FDIC Proposes Recordkeeping Requirements on Large Banks for Timely Deposit Insurance Determination

The FDIC requested comments on a proposed rule that would facilitate the "prompt payment of FDIC-insured deposits when large insured depository institutions fail." Under the proposal, an insured depository institution with two million or more deposit accounts would be required to (i) maintain complete and accurate data on each depositor's ownership interest by right and capacity for each of the institution's deposit accounts, and (ii) develop the capability to calculate the insured and uninsured amounts for each deposit owner by ownership right and capacity for each deposit account. This information would be used by the FDIC to make deposit insurance determinations in the event of the insured depository institution's failure.

In the proposal, the FDIC listed the following reasons for focusing on prompt payments:

• The prompt payment of deposit insurance maintains public confidence in the banking and deposit insurance systems.

• Depositors need prompt access to their insured funds if they are to meet their financial needs and obligations.

• A delay in the payment of deposit insurance – especially during or just after the failure of one of the largest insured depository institutions – could have systemic consequences.

• A delay also could reduce the franchise value of a failed bank and so increase the cost of that failure to the Deposit Insurance Fund.

• Ensuring prompt payments would reduce the likelihood of disruptions in the check-clearing cycle or breaches of direct debit arrangements during the resolution process.

FDIC Chair Martin J. Gruenberg expressed the hope that this recordkeeping requirement could make account access during the failure of a large institution as fast as that of a smaller bank. Mr. Gruenberg also noted that 36 banks would be covered by the rule currently.

This Notice of Proposed Rulemaking follows an Advance Notice of Proposed Rulemaking that was published in April 2015. Comments on the proposal must be submitted no later than 90 days after its publication in the Federal Register.