the ownership of
the deposit, the amount of the deposit
as well as other relevant information
such as a unique identifier, would be
maintained on a covered institution’s
loan platform rather than on any of its
deposit systems. Moreover, the deposit
platforms are not necessarily linked or
integrated in any way with a covered
institution’s various loan platforms. The
covered institutions have informed the
FDIC that it would be unduly expensive
for them to integrate or link the various
loan platforms with their deposit
systems based on their assertions that
not many of the credit balances are very
high; i.e., much lower than the SMDIA.
Therefore, they question the need to
incur the cost to integrate the loan
platforms with the deposit systems.
The FDIC understands that for an
individual loan account, the amount of
a customer’s credit balance may not
seem significant. Nevertheless, if the
FDIC were obligated to conduct a
deposit insurance determination upon
the failure of a covered institution, part
of that process would require the FDIC
to include and aggregate the credit
balance/deposit with any other deposit
accounts owned by that particular
depositor held in the same right and
capacity. For example, a depositor could
have a deposit of $250,000 in the
covered institution in the individual
right and capacity as well as a credit
balance of several thousand dollars. If
the FDIC is unable to identify the credit
balance and aggregate that amount with
the other deposit funds held in the
16 12
U.S.C. 1813(l)(3).
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covered institution in the same right
and capacity, then the FDIC will pay out
uninsured deposits to that individual
depositor. While several thousand
dollars might not seem to be significant
with respect to one depositor, the FDIC
would risk overpaying a number of
depositors if it were not possible for the
FDIC to restrict access to the credit
balances on all affected accounts until a
full deposit insurance determination
could be completed. In the aggregate,
the amount of overpayment could be
significant. Additionally, the covered
institutions have asserted that this
operational issue applies to all of their
various loan platforms, including credit
cards, home equity lines of credit
(HELOCs), automobile loans, and
mortgage loans. Again, in the aggregate,
overpayments on a number of accounts
across many different loan platforms
could result in a significant pay out of
uninsured funds to the failed covered
institution’s depositors. Such a result
would be in contravention of the FDIC’s
statutory mandate to make payment of
‘‘insured deposits . . . as soon as
possible.’’ 17
In order to address the covered
institutions’ concerns, the FDIC is
proposing to add a new paragraph (d) to
§ 370.4. Covered institutions would not
be required to comply with the
recordkeeping requirements of
§ 370.4(a) even though they maintain
the depositor information necessary to
perform a deposit insurance
determination on their internal IT
systems—just not their deposit
platforms. In lieu of integrating their
various loan platforms with their
deposit systems, the covered
institutions would be required to
address the issue of credit balances
existing on their loan platforms in
another manner.
Section 370.4(d)(1) would require that
immediately upon a covered
institution’s failure, its IT system(s)
must be capable of restricting access to
(i) any credit balance reflected on a
customer’s account associated with a
debt obligation to the covered
institution or (ii) an equal amount in the
customer’s deposit account at the
covered institution. The FDIC believes
that it would be preferable for the
covered institutions to be able to restrict
access to the credit balances on the
associated loan platform. Over the
closing weekend, if access to the credit
balance is not restricted, then the credit
cardholder, for example, would be able
to charge expenses to the credit card
account which would, in effect,
eliminate the credit balance. The
17 12
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elimination of the credit balance
represents a payment of deposit
insurance. If the credit cardholder’s
deposit account funds are also released
‘‘as soon as possible,’’ then the outflow
of deposit insurance funds could result
in a payment of uninsured funds to that
depositor and credit cardholder.
Many of the covered institutions have
asserted that it is not possible to restrict
access to the credit balances associated
with their customers’ loan accounts.
The alternative approach would be for
the covered institution’s IT system to be
able to restrict access to an amount
equal to the credit balance on the
customer’s deposit account at the
covered institution. This second option
raises a concern that the requisite
information from the covered
institution’s loan platform regarding the
identity of the customer/depositor, the
amount of the credit balance, and the
appropriate right and capacity will not
be available in time to restrict access to
an equivalent amount in the
corresponding deposit account. The
FDIC’s objective is to make funds in
transactional accounts available to a
failed covered institution’s depositors
by the next business day. If the funds in
deposit accounts are released before the
amount of the credit balance is
restricted, then the FDIC would again be
faced with the possibility that
uninsured funds would be paid to the
failed covered institution’s depositors.
Nevertheless, § 370.4(d)(1)(ii) allows the
covered institution to ensure that its IT
system would be capable of restricting
access to an amount equal to the
overpayment in the customer’s deposit
account instead.
In order to complete the deposit
insurance determination, a covered
institution must be able to extract the
requisite information from the data on
its loan platforms to create a file listing
the credit balances on the loan accounts
as well as the other data fields as set
forth in the file included as Appendix
C to this regulation. The file included as
Appendix C to this part 370 is derived
from the ‘‘Broker Input File
Requirements’’ set forth in Section V of
the FDIC’s Deposit Broker’s Processing
Guide. Additionally, a field to identify
the ownership right and capacity code
has been included. The FDIC
determined that it would be appropriate
to include the file as part of the
regulation because its use in this context
is somewhat different than its
customary use for third parties that have
deposited funds on behalf of others and
who maintain the records identifying
the underlying beneficial owners. In the
situation where the covered institution’s
loan customer has a credit balance
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which is recognized as a deposit, the
covered institution actually maintains
the necessary information to enable its
IT system to perform the deposit
insurance calculation; the requisite data
is housed, however, on a different loan
platform. The FDIC would expect the
covered institution’s IT system, which
must be compliant with § 370.3(b), to be
able to accept and process the file as
formatted in Appendix C. In contrast,
while the FDIC suggests that deposit
brokers and other account holders
acting as agents or fiduciaries submit
their depositors’ information in the
format set forth in the Deposit Broker’s
Processing Guide, a third party deposit
broker or agent for a beneficial owner is
not required to provide the deposit
ownership information in that format.
Most of these third party deposit brokers
are not subject to the FDIC’s supervision
or regulation.
Section 370.4(d)(2)(i) would require
the covered institution to be able to
generate a file in the format set forth in
Appendix C within 24 hours of failure
for all credit balances related to openend loans (revolving credit lines) such
as credit card accounts and HELOCs. In
other words, the 24-hour requirement
would apply to any type of consumer
loan account where the customer or
borrower has the ability to draw on the
credit line without the prior approval or
intervention of the covered institution.
This time frame would be necessary to
ensure that the FDIC would have
sufficient time, after the covered
institution’s failure, to identify the loan
customers with credit balances, match
them to their corresponding deposit
accounts, and restrict access to an
amount equal to the overpayment in the
customer’s deposit account before the
next business day. As mentioned
previously, it is always the FDIC’s goal
to make insured funds available to all
depositors of a failed insured depository
institution as soon as possible, ideally
on the next business day after failure.
Nevertheless, if this process does not
work as intended, then the FDIC will be
unable to make deposit insurance
payments without the potential for
overpayment.
With respect to all other types of loan
accounts with overpayments,
§ 370.4(d)(2)(ii) would require the
covered institution to be able to generate
a file in the format set forth in Appendix
C promptly after the covered
institution’s failure. For closed-end loan
accounts, where the borrower has paid
more than the balance owed or the
outstanding principal balance, the credit
balances would not be available or
accessible to the customer without the
covered institution’s authorization or
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initiation of the payment. Examples of
such loan accounts would include a
final payment on a mortgage loan or
auto loan which exceeds the payoff
amount. Because the credit balance
would not be readily available to the
customer prior to the final deposit
insurance calculation, from the FDIC’s
perspective, there would not be as much
urgency to receive and process the file
as provided in Appendix C.
Questions: The FDIC requests
comment on this proposal to allow
recordkeeping for deposits reflected as
credit balances on a debt account
pursuant to a different procedure. Could
covered institutions produce the file set
forth in Appendix C to be used by the
covered institution’s IT system to
calculate deposit insurance coverage
within the first 24 hours after the
covered institution’s failure? Should this
time frame apply to credit balances on
both open-end and closed-end loan
accounts? What are the approximate
costs and IT challenges of developing
the capabilities to restrict access to
credit balances as reflected on the loan
account platforms? Are there other
examples of either closed-end or openend loan products that should be
explicitly recognized or mentioned?
G. Relief
1. Exception Requests Generally
The FDIC is proposing to revise
§ 370.8(b) to clarify the required
elements of a covered institution’s
exception request. The FDIC also
proposes to revise the Rule to expressly
allow submission of a request by more
than one covered institution for
exception from one or more of the
Rule’s requirements. While part 370
currently does not preclude this, the
FDIC is proposing this revision to
expressly permit a joint submission
because some scenarios under which a
grant of exception would be appropriate
would be common to multiple covered
institutions. Submission of a joint
exception request would allow covered
institutions to better manage resources,
and it would allow the FDIC to
streamline exception determinations.
Each covered institution would still be
required to submit the institutionspecific data required to substantiate the
request as required under current
§ 370.8(b).
Questions: The FDIC invites comment
on its proposal to revise § 370.8(b)(1).
Would this proposed clarification
reduce burden for covered institutions
generally? Would covered institutions
coordinate to submit joint exception
requests?
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2. Publication of FDIC’s Response to
Exception Requests
The FDIC also proposes to add a new
paragraph (b)(2) to § 370.8 to provide
that the FDIC will publish in the
Federal Register a notice of its response
to each exception request. This change
would facilitate transparency and
enable covered institutions to better
understand the types of requests that the
FDIC would grant or deny and the
reasons therefor. The FDIC’s notice of
exception would not disclose the
identity of the requesting covered
institution(s), nor any confidential or
material nonpublic information.
Questions: The FDIC invites comment
on its proposal to revise § 370.8 by
adding a new paragraph (b)(2). Should
the FDIC publish notice of all
exceptions requested? Should the FDIC
publish only exceptions that are granted
and not those that are denied? Is there
a reason that the FDIC should not
publish notice of its response to
exceptions requested by covered
institutions?
3. Certain Exceptions Deemed Granted
The FDIC is proposing a new
paragraph (b)(3) to § 370.8 that would
allow a covered institution to notify the
FDIC that, based on substantially similar
facts and the same circumstances as
presented in the notice published by the
FDIC pursuant to § 370.8(b)(2) in the
proposed rule, the covered institution
elects to use the same exception. Such
exception would be considered granted
subject to the same conditions stated in
the FDIC’s published notice unless the
FDIC informs the covered institution to
the contrary within 120 days after
receipt of the covered institution’s
notification letter. Under this proposed
amendment, the covered institution’s
notification letter would need to include
the information required under
§ 370.8(b)(1), cite the applicable notice
of exception published pursuant to
§ 370.8(b)(2), and demonstrate how the
covered institution’s exception is based
upon substantially similar facts and the
same circumstances as described in the
applicable notice published by the
FDIC. The FDIC believes that
§ 370.8(b)(3) of the proposed rule would
provide covered institutions with more
flexibility and clarity regarding
exceptions to part 370’s requirements. It
would also minimize time spent by
FDIC and covered institutions alike on
processing this type of exception
request.
Questions: The FDIC invites comment
on its proposal to revise § 370.8 to add
this new paragraph (b)(3). Is
‘‘substantially similar facts and the
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same circumstances’’ a reasonable basis
for deeming an exception granted? Is the
120-day time frame for FDIC to notify a
covered institution to the contrary
sufficient? Is this time frame too long or
too short? What alternatives, if any,
should the FDIC consider?
H. Technical Modifications
1. Technical Amendment To Revise
§ 370.1 ‘‘Purpose and Scope’’
The FDIC is proposing a technical
amendment to § 370.1 to correct a cross
reference. The applicable paragraph in
which the term ‘‘covered institution’’ is
defined is § 370.2(c), not § 370.2(a).
2. Technical Amendment To Remove
Definition of ‘‘Brokered Deposit’’ From
§ 370.2
The FDIC is proposing a technical
amendment to § 370.2(b) to remove the
definition of ‘‘brokered deposit’’
because that term is not used in the
regulatory text of part 370. Paragraph (b)
of § 370.2 references 12 CFR 337.6(a)(2),
the source for the substantive definition
of the term. This paragraph would be
reserved for future use, if needed.
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3. Technical Amendment To Revise
Recordkeeping Requirements for
Official Items
Under § 370.4(c), a covered institution
is required to maintain in its deposit
account records the information needed
for its IT system to calculate deposit
insurance coverage with respect to
payment instruments drawn on an
account of the covered institution such
as a cashier’s check, teller’s check,
certified check, personal money order,
or foreign draft (commonly referred to as
‘‘official items’’). Such payment
instruments represent deposit liabilities
of the covered institution to the
respective payees. To illustrate the types
of payment instruments that could be
used to draw on the account, this
paragraph contains a non-exhaustive list
of examples, concluding with ‘‘or any
similar payment instrument that the
FDIC identifies in guidance issued to
covered institutions in connection with
this part.’’ The FDIC recognizes that the
inclusion of this language would
incorporate guidance, which does not
carry the force and effect of law, into a
regulatory requirement and proposes
that this reference to future guidance be
removed. The FDIC seeks to minimize
the confusion between rules duly issued
through notice and comment
rulemaking and agency guidance.
Therefore, the FDIC proposes that this
reference to future guidance be
removed.
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4. Technical Amendment To Revise IT
System Requirements
The FDIC is proposing to amend
§ 370.3(a) by adding a reference to the
proposed new paragraph (d) in § 370.4,
which addresses recordkeeping
treatment for deposits resulting from
credit balances on an account for debt
owed to a covered institution. For such
deposits, a covered institution’s IT
system must be able to meet the
requirements set forth in § 370.3(b), as
modified by the proposed new
paragraph (d) in § 370.4, after the
covered institution’s IT system
generates an input file containing the
data elements needed to calculate
deposit insurance coverage factoring in
those credit balances. Covered
institutions that implement this
mechanism would develop the
capability for their IT systems to
produce the necessary data. The data
would not be supplied by the account
holder (in this situation the debtor listed
on the account for debt owed to a
covered institution), but by a covered
institution’s IT system itself using
information maintained in its records
for the respective debt account. For this
reason, the FDIC proposes to strike the
reference to information collected ‘‘from
the account holders’’ in the last
sentence of § 370.3(a). Instead, the
sentence would read ‘‘. . . information
collected after failure . . .’’ because
additional information needed to
calculate deposit insurance for accounts
for which the general recordkeeping
requirements set forth in 370.4(a) are
not met may be supplied by the
respective account holders, but may also
be supplied by an additional data
production process developed by a
covered institution.
5. Technical Amendment To Revise
General Recordkeeping Requirements
The FDIC is proposing to add a new
paragraph (d) in § 370.4, which
addresses recordkeeping treatment for
deposits resulting from credit balances
on an account for debt owed to a
covered institution. As a result,
§ 370.4(a) would need to be amended to
include a reference to that new
paragraph. To the extent that a covered
institution elects to meet the
recordkeeping requirements set forth in
the proposed new § 370.4(d), it would
not need to meet the general
recordkeeping requirements set forth in
§ 370.4(a).
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6. Technical Amendment To Revise
370.8(d) Regarding Release From 12
CFR 360.9
The FDIC is proposing a technical
amendment to § 370.8(d) to clarify that
a covered institution that is released
from § 360.9 under § 370.8(d) remains
released from § 360.9 only for so long as
it is a covered institution as defined by
part 370. If a part 370 covered
institution released from § 360.9 ceases
to be a part 370 covered institution, and
would otherwise be a 360.9 institution,
then it must comply with the
requirements of § 360.9 (unless it has
independent basis for exemption from
§ 360.9).
7. Technical Amendment To Revise
§ 370.10(b) ‘‘FDIC Testing’’
The FDIC is proposing a technical
amendment to § 370.10(b)(1) to clarify
that material changes to a covered
institution’s IT system, deposit-taking
operations, or financial condition
occurring after the covered institution’s
compliance date could result in more
frequent testing. The FDIC does not
expect to conduct compulsory testing on
the basis of changes to a covered
institution’s IT system, deposit-taking
operations, or financial condition before
a covered institution’s compliance date.
A covered institution’s compliance date
may be accelerated, however, on the
conditions specified in § 370.7 regarding
accelerated implementation.
8. Technical Amendment To Revise
§ 370.7(a)(2)
In 2018, 12 CFR parts 324 and 325
were revised to consolidate the prompt
corrective action capital category
definitions into 12 CFR part 324. The
FDIC is proposing a technical
amendment to § 370.7(a)(2) to revise the
cross reference by 12 CFR part 324
instead of 12 CFR part 325.
9. Technical Amendment To Revise
‘‘Appendix B to Part 370—Output Files
Structure’’
Appendix B to part 370 provides basic
templates for four information files that
a covered institution’s IT system must
be able to produce during its process for
calculating deposit insurance. These
files must be retained afterward as a
record of the calculation. Some of the
data that would be included in these
files is essential for deposit insurance
calculation, while some is non-essential
but nonetheless useful. The FDIC is
proposing to revise these data file
templates to indicate what data is nonessential and therefore may be omitted
while the covered institution does not
have the information needed to
populate the field.
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Questions: The FDIC invites comment
on its proposal to revise these data file
templates to indicate which data fields
must be populated by the covered
institution’s IT system and which data
fields should be populated if the
covered institution has such data. Has
the FDIC identified any fields for which
a ‘‘null value’’ is not permissible, but for
which a covered institution does not
maintain the relevant data? If so, why
doesn’t the covered institution maintain
that data?
IV. Expected Effects
The proposed rule is likely to benefit
covered institutions by reducing
compliance burdens associated with
part 370. Additionally, the proposed
rule is likely to benefit financial market
participants by helping to support
prompt determination of deposit
insurance in the event a covered
institution fails. The Rule requires all
IDIs with two million or more deposit
accounts to have complete deposit
insurance information, by ownership
right and capacity, except as otherwise
permitted. As of December 31, 2018,
there were 36 covered institutions. The
compliance date for these covered
institutions is April 1, 2020. Although
the compliance date of April 1, 2020,
has not yet been reached, we consider
the effects of the proposed rule relative
to a baseline that includes the cost to
covered institutions estimated for
compliance with the Rule. The FDIC
estimates that part 370 will result in
compliance costs of $362.4 million for
36 FDIC-insured institutions.18 The
proposed amendments will likely
mitigate some of those costs.
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A. Benefits
As discussed earlier, the proposed
rule would offer covered institutions
that became covered institutions on the
effective date the option to extend their
April 1, 2020, compliance date by up to
one year. The option of extending the
implementation period would grant
covered institutions that elect to extend
their compliance date greater flexibility
to comply with part 370 in a manner
that would be less burdensome.
Feedback the FDIC has received from
covered institutions suggests that they
18 The 2016 Final Rule estimated total costs of
$478 million, with $386 million of those costs to
38 covered financial institutions and the remainder
borne by the FDIC and account holders. See 12 CFR
part 370 RIN 3064–AE33, Recordkeeping for Timely
Deposit Insurance Determination, Federal Register,
Vol. 81, No. 233, Monday, December 5, 2016 for
further discussion of the cost estimation model. For
this proposed rule, the FDIC updated the list of
covered institutions to 36 as of the effective date of
the 2016 Final Rule. The FDIC also updated the
data in the model to December 31, 2018.
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would benefit from this proposal. It is
difficult to quantify how much covered
institutions would benefit from this
compliance date extension option
because the FDIC does not know how
many institutions will elect to use it or
the progress they may have already
made towards compliance.
Similarly, streamlining the exception
request process is expected to reduce
the costs to covered institutions for
obtaining exceptions from the Rule’s
requirements. The FDIC does not know
how many covered institutions will
request such relief, so the benefits of
this portion of the proposed rule are
difficult to quantify.
As discussed previously, the part 370
does not provide for an adjustment
period for a covered institution to
comply with part 370 after a merger has
occurred. The proposed rule amends
part 370 to give covered institutions
involved in a merger a one-year grace
period for compliance violations. This
additional relief for merger activity
would grant covered institutions greater
flexibility to comply with part 370 in a
manner that is less burdensome, thereby
potentially reducing compliance costs.
It is difficult to estimate the benefits this
proposed amendment would provide
covered institutions because it is
difficult to estimate the volume of future
merger activity or the extent to which
additional efforts would be needed to
integrate deposit account recordkeeping
or IT system capabilities.
The proposed amendments address
recordkeeping concerns for several
types of accounts and would reduce the
associated recordkeeping burdens.
These include accounts where
electronic evidence of an account
relationship exists, certain trust
accounts, certain accounts with
transactional features that are eligible
for pass-through deposit insurance,
mortgage servicing accounts, and others.
These proposed amendments would
likely benefit covered institutions by
reducing their total compliance costs
without unduly increasing the risk of
untimely deposit insurance payments;
however, it is difficult to quantify these
benefits because the FDIC does not
currently have access to data on the
number of such accounts held by
covered institutions.
The proposed rule also improves the
clarity of certain part 370 provisions
and makes corrections. This is expected
to benefit covered institutions by
reducing uncertainty regarding
compliance with part 370. The benefits
to covered institutions of these
proposed amendments is difficult to
quantify because the FDIC does not have
access to data that would shed light on
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the extent to which compliance costs by
covered institutions were increased as a
result of uncertainty.
The reductions in recordkeeping
requirements associated with the
proposed rule would likely reduce the
current estimated compliance burdens
associated with part 370. It is difficult
to estimate the benefits each covered
institution is likely to incur as a result
of the proposed rule because the
estimation depends upon the progress
each covered institution has already
made toward compliance, and the
likelihood that a covered institution
would avail itself of the benefits offered
by the proposed amendments, among
other things. Additionally, it is difficult
to estimate the benefits each covered
institution would be likely to enjoy as
a result of the proposed rule because the
FDIC does not currently have access to
data on the number of accounts held by
covered institutions for which these
benefits would accrue.
For all the reasons described in this
section, quantitative estimates of the
reduction in recordkeeping burden
under the proposed rule are subject to
uncertainty. That being said, an analysis
of deposit account information at
covered institutions suggested that the
proposed rule could affect an estimated
one to 20 percent of accounts on average
for covered institutions.19 The realized
effect would vary depending upon the
types of accounts that a covered
institution holds. The more accounts a
covered institution has, the greater the
reduction in recordkeeping
requirements these proposed
amendments would likely provide. To
conservatively estimate the expected
benefits of the proposed rule, the FDIC
assumed that the reduced recordkeeping
requirements would affect between one
and 20 percent of all deposit accounts
at covered institutions. Therefore, the
proposed rule is estimated to reduce the
compliance burden of part 370 to
between 41,738 and 836,028 hours for
all covered institutions, which equates
to an estimated reduction in compliance
costs of between $2.0 million and $41.8
million.
19 The FDIC analyzed the dollar volume of
retirement, mortgage servicing, and trust accounts
as reported on the December 31, 2018, Call Report
for covered institutions. Additionally, the FDIC
analyzed pre-paid card account data from The
Nilson Report’s, Top 50 U.S. Prepaid Card Issuers
July 2015, Issue 1067 to determine an estimated
range of deposit accounts at covered institutions
that might be affected by the proposed rule.
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B. Costs
to be gained by the proposed approach.
The FDIC considered limiting the
availability of the alternative
recordkeeping requirements for deposits
resulting from credit balances on
accounts for debt owed to the covered
institution to overpayments on credit
card accounts, but rejected this
approach as the same difficulties that
justified this alternative could arise in
connection with other debts to the
covered institution. The FDIC
considered not requiring covered
institutions to deliver notification letters
to the FDIC prior to relying on
exceptions granted to other covered
institutions, but rejected this approach
due to the FDIC’s need to be aware of
which covered institutions are relying
on previously granted exceptions.
The FDIC invites comment on these
alternatives and any others not
discussed in this section.
The proposed rule is unlikely to
impose any significant costs to covered
institutions. The proposed rule would
offer covered institutions that became
covered institutions on the effective
date the option to extend their April 1,
2020, compliance date by up to one
year. Expanding the time to comply
with part 370 would increase the risk
that a covered institution might fail
without having fully implemented the
capabilities that part 370 calls for. An
inability to make timely deposit
insurance determinations for deposit
accounts at a covered institution could
increase the potential for disruptions to
check clearing processes, direct debit
arrangements, or other payment system
functions. However, the FDIC does not
believe that the incremental costs or
risks of extending the initial compliance
date for up to one additional year are
large. Also, the FDIC presumes that
covered institutions have made some
progress toward compliance in the past
two to three years, likely mitigating the
issues that would be associated with
recordkeeping deficiencies in the event
that a covered institution were to fail.
Finally, to the extent that covered
institutions have made some progress
toward compliance with part 370, the
proposed rule may pose some small
costs associated with requisite changes
to part 370 compliance efforts. However,
the FDIC believes that these costs are
likely to be small. The FDIC estimates
that covered institutions requesting
exception from certain part 370
requirements will expend 60 labor
hours doing so on average.
The FDIC invites comment on the
information presented in this section.
Are there any other costs or benefits the
FDIC should consider?
amozie on DSK9F9SC42PROD with PROPOSALS2
V. Alternatives Considered
The FDIC considered several
alternatives while developing this
proposal. The FDIC first considered
leaving part 370 unchanged. The FDIC
rejected this alternative because the
proposed rule would benefit covered
institutions by reducing compliance
burdens or clarifying some of the
requirements while still supporting a
prompt deposit insurance determination
process in the event of failure. The FDIC
considered providing a one-year
extension to all covered institutions that
were covered institutions as of the
effective date of part 370, but opted
instead for the elective extension as the
burden of obtaining the extension is
minimal and is outweighed by the value
of earlier compliance and the
information regarding compliance status
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VI. Regulatory Analysis and Procedures
A. Paperwork Reduction Act
Certain provisions of the proposed
rule contain ‘‘collection of information’’
requirements within the meaning of the
Paperwork Reduction Act (PRA) of 1995
(44 U.S.C. 3501–3521). In accordance
with the requirements of the PRA, the
agencies may not conduct or sponsor,
and the respondent is not required to
respond to, an information collection
unless it displays a currently-valid
Office of Management and Budget
(OMB) control number. The information
collection related to this proposed rule
is entitled ‘‘Recordkeeping for Timely
Deposit Insurance Determination’’ and
has been cleared by OMB under Control
Number 3064–0202. This information
collection will be extended for three
years, with revision. The information
collection requirements contained in
this proposed rule have been submitted
by the FDIC to OMB for review and
approval under section 3507(d) of the
PRA (44 U.S.C. 3507(d)) and section
1320.11 of the OMB’s implementing
regulations (5 CFR 1320).
Comments are invited on:
• Whether the collections of
information are necessary for the proper
performance of the Board’s functions,
including whether the information has
practical utility;
• The accuracy or the estimate of the
burden of the information collections,
including the validity of the
methodology and assumptions used;
• Ways to enhance the quality, utility,
and clarity of the information to be
collected;
• Ways to minimize the burden of the
information collections on respondents,
including through the use of automated
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collection techniques or other forms of
information technology; and
• Estimates of capital or startup costs
and costs of operation, maintenance,
and purchase of services to provide
information.
All comments will become a matter of
public record. Comments on aspects of
this notice that may affect reporting,
recordkeeping, or disclosure
requirements and burden estimates
should be sent to the addresses listed in
the ADDRESSES section of this document.
A copy of the comments may also be
submitted to the OMB desk officer by
mail to U.S. Office of Management and
Budget, 725 17th Street NW, #10235,
Washington, DC 20503; facsimile to
(202) 395–6974; or email to oira_
submission@omb.eop.gov, Attention,
FDIC Desk Officer.
Proposed Information Collection
Title of Information Collection:
Recordkeeping for Timely Deposit
Insurance Determination.
Frequency: On occasion.
Affected Public: Insured depository
institutions having two million or more
deposit accounts and their depositors.20
Current Action: The proposed rule is
estimated to reduce recordkeeping and
reporting requirements by 418,026
hours or $20.9 million dollars. The
proposed rule would reduce compliance
burdens for covered institutions
associated with recordkeeping and
reporting in the following ways:
• Removing the certification
requirement covered institutions must
make with respect to deposit accounts
with transactional features that would
be eligible for pass-through deposit
insurance coverage;
• Enabling covered institutions to
maintain deposit account records for
certain trust accounts in accordance
with the alternative recordkeeping
requirements set forth in § 370.4(b)(2)
rather than the general recordkeeping
requirements set forth in § 370.4(a);
• Offering a different recordkeeping/
reporting method for deposits created as
a result of credit balances on accounts
for debt owed to a covered institution;
• Enabling covered institutions to file
joint requests for exception pursuant to
§ 370.8(b); and
• Deeming certain exceptions granted
if based on substantially similar facts
and the same circumstances as a request
previously granted by the FDIC.
20 Covered institutions will, as necessary, contact
their depositors to obtain accurate and complete
account information for deposit insurance
determinations. For the purposes of this analysis,
the FDIC assumes that depositors will voluntarily
respond.
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An analysis of deposit account
information at covered institutions
suggested that the proposed rule could
affect an estimated one to 20 percent of
accounts on average, for covered
institutions.21 The realized effect would
vary depending upon the types of
accounts that a covered institution
offers. The more deposit accounts a
covered institution has, the greater the
reduction in recordkeeping
requirements these proposed
amendments would provide. To
conservatively estimate the expected
benefits of the proposed rule, the FDIC
assumed that between one and 20
percent of all deposit accounts at
covered institutions would be affected.
For the purposes of the Paperwork
Reduction Act, the FDIC estimates that
approximately 10 percent of nonretirement accounts consist of the type
of accounts for which the FDIC has
granted relief. The number of accounts
affects only one of eight components of
the burden model for the final rule for
part 370 adopted in 2016 (the 2016
Final Rule): Legacy Data Clean-up. This
component consists of two portions: (1)
Automated clean-up, and (2) manual
clean-up. The number of accounts
affects only the manual portion
associated with correcting bank records,
and thus the proposed rule would affect
only that estimate.
Using this adjusted burden as a
baseline for the burden reduction of the
proposed rule, we estimate that the
proposed rule would reduce the
implementation burden by 418,026
hours. This includes 418,058 of burden
reduction but adds 32 hours of
additional burden for requests for
extensions and exemptions under the
proposed rule. The proposed rule would
not change the annual ongoing burden.
For the purpose of the 2016 Final
Rule, the FDIC estimated that manual
data clean-up would involve a 60
percent ratio of internal to external
labor, and that this labor would cost $65
per hour and $85 per hour, respectively.
The FDIC assumed that 5 percent of
deposit accounts had erroneous account
information and that manual labor
would correct 10 accounts per hour of
effort. The FDIC also assumed that for
every hour of manual labor used by
covered institutions, depositors would
also exert one hour toward correcting
account information at a national
average wage rate of $27 per hour. From
this, the FDIC estimated a total
implementation cost of manual data
clean-up of $207.4 million.
As with the burden hours, the FDIC
adjusted the original burden model to
account for updated data and included
IDIs that were actually covered by the
Rule as a new baseline. After this
adjustment, the FDIC estimates that the
cost of manual data clean-up fell to
$188.1 million, a decrease of $20.9
million because of the proposed rule.
Methodology
In estimating the costs of part 370, the
FDIC engaged the services of an
independent consulting firm. Working
with the FDIC, the consultant used its
extensive knowledge and experience
with IT systems at financial institutions
to develop a model to provide cost
estimates for the following activities:
• Implementing the deposit insurance
calculation
• Legacy data clean-up
• Data extraction
• Data aggregation
• Data standardization
• Data quality control and compliance
• Data reporting
• Ongoing operations
Cost estimates for these activities
were derived from a projection of the
types of workers needed for each task,
an estimate of the amount of labor hours
required, an estimate of the industry
average labor cost (including benefits)
Number of
respondents 24
14827
for each worker needed, and an estimate
of worker productivity. The analysis
assumed that manual data clean-up
would be needed for 5 percent of
deposit accounts, 10 accounts per hour
would be resolved, and internal labor
would be used for 60 percent of the
clean-up. This analysis also projected
higher costs for IDIs based on the
following factors:
• Higher number of deposit accounts
• Higher number of distinct core
servicing platforms
• Higher number of depository legal
entities or separate organizational
units
• Broader geographic dispersal of
accounts and customers
• Use of sweep accounts
• Greater degree of complexity in
business lines, accounts, and
operations.
Approximately half of part 370’s
estimated total costs are attributable to
legacy data clean-up. These legacy data
clean-up cost estimates are sensitive to
both the number of deposit accounts
and the number of deposit IT systems.
More than 90 percent of the legacy data
clean-up costs are associated with
manually collecting account
information from customers and
entering it into the covered institutions’
IT systems. Data aggregation, which is
sensitive to the number of deposit IT
systems, makes up about 13 percent of
the Rule’s estimated costs.
The 2016 Final Rule estimated total
costs of $478 million, with $386 million
of those costs to 38 covered financial
institutions and the remainder borne by
the FDIC and account holders.22 For this
proposed rule, the FDIC updated the list
of covered institutions to 36 as of the
effective date of the 2016 Final Rule and
the types of accounts covered. The FDIC
also updated the data in the model to
December 31, 2018.
Estimated
average
hours per
response 25
Estimated
annual
frequency
Estimated
total annual
burden hours
amozie on DSK9F9SC42PROD with PROPOSALS2
Implementation Burden 23
2016 Final Rule:
Lowest Complexity Institutions .................................................................
Middle Complexity Institutions ..................................................................
Highest Complexity Institutions ................................................................
21 The FDIC analyzed the dollar volume of
retirement, mortgage servicing, and trust accounts
as reported on the December 31, 2018, Call Reports
for covered institutions.
22 See 81 FR 87734 (December 5, 2016) for further
discussion of the cost estimation model.
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Jkt 247001
12
13
13
23 Implementation costs and hours are spread
over a three-year period.
24 None of the respondents required to comply
with the Rule are small entities as defined by the
Small Business Administration (i.e., entities with
less than $550 million in total assets).
PO 00000
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Fmt 4701
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1
1
1
31,054
46,342
325,494
372,648
602,446
4,231,422
25 Weighted average rounded to the nearest hour.
For PRA purposes, covered institutions are
presented in roughly equal-sized low, medium and
high complexity tranches ranked by their PRA
implementation hours.
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Estimated
average
hours per
response 25
Estimated
annual
frequency
Number of
respondents 24
Estimated
total annual
burden hours
2016 Final Rule Total ........................................................................
38
........................
137,014
5,206,516
Updated Data and Coverage: 26
Lowest Complexity Institutions .................................................................
Middle Complexity Institutions ..................................................................
Highest Complexity Institutions ................................................................
12
12
12
1
1
1
30,304
58,113
355,132
363,648
697,356
4,261,584
Updated Data and Coverage Total ...................................................
36
1
147,850
5,322,588
Change from Updated Data .......................................................
¥2
........................
........................
116,072
Proposed Rule less Exceptions:
Lowest Complexity Institutions .................................................................
Middle Complexity Institutions ..................................................................
Highest Complexity Institutions ................................................................
12
12
12
1
1
1
28,304
53,643
326,764
339,648
643,716
3,921,168
Proposed Rule Total less Exceptions ...............................................
36
1
136,237
4,904,532
Exceptions or Release: 27
Requests for Release of Requirements ...................................................
Requests for Exception ............................................................................
1
1
1
1
5
60
5
60
........................
........................
........................
4,904,608
0
........................
........................
(417,980)
2016 Final Rule:
Lowest Complexity Institutions .................................................................
Middle Complexity Institutions ..................................................................
Highest Complexity Institutions ................................................................
12
13
13
1
1
1
493.1
516.7
566.6
5,917
6,718
7,365
Proposed Rule Total .........................................................................
38
........................
526
20,000
Updated Data and Coverage:
Lowest Complexity Institutions .................................................................
Middle Complexity Institutions ..................................................................
Highest Complexity Institutions ................................................................
12
12
12
1
1
1
487
488
558
5,844
5,856
6,696
Updated Data and Coverage Total ...................................................
36
........................
511
18,396
Change .......................................................................................
¥2
........................
........................
(1,604)
Proposed Rule:
Lowest Complexity Institutions .................................................................
Middle Complexity Institutions ..................................................................
Highest Complexity Institutions ................................................................
12
12
12
1
1
1
487
488
558
5,844
5,856
6,696
Updated Data and Coverage Total ...................................................
36
........................
511
18,396
Change from Proposed Rule .....................................................
0
........................
........................
0
Change from Proposed Rule .............................................................
Ongoing Burden
amozie on DSK9F9SC42PROD with PROPOSALS2
The implementation costs for all
covered institutions are estimated to
26 This section incorporates changes to the
baseline estimate of Rule burden based on changes
in the number of covered institutions as well as
changes to the data inputs for the burden model.
The 2016 Final Rule estimated 38 IDIs would be
covered. As of April 1, 2017, the effective date of
the Rule, only 32 IDIs were covered by the Rule.
Four additional IDIs became covered by the Rule in
later quarters for a total of 36 covered institutions.
This section uses bank-level data from December
31, 2018, updating the original burden estimate
based on December 31, 2016, data.
27 The proposed rule allows for covered
institutions to request exceptions from Rule
requirements or extensions of time to comply. The
FDIC cannot estimate how many covered
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total $362.4 million and require
approximately 4.9 million labor hours.
This represents a decline of $20.9
million and 417,980 labor hours for
covered institutions due to the proposed
rule. The implementation costs cover (1)
making the deposit insurance
calculation, (2) legacy data cleanup, (3)
data extraction, (4) data aggregation, (5)
data standardization, (6) data quality
control and compliance, and (7) data
reporting.
institutions will request such exceptions or
extensions.
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In terms of initial implementation, the
estimated PRA burden for individual
covered institutions after enacting the
proposed rule would require between
9,056 and 275,112 burden hours, and
these burden hours would be monetized
to range from $757,851 to $31.0 million.
This represents a decline for covered
institutions of 675 to 29,007 burden
hours and $33,787 to $532,873 million,
respectively.
The estimated ongoing burden on
individual covered institutions for
reporting, testing, maintenance, and
other periodic items is estimated to
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range between 481 and 666 labor hours,
and these ongoing burden hours are
monetized to be between $72,146 and
$99,865 annually. The ongoing cost
burdens remain the same.
ESTIMATED MONETIZED COSTS BY COMPONENT
2016
final rule
Updated data
and coverage
Proposed
rule
Component
cost **
Component
cost **
Component
cost **
amozie on DSK9F9SC42PROD with PROPOSALS2
Components
Change in cost
from proposed
rule
Legacy Data Cleanup ......................................................................
Data Aggregation .............................................................................
Data Standardization .......................................................................
Data Extraction ................................................................................
Quality Control & Compliance .........................................................
Insurance Calculation ......................................................................
Reporting .........................................................................................
$226,482,333
64,015,373
36,573,894
25,397,761
18,403,006
9,500,400
5,971,800
$227,449,750
62,707,618
35,811,558
25,073,291
18,024,478
8,584,000
5,661,000
$206,547,385
62,707,618
35,811,558
25,073,291
18,024,478
8,548,000
5,661,000
($20,902,365)
0
0
0
0
0
0
Implementation Costs ......................................................................
$367,936,888
$383,311,695
$362,409,330
($20,902,365)
Ongoing Operations .........................................................................
2,999,963
2,758,899
2,758,899
0
Total Cost .................................................................................
$389,344,530
$386,070,594
$365,168,229
0
Change from Updating Data .............................................
............................
($3,273,936)
............................
............................
Change from Proposed Rule .....................................
............................
............................
($20,902,365)
............................
The estimated annual burden for the
‘‘Recordkeeping for Timely Deposit
Insurance Determination’’ information
collection (OMB Control Number 3064–
0202) if the proposed rule is adopted
would be as follows:
Implementation Burden: 28
Estimated number of respondents: 36
covered institutions and their
depositors.
Estimated time per response: 29
136,237 hours (average).
Low complexity: 11,946–41,406 hours.
Medium complexity: 41,947–74,980
hours.
High complexity: 75,404–762,185
hours.
Estimated total implementation
burden: 4.9 million hours.
Ongoing Burden:
Estimated number of respondents: 36
covered institutions and their
depositors.
Estimated time per response: 511
hours (average) per year.
Low complexity: 433–530 hours.
Medium complexity: 434–530 hours.
High complexity: 435–661 hours.
Estimated total ongoing annual
burden: 18,396 hours per year.
Description of Collection: Part 370
requires a covered institution to (1)
maintain complete and accurate data on
each depositor’s ownership interest by
right and capacity for all of the covered
28 Implementation costs and hours are spread
over a three-year period.
29 For PRA purposes, covered institutions are
presented in roughly equal-sized low, medium and
high complexity tranches ranked by their PRA
implementation hours.
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institution’s deposit accounts, except as
provided, and (2) configure its IT system
to be capable of calculating the insured
and uninsured amount in each deposit
account by ownership right and
capacity, which would be used by the
FDIC to make deposit insurance
determinations in the event of the
covered institution’s failure.
These requirements also must be
supported by policies and procedures
and will involve ongoing burden for
testing, reporting to the FDIC, and
general maintenance of recordkeeping
and IT systems’ functionality. Estimates
of both initial implementation and
ongoing burden are provided.
Compliance with part 370 would
involve certain reporting requirements:
• Not later than ten business days
after the effective date of the final rule
or after becoming a covered institution,
a covered institution shall designate a
point of contact responsible for
implementing the requirements of this
rulemaking.
• Covered institutions would be
required to certify annually that their IT
systems can calculate deposit insurance
coverage accurately and completely
within the 24 hour time frame set forth
in the final rule. If a covered institution
experiences a significant change in its
deposit taking operations, it may be
required to demonstrate more frequently
than annually that its IT system can
calculate deposit insurance coverage
accurately and completely.
• In connection with the certification,
covered institutions shall complete a
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deposit insurance coverage summary
report.
• Covered institutions may seek relief
from any specific aspect of the final
rule’s requirements if circumstances
exist that would make it impracticable
or overly burdensome to meet those
requirements. When doing so, they must
demonstrate the need for exception,
describe the impact of an exception on
the ability to quickly and accurately
calculate deposit insurance for the
related deposit accounts, and state the
number of, and the dollar value of
deposits in, the related deposit
accounts.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA),
5 U.S.C. 601 et seq., generally requires
an agency, in connection with a
proposed rule, to prepare and make
available an initial regulatory flexibility
analysis that describes the impact of a
proposed rule on small entities.30
However, a regulatory flexibility
analysis is not required if the agency
certifies that the rule will not have a
significant economic impact on a
substantial number of small entities.
The Small Business Administration
(SBA) has defined ‘‘small entities’’ to
include banking organizations with total
assets of less than or equal to $550
million who are independently owned
and operated or owned by a holding
30 5
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U.S.C. 601 et seq.
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company with less than $550 million in
total assets.31
The FDIC insures 5,486 institutions,
of which 4,047 are considered small
entities for the purposes of RFA.32
This proposed rule will affect all
insured depository institutions that
have two million or more deposit
accounts. The FDIC does not currently
insure any institutions with two million
or more deposit accounts that have $550
million or less in total consolidated
assets.33 Since this proposal does not
affect any institutions that are defined
as small entities for the purposes of the
RFA, the FDIC certifies that the
proposed rule will not have a significant
economic impact on a substantial
number of small entities.
The FDIC invites comments on all
aspects of the supporting information
provided in this RFA section. In
particular, would this proposal have any
significant effects on small entities that
the FDIC has not identified?
C. Plain Language
Section 722 of the Gramm-LeachBliley Act (Pub. L. 106–102, 113 Stat.
1338, 1471) requires the Federal
banking agencies to use plain language
in all proposed and final rules
published after January 1, 2000. The
FDIC has sought to present the proposed
rule in a simple and straightforward
manner.
The FDIC invites your comments on
how to make this revised proposal
easier to understand. For example:
• Has the FDIC organized the
material to suit your needs? If not, how
could the material be better organized?
• Are the requirements in the
proposed regulation clearly stated? If
not, how could the regulation be stated
more clearly?
• Does the proposed regulation
contain language or jargon that is
unclear? If so, which language requires
clarification?
• Would a different format (grouping
and order of sections, use of headings,
paragraphing) make the regulation
easier to understand?
D. Treasury and General Government
Appropriations Act, 1999—Assessment
of Federal Regulations and Policies on
Families
The FDIC has determined that the
proposed rule will not affect family
well-being within the meaning of § 654
of the Treasury and General
Government Appropriations Act,
enacted as part of the Omnibus
Consolidated and Emergency
Supplemental Appropriations Act of
1999 (Pub. L. 105–277, 112 Stat. 2681).
List of Subjects in 12 CFR Part 370
Bank deposit insurance, Banks,
banking, Reporting and recordkeeping
requirements, Savings associations.
Authority and Issuance
For the reasons set forth in the
preamble, the Federal Insurance Deposit
Corporation proposes to amend 12 CFR
part 370 by revising it to read as follows:
■
PART 370—RECORDKEEPING FOR
TIMELY DEPOSIT INSURANCE
DETERMINATION
Sec.
370.1 Purpose and scope.
370.2 Definitions.
370.3 Information technology system
requirements.
370.4 Recordkeeping requirements.
370.5 Actions required for certain deposit
accounts with transactional features.
370.6 Implementation.
370.7 Accelerated implementation.
370.8 Relief.
370.9 Communication with the FDIC.
370.10 Compliance.
Appendix A to Part 370—Ownership Right
and Capacity Codes
Appendix B to Part 370—Output Files
Structure
Appendix C to Part 370—Credit Balance
Processing File Structure
Authority: 12 U.S.C. 1817(a)(9), 1819
(Tenth), 1821(f)(1), 1822(c), 1823(c)(4).
§ 370.1
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31 The
SBA defines a small banking organization
as having $550 million or less in assets, where ‘‘a
financial institution’s assets are determined by
averaging the assets reported on its four quarterly
financial statements for the preceding year.’’ See 13
CFR 121.201 (as amended, effective December 2,
2014). ‘‘SBA counts the receipts, employees, or
other measure of size of the concern whose size is
at issue and all of its domestic and foreign
affiliates.’’ See 13 CFR 121.103. Following these
regulations, the FDIC uses a covered institution’s
affiliated and acquired assets, averaged over the
preceding four quarters, to determine whether the
covered institution is ‘‘small’’ for the purposes of
RFA.
32 Call Report data, September 30, 2018, the latest
date for which bank holding company data is
available.
33 FDIC Call Report data, December 31, 2018.
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Purpose and scope.
Unless otherwise provided in this
part, each ‘‘covered institution’’
(defined in § 370.2(c)) is required to
implement the information technology
system and recordkeeping capabilities
needed to calculate the amount of
deposit insurance coverage available for
each deposit account in the event of its
failure. Doing so will improve the
FDIC’s ability to fulfill its statutory
mandates to pay deposit insurance as
soon as possible after a covered
institution’s failure and to resolve a
covered institution at the least cost to
the Deposit Insurance Fund.
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§ 370.2
Definitions.
For purposes of this part:
(a) Account holder means the person
or entity who has opened a deposit
account with a covered institution and
with whom the covered institution has
a direct legal and contractual
relationship with respect to the deposit.
(b) [Reserved.]
(c) Covered institution means:
(1) An insured depository institution
which, based on its Reports of
Condition and Income filed with the
appropriate federal banking agency, has
2 million or more deposit accounts
during the two consecutive quarters
preceding the effective date of this part
or thereafter; or
(2) Any other insured depository
institution that delivers written notice
to the FDIC that it will voluntarily
comply with the requirements set forth
in this part.
(d) Compliance date means, except as
otherwise provided in § 370.6(b):
(1) April 1, 2020, for any insured
depository institution that was a
covered institution as of April 1, 2017;
(2) The date that is three years after
the date on which an insured depository
institution becomes a covered
institution; or
(3) The date on which an insured
depository institution that elects to be a
covered institution under § 370.2(c)(2)
files its first certification of compliance
and deposit insurance coverage
summary report pursuant to § 370.10(a).
(e) Deposit has the same meaning as
provided under section 3(l) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(l)).
(f) Deposit account records has the
same meaning as provided in 12 CFR
330.1(e).
(g) Ownership rights and capacities
are set forth in 12 CFR part 330.
(h) Payment instrument means a
check, draft, warrant, money order,
traveler’s check, electronic instrument,
or other instrument, payment of funds,
or monetary value (other than currency).
(i) Standard maximum deposit
insurance amount (or SMDIA) has the
same meaning as provided pursuant to
section 11(a)(1)(E) of the Federal
Deposit Insurance Act (12 U.S.C.
1821(a)(1)(E)) and 12 CFR 330.1(o).
(j) Transactional features with respect
to a deposit account means that the
account holder or the beneficial owner
of deposits can make transfers from the
deposit account to parties other than the
account holder, beneficial owner of
deposits, or the covered institution
itself, by methods that may result in
such transfers being reflected in the
end-of-day ledger balance for such
deposit account on a day that is later
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than the day that such transfer is
initiated, even if initiated prior to the
institution’s normal cutoff time for such
transaction. A deposit account also has
transactional features if preauthorized
or automatic instructions provide for
transfer of deposits in the deposit
account to another deposit account at
the same institution, if such other
deposit account itself has transactional
features.
(k) Unique identifier means an alphanumeric code associated with an
individual or entity that is used
consistently and continuously by a
covered institution to monitor the
covered institution’s relationship with
that individual or entity.
§ 370.3 Information technology system
requirements.
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(a) A covered institution must
configure its information technology
system to be capable of performing the
functions set forth in paragraph (b) of
this section within 24 hours after the
appointment of the FDIC as receiver. To
the extent that a covered institution
does not maintain its deposit account
records in the manner prescribed under
§ 370.4(a) but instead in the manner
prescribed under § 370.4(b), (c) or (d),
the covered institution’s information
technology system must be able to
perform the functions set forth in
paragraph (b) of this section upon input
by the FDIC of additional information
collected after failure of the covered
institution.
(b) Each covered institution’s
information technology system must be
capable of:
(1) Accurately calculating the deposit
insurance coverage for each deposit
account in accordance with 12 CFR part
330;
(2) Generating and retaining output
records in the data format and layout
specified in Appendix B;
(3) Restricting access to some or all of
the deposits in a deposit account until
the FDIC has made its deposit insurance
determination for that deposit account
using the covered institution’s
information technology system; and
(4) Debiting from each deposit
account the amount that is uninsured as
calculated pursuant to paragraph (b)(1)
of this section.
§ 370.4
Recordkeeping requirements.
(a) General recordkeeping
requirements. Except as otherwise
provided in paragraphs (b), (c), and (d)
of this section, a covered institution
must maintain in its deposit account
records for each account the information
necessary for its information technology
system to meet the requirements set
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forth in § 370.3. The information must
include:
(1) The unique identifier of each:
(i) Account holder;
(ii) Beneficial owner of a deposit, if
the account holder is not the beneficial
owner; and
(iii) Grantor and each beneficiary, if
the deposit account is held in
connection with an informal revocable
trust that is insured pursuant to 12 CFR
330.10 (e.g., payable-on-death accounts,
in-trust-for accounts, and Totten Trust
accounts).
(2) The applicable ownership right
and capacity code listed and described
in Appendix A to this part.
(b) Alternative recordkeeping
requirements. As permitted under this
paragraph, a covered institution may
maintain in its deposit account records
less information than is required under
paragraph (a) of this section.
(1) For each deposit account for
which a covered institution’s deposit
account records disclose the existence
of a relationship which might provide a
basis for additional deposit insurance in
accordance with 12 CFR 330.5 or 330.7
and for which the covered institution
does not maintain information that
would be needed for its information
technology system to meet the
requirements set forth in § 370.3, the
covered institution must maintain, at a
minimum, the following in its deposit
account records:
(i) The unique identifier of the
account holder; and
(ii) The corresponding ‘‘pending
reason’’ code listed in data field 2 of the
pending file format set forth in
Appendix B (and need not maintain a
‘‘right and capacity’’ code).
(2) For each formal revocable trust
account that is insured as described in
12 CFR 330.10 and for each irrevocable
trust account that is insured as
described in either 12 CFR 330.12 or 12
CFR 330.13, and for which the covered
institution does not maintain the
information that would be needed for its
information technology system to meet
the requirements set forth in § 370.3, the
covered institution must, at a minimum,
maintain in its deposit account records:
(i) The unique identifier of the
account holder;
(ii) The unique identifier of the
grantor if the deposit account has
transactional features (unless the
account is insured as described in 12
CFR 330.12, in which case the unique
identifier of the grantor need not be
maintained for purposes of this part);
and
(iii) The corresponding ‘‘right and
capacity’’ code listed in data field 4 of
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14831
the pending file format set forth in
Appendix B.
(c) Recordkeeping requirements for
official items. A covered institution
must maintain in its deposit account
records the information needed for its
information technology system to meet
the requirements set forth in § 370.3
with respect to accounts held in the
name of the covered institution from
which withdrawals are made to honor a
payment instrument issued by the
covered institution, such as a certified
check, loan disbursement check, interest
check, traveler’s check, expense check,
official check, cashier’s check, money
order, or similar payment instrument.
To the extent that the covered
institution does not have such
information, it need only maintain in its
deposit account records for those
accounts the corresponding ‘‘pending
reason’’ code listed in data field 2 of the
pending file format set forth in
Appendix B (and need not maintain a
‘‘right and capacity’’ code).
(d) Recordkeeping requirements for
deposits resulting from credit balances
on an account for debt owed to the
covered institution. A covered
institution is not required to meet the
recordkeeping requirements of
paragraphs (a) or (b) of this section with
respect to deposit liabilities reflected as
credit balances on an account for debt
owed to the covered institution if its
information technology system is
capable of:
(1) Immediately upon failure,
restricting access to:
(i) Such credit balances on the
account for debt owed to the covered
institution, or
(ii) An equal amount in that
borrower’s deposit account(s) at the
covered institution; and
(2) Producing:
(i) Within 24 hours after failure, a file
listing credit balances on open-end
credit accounts (revolving credit lines)
such as credit card accounts and home
equity lines of credit in the format
provided in Appendix C to this part 370
that can be used by the covered
institution’s information technology
system to meet the requirements set
forth in § 370.3(b)(1), (2) and (4); and
(ii) Promptly after failure, a file listing
the credit balances on closed-end loan
accounts in the format provided in
Appendix C to this part 370 that can be
used by the covered institution’s
information technology system to meet
the requirements set forth in
§ 370.3(b)(1), (2) and (4).
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(iii) An irrevocable trust that would
be insured as described in 12 CFR
330.13.
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§ 370.5 Actions required for certain
deposit accounts with transactional
features.
(a) For each deposit account with
transactional features for which the
covered institution maintains its deposit
account records in accordance with
§ 370.4(b)(1), a covered institution must
take steps reasonably calculated to
ensure that the account holder will
provide to the FDIC the information
needed for the covered institution’s
information technology system to
calculate deposit insurance coverage as
set forth in § 370.3(b) within 24 hours
after the appointment of the FDIC as
receiver. At a minimum, ‘‘steps
reasonably calculated’’ shall include:
(1) Contractual arrangements with the
account holder that obligate the account
holder to deliver information needed for
deposit insurance calculation to the
FDIC in a format compatible with the
covered institution’s information
technology system immediately upon
the covered institution’s failure; and
(2) A disclosure stating that the
account holder’s delay in delivery of
such information, or the account
holder’s delivery of information in a
format that is not compatible with the
covered institution’s information
technology system, could result in
delayed access to deposits should the
covered institution fail.
(b) A covered institution need not
take the steps required pursuant to
paragraph (a) of this section with
respect to:
(1) Accounts maintained by a
mortgage servicer, in a custodial or
other fiduciary capacity, which are
comprised of payments by mortgagors;
(2) Accounts maintained by real estate
brokers, real estate agents, or title
companies in which funds from
multiple clients are deposited and held
for a short period of time in connection
with a real estate transaction;
(3) Accounts established by an
attorney or law firm on behalf of clients,
commonly known as an Interest on
Lawyers Trust Accounts, or functionally
equivalent accounts;
(4) Accounts held in connection with
an employee benefit plan (as defined in
12 CFR 330.14); and
(5) An account maintained by an
account holder for the benefit of others,
to the extent that the deposits in the
account are held for the benefit of:
(i) A formal revocable trust that would
be insured as described in 12 CFR
330.10;
(ii) An irrevocable trust that would be
insured as described in 12 CFR 330.12;
or
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§ 370.6
Implementation.
(a) A covered institution must satisfy
the information technology system and
recordkeeping requirements set forth in
this part before the compliance date.
(b) Extension.
(1) A covered institution may submit
a request to the FDIC for an extension
of its compliance date. The request shall
state the amount of additional time
needed to meet the requirements of this
part, the reason(s) for which such
additional time is needed, and the total
number and dollar value of accounts for
which deposit insurance coverage could
not be calculated using the covered
institution’s information technology
system were the covered institution to
fail as of the date of the request. The
FDIC’s grant of a covered institution’s
request for extension may be
conditional or time-limited.
(2) An insured depository institution
that became a covered institution on
April 1, 2017, may extend its
compliance date for up to one year upon
written notice to the FDIC prior to April
1, 2020. Such notice shall state the total
number of, and dollar amount of
deposits in, deposit accounts for which
the covered institution’s information
technology system cannot calculate
deposit insurance coverage as of April 1,
2020.
§ 370.7
Accelerated implementation.
(a) On a case-by-case basis, the FDIC
may accelerate, upon notice, the
implementation time frame for all or
part of the requirements of this part for
a covered institution that:
(1) Has a composite rating of 3, 4, or
5 under the Uniform Financial
Institution’s Rating System (CAMELS
rating), or in the case of an insured
branch of a foreign bank, an equivalent
rating;
(2) Is undercapitalized, as defined
under the prompt corrective action
provisions of 12 CFR part 324; or
(3) Is determined by the appropriate
federal banking agency or the FDIC in
consultation with the appropriate
federal banking agency to be
experiencing a significant deterioration
of capital or significant funding
difficulties or liquidity stress,
notwithstanding the composite rating of
the covered institution by its
appropriate federal banking agency in
its most recent report of examination.
(b) In implementing this section, the
FDIC must consult with the covered
institution’s appropriate federal banking
agency and consider the complexity of
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the covered institution’s deposit system
and operations, extent of the covered
institution’s asset quality difficulties,
volatility of the institution’s funding
sources, expected near-term changes in
the covered institution’s capital levels,
and other relevant factors appropriate
for the FDIC to consider in its role as
insurer of the covered institution.
§ 370.8
Relief.
(a) Exemption. A covered institution
may submit a request in the form of a
letter to the FDIC for an exemption from
this part if it demonstrates that it does
not take deposits from any account
holder which, when aggregated, would
exceed the SMDIA for any owner of the
funds on deposit and will not in the
future.
(b) Exception. (1) One or more
covered institutions may submit a
request in the form of a letter to the
FDIC for exception from one or more of
the requirements set forth in this part if
circumstances exist that would make it
impracticable or overly burdensome to
meet those requirements. The request
letter must:
(i) Identify the covered institution(s)
requesting the exception;
(ii) Specify the requirement(s) of this
part from which exception is sought;
(iii) Describe the deposit accounts the
request concerns and state the number
of, and dollar amount of deposits in,
such deposit accounts for each covered
institution requesting the exception;
(iv) Demonstrate the need for
exception for each covered institution
requesting the exception; and
(v) Explain the impact of the
exception on the ability of each covered
institution’s information technology
system to quickly and accurately
calculate deposit insurance for the
related deposit accounts.
(2) The FDIC shall publish a notice of
its response to each exception request in
the Federal Register.
(3) By following the procedure set
forth in this paragraph, a covered
institution may rely upon another
covered institution’s exception request
which the FDIC has previously granted.
The covered institution must notify the
FDIC that it will invoke relief from
certain part 370 requirements by
submitting a notification letter to the
FDIC demonstrating that the covered
institution has substantially similar
facts and the same circumstances as
those of the covered institution that has
already received the FDIC’s approval.
The covered institution’s notification
letter must also include the information
required under paragraph (b)(1) of this
section and cite the applicable notice
published pursuant to paragraph (b)(2)
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of this section. The covered institution’s
notification for exception shall be
deemed granted subject to the same
conditions set forth in the FDIC’s
published notice unless the FDIC
informs the covered institution to the
contrary within 120 days after receipt of
a complete notification for exception.
(c) Release from this part. A covered
institution may submit a request in the
form of a letter to the FDIC for release
from this part if, based on its Reports of
Condition and Income filed with the
appropriate federal banking agency, it
has less than two million deposit
accounts during any three consecutive
quarters after becoming a covered
institution.
(d) Release from 12 CFR 360.9
requirements. A covered institution is
released from the provisional hold and
standard data format requirements of 12
CFR 360.9 upon submitting to the FDIC
the compliance certification required
under § 370.10(a). A covered institution
released from 12 CFR 360.9 under this
paragraph (d) shall remain released for
so long as it is a covered institution.
(e) FDIC approval of a request. The
FDIC will consider all requests
submitted in writing by a covered
institution on a case-by-case basis in
light of the objectives of this part, and
the FDIC’s grant of any request made by
a covered institution pursuant to this
section may be conditional or timelimited.
§ 370.9
Communication with the FDIC.
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(a) Point of contact. Not later than ten
business days after either the effective
date of this part or becoming a covered
institution, a covered institution must
notify the FDIC of the person(s)
responsible for implementing the
recordkeeping and information
technology system capabilities required
by this part.
(b) Address. Point-of-contact
information, reports and requests made
under this part shall be submitted in
writing to: Office of the Director,
Division of Resolutions and
Receiverships, Federal Deposit
Insurance Corporation, 550 17th Street
NW, Washington, DC 20429–0002.
§ 370.10
Compliance.
(a) Certification and report. A covered
institution shall submit to the FDIC a
certification of compliance and a
deposit insurance coverage summary
report on or before its compliance date
and annually thereafter.
(1) The certification must:
(i) Confirm that the covered
institution has implemented all required
capabilities and tested its information
technology system during the preceding
twelve months;
(ii) Confirm that such testing indicates
that the covered institution is in
compliance with this part; and
(iii) Be signed by the covered
institution’s chief executive officer or
chief operating officer and made to the
best of his or her knowledge and belief
after due inquiry.
(2) The deposit insurance coverage
summary report must include:
(i) A description of any material
change to the covered institution’s
information technology system or
deposit taking operations since the prior
annual certification;
(ii) The number of deposit accounts,
number of different account holders,
and dollar amount of deposits by
ownership right and capacity code (as
listed and described in Appendix A);
(iii) The total number of fully-insured
deposit accounts and the total dollar
amount of deposits in all such accounts;
(iv) The total number of deposit
accounts with uninsured deposits and
the total dollar amount of uninsured
amounts in all of those accounts; and
(v) By deposit account type, the total
number of, and dollar amount of
deposits in, deposit accounts for which
the covered institution’s information
technology system cannot calculate
deposit insurance coverage using
information currently maintained in the
covered institution’s deposit account
records.
(3) If a covered institution experiences
a significant change in its deposit taking
operations, the FDIC may require that it
14833
submit a certification of compliance and
a deposit insurance coverage summary
report more frequently than annually.
(b) FDIC Testing.
(1) The FDIC will conduct periodic
tests of a covered institution’s
compliance with this part. These tests
will begin no sooner than the last day
of the first calendar quarter following
the compliance date and would occur
no more frequently than on a three-year
cycle thereafter, unless there is a
material change to the covered
institution’s information technology
system, deposit-taking operations, or
financial condition following the
compliance date, in which case the
FDIC may conduct such tests at any
time thereafter.
(2) A covered institution shall provide
the appropriate assistance to the FDIC as
the FDIC tests the covered institution’s
ability to satisfy the requirements set
forth in this part.
(c) Effect of pending requests. A
covered institution that has submitted a
request pursuant to § 370.6(b) or
§ 370.8(a) through (c) will not be
considered to be in violation of this part
as to the requirements that are the
subject of the request while awaiting the
FDIC’s response to such request.
(d) Effect of changes to law. A covered
institution will not be considered to be
in violation of this part as a result of a
change in law that alters the availability
or calculation of deposit insurance for
such period as specified by the FDIC
following the effective date of such
change.
(e) Effect of merger. An instance of
non-compliance occurring as the direct
result of a merger between a covered
institution and another insured
depository institution shall be deemed
not to constitute a violation of this part
for a period of one year following the
effective date of the merger.
Appendix A to Part 370: Ownership
Right and Capacity Codes
A covered institution must use the codes
defined below when assigning ownership
right and capacity codes.
Code
Illustrative description
SGL .................................
Single Account (12 CFR 330.6): An account owned by one person with no testamentary or ‘‘payable-on-death’’ beneficiaries. It includes individual accounts, sole proprietorship accounts, single-name accounts containing community
property funds, and accounts of a decedent and accounts held by executors or administrators of a decedent’s estate.
Joint Account (12 CFR 330.9): An account owned by two or more persons with no testamentary or ‘‘payable-ondeath’’ beneficiaries (other than surviving co-owners) An account does not qualify as a joint account unless: (1) All
co-owners are living persons; (2) each co-owner has personally signed a deposit account signature card (except
that the signature requirement does not apply to certificates of deposit, to any deposit obligation evidenced by a
negotiable instrument, or to any account maintained on behalf of the co-owners by an agent or custodian); and (3)
each co-owner possesses withdrawal rights on the same basis.
JNT .................................
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Code
Illustrative description
REV .................................
Revocable Trust Account (12 CFR 330.10): An account owned by one or more persons that evidences an intention
that, upon the death of the owner(s), the funds shall belong to one or more beneficiaries. There are two types of
revocable trust accounts:
(1) Payable-on-Death Account (Informal Revocable Trust Account): An account owned by one or more persons
with one or more testamentary or ‘‘payable-on-death’’ beneficiaries.
(2) Revocable Living Trust Account (Formal Revocable Trust Account): An account in the name of a formal revocable ‘‘living trust’’ with one or more grantors and one or more testamentary beneficiaries.
Irrevocable Trust Account (12 CFR 330.13): An account in the name of an irrevocable trust (unless the trustee is an
insured depository institution, in which case the applicable code is DIT.
Certain Other Retirement Accounts (12 CFR 330.14 (b)–(c)) to the extent that participants under such plan have the
right to direct the investment of assets held in individual accounts maintained on their behalf by the plan, including
an individual retirement account described in section 408(a) of the Internal Revenue Code (26 U.S.C. 408(a)), an
account of a deferred compensation plan described in section 457 of the Internal Revenue Code (26 U.S.C. 457),
an account of an individual account plan as defined in section 3(34) of the Employee Retirement Income Security
Act (29 U.S.C. 1002), a plan described in section 401(d) of the Internal Revenue Code (26 U.S.C. 401(d)).
Employee Benefit Plan Account (12 CFR 330.14): An account of an employee benefit plan as defined in section 3(3)
of the Employee Retirement Income Security Act (29 U.S.C. 1002), including any plan described in section 401(d)
of the Internal Revenue Code (26 U.S.C. 401(d)), but not including any account classified as a Certain Retirement
Account.
Business/Organization Account (12 CFR 330.11): An account of an organization engaged in an ‘independent activity’
(as defined in § 330.1(g)), but not an account of a sole proprietorship.
This category includes:
a. Corporation Account: An account owned by a corporation.
b. Partnership Account: An account owned by a partnership.
c. Unincorporated Association Account: An account owned by an unincorporated association (i.e., an account
owned by an association of two or more persons formed for some religious, educational, charitable, social, or
other noncommercial purpose).
Government Account (12 CFR 330.15): An account of a governmental entity.
All time and savings deposit accounts of the United States and all time and savings deposit accounts of a state,
county, municipality, or political subdivision depositing funds in an insured depository institution in the state comprising the public unit or wherein the public unit is located (including any insured depository institution having a
branch in said state).
All demand deposit accounts of the United States and all demand deposit accounts of a state, county, municipality,
or political subdivision depositing funds in an insured depository institution in the state comprising the public unit or
wherein the public unit is located (including any insured depository institution having a branch in said state).
All deposits, regardless of whether they are time, savings or demand deposit accounts of a state, county, municipality or political subdivision depositing funds in an insured depository institution outside of the state comprising
the public unit or wherein the public unit is located.
Mortgage Servicing Account (12 CFR 330.7(d)): An account held by a mortgage servicer, funded by payments by
mortgagors of principal and interest.
Public Bond Accounts (12 CFR 330.15(c)): An account consisting of funds held by an officer, agent or employee of a
public unit for the purpose of discharging a debt owed to the holders of notes or bonds issued by the public unit.
IDI as trustee of irrevocable trust accounts (12 CFR 330.12): ‘‘Trust funds’’ (as defined in § 330.1(q)) account held by
an insured depository institution as trustee of an irrevocable trust.
Annuity Contract Accounts (12 CFR 330.8): Funds held by an insurance company or other corporation in a deposit
account for the sole purpose of funding life insurance or annuity contracts and any benefits incidental to such contracts.
Custodian accounts for American Indians (12 CFR 330.7(e)): Funds deposited by the Bureau of Indian Affairs of the
United States Department of the Interior (the ‘‘BIA’’) on behalf of American Indians pursuant to 25 U.S.C. 162(a),
or by any other disbursing agent of the United States on behalf of American Indians pursuant to similar authority,
in an insured depository institution.
IDI Accounts under Department of Energy Program: Funds deposited by an insured depository institution pursuant to
the Bank Deposit Financial Assistance Program of the Department of Energy.
IRR ..................................
CRA ................................
EBP .................................
BUS .................................
GOV1–GOV2–GOV3 ......
GOV1 .......................
GOV2 .......................
GOV3 .......................
MSA ................................
PBA .................................
DIT ..................................
ANC ................................
BIA ..................................
DOE ................................
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Appendix B to Part 370: Output Files
Structure
These output files will include the data
necessary for the FDIC to determine deposit
insurance coverage in a resolution. A covered
institution’s information technology system
must have the capability to prepare and
maintain the files detailed below. These files
must be prepared in successive iterations as
the FDIC receives additional data from
external sources necessary to complete the
deposit insurance determinations, and, as it
updates pending determinations. The files
will be comprised of the following four
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tables. The unique identifier and government
identification are required in all four tables
so those tables can be linked where
necessary.
A null value, as indicated in the table
below, is allowed for fields that are not
immediately needed to calculate deposit
insurance. To ensure timely calculations for
depositor liquidity purposes, the information
with null-value designations can be obtained
after the initial deposit insurance calculation.
As due diligence for recordkeeping
progresses throughout the years of ongoing
compliance, the FDIC expects that the banks
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will continue efforts to the capture the nullvalue designations and populate the output
file to alleviate the burden at failure. If a null
value is allowed in a field, the record should
not be placed in the pending file.
These files must be prepared in successive
iterations as the covered institution receives
additional data from external sources
necessary to complete any pending deposit
insurance calculations. The unique identifier
is required in all four files to link the
customer information. All files are pipe
delimited. Do not pad leading and trailing
spacing or zeros for the data fields.
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Null value
allowed?
Field name
Description
Format
1. CS_Unique_ID .........................................
This field is the unique identifier that is the primary key for the
depositor data record. It will be generated by the covered institution and there shall not be duplicates.
This field shall contain the ID number that identifies the entity
based on a government issued ID or corporate filing. Populate as follows:
—For a United States individual—SSN or TIN
—For a foreign national individual—where a SSN or TIN
does not exist, a foreign passport or other legal identification number (e.g., Alien Card)
—For a Non-Individual—the Tax identification Number
(TIN), or other register entity number
The valid customer identification types, are noted below:
—SSN—Social Security Number
—TIN—Tax Identification Number
—DL—Driver’s License, issued by a State or Territory of
the United States
—ML—Military ID
—PPT—Valid Passport
—AID—Alien Identification Card
—OTH—Other
The customer type field indicates the type of entity the customer is at the covered institution. The valid values are:
—IND—Individual
—BUS—Business
—TRT—Trust
—NFP—Non-Profit
—GOV—Government
—OTH—Other
Customer first name. Use only for the name of individuals and
the primary contact for entity.
Customer middle name. Use only for the name of individuals
and the primary contact for entity.
Customer last name. Use only for the name of individuals and
the primary contact for entity.
Customer suffix.
The registered name of the entity. Do not use this field if the
customer is an individual.
Street address line 1. The current account statement mailing
address of record.
Street address line 2. If available, the second address line.
Street address line 3. If available, the third address line.
The city associated with the mailing address.
The state for United States addresses or state/province/county
for international addresses.
—For United States addresses use a two-character state
code (official United States Postal Service abbreviations)
associated with the mailing address.
—For international address follow that country state code.
The Zip/Postal Code associated with the customer’s mailing address.
—For United States zip codes, use the United States Postal Service ZIP+4 standard
—For international zip codes follow that standard format of
that country
The country associated with the mailing address. Provide the
country name or the standard International Organization for
Standardization (ISO) country code.
Customer telephone number. The telephone number on record
for the customer, including the country code if not within the
United States.
The email address on record for the customer.
This field indicates whether the customer has outstanding debt
with covered institution. This field may be used by the FDIC
to determine offsets. Enter ‘‘Y’’ if customer has outstanding
debt with covered institutions, enter ‘‘N’’ otherwise.
Variable Character ...............
No.
Variable Character ...............
No.
Character (3) .......................
No.
Character (3) .......................
Yes.
Variable Character ...............
No.
Variable Character ...............
Yes.
Variable Character ...............
No.
Variable Character ...............
Variable Character ...............
Yes.
Yes.
Variable Character ...............
Yes.
Variable
Variable
Variable
Variable
...............
...............
...............
...............
Yes.
Yes.
Yes.
Yes.
Variable Character ...............
Yes.
Variable Character ...............
Yes.
Variable Character ...............
Yes.
Variable Character ...............
Character (1) .......................
Yes.
Yes.
2. CS_Govt_ID ............................................
3. CS_Govt_ID_Type ...................................
4. CS_Type .................................................
5. CS_First_Name .......................................
6. CS_Middle_Name ...................................
7. CS_Last_Name .......................................
8. CS_Name_Suffix .....................................
9. CS_Entity_Name .....................................
10. CS_Street_Add_Ln1 ..............................
11.
12.
13.
14.
CS_Street_Add_Ln2 ..............................
CS_Street_Add_Ln3 ..............................
CS_City .................................................
CS_State ...............................................
15. CS_ZIP ..................................................
16. CS_Country ...........................................
amozie on DSK9F9SC42PROD with PROPOSALS2
The data elements will include:
17. CS_Telephone ......................................
18. CS_Email ..............................................
19. CS_Outstanding_Debt_Flag ..................
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Character
Character
Character
Character
11APP2
EP11AP19.000</GPH>
Customer File. Customer File will be used
by the FDIC to identify the customers. One
record represents one unique customer.
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Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Proposed Rules
Field name
Description
Format
20. CS_Security_Pledge_Flag .....................
This field shall only be used for Government customers. This
field indicates whether the covered institution has pledged
securities to the government entity, to cover any shortfall in
deposit insurance. Enter ‘‘Y’’ if the government entity has
outstanding security pledge with covered institutions, enter
‘‘N’’ otherwise.
Character (1) .......................
Account File. The Account File contains
the deposit ownership rights and capacities
information, allocated balances, insured
No.
is linked to the Customer File by the CS_
Unique_ID.
The data elements will include:
Null value
allowed?
Field name
Description
Format
1. CS_Unique_ID .........................................
This field is the unique identifier that is the primary key for the
depositor data record. It will be generated by the covered institution and there cannot be duplicates.
Deposit account identifier. The primary field used to identify a
deposit account.
The account identifier may be composed of more than one
physical data element to uniquely identify a deposit account.
Account ownership categories.
—SGL—Single accounts
—JNT—Joint accounts
—REV—Revocable trust accounts
—IRR—Irrevocable trust accounts
—CRA—Certain retirement accounts
—EBP—Employee benefit plan accounts
—BUS—Business/Organization accounts
—GOV1, GOV2, GOV3—Government accounts (public unit
accounts)
—MSA—Mortgage servicing accounts for principal and interest payments
—DIT—Accounts held by a depository institution as the
trustee of an irrevocable trust
—ANC—Annuity contract accounts
—PBA—Public bond accounts
—BIA—Custodian accounts for American Indians
—DOE—Accounts of an IDI pursuant to the Bank Deposit
Financial Assistance Program of the Department of Energy
Product category or classification.
—DDA—Demand Deposit Accounts
—NOW—Negotiable Order of Withdrawal
—MMA—Money Market Deposit Accounts
—SAV—Other savings accounts
—CDS—Time Deposit accounts and Certificate of Deposit
accounts, including any accounts with specified maturity
dates that may or may not be renewable.
The current balance in the account at the end of business on
the effective date of the file, allocated to a specific owner in
that insurance category.
For JNT accounts, this is a calculated field that represents the
allocated amount to each owner in JNT category.
For REV accounts, this is a calculated field that represents the
allocated amount to each owner-beneficiary in REV category.
For other accounts with only one owner, this is the account current balance.
This balance shall not be reduced by float or holds. For CDs
and time deposits, the balance shall reflect the principal balance plus any interest paid and available for withdrawal not
already included in the principal (do not include accrued interest).
Accrued interest allocated similarly as data field #5 DP_Allocated_Amt.
The amount of interest that has been earned but not yet paid to
the account as of the date of the file.
Total amount adding #5 DP_Allocated_Amt and #6 DP_Acc_Int.
Hold amount on the account.
The available balance of the account is reduced by the hold
amount. It has no effect on current balance (ledger balance).
The insured amount of the account.
The uninsured amount of the account.
This field indicates a prepaid account with covered institution.
Enter ‘‘Y’’ if account is a prepaid account with covered institutions, enter ‘‘N’’ otherwise.
This field indicates a pass-through account with covered institution. Enter ‘‘Y’’ if account is a pass-through with covered institutions, enter ‘‘N’’ otherwise.
Variable Character ...............
No.
Variable Character ...............
No.
Character (4) .......................
No.
Character (3) .......................
Yes. For credit card
accounts with a
credit balance that
create a deposit liability, use a NULL
value for this field.
Decimal (14,2) .....................
No.
Decimal (14,2) .....................
No.
Decimal (14,2) .....................
Decimal (14,2) .....................
No.
No.
Decimal (14,2) .....................
Decimal (14,2) .....................
Character (1) .......................
No.
No.
No.
Character (1) .......................
No.
2. DP_Acct_Identifier ...................................
3. DP_Right_Capacity .................................
4. DP_Prod_Cat ..........................................
5. DP_Allocated_Amt ..................................
6. DP_Acc_Int ..............................................
7. DP_Total_PI ............................................
8. DP_Hold_Amount ....................................
amozie on DSK9F9SC42PROD with PROPOSALS2
amounts, and uninsured amounts. The
balances are in U.S. dollars. The Account file
Null value
allowed?
9. DP_Insured_Amount ...............................
10. DP_Uninsured_Amount .........................
11. DP_Prepaid_Account_Flag ...................
12. DP_PT_Account_Flag ...........................
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11APP2
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Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Proposed Rules
Field name
Description
Format
13. DP_PT_Trans_Flag ...............................
This field indicates whether the fiduciary account has sub-accounts that have transactional features. Enter ‘‘Y’’ if account
has transactional features, enter ‘‘N’’ otherwise.
Character (1) .......................
Account Participant File. The Account
Participant File will be used by the FDIC to
identify account participants, to include the
official custodian, beneficiary, bond holder,
No.
File is linked to the Account File by CS_
Unique_ID and DP_Acct_Identifier.
The data elements will include:
Null value
allowed?
Field name
Description
Format
1. CS_Unique_ID .........................................
This field is the unique identifier that is the primary key for the
depositor data record. It will be generated by the covered institution and there shall not be duplicates.
Deposit account identifier. The primary field used to identify a
deposit account. The account identifier may be composed of
more than one physical data element to uniquely identify a
deposit account.
Account ownership categories.
—SGL—Single accounts
—JNT—Joint accounts
—REV—Revocable trust accounts
—IRR—Irrevocable trust accounts
—CRA—Certain retirement accounts
—EBP—Employee benefit plan accounts
—BUS—Business/Organization accounts
—GOV1, GOV2, GOV3—Government accounts (public unit
accounts)
—MSA—Mortgage servicing accounts for principal and interest payments
—DIT—Accounts held by a depository institution as the
trustee of an irrevocable trust
—ANC—Annuity contract accounts
—PBA—Public bond accounts
—BIA—Custodian accounts for American Indians
—DOE—Accounts of an IDI pursuant to the Bank Deposit
Financial Assistance Program of the Department of Energy
Product category or classification.
—DDA—Demand Deposit Accounts
—NOW—Negotiable Order of Withdrawal
—MMA—Money Market Deposit Accounts
—SAV—Other savings accounts
—CDS—Time Deposit accounts and Certificate of Deposit
accounts, including any accounts with specified maturity
dates that may or may not be renewable.
Amount of funds attributable to the account participant as an
account holder (e.g., Public account holder of a public bond
account) or the amount of funds entitled to the beneficiary for
the purpose of insurance determination (e.g., Revocable
Trust)
This field is the unique identifier for the Account Participant. It
will be generated by the covered institution and there shall
not be duplicates. If the account participant is an existing
bank customer this field is the same as CS_Unique_ID field.
This field shall contain the ID number that identifies the entity
based on a government issued ID or corporate filling. Populate as follows:
—For a United States individual—Legal identification number (e.g., SSN, TIN, Driver’s License, or Passport Number)
—For a foreign national individual—where a SSN or TIN
does not exist, a foreign passport or other legal identification number (e.g., Alien Card)
—For a Non-Individual—the Tax identification Number
(TIN), or other register entity number
The valid customer identification types, are:
—SSN—Social Security Number
—TIN—Tax Identification Number
—DL—Driver’s License, issued by a State or Territory of
the United States
—ML—Military ID
—PPT—Valid Passport
—AID—Alien Identification Card
—OTH—Other
Customer first name. Use only for the name of individuals and
the primary contact for entity.
Customer middle name. Use only for the name of individuals
and the primary contact for entity.
Variable Character ...............
No.
Variable Character ...............
No.
Character (4) .......................
No.
Character (3) .......................
Yes.
Decimal (14,2) .....................
No.
Variable Character ...............
No.
Variable Character ...............
No.
Character (3) .......................
No.
Variable Character ...............
No.
Variable Character ...............
Yes.
2. DP_Acct_Identifier ...................................
3. DP_Right_Capacity .................................
4. DP_Prod_Category .................................
5. AP_Allocated_Amount .............................
6. AP_Participant_ID ...................................
7. AP_Govt_ID .............................................
8. AP_Govt_ID_Type ...................................
amozie on DSK9F9SC42PROD with PROPOSALS2
mortgagor, or employee benefit plan
participant, for each account and account
holder. One record represents one unique
account participant. The Account Participant
Null value
allowed?
9. AP_First_Name .......................................
10. AP_Middle_Name ..................................
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11APP2
14838
Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Proposed Rules
Description
Format
11. AP_Last_Name .....................................
Customer last name. Use only for the name of individuals and
the primary contact for entity.
The registered name of the entity. Do not use this field if the
participant is an individual.
This field is used as the participant type identifier. The field will
list the ‘‘beneficial owner’’ type:
—OC—Official Custodian
—BEN—Beneficiary
—BHR—Bond Holder
—MOR—Mortgagor
—EPP—Employee Benefit Plan Participant
Variable Character ...............
No.
Variable Character ...............
Yes.
Character (3) .......................
Yes.
12. AP_Entity_Name ...................................
13. AP_Participant_Type .............................
Pending File. The Pending File contains
the information needed for the FDIC to
contact the owner or agent requesting
additional information to complete the
deposit insurance calculation. Each record
represents a deposit account.
The data elements will include:
Null value
allowed?
Field name
Description
Format
1. CS_Unique_ID .........................................
This field is the unique identifier that is the primary key for the
depositor data record. It will be generated by the covered institution and there cannot be duplicates.
Reason code for the account to be included in Pending file.
For deposit account records maintained by the bank, use the
following codes.
—A—agency or custodian
—B—beneficiary
—OI—official item
—RAC—right and capacity code
For alternative recordkeeping requirements, use the following
codes.
—ARB—depository organization for brokered deposits
(Brokered deposit has the same meaning as provided in
12 CFR 337.6(a)(2)).
—ARBN—non-depository organization for brokered deposits (Brokered deposit has the same meaning as provided
in 12 CFR 337.6(a)(2)).
—ARCRA—certain retirement accounts
—AREBP—employee benefit plan accounts
—ARM—mortgage servicing for principal and interest payments
—ARO—other deposits
—ARTR—trust accounts
The FDIC needs these codes to initiate the collection of needed
information.
Deposit account identifier. The primary field used to identify a
deposit account.
The account identifier may be composed of more than one
physical data element to uniquely identify a deposit account.
Account ownership categories.
—SGL—Single accounts
—JNT—Joint accounts
—REV—Revocable trust accounts
—IRR—Irrevocable trust accounts
—CRA—Certain retirement accounts
—EBP—Employee benefit plan accounts
—BUS—Business/Organization accounts
—GOV1, GOV2, GOV3—Government accounts (public unit
accounts)
—MSA—Mortgage servicing accounts for principal and interest payments
—DIT—Accounts held by a depository institution as the
trustee of an irrevocable trust
—ANC—Annuity contract accounts
—PBA—Public bond accounts
—BIA—Custodian accounts for American Indians
—DOE—Accounts of an IDI pursuant to the Bank Deposit
Financial Assistance Program of the Department of Energy
Product category or classification.
—DDA—Demand Deposit Accounts
—NOW—Negotiable Order of Withdrawal
—MMA—Money Market Deposit Accounts
—SAV—Other savings accounts
—CDS—Time Deposit accounts and Certificate of Deposit
accounts, including any accounts with specified maturity
dates that may or may not be renewable.
Current balance. The current balance in the account at the end
of business on the effective date of the file.
Variable Character ...............
No.
Character (5) .......................
No.
Variable Character ...............
No.
Character (4) .......................
Yes.
Character (3) .......................
Yes.
Decimal (14,2) .....................
No.
2. Pending_Reason .....................................
3. DP_Acct_Identifier ...................................
4. DP_Right_Capacity .................................
amozie on DSK9F9SC42PROD with PROPOSALS2
Null value
allowed?
Field name
5. DP_Prod_Category .................................
6. DP_Cur_Bal .............................................
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11APP2
14839
Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Proposed Rules
Field name
Description
7. DP_Acc_Int ..............................................
8. DP_Total_PI ............................................
9. DP_Hold_Amount ....................................
10. DP_Prepaid_Account_Flag ...................
11. CS_Govt_ID ..........................................
12. CS_Govt_ID_Type .................................
13. CS_First_Name .....................................
14. CS_Middle_Name .................................
15. CS_Last_Name .....................................
16. CS_Name_Suffix ...................................
17. CS_Entity_Name ...................................
18. CS_Street_Add_Ln1 ..............................
19.
20.
21.
22.
CS_Street_Add_Ln2 ..............................
CS_Street_Add_Ln3 ..............................
CS_City .................................................
CS_State ...............................................
23. CS_ZIP ..................................................
24. CS_Country ...........................................
25. CS_Telephone ......................................
amozie on DSK9F9SC42PROD with PROPOSALS2
26. CS_Email ..............................................
27. CS_Outstanding_Debt_Flag ..................
28. CS_Security_Pledge_Flag .....................
29. DP_PT_Account_Flag ...........................
30. PT_Parent_Customer_ID ......................
VerDate Sep<11>2014
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This balance shall not be reduced by float or holds. For CDs
and time deposits, the balance shall reflect the principal balance plus any interest paid and available for withdrawal not
already included in the principal (do not include accrued interest).
Accrued interest. The amount of interest that has been earned
but not yet paid to the account as of the date of the file.
Total of principal and accrued interest.
Hold amount on the account.
The available balance of the account is reduced by the hold
amount. It has no impact on current balance (ledger balance)
This field indicates a prepaid account with covered institution.
Enter ‘‘Y’’ if account is a prepaid account, enter ‘‘N’’ otherwise.
This field shall contain the ID number that identifies the entity
based on a government issued ID or corporate filling. Populate as follows:
—For a United States individual SSN or TIN
—For a foreign national individual—where a SSN or TIN
does not exist, a foreign passport or other legal identification number (e.g. Alien Card)
—For a Non-Individual—the Tax identification Number
(TIN), or other register entity number
The valid customer identification types:
—SSN—Social Security Number
—TIN—Tax Identification Number
—DL—Driver’s License, issued by a State or Territory of
the United States
—ML—Military ID
—PPT—Valid Passport
—AID—Alien Identification Card
—OTH—Other
Customer first name. Use only for the name of individuals and
the primary contact for entity.
Customer middle name. Use only for the name of individuals
and the primary contact for entity.
Customer last name. Use only for the name of individuals and
the primary contact for entity.
Customer suffix.
The registered name of the entity. Do not use this field if the
customer is an individual.
Street address line 1. The current account statement mailing
address of record.
Street address line 2. If available, the second address line.
Street address line 3. If available, the third address line.
The city associated with the mailing address.
The state for United States addresses or state/province/county
for international addresses.
—For United States addresses use a two-character state
code (official United States Postal Service abbreviations)
associated with the mailing address.
—For international address follow that country state code.
The Zip/Postal Code associated with the customer’s mailing address.
—For United States zip codes, use the United States Postal Service ZIP+4 standard.
—For international zip codes follow the standard format of
that country.
The country associated with the mailing address. Provide the
country name or the standard International Organization for
Standardization (ISO) country code.
Customer telephone number. The telephone number on record
for the customer, including the country code if not within the
United States.
The email address on record for the customer.
This field indicates whether the customer has outstanding debt
with covered institution. This field may be used to determine
offsets. Enter ‘‘Y’’ if customer has outstanding debt with covered institutions, enter ‘‘N’’ otherwise.
This field indicates whether the CI has pledged securities to the
government entity, to cover any shortfall in deposit insurance.
Enter ‘‘Y’’ if the government entity has outstanding security
pledge with covered institutions, enter ‘‘N’’ otherwise. This
field shall only be used for Government customers.
This field indicates a pass-through account with covered institution. Enter ‘‘Y’’ if account is a pass-through with covered institutions, enter ‘‘N’’ otherwise.
This field contains the unique identifier of the parent customer
ID who has the fiduciary responsibility at the covered institution.
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Decimal (14,2) .....................
No.
Decimal (14,2) .....................
Decimal (14,2) .....................
No.
No.
Character (1) .......................
No.
Variable Character ...............
No.
Character (3) .......................
No.
Variable Character ...............
No.
Variable Character ...............
Yes.
Variable Character ...............
No.
Variable Character ...............
Variable Character ...............
Yes.
Yes.
Variable Character ...............
No.
Variable
Variable
Variable
Variable
...............
...............
...............
...............
Yes.
Yes.
Yes.
Yes.
Variable Character ...............
Yes.
Variable Character ...............
Yes.
Variable Character ...............
Yes.
Variable Character ...............
Character (1) .......................
Yes.
Yes.
Character (1) .......................
No.
Character (1) .......................
No.
Variable Character ...............
No.
E:\FR\FM\11APP2.SGM
Character
Character
Character
Character
11APP2
14840
Federal Register / Vol. 84, No. 70 / Thursday, April 11, 2019 / Proposed Rules
Description
Format
31. DP_PT_Trans_Flag ...............................
This field indicates whether the fiduciary account has sub-accounts that have transactional features. Enter ‘‘Y’’ if account
has transactional features, enter ‘‘N’’ otherwise.
Character (1) .......................
Appendix C to Part 370: Credit Balance
Processing File Structure
1. Data must be in an ASCII-flat, pipe
delimited file.
amozie on DSK9F9SC42PROD with PROPOSALS2
Null value
allowed?
Field name
2. All files must contain 29 columns, even
if the field name is blank or a null value is
present.
3. Do not include column headers or
summary lines. The file must contain only
credit balance records.
Null value allowed?
(Y/N)
Col
Field name
Description
01 .........
02 .........
.............................................
Account Number .................
03
04
05
06
.........
.........
.........
.........
Customer Account Number
.............................................
Tax ID .................................
Tax ID Code .......................
07 .........
08 .........
09 .........
Name ..................................
.............................................
Address 1 ...........................
10 .........
Address 2 ...........................
11 .........
Address 3 ...........................
12 .........
13 .........
City ......................................
State ...................................
............................................................................................................
Account number of account holding pending payments or other
items for refunds of credit balances.
Assigned customer account number .................................................
............................................................................................................
Taxpayer identification number of the account holder ......................
Code indicates corporate (TIN) or personal tax identification number (SSN).
Full name of credit balance owner ....................................................
............................................................................................................
Address line 1 as it appears on the credit balance owner’s statement.
Address line 2 as it appears on the credit balance owner’s statement.
Address line 3 as it appears on the credit balance owner’s statement.
Address city as it appears on the credit balance owner’s statement
State postal abbreviation as it appears on the credit balance owner’s statement.
14 .........
Zip/Postal ............................
15 .........
Country ...............................
16
17
18
19
20
.........
.........
.........
.........
.........
Province ..............................
.............................................
Credit Balance ....................
.............................................
Deposit Account Ownership
Category.
21
22
23
24
25
26
27
28
29
.........
.........
.........
.........
.........
.........
.........
.........
.........
.............................................
.............................................
.............................................
.............................................
.............................................
.............................................
.............................................
.............................................
.............................................
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
The Zip/Postal Code associated with the credit balance owner’s
address at it appears on the credit balance owner’s statement—
For United States zip codes, use the United States Postal Service ZIP+4 standard. For international zip codes follow that standard format of that country.
Country code as it appears on the credit balance owner’s statement.
Province as it appears on the credit balance owner’s statement .....
............................................................................................................
Credit balance of the account as of the institution failure date ........
............................................................................................................
Account ownership category .............................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
............................................................................................................
Y.
Y.
N.
Y.
N.
N.
N.
Y.
N.
Y.
Y.
N.
Y. If Country, column 12, is
‘‘USA’’, value must be a valid
2-character US postal code
(e.g., FL for Florida, IA for
Iowa, etc.). If Country, column
12, is not ‘‘USA’’, value must
be null.
N.
N.
Y.
Y.
N.
Y.
Y. Null value allowed ownership
if account ownership category
will be assigned by the covered institution’s information
technology system upon file
processing.
Y.
Y.
Y.
Y.
Y.
Y.
Y.
Y.
Y
Dated at Washington, DC, on April 2, 2019.
Robert E. Feldman.
Executive Secretary.
[FR Doc. 2019–06713 Filed 4–10–19; 8:45 am]
BILLING CODE 6714–01–P
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11APP2
]]>Agencies
[Federal Register Volume 84, Number 70 (Thursday, April 11, 2019)]
[Proposed Rules]
[Pages 14814-14840]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06713]
[[Page 14813]]
Vol. 84
Thursday,
No. 70
April 11, 2019
Part III
Federal Deposit Insurance Corporation
-----------------------------------------------------------------------
12 CFR Part 370
Recordkeeping for Timely Deposit Insurance Determination; Proposed Rule
Federal Register / Vol. 84 , No. 70 / Thursday, April 11, 2019 /
Proposed Rules
[[Page 14814]]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 370
RIN 3064-AF03
Recordkeeping for Timely Deposit Insurance Determination
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The FDIC is seeking comment on a proposed rule that would to
make certain substantive revisions to ``Recordkeeping for Timely
Deposit Insurance Determination,'' to clarify the rule's requirements,
better align the burdens of the rule with its benefits, and make
technical corrections.
DATES: Comments must be received by May 13, 2019.
ADDRESSES: You may submit comments on the notice of proposed
rulemaking, identified by RIN number, by any of the following methods:
Agency Website: https://www.FDIC.gov/regulations/laws/federal. Follow instructions for submitting comments on the agency
website.
Email: [email protected]. Include RIN 3064-AF03 in the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW,
Washington, DC 20429.
Hand Delivery/Courier: Guard station at the rear of the
550 17th Street Building (located on F Street) on business days between
7:00 a.m. and 5:00 p.m.
Public Inspection: All comments received, including any personal
information provided, will be posted without change to https://www.fdic.gov/regulations/laws/federal/.
FOR FURTHER INFORMATION CONTACT: Marc Steckel, Deputy Director,
Division of Resolutions and Receiverships, (571) 858-8224; Teresa J.
Franks, Associate Director, Division of Resolutions and Receiverships,
(571) 858-8226; Shane Kiernan, Counsel, Legal Division, (703) 562-2632,
[email protected]; Karen L. Main, Counsel, Legal Division, (703) 562-
2079, [email protected]; James P. Sheesley, Counsel, Legal Division,
(703) 562-2047; Andrew J. Yu, Senior Attorney, (703) 562-2784.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
The policy objective of the proposed rule is to reduce compliance
burdens for insured depository institutions (IDIs) covered by the
FDIC's rule entitled ``Recordkeeping for Timely Deposit Insurance
Determination'' \1\ (part 370 or the Rule) while continuing to support
the FDIC's ability to promptly determine deposit insurance coverage in
the event a covered institution fails. Part 370 requires each IDI with
two million or more deposit accounts (each a covered institution) to
(1) configure its information technology system (IT system) to be
capable of calculating the insured and uninsured amount in each deposit
account by right and capacity, for use by the FDIC in making deposit
insurance determinations in the event of the institution's failure, and
(2) maintain complete and accurate information needed by the FDIC to
determine deposit insurance coverage with respect to each deposit
account, except as otherwise provided. After the Rule was adopted and
while covered institutions began preparing to implement it, the FDIC
received feedback from covered institutions, industry consultants,
information technology service providers, and agents placing deposits
on behalf of others, who identified components of the Rule that are
insufficiently clear or unduly burdensome. The proposed rule addresses
these issues by: Establishing the option to extend the part 370
compliance date for certain institutions; simplifying the process for
requesting exception from the Rule's requirements; amending the scope
of certain provisions; and making technical amendments. The proposed
amendments are likely to reduce compliance burdens for covered
institutions while still ensuring that covered institutions implement
the recordkeeping and IT system capabilities needed by the FDIC to make
a timely deposit insurance determination for an IDI of such size and
scale.
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\1\ 12 CFR part 370.
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II. Background
In 2016, the FDIC adopted part 370 to facilitate prompt payments of
FDIC-insured deposits when large IDIs fail. By reducing the
difficulties that the FDIC would face in making a prompt deposit
insurance determination at a failed covered institution, part 370
enhances the ability of the FDIC to meet its statutory obligation to
pay deposit insurance ``as soon as possible'' following failure and to
resolve the covered institution in the manner least costly to the
Deposit Insurance Fund (DIF).\2\ Fulfilling these statutory obligations
is essential to the FDIC's mission. It also achieves significant policy
objectives: Maintaining public confidence in the FDIC and the banking
system; enabling depositors to meet their financial needs and
obligations; preserving the franchise value of the failed covered
institution and protecting the DIF by allowing a wider range of
resolution options; and promoting long term stability in the banking
system by reducing moral hazard. An earlier regulation, the FDIC's rule
entitled ``Large-Bank Deposit Insurance Determination Modernization''
(Sec. 360.9), furthered these policy goals at IDIs having at least $2
billion in domestic deposits and either 250,000 deposit accounts, or
$20 billion in total assets.\3\ Part 370 provides the necessary
additional measures required by the FDIC to ensure prompt and accurate
payment of deposit insurance to depositors of the larger, more complex
IDIs that qualify as covered institutions.
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\2\ 12 U.S.C. 1821(f)(1); 12 U.S.C. 1823(c)(4).
\3\ 12 CFR 360.9. See 73 FR 41180 (July 17, 2008).
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The FDIC is authorized to prescribe rules and regulations as it may
deem necessary to carry out the provisions of the Federal Deposit
Insurance Act (FDI Act).\4\ To pay deposit insurance, the FDIC uses a
failed IDI's records to aggregate the amounts of all deposits that are
maintained by a depositor in the same right and capacity and then
applies the standard maximum deposit insurance amount (SMDIA) of
$250,000.\5\ The FDIC generally relies on the failed institution's
deposit account records to identify deposit owners and the right and
capacity in which deposits are maintained.\6\ Section 7(a)(9) of the
FDI Act authorizes the FDIC to take action as necessary to ensure that
each IDI maintains, and the FDIC receives on a regular basis from such
IDI, information on the total amount of all insured deposits, preferred
deposits, and uninsured deposits at the institution.\7\ The
requirements of part 370, obligating covered institutions to maintain
complete and accurate records regarding the ownership and insurability
of deposits and to have an IT system that can be used to calculate
deposit insurance coverage in the event of failure, facilitate the
FDIC's prompt payment of deposit insurance and enhance the ability to
implement the least costly resolution of these institutions.
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\4\ 12 U.S.C. 1819(a) (Tenth), 1820(g), 1821(d)(4)(B)(iv).
\5\ 12 U.S.C. 1821(a)(1)(C), 1821(a)(1)(E).
\6\ 12 U.S.C. 1822(c), 12 CFR 330.5.
\7\ 12 U.S.C. 1817(a)(9).
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Part 370 became effective on April 1, 2017, with a compliance date
of April 1, 2020, for IDIs that became covered
[[Page 14815]]
institutions on the effective date.\8\ The FDIC has carried out a
continuous outreach program to covered institutions, trade
associations, and other interested parties since issuing part 370. The
FDIC learned through its interactions with these parties about issues
and challenges they face in implementing the capabilities required by
part 370. These include: The need for additional time to complete this
complex exercise; concerns regarding the nature of the compliance
certification; the effect of mergers; the scope of the definition of
``transactional features''; and the covered institution's ability to
certify performance by a third party with respect to submission of
information to the FDIC within 24 hours for deposit accounts with
transactional features that are insured on a pass-through basis.
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\8\ 81 FR 87734, 87738 (December 5, 2016); 12 CFR 370.2(d).
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The FDIC acknowledges that the burden of complying with some of the
requirements of part 370 with regard to certain types of accounts is
not commensurate with the benefit of improvements to prompt payment of
deposit insurance and resolvability that such compliance achieves.
Further, practical difficulties in implementation justify an extension
of the initial compliance date for those covered institutions that
became covered institutions on the initial effective date of the Rule.
Accordingly, the FDIC is issuing this notice of proposed rulemaking
(NPR) to amend part 370 (the proposal, proposed rule, or proposed
amendments) to provide for elective extension of the compliance date,
revise the treatment of deposits created by credit balances on debt
accounts, modify the requirements relating to accounts with
transactional features, change the procedures regarding exceptions, and
clarify matters relating to certification requirements. The proposed
amendments would also make certain technical changes to part 370 and
correct typographical errors. These proposed amendments would better
align the burdens imposed by part 370 upon covered institutions with
the resultant benefits in terms of achievement of the FDIC's statutory
obligations and policy objectives.
III. Discussion of Proposed Amendments and Request for Comment
A. Summary
The FDIC is undertaking this notice of proposed rulemaking to amend
part 370 in advance of the compliance date for the first covered
institutions. The FDIC is proposing to make extensive changes to part
370. Therefore, the FDIC is proposing to revise the text of part 370 in
full rather than prepare fragmentary amendments. The proposal would,
among other things:
Include an optional one-year extension of the compliance
date upon notification to the FDIC;
provide clarifications regarding certification of
compliance under Sec. 370.10, and the effect of a change in law or a
merger on compliance;
provide for voluntary compliance with part 370;
revise the actions that must be taken under Sec. 370.5(a)
with respect to deposit accounts with transactional features that are
insured on a pass-through basis;
amend the recordkeeping requirements set forth in Sec.
370.4 for certain types of deposit relationships;
clarify the process for exceptions requested pursuant to
Sec. 370.8(b), provide for published notice of the FDIC's responses,
and provide that certain exceptions may be deemed granted; and
make corrections and technical and conforming changes.
B. Elective Extension of the Compliance Date
Section 370.2(d) establishes the initial compliance date as the
date that is three years following either the effective date of part
370 or the date on which an IDI becomes a covered institution,
whichever is later. In order to comply with part 370, covered
institutions must add a new set of capabilities in their IT systems and
a new level of regularity in their recordkeeping. Part 370 became
effective on April 1, 2017, so each insured depository institution that
became a covered institution on that date has a compliance date of
April 1, 2020. The FDIC recognizes that some of these covered
institutions may need additional time to implement these new
capabilities. The FDIC has determined that an extension of up to one
year would help these covered institutions more efficiently focus their
efforts on complying with part 370 rather than on seeking exceptions to
compliance with part 370. Accordingly, the FDIC proposes to add a new
paragraph (b)(2) to Sec. 370.6 that would provide covered institutions
that became covered institutions on the effective date with the option
to extend their April 1, 2020, compliance date by up to one year (as
late as April 1, 2021) upon notification to the FDIC. The notification
would need to be provided to the FDIC prior to the original April 1,
2020, compliance date and state the total number of, and dollar amount
of deposits in, deposit accounts for which the covered institution
expects its IT system would not be able to calculate deposit insurance
coverage as of the original April 1, 2020, compliance date. This
information would help the FDIC understand the extent to which the
covered institution's capabilities could be utilized prior to the
extended compliance date should those capabilities be needed. In
connection with this proposed amendment, the definition of compliance
date in Sec. 370.2(d) would also be revised to reference Sec.
370.6(b).
Questions: The FDIC invites comment on its proposal to allow
insured depository institutions that became covered institutions on
April 1, 2017, to extend their compliance date by up to one year. What
are the advantages or disadvantages of extending the compliance date?
Is this one-year extension too long or too short? Why? Should this
extension option be available to all current covered institutions? What
alternatives, if any, should the FDIC consider?
C. Compliance
1. Part 370 Compliance Certification and Deposit Insurance Summary
Report
The proposed amendments to Sec. 370.10(a)(1) address the
requirements for the certification of compliance that a covered
institution must submit to the FDIC upon its initial compliance date
and annually thereafter. The FDIC is proposing to clarify that the
timeframe within which a covered institution must implement the
capabilities needed to comply with part 370 and test its IT system is
the ``preceding twelve months'' rather than during the ``preceding
calendar year.'' Because a covered institution's compliance date might
not coincide with the end of a calendar year, there was confusion over
whether a covered institution's self-test must occur during the
calendar year before a covered institution's compliance date even if
the compliance date is in the next calendar year. This proposed
amendment is intended to clarify that a covered institution must
certify that it has implemented the capabilities required by part 370
and has tested those capabilities at least once during the preceding 12
months.
The FDIC proposes to revise the testing standard for the
certification from confirmation that a covered institution has
``successfully tested'' its IT system to confirmation that ``testing
indicates that the covered institution is in compliance . . .'' because
[[Page 14816]]
``successful'' testing is a subjective standard. Some covered
institutions have questioned whether testing can be considered
``successful'' if they identify deficiencies in compliance. The
objective of part 370 is for a covered institution to implement the
recordkeeping and IT system capabilities that would enable the FDIC to
conduct a deposit insurance determination for all of a covered
institution's deposit accounts. To do this, a covered institution's IT
system must be capable of calculating deposit insurance coverage for
accounts once all information needed to do so is available.
The FDIC also proposes to clarify the standard to which the Sec.
370.10(a)(1) compliance certification is made by revising this
paragraph to state that the certification must be made to the best of
the executive's ``knowledge and belief after due inquiry.'' Covered
institutions and their representatives have expressed concern that the
current language could be viewed as creating a liability standard by
which an executive could be held liable should the covered institution
experience any deficiency in compliance. This proposed amendment would
clarify that the executive's essential duty is to take reasonable steps
to ensure and verify that the certification is accurate and complete to
the best of his or her knowledge after due inquiry.
Questions: The FDIC invites comment on its proposed amendments to
Sec. 370.10(a)(1). What level of certainty should a covered
institution's executive have that the requirements of part 370 are
being met? Are the standards for the certification clear? Are they
appropriate? If not, why not? What other changes to this certification
requirement should the FDIC consider making, if any?
2. Effect of Changes to Law
The FDIC recognizes that future changes to law could impact a
covered institution's compliance with the requirements of part 370 by,
among other things, changing deposit insurance coverage and related
recordkeeping and calculation requirements. These changes in law may be
made with immediate effect, yet the covered institutions may reasonably
require time to collect necessary records and reconfigure their IT
systems to calculate deposit insurance under the changed laws. The FDIC
is proposing to add a new paragraph (d) to Sec. 370.10 to address the
effect of changes to law that alter the availability or calculation of
deposit insurance. This new paragraph (d) would provide that a covered
institution would not be in violation of part 370 as a result of such
change in law for such period as specified by the FDIC following the
effective date of such change in law. The FDIC would publish notice of
the specified period of time in the Federal Register.
Questions: The FDIC invites comment on its proposal to add a new
paragraph (d) to Sec. 370.10 to allow a covered institution time to
consider and address changes in law that alter the availability, or
calculation of, deposit insurance and thereby would impact a covered
institution's compliance with part 370. Should a minimum period of time
following a change in law be added? Why? What alternatives, if any,
should the FDIC consider?
3. Effect of Merger Involving a Covered Institution
Part 370 does not expressly address mergers. Under the Rule, a
covered institution is required to comply with the requirements of part
370 on and after its compliance date without regard for complications
that could be caused by merger. The covered institution would need to
ensure that it is in compliance with respect to its newly acquired
deposit accounts and IT systems unless it had requested and been
granted a time-limited exception by the FDIC.
The FDIC recognizes that covered institutions may need time after a
merger to come into compliance with part 370 again. For that reason,
the FDIC proposes to add a new paragraph (e) to Sec. 370.10 to provide
a covered institution with a one-year period following the effective
date of its merger with another insured depository institution to
ensure that new deposit accounts and IT systems comply with the
requirements of part 370. This proposed one-year period would not
extend a covered institution's preexisting compliance date; rather, it
would provide a one-year grace period to remedy deficiencies in
compliance resulting from the merger. In cases where this one-year
period is not sufficient, a covered institution could request a time-
limited exception for additional time to integrate deposit accounts or
IT systems. To illustrate, if a covered institution merges with an
insured depository institution that is not a covered institution, then
the covered institution's compliance date would not change, but it
would have a one-year period to bring the deposit accounts from the
merged institution into compliance with the requirements of part 370.
If two insured depository institutions, neither a covered institution,
merge to become a covered institution, then the new covered institution
would be required to comply with part 370 by its compliance date and
the one-year grace period provided under this proposed paragraph would
not be applicable. If two covered institutions merge, then the one-year
grace period provided under this proposed paragraph would apply, but
only with respect to instances of non-compliance occurring as the
direct result of the merger.
Questions: The FDIC invites comment on its proposal to add a new
paragraph (e) to Sec. 370.10 to provide a one-year grace period for
instances of non-compliance following merger. Is a one-year grace
period sufficient? If not, how much time would be sufficient and why?
Should a grace period be considered for deposit assumption transactions
as well? What alternatives, if any, should the FDIC consider?
D. Voluntary Compliance With Part 370
The proposed amendments would provide a mechanism for voluntary
compliance with part 370, which may be mutually beneficial to both the
FDIC and certain insured depository institutions. Part 370 currently
defines a ``covered institution'' as an insured depository institution
that had two million or more deposit accounts during the two
consecutive quarters preceding the Rule's effective date of April 1,
2017, or once it has two million or more deposit accounts for two
consecutive quarters thereafter. The FDIC proposes to expand the
definition to include any other insured depository institution that
voluntarily opts into coverage. To do so, an IDI would deliver written
notice to the FDIC stating that it will voluntarily comply with the
requirements of part 370. Such an insured depository institution would
be considered a covered institution as of the date on which the FDIC
receives the notification.
The proposed amendments also designate a compliance date for
insured depository institutions that voluntarily become covered
institutions pursuant to the proposed Sec. 370.2(c)(2). The proposed
rule would add a new paragraph (d)(3) to Sec. 370.2 providing that the
compliance date for such an IDI would be the date on which the covered
institution submits its first certification of compliance and deposit
insurance coverage summary report pursuant to Sec. 370.10(a). The FDIC
recognizes that while an insured depository institution could
voluntarily become a covered institution under the proposed amendments,
the FDIC should not enforce the requirements of the Rule upon such a
covered institution until after it submits a certification of
[[Page 14817]]
compliance and deposit insurance coverage report.
As a result of this proposed amendment, an IDI that is not covered
under part 370 but is covered under Sec. 360.9 (a 360.9 institution)
could voluntarily comply with part 370 and be released from Sec.
360.9, pursuant to Sec. 370.8(d), upon submission of the compliance
certification and deposit insurance summary report to the FDIC as
required under Sec. 370.10(a). A 360.9 institution must continue to
comply with Sec. 360.9 until it meets the conditions for release. A
significant benefit of this proposed amendment would be that a banking
organization with one part 370 covered institution and one 360.9
institution could develop a single unified deposit recordkeeping and IT
system that would be compliant with part 370 and no longer have to
maintain a separate, parallel system to satisfy the requirements of
Sec. 360.9.
Questions: The FDIC invites comment on its proposal to revise Sec.
370.2(c) to allow an insured depository institution that does not have
two million or more deposit accounts to voluntarily comply with part
370. Would insured depository institutions that are not covered
institutions under part 370 elect to voluntarily comply? If your
banking organization consists of both a part 370 covered institution
and a 360.9 institution, would it consider voluntarily complying with
part 370? What alternatives, if any, should the FDIC consider?
E. Transactional Features
1. Purpose for Identifying Deposit Accounts With ``Transactional
Features''
In formulating part 370, the FDIC recognized that for certain types
of deposit accounts, depositors need daily access to funds, but deposit
insurance determinations regarding some of these accounts requires
access to records that an IDI is not required to maintain under the
existing regulatory framework. For example, deposits may be insured on
a pass-through basis under part 330, with records maintained outside of
the IDI by an agent or third party authorized to maintain such records.
Creating appropriate recordkeeping requirements for those accounts for
which the information need not reside at the covered institution, and
providing for their timely delivery in a format that permits the FDIC
to use a covered institution's IT system to calculate deposit insurance
promptly in the event of a failure, was a central concern of the part
370 rulemaking process.
Originally, in the Advance Notice of Proposed Rulemaking (ANPR)
relating to part 370,\9\ the FDIC presented a potential solution that
involved identifying a large subset of deposits as ``closing night
deposits.'' Under this approach, the covered institution would be
required to obtain and maintain data on all closing night deposits at
the end of any business day sufficient to make deposit insurance
determinations on closing night. Comments to the ANPR led the FDIC to
conclude that there was no consensus among potential covered
institutions and other interested parties as to what deposits should be
considered ``closing night deposits.'' The FDIC proposed, in the Notice
of Proposed Rulemaking for part 370,\10\ requiring covered institutions
to collect and maintain the necessary depositor information for all
deposit accounts, with limited exceptions. Commenters raised concerns
about the volume and nature of data that would be transmitted nightly
under such approach.
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\9\ 80 FR 23478 (April 28, 2015).
\10\ 81 FR 10026 (February 26, 2016).
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In issuing the final rule, the FDIC adopted a bifurcated approach
to recordkeeping requirements. The FDIC generally requires that a
covered institution itself maintain the complete set of information
required to allow the FDIC to promptly determine the deposit insurance
coverage for each deposit account. But for certain accounts, including
those that may meet the requirements of Sec. Sec. 330.5 (Recognition
of deposit ownership and fiduciary relationship) and 330.7 (Accounts
held by agent, nominee, guardian, custodian or conservator) and certain
trust accounts, this information may be maintained off-site and with
third parties rather than at the covered institution. These accounts
are ``alternative recordkeeping'' accounts under part 370. The FDIC
recognized, however, that some alternative recordkeeping accounts may
support depositors' routine financial needs and require a prompt
deposit insurance determination to avoid delays in payment processing
should the covered institution's deposit operations be continued by a
successor institution.\11\ The FDIC created a definition of
``transactional features'' to identify such accounts and required
covered institutions to certify that, for alternative recordkeeping
accounts with transactional features, the account holder will submit to
the FDIC the information necessary to complete a deposit insurance
calculation with regard to the account within 24 hours following the
appointment of the FDIC as receiver. The FDIC provided a set of
exceptions to this certification requirement as well.
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\11\ 81 FR 87737, 87740. The successor institution may be an
open institution that acquires these operations or accepts the
transfer of the failed covered institution's insured deposit
liabilities, or a bridge bank organized by the FDIC for such
purposes. A failed covered institution's deposit operations will not
be continued in all potential resolution scenarios.
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The proposed amendments would retain the bifurcated approach to
recordkeeping requirements but change the definition used to describe
accounts with transactional features, as well as revise the actions of
the covered institution required with respect to alternative
recordkeeping accounts with transactional features; the set of
exceptions to the requirements has been amended as well.
2. Proposed Amendments to the Definition of ``Transactional Features''
The proposed amendments would narrow the definition of
transactional features to focus on accounts capable of making transfers
directly from the covered institution to third parties by methods that
would necessitate a prompt insurance determination to avoid disruptions
to payment processing. Interested parties have expressed concerns that
the current transactional features definition is over-inclusive,
capturing accounts for which the FDIC would not need to make a deposit
insurance determination within 24 hours to achieve its policy goals of
preserving stability and avoiding disruption to depositors. Under the
existing definition, an account has transactional features if it can be
used ``to make payments or transfers to third persons or others
(including another account of the depositor or account holder at the
same institution or at a different institution)'' by use of any of a
long list of methods. Examples of such deposit accounts include, but
are not limited to: Deposits placed by third parties with associated
sweep accounts, whether or not those sweep accounts are categorized as
brokered deposits, and prepaid accounts.\12\ The FDIC remains concerned
that if the funds in these accounts are not accessible on the next
business day after a covered institution's failure because the FDIC
cannot complete the deposit insurance determination, then ``the
inability to access their funds could result in returned checks and an
inability to handle their day-to-day financial obligations.'' \13\ This
breadth of included
[[Page 14818]]
transfer methods, together with the impression that the described set
of transferees is all-inclusive, created the impression among some
interested parties that the FDIC intended that all accounts other than
some accounts comprised of time deposits fall into the transactional
features definition.
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\12\ 81 FR 87734, 87751 (December 5, 2016).
\13\ Id. at 87752.
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The FDIC intends that the transactional features definition itself
capture only the subset of alternative recordkeeping accounts for which
an insurance determination within 24 hours following its appointment as
receiver is essential to fulfillment of its policy objectives noted
above. Accordingly, it proposes to amend the definition to narrow the
set of accounts that are identified as having transactional features
for purposes of part 370. The proposed amendments would define
transactional features primarily by reference to the parties who can
receive funds directly from the account by methods that may not be
reflected in the close-of-business account balance on the day of
initiation of such transfer. If the account can be used to make
transfers to parties other than the account holder, the beneficial
owner of the deposits, or the covered institution itself, by use of a
method that results in the transfer not being reflected in the close-
of-business ledger balance for the account on the day the transfer is
initiated, it is an account with transactional features. Generally,
under FDIC rules,\14\ on the day of failure, transfers that are
included in the close-of-business account balance for an account will
be completed, with funds transferred out of the account not being
included in the deposit insurance determination for the account.
Therefore, such transfers will not be affected by the deposit insurance
determination, and any delay in completing the deposit insurance
determination for such account will not create delays in processing
payments.
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\14\ See 12 CFR 360.8.
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Application of this approach can be illustrated by two examples. In
the first example, an account that can be used by the account holder or
depositor to initiate transfers to other parties by check--a method
that may not be reflected on the day of such transfer is initiated,
even if prior to the cutoff time for that specific type of
transaction--would be an account with transactional features under the
proposed definition. This transfer may not be reflected in the close-
of-business ledger balance for the account when initiated by delivery
of the check to the payee. Under part 370, the FDIC should receive the
information necessary to complete a deposit insurance determination
with regard to such an account within 24 hours following its
appointment as receiver, providing it the ability to minimize
disruption to payment processing if the covered institution's deposit
operations are continued following the resolution. In the second
example, an account that can only be used to make transfers to others
by wire transfer--a method that is reflected in the close-of-business
balance for the account if initiated prior to the cutoff time--is not
an account with transactional features solely as a result of this
transfer capability. The funds transmitted by a timely initiated wire
are not included in the close-of-business balance for the account, so
no deposit insurance determination with regard to the account is
required in connection with the processing of that payment.
The proposed definition of transactional features contains an
additional provision, intended to include linked accounts that support
accounts with transactional features. Under this provision, an account
also has transactional features if preauthorized or automatic transfer
instructions provide for transfers to an account with transactional
features at the same institution. These automatic or preauthorized
instructions indicate that the deposits in such account are integral to
supporting payment processing in the account with transactional
features, such that completing a deposit insurance determination in the
account otherwise lacking transactional features is essential to
ensuring continuing processing of payment instructions at the account
with transactional features. It is therefore appropriate to subject
such account to the same expectations regarding timely delivery of the
information needed to conduct a deposit insurance determination should
the covered institution fail.
Unlike under the current definition, the capability to make
transfers to another account of the depositor or account holder at
another institution does not itself result in an account having
transactional features for purposes of part 370 under the proposed
definition. The prior definition included such capabilities to capture
accounts associated with brokered sweep accounts and prepaid account
programs administered by a third party that places deposits at an IDI
on behalf of the cardholders or other depositors, regardless of whether
such accounts were traditional transactional accounts, such as demand
deposit accounts, or money market deposit accounts (MMDA) or savings
accounts not traditionally considered transactional in nature. By
including these accounts, the FDIC sought to enable deposit insurance
determinations within 24 hours following the FDIC's appointment based
on its belief that such accounts were relied upon for transactions and
material delay could undermine public confidence and be extremely
disruptive.\15\ In order to achieve this goal, the final rule required
covered institutions to make certifications, described below, regarding
future delivery of depositor information by third parties that are not
under the control of the covered institution or subject to regulation
by the FDIC. Engagement with deposit brokers, covered institutions and
their representatives during implementation suggested that the benefit
of these requirements might be less than expected, and the burdens of
compliance greater given the wide variety of account types, third
parties, and arrangements involved.
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\15\ 81 FR 87734, 87740 (December 5, 2016).
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Many brokered sweep programs and prepaid card programs operate
through arrangements involving one or more intermediate or clearing
accounts located at institutions other than the covered institution.
The day-to-day transactional activity in such programs can occur in
accounts outside of the covered institution, with the account at the
covered institution being accessed less frequently. The net activity of
all of the customers in the program determines whether the periodic
activity in the account at the covered institution is a deposit or
withdrawal. Covered institutions noted that the other parties involved
in the administration of such programs, such as the deposit brokers,
broker dealers, program managers, and administrators, have ongoing
business relationships with the brokered deposit sweep and prepaid card
customers and with other third parties involved in processing customer
transactions.
Where customer transactions originate with an instruction first
presented to an account at an IDI other than the covered institution,
the need to conduct a deposit insurance determination within 24 hours
after the covered institution's failure may not exist. According to
some of the covered institutions and other industry representatives,
the net activity of customers or the schedule for accessing the account
at the covered institution, may result in no draw on the account at the
covered institution in the days following failure. Further, interested
parties have stated that actions by the other parties involved in the
program, such as advancing funds to
[[Page 14819]]
intermediate accounts during the pendency of a deposit insurance
determination to preserve customer relationships, may further
ameliorate any disruption to depositors resulting from the failure. As
a result, requiring that information needed for deposit insurance
determination be delivered in such timeframe may be less beneficial and
more burdensome than anticipated. The proposed definition thus no
longer captures accounts which transfer to other accounts of the
depositors or account holders at IDIs other than the covered
institution. It is possible that customers of broker dealers who have
cash management accounts or certain prepaid cardholders may experience
a delay in their ability to access the funds in their accounts or that
underlie their cards if the settlement or processing of their
transactions takes place at another IDI but are funded by deposits held
in the covered institution.
Prepaid cardholders should, however, have access to the funds
loaded on their cards on the next business day after a covered
institution fails when prepaid card programs are structured so that the
cardholders' transactions actually settle through a deposit account at
the covered institution. Note that the proposed definition of accounts
with ``transactional features'' includes linked accounts wholly within
the covered institution, to the extent that those accounts support an
account with transactional features. Accordingly, a savings account at
the covered institution that supports, via automatic or preauthorized
instructions, a demand deposit account at the covered institution that
can be accessed by prepaid cards or checks--methods that may not be
reflected in the close-of-business ledger balance of the account--is
itself considered an account with transactional features for purposes
of the proposed definition. Finally, when the covered institution
issues the prepaid cards and acts as the program manager of the prepaid
account program (and thus, maintains the requisite information
regarding the prepaid cardholders), then the prepaid cardholders would
have access to their funds on the next business day after the covered
institution's failure.
Questions: The FDIC invites comment on the proposed definition of
transactional features. Does the proposed definition improve the
description of such accounts? Is the focus on whether or not transfers
are reflected in the close-of-business ledger balance for the account a
workable approach to defining the transfer capabilities of an account
that do not result in it having transactional features? Should other
transfers be included in that category? Is it reasonable for the FDIC
to rely upon the covered institutions' and other industry
representatives' representations regarding the necessity of funds
availability in these accounts immediately after failure? Is it
possible for the covered institutions to evaluate the potential
hardship for broker dealer customers or prepaid cardholders when the
programs are structured so that their transactions would settle at
another IDI? Should the proposed rule simply remove the definition of
transactional features and provide that any special requirements for
certain types of deposit accounts be applicable without regard for
whether the accounts do or do not have transactional features? What are
the other advantages or disadvantages of this proposed amendment? What
alternatives, if any, should the FDIC consider?
3. Actions Required for Certain Deposit Accounts With Transactional
Features Under Sec. 370.5(a)
As part 370 stands now, for those deposit accounts that a covered
institution maintains its deposit account records in accordance with
the alternative recordkeeping requirements set forth in Sec.
370.4(b)(1) and that also have transactional features, the covered
institution must certify to the FDIC that the account holder ``will
provide to the FDIC the information needed . . . to calculate deposit
insurance coverage . . . within 24 hours after'' failure. Covered
institutions have expressed concern that this provision imposes a duty
on a covered institution to control the actions that an account holder
must take after failure, and that a covered institution employee who
signs the certification could be liable to the FDIC if an account
holder does not take those actions. The FDIC designed this provision
with the expectation that covered institutions would work with account
holders to create a mechanism by which account holders are able to
provide, upon the covered institution's failure, the information
necessary for the covered institution's IT system to calculate deposit
insurance coverage.
It was not the FDIC's intent to make a covered institution or a
covered institution's employees liable for the actions, or inactions,
of an account holder. For this reason, the FDIC is proposing to revise
paragraph (a) of Sec. 370.5 by removing the certification requirement
and instead requiring covered institutions to take ``steps reasonably
calculated'' to ensure that the account holder would provide to the
FDIC the information needed for the FDIC to use a covered institution's
part 370-compliant IT system to accurately calculate deposit insurance
available for the respective deposit accounts within 24 hours after the
failure of the covered institution. This change should clarify that the
covered institution would be expected to design and implement in its IT
system the capability to use information provided by account holders
after the covered institution's failure. This change should also
clarify that neither the covered institution nor its employees would be
responsible for the actions that an account holder does or does not
actually take to supply such information after the covered
institution's failure.
Covered institutions would have discretion to determine the methods
by which this requirement may be accomplished, but at a minimum ``steps
reasonably calculated'' would include having contractual arrangements
in place with account holders that would obligate those account holders
to deliver information needed for deposit insurance calculation to the
FDIC in a format compatible with the covered institution's IT system
immediately upon the covered institution's failure and a disclosure
that informs account holders that their delay in delivery of
information to the FDIC, or submission in a format that is not
compatible with the covered institution's IT system, could result in
delayed access to deposits should the covered institution fail and the
FDIC need to conduct a deposit insurance determination. This
requirement would apply to any deposit account for which the details of
the deposit relationship and the interests of the underlying beneficial
owners of the deposits are not in records maintained by the covered
institution, but in records maintained by the account holder or by some
person or entity that has undertaken to maintain such records for the
account holder. There could be a delay in the availability of the
deposits at the covered institution because the information needed to
complete the deposit insurance determination must first be provided by
the account holder. This situation would apply to any accounts eligible
for pass-through deposit insurance coverage unless the underlying
information regarding beneficial ownership of deposits is maintained at
the covered institution.
As a result of the proposed amendment discussed above, a conforming
amendment would need to be made to paragraph (c) of Sec. 370.5, which
provides that a covered institution will not be in violation of part
370 if the FDIC has granted the
[[Page 14820]]
covered institution relief from the certification requirement set forth
in Sec. 370.5(a). The proposed amendment to Sec. 370.5(a) would
remove the certification requirement and Sec. 370.5(c) would no longer
be relevant. Therefore, the FDIC is proposing to remove paragraph (c)
from Sec. 370.5.
Questions: The FDIC invites comment on its proposal to revise Sec.
370.5(a) to clarify the actions a covered institution must take
pursuant to that paragraph. Generally, would a contractual mechanism
between a covered institution and an account holder that requires
immediate submission of information needed for deposit insurance
calculation help ensure that deposit insurance can be determined
quickly for these accounts so that insured deposits can be made
available as soon as possible? What are the advantages or disadvantages
of adding this language? Does it provide greater clarity regarding the
requirements and purpose therefor?
Should this requirement apply to all alternative recordkeeping
accounts or should it be limited to only those accounts that meet the
revised definition of transactional features? Is it more burdensome for
covered institutions and account holders to draw a distinction between
alternative recordkeeping accounts with transactional features and
those without than it would be to simply apply the requirement to all
alternative recordkeeping accounts?
What impediments, if any, prevent a covered institution from adding
language to certain of its deposit account agreements to address means
by which an account holder could submit information to the FDIC after
failure of the covered institution so that the FDIC, using the
capabilities of a covered institution's part 370 compliant IT system,
could quickly and accurately calculate deposit insurance and provide
access to the relevant deposit account(s)? Would account holders be
more likely to supply information needed to calculate deposit insurance
coverage in a format compatible with the covered institution's IT
system immediately after the covered institution's failure if they are
contractually obligated to?
What impediments, if any, prevent a covered institution from
providing notice to certain account holders that the account holders'
delay in providing information to the FDIC after the covered
institution's failure may delay access to deposits? Are covered
institutions or their account holders receptive to the idea of using
technology to expedite the process by which the FDIC determines deposit
insurance? What alternatives, if any, should the FDIC consider if this
approach is unworkable?
4. Exceptions From the Requirements of Sec. 370.5(a) for Certain Types
of Deposit Accounts
Currently, Sec. 370.5(b) provides an enumerated list of accounts
that a covered institution need not address in order to make the
certification required pursuant to Sec. 370.5(a). The FDIC proposes to
retain this list of excepted deposit account types to be clear that
covered institutions would not be required to take the actions
prescribed in revised Sec. 370.5(a) for those types of accounts.
Additionally, the FDIC proposes to make three revisions to this list.
First, the FDIC is proposing to expand the exception for mortgage
servicing accounts under Sec. 370.5(b)(1) to include all deposits in
such an account. Under the Rule, mortgage servicing accounts are
excepted from the Sec. 370.5(a) requirement only to the extent that
those accounts are comprised of principal, interest, taxes, and
insurance. Covered institutions have represented to the FDIC that
deposits for other purposes, such as reserves, may also be held in
mortgage servicing accounts. Removing this limitation clarifies that
covered institutions need not take the actions required under Sec.
370.5(a) with respect to those accounts.
Second, the FDIC is proposing a technical amendment to Sec.
370.5(b)(4) to correct an incorrect cross reference. The applicable
section of the FDIC's regulations governing deposit insurance coverage
for deposit accounts held in connection with an employee benefit plan
is 12 CFR 330.14, not 12 CFR 330.15(f)(2).
Third, the FDIC is proposing to add to this list deposit accounts
maintained by an account holder for the benefit of others to the extent
that the deposits in the custodial account are held for: A formal
revocable trust that would be insured as described in 12 CFR 330.10; an
irrevocable trust that would be insured as described in 12 CFR 330.12;
or an irrevocable trust that would be insured as described in 12 CFR
330.13. The FDIC recognizes that an account holder that places deposits
with a covered institution on behalf of such a trust may not be able to
immediately provide to the FDIC all of the information needed to
calculate the total amount of coverage available for deposits insured
in any one of these three deposit insurance categories should the
covered institution fail. It may take some time for an account holder
to obtain such information from a trustee, who in turn may need time to
review the relevant trust document and confirm the status of the
trust's beneficiaries and the nature of those beneficiaries' interests
in the assets of the trust at the time of the covered institution's
failure. After the information is submitted by the account holder, the
FDIC will need to review trust-specific documentation to verify
eligibility for deposit insurance and calculate the amount of coverage
available. Moreover, including custodial deposit accounts holding trust
deposits among the list of exceptions set forth in Sec. 370.5(b), to
the extent that those accounts are comprised of trust deposits that
would be insured in one of these three deposit insurance categories,
would be more consistent with the recordkeeping requirements for trust
accounts set forth in Sec. 370.4(b)(2). This is the case because
deposit accounts for which a covered institution maintains its deposit
account records in accordance with Sec. 370.4(b)(2) would be processed
after the information needed for deposit insurance determination is
provided by the account holder and the timing for that information
submission is within the account holder's discretion and control.
Questions: The FDIC invites comment on its proposal to revise Sec.
370.5(b) to add an exception for deposit accounts with transactional
features that are insured on a pass-through basis, to the extent that
the deposits in that deposit account are held for the benefit of a
formal revocable trust that would be insured as described in 12 CFR
330.10, an irrevocable trust that would be insured as described in 12
CFR 330.12, or an irrevocable trust that would be insured as described
in 12 CFR 330.13. In order to determine whether this exception would
apply, are covered institutions able to identify the extent to which
such an account is comprised of deposits that would be insured in one
of the three deposit insurance categories that provide additional
deposit insurance for trusts? What are the advantages or disadvantages
of this proposed amendment? Generally, would delayed access to deposits
in these accounts present hardship to the account holder or the
beneficial owner(s) of the deposits? What alternatives, if any, should
the FDIC consider?
Should other types of deposit accounts be included in the list of
exceptions set forth in Sec. 370.5(b)? Why should those types of
deposit accounts be excepted? What would be the consequences of delayed
access to the deposits in those types of deposit accounts if the
account holder does not
[[Page 14821]]
supply information needed for deposit insurance calculation immediately
upon a covered institution's failure?
F. Recordkeeping Requirements
1. Alternative Recordkeeping Requirements for Certain Trust Accounts
Part 370 currently provides covered institutions with the option of
meeting the alternative recordkeeping requirements set forth in Sec.
370.4(b)(2) rather than the general recordkeeping requirements set
forth in Sec. 370.4(a) for certain types of trust deposit accounts.
Specifically, formal revocable trust deposit accounts that are insured
as described in 12 CFR 330.10 (``REV accounts,'' for which the
corresponding right and capacity code is ``REV'' as set forth in
Appendix A) and irrevocable trust deposit accounts that are insured as
described in 12 CFR 330.13 (``IRR accounts,'' for which the
corresponding right and capacity code is ``IRR'' as set forth in
Appendix A) are eligible for alternative recordkeeping under Sec.
370.4(b)(2). Covered institutions must meet the general recordkeeping
requirements set forth in Sec. 370.4(a) with respect to irrevocable
trust deposit accounts that are insured as described in 12 CFR 330.12
(``DIT accounts,'' for which the corresponding right and capacity code
is ``DIT'' as set forth in Appendix A). It is the FDIC's expectation
that, where a covered institution is the trustee for an irrevocable
trust, the covered institution will have the information needed to
calculate the amount of deposit insurance coverage for such trust's
deposit account(s) at any given time. This information would be, among
other things, the identities of trust beneficiaries and their
respective interests. The FDIC recognizes that the covered institution
as trustee would need to be able to monitor for changes in facts that
impact deposit insurance coverage afforded to the trust and update its
deposit account records when such changes occur in order for the
covered institution's IT system to accurately calculate deposit
insurance coverage within the first 24 hours after failure should the
covered institution be placed in receivership.
Representatives of covered institutions have explained to FDIC
staff that updating deposit account records continuously could be
overly burdensome or impracticable in some cases, and that there may be
a significant lag between the time at which a change occurs, the time
at which the covered institution as trustee becomes aware of the
change, and the time at which the covered institution can update its
deposit account records accordingly for purposes of part 370. The FDIC
acknowledges that covered institutions face challenges in meeting the
general recordkeeping requirements for these accounts but seeks to gain
a better understanding of the impediments a covered institution faces
in its efforts to update deposit account records upon changes in facts
affecting deposit insurance coverage for DIT accounts. The FDIC also
seeks to gain a better understanding of the adverse impact of delay in
the ability to access and use deposits in a DIT account while the
deposit insurance determination is pending. The FDIC is proposing to
revise Sec. 370.4(b)(2) to include DIT accounts as another category of
deposit accounts for which a covered institution may meet the
alternative recordkeeping requirements rather than the general
recordkeeping requirements should it find that such change is
justified. For DIT accounts specifically, a covered institution would
not need to maintain the unique identifier of the grantor(s), however,
because DIT accounts are insured without regard to the rule for
aggregation by grantor applicable in the IRR and REV categories for
deposit insurance. To conform with this proposed amendment, Sec. 370.4
would be revised by removing paragraph (a)(1)(iv), which currently
requires a covered institution to maintain in its deposit account
records for each DIT account the unique identifier for the trust's
grantor and each trust beneficiary.
The FDIC is also proposing a technical amendment to Sec.
370.4(b)(2)(iii) to replace the requirement that a covered institution
maintain in its deposit account records for certain trust deposit
accounts the corresponding ``pending reason'' code from data field 2 of
the pending file format set forth in Appendix B. Instead, Sec.
370.4(b)(2)(iii) of the proposed rule would require covered
institutions to maintain in the respective deposit account records the
corresponding ``right and capacity code'' from data field 4 of the
pending file format set forth in Appendix B. Covered institutions
should be able to identify which of the right and capacity codes apply
for deposit accounts that fall into this recordkeeping category. This
determination can be made based on the titling of the deposit account
or documentation maintained in a covered institution's deposit account
records concerning the relationship between the covered institution and
the named account holder.
Questions: The FDIC invites comment on its proposal to revise Sec.
370.4(b)(2) to include irrevocable trust deposit accounts that are
insured as described in 12 CFR 330.12. What are the advantages or
disadvantages of allowing a covered institution to maintain in its
deposit account records less than all of the information needed to
calculate deposit insurance coverage for such deposit accounts? What
impediments does a covered institution face in its efforts to update
deposit account records upon a change in facts and circumstances
affecting deposit insurance coverage for DIT accounts? Will delayed
access to deposits in DIT accounts present hardship to the respective
trusts while the deposit insurance determination is pending? What
alternatives, if any, should the FDIC consider?
Under Sec. 370.4(b)(2)(ii), a covered institution is required to
maintain the unique identifier of the grantor of a trust in its deposit
account records for certain trust accounts. Covered institutions have
represented that the identity of a trust's grantor is not typically
maintained in an IDI's records. The FDIC invites comment on this
requirement. What types of trust accounts is this the case for? Would
it be difficult for covered institutions to obtain the grantor's
identity in order to assign a unique identifier if identifying
information is not maintained in the deposit account records for
certain types of trust accounts?
2. Recordkeeping Requirements for Deposits Resulting From Credit
Balances on an Account for Debt Owed to the Covered Institution
During the FDIC's outreach calls and meetings with many covered
institutions, the covered institutions described many functional and
operational impediments to their ability to comply with the various
recordkeeping requirements of Sec. 370.4. Generally, when the covered
institution maintains the requisite depositor information in its own
records to perform the deposit insurance calculation, the FDIC would
expect the covered institution to comply with Sec. 370.4(a) of the
regulation. Other types of accounts, like agent or fiduciary accounts
(based on pass-through deposit insurance principles), certain trust
accounts, and official items, have already been addressed in Sec. Sec.
370.4(b) and (c). However, another recordkeeping problem raised by the
covered institutions occurs when a borrower of a covered institution
has a credit balance on a debt owed to a covered institution. For
example, if a
[[Page 14822]]
bank customer/credit cardholder has a positive balance on a credit card
account after returning merchandise and receiving a credit to the
account, then that credit amount would be recognized as the customer's
``deposit'' at the covered institution. In accordance with Sec.
3(l)(3) of the FDI Act, such an overpayment on a debt owed to a covered
institution would constitute a deposit.\16\ The FDIC must include (and
aggregate, if necessary) such a deposit in order to perform a deposit
insurance determination in the event of a covered institution's
failure.
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\16\ 12 U.S.C. 1813(l)(3).
---------------------------------------------------------------------------
Upon initial review, it would appear that a covered institution
should be able to comply with the requirements of Sec. 370.4(a)
because the covered institution will presumably have in its IT
system(s) all of the relevant information regarding the depositor
(created by making an overpayment on his or her outstanding debt with
the covered institution). The problem, as described to the FDIC by
various covered institutions, is that the requisite information
regarding the ownership of the deposit, the amount of the deposit as
well as other relevant information such as a unique identifier, would
be maintained on a covered institution's loan platform rather than on
any of its deposit systems. Moreover, the deposit platforms are not
necessarily linked or integrated in any way with a covered
institution's various loan platforms. The covered institutions have
informed the FDIC that it would be unduly expensive for them to
integrate or link the various loan platforms with their deposit systems
based on their assertions that not many of the credit balances are very
high; i.e., much lower than the SMDIA. Therefore, they question the
need to incur the cost to integrate the loan platforms with the deposit
systems.
The FDIC understands that for an individual loan account, the
amount of a customer's credit balance may not seem significant.
Nevertheless, if the FDIC were obligated to conduct a deposit insurance
determination upon the failure of a covered institution, part of that
process would require the FDIC to include and aggregate the credit
balance/deposit with any other deposit accounts owned by that
particular depositor held in the same right and capacity. For example,
a depositor could have a deposit of $250,000 in the covered institution
in the individual right and capacity as well as a credit balance of
several thousand dollars. If the FDIC is unable to identify the credit
balance and aggregate that amount with the other deposit funds held in
the covered institution in the same right and capacity, then the FDIC
will pay out uninsured deposits to that individual depositor. While
several thousand dollars might not seem to be significant with respect
to one depositor, the FDIC would risk overpaying a number of depositors
if it were not possible for the FDIC to restrict access to the credit
balances on all affected accounts until a full deposit insurance
determination could be completed. In the aggregate, the amount of
overpayment could be significant. Additionally, the covered
institutions have asserted that this operational issue applies to all
of their various loan platforms, including credit cards, home equity
lines of credit (HELOCs), automobile loans, and mortgage loans. Again,
in the aggregate, overpayments on a number of accounts across many
different loan platforms could result in a significant pay out of
uninsured funds to the failed covered institution's depositors. Such a
result would be in contravention of the FDIC's statutory mandate to
make payment of ``insured deposits . . . as soon as possible.'' \17\
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\17\ 12 U.S.C. 1821(f)(1) (Emphasis added).
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In order to address the covered institutions' concerns, the FDIC is
proposing to add a new paragraph (d) to Sec. 370.4. Covered
institutions would not be required to comply with the recordkeeping
requirements of Sec. 370.4(a) even though they maintain the depositor
information necessary to perform a deposit insurance determination on
their internal IT systems--just not their deposit platforms. In lieu of
integrating their various loan platforms with their deposit systems,
the covered institutions would be required to address the issue of
credit balances existing on their loan platforms in another manner.
Section 370.4(d)(1) would require that immediately upon a covered
institution's failure, its IT system(s) must be capable of restricting
access to (i) any credit balance reflected on a customer's account
associated with a debt obligation to the covered institution or (ii) an
equal amount in the customer's deposit account at the covered
institution. The FDIC believes that it would be preferable for the
covered institutions to be able to restrict access to the credit
balances on the associated loan platform. Over the closing weekend, if
access to the credit balance is not restricted, then the credit
cardholder, for example, would be able to charge expenses to the credit
card account which would, in effect, eliminate the credit balance. The
elimination of the credit balance represents a payment of deposit
insurance. If the credit cardholder's deposit account funds are also
released ``as soon as possible,'' then the outflow of deposit insurance
funds could result in a payment of uninsured funds to that depositor
and credit cardholder.
Many of the covered institutions have asserted that it is not
possible to restrict access to the credit balances associated with
their customers' loan accounts. The alternative approach would be for
the covered institution's IT system to be able to restrict access to an
amount equal to the credit balance on the customer's deposit account at
the covered institution. This second option raises a concern that the
requisite information from the covered institution's loan platform
regarding the identity of the customer/depositor, the amount of the
credit balance, and the appropriate right and capacity will not be
available in time to restrict access to an equivalent amount in the
corresponding deposit account. The FDIC's objective is to make funds in
transactional accounts available to a failed covered institution's
depositors by the next business day. If the funds in deposit accounts
are released before the amount of the credit balance is restricted,
then the FDIC would again be faced with the possibility that uninsured
funds would be paid to the failed covered institution's depositors.
Nevertheless, Sec. 370.4(d)(1)(ii) allows the covered institution to
ensure that its IT system would be capable of restricting access to an
amount equal to the overpayment in the customer's deposit account
instead.
In order to complete the deposit insurance determination, a covered
institution must be able to extract the requisite information from the
data on its loan platforms to create a file listing the credit balances
on the loan accounts as well as the other data fields as set forth in
the file included as Appendix C to this regulation. The file included
as Appendix C to this part 370 is derived from the ``Broker Input File
Requirements'' set forth in Section V of the FDIC's Deposit Broker's
Processing Guide. Additionally, a field to identify the ownership right
and capacity code has been included. The FDIC determined that it would
be appropriate to include the file as part of the regulation because
its use in this context is somewhat different than its customary use
for third parties that have deposited funds on behalf of others and who
maintain the records identifying the underlying beneficial owners. In
the situation where the covered institution's loan customer has a
credit balance
[[Page 14823]]
which is recognized as a deposit, the covered institution actually
maintains the necessary information to enable its IT system to perform
the deposit insurance calculation; the requisite data is housed,
however, on a different loan platform. The FDIC would expect the
covered institution's IT system, which must be compliant with Sec.
370.3(b), to be able to accept and process the file as formatted in
Appendix C. In contrast, while the FDIC suggests that deposit brokers
and other account holders acting as agents or fiduciaries submit their
depositors' information in the format set forth in the Deposit Broker's
Processing Guide, a third party deposit broker or agent for a
beneficial owner is not required to provide the deposit ownership
information in that format. Most of these third party deposit brokers
are not subject to the FDIC's supervision or regulation.
Section 370.4(d)(2)(i) would require the covered institution to be
able to generate a file in the format set forth in Appendix C within 24
hours of failure for all credit balances related to open-end loans
(revolving credit lines) such as credit card accounts and HELOCs. In
other words, the 24-hour requirement would apply to any type of
consumer loan account where the customer or borrower has the ability to
draw on the credit line without the prior approval or intervention of
the covered institution. This time frame would be necessary to ensure
that the FDIC would have sufficient time, after the covered
institution's failure, to identify the loan customers with credit
balances, match them to their corresponding deposit accounts, and
restrict access to an amount equal to the overpayment in the customer's
deposit account before the next business day. As mentioned previously,
it is always the FDIC's goal to make insured funds available to all
depositors of a failed insured depository institution as soon as
possible, ideally on the next business day after failure. Nevertheless,
if this process does not work as intended, then the FDIC will be unable
to make deposit insurance payments without the potential for
overpayment.
With respect to all other types of loan accounts with overpayments,
Sec. 370.4(d)(2)(ii) would require the covered institution to be able
to generate a file in the format set forth in Appendix C promptly after
the covered institution's failure. For closed-end loan accounts, where
the borrower has paid more than the balance owed or the outstanding
principal balance, the credit balances would not be available or
accessible to the customer without the covered institution's
authorization or initiation of the payment. Examples of such loan
accounts would include a final payment on a mortgage loan or auto loan
which exceeds the payoff amount. Because the credit balance would not
be readily available to the customer prior to the final deposit
insurance calculation, from the FDIC's perspective, there would not be
as much urgency to receive and process the file as provided in Appendix
C.
Questions: The FDIC requests comment on this proposal to allow
recordkeeping for deposits reflected as credit balances on a debt
account pursuant to a different procedure. Could covered institutions
produce the file set forth in Appendix C to be used by the covered
institution's IT system to calculate deposit insurance coverage within
the first 24 hours after the covered institution's failure? Should this
time frame apply to credit balances on both open-end and closed-end
loan accounts? What are the approximate costs and IT challenges of
developing the capabilities to restrict access to credit balances as
reflected on the loan account platforms? Are there other examples of
either closed-end or open-end loan products that should be explicitly
recognized or mentioned?
G. Relief
1. Exception Requests Generally
The FDIC is proposing to revise Sec. 370.8(b) to clarify the
required elements of a covered institution's exception request. The
FDIC also proposes to revise the Rule to expressly allow submission of
a request by more than one covered institution for exception from one
or more of the Rule's requirements. While part 370 currently does not
preclude this, the FDIC is proposing this revision to expressly permit
a joint submission because some scenarios under which a grant of
exception would be appropriate would be common to multiple covered
institutions. Submission of a joint exception request would allow
covered institutions to better manage resources, and it would allow the
FDIC to streamline exception determinations. Each covered institution
would still be required to submit the institution-specific data
required to substantiate the request as required under current Sec.
370.8(b).
Questions: The FDIC invites comment on its proposal to revise Sec.
370.8(b)(1). Would this proposed clarification reduce burden for
covered institutions generally? Would covered institutions coordinate
to submit joint exception requests?
2. Publication of FDIC's Response to Exception Requests
The FDIC also proposes to add a new paragraph (b)(2) to Sec. 370.8
to provide that the FDIC will publish in the Federal Register a notice
of its response to each exception request. This change would facilitate
transparency and enable covered institutions to better understand the
types of requests that the FDIC would grant or deny and the reasons
therefor. The FDIC's notice of exception would not disclose the
identity of the requesting covered institution(s), nor any confidential
or material nonpublic information.
Questions: The FDIC invites comment on its proposal to revise Sec.
370.8 by adding a new paragraph (b)(2). Should the FDIC publish notice
of all exceptions requested? Should the FDIC publish only exceptions
that are granted and not those that are denied? Is there a reason that
the FDIC should not publish notice of its response to exceptions
requested by covered institutions?
3. Certain Exceptions Deemed Granted
The FDIC is proposing a new paragraph (b)(3) to Sec. 370.8 that
would allow a covered institution to notify the FDIC that, based on
substantially similar facts and the same circumstances as presented in
the notice published by the FDIC pursuant to Sec. 370.8(b)(2) in the
proposed rule, the covered institution elects to use the same
exception. Such exception would be considered granted subject to the
same conditions stated in the FDIC's published notice unless the FDIC
informs the covered institution to the contrary within 120 days after
receipt of the covered institution's notification letter. Under this
proposed amendment, the covered institution's notification letter would
need to include the information required under Sec. 370.8(b)(1), cite
the applicable notice of exception published pursuant to Sec.
370.8(b)(2), and demonstrate how the covered institution's exception is
based upon substantially similar facts and the same circumstances as
described in the applicable notice published by the FDIC. The FDIC
believes that Sec. 370.8(b)(3) of the proposed rule would provide
covered institutions with more flexibility and clarity regarding
exceptions to part 370's requirements. It would also minimize time
spent by FDIC and covered institutions alike on processing this type of
exception request.
Questions: The FDIC invites comment on its proposal to revise Sec.
370.8 to add this new paragraph (b)(3). Is ``substantially similar
facts and the
[[Page 14824]]
same circumstances'' a reasonable basis for deeming an exception
granted? Is the 120-day time frame for FDIC to notify a covered
institution to the contrary sufficient? Is this time frame too long or
too short? What alternatives, if any, should the FDIC consider?
H. Technical Modifications
1. Technical Amendment To Revise Sec. 370.1 ``Purpose and Scope''
The FDIC is proposing a technical amendment to Sec. 370.1 to
correct a cross reference. The applicable paragraph in which the term
``covered institution'' is defined is Sec. 370.2(c), not Sec.
370.2(a).
2. Technical Amendment To Remove Definition of ``Brokered Deposit''
From Sec. 370.2
The FDIC is proposing a technical amendment to Sec. 370.2(b) to
remove the definition of ``brokered deposit'' because that term is not
used in the regulatory text of part 370. Paragraph (b) of Sec. 370.2
references 12 CFR 337.6(a)(2), the source for the substantive
definition of the term. This paragraph would be reserved for future
use, if needed.
3. Technical Amendment To Revise Recordkeeping Requirements for
Official Items
Under Sec. 370.4(c), a covered institution is required to maintain
in its deposit account records the information needed for its IT system
to calculate deposit insurance coverage with respect to payment
instruments drawn on an account of the covered institution such as a
cashier's check, teller's check, certified check, personal money order,
or foreign draft (commonly referred to as ``official items''). Such
payment instruments represent deposit liabilities of the covered
institution to the respective payees. To illustrate the types of
payment instruments that could be used to draw on the account, this
paragraph contains a non-exhaustive list of examples, concluding with
``or any similar payment instrument that the FDIC identifies in
guidance issued to covered institutions in connection with this part.''
The FDIC recognizes that the inclusion of this language would
incorporate guidance, which does not carry the force and effect of law,
into a regulatory requirement and proposes that this reference to
future guidance be removed. The FDIC seeks to minimize the confusion
between rules duly issued through notice and comment rulemaking and
agency guidance. Therefore, the FDIC proposes that this reference to
future guidance be removed.
4. Technical Amendment To Revise IT System Requirements
The FDIC is proposing to amend Sec. 370.3(a) by adding a reference
to the proposed new paragraph (d) in Sec. 370.4, which addresses
recordkeeping treatment for deposits resulting from credit balances on
an account for debt owed to a covered institution. For such deposits, a
covered institution's IT system must be able to meet the requirements
set forth in Sec. 370.3(b), as modified by the proposed new paragraph
(d) in Sec. 370.4, after the covered institution's IT system generates
an input file containing the data elements needed to calculate deposit
insurance coverage factoring in those credit balances. Covered
institutions that implement this mechanism would develop the capability
for their IT systems to produce the necessary data. The data would not
be supplied by the account holder (in this situation the debtor listed
on the account for debt owed to a covered institution), but by a
covered institution's IT system itself using information maintained in
its records for the respective debt account. For this reason, the FDIC
proposes to strike the reference to information collected ``from the
account holders'' in the last sentence of Sec. 370.3(a). Instead, the
sentence would read ``. . . information collected after failure . . .''
because additional information needed to calculate deposit insurance
for accounts for which the general recordkeeping requirements set forth
in 370.4(a) are not met may be supplied by the respective account
holders, but may also be supplied by an additional data production
process developed by a covered institution.
5. Technical Amendment To Revise General Recordkeeping Requirements
The FDIC is proposing to add a new paragraph (d) in Sec. 370.4,
which addresses recordkeeping treatment for deposits resulting from
credit balances on an account for debt owed to a covered institution.
As a result, Sec. 370.4(a) would need to be amended to include a
reference to that new paragraph. To the extent that a covered
institution elects to meet the recordkeeping requirements set forth in
the proposed new Sec. 370.4(d), it would not need to meet the general
recordkeeping requirements set forth in Sec. 370.4(a).
6. Technical Amendment To Revise 370.8(d) Regarding Release From 12 CFR
360.9
The FDIC is proposing a technical amendment to Sec. 370.8(d) to
clarify that a covered institution that is released from Sec. 360.9
under Sec. 370.8(d) remains released from Sec. 360.9 only for so long
as it is a covered institution as defined by part 370. If a part 370
covered institution released from Sec. 360.9 ceases to be a part 370
covered institution, and would otherwise be a 360.9 institution, then
it must comply with the requirements of Sec. 360.9 (unless it has
independent basis for exemption from Sec. 360.9).
7. Technical Amendment To Revise Sec. 370.10(b) ``FDIC Testing''
The FDIC is proposing a technical amendment to Sec. 370.10(b)(1)
to clarify that material changes to a covered institution's IT system,
deposit-taking operations, or financial condition occurring after the
covered institution's compliance date could result in more frequent
testing. The FDIC does not expect to conduct compulsory testing on the
basis of changes to a covered institution's IT system, deposit-taking
operations, or financial condition before a covered institution's
compliance date. A covered institution's compliance date may be
accelerated, however, on the conditions specified in Sec. 370.7
regarding accelerated implementation.
8. Technical Amendment To Revise Sec. 370.7(a)(2)
In 2018, 12 CFR parts 324 and 325 were revised to consolidate the
prompt corrective action capital category definitions into 12 CFR part
324. The FDIC is proposing a technical amendment to Sec. 370.7(a)(2)
to revise the cross reference by 12 CFR part 324 instead of 12 CFR part
325.
9. Technical Amendment To Revise ``Appendix B to Part 370--Output Files
Structure''
Appendix B to part 370 provides basic templates for four
information files that a covered institution's IT system must be able
to produce during its process for calculating deposit insurance. These
files must be retained afterward as a record of the calculation. Some
of the data that would be included in these files is essential for
deposit insurance calculation, while some is non-essential but
nonetheless useful. The FDIC is proposing to revise these data file
templates to indicate what data is non-essential and therefore may be
omitted while the covered institution does not have the information
needed to populate the field.
[[Page 14825]]
Questions: The FDIC invites comment on its proposal to revise these
data file templates to indicate which data fields must be populated by
the covered institution's IT system and which data fields should be
populated if the covered institution has such data. Has the FDIC
identified any fields for which a ``null value'' is not permissible,
but for which a covered institution does not maintain the relevant
data? If so, why doesn't the covered institution maintain that data?
IV. Expected Effects
The proposed rule is likely to benefit covered institutions by
reducing compliance burdens associated with part 370. Additionally, the
proposed rule is likely to benefit financial market participants by
helping to support prompt determination of deposit insurance in the
event a covered institution fails. The Rule requires all IDIs with two
million or more deposit accounts to have complete deposit insurance
information, by ownership right and capacity, except as otherwise
permitted. As of December 31, 2018, there were 36 covered institutions.
The compliance date for these covered institutions is April 1, 2020.
Although the compliance date of April 1, 2020, has not yet been
reached, we consider the effects of the proposed rule relative to a
baseline that includes the cost to covered institutions estimated for
compliance with the Rule. The FDIC estimates that part 370 will result
in compliance costs of $362.4 million for 36 FDIC-insured
institutions.\18\ The proposed amendments will likely mitigate some of
those costs.
---------------------------------------------------------------------------
\18\ The 2016 Final Rule estimated total costs of $478 million,
with $386 million of those costs to 38 covered financial
institutions and the remainder borne by the FDIC and account
holders. See 12 CFR part 370 RIN 3064-AE33, Recordkeeping for Timely
Deposit Insurance Determination, Federal Register, Vol. 81, No. 233,
Monday, December 5, 2016 for further discussion of the cost
estimation model. For this proposed rule, the FDIC updated the list
of covered institutions to 36 as of the effective date of the 2016
Final Rule. The FDIC also updated the data in the model to December
31, 2018.
---------------------------------------------------------------------------
A. Benefits
As discussed earlier, the proposed rule would offer covered
institutions that became covered institutions on the effective date the
option to extend their April 1, 2020, compliance date by up to one
year. The option of extending the implementation period would grant
covered institutions that elect to extend their compliance date greater
flexibility to comply with part 370 in a manner that would be less
burdensome. Feedback the FDIC has received from covered institutions
suggests that they would benefit from this proposal. It is difficult to
quantify how much covered institutions would benefit from this
compliance date extension option because the FDIC does not know how
many institutions will elect to use it or the progress they may have
already made towards compliance.
Similarly, streamlining the exception request process is expected
to reduce the costs to covered institutions for obtaining exceptions
from the Rule's requirements. The FDIC does not know how many covered
institutions will request such relief, so the benefits of this portion
of the proposed rule are difficult to quantify.
As discussed previously, the part 370 does not provide for an
adjustment period for a covered institution to comply with part 370
after a merger has occurred. The proposed rule amends part 370 to give
covered institutions involved in a merger a one-year grace period for
compliance violations. This additional relief for merger activity would
grant covered institutions greater flexibility to comply with part 370
in a manner that is less burdensome, thereby potentially reducing
compliance costs. It is difficult to estimate the benefits this
proposed amendment would provide covered institutions because it is
difficult to estimate the volume of future merger activity or the
extent to which additional efforts would be needed to integrate deposit
account recordkeeping or IT system capabilities.
The proposed amendments address recordkeeping concerns for several
types of accounts and would reduce the associated recordkeeping
burdens. These include accounts where electronic evidence of an account
relationship exists, certain trust accounts, certain accounts with
transactional features that are eligible for pass-through deposit
insurance, mortgage servicing accounts, and others. These proposed
amendments would likely benefit covered institutions by reducing their
total compliance costs without unduly increasing the risk of untimely
deposit insurance payments; however, it is difficult to quantify these
benefits because the FDIC does not currently have access to data on the
number of such accounts held by covered institutions.
The proposed rule also improves the clarity of certain part 370
provisions and makes corrections. This is expected to benefit covered
institutions by reducing uncertainty regarding compliance with part
370. The benefits to covered institutions of these proposed amendments
is difficult to quantify because the FDIC does not have access to data
that would shed light on the extent to which compliance costs by
covered institutions were increased as a result of uncertainty.
The reductions in recordkeeping requirements associated with the
proposed rule would likely reduce the current estimated compliance
burdens associated with part 370. It is difficult to estimate the
benefits each covered institution is likely to incur as a result of the
proposed rule because the estimation depends upon the progress each
covered institution has already made toward compliance, and the
likelihood that a covered institution would avail itself of the
benefits offered by the proposed amendments, among other things.
Additionally, it is difficult to estimate the benefits each covered
institution would be likely to enjoy as a result of the proposed rule
because the FDIC does not currently have access to data on the number
of accounts held by covered institutions for which these benefits would
accrue.
For all the reasons described in this section, quantitative
estimates of the reduction in recordkeeping burden under the proposed
rule are subject to uncertainty. That being said, an analysis of
deposit account information at covered institutions suggested that the
proposed rule could affect an estimated one to 20 percent of accounts
on average for covered institutions.\19\ The realized effect would vary
depending upon the types of accounts that a covered institution holds.
The more accounts a covered institution has, the greater the reduction
in recordkeeping requirements these proposed amendments would likely
provide. To conservatively estimate the expected benefits of the
proposed rule, the FDIC assumed that the reduced recordkeeping
requirements would affect between one and 20 percent of all deposit
accounts at covered institutions. Therefore, the proposed rule is
estimated to reduce the compliance burden of part 370 to between 41,738
and 836,028 hours for all covered institutions, which equates to an
estimated reduction in compliance costs of between $2.0 million and
$41.8 million.
---------------------------------------------------------------------------
\19\ The FDIC analyzed the dollar volume of retirement, mortgage
servicing, and trust accounts as reported on the December 31, 2018,
Call Report for covered institutions. Additionally, the FDIC
analyzed pre-paid card account data from The Nilson Report's, Top 50
U.S. Prepaid Card Issuers July 2015, Issue 1067 to determine an
estimated range of deposit accounts at covered institutions that
might be affected by the proposed rule.
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[[Page 14826]]
B. Costs
The proposed rule is unlikely to impose any significant costs to
covered institutions. The proposed rule would offer covered
institutions that became covered institutions on the effective date the
option to extend their April 1, 2020, compliance date by up to one
year. Expanding the time to comply with part 370 would increase the
risk that a covered institution might fail without having fully
implemented the capabilities that part 370 calls for. An inability to
make timely deposit insurance determinations for deposit accounts at a
covered institution could increase the potential for disruptions to
check clearing processes, direct debit arrangements, or other payment
system functions. However, the FDIC does not believe that the
incremental costs or risks of extending the initial compliance date for
up to one additional year are large. Also, the FDIC presumes that
covered institutions have made some progress toward compliance in the
past two to three years, likely mitigating the issues that would be
associated with recordkeeping deficiencies in the event that a covered
institution were to fail. Finally, to the extent that covered
institutions have made some progress toward compliance with part 370,
the proposed rule may pose some small costs associated with requisite
changes to part 370 compliance efforts. However, the FDIC believes that
these costs are likely to be small. The FDIC estimates that covered
institutions requesting exception from certain part 370 requirements
will expend 60 labor hours doing so on average.
The FDIC invites comment on the information presented in this
section. Are there any other costs or benefits the FDIC should
consider?
V. Alternatives Considered
The FDIC considered several alternatives while developing this
proposal. The FDIC first considered leaving part 370 unchanged. The
FDIC rejected this alternative because the proposed rule would benefit
covered institutions by reducing compliance burdens or clarifying some
of the requirements while still supporting a prompt deposit insurance
determination process in the event of failure. The FDIC considered
providing a one-year extension to all covered institutions that were
covered institutions as of the effective date of part 370, but opted
instead for the elective extension as the burden of obtaining the
extension is minimal and is outweighed by the value of earlier
compliance and the information regarding compliance status to be gained
by the proposed approach. The FDIC considered limiting the availability
of the alternative recordkeeping requirements for deposits resulting
from credit balances on accounts for debt owed to the covered
institution to overpayments on credit card accounts, but rejected this
approach as the same difficulties that justified this alternative could
arise in connection with other debts to the covered institution. The
FDIC considered not requiring covered institutions to deliver
notification letters to the FDIC prior to relying on exceptions granted
to other covered institutions, but rejected this approach due to the
FDIC's need to be aware of which covered institutions are relying on
previously granted exceptions.
The FDIC invites comment on these alternatives and any others not
discussed in this section.
VI. Regulatory Analysis and Procedures
A. Paperwork Reduction Act
Certain provisions of the proposed rule contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with
the requirements of the PRA, the agencies may not conduct or sponsor,
and the respondent is not required to respond to, an information
collection unless it displays a currently-valid Office of Management
and Budget (OMB) control number. The information collection related to
this proposed rule is entitled ``Recordkeeping for Timely Deposit
Insurance Determination'' and has been cleared by OMB under Control
Number 3064-0202. This information collection will be extended for
three years, with revision. The information collection requirements
contained in this proposed rule have been submitted by the FDIC to OMB
for review and approval under section 3507(d) of the PRA (44 U.S.C.
3507(d)) and section 1320.11 of the OMB's implementing regulations (5
CFR 1320).
Comments are invited on:
Whether the collections of information are necessary for
the proper performance of the Board's functions, including whether the
information has practical utility;
The accuracy or the estimate of the burden of the
information collections, including the validity of the methodology and
assumptions used;
Ways to enhance the quality, utility, and clarity of the
information to be collected;
Ways to minimize the burden of the information collections
on respondents, including through the use of automated collection
techniques or other forms of information technology; and
Estimates of capital or startup costs and costs of
operation, maintenance, and purchase of services to provide
information.
All comments will become a matter of public record. Comments on
aspects of this notice that may affect reporting, recordkeeping, or
disclosure requirements and burden estimates should be sent to the
addresses listed in the ADDRESSES section of this document. A copy of
the comments may also be submitted to the OMB desk officer by mail to
U.S. Office of Management and Budget, 725 17th Street NW, #10235,
Washington, DC 20503; facsimile to (202) 395-6974; or email to
[email protected], Attention, FDIC Desk Officer.
Proposed Information Collection
Title of Information Collection: Recordkeeping for Timely Deposit
Insurance Determination.
Frequency: On occasion.
Affected Public: Insured depository institutions having two million
or more deposit accounts and their depositors.\20\
---------------------------------------------------------------------------
\20\ Covered institutions will, as necessary, contact their
depositors to obtain accurate and complete account information for
deposit insurance determinations. For the purposes of this analysis,
the FDIC assumes that depositors will voluntarily respond.
---------------------------------------------------------------------------
Current Action: The proposed rule is estimated to reduce
recordkeeping and reporting requirements by 418,026 hours or $20.9
million dollars. The proposed rule would reduce compliance burdens for
covered institutions associated with recordkeeping and reporting in the
following ways:
Removing the certification requirement covered
institutions must make with respect to deposit accounts with
transactional features that would be eligible for pass-through deposit
insurance coverage;
Enabling covered institutions to maintain deposit account
records for certain trust accounts in accordance with the alternative
recordkeeping requirements set forth in Sec. 370.4(b)(2) rather than
the general recordkeeping requirements set forth in Sec. 370.4(a);
Offering a different recordkeeping/reporting method for
deposits created as a result of credit balances on accounts for debt
owed to a covered institution;
Enabling covered institutions to file joint requests for
exception pursuant to Sec. 370.8(b); and
Deeming certain exceptions granted if based on
substantially similar facts and the same circumstances as a request
previously granted by the FDIC.
[[Page 14827]]
An analysis of deposit account information at covered institutions
suggested that the proposed rule could affect an estimated one to 20
percent of accounts on average, for covered institutions.\21\ The
realized effect would vary depending upon the types of accounts that a
covered institution offers. The more deposit accounts a covered
institution has, the greater the reduction in recordkeeping
requirements these proposed amendments would provide. To conservatively
estimate the expected benefits of the proposed rule, the FDIC assumed
that between one and 20 percent of all deposit accounts at covered
institutions would be affected.
---------------------------------------------------------------------------
\21\ The FDIC analyzed the dollar volume of retirement, mortgage
servicing, and trust accounts as reported on the December 31, 2018,
Call Reports for covered institutions.
---------------------------------------------------------------------------
For the purposes of the Paperwork Reduction Act, the FDIC estimates
that approximately 10 percent of non-retirement accounts consist of the
type of accounts for which the FDIC has granted relief. The number of
accounts affects only one of eight components of the burden model for
the final rule for part 370 adopted in 2016 (the 2016 Final Rule):
Legacy Data Clean-up. This component consists of two portions: (1)
Automated clean-up, and (2) manual clean-up. The number of accounts
affects only the manual portion associated with correcting bank
records, and thus the proposed rule would affect only that estimate.
Using this adjusted burden as a baseline for the burden reduction
of the proposed rule, we estimate that the proposed rule would reduce
the implementation burden by 418,026 hours. This includes 418,058 of
burden reduction but adds 32 hours of additional burden for requests
for extensions and exemptions under the proposed rule. The proposed
rule would not change the annual ongoing burden.
For the purpose of the 2016 Final Rule, the FDIC estimated that
manual data clean-up would involve a 60 percent ratio of internal to
external labor, and that this labor would cost $65 per hour and $85 per
hour, respectively. The FDIC assumed that 5 percent of deposit accounts
had erroneous account information and that manual labor would correct
10 accounts per hour of effort. The FDIC also assumed that for every
hour of manual labor used by covered institutions, depositors would
also exert one hour toward correcting account information at a national
average wage rate of $27 per hour. From this, the FDIC estimated a
total implementation cost of manual data clean-up of $207.4 million.
As with the burden hours, the FDIC adjusted the original burden
model to account for updated data and included IDIs that were actually
covered by the Rule as a new baseline. After this adjustment, the FDIC
estimates that the cost of manual data clean-up fell to $188.1 million,
a decrease of $20.9 million because of the proposed rule.
Methodology
In estimating the costs of part 370, the FDIC engaged the services
of an independent consulting firm. Working with the FDIC, the
consultant used its extensive knowledge and experience with IT systems
at financial institutions to develop a model to provide cost estimates
for the following activities:
Implementing the deposit insurance calculation
Legacy data clean-up
Data extraction
Data aggregation
Data standardization
Data quality control and compliance
Data reporting
Ongoing operations
Cost estimates for these activities were derived from a projection
of the types of workers needed for each task, an estimate of the amount
of labor hours required, an estimate of the industry average labor cost
(including benefits) for each worker needed, and an estimate of worker
productivity. The analysis assumed that manual data clean-up would be
needed for 5 percent of deposit accounts, 10 accounts per hour would be
resolved, and internal labor would be used for 60 percent of the clean-
up. This analysis also projected higher costs for IDIs based on the
following factors:
Higher number of deposit accounts
Higher number of distinct core servicing platforms
Higher number of depository legal entities or separate
organizational units
Broader geographic dispersal of accounts and customers
Use of sweep accounts
Greater degree of complexity in business lines, accounts, and
operations.
Approximately half of part 370's estimated total costs are
attributable to legacy data clean-up. These legacy data clean-up cost
estimates are sensitive to both the number of deposit accounts and the
number of deposit IT systems. More than 90 percent of the legacy data
clean-up costs are associated with manually collecting account
information from customers and entering it into the covered
institutions' IT systems. Data aggregation, which is sensitive to the
number of deposit IT systems, makes up about 13 percent of the Rule's
estimated costs.
The 2016 Final Rule estimated total costs of $478 million, with
$386 million of those costs to 38 covered financial institutions and
the remainder borne by the FDIC and account holders.\22\ For this
proposed rule, the FDIC updated the list of covered institutions to 36
as of the effective date of the 2016 Final Rule and the types of
accounts covered. The FDIC also updated the data in the model to
December 31, 2018.
---------------------------------------------------------------------------
\22\ See 81 FR 87734 (December 5, 2016) for further discussion
of the cost estimation model.
\23\ Implementation costs and hours are spread over a three-year
period.
\24\ None of the respondents required to comply with the Rule
are small entities as defined by the Small Business Administration
(i.e., entities with less than $550 million in total assets).
\25\ Weighted average rounded to the nearest hour. For PRA
purposes, covered institutions are presented in roughly equal-sized
low, medium and high complexity tranches ranked by their PRA
implementation hours.
----------------------------------------------------------------------------------------------------------------
Estimated
Number of Estimated average hours Estimated
respondents annual per response total annual
\24\ frequency \25\ burden hours
----------------------------------------------------------------------------------------------------------------
Implementation Burden \23\
----------------------------------------------------------------------------------------------------------------
2016 Final Rule:
Lowest Complexity Institutions.............. 12 1 31,054 372,648
Middle Complexity Institutions.............. 13 1 46,342 602,446
Highest Complexity Institutions............. 13 1 325,494 4,231,422
---------------------------------------------------------------
[[Page 14828]]
2016 Final Rule Total................... 38 .............. 137,014 5,206,516
----------------------------------------------------------------------------------------------------------------
Updated Data and Coverage: \26\
Lowest Complexity Institutions.............. 12 1 30,304 363,648
Middle Complexity Institutions.............. 12 1 58,113 697,356
Highest Complexity Institutions............. 12 1 355,132 4,261,584
---------------------------------------------------------------
Updated Data and Coverage Total......... 36 1 147,850 5,322,588
---------------------------------------------------------------
Change from Updated Data............ -2 .............. .............. 116,072
----------------------------------------------------------------------------------------------------------------
Proposed Rule less Exceptions:
Lowest Complexity Institutions.............. 12 1 28,304 339,648
Middle Complexity Institutions.............. 12 1 53,643 643,716
Highest Complexity Institutions............. 12 1 326,764 3,921,168
---------------------------------------------------------------
Proposed Rule Total less Exceptions..... 36 1 136,237 4,904,532
----------------------------------------------------------------------------------------------------------------
Exceptions or Release: \27\
Requests for Release of Requirements........ 1 1 5 5
Requests for Exception...................... 1 1 60 60
---------------------------------------------------------------
.............. .............. .............. 4,904,608
---------------------------------------------------------------
Change from Proposed Rule............... 0 .............. .............. (417,980)
----------------------------------------------------------------------------------------------------------------
Ongoing Burden
----------------------------------------------------------------------------------------------------------------
2016 Final Rule:
Lowest Complexity Institutions.............. 12 1 493.1 5,917
Middle Complexity Institutions.............. 13 1 516.7 6,718
Highest Complexity Institutions............. 13 1 566.6 7,365
---------------------------------------------------------------
Proposed Rule Total..................... 38 .............. 526 20,000
----------------------------------------------------------------------------------------------------------------
Updated Data and Coverage:
Lowest Complexity Institutions.............. 12 1 487 5,844
Middle Complexity Institutions.............. 12 1 488 5,856
Highest Complexity Institutions............. 12 1 558 6,696
---------------------------------------------------------------
Updated Data and Coverage Total......... 36 .............. 511 18,396
---------------------------------------------------------------
Change.............................. -2 .............. .............. (1,604)
----------------------------------------------------------------------------------------------------------------
Proposed Rule:
Lowest Complexity Institutions.............. 12 1 487 5,844
Middle Complexity Institutions.............. 12 1 488 5,856
Highest Complexity Institutions............. 12 1 558 6,696
---------------------------------------------------------------
Updated Data and Coverage Total......... 36 .............. 511 18,396
---------------------------------------------------------------
Change from Proposed Rule........... 0 .............. .............. 0
----------------------------------------------------------------------------------------------------------------
The implementation costs for all covered institutions are estimated
to total $362.4 million and require approximately 4.9 million labor
hours. This represents a decline of $20.9 million and 417,980 labor
hours for covered institutions due to the proposed rule. The
implementation costs cover (1) making the deposit insurance
calculation, (2) legacy data cleanup, (3) data extraction, (4) data
aggregation, (5) data standardization, (6) data quality control and
compliance, and (7) data reporting.
---------------------------------------------------------------------------
\26\ This section incorporates changes to the baseline estimate
of Rule burden based on changes in the number of covered
institutions as well as changes to the data inputs for the burden
model. The 2016 Final Rule estimated 38 IDIs would be covered. As of
April 1, 2017, the effective date of the Rule, only 32 IDIs were
covered by the Rule. Four additional IDIs became covered by the Rule
in later quarters for a total of 36 covered institutions. This
section uses bank-level data from December 31, 2018, updating the
original burden estimate based on December 31, 2016, data.
\27\ The proposed rule allows for covered institutions to
request exceptions from Rule requirements or extensions of time to
comply. The FDIC cannot estimate how many covered institutions will
request such exceptions or extensions.
---------------------------------------------------------------------------
In terms of initial implementation, the estimated PRA burden for
individual covered institutions after enacting the proposed rule would
require between 9,056 and 275,112 burden hours, and these burden hours
would be monetized to range from $757,851 to $31.0 million. This
represents a decline for covered institutions of 675 to 29,007 burden
hours and $33,787 to $532,873 million, respectively.
The estimated ongoing burden on individual covered institutions for
reporting, testing, maintenance, and other periodic items is estimated
to
[[Page 14829]]
range between 481 and 666 labor hours, and these ongoing burden hours
are monetized to be between $72,146 and $99,865 annually. The ongoing
cost burdens remain the same.
Estimated Monetized Costs by Component
----------------------------------------------------------------------------------------------------------------
2016 final rule Updated data and Proposed rule
------------------ coverage ------------------ Change in cost
Components ------------------ from proposed
Component cost Component cost Component cost rule
** ** **
----------------------------------------------------------------------------------------------------------------
Legacy Data Cleanup..................... $226,482,333 $227,449,750 $206,547,385 ($20,902,365)
Data Aggregation........................ 64,015,373 62,707,618 62,707,618 0
Data Standardization.................... 36,573,894 35,811,558 35,811,558 0
Data Extraction......................... 25,397,761 25,073,291 25,073,291 0
Quality Control & Compliance............ 18,403,006 18,024,478 18,024,478 0
Insurance Calculation................... 9,500,400 8,584,000 8,548,000 0
Reporting............................... 5,971,800 5,661,000 5,661,000 0
----------------------------------------------------------------------------------------------------------------
Implementation Costs.................... $367,936,888 $383,311,695 $362,409,330 ($20,902,365)
----------------------------------------------------------------------------------------------------------------
Ongoing Operations...................... 2,999,963 2,758,899 2,758,899 0
----------------------------------------------------------------------------------------------------------------
Total Cost.......................... $389,344,530 $386,070,594 $365,168,229 0
----------------------------------------------------------------------------------------------------------------
Change from Updating Data....... ................ ($3,273,936) ................ ................
----------------------------------------------------------------------------------------------------------------
Change from Proposed Rule... ................ ................ ($20,902,365) ................
----------------------------------------------------------------------------------------------------------------
The estimated annual burden for the ``Recordkeeping for Timely
Deposit Insurance Determination'' information collection (OMB Control
Number 3064-0202) if the proposed rule is adopted would be as follows:
Implementation Burden: \28\
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\28\ Implementation costs and hours are spread over a three-year
period.
---------------------------------------------------------------------------
Estimated number of respondents: 36 covered institutions and their
depositors.
Estimated time per response: \29\ 136,237 hours (average).
---------------------------------------------------------------------------
\29\ For PRA purposes, covered institutions are presented in
roughly equal-sized low, medium and high complexity tranches ranked
by their PRA implementation hours.
---------------------------------------------------------------------------
Low complexity: 11,946-41,406 hours.
Medium complexity: 41,947-74,980 hours.
High complexity: 75,404-762,185 hours.
Estimated total implementation burden: 4.9 million hours.
Ongoing Burden:
Estimated number of respondents: 36 covered institutions and their
depositors.
Estimated time per response: 511 hours (average) per year.
Low complexity: 433-530 hours.
Medium complexity: 434-530 hours.
High complexity: 435-661 hours.
Estimated total ongoing annual burden: 18,396 hours per year.
Description of Collection: Part 370 requires a covered institution
to (1) maintain complete and accurate data on each depositor's
ownership interest by right and capacity for all of the covered
institution's deposit accounts, except as provided, and (2) configure
its IT system to be capable of calculating the insured and uninsured
amount in each deposit account by ownership right and capacity, which
would be used by the FDIC to make deposit insurance determinations in
the event of the covered institution's failure.
These requirements also must be supported by policies and
procedures and will involve ongoing burden for testing, reporting to
the FDIC, and general maintenance of recordkeeping and IT systems'
functionality. Estimates of both initial implementation and ongoing
burden are provided.
Compliance with part 370 would involve certain reporting
requirements:
Not later than ten business days after the effective date
of the final rule or after becoming a covered institution, a covered
institution shall designate a point of contact responsible for
implementing the requirements of this rulemaking.
Covered institutions would be required to certify annually
that their IT systems can calculate deposit insurance coverage
accurately and completely within the 24 hour time frame set forth in
the final rule. If a covered institution experiences a significant
change in its deposit taking operations, it may be required to
demonstrate more frequently than annually that its IT system can
calculate deposit insurance coverage accurately and completely.
In connection with the certification, covered institutions
shall complete a deposit insurance coverage summary report.
Covered institutions may seek relief from any specific
aspect of the final rule's requirements if circumstances exist that
would make it impracticable or overly burdensome to meet those
requirements. When doing so, they must demonstrate the need for
exception, describe the impact of an exception on the ability to
quickly and accurately calculate deposit insurance for the related
deposit accounts, and state the number of, and the dollar value of
deposits in, the related deposit accounts.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq.,
generally requires an agency, in connection with a proposed rule, to
prepare and make available an initial regulatory flexibility analysis
that describes the impact of a proposed rule on small entities.\30\
However, a regulatory flexibility analysis is not required if the
agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. The Small Business
Administration (SBA) has defined ``small entities'' to include banking
organizations with total assets of less than or equal to $550 million
who are independently owned and operated or owned by a holding
[[Page 14830]]
company with less than $550 million in total assets.\31\
---------------------------------------------------------------------------
\30\ 5 U.S.C. 601 et seq.
\31\ The SBA defines a small banking organization as having $550
million or less in assets, where ``a financial institution's assets
are determined by averaging the assets reported on its four
quarterly financial statements for the preceding year.'' See 13 CFR
121.201 (as amended, effective December 2, 2014). ``SBA counts the
receipts, employees, or other measure of size of the concern whose
size is at issue and all of its domestic and foreign affiliates.''
See 13 CFR 121.103. Following these regulations, the FDIC uses a
covered institution's affiliated and acquired assets, averaged over
the preceding four quarters, to determine whether the covered
institution is ``small'' for the purposes of RFA.
---------------------------------------------------------------------------
The FDIC insures 5,486 institutions, of which 4,047 are considered
small entities for the purposes of RFA.\32\
---------------------------------------------------------------------------
\32\ Call Report data, September 30, 2018, the latest date for
which bank holding company data is available.
---------------------------------------------------------------------------
This proposed rule will affect all insured depository institutions
that have two million or more deposit accounts. The FDIC does not
currently insure any institutions with two million or more deposit
accounts that have $550 million or less in total consolidated
assets.\33\ Since this proposal does not affect any institutions that
are defined as small entities for the purposes of the RFA, the FDIC
certifies that the proposed rule will not have a significant economic
impact on a substantial number of small entities.
---------------------------------------------------------------------------
\33\ FDIC Call Report data, December 31, 2018.
---------------------------------------------------------------------------
The FDIC invites comments on all aspects of the supporting
information provided in this RFA section. In particular, would this
proposal have any significant effects on small entities that the FDIC
has not identified?
C. Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113
Stat. 1338, 1471) requires the Federal banking agencies to use plain
language in all proposed and final rules published after January 1,
2000. The FDIC has sought to present the proposed rule in a simple and
straightforward manner.
The FDIC invites your comments on how to make this revised proposal
easier to understand. For example:
Has the FDIC organized the material to suit your needs? If
not, how could the material be better organized?
Are the requirements in the proposed regulation clearly
stated? If not, how could the regulation be stated more clearly?
Does the proposed regulation contain language or jargon
that is unclear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand?
D. Treasury and General Government Appropriations Act, 1999--Assessment
of Federal Regulations and Policies on Families
The FDIC has determined that the proposed rule will not affect
family well-being within the meaning of Sec. 654 of the Treasury and
General Government Appropriations Act, enacted as part of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1999
(Pub. L. 105-277, 112 Stat. 2681).
List of Subjects in 12 CFR Part 370
Bank deposit insurance, Banks, banking, Reporting and recordkeeping
requirements, Savings associations.
Authority and Issuance
0
For the reasons set forth in the preamble, the Federal Insurance
Deposit Corporation proposes to amend 12 CFR part 370 by revising it to
read as follows:
PART 370--RECORDKEEPING FOR TIMELY DEPOSIT INSURANCE DETERMINATION
Sec.
370.1 Purpose and scope.
370.2 Definitions.
370.3 Information technology system requirements.
370.4 Recordkeeping requirements.
370.5 Actions required for certain deposit accounts with
transactional features.
370.6 Implementation.
370.7 Accelerated implementation.
370.8 Relief.
370.9 Communication with the FDIC.
370.10 Compliance.
Appendix A to Part 370--Ownership Right and Capacity Codes
Appendix B to Part 370--Output Files Structure
Appendix C to Part 370--Credit Balance Processing File Structure
Authority: 12 U.S.C. 1817(a)(9), 1819 (Tenth), 1821(f)(1),
1822(c), 1823(c)(4).
Sec. 370.1 Purpose and scope.
Unless otherwise provided in this part, each ``covered
institution'' (defined in Sec. 370.2(c)) is required to implement the
information technology system and recordkeeping capabilities needed to
calculate the amount of deposit insurance coverage available for each
deposit account in the event of its failure. Doing so will improve the
FDIC's ability to fulfill its statutory mandates to pay deposit
insurance as soon as possible after a covered institution's failure and
to resolve a covered institution at the least cost to the Deposit
Insurance Fund.
Sec. 370.2 Definitions.
For purposes of this part:
(a) Account holder means the person or entity who has opened a
deposit account with a covered institution and with whom the covered
institution has a direct legal and contractual relationship with
respect to the deposit.
(b) [Reserved.]
(c) Covered institution means:
(1) An insured depository institution which, based on its Reports
of Condition and Income filed with the appropriate federal banking
agency, has 2 million or more deposit accounts during the two
consecutive quarters preceding the effective date of this part or
thereafter; or
(2) Any other insured depository institution that delivers written
notice to the FDIC that it will voluntarily comply with the
requirements set forth in this part.
(d) Compliance date means, except as otherwise provided in Sec.
370.6(b):
(1) April 1, 2020, for any insured depository institution that was
a covered institution as of April 1, 2017;
(2) The date that is three years after the date on which an insured
depository institution becomes a covered institution; or
(3) The date on which an insured depository institution that elects
to be a covered institution under Sec. 370.2(c)(2) files its first
certification of compliance and deposit insurance coverage summary
report pursuant to Sec. 370.10(a).
(e) Deposit has the same meaning as provided under section 3(l) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(l)).
(f) Deposit account records has the same meaning as provided in 12
CFR 330.1(e).
(g) Ownership rights and capacities are set forth in 12 CFR part
330.
(h) Payment instrument means a check, draft, warrant, money order,
traveler's check, electronic instrument, or other instrument, payment
of funds, or monetary value (other than currency).
(i) Standard maximum deposit insurance amount (or SMDIA) has the
same meaning as provided pursuant to section 11(a)(1)(E) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(a)(1)(E)) and 12 CFR 330.1(o).
(j) Transactional features with respect to a deposit account means
that the account holder or the beneficial owner of deposits can make
transfers from the deposit account to parties other than the account
holder, beneficial owner of deposits, or the covered institution
itself, by methods that may result in such transfers being reflected in
the end-of-day ledger balance for such deposit account on a day that is
later
[[Page 14831]]
than the day that such transfer is initiated, even if initiated prior
to the institution's normal cutoff time for such transaction. A deposit
account also has transactional features if preauthorized or automatic
instructions provide for transfer of deposits in the deposit account to
another deposit account at the same institution, if such other deposit
account itself has transactional features.
(k) Unique identifier means an alpha-numeric code associated with
an individual or entity that is used consistently and continuously by a
covered institution to monitor the covered institution's relationship
with that individual or entity.
Sec. 370.3 Information technology system requirements.
(a) A covered institution must configure its information technology
system to be capable of performing the functions set forth in paragraph
(b) of this section within 24 hours after the appointment of the FDIC
as receiver. To the extent that a covered institution does not maintain
its deposit account records in the manner prescribed under Sec.
370.4(a) but instead in the manner prescribed under Sec. 370.4(b), (c)
or (d), the covered institution's information technology system must be
able to perform the functions set forth in paragraph (b) of this
section upon input by the FDIC of additional information collected
after failure of the covered institution.
(b) Each covered institution's information technology system must
be capable of:
(1) Accurately calculating the deposit insurance coverage for each
deposit account in accordance with 12 CFR part 330;
(2) Generating and retaining output records in the data format and
layout specified in Appendix B;
(3) Restricting access to some or all of the deposits in a deposit
account until the FDIC has made its deposit insurance determination for
that deposit account using the covered institution's information
technology system; and
(4) Debiting from each deposit account the amount that is uninsured
as calculated pursuant to paragraph (b)(1) of this section.
Sec. 370.4 Recordkeeping requirements.
(a) General recordkeeping requirements. Except as otherwise
provided in paragraphs (b), (c), and (d) of this section, a covered
institution must maintain in its deposit account records for each
account the information necessary for its information technology system
to meet the requirements set forth in Sec. 370.3. The information must
include:
(1) The unique identifier of each:
(i) Account holder;
(ii) Beneficial owner of a deposit, if the account holder is not
the beneficial owner; and
(iii) Grantor and each beneficiary, if the deposit account is held
in connection with an informal revocable trust that is insured pursuant
to 12 CFR 330.10 (e.g., payable-on-death accounts, in-trust-for
accounts, and Totten Trust accounts).
(2) The applicable ownership right and capacity code listed and
described in Appendix A to this part.
(b) Alternative recordkeeping requirements. As permitted under this
paragraph, a covered institution may maintain in its deposit account
records less information than is required under paragraph (a) of this
section.
(1) For each deposit account for which a covered institution's
deposit account records disclose the existence of a relationship which
might provide a basis for additional deposit insurance in accordance
with 12 CFR 330.5 or 330.7 and for which the covered institution does
not maintain information that would be needed for its information
technology system to meet the requirements set forth in Sec. 370.3,
the covered institution must maintain, at a minimum, the following in
its deposit account records:
(i) The unique identifier of the account holder; and
(ii) The corresponding ``pending reason'' code listed in data field
2 of the pending file format set forth in Appendix B (and need not
maintain a ``right and capacity'' code).
(2) For each formal revocable trust account that is insured as
described in 12 CFR 330.10 and for each irrevocable trust account that
is insured as described in either 12 CFR 330.12 or 12 CFR 330.13, and
for which the covered institution does not maintain the information
that would be needed for its information technology system to meet the
requirements set forth in Sec. 370.3, the covered institution must, at
a minimum, maintain in its deposit account records:
(i) The unique identifier of the account holder;
(ii) The unique identifier of the grantor if the deposit account
has transactional features (unless the account is insured as described
in 12 CFR 330.12, in which case the unique identifier of the grantor
need not be maintained for purposes of this part); and
(iii) The corresponding ``right and capacity'' code listed in data
field 4 of the pending file format set forth in Appendix B.
(c) Recordkeeping requirements for official items. A covered
institution must maintain in its deposit account records the
information needed for its information technology system to meet the
requirements set forth in Sec. 370.3 with respect to accounts held in
the name of the covered institution from which withdrawals are made to
honor a payment instrument issued by the covered institution, such as a
certified check, loan disbursement check, interest check, traveler's
check, expense check, official check, cashier's check, money order, or
similar payment instrument. To the extent that the covered institution
does not have such information, it need only maintain in its deposit
account records for those accounts the corresponding ``pending reason''
code listed in data field 2 of the pending file format set forth in
Appendix B (and need not maintain a ``right and capacity'' code).
(d) Recordkeeping requirements for deposits resulting from credit
balances on an account for debt owed to the covered institution. A
covered institution is not required to meet the recordkeeping
requirements of paragraphs (a) or (b) of this section with respect to
deposit liabilities reflected as credit balances on an account for debt
owed to the covered institution if its information technology system is
capable of:
(1) Immediately upon failure, restricting access to:
(i) Such credit balances on the account for debt owed to the
covered institution, or
(ii) An equal amount in that borrower's deposit account(s) at the
covered institution; and
(2) Producing:
(i) Within 24 hours after failure, a file listing credit balances
on open-end credit accounts (revolving credit lines) such as credit
card accounts and home equity lines of credit in the format provided in
Appendix C to this part 370 that can be used by the covered
institution's information technology system to meet the requirements
set forth in Sec. 370.3(b)(1), (2) and (4); and
(ii) Promptly after failure, a file listing the credit balances on
closed-end loan accounts in the format provided in Appendix C to this
part 370 that can be used by the covered institution's information
technology system to meet the requirements set forth in Sec.
370.3(b)(1), (2) and (4).
[[Page 14832]]
Sec. 370.5 Actions required for certain deposit accounts with
transactional features.
(a) For each deposit account with transactional features for which
the covered institution maintains its deposit account records in
accordance with Sec. 370.4(b)(1), a covered institution must take
steps reasonably calculated to ensure that the account holder will
provide to the FDIC the information needed for the covered
institution's information technology system to calculate deposit
insurance coverage as set forth in Sec. 370.3(b) within 24 hours after
the appointment of the FDIC as receiver. At a minimum, ``steps
reasonably calculated'' shall include:
(1) Contractual arrangements with the account holder that obligate
the account holder to deliver information needed for deposit insurance
calculation to the FDIC in a format compatible with the covered
institution's information technology system immediately upon the
covered institution's failure; and
(2) A disclosure stating that the account holder's delay in
delivery of such information, or the account holder's delivery of
information in a format that is not compatible with the covered
institution's information technology system, could result in delayed
access to deposits should the covered institution fail.
(b) A covered institution need not take the steps required pursuant
to paragraph (a) of this section with respect to:
(1) Accounts maintained by a mortgage servicer, in a custodial or
other fiduciary capacity, which are comprised of payments by
mortgagors;
(2) Accounts maintained by real estate brokers, real estate agents,
or title companies in which funds from multiple clients are deposited
and held for a short period of time in connection with a real estate
transaction;
(3) Accounts established by an attorney or law firm on behalf of
clients, commonly known as an Interest on Lawyers Trust Accounts, or
functionally equivalent accounts;
(4) Accounts held in connection with an employee benefit plan (as
defined in 12 CFR 330.14); and
(5) An account maintained by an account holder for the benefit of
others, to the extent that the deposits in the account are held for the
benefit of:
(i) A formal revocable trust that would be insured as described in
12 CFR 330.10;
(ii) An irrevocable trust that would be insured as described in 12
CFR 330.12; or
(iii) An irrevocable trust that would be insured as described in 12
CFR 330.13.
Sec. 370.6 Implementation.
(a) A covered institution must satisfy the information technology
system and recordkeeping requirements set forth in this part before the
compliance date.
(b) Extension.
(1) A covered institution may submit a request to the FDIC for an
extension of its compliance date. The request shall state the amount of
additional time needed to meet the requirements of this part, the
reason(s) for which such additional time is needed, and the total
number and dollar value of accounts for which deposit insurance
coverage could not be calculated using the covered institution's
information technology system were the covered institution to fail as
of the date of the request. The FDIC's grant of a covered institution's
request for extension may be conditional or time-limited.
(2) An insured depository institution that became a covered
institution on April 1, 2017, may extend its compliance date for up to
one year upon written notice to the FDIC prior to April 1, 2020. Such
notice shall state the total number of, and dollar amount of deposits
in, deposit accounts for which the covered institution's information
technology system cannot calculate deposit insurance coverage as of
April 1, 2020.
Sec. 370.7 Accelerated implementation.
(a) On a case-by-case basis, the FDIC may accelerate, upon notice,
the implementation time frame for all or part of the requirements of
this part for a covered institution that:
(1) Has a composite rating of 3, 4, or 5 under the Uniform
Financial Institution's Rating System (CAMELS rating), or in the case
of an insured branch of a foreign bank, an equivalent rating;
(2) Is undercapitalized, as defined under the prompt corrective
action provisions of 12 CFR part 324; or
(3) Is determined by the appropriate federal banking agency or the
FDIC in consultation with the appropriate federal banking agency to be
experiencing a significant deterioration of capital or significant
funding difficulties or liquidity stress, notwithstanding the composite
rating of the covered institution by its appropriate federal banking
agency in its most recent report of examination.
(b) In implementing this section, the FDIC must consult with the
covered institution's appropriate federal banking agency and consider
the complexity of the covered institution's deposit system and
operations, extent of the covered institution's asset quality
difficulties, volatility of the institution's funding sources, expected
near-term changes in the covered institution's capital levels, and
other relevant factors appropriate for the FDIC to consider in its role
as insurer of the covered institution.
Sec. 370.8 Relief.
(a) Exemption. A covered institution may submit a request in the
form of a letter to the FDIC for an exemption from this part if it
demonstrates that it does not take deposits from any account holder
which, when aggregated, would exceed the SMDIA for any owner of the
funds on deposit and will not in the future.
(b) Exception. (1) One or more covered institutions may submit a
request in the form of a letter to the FDIC for exception from one or
more of the requirements set forth in this part if circumstances exist
that would make it impracticable or overly burdensome to meet those
requirements. The request letter must:
(i) Identify the covered institution(s) requesting the exception;
(ii) Specify the requirement(s) of this part from which exception
is sought;
(iii) Describe the deposit accounts the request concerns and state
the number of, and dollar amount of deposits in, such deposit accounts
for each covered institution requesting the exception;
(iv) Demonstrate the need for exception for each covered
institution requesting the exception; and
(v) Explain the impact of the exception on the ability of each
covered institution's information technology system to quickly and
accurately calculate deposit insurance for the related deposit
accounts.
(2) The FDIC shall publish a notice of its response to each
exception request in the Federal Register.
(3) By following the procedure set forth in this paragraph, a
covered institution may rely upon another covered institution's
exception request which the FDIC has previously granted. The covered
institution must notify the FDIC that it will invoke relief from
certain part 370 requirements by submitting a notification letter to
the FDIC demonstrating that the covered institution has substantially
similar facts and the same circumstances as those of the covered
institution that has already received the FDIC's approval. The covered
institution's notification letter must also include the information
required under paragraph (b)(1) of this section and cite the applicable
notice published pursuant to paragraph (b)(2)
[[Page 14833]]
of this section. The covered institution's notification for exception
shall be deemed granted subject to the same conditions set forth in the
FDIC's published notice unless the FDIC informs the covered institution
to the contrary within 120 days after receipt of a complete
notification for exception.
(c) Release from this part. A covered institution may submit a
request in the form of a letter to the FDIC for release from this part
if, based on its Reports of Condition and Income filed with the
appropriate federal banking agency, it has less than two million
deposit accounts during any three consecutive quarters after becoming a
covered institution.
(d) Release from 12 CFR 360.9 requirements. A covered institution
is released from the provisional hold and standard data format
requirements of 12 CFR 360.9 upon submitting to the FDIC the compliance
certification required under Sec. 370.10(a). A covered institution
released from 12 CFR 360.9 under this paragraph (d) shall remain
released for so long as it is a covered institution.
(e) FDIC approval of a request. The FDIC will consider all requests
submitted in writing by a covered institution on a case-by-case basis
in light of the objectives of this part, and the FDIC's grant of any
request made by a covered institution pursuant to this section may be
conditional or time-limited.
Sec. 370.9 Communication with the FDIC.
(a) Point of contact. Not later than ten business days after either
the effective date of this part or becoming a covered institution, a
covered institution must notify the FDIC of the person(s) responsible
for implementing the recordkeeping and information technology system
capabilities required by this part.
(b) Address. Point-of-contact information, reports and requests
made under this part shall be submitted in writing to: Office of the
Director, Division of Resolutions and Receiverships, Federal Deposit
Insurance Corporation, 550 17th Street NW, Washington, DC 20429-0002.
Sec. 370.10 Compliance.
(a) Certification and report. A covered institution shall submit to
the FDIC a certification of compliance and a deposit insurance coverage
summary report on or before its compliance date and annually
thereafter.
(1) The certification must:
(i) Confirm that the covered institution has implemented all
required capabilities and tested its information technology system
during the preceding twelve months;
(ii) Confirm that such testing indicates that the covered
institution is in compliance with this part; and
(iii) Be signed by the covered institution's chief executive
officer or chief operating officer and made to the best of his or her
knowledge and belief after due inquiry.
(2) The deposit insurance coverage summary report must include:
(i) A description of any material change to the covered
institution's information technology system or deposit taking
operations since the prior annual certification;
(ii) The number of deposit accounts, number of different account
holders, and dollar amount of deposits by ownership right and capacity
code (as listed and described in Appendix A);
(iii) The total number of fully-insured deposit accounts and the
total dollar amount of deposits in all such accounts;
(iv) The total number of deposit accounts with uninsured deposits
and the total dollar amount of uninsured amounts in all of those
accounts; and
(v) By deposit account type, the total number of, and dollar amount
of deposits in, deposit accounts for which the covered institution's
information technology system cannot calculate deposit insurance
coverage using information currently maintained in the covered
institution's deposit account records.
(3) If a covered institution experiences a significant change in
its deposit taking operations, the FDIC may require that it submit a
certification of compliance and a deposit insurance coverage summary
report more frequently than annually.
(b) FDIC Testing.
(1) The FDIC will conduct periodic tests of a covered institution's
compliance with this part. These tests will begin no sooner than the
last day of the first calendar quarter following the compliance date
and would occur no more frequently than on a three-year cycle
thereafter, unless there is a material change to the covered
institution's information technology system, deposit-taking operations,
or financial condition following the compliance date, in which case the
FDIC may conduct such tests at any time thereafter.
(2) A covered institution shall provide the appropriate assistance
to the FDIC as the FDIC tests the covered institution's ability to
satisfy the requirements set forth in this part.
(c) Effect of pending requests. A covered institution that has
submitted a request pursuant to Sec. 370.6(b) or Sec. 370.8(a)
through (c) will not be considered to be in violation of this part as
to the requirements that are the subject of the request while awaiting
the FDIC's response to such request.
(d) Effect of changes to law. A covered institution will not be
considered to be in violation of this part as a result of a change in
law that alters the availability or calculation of deposit insurance
for such period as specified by the FDIC following the effective date
of such change.
(e) Effect of merger. An instance of non-compliance occurring as
the direct result of a merger between a covered institution and another
insured depository institution shall be deemed not to constitute a
violation of this part for a period of one year following the effective
date of the merger.
Appendix A to Part 370: Ownership Right and Capacity Codes
A covered institution must use the codes defined below when
assigning ownership right and capacity codes.
------------------------------------------------------------------------
Code Illustrative description
------------------------------------------------------------------------
SGL........................... Single Account (12 CFR 330.6): An
account owned by one person with no
testamentary or ``payable-on-death''
beneficiaries. It includes individual
accounts, sole proprietorship accounts,
single-name accounts containing
community property funds, and accounts
of a decedent and accounts held by
executors or administrators of a
decedent's estate.
JNT........................... Joint Account (12 CFR 330.9): An account
owned by two or more persons with no
testamentary or ``payable-on-death''
beneficiaries (other than surviving co-
owners) An account does not qualify as
a joint account unless: (1) All co-
owners are living persons; (2) each co-
owner has personally signed a deposit
account signature card (except that the
signature requirement does not apply to
certificates of deposit, to any deposit
obligation evidenced by a negotiable
instrument, or to any account
maintained on behalf of the co-owners
by an agent or custodian); and (3) each
co-owner possesses withdrawal rights on
the same basis.
[[Page 14834]]
REV........................... Revocable Trust Account (12 CFR 330.10):
An account owned by one or more persons
that evidences an intention that, upon
the death of the owner(s), the funds
shall belong to one or more
beneficiaries. There are two types of
revocable trust accounts:
(1) Payable-on-Death Account
(Informal Revocable Trust Account):
An account owned by one or more
persons with one or more
testamentary or ``payable-on-death''
beneficiaries.
(2) Revocable Living Trust Account
(Formal Revocable Trust Account): An
account in the name of a formal
revocable ``living trust'' with one
or more grantors and one or more
testamentary beneficiaries.
IRR........................... Irrevocable Trust Account (12 CFR
330.13): An account in the name of an
irrevocable trust (unless the trustee
is an insured depository institution,
in which case the applicable code is
DIT.
CRA........................... Certain Other Retirement Accounts (12
CFR 330.14 (b)-(c)) to the extent that
participants under such plan have the
right to direct the investment of
assets held in individual accounts
maintained on their behalf by the plan,
including an individual retirement
account described in section 408(a) of
the Internal Revenue Code (26 U.S.C.
408(a)), an account of a deferred
compensation plan described in section
457 of the Internal Revenue Code (26
U.S.C. 457), an account of an
individual account plan as defined in
section 3(34) of the Employee
Retirement Income Security Act (29
U.S.C. 1002), a plan described in
section 401(d) of the Internal Revenue
Code (26 U.S.C. 401(d)).
EBP........................... Employee Benefit Plan Account (12 CFR
330.14): An account of an employee
benefit plan as defined in section 3(3)
of the Employee Retirement Income
Security Act (29 U.S.C. 1002),
including any plan described in section
401(d) of the Internal Revenue Code (26
U.S.C. 401(d)), but not including any
account classified as a Certain
Retirement Account.
BUS........................... Business/Organization Account (12 CFR
330.11): An account of an organization
engaged in an `independent activity'
(as defined in Sec. 330.1(g)), but
not an account of a sole
proprietorship.
This category includes:
a. Corporation Account: An account
owned by a corporation.
b. Partnership Account: An account
owned by a partnership.
c. Unincorporated Association
Account: An account owned by an
unincorporated association (i.e., an
account owned by an association of
two or more persons formed for some
religious, educational, charitable,
social, or other noncommercial
purpose).
GOV1-GOV2-GOV3................ Government Account (12 CFR 330.15): An
account of a governmental entity.
GOV1...................... All time and savings deposit accounts of
the United States and all time and
savings deposit accounts of a state,
county, municipality, or political
subdivision depositing funds in an
insured depository institution in the
state comprising the public unit or
wherein the public unit is located
(including any insured depository
institution having a branch in said
state).
GOV2...................... All demand deposit accounts of the
United States and all demand deposit
accounts of a state, county,
municipality, or political subdivision
depositing funds in an insured
depository institution in the state
comprising the public unit or wherein
the public unit is located (including
any insured depository institution
having a branch in said state).
GOV3...................... All deposits, regardless of whether they
are time, savings or demand deposit
accounts of a state, county,
municipality or political subdivision
depositing funds in an insured
depository institution outside of the
state comprising the public unit or
wherein the public unit is located.
MSA........................... Mortgage Servicing Account (12 CFR
330.7(d)): An account held by a
mortgage servicer, funded by payments
by mortgagors of principal and
interest.
PBA........................... Public Bond Accounts (12 CFR 330.15(c)):
An account consisting of funds held by
an officer, agent or employee of a
public unit for the purpose of
discharging a debt owed to the holders
of notes or bonds issued by the public
unit.
DIT........................... IDI as trustee of irrevocable trust
accounts (12 CFR 330.12): ``Trust
funds'' (as defined in Sec. 330.1(q))
account held by an insured depository
institution as trustee of an
irrevocable trust.
ANC........................... Annuity Contract Accounts (12 CFR
330.8): Funds held by an insurance
company or other corporation in a
deposit account for the sole purpose of
funding life insurance or annuity
contracts and any benefits incidental
to such contracts.
BIA........................... Custodian accounts for American Indians
(12 CFR 330.7(e)): Funds deposited by
the Bureau of Indian Affairs of the
United States Department of the
Interior (the ``BIA'') on behalf of
American Indians pursuant to 25 U.S.C.
162(a), or by any other disbursing
agent of the United States on behalf of
American Indians pursuant to similar
authority, in an insured depository
institution.
DOE........................... IDI Accounts under Department of Energy
Program: Funds deposited by an insured
depository institution pursuant to the
Bank Deposit Financial Assistance
Program of the Department of Energy.
------------------------------------------------------------------------
Appendix B to Part 370: Output Files Structure
These output files will include the data necessary for the FDIC
to determine deposit insurance coverage in a resolution. A covered
institution's information technology system must have the capability
to prepare and maintain the files detailed below. These files must
be prepared in successive iterations as the FDIC receives additional
data from external sources necessary to complete the deposit
insurance determinations, and, as it updates pending determinations.
The files will be comprised of the following four tables. The unique
identifier and government identification are required in all four
tables so those tables can be linked where necessary.
A null value, as indicated in the table below, is allowed for
fields that are not immediately needed to calculate deposit
insurance. To ensure timely calculations for depositor liquidity
purposes, the information with null-value designations can be
obtained after the initial deposit insurance calculation. As due
diligence for recordkeeping progresses throughout the years of
ongoing compliance, the FDIC expects that the banks will continue
efforts to the capture the null-value designations and populate the
output file to alleviate the burden at failure. If a null value is
allowed in a field, the record should not be placed in the pending
file.
These files must be prepared in successive iterations as the
covered institution receives additional data from external sources
necessary to complete any pending deposit insurance calculations.
The unique identifier is required in all four files to link the
customer information. All files are pipe delimited. Do not pad
leading and trailing spacing or zeros for the data fields.
[[Page 14835]]
[GRAPHIC] [TIFF OMITTED] TP11AP19.000
Customer File. Customer File will be used by the FDIC to
identify the customers. One record represents one unique customer.
The data elements will include:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Field name Description Format Null value allowed?
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID.................................. This field is the unique identifier Variable Character............... No.
that is the primary key for the
depositor data record. It will be
generated by the covered institution
and there shall not be duplicates.
2. CS_Govt_ID.................................... This field shall contain the ID Variable Character............... No.
number that identifies the entity
based on a government issued ID or
corporate filing. Populate as
follows:
--For a United States individual--SSN
or TIN
--For a foreign national individual--
where a SSN or TIN does not exist, a
foreign passport or other legal
identification number (e.g., Alien
Card)
--For a Non-Individual--the Tax
identification Number (TIN), or
other register entity number
3. CS_Govt_ID_Type............................... The valid customer identification Character (3).................... No.
types, are noted below:
--SSN--Social Security Number
--TIN--Tax Identification Number
--DL--Driver's License, issued by a
State or Territory of the United
States
--ML--Military ID
--PPT--Valid Passport
--AID--Alien Identification Card
--OTH--Other
4. CS_Type....................................... The customer type field indicates the Character (3).................... Yes.
type of entity the customer is at
the covered institution. The valid
values are:
--IND--Individual
--BUS--Business
--TRT--Trust
--NFP--Non-Profit
--GOV--Government
--OTH--Other
5. CS_First_Name................................. Customer first name. Use only for the Variable Character............... No.
name of individuals and the primary
contact for entity.
6. CS_Middle_Name................................ Customer middle name. Use only for Variable Character............... Yes.
the name of individuals and the
primary contact for entity.
7. CS_Last_Name.................................. Customer last name. Use only for the Variable Character............... No.
name of individuals and the primary
contact for entity.
8. CS_Name_Suffix................................ Customer suffix. Variable Character............... Yes.
9. CS_Entity_Name................................ The registered name of the entity. Do Variable Character............... Yes.
not use this field if the customer
is an individual.
10. CS_Street_Add_Ln1............................ Street address line 1. The current Variable Character............... Yes.
account statement mailing address of
record.
11. CS_Street_Add_Ln2............................ Street address line 2. If available, Variable Character............... Yes.
the second address line.
12. CS_Street_Add_Ln3............................ Street address line 3. If available, Variable Character............... Yes.
the third address line.
13. CS_City...................................... The city associated with the mailing Variable Character............... Yes.
address.
14. CS_State..................................... The state for United States addresses Variable Character............... Yes.
or state/province/county for
international addresses.
--For United States addresses use a
two-character state code (official
United States Postal Service
abbreviations) associated with the
mailing address.
--For international address follow
that country state code.
15. CS_ZIP....................................... The Zip/Postal Code associated with Variable Character............... Yes.
the customer's mailing address.
--For United States zip codes, use
the United States Postal Service
ZIP+4 standard
--For international zip codes follow
that standard format of that country
16. CS_Country................................... The country associated with the Variable Character............... Yes.
mailing address. Provide the country
name or the standard International
Organization for Standardization
(ISO) country code.
17. CS_Telephone................................. Customer telephone number. The Variable Character............... Yes.
telephone number on record for the
customer, including the country code
if not within the United States.
18. CS_Email..................................... The email address on record for the Variable Character............... Yes.
customer.
19. CS_Outstanding_Debt_Flag..................... This field indicates whether the Character (1).................... Yes.
customer has outstanding debt with
covered institution. This field may
be used by the FDIC to determine
offsets. Enter ``Y'' if customer has
outstanding debt with covered
institutions, enter ``N'' otherwise.
[[Page 14836]]
20. CS_Security_Pledge_Flag...................... This field shall only be used for Character (1).................... No.
Government customers. This field
indicates whether the covered
institution has pledged securities
to the government entity, to cover
any shortfall in deposit insurance.
Enter ``Y'' if the government entity
has outstanding security pledge with
covered institutions, enter ``N''
otherwise.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Account File. The Account File contains the deposit ownership
rights and capacities information, allocated balances, insured
amounts, and uninsured amounts. The balances are in U.S. dollars.
The Account file is linked to the Customer File by the CS_Unique_ID.
The data elements will include:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Field name Description Format Null value allowed?
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID.................................. This field is the unique identifier Variable Character............... No.
that is the primary key for the
depositor data record. It will be
generated by the covered institution
and there cannot be duplicates.
2. DP_Acct_Identifier............................ Deposit account identifier. The Variable Character............... No.
primary field used to identify a
deposit account.
The account identifier may be
composed of more than one physical
data element to uniquely identify a
deposit account.
3. DP_Right_Capacity............................. Account ownership categories. Character (4).................... No.
--SGL--Single accounts
--JNT--Joint accounts
--REV--Revocable trust accounts
--IRR--Irrevocable trust accounts
--CRA--Certain retirement accounts
--EBP--Employee benefit plan accounts
--BUS--Business/Organization accounts
--GOV1, GOV2, GOV3--Government
accounts (public unit accounts)
--MSA--Mortgage servicing accounts
for principal and interest payments
--DIT--Accounts held by a depository
institution as the trustee of an
irrevocable trust
--ANC--Annuity contract accounts
--PBA--Public bond accounts
--BIA--Custodian accounts for
American Indians
--DOE--Accounts of an IDI pursuant to
the Bank Deposit Financial
Assistance Program of the Department
of Energy
4. DP_Prod_Cat................................... Product category or classification. Character (3).................... Yes. For credit card
--DDA--Demand Deposit Accounts accounts with a credit
--NOW--Negotiable Order of Withdrawal balance that create a
--MMA--Money Market Deposit Accounts deposit liability, use a
--SAV--Other savings accounts NULL value for this field.
--CDS--Time Deposit accounts and
Certificate of Deposit accounts,
including any accounts with
specified maturity dates that may or
may not be renewable.
5. DP_Allocated_Amt.............................. The current balance in the account at Decimal (14,2)................... No.
the end of business on the effective
date of the file, allocated to a
specific owner in that insurance
category.
For JNT accounts, this is a
calculated field that represents the
allocated amount to each owner in
JNT category.
For REV accounts, this is a
calculated field that represents the
allocated amount to each owner-
beneficiary in REV category.
For other accounts with only one
owner, this is the account current
balance.
This balance shall not be reduced by
float or holds. For CDs and time
deposits, the balance shall reflect
the principal balance plus any
interest paid and available for
withdrawal not already included in
the principal (do not include
accrued interest).
6. DP_Acc_Int.................................... Accrued interest allocated similarly Decimal (14,2)................... No.
as data field #5 DP_Allocated_Amt.
The amount of interest that has been
earned but not yet paid to the
account as of the date of the file.
7. DP_Total_PI................................... Total amount adding #5 Decimal (14,2)................... No.
DP_Allocated_Amt and #6 DP_Acc_Int.
8. DP_Hold_Amount................................ Hold amount on the account. Decimal (14,2)................... No.
The available balance of the account
is reduced by the hold amount. It
has no effect on current balance
(ledger balance).
9. DP_Insured_Amount............................. The insured amount of the account. Decimal (14,2)................... No.
10. DP_Uninsured_Amount.......................... The uninsured amount of the account. Decimal (14,2)................... No.
11. DP_Prepaid_Account_Flag...................... This field indicates a prepaid Character (1).................... No.
account with covered institution.
Enter ``Y'' if account is a prepaid
account with covered institutions,
enter ``N'' otherwise.
12. DP_PT_Account_Flag........................... This field indicates a pass-through Character (1).................... No.
account with covered institution.
Enter ``Y'' if account is a pass-
through with covered institutions,
enter ``N'' otherwise.
[[Page 14837]]
13. DP_PT_Trans_Flag............................. This field indicates whether the Character (1).................... No.
fiduciary account has sub-accounts
that have transactional features.
Enter ``Y'' if account has
transactional features, enter ``N''
otherwise.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Account Participant File. The Account Participant File will be
used by the FDIC to identify account participants, to include the
official custodian, beneficiary, bond holder, mortgagor, or employee
benefit plan participant, for each account and account holder. One
record represents one unique account participant. The Account
Participant File is linked to the Account File by CS_Unique_ID and
DP_Acct_Identifier.
The data elements will include:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Field name Description Format Null value allowed?
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID.................................. This field is the unique identifier Variable Character............... No.
that is the primary key for the
depositor data record. It will be
generated by the covered institution
and there shall not be duplicates.
2. DP_Acct_Identifier............................ Deposit account identifier. The Variable Character............... No.
primary field used to identify a
deposit account. The account
identifier may be composed of more
than one physical data element to
uniquely identify a deposit account.
3. DP_Right_Capacity............................. Account ownership categories. Character (4).................... No.
--SGL--Single accounts
--JNT--Joint accounts
--REV--Revocable trust accounts
--IRR--Irrevocable trust accounts
--CRA--Certain retirement accounts
--EBP--Employee benefit plan accounts
--BUS--Business/Organization accounts
--GOV1, GOV2, GOV3--Government
accounts (public unit accounts)
--MSA--Mortgage servicing accounts
for principal and interest payments
--DIT--Accounts held by a depository
institution as the trustee of an
irrevocable trust
--ANC--Annuity contract accounts
--PBA--Public bond accounts
--BIA--Custodian accounts for
American Indians
--DOE--Accounts of an IDI pursuant to
the Bank Deposit Financial
Assistance Program of the Department
of Energy
4. DP_Prod_Category.............................. Product category or classification. Character (3).................... Yes.
--DDA--Demand Deposit Accounts
--NOW--Negotiable Order of Withdrawal
--MMA--Money Market Deposit Accounts
--SAV--Other savings accounts
--CDS--Time Deposit accounts and
Certificate of Deposit accounts,
including any accounts with
specified maturity dates that may or
may not be renewable.
5. AP_Allocated_Amount........................... Amount of funds attributable to the Decimal (14,2)................... No.
account participant as an account
holder (e.g., Public account holder
of a public bond account) or the
amount of funds entitled to the
beneficiary for the purpose of
insurance determination (e.g.,
Revocable Trust)
6. AP_Participant_ID............................. This field is the unique identifier Variable Character............... No.
for the Account Participant. It will
be generated by the covered
institution and there shall not be
duplicates. If the account
participant is an existing bank
customer this field is the same as
CS_Unique_ID field.
7. AP_Govt_ID.................................... This field shall contain the ID Variable Character............... No.
number that identifies the entity
based on a government issued ID or
corporate filling. Populate as
follows:
--For a United States individual--
Legal identification number (e.g.,
SSN, TIN, Driver's License, or
Passport Number)
--For a foreign national individual--
where a SSN or TIN does not exist, a
foreign passport or other legal
identification number (e.g., Alien
Card)
--For a Non-Individual--the Tax
identification Number (TIN), or
other register entity number
8. AP_Govt_ID_Type............................... The valid customer identification Character (3).................... No.
types, are:
--SSN--Social Security Number
--TIN--Tax Identification Number
--DL--Driver's License, issued by a
State or Territory of the United
States
--ML--Military ID
--PPT--Valid Passport
--AID--Alien Identification Card
--OTH--Other
9. AP_First_Name................................. Customer first name. Use only for the Variable Character............... No.
name of individuals and the primary
contact for entity.
10. AP_Middle_Name............................... Customer middle name. Use only for Variable Character............... Yes.
the name of individuals and the
primary contact for entity.
[[Page 14838]]
11. AP_Last_Name................................. Customer last name. Use only for the Variable Character............... No.
name of individuals and the primary
contact for entity.
12. AP_Entity_Name............................... The registered name of the entity. Do Variable Character............... Yes.
not use this field if the
participant is an individual.
13. AP_Participant_Type.......................... This field is used as the participant Character (3).................... Yes.
type identifier. The field will list
the ``beneficial owner'' type:
--OC--Official Custodian
--BEN--Beneficiary
--BHR--Bond Holder
--MOR--Mortgagor
--EPP--Employee Benefit Plan
Participant
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pending File. The Pending File contains the information needed
for the FDIC to contact the owner or agent requesting additional
information to complete the deposit insurance calculation. Each
record represents a deposit account.
The data elements will include:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Field name Description Format Null value allowed?
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID.................................. This field is the unique identifier Variable Character............... No.
that is the primary key for the
depositor data record. It will be
generated by the covered institution
and there cannot be duplicates.
2. Pending_Reason................................ Reason code for the account to be Character (5).................... No.
included in Pending file.
For deposit account records
maintained by the bank, use the
following codes.
--A--agency or custodian
--B--beneficiary
--OI--official item
--RAC--right and capacity code
For alternative recordkeeping
requirements, use the following
codes.
--ARB--depository organization for
brokered deposits (Brokered
deposit has the same meaning as
provided in 12 CFR 337.6(a)(2)).
--ARBN--non-depository
organization for brokered
deposits (Brokered deposit has
the same meaning as provided in
12 CFR 337.6(a)(2)).
--ARCRA--certain retirement
accounts
--AREBP--employee benefit plan
accounts
--ARM--mortgage servicing for
principal and interest payments
--ARO--other deposits
--ARTR--trust accounts
The FDIC needs these codes to
initiate the collection of needed
information.
3. DP_Acct_Identifier............................ Deposit account identifier. The Variable Character............... No.
primary field used to identify a
deposit account.
The account identifier may be
composed of more than one physical
data element to uniquely identify a
deposit account.
4. DP_Right_Capacity............................. Account ownership categories. Character (4).................... Yes.
--SGL--Single accounts
--JNT--Joint accounts
--REV--Revocable trust accounts
--IRR--Irrevocable trust accounts
--CRA--Certain retirement accounts
--EBP--Employee benefit plan
accounts
--BUS--Business/Organization
accounts
--GOV1, GOV2, GOV3--Government
accounts (public unit accounts)
--MSA--Mortgage servicing accounts
for principal and interest
payments
--DIT--Accounts held by a
depository institution as the
trustee of an irrevocable trust
--ANC--Annuity contract accounts
--PBA--Public bond accounts
--BIA--Custodian accounts for
American Indians
--DOE--Accounts of an IDI pursuant
to the Bank Deposit Financial
Assistance Program of the
Department of Energy
5. DP_Prod_Category.............................. Product category or classification. Character (3).................... Yes.
--DDA--Demand Deposit Accounts
--NOW--Negotiable Order of
Withdrawal
--MMA--Money Market Deposit
Accounts
--SAV--Other savings accounts
--CDS--Time Deposit accounts and
Certificate of Deposit accounts,
including any accounts with
specified maturity dates that may
or may not be renewable.
6. DP_Cur_Bal.................................... Current balance. The current balance Decimal (14,2)................... No.
in the account at the end of
business on the effective date of
the file.
[[Page 14839]]
This balance shall not be reduced by
float or holds. For CDs and time
deposits, the balance shall reflect
the principal balance plus any
interest paid and available for
withdrawal not already included in
the principal (do not include
accrued interest).
7. DP_Acc_Int.................................... Accrued interest. The amount of Decimal (14,2)................... No.
interest that has been earned but
not yet paid to the account as of
the date of the file.
8. DP_Total_PI................................... Total of principal and accrued Decimal (14,2)................... No.
interest.
9. DP_Hold_Amount................................ Hold amount on the account. Decimal (14,2)................... No.
The available balance of the account
is reduced by the hold amount. It
has no impact on current balance
(ledger balance)
10. DP_Prepaid_Account_Flag...................... This field indicates a prepaid Character (1).................... No.
account with covered institution.
Enter ``Y'' if account is a prepaid
account, enter ``N'' otherwise.
11. CS_Govt_ID................................... This field shall contain the ID Variable Character............... No.
number that identifies the entity
based on a government issued ID or
corporate filling. Populate as
follows:
--For a United States individual
SSN or TIN
--For a foreign national
individual--where a SSN or TIN
does not exist, a foreign
passport or other legal
identification number (e.g. Alien
Card)
--For a Non-Individual--the Tax
identification Number (TIN), or
other register entity number
12. CS_Govt_ID_Type.............................. The valid customer identification Character (3).................... No.
types:
--SSN--Social Security Number
--TIN--Tax Identification Number
--DL--Driver's License, issued by
a State or Territory of the
United States
--ML--Military ID
--PPT--Valid Passport
--AID--Alien Identification Card
--OTH--Other
13. CS_First_Name................................ Customer first name. Use only for the Variable Character............... No.
name of individuals and the primary
contact for entity.
14. CS_Middle_Name............................... Customer middle name. Use only for Variable Character............... Yes.
the name of individuals and the
primary contact for entity.
15. CS_Last_Name................................. Customer last name. Use only for the Variable Character............... No.
name of individuals and the primary
contact for entity.
16. CS_Name_Suffix............................... Customer suffix. Variable Character............... Yes.
17. CS_Entity_Name............................... The registered name of the entity. Do Variable Character............... Yes.
not use this field if the customer
is an individual.
18. CS_Street_Add_Ln1............................ Street address line 1. The current Variable Character............... No.
account statement mailing address of
record.
19. CS_Street_Add_Ln2............................ Street address line 2. If available, Variable Character............... Yes.
the second address line.
20. CS_Street_Add_Ln3............................ Street address line 3. If available, Variable Character............... Yes.
the third address line.
21. CS_City...................................... The city associated with the mailing Variable Character............... Yes.
address.
22. CS_State..................................... The state for United States addresses Variable Character............... Yes.
or state/province/county for
international addresses.
--For United States addresses use
a two-character state code
(official United States Postal
Service abbreviations) associated
with the mailing address.
--For international address follow
that country state code.
23. CS_ZIP....................................... The Zip/Postal Code associated with Variable Character............... Yes.
the customer's mailing address.
--For United States zip codes, use
the United States Postal Service
ZIP+4 standard.
--For international zip codes
follow the standard format of
that country.
24. CS_Country................................... The country associated with the Variable Character............... Yes.
mailing address. Provide the country
name or the standard International
Organization for Standardization
(ISO) country code.
25. CS_Telephone................................. Customer telephone number. The Variable Character............... Yes.
telephone number on record for the
customer, including the country code
if not within the United States.
26. CS_Email..................................... The email address on record for the Variable Character............... Yes.
customer.
27. CS_Outstanding_Debt_Flag..................... This field indicates whether the Character (1).................... Yes.
customer has outstanding debt with
covered institution. This field may
be used to determine offsets. Enter
``Y'' if customer has outstanding
debt with covered institutions,
enter ``N'' otherwise.
28. CS_Security_Pledge_Flag...................... This field indicates whether the CI Character (1).................... No.
has pledged securities to the
government entity, to cover any
shortfall in deposit insurance.
Enter ``Y'' if the government entity
has outstanding security pledge with
covered institutions, enter ``N''
otherwise. This field shall only be
used for Government customers.
29. DP_PT_Account_Flag........................... This field indicates a pass-through Character (1).................... No.
account with covered institution.
Enter ``Y'' if account is a pass-
through with covered institutions,
enter ``N'' otherwise.
30. PT_Parent_Customer_ID........................ This field contains the unique Variable Character............... No.
identifier of the parent customer ID
who has the fiduciary responsibility
at the covered institution.
[[Page 14840]]
31. DP_PT_Trans_Flag............................. This field indicates whether the Character (1).................... No.
fiduciary account has sub-accounts
that have transactional features.
Enter ``Y'' if account has
transactional features, enter ``N''
otherwise.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Appendix C to Part 370: Credit Balance Processing File Structure
1. Data must be in an ASCII-flat, pipe delimited file.
2. All files must contain 29 columns, even if the field name is
blank or a null value is present.
3. Do not include column headers or summary lines. The file must
contain only credit balance records.
------------------------------------------------------------------------
Null value
Col Field name Description allowed? (Y/N)
------------------------------------------------------------------------
01........... .................. .................. Y.
02........... Account Number.... Account number of Y.
account holding
pending payments
or other items
for refunds of
credit balances.
03........... Customer Account Assigned customer N.
Number. account number.
04........... .................. .................. Y.
05........... Tax ID............ Taxpayer N.
identification
number of the
account holder.
06........... Tax ID Code....... Code indicates N.
corporate (TIN)
or personal tax
identification
number (SSN).
07........... Name.............. Full name of N.
credit balance
owner.
08........... .................. .................. Y.
09........... Address 1......... Address line 1 as N.
it appears on the
credit balance
owner's statement.
10........... Address 2......... Address line 2 as Y.
it appears on the
credit balance
owner's statement.
11........... Address 3......... Address line 3 as Y.
it appears on the
credit balance
owner's statement.
12........... City.............. Address city as it N.
appears on the
credit balance
owner's statement.
13........... State............. State postal Y. If Country,
abbreviation as column 12, is
it appears on the ``USA'', value
credit balance must be a valid
owner's statement. 2-character US
postal code
(e.g., FL for
Florida, IA for
Iowa, etc.). If
Country, column
12, is not
``USA'', value
must be null.
14........... Zip/Postal........ The Zip/Postal N.
Code associated
with the credit
balance owner's
address at it
appears on the
credit balance
owner's
statement--For
United States zip
codes, use the
United States
Postal Service
ZIP+4 standard.
For international
zip codes follow
that standard
format of that
country.
15........... Country........... Country code as it N.
appears on the
credit balance
owner's statement.
16........... Province.......... Province as it Y.
appears on the
credit balance
owner's statement.
17........... .................. .................. Y.
18........... Credit Balance.... Credit balance of N.
the account as of
the institution
failure date.
19........... .................. .................. Y.
20........... Deposit Account Account ownership Y. Null value
Ownership category. allowed
Category. ownership if
account
ownership
category will be
assigned by the
covered
institution's
information
technology
system upon file
processing.
21........... .................. .................. Y.
22........... .................. .................. Y.
23........... .................. .................. Y.
24........... .................. .................. Y.
25........... .................. .................. Y.
26........... .................. .................. Y.
27........... .................. .................. Y.
28........... .................. .................. Y.
29........... .................. .................. Y
------------------------------------------------------------------------
By order of the Board of Directors. Federal Deposit Insurance
Corporation.
Dated at Washington, DC, on April 2, 2019.
Robert E. Feldman.
Executive Secretary.
[FR Doc. 2019-06713 Filed 4-10-19; 8:45 am]
BILLING CODE 6714-01-P
