[Federal Register Volume 73, Number 9 (Monday, January 14, 2008)]
[Proposed Rules]
[Pages 2364-2401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-273]



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Part IV





Federal Deposit Insurance Corporation





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12 CFR Part 360



Processing of Deposit Accounts in the Event of an Insured Depository 
Institution Failure and Large-Bank Deposit Insurance Determination 
Modernization; Proposed Rule

  Federal Register / Vol. 73, No. 9 / Monday, January 14, 2008 / 
Proposed Rules  

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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 360

RIN 3064-AD26


Processing of Deposit Accounts in the Event of an Insured 
Depository Institution Failure and Large-Bank Deposit Insurance 
Determination Modernization

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 composed of two 
parts. The first part would establish the FDIC's practice for 
determining deposit account balances at a failed insured depository 
institution. The second part would require the largest insured 
depository institutions to adopt mechanisms that would, in the event of 
the institution's failure: provide the FDIC with standard deposit 
account and customer information; and allow the FDIC to place and 
release holds on liability accounts, including deposits. The first part 
of the proposal would apply to all insured depository institutions. The 
second part of the proposal would apply only to insured depository 
institutions having at least $2 billion in domestic deposits and 
either: more than 250,000 deposit accounts (currently 152 
institutions); or total assets over $20 billion, regardless of the 
number of deposit accounts (currently 7 institutions). The FDIC is 
seeking comment on all aspects of the proposed rule.

DATES: Comments must be submitted on or before April 14, 2008.

ADDRESSES: You may submit comments by any of the following methods:
     Agency Web site: http://www.fdic.gov/regulations/laws/federal. Follow instructions for submitting comments on the Agency Web 
Site.
     E-mail: [email protected]. Include ``Processing of Deposit 
Accounts and Insurance Determination Modernization'' 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 a.m. and 5 p.m. (EST).
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    Public Inspection: All comments received will be posted without 
change to http://www.fdic.gov/regulations/laws/federal including any 
personal information provided. Comments may be inspected and 
photocopied in the FDIC Public Information Center, 3501 North Fairfax 
Drive, Room E-1002, Arlington, VA 22226, between 9 a.m. and 5 p.m. 
(EST) on business days. Paper copies of public comments may be ordered 
from the Public Information Center by telephone at (877) 275-3342 or 
(703) 562-2200.

FOR FURTHER INFORMATION CONTACT: James Marino, Project Manager, 
Division of Resolutions and Receiverships, (202) 898-7151 or 
[email protected], Joseph A. DiNuzzo, Counsel, Legal Division, (202) 
898-7349 or [email protected], Christopher L. Hencke, Counsel, Legal 
Division, (202) 898-8839 or [email protected] or Catherine Ribnick, 
Counsel, Legal Division, (703) 562-2407 or [email protected].

SUPPLEMENTARY INFORMATION: The proposed rule comprises two parts. The 
first part would establish the FDIC's practice for determining deposit 
account balances at a failed insured depository institution.\1\ The 
second part would require the largest insured depository institutions 
to adopt systems that would, in the event of the institution's failure: 
(1) Provide the FDIC with standard deposit account and customer 
information; and (2) allow the FDIC to place and release holds on 
liability accounts, including deposits.
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    \1\ Part one imposes no requirements on insured depository 
institutions, rather it only establishes the FDIC's practices for 
determining deposit account balances in the event of failure.
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I. Determining Deposit Account Balances at a Failed Insured Depository 
Institution

A. Background

    Upon the failure of an FDIC-insured depository institution, the 
FDIC must determine the total insured amount for each depositor. 12 
U.S.C. 1821(f). To make this determination, the FDIC must ascertain the 
balances of all deposit accounts owned by the same depositor in the 
same ownership capacity at a failed institution as of the day of 
failure.
    The second part of this proposed rule, among other things, would 
require certain large depository institutions to place holds on 
liability accounts, including deposits, in the event of failure. The 
amount held would vary depending on the account balance, the nature of 
the liability (whether it is a deposit or non-deposit for insurance 
purposes) and the expected losses resulting from the failure. In order 
to calculate these hold amounts, the rules used by the FDIC to 
determine account balances as of the day of failure must be clearly 
established.
    A deposit account balance can be affected by transactions \2\ 
presented during the day. A customer, a third party or the depository 
institution can initiate a deposit account transaction. All depository 
institutions process and post these deposit account transactions 
according to a predetermined set of rules to determine whether to 
include a deposit account transaction either in that day's close-of-
business balances or in the next day's close-of-business balances. 
These rules establish cutoff times that vary by institution and by type 
of deposit account transaction--for example, check clearing, Fedwire, 
ATM, and teller transactions. Institutions post transactions initiated 
before the respective cutoff time as part of that day's business and 
generally post transactions initiated after the cutoff time the 
following business day. Further, institutions automatically execute 
prearranged ``sweep'' instructions affecting deposit balances at 
various points throughout the day. The cutoff rules for posting deposit 
account transactions and the prearranged automated instructions define 
the close-of-business balance for each deposit account on any given 
business day.\3\
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    \2\ A deposit account transaction, such as deposits, 
withdrawals, transfers and payments, causes funds to be debited from 
or credited to the account.
    \3\ Some depository institutions operate ``real-time'' deposit 
systems in which some deposit account transactions are posted 
throughout the business day. Most depository institutions, however, 
process deposits in a ``batch mode,'' where deposit account 
transactions presented before the cutoff time are posted that 
evening or in the early morning hours of the following day. With 
either system--batch or real-time--the institution calculates a 
close-of-business deposit balance for each deposit account on each 
business day.
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    In the past, the FDIC usually took over an institution as receiver 
after it had closed on a Friday. For institutions with a few branches 
in one state, deposit account transactions for the day were completed 
and determining account balances on that day was relatively 
straightforward. The growth of interstate banking and branching over 
the past two decades and the increasing complexity of bank products and 
practices (such as sweep accounts) has made the determination of 
account balances on the day of closing much more complicated. Financial 
institutions are much larger and the industry is more concentrated than 
in the past, factors further complicating the determination.

[[Page 2365]]

B. The proposed rule

Overview
    In general. The FDIC makes deposit insurance determinations based 
upon deposit account balances at a failed institution on the day of 
failure. The proposed rule would define what is meant by a deposit 
account balance on the day an insured depository institution fails and, 
thus, would define the deposit account balances on which the FDIC would 
make insurance determinations. A deposit account balance on the day of 
failure would be defined as the end-of-day ledger balance of the 
deposit on the day of failure. Whether a deposit account transaction 
would be included in the end-of-day ledger balance on the day of 
failure would depend generally upon how it normally would be treated 
using the institution's ordinary cutoff time on that day. As mentioned 
above, many institutions have different cutoff times for different 
kinds of transactions, such as check clearing, Fed wire, ATM and teller 
transactions.
    Under the proposed rule, the FDIC would establish the FDIC Cutoff 
Point, defined as a point in time after it takes control of the failed 
institution as receiver. If the institution's ordinary cutoff time on 
the day of failure for any particular kind of transaction preceded the 
FDIC Cutoff Point, the institution's ordinary cutoff time would be 
used. Otherwise, the institution's ordinary cutoff time for an 
individual kind of transaction would be replaced by the FDIC Cutoff 
Point. The ``Applicable Cutoff Time'' used for any kind of transaction 
thus would be the earlier of the institution's ordinary cutoff time or 
the FDIC Cutoff Point. In practice, there might be several Applicable 
Cutoff Times for a given failed institution, since different kinds of 
transactions could have different cutoff times. No Applicable Cutoff 
Time would be later than the FDIC Cutoff Point established by the FDIC, 
though some could be earlier.
    Transactions occurring after the Applicable Cutoff Time would be 
posted to the next day's business, if the operations of the failed 
institution were carried on by a successor institution. In a depository 
institution failure where deposit operations are not continued by a 
successor institution, account transactions on the day of failure would 
be posted to the applicable deposit accounts until the FDIC takes 
control of the institution as receiver. This practice would be 
consistent with the FDIC's current practice in handling deposit account 
transactions in deposit insurance payout situations.\4\
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    \4\ This is when the FDIC handles the resolution of a failed 
depository institutions by making payments to insured depositors. 
More commonly, the FDIC handles a failed institution by arranging a 
purchase-and-assumption transaction with a healthy depository 
institution. In those cases, insured depositors' funds are 
transferred to the assuming institution and available at that 
institution to depositors.
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    Upon taking control of a failed institution as receiver, the FDIC 
would take steps necessary to limit additional transactions to ensure, 
to the extent practicable, that funds would not be received by or 
removed from the failed institution. These steps might include the 
suspension of wire activities and new deposit account transactions. For 
example, wire transactions not yet executed by the FDIC Cutoff Point 
would not be allowed to occur.
    For a failed institution operating in several time zones, the FDIC 
Cutoff Point, which would set the latest possible time for any 
particular transaction's Applicable Cutoff Time, would be translated 
into local time. For example, a 6 p.m. Eastern Time FDIC Cutoff Point 
on the day an institution was closed would mean a 5 p.m. FDIC Cutoff 
Point in the Central Time zone. As receiver, the FDIC would attempt, as 
it has customarily done in the past, to close all offices of the failed 
institution as soon as practicable after taking over as receiver.
    To illustrate the Applicable Cutoff Time, consider an institution 
whose normal cutoff time for teller transactions is 3 p.m. local time. 
Assume that the institution has branches in both the Eastern and 
Pacific Time zones. Assume also that the FDIC designates 5 p.m. Eastern 
Time as the FDIC Cutoff Point. The Applicable Cutoff Time for teller 
transactions would then be 3 p.m. Eastern Time for branches in the east 
and 2 p.m. Pacific Time for branches in the west. Thus, a deposit made 
at a teller station at a branch in the west at 1 p.m. local time would 
be posted to (and included in) the end-of-day ledger balance on the day 
of failure. A deposit made at a teller station at a branch in the west 
at 2:30 p.m. local time (assuming that the FDIC could not immediately 
close the branch) would not be posted to (or included in) the end-of-
day ledger balance on the day of failure. Instead, the deposit would be 
included in the next day's business, unless no successor institution 
continued the operations of the failed institution, in which case it 
would either be included in the day-of-failure's business or returned. 
The deposit insurance implications of including or not including the 
deposit in the end-of-day ledger balance on the day of failure are 
discussed below.
    Prearranged instructions to ``sweep'' funds after the posting 
process. Certain account agreements, such as those applying to zero 
balance accounts \5\ and other internal sweep accounts,\6\ provide for 
the automated transfer from one account at an institution to another 
account at the institution after transactions are posted for the day, 
but before the end-of-day balance is established. Applicable contracts 
and business rules governing these accounts determine the amount to be 
transferred. Under the proposed rule, any automated internal sweep 
transaction from one account at the failed institution to another 
account at the failed institution would be completed on the day of 
failure.\7\ In effect, the FDIC, as receiver would recognize the 
transfer, pursuant to the account agreement, in determining the end-of-
day balance for deposit insurance and depositor preference purposes. 
The completion of prearranged internal sweep transactions results in 
the calculation of end-of-day deposit balances for insurance purposes 
consistent with how such funds currently are treated for Call Report 
and assessment purposes.
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    \5\ In the case of a zero balance account ordinarily a customer 
has a master account tied to one or more subsidiary accounts. The 
institution's agreement with the customer calls for the subsidiary 
account to have a zero balance at the end of each day. For example, 
if funds need to be transferred from the master account to cover 
checks presented against the subsidiary account, this will be done 
during the nightly processing cycle. Alternatively, if there are 
excess funds in the subsidiary account they will be transferred to 
the master account prior to the end of the day.
    \6\ Insured depository institutions maintain two types of sweep 
accounts. Internal sweep arrangements--such as those where the 
investment vehicle is a ``deposit'' in a foreign branch of the 
institution or its international banking facility--sweep funds only 
within the institution itself by accounting or bookkeeping entries. 
External sweep arrangements--such as those connected to investments 
in money market mutual funds--move funds (usually by wire transfer) 
outside the institution and, hence, off its books altogether.
    \7\ The FDIC as receiver would not, however, complete an 
external sweep--a sweep in which funds leave the institution and 
another entity assumes liability to the customer--if funds have not 
already left the failed institution by the FDIC general cutoff time. 
An external sweep includes, for example, an account where funds are 
swept from a deposit account at the institution and wired to a third 
party money market mutual fund every evening. External sweeps also 
would include an arrangement where funds are swept from a deposit 
account at a depository institution to an account or product at an 
affiliate of the institution, even if the transfer is accomplished 
through a book-entry at the depository institution. In some cases it 
would not be practicable to stop an external sweep from occurring 
after the FDIC general cutoff time. In these cases the FDIC would 
use the pre-sweep deposit balance for insurance purposes.

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    For example, assume an agreement between a depository institution 
and its customer provides that, at the close of every business day, the 
funds in excess of a designated amount are to be transferred from the 
customer's checking account at the institution's domestic branch to a 
Eurodollar account at the institution's foreign branch. Under the 
proposed rule, the transfer of funds to the foreign branch would be 
deemed to have been completed on the day of failure, regardless of the 
FDIC Cutoff Point, because the transfer was authorized as of that day 
as part of the agreement between the institution and its customer.
    The proposed treatment of internal zero balance and other sweep 
accounts has important implications for a customer's depositor and 
creditor status and chances of recovery from the receivership estate. 
The implications are discussed below.
    Post-closing adjustments. Under the proposed rule, the FDIC, as 
receiver, would be able to correct errors and omissions after the day 
of failure and reflect them in the day-of-closing deposit account 
balances.
    No requirements proposed. The proposed rule would not require 
insured institutions to have in place computer systems capable of 
applying the FDIC Cutoff Point to determine deposit account balances 
upon an institution's day of failure. The FDIC requests comments on 
whether such a requirement should be imposed for either all 
institutions or, alternatively, for ``Covered Institutions''--defined 
in the second part of the proposed rule as institutions having at least 
$2 billion in domestic deposits and either: more than 250,000 deposit 
accounts; or total assets over $20 billion, regardless of the number of 
deposit accounts.
Treatment of Uncollected Deposited Checks
    Under the proposed rule, in determining deposit account balances at 
a failed insured depository institution, the FDIC would deem all checks 
deposited into and posted to a deposit account by the Applicable Cutoff 
Time as part of the deposit account balance for insurance purposes. 
This approach means that the FDIC would use the ``ledger balance'' of 
the account for purposes of its deposit insurance determination, in 
contrast to using either ``available funds'' or ``collected funds'' 
account balances.
    The FDIC proposes to use deposit account ledger balances for 
deposit insurance purposes for several reasons:
     Depository institutions use and calculate the ledger 
balance in a more consistent way than other balances.
     It is consistent with the way that depository institutions 
report deposits on Call Reports and Thrift Financial Reports and it is 
the balance the FDIC uses to determine an institution's deposit base 
for calculating the institution's deposit insurance assessments.\8\
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    \8\ The FDIC's recent revisions to the FDIC's risk-based 
assessment system have made an institution's assessment base, which 
is used to determine its deposit insurance assessment, virtually 
identical with an institution's deposits as defined in the Federal 
Deposit Insurance Act. The revisions eliminated the ``float'' 
deductions previously used to compute an institution's assessment 
base; hence, deposits posted to a deposit account but not yet 
collected are now part of the assessment base. The stated rationale 
for eliminating the float deduction from the calculation of an 
institution's assessment base was that such deductions were small 
and decreasing as a result of legal, technological and system 
payment changes. 71 FR 69720 (Nov. 30, 2006).
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     It is the easiest balance for depositors to understand, 
and it is the most frequently used balance on financial statements 
provided to customers.
    Using ledger balances also is consistent with the definition of 
``deposit'' in the Federal Deposit Insurance Act (``FDI Act''), which 
includes balances both ``conditionally'' or ``unconditionally'' 
credited to a deposit account. 12 U.S.C. 1813(l).
    Further, especially in a large depository institution failure, 
using ledger balances may be the only operationally feasible means for 
the FDIC to make deposit insurance determinations timely and 
expeditiously. As discussed in more detail in the second part of this 
rulemaking, the FDIC is statutorily obligated to pay insured deposits 
``as soon as possible'' after an insured depository institution fails. 
12 U.S.C. 1821(f)(1). The FDIC places a high priority on providing 
access to insured deposits promptly and, in the past, has usually been 
able to allow most depositors access to their deposits on the business 
day following closing. The largest insured institutions are much bigger 
than any institution has been in the past and are growing increasingly 
complex. Providing prompt access to depositors if one of these 
institutions were to fail would prove difficult if adjustments for 
uncollected funds were necessary.
    The proposed rule differs from the FDIC's past and current practice 
in an important way. In the past, for a check that was posted to an 
account but not yet collected at the time of failure--including a check 
already forwarded by the failed institution for collection but not yet 
collected--the FDIC acted as agent or trustee for the depositor and 
remitted or credited payments received on these checks to the depositor 
in full. These checks were not included in deposits on the day of 
failure for insurance purposes and were not subject to deposit 
insurance limits.\9\ In contrast, under the proposed rule, when a check 
is posted to an account at the failed institution as provided by the 
Applicable Cutoff Time, the check would be included in the end-of-day 
balance and would be subject to deposit insurance limits, even if 
uncollected.\10\
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    \9\ FDIC Adv. Op. 95-2 (Jan. 23, 1995).
    \10\ If the check ultimately proved to be uncollectible, the 
ledger balance would be adjusted accordingly.
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    To illustrate, assume again that the FDIC Cutoff Point for teller 
transactions at a failed institution is 2 p.m. Pacific Time for 
branches in the west. In the past, the receiver, as agent or trustee, 
would collect any deposit made to the account (whether before or after 
2 p.m. local time) that was uncollected on the day of failure and 
credit or remit the proceeds to the depositor without regard to 
insurance limits. The amount of the checks would not have counted 
against the depositor's deposit total for insurance purposes. Under the 
proposed rule, however, any deposit made at a teller station at a 
branch in the west up to 2 p.m. local time (possibly including deposits 
made in previous days) would be included in the end-of-day ledger 
balance on the day of failure (unless previously withdrawn by the 
depositor). If such a deposit caused the depositor's total deposits to 
exceed the maximum deposit insurance amount for that ownership 
capacity, the depositor would have uninsured deposits.
    Some depositors may receive less favorable treatment under the 
proposed rule than if the FDIC were to continue to use its current 
approach to handling uncollected deposited checks. The increasing speed 
with which checks are processed as a result of electronic check 
processing, the use of checking account debit cards and other 
developments, however, should limit the effect of the proposed rule in 
this regard. Moreover, the current approach would not be feasible in a 
larger bank failure, and the FDIC must plan for all contingencies.
Treatment of Internal Sweep Accounts in General
    Background. In a prearranged, internal sweep arrangement, the 
nature of an institution's liability to its customer changes 
automatically and repeatedly (usually once or twice every

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day). Usually, some or all of the funds in an obligation denominated a 
deposit account (typically, a checking account) are transferred to a 
non-deposit liability account within the same depository institution 
(an ``internal sweep''). For many such internal sweeps (such as sweeps 
to Eurodollar accounts, discussed below), funds do not usually 
transfer; rather, a ledger or accounting entry is used to record that 
the obligation has moved to another type of account.
    Most agreements between sweep customers and a depository 
institution expressly provide that the institution's liability, once 
the sweep occurs, is not a deposit (as defined in section 3(l) of the 
FDI Act) and that the institution will pay interest (typically 
overnight) while the liability remains a non-deposit liability. These 
sweep agreements allow an institution to pay interest without violating 
the statutory prohibition on the payment of interest on demand 
deposits.\11\ These sweep agreements also relieve insured institutions 
from having to maintain reserve requirements for the swept liabilities 
under the regulations issued by the Board of Governors of the Federal 
Reserve System.\12\ In addition, the agreements relieve institutions 
from having to pay deposit insurance assessments (or premiums) on the 
swept liabilities, since only deposits are included in the base upon 
which institutions pay assessments.\13\
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    \11\ In general, insured depository institutions are prohibited 
from paying interest on commercial demand deposits. See 12 U.S.C. 
371a; 12 U.S.C. 1828(g); 12 CFR part 217; 12 CFR part 329.
    \12\ 12 CFR Part 204.
    \13\ 12 CFR 327.5.
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    The Adagio decision. The need for a rule to govern the treatment of 
internal sweep accounts in an institution failure is motivated, in 
part, by a recent court decision involving the treatment of sweep 
accounts. In Adagio Investment Holding Ltd. v. FDIC, 338 F. Supp. 2d 71 
(D.D.C. 2004), the FDIC was appointed as the receiver of the failed 
Connecticut Bank of Commerce. On the night of the bank's failure, in 
accordance with its customary practice, the FDIC ``completed the day's 
business'' which involved processing pending transactions, including 
approximately $20.2 million which had been authorized to be swept from 
a demand deposit account in the bank to a non-insured non-deposit 
account in the bank's international banking facility (``IBF''). Because 
``deposits'' in an IBF are not deposits for purposes of section 3(l) of 
the FDI Act, the FDIC issued (pursuant to the national deposit 
preference statute, described below) the holders of these ``deposits'' 
receivership certificates as general creditors rather than according 
them priority status as depositors. The creditors, claiming that the 
receiver did not have authority to permit the sweeps, sued the FDIC. In 
the Adagio case, the court concluded that the sweep should not have 
been performed in light of the lack of ``any provision in either the 
statute or regulations that would permit the sweep that occurred.* * 
*'' 338 F. Supp. 2d at 81.
    Operation of the proposed rule as to sweeps. Under the proposed 
rule, the FDIC would complete a prearranged internal sweep transaction 
on the day of the institution's failure if the applicable sweep account 
agreement provides for the automated sweep after transactions are 
posted for the day, but before the final deposit account balance is 
established.
    As in the Adagio situation, a sweep that resulted in a non-deposit 
liability would leave the creditor with an unsecured general creditor 
claim against the receivership. This is because under the national 
deposit preference statute (section 11(d)(11) of the FDI Act, 12 U.S.C. 
1821(d)(11)), unsecured general creditor claims receive payment from 
the receivership estate only after all deposit claims, including 
uninsured deposits and the FDIC's claim as the subrogee of all insured 
deposits, have been paid in full. As a result, general creditors often 
receive little or no recovery in the receivership of a failed 
depository institution, while uninsured depositors have historically 
recovered at least part of their funds. Thus, the sweep of a liability 
from a deposit account to a non-deposit account (on the day of the 
institution's failure) could significantly reduce the accountholder's 
recovery from the receivership estate.
    Customers could either lose or gain from having internal sweeps 
completed. Eurodollar sweeps and sweeps to IBF accounts are two 
examples of internal sweep arrangements that would result in customers 
losing due to the sweep being completed. The Eurodollar and IBF sweep 
arrangement typically begins each business day with balances only in a 
domestic deposit account. At the end of the day, the customer's claim 
is denominated a Eurodollar account (typically associated with the 
bank's branch in the Cayman Islands or Bahamas) or an IBF account. At 
the start of the next business day, the depository institution will 
sweep the balance back to the domestic deposit account. The cycle 
typically repeats itself daily.
    Usually the underlying contract for a Eurodollar sweep specifies 
that the obligation at the foreign branch is not payable in the United 
States and, hence, is not a deposit,\14\ for deposit insurance and 
depositor preference purposes. Upon an institution failure, amounts in 
a Eurodollar account in a non-insured branch of the failed institution 
would be treated as foreign deposits and would not be deposits for 
insurance or depositor preference purposes. The same treatment would 
apply to sweeps to IBFs, which by statutory definition are not 
deposits. Eurodollar and IBF accountholders would be accorded general 
creditor status in the receivership estate. Institutions do not pay 
deposit insurance assessments on liabilities denominated, as of an 
institution's close of business, as foreign deposits or IBF deposits.
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    \14\ The definition of ``deposit'' in the FDI Act expressly 
excludes: ``any obligation of a depository institution which is 
carried on the books and records of an office of such bank or 
savings association located outside of any State, unless (i) such 
obligation would be a deposit if it were carried on the books and 
records of the depository institution, and would be payable at an 
office located in any State; and (ii) the contract evidencing the 
obligation provides by express terms, and not by implication, for 
payment at an office of the depository institution located in any 
State.'' 12 U.S.C. 1813(l)(5)(A). Also, the FDI Act defines IBF 
obligations as non-deposits. 12 U.S.C. 1813(l)(5)(B).
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    Thus, under the proposed rule, the sweep to the IBF described in 
the Adagio decision would be completed by the receiver on the day of 
failure and the account holders, who held IBF accounts after the sweep, 
would be deemed to be general creditors of the receivership, rather 
than depositors, under the deposit preference statute.\15\
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    \15\ Rights are fixed as of the close of the day's business. 
Those rights would not be changed if, for example, it was 
impractical to reprogram the bank's computers before a liability 
swept to a foreign branch of an insured institution as of the day of 
the institution's failure was swept back to a deposit account at the 
bridge bank serving as the successor to the failed institution.
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    Completing repurchase agreement sweeps could--if the accounts are 
properly structured--benefit the customer. In a repurchase sweep, the 
process is similar to that of a Eurodollar or IBF sweep. At the start 
of the business day, the customer balances reside in a deposit account. 
At some point during the day the obligation is changed to an interest-
bearing, non-deposit liability account, and is so reported by the 
institution as of the close of business. In some cases, the institution 
sells securities to the customer (and agrees to repurchase them later). 
At the start of the next business day, the depository institution will 
repurchase the securities by re-crediting the deposit account. The 
cycle repeats itself daily.
    Under the proposed rule, internal repurchase account sweeps would 
be

[[Page 2368]]

accorded the same treatment as other pre-arranged, automated sweep 
arrangements. That is, the FDIC would consider sweep transactions to be 
completed on the day of the institution's failure if the applicable 
sweep account agreement provides for the automated sweep before the 
final deposit account balance is established.
    Some repurchase sweep agreements provide for an actual sale of 
securities by the depository institution to a customer (followed by the 
institution's ``repurchase'' of the securities from the customer). When 
the customer uses a deposit account to make the purchase, the bank's 
deposit liability to the customer is extinguished. In other cases, 
however, the so-called repurchase agreement does not provide for the 
actual sale and repurchase of securities. Rather, the agreement 
provides for the transfer of the customer's claim from a deposit 
account at the depository institution to another liability account, 
collateralized by either specific securities or a pool of securities, 
at the same institution. In this regard, the FDIC seeks comment on 
specific questions: Do some or all repurchase arrangements as actually 
executed: (1) Pass title to the customer in a transaction that is 
enforceable against the FDIC? or (2) create perfected security 
interests that are enforceable against the FDIC? Comments also are 
requested as to whether the nature of some or all repurchase sweep 
arrangements satisfies the definition of ``deposit'' in section 3(l) of 
the FDI Act. In addition, comments are requested as to what arguments 
may be made that repurchase arrangements in which the institution 
collateralizes its liability are permissible, given restrictions on 
collateralizing private deposits. See Texas & Pacific Railway Company 
v. Pottorff, 291 U.S. 245 (1934).
Treatment of Sweep Accounts Involving the Transfer of Funds Outside the 
Depository Institution
    The proposed rule would apply differently to sweep accounts 
involving the transfer of funds outside the depository institution. In 
those situations, the status of the funds as of the institution's day 
of failure would depend on whether the funds left the institution (via 
wire transfer or otherwise) before the FDIC Cutoff Point. For example, 
assume the customer and the institution have an agreement that funds in 
excess of a certain amount are to be wired to a mutual fund (outside 
the institution) at 5 p.m. each business day. The institution fails and 
the FDIC Cutoff Point is set at 4 p.m. If the funds have not been wired 
out of the institution by 4 p.m., the FDIC would consider the funds to 
be part of the deposit account balance upon which the FDIC would make a 
deposit insurance determination. Conversely, under the same facts, 
except that the FDIC Cutoff Point is set at 6 p.m., the wire transfer 
would be executed at 5 p.m., and the wired funds would no longer be 
part of the deposit account balance upon which the FDIC would make a 
deposit insurance determination.
    Where funds subject to a prearranged, automated external sweep have 
been temporarily transferred to an intermediate deposit account (or 
omnibus account) at the failed institution awaiting transfer to an 
external source, but have not actually been transferred to the external 
source (for example, the mutual fund) by the FDIC Cutoff Point, those 
funds would still be considered part of the customer's deposit account 
balance for deposit insurance and receivership purposes.
    External sweep arrangements typically provide that invested funds 
remain outside the institution on a day-to-day basis. In this regard, 
at the point of failure the preponderance of a customer's funds would 
reside in the external sweep investment vehicle and not be considered a 
deposit for Call Report, assessment or insurance purposes. Such 
external funds typically would not be subject to loss in the event of 
failure. The proposed rule would affect only those balances leaving the 
institution on the day of failure. Thus, the proposed treatment of 
external sweep arrangements is consistent with the FDIC's practice, 
upon taking control of a failed institution as receiver, to limit the 
removal of funds from the failed institution.
    Request for comment on sweeps alternative. As described above, 
funds subject to an internal sweep that is to take place before end-of-
day balances are calculated would not be accorded treatment as deposits 
because they would be swept, within the depository institution, by 
prearrangement, before the institution's close of business, from a 
deposit to a non-deposit account. Under such an arrangement, no deposit 
insurance premiums would have been assessed against these funds since 
they would not have been reported as deposits by the institution. The 
FDIC requests comments on whether, if the swept funds in such 
arrangements were to be assessed insurance premiums, they also should 
be eligible to be treated as deposits for purposes of FDIC deposit 
insurance and depositor preference. The FDIC requests comment on 
whether or to what extent such an option would involve any operational 
or regulatory burden or other adverse regulatory consequences.
Request for Comment on Part One of the Proposed Rule
    In addition to requesting responses to the specific questions posed 
above and requesting comments on all aspects of this part of the 
proposed rulemaking, the FDIC requests comments on alternative 
approaches for determining deposit account balances at a failed insured 
depository institution, including whether the FDIC should have the 
discretion to establish a universal cut-off time for such 
determinations at the time it takes control of a failed insured 
depository institution.

II--Large-Bank Deposit Insurance Determination Modernization

    As mentioned above, the second part of the proposed rule would 
require the largest insured depository institutions to adopt mechanisms 
that would, in the event of the institution's failure: (1) Provide the 
FDIC with standard deposit account and customer information and (2) 
allow the placement and release of holds on liability accounts, 
including deposits.

A. Overview

    This part of the proposed rule applies to large FDIC-insured 
institutions, defined in the proposed rule as ``Covered Institutions.'' 
The definition would encompass insured depository institutions having 
at least $2 billion in domestic deposits and at least either: (1) 
250,000 deposit accounts; or (2) $20 billion in total assets, 
regardless of the number of deposit accounts. Currently, the combined 
total number of Covered Institutions would be 159.\16\ In summary, 
Covered Institutions would be required to adopt mechanisms that would, 
in the event of the institution's failure:
---------------------------------------------------------------------------

    \16\ Based upon Call Reports dated June 30, 2007.
---------------------------------------------------------------------------

     Allow automatic posting of provisional holds on large 
liability accounts in any percentage specified by the FDIC on the day 
of failure.
     Provide the FDIC with deposit and customer account data in 
a standard format.
     Allow automatic removal of the provisional holds and 
posting of the results of insurance determinations as specified by the 
FDIC.

B. Need for a Rule

    When handling a depository institution failure the FDIC is required 
to structure the least costly of all possible resolution transactions, 
except

[[Page 2369]]

in the event of systemic risk.\17\ In addition, the FDIC is required to 
pay insured deposits ``as soon as possible'' after an institution 
fails.\18\ The FDIC places a high priority on providing access to 
insured deposits promptly and, in the past, has usually been able to 
allow most depositors access to their deposits on the business day 
following closing. Doing so enables the FDIC to: (1) Maintain public 
confidence in the banking industry and the FDIC; (2) provide the best 
possible service to insured depositors by minimizing uncertainty about 
their status and avoiding costly disruptions that may limit their 
ability to meet financial obligations; (3) mitigate the spillover 
effects of a failure, such as risks to the payments system, problems 
stemming from depositor illiquidity and a substantial reduction in 
credit availability; and (4) retain, where feasible, the franchise 
value of the failed institution (and thus minimize the FDIC's 
resolution costs).
---------------------------------------------------------------------------

    \17\ Section 13(c)(4)(A)(ii) of the FDI Act, 12 U.S.C. 
1823(c)(4)(A)(ii), and section 13(c)(4)(G)(i) of the FDI Act, 12 
U.S.C. 1823(c)(4)(G)(i).
    \18\ Section 11(f)(1) of the FDI Act, 12 U.S.C. 1821(f)(1).
---------------------------------------------------------------------------

    The largest insured depository institutions are growing 
increasingly complex. The proposed rule would help facilitate an 
insurance determination and dramatically improve upon access to 
depositor funds if one of these institutions were to fail. The proposed 
rule is intended to allow the deposit operations of a failed 
institution to be continued on the day following failure. It is also 
intended to permit the FDIC to meet its legal mandates regarding the 
resolution of failed insured institutions, provide liquidity to 
depositors promptly, enhance market discipline, ensure equitable 
treatment of depositors at different institutions and reduce the FDIC's 
costs by preserving the franchise value of a failed institution.
    Limitations of current processes. Making deposit insurance 
determinations is inherently complex because a single depositor may 
have more than one account and may hold accounts in different ownership 
capacities, each of which may be separately insured.\19\ To make 
insurance determinations, the FDIC must aggregate all accounts owned by 
a depositor in a single ownership capacity. This process often requires 
reviewing detailed account agreements and other documents.
---------------------------------------------------------------------------

    \19\ The basic FDIC insurance limit is $100,000 per depositor, 
per insured institution, although the insurance limit for Individual 
Retirement Accounts and other specified types of retirement accounts 
was recently increased to $250,000. 71 FR 14629, March 23, 2006. 
Deposits maintained by a person or entity in different ownership 
rights and capacities at one institution are aggregated and 
separately insured up to the insurance limit. All types of deposits 
(for example, checking accounts, savings accounts, certificates of 
deposit, interest checks and cashier's checks) held by a depositor 
in the same ownership category at an institution are added together 
before the FDIC applies the insurance limit for that category. Today 
the FDIC generally relies upon the deposit account records of a 
failed institution in making a deposit insurance determination. The 
FDIC's rules and regulations for deposit insurance coverage describe 
the categories of ownership rights and capacities eligible for 
separate insurance coverage. FDIC refers to these as ``ownership 
categories.'' Addendum 1 describes the main ownership categories.
---------------------------------------------------------------------------

    The larger the number of deposit accounts at an institution, the 
more complex and difficult the insurance determination becomes. 
Complexity also depends upon the volume of transactions, the amount of 
uninsured funds, the number of separate computer systems or 
``platforms'' on which deposit accounts are maintained and the speed at 
which the institution's deposit operations must be resumed following 
failure. These factors all present significant challenges in a large-
bank failure.
    All of the insured institution failures using the FDIC's current 
processes and procedures have been of modest size, the largest being 
NetBank (2007) with total deposits at the time of closure of $1.9 
billion and roughly 175,000 deposit accounts. With this proposed rule, 
the FDIC's processes and procedures for determining deposit insurance 
coverage would be improved to avoid delays.
    Table 1 reflects the increasing number of deposit accounts at the 
largest insured institutions over the past 10 years. If this trend 
continues, the largest institutions will hold even more deposit 
accounts in the future.

      Table 1.--Top Ten Institutions, By Number of Deposit Accounts
                              (In Millions)
------------------------------------------------------------------------
                      Rank                         1997    2002    2007
------------------------------------------------------------------------
1...............................................    11.3    27.9    54.0
2...............................................    10.4    17.3    33.9
3...............................................     5.0    11.1    24.1
4...............................................     4.1    10.7    20.5
5...............................................     4.0    10.4    19.4
6...............................................     3.8    10.0    16.2
7...............................................     3.7     9.0    12.7
8...............................................     3.7     6.8     9.5
9...............................................     3.6     6.0     9.4
10..............................................     3.2     5.1     7.2
                                                 -----------------------
    Total.......................................    52.7   114.3   206.8
------------------------------------------------------------------------

    In most instances, larger institutions are considerably more 
complex, have more deposit accounts, are more geographically dispersed 
and have more diverse systems and data-integration issues than small 
institutions. This is especially true of large institutions that have 
engaged in merger activity.
    Table 2 shows some of the differences between Covered Institutions 
under the proposed rule, and all other institutions (Non-Covered 
Institutions). By definition, Covered Institutions typically have more 
accounts than other institutions. Covered Institutions also usually 
have more complex deposit systems and require a rapid resumption of 
deposit operations in the event of failure to protect the institution's 
franchise value.

                                         Table 2.--Industry Segmentation
----------------------------------------------------------------------------------------------------------------
                                                                                           Total
                                                                                          domestic
             Segment                       Definition            Number     % of Total    deposits    % of Total
                                                                                         (billions)
----------------------------------------------------------------------------------------------------------------
Covered..........................  Total domestic deposits            159          1.8        4,612         68.9
                                    of at least $2 billion
                                    with: (1) over 250,000
                                    deposit accounts or (2)
                                    total assets over $20
                                    billion but less than
                                    250,000 deposit accounts.
Non-Covered......................  All insured institutions         8,466         98.2        2,086         31.1
                                    not Covered.
                                  ------------------------------------------------------------------------------
    Total........................  .........................        8,625        100.0        6,698        100.0
----------------------------------------------------------------------------------------------------------------
Note: Data are as of June 30, 2007.


[[Page 2370]]

    Even when a smaller institution fails, making insurance 
determinations is a time consuming process. The FDIC typically needs 
several months of advance planning to make deposits available to 
insured depositors on the next business day. In the past, insured 
institution closures typically have occurred on a Friday, which has 
allowed the FDIC two days to prepare for the next business day. But 
Friday closures are not always the case and the FDIC must be prepared 
for all contingencies.
    Previous ANPRs. In 2005, the FDIC published an advance notice of 
proposed rulemaking (the 2005 ANPR),\20\ which requested comment on 
three options for enhancing the speed at which depositors at larger, 
more complex insured institutions would receive access to their funds 
in the event of failure.\21\ All of the options would have required 
that Covered Institutions modify their deposit account systems. Option 
1 would have imposed requirements very similar to those in this 
proposed rule, except that, in addition, institutions would have been 
required to maintain a unique identifier for each depositor and for the 
insurance ownership category of each account.
---------------------------------------------------------------------------

    \20\ 70 FR 73652 (Dec. 13, 2005).
    \21\ In the 2005 ANPR Covered Institutions were defined to 
include all insured institutions with total number of deposit 
accounts over 250,000 and total domestic deposits over $2 billion. A 
full description of the three options is provided in the 2005 ANPR.
---------------------------------------------------------------------------

    Option 2 was similar to Option 1 except that the standard data set 
would have included only information that institutions currently 
possessed. The option would not have required institutions to create a 
unique identifier for each depositor or to classify each account by 
ownership category, similar to the requirements in this proposed rule.
    Option 3 was to require the largest ten or twenty insured 
institutions (in terms of the number of deposit accounts) to know the 
insurance status of their depositors and to be able to deduct expected 
losses from uninsured deposit accounts in the event of failure.
    Sixty-four percent of the 28 comment letters on the 2005 ANPR 
opposed the proposal, citing high costs and regulatory burden.\22\
---------------------------------------------------------------------------

    \22\ The 2005 ANPR comment letters are available at: http://www.fdic.gov/regulations/laws/federal/2005/05comlargebank.html. 
Addendum 2 provides a more complete discussion of comments.
---------------------------------------------------------------------------

    In response, the FDIC published a second advance notice of proposed 
rulemaking (the 2006 ANPR) \23\ focusing on the less costly and 
burdensome alternatives. The 2006 ANPR proposed dividing Covered 
Institutions into two tiers. Tier 1 institutions would comprise the 
largest, most complex Covered Institutions. The Tier 1 proposed 
requirements were the same as the Option 1 requirements under the 2005 
ANPR, except that the deposit insurance category would not be required 
for each deposit account. Tier 2 institutions--the remainder of Covered 
Institutions--would have the same requirements as Tier 1, except that 
there would not be a unique depositor ID requirement.
---------------------------------------------------------------------------

    \23\ 71 FR 74857 (Dec. 13, 2006).
---------------------------------------------------------------------------

    The comment letters from the trade associations nevertheless still 
cited high costs and regulatory burden and argued that the benefits to 
the FDIC would be low and might never materialize.\24\ These letters 
suggested that the FDIC should conduct more research on the costs of 
the options and the potential benefits. It was recommended that the 
FDIC focus on troubled institutions or abandon the initiative 
altogether.\25\
---------------------------------------------------------------------------

    \24\ See comment letters provided by American Bankers 
Association (March 13, 2007), America's Community Bankers (March 13, 
2007) and The Financial Services Roundtable (March 7, 2007).
    \25\ In total, the FDIC received 13 comments on the 2006 ANPR. 
The 2006 comment letters are available at: http://www.fdic.gov/regulations/laws/federal/2006/06comAC98.html. Addendum 2 provides a 
more complete discussion of comments.
---------------------------------------------------------------------------

    In response, the FDIC has further reduced the potential costs and 
burdens in this NPR by dropping the requirement that the largest, most 
complex Covered Institutions provide a unique identifier for each 
depositor. The FDIC's has striven to limit costs and burdens as much as 
possible while still maintaining the proposed capability for resolving 
failed institutions at the least cost and providing depositors prompt 
access to funds.
    In each ANPR the FDIC requested comment on other alternatives 
allowing it to meet its objectives in a less costly or burdensome 
manner. No alternative strategies have been proposed. Some trade 
organizations proposed delaying implementation of these requirements 
until a Covered Institution becomes troubled. Given the technological 
complexity of making funds available quickly and the risk that a 
Covered Institution could fail with limited warning, this proposal is 
not compatible with the FDIC's obligation to be prepared for a large-
bank failure.
    In response to the 2006 ANPR, the Board of Governors of the Federal 
Reserve System noted that the options reduced the likelihood of a too-
big-to-fail resolution structure, promoted market discipline, lowered 
resolution costs and should be in place and tested before a large 
institution becomes troubled. The Federal Reserve Bank of Minneapolis 
also argued that the FDIC must revamp its systems for determining 
insurance at large institutions, should work with the industry to 
minimize the costs of the proposed options (but still ensure they meet 
the FDIC's objectives) and should not wait to implement the options 
until a bank becomes troubled.\26\ The FDIC agrees.
---------------------------------------------------------------------------

    \26\ Board of Governors of the Federal Reserve System (February 
27, 2007) and Federal Reserve Bank of Minneapolis (January 17, 
2007).
---------------------------------------------------------------------------

C. The Proposed Rule

    Use of the terms ``deposit,'' ``foreign deposit'' and 
``international banking facility deposit.''
    In this part of the proposed rule, the term ``deposit'' continues 
to be used as defined in section 3(l) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(l)). A deposit--also called a ``domestic 
deposit''--includes only deposit liabilities payable in the United 
States, typically those deposits maintained in a domestic office of an 
insured depository institution. Insured depository institutions may 
maintain deposit liabilities in a foreign branch (``foreign 
deposits''), but these liabilities are not deposits in the statutory 
sense (for insurance or depositor preference purposes) for the time 
that they are payable solely at a foreign branch or branches. Insured 
depository institutions also may maintain deposit liabilities in an 
international banking facility (IBF). An ``international banking 
facility deposit,'' as defined by the Board of Governors of the Federal 
Reserve System in Regulation D (12 CFR 204.8(a)(2)), also is not a 
deposit for insurance purposes under section 3(l) or depositor 
preference purposes.
Definition of Institutions Covered
    This part of the proposed rule would apply to a Covered 
Institution, which would be defined as any insured depository 
institution having at least $2 billion in domestic deposits and at 
least either: (1) 250,000 deposit accounts; or (2) $20 billion in total 
assets, regardless of the number of deposit accounts.\27\ Any other 
insured depository institution would be a Non-Covered Institution,

[[Page 2371]]

and would not be subject to this part of the proposed rule.\28\ The 
FDIC requests specific comment on the proposed definition.
---------------------------------------------------------------------------

    \27\ For the purposes of the criteria in the text, an ``insured 
depository institution'' includes all institutions defined as such 
in the FDI Act. 12 U.S.C. 1813(c)(2). Other applicable terms would 
be as defined in the Reports of Condition and Income (Call Report) 
instructions (for insured banks) and Thrift Financial Reports (TFR) 
instructions (for insured savings associations): ``deposit 
accounts'' mean the total number of deposit accounts (including 
retirement accounts), ``domestic deposits'' mean total deposits held 
in domestic offices (for insured banks) or deposits (for insured 
savings associations), and ``total assets'' means the reported 
amount of total assets.
---------------------------------------------------------------------------

Continuation of Business Operations
    In the event of failure a Covered Institution's legal entity status 
will terminate. In most cases, however, it is expected that a new 
entity will carry on the Covered Institution's business operations.\29\ 
The new legal entity under which business operations will be continued 
is the Successor Institution, which could include an established or new 
insured depository institution or a bridge bank operated by the FDIC. 
The proposed rule is intended to provide a means to facilitate access 
to deposit funds and maintain the franchise value of the failed Covered 
Institution or a Successor Institution. Thus, in most cases, core 
business operations will continue post failure, although some 
operations may be suspended temporarily.
---------------------------------------------------------------------------

    \28\ The criteria for a Covered Institution apply to separately 
chartered insured depository institutions. Commonly owned depository 
institutions are not aggregated for the purposes of these criteria. 
Furthermore, a holding company may own insured depository 
institutions that are both Covered and Non-Covered.
    \29\ The provisional hold functionality and other requirements 
of the proposed rule should be developed in this context. It is 
possible a Covered Institution may be liquidated in the event of 
failure. The decision to liquidate or continue the deposit 
operations of a Covered Institution will be made on a case-by-case 
basis depending on the individual circumstances at the time.
---------------------------------------------------------------------------

Process Overview
    As discussed in part one of the proposed rule, in the event of 
failure, the FDIC would complete daily account processing to generate 
the deposit balances used by the FDIC for insurance purposes. Under 
part two of the proposed rule, after completion of the failed Covered 
Institution's final daily processing, the Successor Institution would 
place provisional holds on selected \30\ deposit accounts, foreign 
deposit accounts and certain other liability accounts subject to a 
sweep arrangement. Provisional holds, once posted, would allow 
depositors access to the remaining balance in their accounts the day 
following failure, yet guard against the possibility of an uninsured 
depositor or unsecured general creditor receiving more than allowed 
under deposit insurance rules or the depositor preference statute.\31\ 
The FDIC would use a standard set of depositor and customer data to 
make deposit insurance determinations. These determinations would be 
provided to the Successor Institution, probably several days after 
failure. The Successor Institution would then remove the provisional 
holds as specified by the FDIC and, if necessary, replace them with 
additional holds or debits based upon the deposit insurance 
determinations. The FDIC would continue to notify the Successor 
Institution to remove additional holds as information is received from 
depositors to complete the insurance determination. Figure 1 presents a 
hypothetical timeline of this process using local time at the Successor 
Institution's headquarters.
---------------------------------------------------------------------------

    \30\ The FDIC will supply the business rules upon which a 
provisional hold will be placed. These business rules will be based 
upon current balance and account product types.
    \31\ Uninsured depositors are entitled to a pro rata 
distribution of the receivership proceeds with respect to their 
claim. The FDIC--at its discretion--may immediately distribute 
receivership proceeds in the form of advance dividends at failure. 
Advance dividends are based on the expected recovery to uninsured 
depositors.
---------------------------------------------------------------------------

    The FDIC requests comment on all aspects of this proposed approach, 
including costs, benefits and alternative approaches that would allow 
the FDIC to accomplish its objectives of affording a timely deposit 
insurance determination, a prompt release of funds to depositors, while 
preventing depositors and creditors from receiving more than they are 
entitled to under applicable law.
BILLING CODE 6714-01-P

[[Page 2372]]

[GRAPHIC] [TIFF OMITTED] TP14JA08.004


[[Page 2373]]


Provisional Holds
    General description. Under the proposed rule, Covered Institutions 
would be required to have in place an automated process for 
implementing provisional holds concurrent with or immediately following 
the daily deposit account processing on the day of failure. After the 
placement of provisional holds, all other holds previously placed by 
the institution would still remain in effect.\32\ The proposal would 
not require development of mechanisms to stop or alter interest accrual 
for the affected accounts.
---------------------------------------------------------------------------

    \32\ Provisional holds could overlap preexisting holds if the 
entire account is held or the unheld account balance before posting 
the provisional hold is less than the amount of the provisional 
hold. In such cases posting the provisional hold would have to be 
constructed so that it did not cause the account to become 
``overdrawn'' and trigger service fees against the account.
---------------------------------------------------------------------------

    Account-by-account application. Provisional holds would be applied 
to individual accounts in an automated fashion. Commonly owned accounts 
would not be aggregated by ownership for the purposes of calculating or 
placing provisional holds. Provisional holds would extend to all non-
closed deposit accounts held in domestic and foreign offices, as well 
as certain sweep account arrangements.\33\
---------------------------------------------------------------------------

    \33\ Non-closed deposit accounts include those that are open, 
dormant, inactive, abandoned, restricted, frozen or blocked, in the 
process of closing or subject to escheatment.
---------------------------------------------------------------------------

    The nature of a provisional hold. The provisional hold is intended 
to bar access to some or all of a customer's account pending the 
results of the insurance determination. Preventing access could be 
accomplished using various methods, each of which have different 
implications for customer access and implementation costs. As described 
in the previous ANPRs, the FDIC contemplated the use of a persistent or 
hard hold. But other hold types or mechanisms may also accomplish the 
FDIC's objectives. Possible options include:
     Persistent hold. A ``persistent'' provisional hold would 
be applied once (on or immediately after the day of failure) and stay 
on the deposit account until it is removed at the order of the FDIC. 
Once applied, the persistent hold would reduce the customer's available 
balance. Only ``forced post'' transactions,\34\ as dictated by the 
Covered Institution's normal practices, will post through a persistent 
provisional hold. In this regard, a persistent provisional hold 
protects held funds until the results of the insurance determination 
can be provided. The customer would be blocked from accessing funds 
held by a persistent hold regardless of the account transaction 
mechanism or the time of day.
---------------------------------------------------------------------------

    \34\ Forced post transactions may include items such as ATM 
withdrawals, POS transactions, cashed checks, fees and deposit 
corrections.
---------------------------------------------------------------------------

     Memo hold. A provisional hold could be a ``memo hold'' for 
institutions that post deposit account transactions via batch process. 
A memo-type provisional hold remains effective only intra-day and does 
not affect the batch deposit posting process. The memo-type provisional 
hold amount is calculated immediately after end-of-day balances are 
available on the day of failure and the same amount is applied on a 
daily basis until changed or removed at the instruction of the FDIC. 
Once applied, a memo-type provisional hold would reduce the customer's 
available intra-day balance, blocking wire, over-the-counter, on-line, 
ATM, POS, VRU, and call center transactions in a batch-posting 
institution. A memo-type hold would block the customer from accessing 
funds intra-day and would allow the posting of all transactions during 
the nightly processing cycle. The memo-type provisional hold 
essentially protects the held balance from being authorized and 
therefore the declined items would not be presented for nightly 
processing.
     Holding balances in an alternate account. Rather than 
placing an account hold, balances could be removed from the account to 
which a provisional hold is to be applied and otherwise ``held'' in a 
work in progress (WIP) or suspense account. Since balances are removed 
from the affected account, they would not be available to the customer 
until the provisional hold was removed and the balance restored to the 
original account.
    The more effective the hold mechanism is at preventing access to 
held amounts, the more likely it is to generate NSF checks. Holding 
balances in a separate account or using a persistent provisional hold 
protects the FDIC's interests by blocking customer access to held 
amounts at all times. These hold types thus may have the most severe 
effect on items returned due to insufficient funds. However, it may be 
possible to reduce the volume of returned items to a manageable level 
by instructing account officers, who would be reviewing the larger 
deposit account relationships, to limit the number of returned items if 
doing so would alleviate operational difficulties and the risk of loss 
due to nonpayment is expected to be low.
    A memo-type provisional hold would allow transactions to be 
processed business-as-usual during the nightly cycle. In an institution 
with a ``pay-all'' policy, in which NSF items are processed during the 
batch nightly processing cycle and the return decision is made the 
following morning, either through automated decision rules or by 
account officer review, each of the three types of provisional holds 
might be equally effective. On the other hand, if the institution has a 
``pay-none'' policy, in which NSF items not protected by a pre-existing 
overdraft agreement are slated for return the following business day, a 
memo-type hold may allow the FDIC more latitude in managing returned 
items and be less costly for the Covered Institution. However, it may 
place the FDIC at higher risk of inadvertently paying a claimant more 
than he or she is entitled to under the law. If a Covered Institution 
uses a memo-type provisional hold, the FDIC could require it to have in 
place practices and procedures for returning as NSF those items 
reducing the deposit account balance below the amount of the 
provisional hold, and to demonstrate the effectiveness of this process.
    A persistent provisional hold may require greater systems 
development and other implementation costs on the part of the Covered 
Institution compared to holding balances in a separate account or a 
memo hold. Further, persistent provisional holds may take longer to 
post following failure, potentially making it difficult or impossible 
for some Covered Institutions to be opened in a timely fashion the 
following business day.
    The FDIC is considering the desirability of each hold format 
discussed above, or whether to allow any combination of the three 
depending on the circumstances of the Covered Institution. If the FDIC 
were to allow the use of multiple hold types, it might require Covered 
Institutions to notify the FDIC which types are being used and why they 
are effective in limiting access to held amounts. The FDIC is asking 
for industry comment on the extent to which a particular type of hold 
better accomplishes the FDIC's objectives of preventing depositors and 
creditors from receiving more than they are entitled to under 
applicable law, maintaining franchise value of the institution, 
limiting systems development and implementation costs at Covered 
Institutions and improving the speed at which holds can be posted after 
failure. The FDIC also is interested in knowing whether other hold 
mechanisms not discussed here should be considered.
    Provisional holds for deposit accounts. On the day of failure, the

[[Page 2374]]

FDIC would specify a deposit account balance ( the ``account balance 
threshold'') that would determine whether a provisional hold would be 
placed on a particular deposit account.\35\ No provisional hold would 
be placed on a deposit account with a balance less than or equal to the 
account balance threshold. For a deposit account above the account 
balance threshold, the FDIC would specify, again on the day of failure, 
a percentage (the ``provisional hold percentage'') that would be 
multiplied by the account balance in excess of the account balance 
threshold.\36\ The product of this multiplication would equal the 
dollar amount of the provisional hold. Institutions would be required 
to adopt systems that would allow the hold to be calculated and placed. 
The account balance threshold as well as the provisional hold 
percentage could vary for the following four categories, as the Covered 
Institution customarily defines them:
---------------------------------------------------------------------------

    \35\ The account balance threshold could be any dollar amount 
specified by the FDIC, including zero.
    \36\ The provisional hold percentage could be any percentage 
specified by the FDIC, from 0 to 100 percent.
---------------------------------------------------------------------------

    1. Consumer demand deposit, negotiable order of withdrawal 
(``NOW'') and money market deposit accounts (``MMDA'').
    2. Other consumer deposit accounts (time deposit and savings 
accounts, excluding NOW accounts and MMDAs).
    3. Non-consumer demand deposit, NOW accounts and MMDAs.
    4. Other non-consumer deposit accounts (time deposit and savings 
accounts, excluding NOW accounts and MMDAs).
    The likely value of the account balance threshold for deposit 
accounts would be between $30,000 and $80,000. Based on data provided 
by a sample of insured institutions, this range of values would make 
only about 10 percent of deposit accounts subject to the provisional 
hold at most institutions. Given the historical loss experience for 
large institutions and their general liability structure, the FDIC 
expects that the provisional hold percentage on domestic deposits would 
usually be less than 15 percent.
    Provisional holds for foreign deposits. For foreign deposits the 
provisional hold methodology will be the same as for deposit accounts, 
except that the account balance thresholds and the provisional hold 
percentages may vary based on the country in which the account is 
located.
    Provisional holds for international banking facility deposits. For 
international banking facility deposits the provisional hold 
methodology will be the same as for deposit accounts, except that the 
account balance thresholds and the provisional hold percentages may 
differ.
    Provisional holds for deposit accounts with prearranged, automated 
sweep features. As discussed in part one of the proposed rule, certain 
deposit accounts have a feature to ``sweep'' funds periodically 
according to predefined rules into another deposit account, a foreign 
deposit or an alternative investment vehicle.\37\ The deposit account 
through which the customer has primary access to deposited funds--
usually a demand deposit account--is the ``base sweep account.'' The 
investable or excess account balance is swept periodically into a 
``sweep investment vehicle.'' Sweep investment vehicles may include, 
but are not limited to: (1) A deposit account at the same institution 
or an affiliated insured depository institution, (2) a foreign or IBF 
deposit, (3) repurchase agreements, (4) federal funds, (5) commercial 
paper and (6) a proprietary or third-party money market mutual fund.
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    \37\ Sweep accounts as described here do not include zero 
balance account (ZBA) arrangements that move funds to and from a 
master (or concentration) deposit account and one or more subsidiary 
deposit amounts at the same bank. Such deposit account arrangements 
are not intended to provide a yield on excess deposit balances nor 
do they change the customer's insurance status. ZBAs would be 
subject to the provisional hold methodology for deposit accounts 
described above.
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    Some sweep accounts would be subject to the same provisional hold 
requirements as a deposit account. These are defined as ``Class A'' 
sweep accounts and include:
     Base sweep accounts where the sweep investment vehicle is 
another deposit account in an office of the same institution. Both the 
base sweep account and the sweep investment vehicle are deposits that 
will be subject to the provisional hold requirements of a deposit 
account.
     Base sweep accounts where funds are wired from the Covered 
Institution to a separate legal entity other than the Covered 
Institution (e.g. a proprietary or third-party money market mutual 
fund). In this case, funds residing in the base sweep account (if any) 
would be subject to a provisional hold as any other deposit account 
held in a domestic office. No provisional hold would be required for 
funds residing outside the Covered Institution in the sweep investment 
vehicle.
    All other sweep accounts--defined as ``Class B'' sweep accounts--
would have a dual provisional hold methodology. For the fund balance 
remaining in the base sweep account as of the institution's customary 
close-of-business on the day of failure, the provisional hold 
methodology would be the same as applied to other deposit accounts. For 
the funds residing in the sweep investment vehicle as of the 
institution's customary close-of-business, the provisional hold 
methodology would have the capability of a separate account balance 
threshold and provisional hold percentage.\38\ The balance threshold as 
well as the provisional hold percentage may vary for different types of 
sweep investment vehicles.\39\
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    \38\ Some Covered Institutions may allow a single base sweep 
account to be associated with multiple investment vehicles. In this 
case a separate provisional hold methodology must be developed for 
each investment vehicle.
    \39\ Some alternative investment vehicles are deposits held in 
foreign offices. These foreign deposits would be subject only to the 
provisional hold methodology for the sweep alternative investment. 
Such foreign deposits would be excluded from the provisional hold 
methodology designed for non-sweep deposits held in the same foreign 
office.
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    The proposed rule would not require mechanisms to stop the 
processing of any prearranged deposit account sweep transactions in the 
event of failure. The provisional holds described above would allow for 
the transfer of balances from a deposit account to a sweep investment 
vehicle. The provisional holds would apply to liability accounts as 
they are designated on the books and records of the institution at its 
customary close-of-business.
    Consider, for example, a prearranged automated sweep transaction in 
which a customer's entire deposit account balance is swept to the 
institution's Cayman Island branch prior to the institution's customary 
close-of-business. Under part one of the proposed rule, the Cayman 
Island branch deposit would be classified and treated as a foreign 
deposit. In the event of failure the FDIC could request a provisional 
hold on the Cayman Island foreign deposit with an account balance 
threshold of $0 and a provisional hold percentage of 100. The funds 
booked as a Cayman Island branch deposit as of the institution's 
customary close-of-business could be swept back to a deposit account 
the morning following failure, but only if the provisional hold remains 
in place.\40\ Thus the depositor will not be allowed to remove held 
amounts from the Successor Institution.
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    \40\ While funds may be swept back to the deposit account the 
morning following failure, the rights of these funds for claims 
purposes were set based on the institution's end-of-day account 
balances, and are not changed by the early morning sweep.
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    Provisional holds for deposit accounts which accept automated 
credits from

[[Page 2375]]

funds invested within the Covered Institution. Certain customers may 
provide the institution with instructions each day or periodically to 
invest funds in a non-deposit investment vehicle within the institution 
(e.g., an overnight time account at the Cayman Island branch), whereby 
such funds are automatically credited to the customer's deposit account 
the following day (``automated credit account''). While the daily 
decision to invest funds--and in what amounts--rests with the customer, 
the return of the funds the following day to the customer's deposit 
account is automated and may be functionally similar or identical to 
the return of funds in a sweep account arrangement. In some cases the 
deposit account receiving automated credits also will be a sweep base 
account accepting funds from a sweep investment vehicle.
    Automated credit accounts would have a dual provisional hold 
methodology. For the fund balance remaining in the automated credit 
account as of the institution's customary close-of-business the 
provisional hold methodology would be the same as applied to other 
deposit accounts. For the funds residing in the investment vehicle as 
of the institution's customary close-of-business, the provisional hold 
methodology would have the capability of a separate account balance 
threshold and provisional hold percentage.\41\ The account balance 
threshold, as well as the provisional hold percentage, may vary for 
different types of investment vehicles. These account balance 
thresholds and provisional hold percentages could be different from 
those applied to: (1) Funds automatically swept into a similar or 
identical investment vehicle or (2) funds held in a similar or 
identical investment vehicle that does not provide for an automated 
crediting of funds.\42\
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    \41\ Some automated credit accounts may also be a base sweep 
account. In this case a separate provisional hold methodology must 
be developed for each investment vehicle. It is possible, for 
example, for a customer to each day provide the institution with 
instructions to invest a certain amount of funds in a Cayman Island 
branch time account where the funds would be returned to the 
customer's demand deposit account the following morning. Further, 
the customer may also have provided prearranged instructions to have 
excess balances residing in the same deposit account swept to a 
Cayman Island branch account where such funds also are returned to 
the demand account the following morning. In this case the Covered 
Institution must have a provisional hold methodology that: (1) 
Treats funds residing in the demand deposit account as of the 
institution's end-of-day consistent with other deposit accounts, (2) 
treats funds residing in the Cayman Island branch account as a 
result of the prearranged sweep consistent with other Cayman Island 
sweep investment vehicles and (3) treats funds residing in the 
Cayman Island branch account as a result of the daily investment 
instructions using a separate account balance threshold and 
provisional hold percentage.
    \42\ Some investment vehicles are foreign deposits. These funds 
would be subject only to the provisional hold methodology for the 
automated credit account. Such accounts would be excluded from the 
provisional hold methodology designed for non-sweep foreign deposits 
held in the same office.
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    Account balance used for provisional hold calculation. The account 
balance threshold and provisional hold percentage would be applied 
against the ledger balance calculated by the institution as of the end 
of the business day, in the event of failure.
    Provisional hold duration. Under the proposed rule, the methodology 
for implementing a provisional hold process must be designed to hold 
funds until removed by the Successor Institution as instructed by the 
FDIC. Provisional holds will be removed when the results of the deposit 
insurance determination are available, generally anticipated being 
several days after failure, depending on the size and complexity of the 
failed institution's deposit base.
    Provisional hold designation. Provisional holds should be labeled 
``FDIC PHold''.
    Provisional hold customer disclosure. The FDIC is considering 
whether to require the provisional hold, once placed, to be apparent if 
the customer views account information on-line or through other means. 
Some deposit systems, for example, have the capability to display point 
of sale (POS) authorized holds. The FDIC requests comment on the 
desirability and cost of such a requirement. If required, how should 
such disclosure be structured?
    Security level and mechanism for manual removal of provisional 
holds. The Covered Institution will create policies, procedures and 
systems reasonably capable of preventing the alteration of FDIC 
provisional holds or other FDIC hold amounts except under the specific 
written direction of the FDIC.
    Timeliness of the provisional holds process. The mechanisms put in 
place by a Covered Institution must have the capability of placing 
provisional holds on the applicable accounts prior to the Successor 
Institution opening for business the following day, but in no case 
later than 9 a.m. local time the day following the day of the 
depository institution failure.
    Exception for systems with a small number of accounts. A Covered 
Institution may have multiple account systems through which provisional 
holds will be placed. Some account systems may service a relatively 
small number of accounts making the manual application of provisional 
holds feasible. The FDIC is considering whether to allow practices and 
procedures whereby provisional holds could be applied manually in 
certain cases, if the Covered Institution can demonstrate the holds 
could be applied in a timely fashion. If so, the manual application of 
provisional holds must be approved by the FDIC in response to a written 
request, which would include a justification for the manual process and 
its relative effectiveness for posting provisional holds in the event 
of failure. The FDIC requests comment on whether such exceptions would 
be desirable and, if so, how and in what circumstances they should be 
considered.
    Institutional contacts. A Covered Institution. would be required to 
notify the FDIC of the person(s) responsible for producing the standard 
deposit data download and administering provisional holds, both while 
this functionality is being constructed and on an on-going basis. The 
Covered Institution. would be responsible for ensuring such contact 
information is current.
    The FDIC requests specific comments on all aspects of these 
proposed requirements concerning provisional holds on deposits.
Removal of Provisional Holds
    General process. The FDIC will begin forwarding insurance 
determination results to the Successor Institution once a substantial 
number of the insurance determinations have been made, which should be 
within a few days after failure. These results must be incorporated 
into the institution's deposit systems as soon as practicable, perhaps 
as quickly as the day following the receipt of the standard depositor 
and customer data sets. The results would contain instructions for the 
removal of provisional holds as well as replacement transactions, which 
could include the placement of new holds or account debits and credits.
    The processing would work as follows. The FDIC would notify the 
Successor Institution that some or all of the deposit insurance 
determination results are available. The Successor Institution would 
remove the specified provisional holds and then, for uninsured 
accounts: (1) The account would be debited for the uninsured amount or 
(2) a debit and credit of the account (that is, debit the uninsured 
balance and credit an advance dividend). A new hold also may be applied 
to certain accounts. Removal of provisional holds and placement of new 
FDIC holds, debits and credits must be completed in the same nightly

[[Page 2376]]

processing schedule and the institution would have to be open for 
business as usual on the next business day. Since certain accounts 
cannot be determined without obtaining additional information from the 
depositor, the removal of provisional holds will occur in stages. In 
each stage the FDIC will provide the list of accounts against which 
provisional holds are to be removed as well as the corresponding hold, 
debit or credit transactions.
    Removal of provisional holds. The Successor Institution must be 
able to remove provisional holds in batch as specified by the FDIC. On 
the day(s) provisional holds are to be removed, the FDIC would provide 
the Successor Institution with a file listing the accounts subject to 
removal of the provisional hold. The file format is shown in Addendum 
3. The file would be in a tab- or pipe-delimited format and provided to 
the Successor Institution through FDICconnect or Direct Connect, 
depending on the size of the file. The file would be encrypted using a 
FDIC-supplied algorithm.
Provisional Hold Replacement Transactions
    Debiting and crediting accounts after provisional holds are 
removed. On the day a provisional hold removal file is provided to the 
Successor Institution, the FDIC also would provide a file or set of 
files either in ACH format \43\ or in a tab- or pipe-delimited format 
listing the accounts subject to debit or credit transactions, which 
reflect the results of the insurance determination process.\44\ 
Addendum 4 provides details on the debit/credit data file structure. 
Multiple files may be needed to optimize the number of transactions to 
be processed in a single batch. For a large bank there could be 
millions of debit and credit transactions which may require multiple 
batch files.
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    \43\The FDIC will be establishing ACH transactions, through the 
proper ACH definition channels to register the debit and credit 
transactions proposed here.
    \44\The FDIC is proposing an optional tab- or pipe-delimited 
file format to ensure that Covered Institutions can apply debits and 
credits to all account types. The FDIC is unsure whether ACH 
transactions can be applied to all of the account classes (e.g. CDs 
and IRAs) maintained by the all Covered Institutions; therefore, 
this format has been included as an alternative means to process 
debt and credit transactions.
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    The debit and credit transaction file would be transmitted to the 
Successor Institution through FDICconnect or Direct Connect, depending 
on the size of the file. The file would be encrypted using a FDIC-
supplied algorithm to secure data during the transport process. The 
FDIC would provide the Successor Institution with the necessary 
software algorithms needed to decrypt the data files.
    Posting of additional FDIC holds. On the day provisional holds are 
to be removed, the FDIC also would provide the Successor Institution 
with a file listing the accounts subject to a new hold to be placed 
after the removal of the provisional hold. The FDIC is considering 
whether to require a persistent or memo-type hold, the transfer of 
funds to a WIP account, or allow various alternatives depending on the 
circumstances of the Covered Institution. (As noted, we also are 
interested in comments on other alternatives.) The file format is shown 
in Appendix 3. The file would be in a tab- or pipe-delimited format and 
provided to the Successor Institution through FDICconnect or Direct 
Connect, depending on the size of the file. The file would be encrypted 
using a FDIC-supplied algorithm.
Removal of Additional FDIC Holds
    In some cases provisional holds would be replaced by a second FDIC 
hold. These holds would be removed over time as further information is 
gathered from depositors needed to complete the insurance 
determination. These additional FDIC holds would be removed using the 
same file format described in Appendix 3.
The Generation of Deposit Account and Customer Data in a Standard 
Structure
    A Covered Institution would be required to have in place practices 
and procedures to provide the FDIC with required depositor and customer 
data in a standard format following the close of any day's business. 
Covered Institutions would not be required to collect or generate new 
depositor or customer information. The standard data files are created 
through a mapping of pre-existing data elements and internal 
institution codes into standard data formats. Data will be provided on 
all non-closed deposit or foreign deposit accounts as well as Class B 
and automated credit accounts.
    Files. The FDIC would require these data to be provided in the 
following five separate files:
    1. Deposit file. Data fields for each non-closed deposit or foreign 
deposit account, except those deposit or foreign deposit accounts 
serving as an investment vehicle reported in the Class B Sweep/
Automated Credit file. See Appendix A for more detail.
    2. Class B Sweep/Automated Credit file. Data fields capturing 
information on funds residing in investment vehicles linked to each 
non-closed deposit account: (1) Involved in Class B sweep activity or 
(2) which accept automated credits. See Appendix B for more detail.
    3. Hold file.\45\ Deposit hold data fields for each non-closed 
deposit account. See Appendix C for more detail.
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    \45\The Hold file contains information on holds against each 
deposit account, including FDIC provisional holds. Since provisional 
holds may be generated after the completion of an institution's 
nightly deposit processing cycle, they may not be reflected fully in 
the Hold file generated as of the day of closing. The FDIC may 
require a second Hold file to be generated the day following closing 
to fully capture provisional holds that may not have been posted 
until the next deposit processing cycle.
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    4. Customer file. Data fields for each customer. See Appendix D for 
more detail.
    5. Deposit-customer join file. Data necessary to link each deposit 
and foreign deposit with the customers who have an interest in the 
account. See Appendix E for more detail.
    Possible file combinations. Data could be submitted using one of 
each deposit, Class B sweep/automated credit, hold, customer, customer 
address and deposit-customer join files. Alternatively, data could be 
supplied using multiple files for each type. The number of files could 
correspond to the number of institutional systems of record, for 
example. When deposit accounts are maintained in multiple deposit 
applications (e.g., Business, IRA or Trust), then multiple data files 
adhering to the required data structure are acceptable to the FDIC. 
When an institution provides multiple data files for a single deposit 
application, all of the files must sum to the institution's subsidiary 
system control totals. In addition, either a set of customer files or a 
single customer file must accompany the deposit file(s). See Appendix F 
for rules governing the possible file combinations for depositor and 
customer data.
    File format. Depositor and customer data files would be provided in 
tab- or pipe-delimited format. Each file name would contain the 
institution's FDIC Certificate Number, the file type (deposit, sweep 
hold, customer, customer address, join or other) and the date of the 
extract. Additional data could be provided, not required by the 
regulation, that may be helpful to the FDIC's deposit insurance 
determination process. For these additional files, the names should 
describe the file content such as ``lookup table'' or ``product 
codes''. All files would be encrypted using a FDIC-supplied algorithm. 
The FDIC would transmit the encryption algorithm over FDICconnect. The 
FDIC will support both ASCII and EBCDIC delimited files. All EBCDIC 
fields must

[[Page 2377]]

be provided in Pic(X) format. Binary, packed or signed numeric formats 
will not be allowed.
    File transmission mechanism. The FDIC would require that the data 
files be provided to the FDIC in the most expeditious manner. Data 
which can be compressed and encrypted could be transmitted to FDIC 
using existing telecommunication services. Should the volume be too 
great to transmit in the most expeditious manner then a portable hard 
drive should be used and physically transported by FDIC personnel to 
the FDIC's data processing facilities. The FDIC requests comment on 
various transmission/transport mechanisms.
Reporting Requirements
    The criteria defining a Covered Institution include the number of 
its deposit accounts, total domestic deposits and total assets. Total 
domestic deposits and total assets are reported quarterly on the 
Consolidated Reports of Condition and Income (insured bank) and the 
Thrift Financial Report (insured savings association). Savings 
associations report the number of deposit accounts quarterly, but banks 
report on the total number of deposit accounts only annually, as part 
of the June reporting cycle. The FDIC would recommend quarterly 
reporting of the number of deposit accounts for all insured 
institutions with total assets over $1 billion.
Testing Requirements
    The FDIC will conduct an initial test at each Covered Institution 
sometime after the initial implementation period ends.\46\ All testing 
would be coordinated with the financial institution and conducted at 
the site of their choosing if multiple sites are available. Once the 
initial test is completed successfully, the FDIC anticipates that it 
would conduct additional tests infrequently at institutions that do not 
make major changes to their deposit systems \47\--perhaps only once 
every three-to-five years. More frequent testing may be necessary for 
institutions that make major acquisitions, experience financial 
distress (even if the distress is unlikely to result in failure) or 
undertake major system conversions.
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    \46\ In addition to testing, the FDIC expects to require that 
information contact points be validated (and updated as needed) 
every three-to-six months.
    \47\ A major change to a deposit system means a change made to a 
Covered Institution's data environment affecting one or more of the 
data elements described in attached Appendices. Changes could be the 
result of a merger or the streamlining of a financial institution's 
systems of record.
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    Covered Institutions would be responsible for establishing a series 
of test accounts on their deposit account systems that could be used 
for verification purposes. These accounts would be used to verify the 
processing of holds, debits and credits. During the institution 
verification process the FDIC would expect to send transactions to the 
Covered Institution using FDICconnect or otherwise to verify that each 
institution could properly process these transactions.
    The FDIC is contemplating development of a XML validation service 
which would be provided to each Covered Institution for the purpose of 
establishing compliance with the NPR standard data requirements for 
depositor and customer records. The XML schema would read a file (which 
has been created in the NPR standard format), validate the accuracy and 
integrity of the file content and provide a report that establishes the 
institution's compliance with the NPR criteria. In addition to the XML 
service, the FDIC also would provide a more readable description of the 
validation process to help facilitate institutional testing. The report 
generated from the XML validation would not contain any bank specific 
account information and the files would be encrypted prior to 
transmission to the FDIC. The results of the XML validation process 
would be reviewed by the institution to ensure that it does not contain 
any personally identifiable account information prior to being 
transmitted to the FDIC.
    A Covered Institution would be responsible for ensuring that a 
representative sample of data has been passed through the XML 
validation service. At a minimum the sampling strategy should cover a 
cross-section of: (1) The geographies for the institution; (2) 
insurance categories found in Addendum 1; (3) the age of accounts: and 
(4) a cross section of account ledger balances maintained by the 
institution. The Covered Institution would be required to provide the 
FDIC its sampling strategy along with the validation results as a part 
of the periodic verification process. The FDIC is anticipating making 
available this XML validation service in the third quarter of 2008.
    To reduce the frequency of FDIC testing and ensure ongoing 
compliance, the FDIC expects to require Covered Institutions to conduct 
tests in-house on a regular basis (perhaps every year) and provide the 
FDIC with evidence that the test was conducted and a summary of the 
test results.
    In addition, the FDIC would have to test certain other requirements 
inside the institution, including but not limited to the ability to 
place and remove provisional holds, place new holds and implement 
debits and credits using a data set that meets the FDIC standards.
    To protect financial privacy, the FDIC's testing process would not 
require that Covered Institutions transmit any sensitive customer data 
outside of the institution's premises. Therefore, all testing involving 
any sensitive customer data would be conducted on the institution's 
premises. The FDIC does not intend to remove sensitive data from the 
institution's premises under the proposed testing process. These items 
include, but might not be limited to, the completeness and reliability 
of the standard data structure, the format requirements of the standard 
data structure, and the accuracy and effectiveness of the provisional 
holds.
Implementation Requirements
    Institutions meeting the criteria of a Covered Institution upon the 
effective date of the regulation. A Covered Institution would have 18 
months from the regulation's effective date to fully implement the 
respective requirements.
    Institutions meeting the criteria of a Covered Institution after 
the effective date of the regulation. Any insured institution meeting 
the criteria of a Covered Institution for at least two consecutive 
quarters would have 18 months following the end of the two consecutive 
quarters in which to fully implement the respective requirements.
    Merger involving two Covered Institutions. Under the proposed rule, 
the requirements must be fully implemented within 18 months following 
the completion of the acquisition, although the acquisition does not 
delay any implementation requirements which may already have been in 
place for the individual institutions involved in the merger.
    Merger involving a Covered and Non-Covered Institution. Under the 
proposed rule, the requirements must be fully implemented within 18 
months following the completion of the acquisition, although the merger 
does not delay any implementation requirements which may already have 
been in place for the individual institutions involved in the merger.
    Exception for troubled institutions. Under the proposed rule, on a 
case-by-case basis, the FDIC could accelerate the implementation 
timeframe of all or part of the proposed rule for a Covered Institution 
that either: (1) Has a composite rating of 3, 4 or 5 under the Uniform 
Financial Institutions Rating System (commonly referred to as

[[Page 2378]]

CAMELS) \48\ or (2) is undercapitalized as defined for purposes of the 
prompt corrective action (``PCA'') rules.\49\ In determining the 
accelerated implementation timeframe for such institutions, the FDIC 
would be required to consider such factors as the: (1) Complexity of 
the institution's deposit systems and operations; (2) extent of asset 
quality difficulties; (3) volatility of funding sources; (4) expected 
near-term changes in capital levels; and (5) other relevant factors 
appropriate for the FDIC to consider in its roles as insurer and 
possible receiver of the institution. The proposed rule would require 
the FDIC to consult with the Covered Institution's primary federal 
regulator in determining whether to implement this provision of the 
proposed rule.
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    \48\ CAMELS is an acronym drawn from the first letters of the 
individual components of the rating system: Capital adequacy, Asset 
quality, Management, Earnings, Liquidity, and Sensitivity to market 
risk.
    \49\ 12 CFR Part 325.
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    Applications for extension of implementation requirements. A 
Covered Institution could request an extension of the 18-month deadline 
for implementing the requirements of the proposed rule. An application 
for such an extension would be subject to the FDIC's rules of general 
applicability, 12 CFR 303.251. For good cause shown, the FDIC could 
grant the application for an extension.
New Deposit Accounts
    Knowing the identity of each depositor is an important aspect of a 
deposit insurance determination. The previous ANPRs contemplated 
requiring a unique ID for each depositor under certain options. This 
proposed rule does not require a unique depositor ID, rather the FDIC 
would rely upon customer information already maintained by the Covered 
Institution to link commonly owned accounts. Nevertheless, a unique 
depositor ID could prove helpful and speed the insurance determination 
process, especially for Covered Institutions with a large number of 
deposit accounts. Should the FDIC require a unique depositor ID to be 
assigned by Covered Institutions when a new account is opened? What 
would be the relative costs of such a requirement?

III. Request for Comments

    The FDIC realizes that the proposed requirements for Covered 
Institutions could not be implemented without some regulatory and 
financial burden on the industry. The FDIC is seeking to minimize the 
burden while at the same time ensuring it can effectively carry out its 
mandates to make insured funds available quickly to depositors and 
provide a least-cost resolution for Covered Institutions. The FDIC 
seeks comment on the potential industry costs and feasibility of 
implementing the requirements of the proposed rule. The FDIC also is 
interested in comments on whether there are other ways to accomplish 
its goals that might be more effective or less costly or burdensome. In 
other words, what approach or combination of approaches (which may 
include new alternatives) most effectively meets this cost/benefit 
tradeoff? The FDIC seeks comments on all aspects of both parts of the 
proposed rule. In particular, the FDIC seeks comments on these specific 
issues:
    1. The definition of a Covered Institution.
    2. The desirability and structure of requiring the provisional 
hold, once placed, to be apparent if the customer views account 
information on-line or through other means.
    3. The cost and effectiveness of the proposed provisional holds 
requirements.
    4. The various mechanisms for transmitting data to the FDIC.
    5. The cost and effectiveness of the proposed testing process.
    6. The desirability of a unique depositor ID requirement for new 
deposit accounts.
Solicitation of Comments on Use of Plain Language
    Also, section 722 of the Gramm-Leach-Bliley Act, Public Law 106-
102, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking 
agencies to use plain language in all proposed and final rules 
published after January 1, 2000. We invite your comments on how to make 
this proposal easier to understand. For example:
     Have we organized the material to suit your needs? If not, 
how could this material be better organized?
     Are the requirements in the proposed regulation clearly 
stated? If not, how could the regulation be more clearly stated?
     Does the proposed regulation contain language or jargon 
that is not clear? 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? If so, what changes to the format would make the regulation 
easier to understand?
     What else could we do to make the regulation easier to 
understand?
Discussion Meetings
    Between 2004 and 2007, the FDIC met with six would-be Covered 
Institutions and four software vendors/servicers for Covered 
Institutions. These meetings took place at various stages in the 
development process. The FDIC found these meetings to be extremely 
helpful to its understanding of industry systems, practices and cost 
issues, and is requesting additional meetings with interested parties. 
FDIC staff is willing to travel to facilitate a meeting or structure a 
teleconference. Any such meetings will be documented in the FDIC's 
public files to note the institution's general views on the proposed 
rule or answers to questions that have been posed. In past meetings, 
the institutions and software vendors/servicers discussed proprietary 
information. Such confidential information would not be made public. 
Any institution or organization wishing to discuss this proposal in 
more detail should contact James Marino, Project Manager, Division of 
Resolutions and Receiverships, (202) 898-7151 or [email protected]. 

IV. Paperwork Reduction Act

    OMB Number: New Collection.
    Frequency of Response: On occasion.
    Affected Public: Insured depository institutions having at least $2 
billion in domestic deposits and either at least: (i) 250,000 deposit 
accounts; or (ii) $20 million in total assets.
    Estimated Number of Respondents: 159.
    Estimated time per response: 80-75,000 hours per respondent.
    Estimated Total Annual burden: 312,500-625,000 hours.
    Background/General Description of Collection: Section 360.9 
contains collections of information pursuant to the Paperwork Reduction 
Act (44 U.S.C. 3501 et seq.) (``PRA''). In particular, the following 
requirements of this proposed rule constitute collections of 
information as defined by the PRA: all notices that Covered 
Institutions must provide the FDIC of persons responsible for producing 
the standard data download and administering provisional holds, both 
while the functionality is being constructed and on an on-going basis 
(360.9(c)(3)); written practices and procedures for providing the FDIC 
with required deposit account and customer data, as to all accounts 
held in domestic and foreign offices, in a standard format upon the 
close of any day's business, to be created through a mapping of pre-
existing data elements into standard data formats in six separate 
files, as indicated in the appendices to this Part 360 (360.9(d)(1) and 
(2)); all data provided to the FDIC pursuant to 360.9(d)(3); and the 
dollar costs and

[[Page 2379]]

time burdens associated with information systems acquisition, 
modification and maintenance that respondents will need in order to 
respond to the information requirements. The collections of information 
contained in this proposed rule have been submitted to OMB for review.
    Estimated costs: Compliance with these requirements will require 
Covered Institutions to implement functionality to post provisional 
holds, remove provisional holds, post debit and credit transactions, 
post additional holds and provide customer data in a standard format 
reconciled to supporting subsidiary systems. These requirements also 
must be supported by policies and procedures and well as notification 
of individuals responsible for the systems. Further, the requirements 
will involve on-going costs for testing and general maintenance and 
upkeep of the functionality. Estimates of both initial implementation 
and on-going costs are provided.
    Implementation costs will vary widely among the Covered 
Institutions. There are considerable differences in the complexity and 
scope of the deposit operations across Covered Institutions. Some 
Covered Institutions only slightly exceed the 250,000 deposit account 
threshold while several institutions have over 20 million deposit 
accounts. In addition, some Covered Institutions--most notably the 
largest--have proprietary deposits systems likely requiring an in-
house, custom solution for the proposed requirements while most--
generally the small-to-mid-sized ones--purchase deposit software from a 
vendor or use a servicer for deposit processing. Deposit software 
vendors and servicers are expected to incorporate the proposed 
requirements into their products or services to be available for their 
clients. In these cases implementation costs will be greatly reduced. 
This analysis assumes 100 of the 159 Covered Institutions, or 63 
percent, would have reduced implementation costs due to the use of 
software or services from a vendor.
    Comments from the 2005 and 2006 ANPRs provided some indication of 
implementation and on-going costs. Further, during November 2007 the 
FDIC had conversations with several Covered Institutions and deposit 
software vendors, which assisted in formulating these cost estimates.
    For Covered Institutions with proprietary deposit systems 
implementation costs will vary considerably. The costs for the least 
complex of these institutions are estimated to range between $250,000 
and $350,000.\50\ For super-regional organizations implementation costs 
are estimated to be between $2 million and $4 million.\51\ The costs 
for the largest, most complex Covered Institutions are estimated to be 
several times that of the super-regional organizations. For Covered 
Institutions using software or servicing provided by a vendor 
implementation costs were estimated to be $13,000 to $20,000 per 
institution. These costs primarily are due to installation of software 
received from the vendor.
---------------------------------------------------------------------------

    \50\ Compliance with the proposed requirements will require 
staff time. This analysis assumes an hourly cost of $160 for Covered 
Institutions.
    \51\ The comment letter provided by the American Bankers 
Association dated March 13, 2007 in response to the 2006 ANPR 
indicated cost estimates provided by members ranged from $2 million 
to $6 million per institution for implementation (page 3).
---------------------------------------------------------------------------

    Using this methodology overall industry implementation costs are 
estimated to range between $50 million and $100 million. The best 
estimate of implementation costs is the mid-point of this range, or $75 
million. In reviewing implementation costs as part of the comments 
received from previous ANPRs the FDIC viewed them relative to a one 
basis point assessment against deposits. In this context the estimated 
implementation costs range between 11 and 21 percent of a one basis 
point assessment against deposits of Covered Institutions. The mid-
point cost estimate would be 16 percent.
    On-going costs for testing, maintenance and other periodic items is 
estimated to range between $6,000 and $13,000 for those Covered 
Institutions using software or servicing provided by a vendor. For 
super-regional organizations on-going costs are estimated to be between 
$150,000 and $250,000. The largest, most complex Covered Institution 
was estimated to have on-going costs as high as $500,000 per year. 
Overall, on-going industry cost estimates ranged from $4 million to 
$6.5 million, or 0.8 to 1.4 percent of a one basis point assessment 
against the deposits of Covered Institutions.
    Comments: In addition to the questions raised elsewhere in this 
Preamble, comment is solicited on: (1) Whether the proposed collection 
of information is necessary for the proper performance of the functions 
of the agency, including whether the information will have practical 
utility; (2) the accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (3) the quality, utility, and clarity 
of the information to be collected; (4) ways to minimize the burden of 
the collection of information on those who are to respond, including 
through the use of appropriate automated, electronic, mechanical, or 
other technological collection techniques or other forms of information 
technology; e.g., permitting electronic submission of responses; and 
(5) estimates of capital or start-up costs and costs of operation, 
maintenance, and purchases of services to provide information.
    Addresses: Interested parties are invited to submit written 
comments to the FDIC concerning the Paperwork Reduction Act 
implications of this proposal. Such comments should refer to ``Large 
Bank Deposit Insurance Determination, 3064-xxxx.'' Comments may be 
submitted by any of the following methods:
     Agency Web Site: http://www.FDIC.gov/regulations/laws/
federal. Follow instructions for submitting comments on the Agency Web 
Site.
     E-mail: [email protected]. Include ``Large Bank Deposit 
Insurance Determination, 3064-xxxx'' in the subject line of the 
message.
     Mail: Executive Secretary, Attention: Comments, FDIC, 550 
17th St., NW., Room F-1066, Washington, DC 20429.
     Hand Delivery/Courier: Comments may be hand-delivered to 
the guard station at the rear of the 550 17th Street Building (located 
on F Street), on business days between 7 a.m. and 5 p.m. (EST).
     A copy of the comments may also be submitted to the OMB 
desk officer for the FDIC, Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 3208, Washington, DC 20503.
    Public Inspection: All comments received will be posted without 
change to http://www.fdic.gov/regulations/laws/federal including any 
personal information provided. In accordance with the Paperwork 
Reduction Act (44 U.S.C. 3501 et seq.) the FDIC may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid Office of Management 
and Budget (OMB) control number.

V. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires an agency 
publishing a notice of proposed rulemaking to prepare and make 
available for public comment an initial regulatory flexibility analysis 
that describes the impact of the final rule on small entities. 5 U.S.C. 
603(a). Pursuant to regulations issued by the Small Business 
Administration (13 CFR 121.201), a ``small entity'' includes

[[Page 2380]]

a bank holding company, commercial bank, or savings association with 
assets of $165 million or less (collectively, small banking 
organizations). The RFA provides that an agency is not required to 
prepare and publish a regulatory flexibility analysis if the agency 
certifies that the proposed rule would not have a significant economic 
impact on a substantial number of small entities. 5 U.S.C. 605(b).
    Pursuant to section 605(b) of the RFA (5 U.S.C. 605(b)), the FDIC 
certifies that this proposed rule would not have a significant economic 
impact on a substantial number of small entities. The proposed rule 
consists of two parts. The first part would establish the FDIC's 
practice for determining deposit account balances at a failed insured 
depository institution. It would impose no requirements on insured 
depository institutions. The second part of the proposed would require 
the largest insured depository institutions to adopt systems that 
would, in the event of the institution's failure: (1) Provide the FDIC 
with standard deposit account and customer information; and (2) allow 
the FDIC to place and release holds on liability accounts, including 
deposits. This part of the proposed rule would apply only to Covered 
Institutions--defined in the proposed rule as insured depository 
institutions having at least $2 billion in domestic deposits and 
either: (1) More than 250,000 deposit accounts; or (2) total assets 
over $20 billion, regardless of the number of deposit accounts. There 
are no small banking organizations that would come within the 
definition of Covered Institutions.

VI. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The FDIC has determined that the proposed rule would not affect 
family well-being within the meaning of section 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).

Addendum 1--Overview of Primary FDIC Deposit Insurance Categories

------------------------------------------------------------------------
      Insurance category                      Description
------------------------------------------------------------------------
1. Single Ownership..........  Funds owned by a natural person including
                                those held by an agent or custodian,
                                sole proprietorship accounts and
                                accounts that fail to qualify in any
                                other category below. Coverage extends
                                to $100,000 per depositor.
2. Joint Ownership...........  Accounts jointly owned as joint tenants
                                with the right of survivorship, as
                                tenants in common or as tenants by the
                                entirety. Coverage extends to $100,000
                                per co-owner.
                                   The account title generally
                                   must be in the form of a joint
                                   account (``Jane Smith & John
                                   Smith'').
                                   Each of the co-owners must
                                   sign the account signature card.
                                   (This requirement has exceptions,
                                   including certificates of deposit.)
                                   The withdrawal rights of the
                                   co-owners must be equal.
3. Revocable Trust...........  Accounts whereby the owner evidences an
                                intention that upon his or her death the
                                funds shall belong to one or more
                                qualifying beneficiaries. For each
                                owner, coverage extends to $100,000 per
                                beneficiary.
                                   The title of the account must
                                   include ``POD'' (payable-on-death) or
                                   ``trust'' or some similar term.
                                   The beneficiaries must be
                                   specifically named in the account
                                   records. (This requirement applies to
                                   informal ``POD'' accounts but does
                                   not apply to formal ``living trust''
                                   accounts.)
                                   The beneficiaries must be the
                                   owner's spouse, children,
                                   grandchildren, parents or siblings.
4. Irrevocable Trust.........  Accounts established pursuant to an
                                irrevocable trust agreement. Coverage
                                extends to $100,000 per beneficiary.
                                   The account records must
                                   indicate that the funds are held by
                                   the trustee pursuant to a fiduciary
                                   relationship.
                                   The account must be supported
                                   by a valid irrevocable trust
                                   agreement.
                                   Under the trust agreement,
                                   the grantor of the trust must retain
                                   no interest in the trust funds.
                                   For ``per beneficiary''
                                   coverage, the interest of the
                                   beneficiary must be ``non-
                                   contingent.''
5. Self-Directed Retirement..  Individual retirement accounts under 26
                                U.S.C. 408(a), eligible deferred
                                compensation plans under 26 U.S.C. 457,
                                self-directed individual account plans
                                under 29 U.S.C. 1002 and self-directed
                                Keogh plans under 26 U.S.C. 401(d).
                                Coverage extends to $250,000 per owner
                                or participant.
                                   The account records must
                                   indicate that the account is a
                                   retirement account.
                                   The account must be an actual
                                   retirement account under the cited
                                   sections of the Tax Code.
6. Corporation, Partnership    Accounts of a corporation, partnership or
 or Unincorporated              unincorporated association. Coverage
 Association.                   extends to $100,000 per entity.
                                   The account records must
                                   indicate that the entity is the owner
                                   of the funds or that the nominal
                                   accountholder is merely an agent or
                                   custodian (with the entity's
                                   ownership interest reflected by the
                                   custodian's records).
                                   The entity must be engaged in
                                   an ``independent activity.''
                                   The entity must not be a sole
                                   proprietorship (which is treated as a
                                   single ownership account).
7. Employee Benefit Plan.....  Deposits of an employee benefit plan as
                                defined at 29 U.S.C. 1002, including any
                                plan described at 26 U.S.C. 401(d).
                                Coverage extends to $100,000 per
                                participant.
                                   The account records must
                                   indicate that the funds are held by
                                   the plan administrator pursuant to a
                                   fiduciary relationship.
                                   The account must be supported
                                   by a valid employee benefit plan
                                   agreement.
                                   For ``per participant''
                                   coverage the interests of the
                                   participants must be ascertainable
                                   and non-contingent.
8. Public Unit...............  Funds of ``public units'' or ``political
                                subdivisions'' thereof. Coverage extends
                                to $100,000 for interest-bearing
                                deposits and $100,000 for non-interest-
                                bearing deposits for each official
                                custodian of the public unit or
                                subdivision.
                                   For separate coverage for the
                                   non-interest-bearing deposits, the
                                   insured financial institution must be
                                   located in the same State as the
                                   public unit.
                                   The account records must
                                   indicate that the funds are held by
                                   the custodian in a custodial
                                   capacity.
                                   For ``per custodian''
                                   coverage, the custodian must be a
                                   separate ``official custodian.''
                                   For ``per subdivision''
                                   coverage, the governmental entity
                                   must be a separate ``political
                                   subdivision.''
------------------------------------------------------------------------


[[Page 2381]]

Addendum 2--Summary of 2005 and 2006 ANPR Comments

    The FDIC received 28 comment letters in response to the 2005 ANPR 
and 13 from the 2006 ANPR. While most of the comment letters touched on 
multiple points, they generally focused on a common theme. The various 
themes of the letters are summarized in Table 3. In response to the 
2005 ANPR 64 percent of the comment letters indicated opposition due to 
the view that implementation costs of the options outweighed any 
potential benefits, high potential costs and regulatory burdens, or the 
options simply are not needed, compared to 62 percent of the 2006 ANPR 
comments. In other words, these commenters expressed the general belief 
during both years that the FDIC failed to make a compelling case in 
favor of any of the options in light of their perceptions of the costs.

                                Table 3.--Summary of 2005 and 2006 ANPR Comments
----------------------------------------------------------------------------------------------------------------
                                                             2005 ANPR                       2006 ANPR
                 General comment                 ---------------------------------------------------------------
                                                      Number        Percentage        Number        Percentage
----------------------------------------------------------------------------------------------------------------
Costs Outweigh Benefits or Opposed Due to Costs/              15            53.6               6            46.2
 Burdens........................................
Options Are Not Needed..........................               3            10.7               2            15.8
Do Not Include Our Institution As Covered.......               2             7.1               1             7.7
Supportive, But In Some Cases Expressed Concern                5            17.9               1             7.7
 Over Costs.....................................
Supportive Because Of Too-Big-To-Fail and/or                   2             7.1               2            15.8
 Market Discipline..............................
Options Raise Significant Privacy Issues........               1             3.6               1             7.7
                                                 ---------------------------------------------------------------
    Total.......................................              28           100.0              13           100.0
----------------------------------------------------------------------------------------------------------------

    The 2005 ANPR noted that the FDIC was considering expanding the 
definition of a Covered Institution to include any institution with at 
least $20 billion in total assets, regardless of the total number of 
deposit accounts. Two institutions falling into this category commented 
that the definition of a Covered Institution should not be changed from 
the original definition of at least 250,000 deposit accounts and $2 
billion in domestic deposits. The 2006 ANPR more explicitly included 
the expanded definition of Covered Institutions. One respondent falling 
within this expanded definition noted they should not be defined as a 
Covered Institution.
    During both comment periods, some commenters were expressly 
supportive of one or more of the options, but in some cases indicated 
concern over costs. In particular, the letter from Dollar Bank stated 
it ``understands and supports the need for the FDIC to have a rapid and 
effective process for determining insurance coverage. Not only does 
this benefit the FDIC directly, but effective performance by the FDIC 
also benefits the entire banking system by assuring the public of the 
reliability of federal insurance of deposits. The FDIC asked in this 
Proposal for suggestions on alternative approaches that might achieve 
approximately the same benefits for the FDIC at lower costs for banks. 
Because Dollar sees no reasonable alternative, it supports the general 
thrust of the Proposal.'' \52\
---------------------------------------------------------------------------

    \52\ Comment letter provided by Dollar Bank dated March 13, 2006 
in response to the 2005 ANPR, page 1.
---------------------------------------------------------------------------

    In response to the 2006 ANPR the Board of Governors of the Federal 
Reserve indicated it ``strongly supports the goal of the 2006 ANPR, 
which is to ensure that the largest and most complex insured 
depositories and the FDIC have in place data and other management 
systems that would enable the FDIC to promptly identify insured 
deposits and resolve the institution in an orderly manner that is least 
costly to the FDIC and to taxpayers. Moreover, the Board fully agrees 
that it is important for these systems to be in place and operationally 
tested before a large or complex institution becomes troubled.'' \53\
---------------------------------------------------------------------------

    \53\ Comment letter provided by the Board of Governors of the 
Federal Reserve System dated February 27, 2007 in response to the 
2006 ANPR, page 1.
---------------------------------------------------------------------------

    The FDIC received comment letters from the Federal Reserve Bank of 
Minneapolis in response to both ANPRs. Its letter regarding the 2006 
ANPR provided three recommendations to the FDIC.\54\
---------------------------------------------------------------------------

    \54\ Comment letter provided by the Federal Reserve Bank of 
Minneapolis dated January 17, 2007 in response to the 2006 ANPR, 
page 1.
---------------------------------------------------------------------------

     ``Given the net benefits of its suggested reforms, the 
FDIC must revamp the current insurance determination procedures; the 
question, therefore, is ``how'' not ``if.''
     The FDIC should reject, as time-inconsistent, proposals to 
address flaws in the status quo only when banks become riskier.
     The FDIC should adjust its proposals, based on industry 
input, to minimize costs while ensuring that the recommended approach 
remains credible and covers institutions for which the current system 
would not facilitate least-cost resolution.''
    The 2005 and 2006 ANPRs solicited comment on alternative means of 
meeting the objective of conducting a timely insurance determination on 
Covered insured institutions.'' No alternative suggestions were 
received.
    Since such a large portion of the comment letters raised concerns 
about costs versus benefits, this topic will be discussed in the next 
section. This will be followed by a discussion of other issues raised 
in the comment letters.

Commenters' Views on Costs Versus Benefits

    General arguments. Many commenters--including all responses from 
the trade organizations--argued that any options presented in either 
ANPR would impose high or significant costs on Covered Institutions. 
These costs would come in the form of dollar expenditures and the 
utilization of scarce technological resources.
    Many commenters also argued that the likelihood of a Covered-
Institution failure was remote. The Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (``FIRREA''), the Federal Deposit 
Insurance Corporation Improvement Act of 1991 (``FIDICA'') and the 
Federal Deposit Insurance Reform Act of 2005 (``FDIRA'') were cited as 
containing provisions reducing the likelihood of large-institution 
failures. It was noted that the FDIC is undergoing the longest period 
in its history without a failure. Furthermore, responders pointed out 
that the most recent failures were of institutions not proposed to be 
covered by the regulation. It also was argued that the FDIC likely will 
have ample warning of a large-institution failure, thereby allowing for 
adequate preparation time.

[[Page 2382]]

Several commenters recommended applying the 2005 ANPR options only in 
the event the Covered Institution reaches problem status. This 
suggestion is discussed in more detail below.
    Failure preparation time. The joint trade association letter noted 
``failures that have occurred in the last few years were among 
financial institutions that would not be covered by this 2005 ANPR. 
Regulators frequently had knowledge of the problems undermining these 
institutions and had time to prepare for closure. Sudden failures were 
more likely to have been caused by fraud or other criminal activity. It 
is highly unlikely that such a series of similar events could cause a 
failure of covered financial institutions because of their size, 
capital strength and diversity of lines of business. Constructing, 
maintaining and periodically testing the programs proposed under this 
2005 ANPR solely because of the remote chance of sudden failure 
resembles an expensive solution in search of a very low probability 
problem.'' \55\
---------------------------------------------------------------------------

    \55\ American Bankers Association, America's Community Bankers 
and The Financial Services Roundtable, page 3.
---------------------------------------------------------------------------

    The 2005 ANPR noted that Covered Institutions are more likely to be 
closed due to liquidity reasons, thus are prone to fail on any day of 
the week. Covered Institutions generally would be handled through a 
bridge bank structure, and to preserve franchise value the failed 
institution must open the day following failure. The provisional hold 
functionality included in Options 1 and 2 allows for a next-day opening 
of the bridge institution. The nightly processing cycle of Covered 
Institutions does not end until the early morning hours, often 
extending until 4 a.m. and, in some cases, until 7:30 a.m. Once the 
nightly processing schedule is complete a failed institution must 
generate deposit data to be used by the FDIC to make the deposit 
insurance determination. The 2005 ANPR options recognize that, even 
under the best of circumstances, it would be impossible for the FDIC to 
complete the steps necessary for a deposit insurance determination and 
have the results posted in time for the opening of the bridge bank the 
business day following failure.\56\ Therefore, it is the FDIC's view 
that one or more of the 2005 ANPR options appear necessary for a 
successful bridge bank opening, regardless of the advance warning or 
preparation time allotted.
---------------------------------------------------------------------------

    \56\ These steps include: (1) Generating the depositor data 
file, (2) transmitting the data file to the FDIC, (3) processing the 
depositor data to produce the deposit insurance determination 
results and (4) transmitting and posting these results on the 
institution's deposit systems.
---------------------------------------------------------------------------

    Additional research recommended. In both ANPRs the trade 
organizations stressed that the costs of the FDIC's proposed approaches 
far exceeded any quantifiable benefits. This theme was present in the 
comments to the 2005 ANPR, and continued--in some cases more 
vigorously--in the 2006 ANPR comments. In addition, in the 2006 ANPR 
comments the trade organizations placed greater emphasis on the FDIC's 
need to gather more information on costs and benefits to make an 
informed decision.
    With regard to potential benefits, The Financial Services 
Roundtable ``recommends that the FDIC publish for public comment the 
stages that a large bank and its supervisor would go through before the 
bank reached the point where it would be deemed to be a `failed' 
institution. This analysis is needed so that the probability of a large 
institution becoming a failure can be assessed. These stages, which 
almost certainly would be spread over several years, include 
recapitalizations, downsizing, management changes, strategic 
redirections, acquisition by a healthy bank, supervisory interventions, 
and other actions which would steer the institution away from failure 
long before it became a failed institution. As a point of fact, there 
have been instances when this has occurred among larger banks--most 
recently when Riggs Bank was acquired by PNC. It may be that, given 
these stages, the probability of a large bank failing at a cost to the 
FDIC is so low and the cost upon failure being so low, that the 
additional benefit provided by the proposed rule, relative to the 
FDIC's present procedures, is essentially zero.'' \57\
---------------------------------------------------------------------------

    \57\ Comment letter from The Financial Services Roundtable dated 
March 7, 2007 in response to the 2006 ANPR, page 3.
---------------------------------------------------------------------------

    Also, with regard to potential costs, The Financial Services 
Roundtable ``is concerned that the FDIC has not properly estimated the 
cost of implementing the proposed rule and maintaining the related 
information systems. In particular, the Roundtable is concerned that 
the FDIC has not gathered any cost information in a systematic manner 
as to what it would cost Covered Institutions to not only implement the 
proposed rule, but also to maintain deposit data in a manner that 
complies with the proposed rule. The implementation cost data provided 
in Table 4 of the [2005] ANPR does not constitute a rigorous cost 
estimate gathered from a representative sample of Covered Institutions 
which could then be extrapolated to a realistic cost estimate for all 
Covered Institutions. Instead, these cost estimates are fairly ad-hoc 
and not prepared in accordance with a predetermined cost-survey 
methodology. The FDIC should conduct a systematic study of the cost of 
implementing the proposed rule, including its own costs in ensuring 
compliance with the proposed rule.'' \58\
---------------------------------------------------------------------------

    \58\ Ibid.
---------------------------------------------------------------------------

    Estimated costs--the 2005 ANPR. No trade organization provided 
specific cost estimates on the 2005 ANPR options, other than to say the 
costs would be ``high'' or ``very substantial.'' Four of the 14 large-
institution responders--Wachovia Corporation, Capital One Financial 
Corporation, First Tennessee and Dollar Bank--provided cost estimates 
for one or more of the options. These estimates generally were 
characterized as being ``rough'' and frequently contained caveats. The 
estimates provided are listed in Table 4, which also shows the 
assessable deposit base of the institution (indicating institution 
size) and the impact of a 1-basis point annual FDIC assessment 
(indicating a basis for relative cost comparison).
    The paucity of data provided on Option 3 reflects the view among 
most commenters that it is unfeasible. Wachovia Corporation indicated, 
for example, that Option 3 was ``wholly unacceptable,'' \59\ which 
appears to be the reason why no cost estimate was provided for this 
option. First Tennessee was the only responder providing an estimate 
for Option 3 indicating it was roughly five times higher that that for 
Option 2.
---------------------------------------------------------------------------

    \59\ Wachovia Corporation, page 3.

[[Page 2383]]



                                  Table 4.--Cost Estimates of 2005 ANPR Options
----------------------------------------------------------------------------------------------------------------
                                                                                   1-Basis point
                                                    Estimated       Assessable      annual FDIC   Estimated cost
          Responder                 Comment       implementation   deposits  ($   assessment  ($  as a % of 1 BP
                                                       cost          Millions)       Millions)      assessment
----------------------------------------------------------------------------------------------------------------
Wachovia Corporation.........  Option 2, for     ``$2 mm or              307,000           30.7               7%
                                demand deposit,   more''.
                                time deposit
                                and securities
                                systems only.
Capital One Financial          Option 1........  ``over                   44,000            4.4                5
 Corporation.                                     $220,000''.
First Tennessee..............  Option 2........  ``exceed                 23,000            2.3               44
                                                  $1,000,000''.
First Tennessee..............  Option 3........  ``mid seven              23,000            2.3              200
                                                  figures''.
Dollar Bank..................  Cost of Option    ``approximately           4,500            0.45              13
                                2,                $60,000''.
                                ``negligible''
                                additional cost
                                for Option 1.
----------------------------------------------------------------------------------------------------------------

    For Options 1 and 2 the cost estimates provided in the table are 
fairly modest when matched against other potential deposit insurance 
costs. Compared to a 1-basis point annual FDIC assessment, the 
estimated implementation costs of Options 1 or 2 ranged from 5 to 44 
percent. The FDIC expects that implementation costs will vary across 
institutions. The deposit systems at Covered Institutions are 
different. In particular, some institutions rely primarily on 
proprietary systems while others use software or servicing provided by 
an outside vendor.
    Both ANPRs noted that many Covered Institutions use deposit 
software supplied by a common vendor or have their deposits serviced by 
a common servicer. The ANPRs suggested this structure may help mitigate 
the implementation costs of the options. No deposit software vendor or 
servicer responded to either ANPR. In commenting on the 2006 ANPR, The 
Financial Services Roundtable indicated ``there is very little 
commonality across the deposit-accounting systems of Covered 
Institutions because each institution, over the years, has customized 
its systems to meet its own needs and to integrate the acquisition of 
other banks. This absence of systems commonality will greatly increase 
the cost of implementing the proposed rule.'' \60\ The FDIC believes 
this common usage would mitigate implementation costs.
---------------------------------------------------------------------------

    \60\ Comment letter provided by The Financial Services 
Roundtable dated March 7, 2007 provided in response to the 2006 
ANPR, page 4.
---------------------------------------------------------------------------

    Estimated costs--the 2006 ANPR. The 2006 ANPR comments provided 
additional cost information. The American Bankers Association noted 
that ``[c]ost estimates provided by our members ranged from $2 million 
to $6 million per institution for initial compliance, testing, and 
training, plus additional testing and validation costs of approximately 
$500,000 per year. These are rough estimates, of course, given that the 
ANPR, by design, did not provide enough specifications for a bank to 
know precisely what it would spend.'' \61\
---------------------------------------------------------------------------

    \61\ Comment letter provided by the American Bankers Association 
dated March 13, 2007 in response to the 2006 ANPR, page 3.
---------------------------------------------------------------------------

    Two commercial banks also provided cost information for the 2006 
ANPR requirements. Union Bank of California indicated ``the proposed 
functionality by all banks system-wide could be in the billions of 
dollars,'' although no documentation was provided in support of this 
estimate.\62\ Zions Bancorporation indicated ``it would cost our 
institution millions of dollars to implement.'' \63\
---------------------------------------------------------------------------

    \62\ Comment letter provided by Union Bank of California dated 
March 13, 2007 in response to the 2006 ANPR, page 1.
    \63\ Comment letter provided by Zions Bancorporation dated March 
5, 2007 in response to the 2006 ANPR, page 1.
---------------------------------------------------------------------------

    Too big to fail and market discipline. During both comment periods 
several commenters raised the issue of TBTF, effectively expressing the 
concern that uninsured depositors of a large institution could be made 
whole in the event of failure, regardless of expected losses in the 
failed institution. The Federal Reserve Bank of Minneapolis letter in 
response to the 2005 ANPR noted that ``[i]n the face of insufficient 
technology to segregate deposits or information to determine the 
insurance status of deposits, therefore, the FDIC would likely prefer 
to provide depositors with access to deposits even if they might be 
uninsured. This preference, even if understandable, undercuts least 
cost resolution and puts pressure on policymakers to invoke the 
systemic risk exception of [FDICIA]. Invoking the systemic risk 
exception due to limitations in the resolution process (as opposed to 
preventing a true systemic crisis) could contribute to substantial 
resource misallocation in the economy over time.'' \64\ The letter 
noted that these costs are difficult to quantify, although they could 
be substantial.
---------------------------------------------------------------------------

    \64\ Federal Reserve Bank of Minneapolis, pages 2-3.
---------------------------------------------------------------------------

FDIC's Views on the Cost/Benefit Tradeoff

    Any option will impose industry costs, but benefits also will 
accrue. The FDIC must balance these costs and benefits.
    Summary of costs. In its 2005 visitations to the four large deposit 
software vendors/servicers, two of the organizations indicated the cost 
of the provisional hold functionality was fairly modest. Both ANPRs 
specifically requested comment on the costs of implementing the various 
options. The limited data summarized above suggests fairly modest 
implementation costs for an Option 2 approach and, for some 
institutions, Option 1 as well, as defined in the 2005 ANPR. These 
options are similar to the options presented in the 2006 ANPR. The 
consensus of comments was that 2005 ANPR Option 3 would be extremely 
expensive.
    Many responders to both ANPRs noted the low likelihood of a 
Covered-Institution failure. Historical evidence indicates this to be 
the case. The FDIC also agrees that the reforms implemented in FIRREA, 
FDICIA and FDIRA serve to reduce the probability of a Covered-
institution failure. However, even if the likelihood of a failure among 
Covered Institutions is perceived to be low, it is not zero. The FDIC 
should have in place a credible plan for resolving the failure of an 
institution of any size with the least possible costs. The ability to 
determine the insurance status of depositors in a failed institution in 
a timely manner is a critical element for ensuring a least-costly 
resolution.
    Meeting the FDIC's legal mandates. FDICIA was one of the most 
important

[[Page 2384]]

pieces of legislation affecting the FDIC's failure resolution process. 
Its least-cost requirement effectively requires uninsured depositors to 
be exposed to losses. Also, FDICIA's legislative history and the nature 
of the systemic risk exception provide a clear message that uninsured 
depositors of large institutions are to be treated on par with those of 
any size. Meeting these mandates is an important benefit of the 
requirements being proposed.
    Providing liquidity to depositors. The provisional hold 
functionality proposed in both ANPRs create a mechanism for the FDIC to 
provide customer access to their deposit accounts immediately after 
failure, albeit with some FDIC provisional hold for large accounts. The 
ability to continue uninterrupted the deposit operations of a Covered 
Institution in the event of failure has significant benefits for 
depositors as well as the preservation of the institution's franchise 
value.
    Enhancement of market discipline. The FDIC's legal mandates have 
direct implications for TBTF and market discipline. If financial 
markets perceive uninsured depositors in large institutions will be 
made whole in the event of failure, deposits will be directed toward 
these larger depository institutions. The result would be the 
misallocation of economic resources. Many market observers believe 
there are substantial benefits of improved market discipline that 
accrue even without serious industry distress or bank failures. The 
FDIC agrees with Mr. Stern's assessment that this resource 
misallocation could be significant.
    Effective market discipline also limits the size of troubled 
institutions and results in a more rapid course toward failure. Both 
serve to mitigate overall resolution losses. Lower resolution losses 
benefit insured institutions through lower insurance assessments.
    Equity in the treatment of depositors of insured institutions. In 
the absence of one or more of the options outlined in the 2005 and 2006 
ANPRs, the FDIC is concerned that the resolution of a Covered 
Institution could be accomplished only through a significant departure 
from its normal claims procedures. This departure could involve leaving 
the bank closed until an insurance determination is made or the use of 
shortcuts to speed the opening of the bridge institution. The use of 
shortcuts or other mechanisms to facilitate depositor access to funds 
will imply disparate treatment among depositors within the failed 
institution and certainly different treatment relative to the closure 
of a Non-Covered Institution. The FDIC places a high priority on the 
consistent implementation of its claims policies and procedures 
regardless of the size or complexity of the institution.
    Preservation of franchise value in the event of failure. The sale 
of the franchise of a failed institution can provide significant value 
to mitigate failure costs and is a necessary ingredient to a least-cost 
resolution. Superior Bank, FSB, one of the largest failures over the 
past 10 years, generated a franchise premium of $52 million, or 17 
percent of current estimated FDIC losses in the failure. An ineffective 
claims process--especially one deviating significantly from the FDIC's 
normal policies and procedures--risks reducing or destroying an 
important asset of the receivership. Preservation of franchise value in 
the event of failure of a Covered Institution will be an important 
benefit of the proposed options.
Implementation of Options Upon Reaching Problem Status
    In response to both ANPRs several commenters suggested delaying the 
implementation of any options until a Covered Institution reaches 
``problem bank status.'' \65\ For supervisory purposes problem bank 
status refers to any insured depository institution with a composite 
CAMELS rating of ``4'' or ``5''.
---------------------------------------------------------------------------

    \65\ See, for example, the American Bankers Association, 
America's Community Bankers and The Financial Services Roundtable 
letter in response to the 2005 ANPR, page 3.
---------------------------------------------------------------------------

    Several commenters also provided insights into the potential time 
needed to implement the proposed rules. The Clearing House, for 
example, noted that ``material information system changes take 
significant time. Our member banks have discussed the ANPR with their 
technical staffs and have determined that any of the requested changes 
could be made, but only over a significant period of time. Without more 
specific direction, they cannot put a specific timeframe on the 
project, but to make any substantial changes over multiple systems, and 
then fully test them, is likely to take more than a year.'' \66\ 
Additional time would be needed for the FDIC to test the system 
changes.
---------------------------------------------------------------------------

    \66\ The Clearing House, page 3.
---------------------------------------------------------------------------

    The FDIC is concerned that a Covered Institution could fail prior 
to reaching problem status (with a CAMELS rating of ``3'', for 
example), or relatively shortly after attaining problem status. If the 
one-year implementation time estimate is generally accurate, the FDIC 
risks not meeting its objectives should a Covered Institution fail more 
quickly than one year after being designated a problem institution. 
Further, a period of financial or operational stress is not the 
opportune time to make the proposed system enhancements.

New Deposit Accounts

    The 2006 ANPR solicited comments on whether Covered Institutions 
should be encouraged or required to know the insurance status of each 
new deposit account and/or notify customers of this status when a new 
account is opened. The American Bankers Association noted that the 
``training and compliance costs associated with any modifications to 
banks'' account opening procedures would be enormous. Perhaps of 
greater significance, any modification has the potential to affect 
customer relations negatively. This is especially so if the account 
opening process is lengthened and the customer, after hearing a 
discussion about insurance status, is left with the impression that the 
bank at which he or she has just entrusted his or her money is a 
candidate for failure. It is not in anyone's best interest to require 
regulatory disclosures that in their language could have the effect of 
undermining confidence in the banking system.'' \67\
---------------------------------------------------------------------------

    \67\ Comment letter provided by the American Bankers Association 
dated March 13, 2007 in response to the 2006 ANPR, page 7.
---------------------------------------------------------------------------

Addendum 3--Non-Monetary Transaction File Structure

    This is the structure of the data file the FDIC will provide to 
remove or add a FDIC hold for an individual account or sub-account. The 
file will be in a tab-or pipe-delimited format and provided through 
FDICconnect or Direct Connect. The file will be encrypted using a FDIC-
supplied algorithm.

[[Page 2385]]



----------------------------------------------------------------------------------------------------------------
            Field name                Field description          Comments                     Format
----------------------------------------------------------------------------------------------------------------
1. DP--Acct--Identifier...........  Account Identifier...  The Account           Character (25).
                                    The primary field       Identifier may be
                                     used to identify the   composed of more
                                     account. This field    than one physical
                                     may be the Account     data element. If
                                     Number..               multiple fields are
                                                            required to
                                                            identify the
                                                            account, data
                                                            should be placed in
                                                            separate fields and
                                                            the FDIC instructed
                                                            how these fields
                                                            are combined to
                                                            uniquely identify
                                                            the account.
2. DP--Acct--Identifier-2.........  Account Identifier-2.  ....................  Character (25).
                                    If necessary, the
                                     second element used
                                     to identify the
                                     account..
3. DP--Acct--Identifier-3.........  Account Identifier-3.  ....................  Character (25).
                                    If necessary, the
                                     third element used
                                     to identify the
                                     account..
4. DP--Acct--Identifier-4.........  Account Identifier-4.  ....................  Character (25).
                                    If necessary, the
                                     fourth element used
                                     to identify the
                                     account..
5. DP --Acct--Identifier-5........  Account Identifier-5.  ....................  Character (25).
                                    If necessary, the
                                     fifth element used
                                     to identify the
                                     account..
6. DP--Sub--Acct--Identifier......  Sub-Account            The Sub-Account       Character (25).
                                     Identifier.            Identifier may
                                    If available, the sub-  identify separate
                                     account identifier     deposits tied to
                                     for the account..      this account where
                                                            there are different
                                                            processing
                                                            parameters such as
                                                            interest rates or
                                                            maturity dates, but
                                                            all owners are the
                                                            same.
7. PH--Hold--Action...............  Hold Action..........  ....................  Character (1).
                                    The requested hold
                                     action to be taken
                                     for this account or
                                     sub-account.
                                     Possible values are:.
                                        R =
                                        Remove.
                                        A = Add..
8. PH--Hold--Amt..................  Hold Amount..........  ....................  Decimal (14,2).
                                    Dollar amount of the
                                     FDIC hold to be
                                     removed or added..
9. PD--Hold--Desc.................  Hold Description.....  ....................  Character (225).
                                    FDIC hold to be
                                     removed or added..
----------------------------------------------------------------------------------------------------------------

Addendum 4--Debit/Credit File Structure

    This is the structure of the data file the FDIC will provide to 
apply debits and credits to an individual account or sub-account after 
the removal of FDIC holds. The file will be in a tab-or pipe-delimited 
format and provided through FDICconnect or Direct Connect. The file 
will be encrypted using a FDIC-supplied algorithm. The FDIC also is 
considering using ACH transactions to apply monetary transactions to 
accounts being held by the FDIC. Further analysis is required to 
determine how non-monetary and monetary transactions can be 
synchronized while ensuring that account funds are properly maintained 
in order for FDIC transactions to be applied.

----------------------------------------------------------------------------------------------------------------
            Field name                Field description          Comments                     Format
----------------------------------------------------------------------------------------------------------------
1. DP--Acct--Identifier...........  Account Identifier...  The Account           Character (25).
                                    The primary field       Identifier may be
                                     used to identify the   composed of more
                                     account. This field    than one physical
                                     may the Account        data element. If
                                     Number..               multiple fields are
                                                            required to
                                                            identify the
                                                            account, data
                                                            should be placed in
                                                            separate fields and
                                                            the FDIC instructed
                                                            how these fields
                                                            are combined to
                                                            uniquely identify
                                                            the account.
2. DP --Acct--Identifier-2........  Account Identifier-2.  ....................  Character (25).
                                    If necessary, the
                                     second element used
                                     to identify the
                                     account..
3. DP--Acct--Identifier-3.........  Account Identifier-3.  ....................  Character (25).
                                    If necessary, the
                                     third element used
                                     to identify the
                                     account..
4. DP --Acct--Identifier-4........  Account Identifier-4.  ....................  Character (25).
                                    If necessary, the
                                     fourth element used
                                     to identify the
                                     account..
5. DP --Acct--Identifier-5........  Account Identifier-5.  ....................  Character (25).
                                    If necessary, the
                                     fifth element used
                                     to identify the
                                     account..

[[Page 2386]]

 
6. DP --Sub-- Acct-- Identifier...  Sub-Account            The Sub-Account       Character (25).
                                     Identifier.            Identifier may
                                    If available, the sub-  identify separate
                                     account identifier     deposits tied to
                                     for the account..      this account where
                                                            there are different
                                                            processing
                                                            parameters such as
                                                            interest rates or
                                                            maturity dates, but
                                                            all owners are the
                                                            same.
7. DC --Debit--Amt................  Debit Amount.........  ....................  Decimal (14,2).
                                    Dollar amount of the
                                     debit to be applied
                                     to the account or
                                     sub-account..
8. DC--Credit--Amt................  Credit Amount........  ....................  Decimal (14,2).
                                    Dollar amount of the
                                     credit to be applied
                                     to the account or
                                     sub-account..
9. DC-- Transaction-- Desc........  Debit/Credit           ....................  Character (225).
                                     Description.
                                    FDIC message
                                     associated with the
                                     debit or credit
                                     transaction..
----------------------------------------------------------------------------------------------------------------

List of Subjects in 12 CFR Part 360

    Banks, banking, savings associations.

    For the reasons stated above, the Board of Directors of the Federal 
Deposit Insurance Corporation proposes to amend part 360 of title 12 of 
the Code of Federal Regulations as follows:

PART 360--RESOLUTION AND RECEIVERSHIP RULES

    1. The authority citation for part 360 continues to read as 
follows:

    Authority: 12 U.S.C. 1821(d)(1), 1821(d)(10)(c), 1821(d)(11), 
1821(e)(1), 1821(e)(8)(D)(i), 1823(c)(4), 1823(e)(2); Sec. 401(h), 
Pub. L 101-73, 103 Stat. 357.

    2. Add new Sec. Sec.  360.8 and 360.9 to read as follows:


Sec.  360.8.  Method for determining deposit account balances at a 
failed insured depository institution.

    (a) Purpose. The purpose of this section is to describe the process 
the FDIC will use to determine deposit account balances for insurance 
coverage and receivership purposes at a failed insured depository 
institution.
    (b) Definitions--(1) The FDIC cutoff point means the point in time 
established by the FDIC after it has been appointed receiver of a 
failed insured depository institution and takes control of the failed 
institution.
    (2) The Applicable cutoff time for a specific type of deposit 
account transaction means the earlier of either the failed 
institution's normal cutoff time for that specific type of transaction 
or the FDIC cutoff point. In a depository institution failure where 
deposit operations are not transferred to a successor institution, the 
Applicable cutoff time for a particular type of deposit account 
transaction is the FDIC cutoff point.
    (3) Close-of-business deposit account balance means the closing 
ledger balance of a deposit account on the day of failure of an insured 
depository institution determined by using the applicable cutoff time. 
This balance may be adjusted to reflect steps taken by the receiver to 
ensure that funds are not received by or removed from the institution 
after the FDIC cutoff point.
    (c) Determining closing day balances. (1) In determining deposit 
account balances for insurance coverage and receivership purposes at a 
failed insured depository institution, the FDIC will use close-of-
business deposit account balances as may be adjusted for funds that are 
received by or removed from the institution after the FDIC cutoff 
point.
    (2) A check posted to the close-of-business deposit account balance 
but not collected by the depository institution will be included as 
part of the balance, subject to the correction of errors and omissions 
and adjustments for uncollectible items that the FDIC may make in its 
role as receiver of the failed depository institution.
    (3) For deposit insurance and receivership purposes in connection 
with the failure of an insured depository institution, a depositor's 
rights will be determined as of the point the close-of-business deposit 
account balance is calculated, irrespective of the continuation of the 
institution's computer and other systems after this point. These rights 
may be adjusted as necessary to account for funds that are received by 
or removed from the institution after the FDIC cutoff point.


Sec.  360.9.  Large-bank deposit insurance determination modernization.

    (a) Purpose and scope. This section is intended to allow the 
deposit and other operations of a large insured depository institution 
(defined as a ``Covered Institution'') to continue functioning on the 
day following failure. It also is intended to permit the FDIC to 
fulfill its legal mandates regarding the resolution of failed insured 
institutions to provide liquidity to depositors promptly, enhance 
market discipline, ensure equitable treatment of depositors at 
different institutions and reduce the FDIC's costs by preserving the 
franchise value of a failed institution.
    (b) Definitions--(1) A covered institution means an insured 
depository institution which, based on items as defined in Reports of 
Income and Condition or Thrift Financial Reports filed with the 
applicable federal regulator, has at least $2 billion in domestic 
deposits and at least either:
    (i) 250,000 deposit accounts; or
    (ii) $20 billion in total assets, regardless of the number of 
deposit accounts.
    (2) Domestic deposits, number of deposit accounts and total assets 
are as defined in the instructions for the filing of Reports of Income 
and Condition and Thrift Financial Reports, as applicable to the 
insured depository institution for determining whether it qualifies as 
a Covered Institution. A foreign deposit means an uninsured deposit 
liability maintained in a foreign branch of an insured depository 
institution. An international banking facility deposit is as defined by 
the Board of Governors of the Federal Reserve System in Regulation D 
(12 CFR 204.8(a)(2)). A demand deposit account, NOW account, money 
market deposit account, savings deposit account and time deposit 
account are as defined in the instructions for the filing of Reports of 
Income and Condition and Thrift Financial Reports.
    (3) Sweep account arrangements consist of a deposit account linked 
to an interest-bearing investment vehicle whereby funds are swept to 
and from the deposit account according to prearranged rules, usually on 
a daily basis. Class A sweep account

[[Page 2387]]

arrangements are those where: The interest-bearing investment vehicle 
is another domestic deposit account in an office of the Covered 
Institution; or for the purposes of the movement of funds to the 
interest-bearing investment vehicle, funds are wired from the insured 
depository institution to a separate legal entity other than the 
Covered Institution. Class B sweep account arrangements are all other 
sweep account arrangements.
    (4) Automated credit account arrangements consist of a deposit 
account into which funds are automatically credited from an interest-
bearing investment vehicle where the funds in the interest-bearing 
investment vehicle were not invested by prearranged rules.
    (5) Non-covered institution means an insured depository institution 
that does not meet the definition of a covered institution.
    (6) Provisional hold means an effective restriction on access to 
some or all of a deposit or other liability account after the failure 
of an insured depository institution.
    (c) Posting and removing provisional holds. (1) A covered 
institution shall have in place an automated process for implementing a 
provisional hold on domestic deposit accounts, foreign deposit accounts 
and Class B sweep and automated credit account arrangements immediately 
following the determination of the close-of-business deposit account 
balances, as prescribed in section 360.8, at the failed covered 
institution.
    (2) The system requirements under paragraph (c)(1) of this section 
must have the capability of placing the provisional holds prescribed 
under that provision no later than 9 a.m. local time the day following 
the FDIC Cutoff Point, as defined in Sec.  360.8(b)(3).
    (3) Pursuant to instructions to be provided by the FDIC, a Covered 
Institution must notify the FDIC of the person(s) responsible for 
producing the standard data download and administering provisional 
holds, both while the functionality is being constructed and on an on-
going basis.
    (4) For deposit accounts held in domestic offices of an insured 
depository institution, the provisional hold algorithm must be designed 
to exempt accounts below a specific account balance threshold, as 
determined by the FDIC. The account balance threshold could be any 
amount, including zero. For accounts above the account balance 
threshold determined by the FDIC, the algorithm must be designed to 
calculate and place a hold equal to the dollar amount of funds in 
excess of the account balance threshold multiplied by the provisional 
hold percentage determined by the FDIC. The provisional hold percentage 
could be any amount, from zero to one hundred percent. The account 
balance threshold as well as the provisional hold percentage could vary 
for the following four categories, as the Covered Institution 
customarily defines consumer accounts:
    (i) Consumer demand deposit, NOW and money market deposit accounts;
    (ii) Other consumer deposit accounts (time deposit and savings 
accounts, excluding NOW and money market deposit accounts);
    (iii) Non-consumer demand deposit, NOW and money market deposit 
accounts; and
    (iv) Other non-consumer deposit accounts (time deposit and savings 
accounts, excluding NOW and money market deposit accounts).
    (5) For deposit accounts held in foreign offices of an insured 
depository institution, other than those connected to a Class B sweep 
or automated credit arrangements, the provisional hold algorithm will 
be the same as for deposit accounts, except that the account balance 
threshold and the hold percentage may vary based on the country in 
which the account is located.
    (6) For international banking facility deposits, other than those 
connected to a Class B sweep or automated credit arrangements, the 
provisional hold algorithm will be the same as for deposit accounts, 
except that the account balance threshold and the hold percentage may 
differ.
    (7) For the interest-bearing investment vehicle of a Class B sweep 
arrangement, the provisional hold algorithm must be designed with the 
capability to place a provisional hold on the interest-bearing 
investment vehicle with possibly a different account balance threshold 
and a different hold percentage according to the type of interest-
bearing investment vehicle.
    (8) For the interest-bearing investment vehicle of an automated 
credit account arrangement, the provisional hold algorithm must be 
designed with the capability to place a provisional hold on the 
interest-bearing investment vehicle with possibly a different account 
balance threshold and a different hold percentage according to the type 
of interest-bearing investment vehicle.
    (9) The automated process for provisional holds required by 
paragraph (c)(1) of this section must include the capability of 
removing provisional holds in batch mode and, during the same 
processing cycle, applying debits, credits or additional holds on the 
deposit accounts from which the provisional holds were removed, as 
determined by the FDIC.
    (d) Providing a standard data format for generating deposit account 
and customer data. (1) A covered institution must have in place 
practices and procedures for providing the FDIC in a standard format 
upon the close of any day's business with required account and customer 
data, for all deposit accounts held in domestic and foreign offices and 
interest-bearing investment accounts connected with Class B sweep and 
automated credit arrangements. Such standard data files are to be 
created through a mapping of pre-existing data elements and internal 
institution codes into standard data formats.
    (2) The requirements of paragraph (d)(1) of this section shall be 
provided in five separate files, as indicated in the appendices to this 
Part 360.
    (3) Upon request by the FDIC, a covered institution must submit the 
data required by paragraph (d)(1) of this section to the FDIC, in a 
manner prescribed by the FDIC.
    (4) In providing the data required under paragraph (d)(1) of this 
section to the FDIC, the Covered Institution must be able to reconcile 
the total deposit balances and the number of deposit accounts to the 
institution's subsidiary system control totals.
    (e) Implementation requirements. (1) A covered institution must 
comply with the requirements of this section no later than eighteen 
months after the effective date of this section.
    (2) An insured depository institution not within the definition of 
a covered institution on the effective date of this section must comply 
with the requirements of this section no later than eighteen months 
following the end of the second calendar quarter for which it meets the 
criteria for a covered institution.
    (3) Upon the merger of two or more non-covered institutions, if the 
resulting institution meets the criteria for a covered institution, 
that covered institution must comply with the requirements of this 
section no later than eighteen months after the effective date of the 
merger.
    (4) Upon the merger of two or more covered institutions, the merged 
institution must comply with the requirements of this section within 
eighteen months following the effective date of the merger. This 
provision, however, does not supplant any preexisting implementation 
date requirement, in place prior to the date of the merger, for the 
individual covered institution(s) involved in the merger.

[[Page 2388]]

    (5) Upon the merger of one or more covered institutions with one or 
more non-covered institutions, the merged institution must comply with 
the requirements of this section within eighteen months following the 
effective date of the merger. This provision, however, does not 
supplant any preexisting implementation date requirement for the 
individual covered institution(s) involved in the merger.
    (6) Notwithstanding the general requirements of this paragraph (e), 
on a case-by-case basis, the FDIC may accelerate, upon notice, the 
implementation timeframe of all or part of the requirements of this 
section for a covered institution that either: Has a composite rating 
of 3, 4, or 5 under the Uniform Financial Institution's Rating System; 
or is undercapitalized as defined under the prompt corrective action 
provisions of 12 CFR part 325. In implementing this paragraph (e)(6), 
the FDIC must consult with the covered institution's primary federal 
regulator and consider the:
    (i) Complexity of the institution's deposit systems and operations;
    (ii) Extent of the institution's asset quality difficulties;
    (iii) Volatility of the institution's funding sources;
    (iv) Expected near-term changes in the institution's capital 
levels; and
    (v) Other relevant factors appropriate for the FDIC to consider in 
its roles as insurer and possible receiver of the institution.
    (7) Notwithstanding the general requirements of this paragraph (e), 
a covered institution may request, by letter, that the FDIC extend the 
deadline for complying with the requirements of this section. A request 
for such an extension is subject to the FDIC's rules of general 
applicability under 12 CFR 303.251.
    (f) Testing requirements. Covered institutions must provide 
appropriate assistance to the FDIC in its testing of the systems 
required by this section. The FDIC will provide testing details to 
covered institutions through the issuance of subsequent procedures and/
or guidelines.
    3. Add new Appendices A through F to Part 630 to read as follows:

Appendix A to Part 630--Deposit File Structure

    A. This is the structure for the data file to provide deposit 
data to the FDIC. If data or information are not maintained or do 
not apply, a null value in the appropriate field should be 
indicated. The file will be in a tab-or pipe-delimited format. Each 
file name will contain the institution's FDIC Certificate Number, an 
indication that it is a deposit file type and the date of the 
extract. The files will be encrypted using an FDIC-supplied 
algorithm. The FDIC will transmit to the Covered Institution the 
encryption algorithm over FDICconnect.
    B. The total deposit balances and the number of deposit accounts 
in each deposit file must be reconciled to the subsidiary system 
control totals.
    C. The FDIC intends to fully utilize a Covered Institution's 
understanding of its customers and the data maintained around 
deposit accounts. Should additional information be available to the 
Covered Institution to help the FDIC more quickly complete its 
insurance determination process, it may add this information to the 
end of this data file. Should additional data elements be provided, 
a complete data dictionary for these elements must be supplied along 
with a description of how this information could be best used to 
establish account ownership or insurance category.
    D. The deposit data elements provide information specific to 
deposit account balances and account data. The sequencing of these 
elements, their physical data structures and the field data format 
and field length must be provided to the FDIC along with the data 
structures identified below.
    E. A header record will also be required at the beginning of 
this file. This record will contain the number of accounts to be 
included in this file, the maximum number of characters contained in 
largest account title field maintained within the deposit file and 
the maximum number of characters contained in largest address field 
maintained within the deposit file.

    Note: Each record must contain the account title/name and 
current account statement mailing address. Fields 16-32 relate to 
the account name and address information. Some systems provide for 
separate fields for account title/name, street address, city, state, 
ZIP, and country, all of which are parsed out. Others systems may 
simply provide multiple lines for name, street address, city, state, 
ZIP, with no distinction. Populate fields that best fit the system's 
data, either fields 16-26 or fields 27-32.


----------------------------------------------------------------------------------------------------------------
            Field name                Field description          Comments                     Format
----------------------------------------------------------------------------------------------------------------
1. DP--Acct--Identifier...........  Account Identifier...  The Account           Character (25).
                                    The primary field       Identifier may be
                                     used to identify the   composed of more
                                     account. This field    than one physical
                                     may be the Account     data element. If
                                     Number.                multiple fields are
                                                            required to
                                                            identify the
                                                            account, data
                                                            should be placed in
                                                            separate fields and
                                                            the FDIC instructed
                                                            how these fields
                                                            are combined to
                                                            uniquely identify
                                                            the account.
2. DP--Acct--Identifier-2.........  Account Identifier-2.  ....................  Character (25).
                                    If necessary, the
                                     second element used
                                     to identify the
                                     account..
3. DP--Acct--Identifier-3.........  Account Identifier-3.  ....................  Character (25).
                                    If necessary, the
                                     third element used
                                     to identify the
                                     account..
4. DP--Acct--Identifier-4.........  Account Identifier-4.  ....................  Character (25).
                                    If necessary, the
                                     fourth element used
                                     to identify the
                                     account..
5. DP--Acct--Identifier-5.........  Account Identifier-5.  ....................  Character (25).
                                    If necessary, the
                                     fifth element used
                                     to identify the
                                     account..
6. DP--Sub--Acct--Identifier......  Sub-Account            The Sub-Account       Character (25).
                                     Identifier.            Identifier may
                                    If available, the sub-  identify separate
                                     account identifier     deposits tied to
                                     for the account..      this account where
                                                            there are different
                                                            processing
                                                            parameters such as
                                                            interest rates or
                                                            maturity dates, but
                                                            all owners are the
                                                            same.
7. DP--Bank--No...................  Bank Number..........  ....................  Character (15).
                                    The bank number
                                     assigned to the
                                     deposit account..

[[Page 2389]]

 
8. DP--Tax--ID....................  Tax ID...............  For consumer          Character (15).
                                    The tax                 accounts,
                                     identification         typically, this
                                     number maintained on   would be the
                                     the account..          primary account
                                                            holder's social
                                                            security number
                                                            (``SSN''). For
                                                            business accounts
                                                            it would be the
                                                            federal tax
                                                            identification
                                                            number (``TIN'').
                                                            Hyphens are
                                                            optional in this
                                                            field.
9. DP--Tax--Code..................  Tax ID Code..........  Generally deposit     Character (1).
                                    The type of the tax     systems have flags
                                     identification         or indicators set
                                     number. Possible       to indicate whether
                                     values are:.           the number is an
                                     S = Social     SSN or TIN.
                                     Security Number..
                                     T = Federal
                                     Tax Identification
                                     Number..
                                     O = Other...
10. DP--Branch....................  Branch Number........  In lieu of a branch   Character (15).
                                    The branch or office    number this field
                                     associated with the    may represent a
                                     account..              specialty
                                                            department or
                                                            division.
11. DP--Cost--Center..............  Cost Center or         This field ties to    Character (20).
                                     G[bs]L Code.              accounts.
                                    The identifier used
                                     for organization
                                     reporting or
                                     ownership of the
                                     account. Insert null
                                     value if the cost
                                     center is not
                                     carried in the
                                     deposit record..
12. DP--Dep--Type.................  Deposit Type           A deposit--also       Character (1).
                                     Indicator.             called a ``domestic
                                    The type of deposit     deposit''--includes
                                     by office location.    only deposit
                                     Possible values are:.  liabilities payable
                                     D = Deposit    in the United
                                     (Domestic)..           States, typically
                                     F = Foreign    those deposits
                                     Deposit..              maintained in a
                                                            domestic office of
                                                            an insured
                                                            depository
                                                            institution, as
                                                            defined in section
                                                            3(l) of the Federal
                                                            Deposit Insurance
                                                            Act (12 U.S.C.
                                                            1813(l)). A foreign
                                                            deposit is a
                                                            deposit liability
                                                            in a foreign branch
                                                            payable solely at a
                                                            foreign branch or
                                                            branches.
13. DP--Currency--Type............  Currency Type........  ....................  Character (3).
                                    The ISO 4217 currency
                                     code.
14. DP--Ownership--Ind............  Customer Ownership     Single: Accounts      Character (2).
                                     Indicator.             owned by an
                                    The type of ownership   individual and
                                     at the account         those accounts held
                                     level. Possible        as Minor Accounts,
                                     values are:.           Estate Accounts,
                                     S = Single..   Non-Minor Custodian/
                                     J = Joint      Guardian Accounts,
                                     Account..              Attorney in Fact
                                     P =            Accounts and Sole
                                     Partnership account..  Proprietorships.
                                     C =           Joint Account:
                                     Corporation..          Accounts owned by
                                     B = Brokered   two or more
                                     Deposits..             individuals, but
                                     I = IRA        does not include
                                     Accounts..             the ownership of a
                                     U =            Payable on Death
                                     Unincorporated         Account or Trust
                                     Association..          Account..
                                     R =           Partnership Account:
                                     Revocable Trust..      Accounts owned by a
                                     IR =           Partnership..
                                     Irrevocable Trust..   Corporation:
                                     G =            Accounts owned by a
                                     Government Accounts..  Corporation (e.g.
                                     E = Employee   Inc., L.L.C., or
                                     Benefit Plan           P.C.).
                                     Accounts..            Brokered Deposits:
                                     O = Other...   Accounts placed by
                                                            a deposit broker
                                                            who acts as an
                                                            intermediary for
                                                            the actual owner or
                                                            sub-broker.
                                                           IRA Accounts:
                                                            Accounts for which
                                                            the owner has the
                                                            right to direct how
                                                            the funds are
                                                            invested including
                                                            Keoghs and other
                                                            Self-Directed
                                                            Retirement Accounts.
                                                           Unincorporated
                                                            Association: An
                                                            account owned by an
                                                            association of two
                                                            or more persons
                                                            formed for some
                                                            religious,
                                                            educational,
                                                            charitable, social
                                                            or other non-
                                                            commercial purpose.
                                                           Revocable Trusts:
                                                            Including PODs and
                                                            formal revocable
                                                            trusts (e.g. Living
                                                            Trusts, Intervivos
                                                            Trusts or Family
                                                            Trusts).

[[Page 2390]]

 
                                                           Irrevocable Trusts:
                                                            Accounts held by a
                                                            trust established
                                                            by statute or
                                                            written trust in
                                                            which the grantor
                                                            relinquishes all
                                                            power to revoke the
                                                            trust.
                                                           Government Accounts:
                                                            Accounts owned by a
                                                            government entity
                                                            (e.g. City, State,
                                                            County or Federal
                                                            government entities
                                                            and their sub-
                                                            divisions).
                                                           Employee Benefit
                                                            Plan: Accounts
                                                            established by the
                                                            administrator of an
                                                            Employee Benefit
                                                            Plan including
                                                            defined
                                                            contribution,
                                                            defined benefit and
                                                            employee welfare
                                                            plans.
                                                           Other Accounts:
                                                            Accounts owned by
                                                            an entity not
                                                            described above.
15. DP--Prod--Cat.................  Product Category.....  Product Category is   Character (3).
                                    The product             sometimes referred
                                     classification.        to as ``application
                                     Possible values are:.  type'' or ``system
                                     DDA = Non-     type''.
                                     Interest Bearing
                                     Checking accounts..
                                     NOW =
                                     Interest Bearing
                                     Checking accounts..
                                     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..
16. DP--Stat--Code................  Status Code..........  ....................  Character (1).
                                    Status or condition
                                     of the account.
                                     Possible values are:.
                                     O = Open....
                                     D = Dormant.
                                     I =
                                     Inactive..
                                     E =
                                     Escheatment..
                                     A =
                                     Abandoned..
                                     C = Closing.
                                     R =
                                     Restricted/Frozen/
                                     Blocked..
17. DP--Acct--Title--1............  Account Title Line 1.  These data will be    Character (100).
                                    Account styling or      used to identify
                                     titling of the         the owners of the
                                     account..              account.
18. DP--Acct--Title--2............  Account Title Line 2.  ....................  Character (100).
                                    If available, the
                                     second account title
                                     line..
19. DP--Acct--Title--3............  Account Title Line 3.  ....................  Character (100).
                                    If available, the
                                     third account title
                                     line..
20. DP--Acct--Title--4............  Account Title Line 4.  ....................  Character (100).
                                    If available, the
                                     fourth account title
                                     line..
21. DP--Street--Add--Ln--1........  Street Address Line 1  ....................  Character (100).
                                    The current account
                                     statement mailing
                                     address of record..
22. DP--Street--Add--Ln--2........  Street Address Line 2  ....................  Character (100).
                                    If available, the
                                     second mailing
                                     address line..
23. DP--Street--Add--Ln--3........  Street Address Line 3  ....................  Character (100).
                                    If available, the
                                     third mailing
                                     address line..
24. DP--City......................  City.................  ....................  Character (50).
                                    The city associated
                                     with the mailing
                                     address..
25. DP--State.....................  State................  Use a two-character   Character (2).
                                    The state               state code
                                     abbreviation           (official U.S.
                                     associated with the    Postal Service
                                     mailing address..      abbreviations).
26. DP--ZIP.......................  ZIP..................  If the ``+4'' code    Character (10).
                                    The ZIP + 4 code        is not available
                                     associated with the    provide only the 5-
                                     mailing address..      digit ZIP code.
                                                            Hyphens are
                                                            optional in this
                                                            field.

[[Page 2391]]

 
27. DP--Country...................  Country..............  Provide the country   Character (10).
                                    The country             name or the
                                     associated with the    standard IRS
                                     mailing address..      country code.
28. DP--NA--Line--1...............  Name/Address Line 1..  Fields 27-32 are to   Character (100).
                                    Alternate name/         be used if address
                                     address format for     data are not parsed
                                     the current account    to populated Fields
                                     statement mailing      16-26.
                                     address of record,
                                     first line..
29. DP--NA--Line--2...............  Name/Address Line 2..  ....................  Character (100).
                                    Alternate name/
                                     address format,
                                     second line..
30. DP--NA--Line--3...............  Name/Address Line 3..  ....................  Character (100).
                                    Alternate name/
                                     address format,
                                     third line..
31. DP--NA--Line--4...............  Name/Address Line 4..  ....................  Character (100).
                                    Alternate name/
                                     address format,
                                     fourth line..
32. DP--NA--Line--5...............  Name/Address Line 5..  ....................  Character (100).
                                    Alternate name/
                                     address format,
                                     fifth line..
33. DP--NA--Line--6...............  Name/Address Line 6..  ....................  Character (100).
                                    Alternate name/
                                     address format,
                                     sixth line..
34. DP--Cur--Bal..................  Current Balance......  This balance should   Decimal (14,2).
                                    The current balance     not be reduced by
                                     in the account at      float or holds. For
                                     the end of business    CDs and time
                                     on the effective       deposits, the
                                     date of this file..    balance should
                                                            reflect the
                                                            principal balance
                                                            plus any interest
                                                            paid and available
                                                            for withdrawal not
                                                            already included in
                                                            the principal (do
                                                            not include accrued
                                                            interest). The
                                                            total of all
                                                            current balances in
                                                            this file should
                                                            reconcile to the
                                                            total deposit trial
                                                            balance totals or
                                                            other summary
                                                            reconciliation of
                                                            deposits performed
                                                            by the institution.
35. DP--Int--Rate.................  Interest Rate........  Interest rate should  Decimal (10,9).
                                    The current interest    be expressed in
                                     rate in effect for     decimal format,
                                     interest bearing       i.e., 2.0% should
                                     accounts..             be represented as
                                                            0.020000000.
36. DP--Bas--Days.................  Basis Days...........  ....................  Character (1).
                                    Basis on which
                                     interest is to be
                                     paid. Possible
                                     values are:.
                                     1 = 30/360..
                                     2 = 30/365..
                                     3 = 365/365
                                     (actual/actual)..
                                     4 = 365/366.
37. DP--Int--Type.................  Interest Type........  ....................  Character (1).
                                    Type of interest to
                                     be paid. Possible
                                     values are:.
                                     S = Simple..
                                     D = Daily
                                     Compounding..
                                     C =
                                     Continuous
                                     Compounding..
38. DP--Int--Factor...............  Interest Rate Daily    Interest rate should  Decimal (10,9).
                                     Factor.                be expressed in
                                    The daily interest      decimal format,
                                     rate factor used for   i.e., 2.0% should
                                     generating interest..  be represented as
                                                            0.020000000.
39. DP--Acc--Int..................  Accrued Interest.....  ....................  Decimal (14,2).
                                    The amount of
                                     interest that has
                                     been earned but not
                                     yet paid to the
                                     account as of the
                                     date of the file..
40. DP--Lst--Int--Pd..............  Date Last Interest     ....................  Date (YYYYMMDD).
                                     Paid.
                                    The date through
                                     which interest was
                                     last paid to the
                                     account..
41. DP--Lst--Deposit..............  Date Last Deposit....  For example, a        Date (YYYYMMDD).
                                    The date of the last    deposit that
                                     deposit transaction    included checks and/
                                     posted to the          or cash.
                                     account..
42. DP--Int--Mon--Base............  Interest Month Base..  ....................  Character (1).
                                    The basis for
                                     determining
                                     calculations to the
                                     account. Possible
                                     values are:.
                                     A = Actual
                                     number of days in
                                     the month..
                                     M = 30-day
                                     month..
43. DP--Int--Term--No.............  Interest Term Number.  ....................  Decimal (3,0).
                                    The number of months
                                     in the current
                                     interest term..

[[Page 2392]]

 
44. DP--Nxt--Mat..................  Date of Next Maturity  For non-renewing CDs  Date (YYYYMMDD).
                                    For CD and time         that have matured
                                     deposit accounts,      and are waiting to
                                     the next date the      be redeemed, this
                                     account is to          date may be in the
                                     mature..               past.
45. DP--Open--DT..................  Account Open Date....  If the account had    Date (YYYYMMDD).
                                    The date the account    previously been
                                     was opened..           closed and re-
                                                            opened, this should
                                                            reflect the most
                                                            recent re-opened
                                                            date.
46. DP--Sweep--Code...............  Sweep Code...........  ....................  Character (1).
                                    Indicates if the
                                     account is a sweep
                                     account. Possible
                                     values are:.
                                     Y = Yes.....
                                     N = No......
47. DP--Hold--To--Post............  Full Hold on the       ....................  Character (1).
                                     account:.
                                    Indicator if all
                                     postings to this
                                     account are
                                     restricted. Possible
                                     values are:.
                                     Y = Yes.....
                                     N = No......
48. DP--Issue--Val--Amt...........  Issued Value Amount..  For CDs only........  Decimal (14,2).
                                    The value of the
                                     current CD when
                                     issued..
49. DP--Int--CD--Cde..............  Type of Interest for   For CDs only........  Character (1).
                                     CD.
                                    Possible values are:.
                                     C = Rate
                                     Change Allowed..
                                     N = Rate
                                     Change Not Allowed..
                                     R = Change
                                     Rate to Default at
                                     Renewal..
                                     T = Rate
                                     Change Allowed Only
                                     During the Term..
50. DP--IRA--Cde..................  IRA Code.............  Optional code field   Character (1).
                                    The type of IRA.        to be used if
                                     Possible values are:.  available to help
                                     C =            further identify
                                     Corporate              the types of IRA
                                     Retirement..           accounts.
                                     E =
                                     Educational IRA..
                                     I = IRA
                                     Account..
                                     K = Keogh
                                     Account..
                                     R = Roth IRA
                                     Account..
                                     S = SEP
                                     Account..
                                     T =
                                     Transitional Roth
                                     IRA..
                                     V = Versa
                                     Account..
                                     H = Health
                                     Savings Account..
51. Deposit--Class--Type..........  Deposit Class Type...  The institution may   Character (10).
                                    The deposit class.      also use more or
                                     Possible values are:.  fewer class types.
                                     RTL =
                                     Retail..
                                     FED =
                                     Federal government..
                                     STATE =
                                     State government..
                                     COMM =
                                     Commercial..
                                     CORP =
                                     Corporate..
                                     BANK = Bank
                                     Owned..
                                     DUE TO =
                                     Other Banks..
52. DP--Product--Class--Cde.......  Deposit Class Codes..  These Product Class   Character (2).
                                    The deposit class       codes are used in
                                     codes. Possible        conjunction with
                                     values are:.           the Deposit Class
                                    RTL..................   Types in field 51.
                                     1 = Payable    This field is to be
                                     on Death..             used in concert
                                     2 =            with fields 12 and
                                     Individual..           13 identified above
                                     3 = Living     to enable the
                                     Trust--Intervivos or   financial
                                     Family..               institution to
                                     4 =            capture more
                                     Irrevocable Trust      detailed
                                     (includes              information
                                     Educational IRAs)..    concerning account
                                     5 = Estate..   types. It is the
                                     6 = Attorney   intent of the FDIC
                                     in Fact..              to have the
                                     7 = Minor--    financial
                                     (includes all          institution map
                                     variations of          their detailed
                                     Uniform Gifts to       account type to the
                                     Minor Accounts)..      codes identified in
                                     8 =            this field. The
                                     Bankruptcy Personal..  institution may
                                     9 = Pre-Need   also use additional
                                     Burial..               codes, but in this
                                     10 = Escrow.   event the
                                     11 =           institution must
                                     Representative Payee/  supply the detailed
                                     Beneficiary..          description and
                                                            code value for each
                                                            additional code
                                                            used. If no
                                                            additional account
                                                            product type detail
                                                            is available, then
                                                            this field should
                                                            be left blank.

[[Page 2393]]

 
                                        12 = Sole
                                        Proprietorship..
                                     13 = Joint..
                                     14 = Non-
                                     Minor Custodian/
                                     Guardian..
                                     15 = Other
                                     Retail..
                                    FED
                                        16 = FHA.
                                        17 =
                                        Federal
                                        Government..
                                    STATE
                                        18 =
                                        City..
                                        19 =
                                        State..
                                        20 =
                                        County, Clerk of
                                        Court..
                                        21 =
                                        Other State..
                                    COMMERCIAL
                                     22 =
                                     Business Escrow..
                                     23 =
                                     Bankruptcy..
                                     24 = Club...
                                     25 = Church.
                                     26 =
                                     Unincorporated
                                     Association..
                                     27 =
                                     Unincorporated Non
                                     Profit..
                                     28 = Other
                                     Commercial..
                                    CORPORATION
                                     29 =
                                     Business Trust..
                                     30 =
                                     Business Agent..
                                     31 =
                                     Business Guardian..
                                     32 =
                                     Incorporated
                                     Association..
                                     33 =
                                     Incorporated Non
                                     Profit..
                                     34 =
                                     Corporation..
                                     35 =
                                     Corporate
                                     Partnership..
                                     36 =
                                     Corporate
                                     Partnership Trust..
                                     37 =
                                     Corporate Agent..
                                     38 =
                                     Corporate Guardian..
                                     39 = Pre-
                                     Need Funeral Trust..
                                     40 = Limited
                                     Liability
                                     Incorporation..
                                     41 = LLC
                                     partnership..
                                     42 = Lawyer
                                     Trust..
                                     43 = Realtor
                                     Trust..
                                     44 = Other
                                     Corporation..
                                    BANK
                                     45 =
                                     Certified & Official
                                     Checks, Money
                                     Orders, Loan
                                     Disbursements
                                     Checks, and Expense
                                     Checks..
                                     46 = ATM
                                     Settlement..
                                     47 = Other
                                     Bank Owned Accounts..
                                    DUE TO (Other Banks)
                                     48 = Due to
                                     U.S. Banks..
                                     49 = Due to
                                     U.S. Branches of
                                     Foreign Banks..
                                     50 = Due to
                                     Other Depository
                                     Institutions..
                                     51 = Due to
                                     Foreign Banks..
                                     52 = Due to
                                     Foreign Branches of
                                     U.S. banks..
                                     53 = Due to
                                     Foreign Governments
                                     and Official
                                     Institutions..
53. DP--Routing--No...............  Bank Routing Number..  This field is         Character (15).
                                    The routing/transit     identifier
                                     number..               information for ACH
                                                            transactions
                                                            generated by the
                                                            FDIC.
----------------------------------------------------------------------------------------------------------------

Appendix B to Part 630--Class B Sweep/Automated Credit Account File 
Structure

    A. This is the structure of the data file to provide information 
to the FDIC on funds residing in investment vehicles linked to each 
non-closed deposit account or sub-account: Involved in Class B sweep 
activity; or which accepts automated credits. A single record should 
be used for each instance where funds affiliated with the deposit 
account are held in an alternative investment vehicle. For any 
alternative investment vehicle, a separate account may or may not 
exist. If an account exists for the investment vehicle it should be 
noted in the record. If no account exists then a null value for the 
Class B Sweep/Automated Credit Account Identifiers should be 
provided, but the remainder of the data fields defined below should 
be populated.
    B. For data provided in the Class B Sweep/Automated Credit 
Account File the total

[[Page 2394]]

account balances and the number of accounts must be reconciled to 
subsidiary system control totals.

----------------------------------------------------------------------------------------------------------------
            Field name                Field description          Comments                     Format
----------------------------------------------------------------------------------------------------------------
1. DP--Acct--Identifier...........  Account Identifier...  The Account           Character (25).
                                    The primary field       Identifier may be
                                     used to identify the   composed of more
                                     account from which     than one physical
                                     funds are swept or     data element. If
                                     debited. The field     multiple fields are
                                     may be the Account     required to
                                     number..               identify the
                                                            account, data
                                                            should be placed in
                                                            separate fields and
                                                            the FDIC instructed
                                                            how these fields
                                                            are combined to
                                                            uniquely identify
                                                            the account.
2. DP--Acct--Identifier-2.........  Account Identifier-2.  ....................  Character (25).
                                    If necessary, the
                                     second element used
                                     to identify the
                                     account from which
                                     funds are swept or
                                     debited..
3. DP--Acct--Identifier-3.........  Account Identifier-3.  ....................  Character (25).
                                    If necessary, the
                                     third element used
                                     to identify the
                                     account from which
                                     funds are swept or
                                     debited..
4. DP--Acct--Identifier-4.........  Account Identifier-4.  ....................  Character (25).
                                    If necessary, the
                                     fourth element used
                                     to identify the
                                     account from which
                                     funds are swept or
                                     debited..
5. DP--Acct--Identifier-5.........  Account Identifier-5.  ....................  Character (25).
                                    If necessary, the
                                     fifth element used
                                     to identify the
                                     account from which
                                     funds are swept or
                                     debited..
6. DP--Sub--Acct--Identifier......  Sub-Account            The Sub-Account       Character (25).
                                     Identifier.            Identifier may
                                    If available, the sub-  identify separate
                                     account identifier     deposits tied to
                                     for the account..      this account where
                                                            there are different
                                                            processing
                                                            parameters such as
                                                            interest rates or
                                                            maturity dates, but
                                                            all owners are the
                                                            same.
7. SW--Acct--Identifier...........  Class B Sweep/         Funds may be swept    Character (25).
                                     Automated Credit       into an investment
                                     Account Identifier.    vehicle not
                                    The primary field       represented as an
                                     used to identify the   account. In this
                                     account into which     case this field
                                     funds are swept or     should be a null
                                     credited. This field   value.
                                     may be the Account    The Class B Sweep/
                                     Number..               Automated Credit
                                                            Account Identifier
                                                            may be composed of
                                                            more than one
                                                            physical data
                                                            element. If
                                                            multiple fields are
                                                            required to
                                                            identify the
                                                            account, data
                                                            should be placed in
                                                            separate fields and
                                                            the FDIC instructed
                                                            how these fields
                                                            are combined to
                                                            uniquely identify
                                                            the account.
8. SW--Acct--Identifier-2.........  Class B Sweep/         ....................  Character (25).
                                     Automated Credit
                                     Account Identifier-2.
                                    If necessary, the
                                     second element of
                                     the account
                                     identifier used to
                                     identify the account
                                     into which funds are
                                     swept or credited..
9. SW--Acct--Identifier-3.........  Class B Sweep/         ....................  Character (25).
                                     Automated Credit
                                     Account Identifier-3.
                                    If necessary, the
                                     third element of the
                                     account identifier
                                     used to identify the
                                     account into which
                                     funds are swept or
                                     credited..
10. SW--Acct--Identifier-4........  Class B Sweep/         ....................  Character (25).
                                     Automated Credit
                                     Account Identifier-4.
                                    If necessary, the
                                     fourth element of
                                     the account
                                     identifier used to
                                     identify the account
                                     into which funds are
                                     swept or credited..
11. SW--Acct--Identifier-5........  Class B Sweep/         ....................  Character (25).
                                     Automated Credit
                                     Account Identifier-5.
                                    If necessary, the
                                     fifth element of the
                                     account identifier
                                     used to identify the
                                     account into which
                                     funds are swept or
                                     credited..

[[Page 2395]]

 
12. SW--Sub--Acct--Identifier.....  Class B Sweep/         ....................  Character (25).
                                     Automated Credit Sub-
                                     Account Identifier.
                                    If available, the sub-
                                     account identifier
                                     for the account..
13. SW--Type......................  Class B Sweep/         ....................  Character (3).
                                     Automated Credit
                                     Type.
                                    The investment
                                     vehicle. Possible
                                     values are:.
                                        RE =                             ...............................
                                        Repurchase
                                        Agreement.
                                        DD =                             ...............................
                                        Deposit Held in a
                                        Domestic Office.
                                        DF =                             ...............................
                                        Deposit Held in a
                                        Foreign Office.
                                        IBF =                            ...............................
                                        Deposit Held in
                                        an International
                                        Banking Facility.
                                        AI =                             ...............................
                                        Deposit Held in
                                        an Affiliated
                                        Depository
                                        Institution.
                                     FF = Federal                        ...............................
                                     Funds.
                                     CP =                                ...............................
                                     Commercial Paper.
                                     OT = Other.                         ...............................
14. SW--Inv--Amount...............  Fund Balance in Class  ....................  Decimal (14,2).
                                     B Sweep/Automated
                                     Credit Investment
                                     Vehicle.
                                    Dollar amount
                                     residing in the
                                     investment vehicle..
15. DP--Currency--Type............  Currency Type........  ....................  Character (3).
                                    The ISO 4217 currency
                                     code..
16. SW--Hold--Amount..............  FDIC Hold Amount.....  ....................  Decimal (14,2).
                                    Amount of FDIC hold
                                     on funds residing in
                                     the investment
                                     vehicle..
17. SW--Sweep--Interval...........  Sweep/Investment       ....................  Character (2).
                                     Frequency.
                                    The frequency with
                                     which the sweep or
                                     investment occurs.
                                     Possible values are:.
                                     D = Daily.                          ...............................
                                     W = Weekly.                         ...............................
                                     BW = Bi                             ...............................
                                     Weekly.
                                     M = Monthly.                        ...............................
                                     BM = Bi-                            ...............................
                                     Monthly.
                                     Q =                                 ...............................
                                     Quarterly.
                                     O = Other.                          ...............................
----------------------------------------------------------------------------------------------------------------

Appendix C to Part 630--Hold File Structure

    This is the structure of the data file to provide information to 
the FDIC for each legal or collateral hold placed on a deposit 
account or sub-account. If data or information are not maintained or 
do not apply, a null value in the appropriate field should be 
indicated. The file will be in a tab-or pipe-delimited format. Each 
file name will contain the institution's FDIC Certificate Number, an 
indication that it is a hold data file type and the date of the 
extract. The files will be encrypted using an FDIC-supplied 
algorithm. The FDIC will transmit the encryption algorithm over 
FDICconnect.

----------------------------------------------------------------------------------------------------------------
            Field name                Field Description          Comments                     Format
----------------------------------------------------------------------------------------------------------------
1. DP--Acct--Identifier...........  Account Identifier...  The Account           Character (25).
                                    The primary field       Identifier may be
                                     used to identify the   composed of more
                                     account. This field    than one physical
                                     may be the Account     data element. If
                                     Number..               multiple fields are
                                                            required to
                                                            identify the
                                                            account, data
                                                            should be placed in
                                                            separate fields and
                                                            the FDIC instructed
                                                            how these fields
                                                            are combined to
                                                            uniquely identify
                                                            the account.
2. DP--Acct--Identifier-2.........  Account Identifier-2.  ....................  Character (25).
                                    If necessary, the
                                     second element used
                                     to identify the
                                     account..
3. DP--Acct--Identifier-3.........  Account Identifier-3.  ....................  Character (25).
                                    If necessary, the
                                     third element used
                                     to identify the
                                     account..
4. DP--Acct--Identifier-4.........  Account Identifier-4.  ....................  Character (25).
                                    If necessary, the
                                     fourth element used
                                     to identify the
                                     account..

[[Page 2396]]

 
5. DP--Acct--Identifier-5.........  Account Identifier-5.  ....................  Character (25).
                                    If necessary, the
                                     fifth element used
                                     to identify the
                                     account..
6. DP--Sub--Acct--Identifier        Sub-Account            The Sub-Account       Character (25).
                                     Identifier If          Identifier may
                                     available, the sub-    identify separate
                                     account identifier     deposits tied to
                                     for the account.       this account where
                                    If available, the sub-  there are different
                                     account identifier     processing
                                     for the account.       parameters such as
                                                            interest rates or
                                                            maturity dates, but
                                                            all owners are the
                                                            same.
7. HD--Hold--Amt..................  Hold Amount..........  ....................  Decimal (14,2).
                                    Dollar amount of the
                                     hold..
8. HD--Hold--Reason...............  Hold Reason..........  ....................  Character (2).
                                    Reason for the hold.
                                     Possible values are:.
                                        LN = Loan                        ...............................
                                        Collateral Hold.
                                     LG = Court                          ...............................
                                     Order Hold.
                                     FD = FDIC                           ...............................
                                     hold.
                                        OT =                             ...............................
                                        Other (do not
                                        include daily
                                        operational type
                                        holds).
9. HD--Hold--Desc.................  Hold Description.....  ....................  Character (255).
                                    Description of the
                                     hold available on
                                     the system..
10. HD--Hold--Start--Dt...........  Hold Start Date......  ....................  Date (YYYYMMDD).
                                    The date the hold was
                                     initiated..
11. HD--Hold--Exp--Dt.............  Hold Expiration Date.  ....................  Date (YYYYMMDD).
                                    The date the hold is
                                     to expire..
----------------------------------------------------------------------------------------------------------------

Appendix D to Part 630--Customer File Structure

    This is the structure of the data file to provide to the FDIC 
information related to each customer who has an account or sub-
account reported in the deposit data or Class B sweep/automated 
credit account file. If data or information are not maintained or do 
not apply, a null value in the appropriate field should be 
indicated. The file will be in a tab- or pipe-delimited format. Each 
file name will contain the institution's FDIC Certificate Number, an 
indication that it is a customer file type and the date of the 
extract. The files will be encrypted using an FDIC-supplied 
algorithm. The FDIC will transmit the encryption algorithm over 
FDICconnect.

    Note: Each record must contain the customer's name and permanent 
legal address. Fields 4-12 relate to the customer name for 
individuals only. Fields 13-14 relate to the customer name for 
entities other than individuals. Some systems provide for separate 
fields for name, street address, city, state, ZIP, and country, all 
of which are parsed out. Other systems may simply provide multiple 
lines for name, street address, city, state, ZIP, with no 
distinction. In this case, certain name and address data elements 
must be parsed and provided in the appropriate fields.


----------------------------------------------------------------------------------------------------------------
            Field name                Field description          Comments                     Format
----------------------------------------------------------------------------------------------------------------
1. CS--Cust--Identifier...........  Customer Identifier..  ....................  Character (25).
                                    The unique field used
                                     by the institution
                                     to identify the
                                     customer..
2. CS--Tax--ID....................  Customer Tax ID        Hyphens are optional  Character (11).
                                     Number.                in this field.
                                    The tax
                                     identification
                                     number on record for
                                     the customer..
3. CS--Tax --Code.................  Customer Tax ID Code.  ....................  Character (1).
                                    The type of the tax
                                     identification
                                     number of the
                                     customer. Possible
                                     values are:.
                                        S =
                                        Social Security
                                        Number.
                                        T =
                                        Federal Tax
                                        Identification
                                        Number.
                                        O = Other
4. CS--Name--Line--1..............  Individual Customer    ....................  Character (100).
                                     Name Line 1.
                                    If available, the
                                     free-form name
                                     narrative of the
                                     customer, first
                                     line..
5. CS--Name--Line--2..............  Individual Customer    ....................  Character (100).
                                     Name Line 2.
                                    If available, the
                                     free-form name
                                     narrative of the
                                     customer, second
                                     line..
6. CS--Last--Name.................  Individual Customer    This field is         Character (50).
                                     Last Name.             required if the
                                    For individuals, the    data element is in
                                     customer's last        the institution's
                                     name..                 records. If
                                                            necessary, data
                                                            should be parsed
                                                            from fields 4 or 5
                                                            to obtain this
                                                            element.

[[Page 2397]]

 
7. CS--First--Name................  Individual Customer    This field is         Character (50).
                                     First Name.            required if the
                                    For individuals, the    data element is in
                                     customer's first       the institution's
                                     name..                 records. If
                                                            necessary, data
                                                            should be parsed
                                                            from fields 4 or 5
                                                            to obtain this
                                                            element.
8. CS--Middle--Name...............  Individual Customer    This field is         Character (50).
                                     Middle Name.           required if the
                                    For individuals, the    data element is in
                                     customer's middle      the institution's
                                     name..                 records. If
                                                            necessary, data
                                                            should be parsed
                                                            from fields 4 or 5
                                                            to obtain this
                                                            element.
9. CS--Suffix.....................  Individual             This field is         Character (20).
                                     Professional Suffix.   required if the
                                    For individuals, the    data element is in
                                     suffix designating     the institution's
                                     customer's academic,   records. If
                                     professional or        necessary, data
                                     honorary status,       should be parsed
                                     such as Esq., PhD.,    from fields 4 or 5
                                     M.D., and D.D.S..      to obtain this
                                                            element.
10. CS--Generation................  Individual             This field is         Character (10).
                                     Generational Suffix.   required if the
                                    For individuals, the    data element is in
                                     suffix designating     the institution's
                                     the customer's         records. If
                                     generational status,   necessary, data
                                     such as Jr., Sr. or    should be parsed
                                     III..                  from fields 4 or 5
                                                            to obtain this
                                                            element.
11. CS--Prefix....................  Individual Customer    This field is         Character (10).
                                     Prefix.                required if the
                                    For individuals, the    data element is in
                                     prefix of the          the institution's
                                     customer, such as      records. If
                                     Rev., Dr., Mrs., Mr.   necessary, data
                                     or Ms..                should be parsed
                                                            from fields 4 or 5
                                                            to obtain this
                                                            element.
12. CS--Birth--Dt.................  Individual Customer    ....................  Date (YYYYMMDD).
                                     Birth Date.
                                    For individuals, the
                                     customer's birth
                                     date..
13. CS--Ent--Name--Line--1........  Entity Name Line 1...  ....................  Character (100).
                                    For entities other
                                     than individuals,
                                     the free-form name
                                     narrative of the
                                     customer, first
                                     line..
14. CS--Ent--Name--Line--2........  Entity Name Line 2...  ....................  Character (100).
                                    If available for
                                     entities other than
                                     individuals, the
                                     free-form name
                                     narrative of the
                                     customer, second
                                     line..
15. CS--Nar--Addr--Line--1........  Customer Address Line  ....................  Character (100).
                                     1.
                                    If available, the
                                     free-form permanent
                                     legal address
                                     narrative for the
                                     customer, line one..
16. CS--Nar--Addr --Line--2.......  Customer Address Line  ....................  Character (100).
                                     2.
                                    If available, the
                                     free-form permanent
                                     legal address
                                     narrative of the
                                     customer, line two..
17. CS--Nar--Addr --Line--3.......  Customer Address Line  ....................  Character (100).
                                     3.
                                    If available, the
                                     free-form permanent
                                     legal address
                                     narrative of the
                                     customer, line
                                     three..
18. CS--Street--Address--1........  Street Address Line 1  This field is         Character (100).
                                    The permanent legal     required. If
                                     address of the         necessary, data
                                     customer, line one..   should be parsed
                                                            from fields 16 or
                                                            17 to obtain this
                                                            element.
19. CS--Street--Address--2........  Street Address Line 2  This field is         Character (100).
                                    The permanent legal     required. If
                                     address of the         necessary, data
                                     customer, line two..   should be parsed
                                                            from fields 16 or
                                                            17 to obtain this
                                                            element.
20. CS--City......................  City.................  This field is         Character (25).
                                    The city associated     required. If
                                     with the permanent     necessary, data
                                     legal address..        should be parsed
                                                            from fields 16 or
                                                            17 to obtain this
                                                            element.
21. CS--State.....................  State................  This field is         Character (2).
                                    The state               required. If
                                     abbreviation           necessary, data
                                     associated with the    should be parsed
                                     permanent legal        from fields 16 or
                                     address..              17 to obtain this
                                                            element. Use a two-
                                                            character state
                                                            code (official U.S.
                                                            Postal Service
                                                            abbreviations).
22. CS--ZIP.......................  ZIP..................  This field is         Character (10).
                                    The ZIP + 4 code        required. If
                                     associated with the    necessary, data
                                     permanent legal        should be parsed
                                     address..              from fields 16 or
                                                            17 to obtain this
                                                            element. If the
                                                            ``+4'' code is not
                                                            available provide
                                                            only the 5-digit
                                                            ZIP code. Hyphens
                                                            are optional in
                                                            this field.
23. CS--Country...................  Country..............  This field is         Character (10).
                                    The country             required. If
                                     associated with the    necessary, data
                                     permanent legal        should be parsed
                                     address..              from fields 16 or
                                                            17 to obtain this
                                                            element. Provide
                                                            the name of the
                                                            country or the
                                                            standard IRS
                                                            country code.

[[Page 2398]]

 
24. CS--Telephone.................  Customer Telephone     ....................  Character (20).
                                     Number.
                                    The telephone number
                                     on record for the
                                     customer..
25. CS--Email.....................  Customer Email         ....................  Character (150).
                                     Address.
                                    The e-mail address on
                                     record for the
                                     customer..
----------------------------------------------------------------------------------------------------------------

Appendix E to Part 630--Deposit-Customer Join File Structure

    A. This is the structure of the data file to provide to the FDIC 
information necessary to link the records in the deposit and 
customer files. If data or information are not maintained or do not 
apply, a null value in the appropriate field should be indicated. 
The file will be in a tab- or pipe-delimited format. Each file name 
will contain the institution's FDIC Certificate Number, an 
indication that it is a join file type, and the date of the extract. 
The files will be encrypted using an FDIC-supplied algorithm. The 
FDIC will transmit the encryption algorithm over FDICconnect.
    B. The deposit-customer join file will have one or more records 
for each deposit account, depending on the number of relationships 
to each account. A simple individual account, for example, will be 
associated with only one record in the deposit-customer join file 
indicating the owner of the account. A joint account with two owners 
will be associated with two records in the deposit-customer join 
file, one for each owner. The deposit-customer join file will 
contain other records associated with a deposit account to 
designate, among other things, beneficiaries, custodians, trustees, 
and agents. This methodology allows the FDIC to know all of the 
possible relationships for an individual account and also whether a 
single customer is involved in many accounts.

----------------------------------------------------------------------------------------------------------------
                                          FDIC field
            Field name                   description             Comments                     Format
----------------------------------------------------------------------------------------------------------------
1. CS--Cust--Identifier...........  Customer Identifier..  ....................  Character (25).
                                    The unique field used
                                     by the institution
                                     to identify the
                                     customer..
2. DP--Acct--Identifier...........  Account Identifier...  The Account           Character (25).
                                    The primary field       Identifier may be
                                     used to identify the   composed of more
                                     account. This field    than one physical
                                     may be the Account     data element. If
                                     Number..               multiple fields are
                                                            required to
                                                            identify the
                                                            account, the data
                                                            should be placed in
                                                            separate fields and
                                                            the FDIC instructed
                                                            how these fields
                                                            are combined to
                                                            uniquely identify
                                                            the account.
3. DP--Acct--Identifier-2.........  Account Identifier-2.  ....................  Character (25).
                                    If necessary, the
                                     second element used
                                     to identify the
                                     account..
4. DP--Acct--Identifier-3.........  Account Identifier-3.  ....................  Character (25).
                                    If necessary, the
                                     third element used
                                     to identify the
                                     account..
5. DP--Acct--Identifier-4.........  Account Identifier-4.  ....................  Character (25).
                                    If necessary, the
                                     fourth element used
                                     to identify the
                                     account..
6. DP--Acct--Identifier-5.........  Account Identifier-5.  ....................  Character (25).
                                    If necessary, the
                                     fifth element used
                                     to identify the
                                     account..
7. CS--Rel--Code..................  Relationship Code....  Institutions must     Character (5).
                                    The code indicating     map their
                                     how the customer is    relationship codes
                                     related to the         to the codes in the
                                     account. Possible      list to the right.
                                     values are:.           If the institution
                                     ADM =          maintains more than
                                     Administrator..        one relationship
                                     AGT = Agent/   they must supply
                                     Representative..       the additional
                                     ATF =          relationship codes
                                     Attorney For..         being utilized
                                     AUT =          along with the code
                                     Authorized Signer..    definition.
                                     BNF =
                                     Beneficiary..
                                     CSV =
                                     Conservator..
                                     CUS =
                                     Custodian..
                                     DBA = Doing
                                     Business As..
                                     EXC =
                                     Executor..
                                     GDN =
                                     Guardian..
                                     MIN = Minor.
                                     PRI =
                                     Primary Owner..
                                     SEC =
                                     Secondary Owner(s)..
                                     TTE =
                                     Trustee..
8. CS--Bene--Code.................  Beneficiary Type Code  This includes         Character (1).
                                    If the customer is      beneficiaries on
                                     considered a           retirement
                                     beneficiary, the       accounts, trust
                                     type of account        accounts, minor
                                     associated with this   accounts, and
                                     customer. Possible     payable-on-death
                                     values are:.           accounts.
                                        I = IRA..
                                        T =
                                        Trust--Irrevocabl
                                        e.
                                        R =
                                        Trust--Revocable.
                                        M =
                                        Uniform Gift to
                                        Minor.

[[Page 2399]]

 
                                        P =
                                        Payable on Death.
                                        O = Other
----------------------------------------------------------------------------------------------------------------

Appendix F to Part 360--Possible File Combinations for Deposit Data

    A Covered Institution must provide deposit data using separate 
deposit, sweep, hold, customer, customer address and deposit-
customer join files. The simplest file structure involves providing 
one of each file. This basic file format is shown in Figure 2.
BILLING CODE 6714-01-P
[GRAPHIC] [TIFF OMITTED] TP14JA08.005

    Multiple combinations of deposit, sweep, hold, customer, 
customer address and deposit-customer join files are permissible, 
but only in the following circumstances:
    1. Each separate deposit file must have companion hold and 
deposit-customer join files covering the same deposit accounts.
    2. Each separate customer file must have a companion customer 
address file covering the same customers.
    3. A single customer file may be submitted covering customers 
affiliated with deposit accounts in one or more deposit files as 
long as the customer file contains information on all of the 
customers affiliated with the deposit files.
    4. Several customer files may be submitted as long as each 
separate customer file contains information on all of the customers 
affiliated with the associated deposit files.
    Figure 3 shows a permissible file configuration using a single 
Customer File affiliated with Deposit File A and Deposit File B. As 
required, Deposit File A has a companion Hold File A and Deposit-
Customer Join File A. The same is true for Deposit File B.
    Another permissible combination of files is shown in Figure 4, 
which is a variation of the basic data file structure shown in 
Figure 2.

[[Page 2400]]

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[[Page 2401]]


[GRAPHIC] [TIFF OMITTED] TP14JA08.007


    By order of the Board of Directors.

    Dated at Washington, DC, this 19th day of December, 2007.

Federal Deposit Insurance Corporation.

Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. E8-273 Filed 1-11-08; 8:45 am]
BILLING CODE 6714-01-C