[Federal Register Volume 81, Number 38 (Friday, February 26, 2016)]
[Proposed Rules]
[Pages 10026-10056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03658]



[[Page 10025]]

Vol. 81

Friday,

No. 38

February 26, 2016

Part III





Federal Deposit Insurance Corporation





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12 CFR Part 370





Recordkeeping for Timely Deposit Insurance Determination; Proposed Rule

  Federal Register / Vol. 81 , No. 38 / Friday, February 26, 2016 / 
Proposed Rules  

[[Page 10026]]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 370

RIN 3064-AE33


Recordkeeping for Timely Deposit Insurance Determination

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The FDIC is seeking comment on a proposed rule that would 
facilitate prompt payment of FDIC-insured deposits when large insured 
depository institutions fail. The proposal would require insured 
depository institutions that have two million or more deposit accounts 
to maintain complete and accurate data on each depositor's ownership 
interest by right and capacity for all of the institution's deposit 
accounts, and to develop the capability to calculate the insured and 
uninsured amounts for each deposit owner by ownership right and 
capacity for all deposit accounts, which would be used by the FDIC to 
make deposit insurance determinations in the event of the insured 
depository institution's failure.

DATES: Comments must be received by May 26, 2016.

ADDRESSES: You may submit comments on the notice of proposed rulemaking 
using any of the following methods:
     Agency Web site: https://www.fdic.gov/regulations/laws/federal. Follow the instructions for submitting comments on the agency 
Web site.
     Email: [email protected]. Include RIN 3064--AE33 on 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: 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.
     Public Inspection: All comments received, including any 
personal information provided, will be posted generally without change 
to https://www.fdic.gov/regulations/laws/federal.

FOR FURTHER INFORMATION CONTACT: Marc Steckel, Deputy Director, 
Division of Resolutions and Receiverships, 571-858-8224; Teresa J. 
Franks, Associate Director, Division of Resolutions and Receiverships, 
571-858-8226; Shane Kiernan, Counsel, Legal Division, 703-562-2632; 
Karen L. Main, Counsel, Legal Division, 703-562-2079.

SUPPLEMENTARY INFORMATION:

I. Policy Objectives

    The FDIC is proposing new requirements for certain large and 
complex insured depository institutions (``IDIs''), as measured by 
number of deposit accounts, to ensure that depositors have prompt 
access to insured funds in the event of a failure. When a bank fails, 
the FDIC must provide depositors insured funds ``as soon as possible'' 
after failure while also resolving the failed bank in the least costly 
manner.
    The FDIC makes deposit insurance determinations after calculating 
the net amount due to depositors of a failed institution based upon the 
laws and regulations governing deposit insurance. While the general 
coverage limit of $250,000 is widely understood and may appear to be 
easily applied, the laws and regulations governing deposit insurance 
limits are more detailed, which necessitates more complex processing. 
The process begins by aggregating the amounts of all deposits in the 
failed institution by depositor according to the rights and capacities 
associated with each account type. This process becomes more 
complicated, for example, when there are a large number of deposit 
accounts, when the failed institution has multiple deposit systems, 
when identifying information for the same depositor in separate 
accounts is incorrect or inconsistent, when beneficial owners of pass-
through accounts have not been identified, or when beneficiaries of 
trust accounts and their relative interests have not been identified.
    The proposed rule would reduce the difficulties the FDIC faces when 
making prompt deposit insurance determinations at the largest IDIs. It 
would require IDIs with two million or more deposit accounts to 
maintain complete and accurate depositor information and to develop the 
capability to calculate deposit insurance coverage for all deposit 
accounts using their own information technology system (``IT system''). 
The proposed rule would ensure that customers of both large and small 
failed banks receive the same prompt access to their funds, reducing 
disparities that might undermine market discipline or create unintended 
competitive advantages in the market for large deposits.
    The size and complexity of the IDIs affected by this rule justify 
imposing more specific data requirements on those IDIs than on smaller 
IDIs to ensure that the FDIC can make prompt deposit insurance 
determinations. Institutions covered by the proposed rule often use 
multiple deposit systems, which may complicate the FDIC's deposit 
insurance determination as described in IV. Need for Further 
Rulemaking. While challenges resulting from incomplete information are 
present when any bank fails, obtaining the necessary information could 
significantly delay the availability of funds when information is 
incomplete for millions of accounts. Additionally, larger IDIs 
generally rely on credit-sensitive funding more than smaller IDIs do, 
which makes them more likely to suffer a liquidity-induced failure. 
This dynamic increases the risk that the FDIC would have less lead time 
to prepare for administering deposit claims as part of a resolution. 
Further, to establish a bridge depository institution, which is a 
likely resolution strategy for large complex institutions, the FDIC 
must generally have the ability to rapidly determine the amount of 
insured and uninsured deposits held by the predecessor failed bank. 
Having the option to establish a bridge depository institution enhances 
the FDIC's ability to resolve a failed IDI by transferring parts to 
smaller institutions rather than arranging the purchase and assumption 
of the entire bank by another large bank. This option greatly enhances 
the FDIC's ability to market the failed IDI and preserve its franchise 
value.
    Ensuring the swift availability of funds for millions of depositors 
at a large IDI would contribute to financial stability. Confidence that 
the FDIC can promptly determine insured amounts will reinforce the 
understanding that any size bank can fail without systemic disruptions. 
That understanding would, in turn, reduce the moral hazard that might 
otherwise induce the largest banks to take excessive risks.

II. Legal Authority

    The FDIC is authorized to prescribe rules and regulations as it may 
deem necessary to carry out the provisions of the Federal Deposit 
Insurance Act (``FDI Act'').\1\ Under the FDI Act, the FDIC is 
responsible for paying deposit insurance ``as soon as possible'' 
following the failure of an IDI.\2\ To pay deposit insurance, the FDIC 
uses a failed IDI's records to aggregate the amounts of all deposits 
that are maintained by a depositor in the same right and capacity and 
then applies the standard maximum deposit insurance amount (``SMDIA'') 
of $250,000.\3\ As authorized by law, the FDIC must rely on the failed 
institution's deposit account records to

[[Page 10027]]

identify deposit owners and the right and capacity in which deposits 
are owned.\4\ In addition, the FDIC operates under a mandate to 
implement the resolution of a failed IDI at the least possible cost to 
the Deposit Insurance Fund.\5\ Requiring institutions with two million 
or more deposit accounts to maintain complete and accurate data 
regarding deposit ownership and to have IT systems that can be used by 
the FDIC to calculate deposit insurance coverage in the event of 
failure will enable the prompt payment of deposit insurance and 
preserve the FDIC's ability to implement the least costly resolution of 
such an institution.
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    \1\ 12 U.S.C. 1819(a)(Tenth); 1820(g); 1821(d)(4)(B)(iv).
    \2\ 12 U.S.C. 1821(f)(1).
    \3\ 12 U.S.C. 1821(a)(1)(C), 12 U.S.C. 1821(a)(1)(E).
    \4\ 12 U.S.C. 1822(c); 12 CFR 330.5.
    \5\ 12 U.S.C. 1823(c)(4).
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III. Current Regulatory Approach

    Although the statutory requirement that the FDIC pay insurance ``as 
soon as possible'' does not require the FDIC to pay insurance within a 
specific time period, the FDIC strives to pay insurance promptly. 
Indeed, the FDIC strives to make most insured deposits available to 
depositors by the next business day after a bank fails. The FDIC 
believes that prompt payment of deposit insurance is essential for 
several reasons. First, prompt payment of deposit insurance maintains 
public confidence in the deposit insurance system as well as in the 
banking system. Second, depositors must have prompt access to their 
insured funds in order to meet their financial needs and obligations. 
Third, a delay in the payment of deposit insurance--especially in the 
case of the failure of one of the largest insured depository 
institutions--could have systemic consequences. Fourth, a delay could 
reduce the franchise value of the failed bank and thus increase the 
cost to the Deposit Insurance Fund. Fifth, prompt payment would reduce 
the likelihood that disruptions in the check clearing cycle or to 
direct debit arrangements would occur during the resolution process.
    The FDIC took an initial step toward ensuring that prompt deposit 
insurance determinations could be made at large insured depository 
institutions through the issuance in July 2008 of Sec.  360.9 of the 
FDIC's regulations.\6\ Section 360.9 applies to IDIs with at least $2 
billion in domestic deposits and at least 250,000 deposit accounts or 
$20 billion in total assets.\7\ Section 360.9 requires these 
institutions to be able to provide the FDIC with standard deposit 
account information that can be used in the event of the institution's 
failure. The appendices to part 360 prescribe the structure for the 
data files that those institutions must provide to the FDIC. However, 
they are permitted to populate the data fields by using only 
preexisting data elements. If the institution does not maintain the 
information to complete a particular data field, then a null value can 
be used in that field. As a result of this discretionary approach, 
these institutions' standard data files are frequently incomplete. 
Section 360.9 also requires these institutions to maintain the 
technological capability to automatically place and release holds on 
deposit accounts if an insurance determination could not be made by the 
FDIC by the next business day after failure. While Sec.  360.9 would 
assist the FDIC in fulfilling its legal mandates regarding the 
resolution of failed institutions subject to that rule, the FDIC 
believes that if a large institution were to fail with little prior 
warning, additional measures would be needed to ensure the prompt and 
accurate payment of deposit insurance to all depositors.
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    \6\ 12 CFR 360.9. See 73 FR 41180 (July 17, 2008).
    \7\ 12 CFR 360.9(b)(1).
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IV. Need for Further Rulemaking

    While the FDIC is authorized to rely upon the account records of a 
failed IDI to identify owners and ownership rights and capacities, in 
the FDIC's experience it is not unusual for a failed bank's records to 
be ambiguous or incomplete. For example, the FDIC might discover 
multiple accounts under one name but at different addresses or under 
different names but at the same address. The problem of accurately 
identifying the owners of deposits is exacerbated when an account at a 
failed bank has been opened through a deposit broker or other agent or 
custodian and neither the name nor the address of the owner appears in 
the failed bank's records. Often in such cases, the only party 
identified in the records is the agent or custodian. (In the case of 
accounts held by agents or custodians, the FDIC provides ``pass-
through'' insurance coverage, meaning that the coverage ``passes 
through'' the agent or custodian to each of the actual owners.\8\) 
Trust accounts may also present challenges to an accurate determination 
of deposit insurance coverage, even when the owner of a particular 
account is clearly disclosed in the failed bank's account records. The 
identities of the beneficiaries might not be contained in the bank's 
records or electronically stored in a structured way using standardized 
formatting. A further complication is that bank records on trust 
accounts are often in paper form or electronically scanned images that 
require a time-consuming manual review.
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    \8\ See 12 CFR 330.7.
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    Under each of these circumstances, in order to ensure the accurate 
payment of deposit insurance, the FDIC may need to delay the payment of 
insured amounts to depositors while it manually reviews files and 
obtains additional information as to the actual owners or beneficiaries 
and their respective interests. Such delays in the insurance 
determination process could increase the likelihood of disruptions to 
an assuming institution's or an FDIC-managed bridge bank's back office 
functions, such as the check clearing cycle and direct debit 
arrangements.
    While these challenges to accurately determining and promptly 
paying deposit insurance may be present at any size of failed 
institution, they become increasingly formidable as the size and 
complexity of the institution increases. Larger institutions are 
generally more complex, have more deposit accounts, greater geographic 
dispersion, multiple deposit systems, and more issues with data 
accuracy and completeness. These factors, which all contribute to the 
difficulty of making a prompt deposit insurance determination, have 
become more pronounced over time and can be attributed largely to 
consolidation in the banking industry. From 2004 to 2014, the largest 
number of deposit accounts held at a single IDI increased 119 percent, 
and the deposit accounts at the ten banks having the most deposit 
accounts increased 106 percent. As a result of this concentration, the 
largest banks have become even more complex than before, with greater 
potential for significant IT systems disparities, as well as data 
accuracy and completeness problems. The largest IDIs which grew through 
acquisition have inherited the legacy deposit account systems of the 
acquired banks. Those systems might have missing and inaccurate deposit 
account information; the acquired records might not be automated or 
compatible with the acquired institution's deposit systems--resulting 
in multiple deposit platforms.
    Although the largest institutions are still able to conduct their 
banking operations without expending the resources necessary to 
integrate these inherited systems or update the acquired deposit 
account files, the state of their deposit systems would complicate and 
prolong the deposit insurance determination process in the event of 
failure. Because delays in deposit insurance determinations could lead 
to bank runs or other systemic problems, the FDIC believes that

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improved strategies must be implemented to ensure prompt deposit 
insurance determinations upon the failure of a bank with a large number 
of deposit accounts.
    The FDIC's experience in the financial crisis, which peaked in the 
months following the promulgation of Sec.  360.9, indicated that 
failures can often happen with very little notice and time for the FDIC 
to prepare. Since 2009, the FDIC was called upon to resolve 47 
institutions within 30 days from the commencement of the resolution 
process to the ultimate closing of the bank. In addition to these rapid 
failures, the financial condition of two banks with a large number of 
deposit accounts--Washington Mutual Bank and Wachovia \9\--deteriorated 
very quickly, leaving the FDIC little time to prepare. If a large bank 
were to fail due to liquidity problems, the FDIC's opportunity to 
prepare for the bank's closing would be limited, thus further 
exacerbating the challenge to making prompt deposit insurance 
determinations.
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    \9\ In their final Call Reports (2Q-08) Washington Mutual 
reported 42 million deposit accounts and Wachovia reported 29 
million deposit accounts.
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    The FDIC has worked with institutions covered by Sec.  360.9 for 
several years to confirm their ability to comply with the rule's 
requirements. This implementation process has led the FDIC to conclude 
that the standard data sets and other requirements of Sec.  360.9 are 
not sufficient to mitigate the complexities of the largest institution 
failures. Based on its experience reviewing the covered institutions' 
deposit data (and often finding inaccurate or incomplete data), deposit 
recordkeeping systems, and capabilities for imposing provisional holds, 
the FDIC believes that Sec.  360.9 has not been as effective as had 
been hoped in enhancing the capacity of the FDIC to make prompt deposit 
insurance determinations. Specifically, the continued growth following 
the promulgation of Sec.  360.9 in the number of deposit accounts at 
larger IDIs and the number and complexity of deposit systems or 
platforms in many of these institutions would exacerbate the difficulty 
of making prompt deposit insurance determinations. A failed IDI that 
has multiple deposit systems would further complicate the aggregation 
of deposits owned by a particular depositor in a particular right and 
capacity, causing additional delay.
    Using the FDIC's IT system to make deposit insurance determinations 
at a failed institution with a large number of deposit accounts would 
require the transmission of massive amounts of deposit data from the 
IDI's IT system to the FDIC's IT system. The time required for 
transmitting and processing such a large amount of data would present a 
significant impediment to making an insurance determination in the 
timely manner that the public has come to expect. The 36 institutions 
projected to be covered by the proposed rule each hold between 2 
million and 85 million deposit accounts. Requiring the covered 
institutions to enhance their deposit account data and upgrade their IT 
systems so that the FDIC can perform the deposit insurance 
determination on all of their deposit accounts without a data transfer 
would address many of these issues.
    On April 28, 2015, the FDIC published in the Federal Register an 
Advance Notice of Proposed Rulemaking (``ANPR'') seeking comment on 
whether certain insured depository institutions such as those that have 
two million or more deposit accounts should be required to take steps 
to ensure that depositors would have access to their FDIC-insured funds 
in a timely manner (usually within one business day of failure) if one 
of these institutions were to fail.\10\ Specifically, the FDIC sought 
comment on whether these IDIs should be required to enhance their 
recordkeeping to maintain and be able to provide substantially more 
accurate and complete data on each depositor's ownership interest by 
right and capacity for all or a large subset of the institution's 
deposit accounts. The FDIC also sought comment on whether these IDIs' 
IT systems should have the capability to calculate the insured and 
uninsured amounts for each depositor by deposit insurance capacity for 
all or a substantial subset of deposit accounts at the end of any 
business day. The comment period ended on July 27, 2015. The FDIC 
received 10 comment letters. The FDIC also had six meetings or 
conference calls with banks, trade groups, and software providers.
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    \10\ 80 FR 23478 (April 28, 2015).
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V. Discussion of Comments

    The FDIC has carefully considered all of the comments. The 
commenters generally acknowledged the FDIC's objectives regarding the 
need for the covered institutions to maintain more complete and 
accurate depositor information and to develop the capability to 
calculate the deposit insurance coverage for all deposit accounts using 
their IT systems. The commenters recognized the FDIC's obligation to 
fulfill its statutory mandates. One commenter that would not be covered 
expressed its full support for the proposals set forth in the ANPR. 
This commenter agreed that because delays in the FDIC's determination 
of deposit insurance coverage could lead to bank runs or other systemic 
problems, more needs to be done to ensure that the FDIC can continue to 
make prompt deposit insurance determinations for accounts at even the 
largest and most complex insured depository institutions, specifically 
those with a large number of deposit accounts. In addition, another 
commenter noted a number of possible benefits to the implementation of 
these proposals by the covered institutions; this commenter believed 
that the greatest benefit would be the preservation of the public's 
confidence in the FDIC and in the banking industry in general. Other 
benefits identified included: Greater efficiencies in the wind-down 
process, less time and human capital spent in the wind-down process, 
and better compliance with anti-money laundering and Bank Secrecy Act 
requirements because of the necessity to identify the underlying 
beneficial owners of various types of accounts.
    Nevertheless, a number of commenters expressed concerns with 
various aspects of the proposals as set forth in the ANPR. The 
following discussion organizes their comments to present the most 
common positions discussed in their letters and communications which, 
inter alia, include: The FDIC would be transferring its statutory 
responsibility to make the deposit insurance determinations to the 
covered institutions; community banks should not be covered by the 
proposals; and the implementation of enhanced deposit account 
recordkeeping and IT system capabilities by covered institutions would 
be a multi-year effort involving significant bank resources.

A. FDIC's Statutory Responsibility for Deposit Insurance Determination

    Several commenters voiced the opinion that the proposal to require 
certain large IDIs to develop the capability to perform the deposit 
insurance calculation on all or a significant subset of their deposit 
accounts effectively would be transferring the FDIC's statutory 
responsibility to make deposit insurance determinations to the covered 
institutions. This is not the case. The FDIC recognizes the importance 
of distinguishing between the covered institutions' responsibility to 
maintain complete and accurate records and to enhance their IT systems 
from the FDIC's responsibility to make deposit

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insurance determinations and pay deposit insurance.
    In order to pay insured deposits to the failed bank's depositors as 
soon as possible, as directed in section 11(f)(1) of the FDI Act,\11\ 
the FDIC is authorized by section 12(c) of the FDI Act to rely upon the 
failed bank's records to determine the owners of deposits at the failed 
bank.\12\ The large number of deposit accounts at covered institutions 
makes it necessary for the FDIC to require these institutions to obtain 
and maintain the necessary depositor information in their records in 
order to facilitate the identification of the owners of the deposits 
and the amounts thereof. Deposit account recordkeeping is the covered 
institutions' responsibility.
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    \11\ 12 U.S.C. 1821(f)(1).
    \12\ 12 U.S.C. 1822(c).
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    In order to fulfill its statutory responsibilities with respect to 
the depositors of the largest and most complex IDIs, the FDIC must be 
able to rely on the covered institutions having the requisite deposit 
account information readily available and having an IT system capable 
of performing the deposit insurance calculations at the FDIC's 
direction. Therefore, the proposed rule would require the covered 
institutions to improve their deposit account recordkeeping and the 
capability of their IT systems so that in the event of failure, deposit 
records would be immediately available to the FDIC for the purpose of 
quickly and accurately determining the appropriate deposit insurance 
coverage for each deposit account. Upon a covered institution's 
failure, the FDIC would employ the covered institution's IT system to 
make the deposit insurance determination. Requiring the covered 
institutions to develop these capabilities would enable the FDIC to 
satisfy its statutory mandate to pay insured deposits as soon as 
possible. The FDIC would use these capabilities to make deposit 
insurance determinations only after the failure of a covered 
institution. Consequently, it would not be delegating its statutory 
responsibility to the covered institution.

B. Requiring Banks To Maintain the Necessary Depositor Information on 
the Beneficial Owners of Pass-Through Deposit Accounts

    The FDIC sought comment regarding two options proposed to address 
the issue of determining the deposit insurance coverage for pass-
through deposit accounts promptly. The first option would require the 
FDIC to identify the covered institutions' pass-through accounts (upon 
failure) and place temporary holds on the entire balance in each 
account. Current FDIC regulation allows the information which would 
identify the beneficial owners of the pass-through deposit accounts to 
be maintained off-site in the deposit broker's or other agent's 
records. Therefore, the financial intermediaries (banks, brokers, 
agents, and custodians) would submit the required depositor information 
to the FDIC in a standard format within a certain time frame. The 
FDIC's claims agents would then review the depositor information 
provided by the agents and make a deposit insurance determination. This 
process is labor-intensive and generally requires depositors' access to 
these funds to be temporarily restricted.
    Two commenters focused their discussion on deposit products and 
accounts provided by brokers to their customers and the preferred 
procedure for providing the depositors' information to the FDIC at bank 
failure. Both commenters supported the continued use of the procedures 
described in Option 1 which would, in effect, maintain the status quo.
    As discussed more fully in I. Policy Objectives and IV. Need for 
Further Rulemaking, the FDIC does not believe that relying on the 
status quo is a viable approach with respect to the possible failure of 
a covered institution. For example, the volume of pass-through accounts 
for which beneficial ownership information would be unavailable in the 
covered institution's records at failure could far exceed the number of 
accounts handled in any of the FDIC's previous resolutions. Moreover, 
some of these pass-through accounts could be transactional in nature. 
Depositors may require immediate access to deposit accounts insured on 
a pass-through basis such as brokered money market demand account 
(``MMDA'') funds, transaction accounts (including both negotiable order 
of withdrawal (``NOW'') accounts and demand deposit accounts offered by 
a financial intermediary) and certain types of prepaid cards. If funds 
in these transactional accounts are not available when the bridge bank 
or another assuming institution opens on the next business day, then 
outstanding items could be returned unpaid and affected depositors 
might not have immediate access to their funds. This proposal does not 
aim to directly address this challenge, but instead would cause covered 
institutions to identify and report such accounts so that they can be 
further considered.
    In order to address the increased volume of pass-through accounts 
at covered institutions, as well as the need of the beneficial owners 
to have immediate access to the funds in their transactional accounts 
on the next business day, the FDIC presented a second option to require 
the covered institutions to maintain up-to-date information on the 
principal or underlying depositor at the covered institutions. This 
proposed change in deposit account recordkeeping would allow the FDIC 
to make immediate or prompt deposit insurance determinations either for 
all pass-through deposit accounts or at least those accounts where 
depositors would expect and require immediate access to their funds on 
the next business day.
    Both of the commenters who discussed pass-through deposit account 
issues voiced opposition to the FDIC's pass-through proposal for a 
number of reasons. One commenter challenged the FDIC's statutory 
authority to require the covered banks to maintain depositor 
information on the beneficial owners of brokered deposits in the 
covered institutions' own records. This commenter correctly noted that 
the concept of pass-through deposit insurance coverage is grounded in 
the FDIC's enabling statute, the FDI Act. Section 11(a)(1)(C) states 
that ``[f]or the purpose of determining the net amount due to any 
depositor . . . the [FDIC] shall aggregate the amounts of all deposits 
in the insured depository institution which are maintained by a 
depositor in the same capacity and the same right for the benefit of 
the depositor either in the name of the depositor or in the name of any 
other person.'' The FDIC is not attempting to alter the statutory basis 
for pass-through insurance coverage, however.
    Section 12(c) of the FDI Act provides the FDIC with the legal basis 
for determining deposit insurance coverage. The FDIC is not required to 
recognize and pay deposit insurance to any person whose ``name or 
interest as such owner is not disclosed on the records'' of the failed 
financial institution ``if such recognition would increase the 
aggregate amount of the insured deposits'' in such failed IDI. The only 
exception to this standard is the proviso: ``Except as otherwise 
prescribed by the Board of Directors.'' In 1990 and again in 1998, the 
FDIC adopted amendments to the deposit insurance regulations which 
involved recordkeeping requirements for fiduciary relationships (which 
include deposit brokers and their beneficial owners). For example, the 
multi-tiered fiduciary relationship provisions permit deposit insurance 
coverage for the principal or underlying depositor if the

[[Page 10030]]

banks either: (1) Maintain the beneficial ownership information 
regarding the deposits placed by brokers (for each tier of ownership) 
at the bank; or (2) indicate on the bank's records that the beneficial 
ownership information will be maintained by parties (in the normal 
course of business) at each level of the fiduciary relationships. 
Additionally, this deposit insurance regulation allows a depositor to 
prove, in effect, the existence of pass-through coverage for a deposit 
account even though the bank's records do not explicitly or clearly 
indicate such a relationship exists. The FDIC's regulations recognizing 
multi-tiered fiduciary relationships and allowing records of beneficial 
ownership to be maintained off-site represent the action and approval 
of the FDIC.
    This commenter stated that the FDIC's amendments to its 
recordkeeping requirements for fiduciary or pass-through accounts 
``provide[d] the FDIC with greater flexibility in granting pass-through 
coverage when the existence of an agency or other relationship 
necessary for pass-through insurance is not clear from the bank's 
records.'' If the commenter has interpreted the flexibility afforded to 
the banks regarding the fiduciary relationship recordkeeping 
requirements as creating additional FDIC pass-through deposit insurance 
coverage for deposits placed by multi-tiered fiduciaries or deposit 
brokers, then that interpretation would be inconsistent with the 
position the FDIC is taking in the proposed rule. Allowing the covered 
institutions to rely on the deposit brokers or other agents to maintain 
the necessary documentation represents a liberalization of the 
recordkeeping requirement set forth in section 12(c) of the FDI Act. As 
such, the FDIC's deposit insurance regulations allow the FDIC to 
recognize the pass-through nature of certain deposit accounts and pay 
deposit insurance to the underlying deposit owners even when the 
records are not maintained at the failed bank. The FDIC does not view 
the relaxing of the statutory recordkeeping requirement as ``granting'' 
pass-through insurance coverage, but rather merely facilitating 
recordkeeping arrangements between the covered institutions and their 
deposit brokers and other agents. Conversely, requiring the covered 
institutions to maintain beneficial ownership information on-site would 
not adversely impact the availability of pass-through insurance 
coverage provided that the necessary documentation is present in the 
covered institution's records.
    In summary, the FDI Act provides for pass-through deposit insurance 
for the principal depositor or the beneficial owner of a deposit placed 
by an agent on its behalf. The FDIC recognizes these depositors and 
pays deposit insurance when their ownership is appropriately 
documented. In that regard, the FDIC must also adhere to the legal 
standard set forth in section 12(c) of the FDI Act to identify deposit 
owners and pay insured deposits. The FDIC has the authority pursuant to 
section 12(c) of the FDI Act to require the covered institutions to 
maintain the necessary records on-site. If the FDIC determines that the 
current recordkeeping flexibility is no longer appropriate or feasible 
for the covered institutions, then the FDIC Board is within its 
statutory authority to adopt different recordkeeping requirements 
through the issuance of a new regulation. To deny the FDIC's authority 
to require the covered institutions to maintain the necessary 
information on the beneficial owners of the brokered deposits in their 
own records in order to make accurate and timely deposit insurance 
determinations would, in effect, ignore section 12(c) of the FDI Act.

C. Arguments Against Adoption of Option 2

    The other commenter presented four arguments to demonstrate why 
Option 2 would not be an acceptable alternative to the status quo. 
First, the ANPR did not demonstrate the existence of a problem with 
pass-through accounts that would justify the imposition of a new 
regulatory burden as described in the FDIC's pass-through proposal. 
Second, requiring covered institutions also to maintain beneficial 
ownership information that presently resides with financial 
intermediaries such as deposit brokers would needlessly increase the 
exposure of depositor information to cyber-attack and identity theft. 
Third, community banks would be forced to provide information on their 
best customers to large banks, potentially giving the covered 
institutions an unfair competitive advantage. Finally, the application 
of different depositor recordkeeping rules to different banks could 
create depositor confusion and reduce public confidence in the FDIC.
    In response to the first argument, the FDIC briefly addressed in 
the ANPR the problems of pass-through accounts in making a deposit 
insurance determination.\13\ Moreover, the challenges the FDIC faces in 
making timely deposit insurance determinations for pass-through deposit 
accounts are also discussed in IV. Need for Further Rulemaking, above. 
Second, IDIs already maintain significant amounts of sensitive data 
such as PII that could be a target for cyber-attack or identity theft. 
However, they have cybersecurity defenses in place and are continuously 
enhancing those defenses. The FDIC believes that the benefits of 
conducting the deposit insurance determination using the covered 
institutions' own IT systems would outweigh the risk of the beneficial 
ownership information being exposed to cyber-attack or identity theft. 
With respect to the commenter's third argument, it would be the duty of 
the covered institution receiving the deposit to obtain and maintain 
the beneficial ownership information. Nevertheless, the commenter 
expressed concern that community banks would be forced to share 
proprietary information regarding their best customers with the large 
covered institutions thereby putting them at a competitive 
disadvantage. A community bank could refuse to provide information on 
its best customers if it so chooses. As discussed more fully in VI. 
Description of the Proposed Rule, the recipient covered institution 
would then be able to apply to the FDIC for an exception to the 
proposed rule's requirements for that particular account. The argument 
that the FDIC would be creating different deposit insurance coverage 
rules if the proposed rule is finalized is discussed below.
---------------------------------------------------------------------------

    \13\ ``The problem identifying the owners of deposits is 
exacerbated when an account at a failed bank has been opened through 
a deposit broker or other agent or custodian. In this scenario, 
neither the name nor the address of the owner may appear in the 
failed bank's records.'' 81 FR 23478 (April 28, 2015). ``The need to 
obtain information from the agents or custodians delays the 
calculation of deposit insurance by the FDIC, which may result in 
delayed payments of insured amounts or erroneous overpayment of 
insurance. At certain banks with a large number of deposit accounts 
and large numbers of pass-through accounts, potential delays or 
erroneous overpayments could be substantial.'' Id. at 23482.
---------------------------------------------------------------------------

    The proposed rule would not create different deposit insurance 
coverage for the covered institutions' depositors. The purpose of this 
proposed rulemaking is to modify the deposit account recordkeeping 
requirements for the largest and most complex IDIs. For example, Sec.  
330.5(b)(2) and (3) of the FDIC's regulations allows IDIs to have the 
beneficial ownership information concerning deposit accounts opened by 
agents and other financial intermediaries to be maintained by a 
financial intermediary rather than on-site at the IDI. In other words, 
the requisite deposit ownership information to determine pass-through 
insurance coverage will not be found in the IDI's

[[Page 10031]]

records. The FDIC's proposal to require the covered institutions to 
obtain and maintain beneficial ownership information on pass-through 
accounts in-house should not be characterized as a limitation or 
restriction on deposit insurance coverage for pass-through accounts.
    While it is true that the FDIC is not required to pay deposit 
insurance to any depositor ``whose name or other interest as such owner 
is not disclosed on the record'' of the failed bank, this is not the 
FDIC's intention in the current rulemaking process. The pass-through 
proposal, as described in the ANPR, does not attempt to restrict or 
limit pass-through deposit insurance coverage. Covered institutions 
would have heightened recordkeeping and IT system capability 
requirements to enable the FDIC to fulfill its statutory responsibility 
to pay insured deposits as soon as possible regardless of the size of 
the IDI. These proposed requirements would not, however, change the 
deposit insurance coverage standards for any covered institution's 
depositors.
    The FDIC also recognizes that requiring the covered institutions to 
obtain and maintain information on the beneficiaries of certain types 
of trust accounts at the covered institutions is a new approach. The 
FDIC's intent, however, is not to create different insurance coverage 
rules for accounts at different banks as characterized by one 
commenter. The FDIC does not view this enhanced recordkeeping 
requirement for the largest and most complex institutions as 
effectively bifurcating the deposit insurance coverage rules. Rather, 
the FDIC is proposing to impose a higher recordkeeping standard on the 
covered institutions so that the depositors at those institutions can 
be confident that the FDIC will pay their insured deposits within the 
same time frame that currently applies to the FDIC's resolution of 
smaller insured depository institutions. Even though the deposit 
account recordkeeping requirements for the covered institutions would 
be increased, the underlying deposit insurance coverage for the covered 
institutions' depositors would remain unchanged.
    This proposed approach stands in contrast, however, to the 
procedure adopted by the Canada Deposit Insurance Corporation 
(``CDIC'') in the context of deposits held in trust at its member 
institutions. The CDIC requires its member institutions on an annual 
basis to contact the trustees of deposit accounts and to request that 
the trustees update the institutions' records regarding the number of 
beneficiaries, their names and addresses, and their proportional 
ownership of the deposits held at the Canadian banks.\14\ If the 
requisite information is not updated and provided to the member 
institutions by the applicable deadline, then in the event of a 
Canadian institution's failure, the deposit account would be 
characterized as a single ownership account in the name of the trustee. 
The CDIC would aggregate all eligible deposits within a trust and 
insure them for up to $100,000, regardless of the number of 
beneficiaries. Inaccurate or incomplete ownership records for Canadian 
trust accounts result in a diminution of deposit insurance coverage for 
the beneficiaries. This is a reasonable result given that the 
information the CDIC must rely upon to make its deposit insurance 
determination is incomplete and/or inaccurate. The FDIC has the legal 
authority to adopt a similar approach because it is authorized by 
section 12(c) of the FDI Act to rely upon the failed bank's records to 
determine the ownership of the failed bank's deposit accounts. 
Therefore, the FDIC would be justified in limiting the availability of 
pass-through insurance coverage as provided by the FDI Act if the 
covered institutions do not implement the proposed recordkeeping 
requirements. Nevertheless, the FDIC does not intend to penalize the 
covered institutions' depositors for the possible inadequacies of the 
covered institutions' records or IT systems. The lack of accurate or 
complete ownership information could, however, delay the FDIC's 
determination of deposit insurance coverage in the event of a covered 
institution's failure. If the covered institution is not able to 
collect and maintain the requisite deposit ownership information on-
site and seeks an exception, the proposed rule would require the 
covered institution to notify the underlying owners of pass-through or 
trust accounts that payment of deposit insurance could be delayed in 
the event of failure.
---------------------------------------------------------------------------

    \14\ Canada Deposit Insurance Corporation, Annual disclosure by 
trustees, available at http://www.cdic.ca/en/about-di/how-it-works/trusts/disclosure-rules/Pages/annual-disclosure.aspx. (Accessed on 
January 13, 2016.)
---------------------------------------------------------------------------

D. Access to Liquid Deposit Accounts

    Many commenters advanced the argument that obtaining and 
maintaining the information on the beneficial owners of many types of 
pass-through deposit accounts would not be possible. The commenters 
offered a number of reasons, among them: Ownership of certificates of 
deposit can change on a nightly basis, the volume of underlying 
beneficial owners is too large, the costs involved to develop the IT 
system to store such information would be prohibitively expensive, and 
concerns regarding maintenance of confidentiality. The FDIC is aware of 
these factors and recognizes that situations will exist which would 
prevent a covered institution from being able to comply with the 
general requirements of the proposed rule. As more fully discussed in 
VI. Description of the Proposed Rule, the proposed rule provides 
covered institutions with a procedure to apply to the FDIC for an 
exception from compliance with some or all of the recordkeeping 
requirements for certain types or categories of deposit accounts. 
Nevertheless, the FDIC expects that every effort would be made to 
collect and maintain the requisite depositor information to allow the 
beneficial owners of brokered transactional accounts to have access to 
their insured deposits just as they would have to a traditional 
checking and other transactional account. Without access to their funds 
on the next business day after failure, outstanding items could be 
returned unpaid, causing these depositors financial hardship or 
inconvenience.
    One commenter did seek confirmation that the FDIC would continue a 
practice discussed in connection with the implementation of Sec.  
360.9, which allows a financial intermediary acting as a fiduciary to 
make withdrawals from MMDAs transferred to a bridge bank or an assuming 
institution to satisfy the withdrawal requests of its customers. 
Nevertheless, as the FDIC stated in the preamble to the Sec.  360.9 
final rule, ``Responsibility for [any] shortfall will rest with the 
broker or agent in whose name the account is titled, and not the FDIC 
as insurer.'' \15\ The FDIC will consider the efficacy of permitting 
this practice in the context of this proposed rule. It is important to 
note, however, that the FDIC would authorize a financial intermediary's 
access to the funds held in its custodial or omnibus account on the 
next business day after a covered institution's failure on a case-by-
case basis and only when to do so would be consistent with the least 
cost test. It is unclear to the FDIC how deposit brokers would be able 
to quickly identify the appropriate deposit insurance coverage for 
their customers so that the brokers would not expose themselves to the 
liability associated with the overpayment of funds to their underlying 
customers. If the deposit brokers have the capacity or capability to 
track those relationships, the FDIC

[[Page 10032]]

questions how difficult it would be to provide that information on a 
more frequent basis to the covered institutions.
---------------------------------------------------------------------------

    \15\ 73 FR 41180, 41189 (July 17, 2008).
---------------------------------------------------------------------------

E. Signature Card Requirement

    Three commenters raised a different issue regarding ``qualifying 
joint accounts'' as defined in the FDIC's regulations at 12 CFR 
330.9(c). They expressed their concern specifically with the signature 
card requirement included as one factor (of three) in establishing a 
qualifying joint account. These commenters offered reasons why it is 
difficult for covered institutions to ensure that the joint account 
holders' signature card complies with the FDIC's regulation. Another 
commenter noted that the framework for certain types of deposit 
accounts, such as joint accounts and payable-on-death (``POD'') 
accounts, is found in state law. Therefore, covered institutions which 
have a multi-state presence must structure those account categories to 
satisfy different states' laws. Some of these commenters suggested 
possible solutions to the perceived problem of maintaining signed and 
accurate signature cards for joint accounts: First, the regulatory 
requirement could be deleted in the context of a bank failure or 
second, the regulation could be amended so that all banks would be 
allowed to conclusively presume that a joint account is a ``qualifying 
joint account'' based solely on the titling of the account on their 
systems.
    For several reasons, the FDIC has decided not to use the proposed 
rule as a vehicle for eliminating the signature card requirement for 
joint accounts. First, the FDIC believes that its signature card 
requirement simply reflects what an insured depository institution 
should be doing as a matter of safe and sound banking practice 
regardless of the FDIC's deposit insurance coverage requirements. The 
signature card represents the contractual relationship between the 
depositor (or depositors) and the covered institution, and signature 
cards are a reliable indicator of deposit ownership. Second, the 
purpose of the proposed rule is simply to ensure that the FDIC's 
deposit insurance rules at 12 CFR part 330 can be applied in a timely 
manner in the event of failure of a covered institution. Finally, 
elimination of the signature card requirement for joint accounts might 
enable some depositors to disguise single accounts (owned entirely by 
one person) as joint accounts (opened in the names of two persons). 
Simplification of the rules or requirements prescribed by Part 330 
could produce unintended consequences. In short, the FDIC is not 
proposing to amend the insurance coverage rules in 12 CFR part 330. 
Assuming that the FDIC does decide to amend part 330, it would do so 
through a separate rulemaking so that all consequences of doing so 
could be thoughtfully considered.

F. No Effect on Community Banks

    Two commenters voiced strong opposition to the possibility that the 
proposals described in the ANPR might be applied to community banks. 
One expressed concern that, in the future, the FDIC might extend the 
proposal's requirements to the covered institutions currently subject 
to Sec.  360.9. Another stated that the proposal could force community 
banks to disclose the identity of their best customers (and information 
about the deposit relationship) if the proposal would require large 
banks receiving brokered deposits to obtain and maintain information 
about beneficial owners. This could give the large banks an unfair 
competitive advantage.
    Currently, 12 CFR 360.9 applies to approximately 150 insured 
depository institutions. As the ANPR explained, the most recent 
financial crisis has resulted in continued consolidation of the banking 
industry and even greater complexity of banks' deposit systems. The 
FDIC's concerns are focused on the very largest and most complex 
institutions and not on insured depository institutions that would be 
identified as community banks. The proposals set forth in this notice 
of proposed rulemaking (``NPR'') would apply to only a subset of the 
covered institutions under Sec.  360.9; i.e., approximately the largest 
36 banks in the country as measured by number of deposit accounts. The 
proposed threshold for becoming subject to the requirements of the 
proposed rule is two million or more deposit accounts. The FDIC 
solicited comment on this proposed standard in the ANPR but received no 
comments recommending that the threshold should be raised to a greater 
number of accounts. On the other hand, one commenter suggested that 
IDIs with $10 billion in assets and 100,000 accounts should be required 
to comply with the ANPR's proposals if ultimately adopted.\16\ The FDIC 
will again solicit comments regarding the appropriate size institution 
to be subject to these proposed requirements, and what criteria, if 
any, should be considered in addition to the number of deposit 
accounts. Finally, the proposed regulation provides for an exemption 
from the requirements set forth therein; i.e., the covered institution 
would not have any deposit accounts and does not intend to have any 
deposit accounts (when aggregated) which would exceed the standard 
maximum deposit insurance amount, which is currently $250,000. 
Therefore, if a relatively small covered institution with two million 
or more accounts could satisfy that condition, it would be able to seek 
an exemption from complying with the proposed regulation. Ultimately, 
as stated in the ANPR, the FDIC ``does not contemplate imposing these 
requirements on community banks'' as this is aimed at institutions with 
more than two million deposit accounts.\17\
---------------------------------------------------------------------------

    \16\ 80 FR 23478, 23481 (April 28, 2015).
    \17\ Id. at p. 23478.
---------------------------------------------------------------------------

G. Accounts Subject to Immediate Deposit Insurance Determination 
(``Closing Night Deposits'')

    Commenters who addressed the scope of closing night deposits 
generally agreed that individual, joint, and business accounts should 
be designated as closing night deposits. Some commenters asserted that 
these three categories represent a substantial subset of deposit 
accounts. One commented that it should also include retirement 
accounts. Another suggested that closing night deposits be limited to 
transaction, savings, and money market accounts where clients are 
accustomed to immediate liquidity. This commenter would also include 
brokered MMDAs, prepaid cards such as payroll cards and General Purpose 
Reloadable (``GPR'') cards, and POD accounts. Still another commenter 
advocated for coverage of transactional and MMDA accounts at a minimum 
to meet depositors' immediate liquidity needs, as well as savings 
accounts and, on a voluntary basis, certificates of deposit.
    Several commenters asserted that the covered institutions have 
significantly varying projections of the percentages of their deposit 
balances for which they anticipate their IT systems having the 
capability to make insurance determinations because the data and 
systems capabilities vary among covered institutions and the definition 
of ``closing night deposits'' is not yet known. Another commenter 
estimated that its suggested definition would represent approximately 
90-92 percent of its deposits. It noted, however, that the other 8-10 
percent of its deposit base would be very difficult to treat as closing 
night deposits. And another commenter estimated that its definition 
would represent 70 percent of its accounts and 55 percent of balances 
from its core deposit systems. One

[[Page 10033]]

commenter, on the other hand, took the position that banks covered by 
the proposal should be able to handle all the pass-through deposit 
accounts as well as the prepaid cards as closing night deposits, 
stating that they should maintain up-to-date records for all of their 
pass-through accounts sufficient to allow immediate or prompt insurance 
determinations.
    The FDIC recognizes that the concept of ``closing night deposits'' 
served as a proxy for those deposit accounts and deposit insurance 
rights and capacities for which depositors would expect immediate 
access to their funds on the next business day. Therefore, the deposit 
insurance determination would have to be performed by the FDIC on 
``closing night'' to ensure next business day availability. It is 
apparent to the FDIC from the comments that, for most covered 
institutions, the deposit accounts or deposit insurance rights and 
capacities that the commenters would prefer be identified as closing 
night deposits were those for which the requisite deposit ownership 
information was readily available.
    However, as noted by the commenters, there is currently no 
uniformity or consistency among institutions regarding which deposit 
insurance categories could be handled as closing night deposits. At the 
moment, certain institutions would be able to include more types and a 
greater volume of deposit accounts for immediate insurance 
determination processing than other covered institutions. The FDIC does 
not intend to restrict the covered institutions to a pre-determined set 
of deposit insurance categories. Consequently, the FDIC has adjusted 
its approach for identifying the deposit accounts for which a covered 
institution should have complete and accurate ownership information 
that would be needed by the FDIC to make deposit insurance 
determinations at the time of the covered institution's failure. The 
ultimate goal would be for a covered institution's IT system to be able 
to calculate deposit insurance on all deposit accounts promptly upon 
the covered institution's failure. Rather than rely on the notion of 
``closing night deposits,'' the proposed rule generally requires 
covered institutions to obtain and maintain the deposit account 
information for all deposit accounts.
    Nevertheless, the FDIC recognizes that it may prove difficult, and 
in some cases, impossible, for covered institutions to obtain the 
requisite depositor information for certain deposit insurance 
categories and/or types of deposit accounts. To address that 
possibility, the proposed rule provides a procedure for a covered 
institution to request an extension to comply with the proposed rule's 
requirements, an exception from compliance with respect to certain 
deposit accounts which meet certain criteria, and in one specific 
situation, an exemption from compliance with the regulation as 
ultimately adopted. The accounts that would not fit within the scope of 
closing night deposits are those for which the covered institutions 
would be unable to obtain the necessary deposit ownership information 
and are, therefore, the type which would be eligible for exception. The 
FDIC would consider the particular facts and circumstances presented in 
a covered institution's application when determining whether to grant 
an exception for certain types of accounts or deposit insurance 
categories.

H. Accounts Not Subject to Immediate Deposit Insurance Determination 
(``Post-Closing Deposits'')

    The majority of the commenters expressed the opinion that certain 
types of accounts, such as formal trust accounts, brokered deposits, 
time deposits, foreign deposits, prepaid cards and other omnibus 
accounts entitled to pass-through deposit insurance coverage should not 
be closing night deposits. (Omnibus accounts are described by one 
commenter as business accounts or operating cash accounts in which cash 
is temporarily deposited while awaiting investment or distribution.) 
According to the commenters, acquiring complete records of beneficial 
owners of pass-through accounts presents significant challenges. 
Moreover, the commenters maintained that these accountholders do not 
need immediate or near-immediate access to funds after failure. Such 
accounts should therefore be post-closing deposits. A number of 
commenters stated that the FDIC already has established procedures for 
determining deposit insurance for brokered deposits placed at a failed 
institution. Furthermore, these commenters recommended that there be no 
material change in the FDIC's procedures in this regard, and therefore, 
brokered deposits should continue to be handled as post-closing 
deposits.
    Several commenters also stated that covered institutions should not 
be required to maintain information on beneficiaries of trust deposit 
accounts, beneficial owners of pass-through accounts, or other parties 
for whom covered institutions do not currently collect such 
information. Their comment letter set forth four legal or practical 
barriers to a covered institution's ability and/or authority to obtain 
depositor information on various types of trust accounts. First, a 
trustee has a fiduciary duty to keep the affairs of the trust 
confidential. Second, the Uniform Trust Code and certain state statutes 
provide that a trustee may use a Certification of Trust to protect the 
privacy of a trust instrument by discouraging requests for complete 
copies of the instrument. Third, banks serving as trustees pursuant to 
a bond indenture, for example, do not know who the beneficiaries are. 
Fourth, the status of various beneficiaries (e.g., birth, death, non-
contingent) changes periodically as conditions for contingent 
beneficiaries are satisfied. One of these commenters asserted that it 
is entirely infeasible for covered institutions to meet a requirement 
to have beneficiary information on an ongoing basis. These commenters, 
in effect, concluded that all trust accounts and pass-through accounts 
should be handled as post-closing deposits.
    Additionally, several commenters requested that foreign deposits be 
excluded entirely from the scope of any proposed or final rule. These 
commenters reasoned that these types of deposits are not eligible for 
deposit insurance, and therefore, should not be evaluated for insurance 
coverage at the depositor level.
    As discussed above, the FDIC is not utilizing the concepts of 
closing night deposits and post-closing deposits in the proposed rule 
to differentiate between the types of deposit accounts for which 
deposit insurance should be calculated immediately upon a covered 
institution's failure. As several commenters noted, determining which 
depositors should have immediate access to their funds following a bank 
failure is a public policy issue that should be determined by Congress 
and the FDIC. The FDIC believes that it is not realistic or accurate to 
assume that all transaction accounts will be found in the individual, 
joint, and business account categories. In fact, several of the 
commenters recognized that, with technological advances and the 
evolution of financial products, many other types of accounts can be 
structured as transactional accounts. For example, one commenter 
recognized that its clients would likely need immediate or near-
immediate access to brokered MMDA funds after failure. Another 
commenter believed that transaction accounts, MMDA, and savings 
accounts would include the funds that may be most needed by consumers. 
Moreover, this same commenter suggested that access to CDs is not 
critical and therefore should be included only on a voluntary basis. 
Still

[[Page 10034]]

another commenter acknowledged that certain types of prepaid cards such 
as ``payroll cards and General Purpose Reloadable prepaid cards can be 
used as alternatives or substitutes, to DDA accounts.'' A different 
commenter recognized that cardholders will ``likely need immediate 
access to the funds in the custodial account [which holds the pass-
through funds] to meet their basic financial needs and obligations.'' 
Finally, a commenter stated that access to POD accounts is often needed 
immediately because a POD account can be used as a depositor's primary 
banking account.
    There appears to be no consensus within the banking industry 
regarding which categories or types of deposit accounts must be made 
immediately available to the depositors of a failed bank. The FDIC 
believes, however, that only providing immediate access to the deposit 
accounts associated with the individual, joint and business categories 
may no longer be adequate because consumers now have access to many 
additional types of deposit accounts and financial products outside of 
these categories which effectively serve as transactional accounts. 
Therefore, the FDIC has developed the proposed rule to require covered 
institutions to obtain and maintain the necessary information regarding 
all deposit accounts so that the FDIC can make deposit insurance 
determinations and pay insured deposits as soon as possible after a 
covered institution's failure as required by section 11(f)(1) of the 
FDI Act.\18\ For example, there are certain types of accounts, such as 
POD accounts, for which a covered institution should already have the 
requisite account information available in the IDI as it is required by 
the FDIC's deposit insurance regulations. Section 330.10(b)(2) of the 
FDIC's regulations states ``[f]or informal revocable trust accounts, 
the beneficiaries must be specifically named in the deposit account 
records of the insured depository institution.'' \19\ Moreover, the 
FDIC believes that the same advances in technology that allow financial 
institutions to offer new types of transactional accounts and other 
financial products as substitutes for checking accounts may facilitate 
and support the covered institutions' efforts to obtain and maintain 
deposit account information for additional deposit insurance categories 
and types of accounts. One commenter described characteristics of its 
banking software, specifically, its customer information file (``CIF'') 
which is ``organized by customer name and tax ID number . . . to help 
uniquely identify each customer. . . . the system also maintains 
placeholders for related party or non-customer CIFs such that detailed 
information can be maintained on cosigners, guarantors, beneficiaries, 
and other similar types of entities.'' Finally, according to this 
commenter, the related party CIF feature ``has the capacity to track 
the beneficial owners included in a brokered deposit'' or in the case 
of a trust account, the system can track beneficiaries to the extent 
that they are known. The FDIC believes that it is reasonable to expect 
that institutions that would be covered by the proposed rule would be 
able to make substantial progress toward complying with the 
recordkeeping requirements of the proposal.
---------------------------------------------------------------------------

    \18\ 12 U.S.C. 1821(f)(1).
    \19\ 12 CFR 330.10(b)(2). As discussed, above, the covered 
institutions should also have the requisite information to verify 
joint accounts in their records as well. See, 12 CFR 330.9(c).
---------------------------------------------------------------------------

    With respect to foreign deposits, the FDIC believes that covered 
institutions should maintain the relevant depositor information 
concerning foreign deposits in their deposit account systems. While it 
is true, as several commenters pointed out, that the FDIC does not need 
the information about foreign deposits to complete its initial deposit 
insurance determinations on a failed bank, the FDIC will need such 
information post-closing to determine whether certain depositors who 
hold dually payable accounts in foreign branches of domestic covered 
institutions should receive advance dividends on their foreign 
deposits. In October 2013, the FDIC amended its deposit insurance 
regulations to clarify that deposits placed in a foreign branch of a 
domestic bank that are dually payable would be recognized as 
``uninsured deposits'' rather than as a general unsecured claim against 
the failed bank's receivership estate.\20\ Therefore, under the 
``depositor preference'' provisions of the FDI Act, depositors with 
deposits that are dually payable would receive payments on their 
uninsured deposit amounts before general unsecured creditors.\21\ For 
that reason, information regarding foreign deposits is relevant and 
necessary for the resolution of a failed covered institution. The FDIC 
believes that retaining this recordkeeping requirement should not 
impose any additional burden because the potentially covered 
institutions are all subject to Sec.  360.9 currently. Section 360.9(d) 
requires the institutions covered by that rule to be able to provide 
the FDIC with standard data sets ``with required depositor and customer 
data for all deposit accounts held in domestic and foreign offices.'' 
\22\ Appendix C to part 360, entitled ``Deposit File Structure,'' 
contains a data field which requires the covered institution to provide 
a ``deposit type indicator''; i.e., whether the deposit is domestic or 
foreign.\23\ Finally, insured depository institutions that have foreign 
offices provide information regarding their foreign deposits in their 
Call Reports.
---------------------------------------------------------------------------

    \20\ 78 FR 56583 (September 13, 2013). See 12 CFR 330.1 and 
330.3(e).
    \21\ 12 U.S.C. 1821(d)(11)(A).
    \22\ 12 CFR 360.9(d)(1).
    \23\ 12 CFR part 360, Appendix C, field 12.
---------------------------------------------------------------------------

I. Prepaid Cards

    Four commenters shared their views regarding the applicable 
treatment of prepaid cards as ``closing night'' versus ``post-closing 
night'' deposits as described in the ANPR. Several commenters relied on 
the guidance and practices adopted in the implementation of Sec.  360.9 
to conclude that deposits represented by prepaid cards would still have 
to be handled as post-closing night deposits. These commenters stated 
that the FDIC, in working with the covered institutions to implement 
Sec.  360.9, ``identified classes of deposits for which full depositor 
identification could not reasonably or practically be obtained and the 
data download requirements would not apply;'' they cited to the FDIC's 
Web site and the guidance that was originally posted on March 18, 
2009.\24\ Moreover, their comment letter enumerated several of the 
attributes of these types of deposits as described in the FDIC's 
guidance: ``credit card, prepaid card, payroll card, gift card, and 
other similar accounts . . . due to the small balances and 
inaccessibility to owner information; balances representing government 
benefits payable, such as food stamps, child support, and similar 
programs.'' These commenters reiterated their position by emphasizing 
that ``[w]here account attributes mean that these data are unavailable 
or cannot feasibly be collected, these accounts should be identified as 
`post-closing deposits.' '' (Emphasis supplied.)
---------------------------------------------------------------------------

    \24\ Available at https://www.fdic.gov/regulations/resources/largebankdim/modernization.html.
---------------------------------------------------------------------------

    One commenter took the position that prepaid card accounts should 
be divided into two categories; i.e., closing night and post-closing 
night deposits. Various types of prepaid cards such as payroll cards 
and general purpose reloadable (``GPR'') prepaid cards can be used as 
alternatives, or substitutes, to demand deposit accounts (``DDA'')

[[Page 10035]]

accounts. This commenter believed that holders of these types of 
prepaid cards would require uninterrupted access to the funds loaded on 
their cards to meet their daily living expenses. In effect, they should 
receive the same treatment as other core retail DDA transaction 
accounts. Nevertheless, there are other types of prepaid cards, such as 
gift cards, that would not need to be recognized as closing night 
deposits. (In fact, some of these types of cards may not be eligible 
for deposit insurance coverage.) This commenter identified two problems 
with treating prepaid cards as closing night deposits. In order to 
calculate deposit insurance coverage, a covered institution would have 
to be able to aggregate all of an individual's single accounts--which 
could include prepaid cards. Some card programs allow employers to load 
an employee's wages directly to a payroll card; these cards are 
currently associated with employee name, address, and a unique 
identifier. A problem would arise, however, if the employee is a 
foreign national in which case the prepaid cardholder's unique 
identifier might be a passport ID. In such cases, the necessary 
aggregation step would not be possible until a covered institution made 
additional system development efforts because aggregation could not be 
executed via Social Security Number match. Finally, this commenter 
believed that irrespective of the particular problem described above, 
the investment required to maintain the current ownership interests of 
holders of its prepaid cards ``may be significant.'' One commenter 
believed that balances on prepaid cards should be easy to track; 
conversely, identification of prepaid card owners would present 
significant challenges. This commenter concluded that there should be a 
hybrid approach for handling the beneficial owner information for 
various types of pass-through accounts. Covered institutions should be 
required to obtain and maintain beneficial owner information in their 
own records for some types of pass-through accounts, but the requisite 
information on beneficiaries or beneficial owners of other types of 
accounts would be provided to the FDIC by a specified time after the 
covered institution's failure.
    One commenter highlighted several issues that it believed would 
impair the FDIC's ability to make prompt deposit insurance 
determinations at the largest institutions, e.g., numerous legacy 
software systems inherited through acquisitions and mergers and the 
significant expansion in accounts with pass-through insurance 
coverage--in particular, prepaid card programs. To address the pass-
through insurance coverage and prepaid card issues, this commenter 
recommended that the covered institutions be required to ``maintain up-
to-date records sufficient to allow immediate or prompt insurance 
determinations for all pass-through accounts.'' Moreover, with respect 
to prepaid cards, the commenter took the position that covered 
institutions should be required to maintain current records on each 
prepaid cardholder's ownership interest. The commenter argued that 
these IDIs should not be allowed to rely on the agent's or custodian's 
records any longer. The information concerning the prepaid cardholders 
should be available at the covered institution so that examiners can 
check them periodically for accuracy.
    The FDIC recognizes two major types of prepaid cards: ``closed-loop 
cards'' and ``open-loop cards.'' Generally, in the case of a ``closed-
loop'' card, the card is sold to a member of the public in the same 
manner that a gift certificate might be sold to a member of the public. 
The card enables the cardholder to obtain goods or services from a 
specific merchant or group of merchants. Examples of ``closed-loop'' 
merchant cards include prepaid telephone cards and gift cards sold by 
bookstores, coffee shops and other retailers. The funds paid to a 
merchant in exchange for a merchant card are not insured on a pass-
through basis by the FDIC because the funds are not placed into a 
custodial deposit account at an insured depository institution. Indeed, 
the funds might not be placed into any type of deposit account at an 
insured depository institution. Rather, the funds might be used by the 
merchant in the operation of its business. For purposes of the proposed 
rule, the FDIC is concerned with ``open-loop'' cards and similar 
products that provide access to stored funds placed on deposit (by the 
cardholder or another party) at an insured depository institution. 
Examples of such cards include GPR cards, payroll cards and government 
benefits cards. In some cases, the access mechanism is not a plastic 
card but some other device such as a code used through a computer or 
mobile telephone. In any event, after the placement of the funds into 
an account at an insured depository institution, the funds are 
transferred or withdrawn by the holders of the access mechanisms.
    In many cases, the prepaid card or other mechanism is 
``reloadable,'' meaning that additional funds may be placed at the 
insured depository institution for the cardholder's use. The card could 
be reloaded in many ways, including direct deposit, transfer of funds 
from another bank account, placement of funds at the insured depository 
institution through an ATM, or delivery of funds to a clerk at a retail 
store for subsequent transfer of the funds to the insured depository 
institution. Moreover, some types of prepaid cards are subject to 
certain federal consumer protection laws. Specifically, Regulation E, 
Electronic Funds Transfers, 12 CFR part 1005, applies to payroll cards, 
which are established directly or indirectly through an employer, and 
government benefit cards, which are issued by government agencies.\25\ 
In addition, a 2010 Department of Treasury regulation requires deposit 
insurance for government benefits cards.\26\
---------------------------------------------------------------------------

    \25\ 12 CFR 1005.15(a); 12 CFR 1005.18.
    \26\ Management of Federal Agency Disbursements, 75 FR 80315 
(December 22, 2010). (Codified at 31 CFR part 208.)
---------------------------------------------------------------------------

    Working from the premise that, with respect to prepaid cards, the 
FDIC's focus is with making prompt deposit insurance determinations on 
``open-loop'' prepaid cards, the FDIC recognizes the concerns voiced by 
the commenters who addressed this issue. For example, it may be much 
easier to track the balances on certain types of prepaid cards than it 
would be to identify the actual owners/depositors of those cards. As 
noted by several commenters, ownership information for some types of 
prepaid cards might be unavailable or could not feasibly be collected. 
Nevertheless, the FDIC believes that the financial and technological 
landscape which existed when it issued its guidance in connection with 
Sec.  360.9 over six years ago has changed. Therefore, covered 
institutions should consider their current capabilities before 
asserting that ownership information for certain types of prepaid cards 
is not available or could not reasonably be collected. Advances in 
information technology should keep pace with the development of 
financial products offered to the public. The same innovation which is 
responsible for creating the myriad of payment/debit cards should be 
applied to develop the covered institutions' capability to identify and 
track the ownership and balances on open-loop cards issued and/or 
sponsored by these institutions.
    Ultimately, the FDIC would consider a hybrid approach as suggested 
by two of the commenters. A prepaid card is a type of pass-through 
deposit account which, in many cases, the customer uses

[[Page 10036]]

regularly for transactions. Therefore, consumers would need to have 
immediate access to those funds after a covered institution's failure. 
The FDIC proposes that covered institutions obtain and maintain 
ownership information regarding GPR cards, employers' payroll cards and 
government benefit cards, at a minimum. As discussed more fully in the 
Description of the Proposed Rule, a covered institution would be able 
to request an extension or an exception from certain provisions of the 
proposed rule for those accounts, including various types of prepaid 
cards, for which depositor information would truly be unavailable or 
infeasible to collect and maintain.

J. Time Frame for Calculating Deposit Insurance Coverage Upon a Covered 
Institution's Failure

    Several commenters predicted the deposit insurance calculation 
would take at least 24 hours following bank failure provided that it is 
limited to single, joint and business accounts. First, daily closing 
balances would be established by the FDIC after the failed covered 
institutions normal daily processing runs to completion, usually not 
before the early morning hours of the following day. Then, the 
augmented system developed pursuant to the proposed rule would 
calculate deposit insurance coverage, taking at least 12 hours based on 
the time required for normal daily processing. After that, insured 
balances would be posted to the deposit accounts for which a 
determination has been made by the FDIC, which could take at least 
another 12 hours. A commenter predicted that, under the same 
assumptions for closing night deposits, the deposit insurance 
determination process could be completed by the FDIC ``by noon the 
calendar day following bank failure.'' This commenter explained that 
this ``timeline is predicated on the nightly batch cycle and posting, 
which would need to complete before data could be gathered to begin the 
insurance determination process.'' Another commenter indicated that if 
a covered institution failed on a Friday, for example, there would 
usually be no batch processing to the applications until the following 
Monday. Moreover, a bank deposit servicer would normally require 24 
hours' notice to run batch processing.
    The FDIC has considered these comments and recognizes that various 
institutions' systems require different amounts of time to compute 
their end-of-day ledger balances. Nevertheless, the FDIC believes that, 
given the overriding concerns for financial system stability in a time 
of crisis, it should establish a uniform time frame within which the 
FDIC can employ the covered institution's IT system to facilitate the 
deposit insurance determination process measured from the time of the 
covered institution's failure and the FDIC's appointment and take-over 
of the failed institution. The FDIC proposes, therefore, that all 
covered institutions would develop their IT systems to ensure that the 
FDIC could complete the deposit insurance determination process within 
24 hours after appointment as the receiver. This 24 hour standard would 
ensure uniformity and consistency across all covered institutions and 
would allow the FDIC to guarantee prompt payment of insured deposits 
regardless of the particular failed institution and its deposit 
systems.

K. Disclosure of Insured and Uninsured Amounts to Depositors

    Several commenters are opposed to requiring the covered 
institutions to disclose to their depositors the insured and uninsured 
amounts of their deposits. They provided several arguments in favor of 
their position. Providing up-to-date information regarding the deposit 
insurance status of depositors' accounts would not be feasible because 
by the time the covered institutions run their daily processes (and 
then calculate the insured balances), additional transactions would 
have taken place which would render the information out-of-date. The 
stale information combined with the complexity of the deposit insurance 
rules could lead to unnecessary customer concern and inquiry. Moreover, 
although the ANPR raised the question of requiring covered institutions 
to be able to calculate deposit insurance coverage at the close of any 
business day, the commenters noted that there is no requirement that 
covered institutions actually perform this operation on a daily basis. 
The complexity involved to run this operation and present the 
information in a customer friendly format would far exceed even the 
complexity of a system to support the FDIC's deposit insurance 
determination at an IDI's failure. The commenters opined that the costs 
of this requirement would far outweigh any questionable benefit.
    One commenter recommended that the FDIC's Electronic Deposit 
Insurance Estimator continue to serve as ``the appropriate 
communication tool for depositors inquiring on insurance coverage.'' 
This commenter also stated that, if only the covered institutions are 
required to provide this information to their depositors, then this 
disparity in the treatment of depositors at community banks could be 
viewed as a competitive disadvantage to the smaller banks.
    Another commenter stated that ``developing the system functionality 
to calculate the deposit insurance for each account and customer by 
closing night (or any given night) could be particularly onerous, 
especially if there are various deposit systems to consider.'' This 
commenter opined that it would most likely not be worth the cost of 
development and implementation. The commenter suggested that a covered 
institution could provide such information, if requested by a 
depositor, but it should not be required to do so proactively. The FDIC 
has considered the commenters' views regarding this matter and is not 
pursuing this initiative as part of this rulemaking process.

L. Compliance Testing

    Two commenters mentioned the issue of the FDIC's need to conduct 
testing to ensure the covered institutions' compliance with the 
requirements presented in the ANPR. The commenters recommended that the 
FDIC be flexible in its approach. These commenters expressed the need 
for the FDIC to provide clear direction on the timing, requirements, 
parameters, and expectations of testing and reporting as detailed 
standards would help covered institutions prepare to meet FDIC 
expectations. They specifically requested that the testing protocols be 
developed through the public rulemaking process. ``The frequency of 
testing is a major concern that escalates with the complexity of tests 
and location (on-site vs. remote).'' These commenters supported their 
assertion regarding testing by noting that ``even basic testing would 
take a minimum of 12 hours and many staff to run the system before any 
follow-up trials or reporting'' could begin. Consequently, they 
recommended off-site testing and reporting with attestation of results; 
on-site examinations, if required, should be scheduled well in advance 
to allow the covered institutions to plan workflows. A commenter 
recognized the importance of compliance testing to the FDIC and 
acknowledged that testing would be an important component of this 
proposed process from its perspective as well. This commenter 
emphasized that it would be looking to the FDIC for additional guidance 
regarding the FDIC's testing expectations in order to better organize 
its efforts and allocate its resources

[[Page 10037]]

appropriately. The commenter also expressed its willingness to work 
with FDIC personnel to conduct on-site testing.
    The FDIC recognizes that imposing testing requirements on the 
covered institutions would create additional demands on their human 
resources and IT systems as well as impose certain additional financial 
costs. The FDIC has endeavored to develop a testing protocol that would 
minimize burden on a covered institution but still provide the FDIC 
with the information necessary to confirm that each covered 
institution's IT system would be capable of calculating deposit 
insurance coverage within the prescribed time frame. In many respects, 
the proposed testing procedures would be similar to those which 
currently apply to the institutions covered by Sec.  360.9. The FDIC 
would expect to conduct one initial on-site testing visit. Once the 
initial test is completed successfully, the FDIC would schedule 
additional on-site testing visits to occur no more frequently than 
annually. More frequent testing might be necessary for covered 
institutions that make major acquisitions, experience financial 
distress (even if the distress would be unlikely to result in failure), 
or undertake major IT system conversions. To reduce the frequency of 
on-site testing by the FDIC and to ensure on-going compliance, the FDIC 
would require the covered institutions to conduct their own in-house 
tests on an annual basis (as is currently required under Sec.  360.9). 
The covered institutions would be required to provide the FDIC with 
verification that the test was conducted, a summary of the test 
results, and its certification that the functionality could be 
successfully implemented. The FDIC is proposing that no testing would 
be conducted during the proposed two-year implementation period.

M. Time Frame for Implementation of Recordkeeping and IT System 
Capabilities

    According to some commenters, the covered institutions have advised 
that ``they would need at least four years with potential extensions 
for implementation after any final rule is issued.'' These commenters 
noted that the covered institutions are currently in the process of 
incorporating systems enhancements to comply with a number of other 
regulatory requirements. They urged the FDIC to recognize that any 
requirements imposed by the ANPR proposals would have to be queued with 
these other regulatory requirements. Finally, these commenters 
requested the FDIC to provide ``means to alleviate the burden of 
individual, customized programming'' of the covered institutions' 
systems and that the FDIC be prepared to work closely with the 
individual covered institutions to address the systems development 
which would ``necessarily involve details that are unique to each 
covered bank.''
    One commenter discussed implementation time frames in three 
different contexts in its comment letter. First, the commenter 
predicted that based upon its definition of closing night deposits, 
which would include transaction, savings and MMDAs for individual, 
joint and business account categories, ``it would take a minimum of 18 
months to implement the enhancements for this portion of the bank's 
deposit base.'' Second, with respect to deposit accounts that this 
commenter characterized as post-closing deposits (which include trust 
accounts, retirement accounts, etc.), the commenter estimated that it 
would take a ``minimum of two years to implement enhancements to the 
deposit system for this portion of its deposit base.'' Finally, the 
commenter suggested that any final rule should include a phased-in 
approach to implementation.
    Another commenter recommended a two-year phase-in period for these 
covered banks to modify their software systems and implement the new 
regulatory requirements. On the other hand, another commenter stated 
that the software systems it offers have the requisite capabilities to 
capture the necessary data already; however, identifying beneficiaries 
on many trust accounts could be quite labor intensive and would require 
a significant amount of customer interaction. This commenter also found 
regulatory efficiency in the sense that the system enhancements would 
support FinCEN's goals with forthcoming anti-money laundering 
regulations.
    One commenter argued that there is no need for the FDIC to rush to 
impose new deposit account recordkeeping requirements on financial 
institutions. This commenter believed that Sec.  360.9 has not been in 
effect long enough to determine its effectiveness and, moreover, that 
the IDIs that would be subject to the proposal are not in danger of 
failing.
    The commenters' predictions regarding the appropriate time frame(s) 
to implement the proposals described in the ANPR ranged from 18 months 
to four or more years. The FDIC recognizes that many factors must be 
considered, and numerous variations in the covered institutions' IT 
systems will cause significant differences in the speed with which the 
covered institutions would be able to collect the required depositor 
information and adapt or develop the necessary IT capabilities to 
comply with the proposed rule's requirements. The FDIC believes that, 
for purposes of this proposed rule, two years is a reasonable time 
frame within which a covered institution should collect information 
from depositors and develop the IT system capability to calculate 
deposit insurance coverage. To the extent that two years is 
insufficient for a specific covered institution, the proposed rule 
would allow the covered institution to apply either for an extension of 
time to achieve compliance or for an exception from the requirements of 
certain provisions of the rule as currently proposed. These 
applications for extensions or exceptions should be submitted to the 
FDIC during the first two years after the effective date of a final 
rule.
    The FDIC has several observations in response to commenters' 
assertions that there is no need for the FDIC to hasten new 
recordkeeping requirements on covered institutions or that Sec.  360.9 
has not been in effect for a sufficiently long period of time to 
determine its effectiveness. As more fully discussed in the ANPR, the 
process of developing Sec.  360.9 began more than 10 years ago.\27\ 
Section 360.9 was adopted on August 18, 2008.\28\ The FDIC has worked 
with the institutions covered by Sec.  360.9 for the last seven years 
to implement its recordkeeping and provisional hold requirements. As a 
result of compliance visits conducted during this implementation 
period, the FDIC now recognizes some of Sec.  360.9's limitations; for 
example, the standard data files of most institutions are not required 
to obtain and maintain depositor information that they do not already 
collect for their own purposes. As set forth in this ANPR, ``[b]ased on 
its experience reviewing banks' deposit data, deposit systems and 
mechanisms for imposing provisional holds, staff has concluded that 
Sec.  360.9 has not been as effective as had been hoped in enhancing 
the capacity to make prompt deposit insurance determinations.'' \29\ 
Therefore, seven years after the effective date of the first rulemaking 
effort to improve large IDIs' recordkeeping and IT systems' 
capabilities to support the FDIC's statutory mandate to pay insured 
deposits as soon as possible, the FDIC is undertaking an initiative to 
find a better way to achieve the goals it sought to achieve with the 
promulgation of

[[Page 10038]]

Sec.  360.9. The FDIC began the rulemaking process through the 
publication of an ANPR--a preliminary step in the informal rulemaking 
process. The FDIC believes that it is proceeding deliberately, but not 
prematurely, by taking this step to issue the proposed rule.
---------------------------------------------------------------------------

    \27\ 70 FR 73652 (December 13, 2005).
    \28\ 73 FR 41180 (July 17, 2008).
    \29\ 80 FR 23478, 23480 (April 28, 2015).
---------------------------------------------------------------------------

    Finally, two commenters maintained that none of the covered 
institutions are in danger of failing, and therefore, no additional 
rulemaking is necessary at this time. During the course of the Sec.  
360.9 rulemaking process, the FDIC received many comments reflecting 
that same sentiment. In fact, the preamble to the Sec.  360.9 final 
rule states that several commenters noted that, ``the expected benefits 
to the FDIC are not likely to outweigh the costs, especially given the 
perceived extremely low likelihood of failure of any particular large 
bank.'' \30\ Yet, IndyMac Bank failed six days before the publication 
of the Sec.  360.9 final rule and Washington Mutual Bank failed only 
months later. During the financial crisis that began in 2008, 511 
insured depository institutions failed, comprising a total asset value 
of approximately $696 billion. These failed banks range in asset value 
from a few million to over $300 billion.\31\ Further disruptions were 
mitigated by the U.S. government providing unprecedented assistance to 
the financial sector. Therefore, the FDIC believes it is prudent and 
appropriate to address this deposit insurance determination project 
now, while the banking industry is not under stress and before another 
financial crisis develops.
---------------------------------------------------------------------------

    \30\ 73 FR 41180, 41185 (July 17, 2008) (Emphasis supplied).
    \31\ 80 FR 23478, 23480 (April 28, 2015).
---------------------------------------------------------------------------

N. Burden Imposed by the ANPR

    Several commenters stated that ``[c]overed banks advise that it 
will not be possible for them to estimate costs until key issues are 
resolved, including the scope of deposits to be included in `closing 
night deposits.' '' Moreover, these commenters requested that the FDIC 
provide a clear statement of the deposit accounts/systems to be 
covered, the business rule that the covered institutions would need to 
follow in order to design their systems in a manner in which they can 
be employed by the FDIC to determine deposit insurance and adjust 
account balances accordingly, as well as guidance regarding systems 
expectations.
    A commenter made several observations regarding the perceived costs 
versus benefits of adopting the ANPR proposals. First, while this 
commenter acknowledged that the FDIC may need this information to 
fulfill its statutory duties, it did not consider any of the required 
recordkeeping enhancements or the capability to calculate deposit 
insurance coverage as providing any intrinsic benefits to a covered 
institution itself. Moreover, it asserted that most of the covered 
institutions ``are operating as going-concerns without financial 
difficulty.'' It also made the point that the implementation of the 
ANPR's proposals would require an unsuitable use of resources to make 
substantial changes to existing legacy platforms. Another commenter 
pointed out that the burden is based more on the need for manual 
information collection than it is on increasing IT system capabilities.
    Regarding cost/benefit, two commenters argued that the costly 
operational and information technology-related requirements would not 
generally enhance current processes or ongoing operations. Further, one 
of those commenters maintained that institutions are consolidating to 
cope with compliance costs and the additional costs imposed by the 
proposed rule would be passed through to consumers in the form of 
higher costs for banking services and products. Two commenters 
acknowledged that the benefit would be worth the cost, however. One 
reasoned that because delays in insurance determinations could 
undermine public confidence, more needs to be done to ensure prompt 
deposit insurance determinations when IDIs with a large number of 
deposit accounts fail. Another found benefits in improved consumer 
confidence in the FDIC and the banking system and greater efficiencies 
in the wind-down process which would translate to less time and human 
capital spent and thus less cost associated with the process.
    The FDIC recognizes that the ANPR presented various options and 
general concepts regarding how a covered institution might develop its 
IT system and improve its depositor information collection and 
recordkeeping capabilities to comply with the FDIC's proposals. The 
ANPR represented the FDIC's effort to solicit the opinions and 
recommendations of the financial services industry as well as other 
interested parties at a very early stage in the development of its 
proposal. For this reason, no specific regulatory text was offered for 
consideration.
    The FDIC's proposed rule provides specific requirements that the 
FDIC believes would be necessary to achieve its objectives as well as 
the details that the commenters are seeking, e.g., the types of deposit 
accounts and/or categories to be included within the scope of the 
proposed rule as well as guidance regarding systems expectations. In 
addition, materials available on the FDIC's Web site which describe 
deposit insurance coverage as well as the periodic deposit insurance 
coverage seminars offered by the FDIC should assist the covered 
institutions to develop their systems and to assess the cost to comply 
with the proposed rule's requirements. Finally, the FDIC, in addressing 
the requirements of the Paperwork Reduction Act, has provided its own 
estimates of the potential costs and burden to the covered 
institutions.\32\ The FDIC invites all interested parties, including 
covered institutions to comment on the FDIC's estimates as well as 
provide their own. See, X. Regulatory Process, A. Paperwork Reduction 
Act, below.
---------------------------------------------------------------------------

    \32\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

VI. The Proposed Rule

A. Summary

    The proposed rule would apply to all insured depository 
institutions that have two million or more deposit accounts, defined as 
``covered institutions.'' Each covered institution would be required to 
(i) collect the information needed to allow the FDIC to determine 
promptly the deposit insurance coverage for each owner of funds on 
deposit at the covered institution, and (ii) ensure that its IT system 
is capable of calculating the deposit insurance available to each owner 
of funds on deposit in accordance with the FDIC's deposit insurance 
rules set forth in 12 CFR part 330. Moreover, the covered institutions' 
IT systems would need to facilitate the FDIC's deposit insurance 
determination by calculating deposit insurance coverage for each 
deposit account and adjusting account balances within 24 hours after 
the appointment of the FDIC as receiver should the covered institution 
fail. Developing these capabilities would improve the FDIC's deposit 
insurance determination and payment process by avoiding the need to 
transfer increasingly large amounts of data from a covered 
institution's IT system to the FDIC's IT system (including the need to 
rectify that data) in the event of a covered institution's failure. A 
covered institution could apply for: An extension of the implementation 
deadlines; an exception from the information collection requirements 
for certain deposit accounts under specified circumstances; an 
exemption from the proposed rule's requirements if all the deposits it 
takes are fully insured; or a release from all

[[Page 10039]]

requirements when it no longer meets the definition of a covered 
institution. Covered institutions would be required to certify 
compliance annually and a failure to meet the requirements of the 
proposed rule would result in enforcement action pursuant to section 8 
of the FDI Act.

B. Scope

    The FDIC has identified two million accounts as the threshold for 
coverage under this proposed rule. This encompasses one half of one 
percent of all FDIC insured institutions, but includes the institutions 
where a prompt deposit insurance determination poses the greatest 
challenges. The proposed threshold of two million accounts is based on 
the FDIC's recent experience resolving failed institutions and 
preparing for the resolution of near-failures. We conclude that, 
although the total number of deposit accounts is only one dimension of 
the problem in making timely deposit insurance determinations, it is 
the most readily measured dimension of this problem. Moreover, the 
number of deposit accounts is highly correlated with the other 
attributes, such as the complexity of account relationships and 
multiple deposit systems that also contribute to this problem. The 
choice of two million deposit accounts as a threshold for coverage 
follows directly from the notion that the largest institutions pose a 
much greater challenge in terms of making a deposit insurance 
determination, and will also incur a lower cost of implementation per 
deposit account. That is, it is much more likely that the public 
benefits of meeting these requirements will exceed implementation costs 
at these very large institutions. To preclude the possibility that 
these requirements will be needlessly imposed on institutions that do 
not hold uninsured deposits, the proposal allows those institutions to 
apply for an exemption.
    The FDIC's experience shows that making a deposit insurance 
determination can still pose operational challenges even at 
institutions with less than two million deposit accounts, particularly 
where there are serious inadequacies in the data and complex deposit 
account relationships. The FDIC is improving its existing systems and 
processes to address the challenges presented by banks below the two 
million account threshold. However, the volume of accounts and 
complexity of deposit recordkeeping systems at institutions with two 
million or more deposit accounts require that those institutions 
organize and correct deposit records in advance of failure. This 
approach would balance the costs of regulation with the benefits of 
making timely and accurate deposit insurance payments for U.S. 
financial stability and public confidence in the banking industry.
    Most comments submitted in response to the ANPR did not explicitly 
address the proposed threshold for coverage. Two commenters, however, 
suggested that the proposed rule should not apply to community banks, 
but they did not identify a threshold number of accounts for coverage. 
One commenter shared its view that IDIs with $10 billion in assets and 
100,000 accounts should be required to comply with the requirements 
described in the ANPR. The FDIC continues to seek comment regarding the 
appropriate scope of coverage for the proposed rule.

C. Definitions

    An insured depository institution would be a ``covered 
institution'' if, as of the effective date of a final rule, it had two 
million or more deposit accounts for the two consecutive quarters 
immediately preceding the effective date, as determined by reference to 
Schedule RC-O, ``Other Data for Deposit Insurance and FICO 
Assessments,'' in its Report of Condition and Income. An IDI that is 
not a covered institution as of the effective date of a final rule 
would become a covered institution when it has two million or more 
deposit accounts for any two consecutive quarters following the 
effective date. If the total number of deposit accounts at a covered 
institution were to fall below two million for three consecutive 
quarters after becoming a covered institution, then it could apply to 
the FDIC for release from the requirements set forth in the proposed 
rule.
    The proposed rule incorporates by reference several of the concepts 
used for determining deposit insurance coverage. The term ``deposit'' 
is as defined in section 3(l) of the FDI Act.\33\ The ``standard 
maximum deposit insurance amount,'' or ``SMDIA,'' is defined in section 
11(a)(1)(F) of the FDI Act, as well as in the FDIC's regulations, and 
is currently $250,000.\34\ The SMDIA represents the amount of deposit 
insurance coverage available to the owner of funds on deposit at an 
insured depository institution per each ``ownership right and 
capacity'' in which the deposits are owned. The ``ownership rights and 
capacities'' for which deposit insurance coverage is available are 
described in great detail in 12 CFR part 330, so that description is 
incorporated by reference in the proposed rule. A covered institution 
would need to understand what each of these defined terms means and how 
the terms operate in order to identify the depositor information and 
develop the IT system capabilities needed to meet the requirements of 
the proposed rule.
---------------------------------------------------------------------------

    \33\ 12 U.S.C. 1813(l)
    \34\ 12 U.S.C. 1821(a)(1)(F); 12 CFR 330.1(o).
---------------------------------------------------------------------------

    The FDIC is proposing to use the term ``unique identifier'' to mean 
a number associated with an individual or entity that can be used by a 
covered institution to monitor its deposit relationship with only that 
individual or entity. The FDIC anticipates that the social security 
number, taxpayer identification number, or other government-issued 
identification number of an individual or entity (such as a passport 
number, or a visa number assigned to a foreign individual) could be 
used so long as a covered institution consistently and continuously 
uses only that number as the unique identifier for each individual or 
entity involved in the deposit relationship.

D. Requirements

    The requirements of the proposed rule are set forth in Sec.  370.3. 
In order for the FDIC to accurately and completely determine the 
deposit insurance coverage associated with each account for each owner 
of deposits as soon as possible after a covered institution's failure, 
certain information must be readily available. The proposed rule's 
general mandate is that each covered institution must obtain from each 
of its account holders the information needed to calculate the amount 
of deposit insurance available for each owner of deposits.
    To determine the amount of deposit insurance coverage, the FDIC 
must presume that deposits are actually owned in the manner indicated 
on the deposit account records of an IDI.\35\ If the deposit account 
records of an insured depository institution disclose the existence of 
a relationship that provides a basis for additional insurance, the 
details of the relationship and the interests of other parties in the 
account must be ascertainable either from the deposit account records 
of the IDI or from records maintained, in good faith and in the regular 
course of business, by the depositor or by some person or entity that 
has undertaken to maintain such records for the depositor.\36\ The 
proposed rule would require a covered institution to obtain from each 
account holder the information needed to determine deposit insurance 
coverage

[[Page 10040]]

``notwithstanding 12 CFR 330.5(b)(2) and (3).'' This means that, 
although 12 CFR 330.5(b)(2) and (3) permit deposit ownership 
information to be maintained by some entity other than a covered 
institution, the covered institution would be required to obtain the 
requisite deposit ownership information and maintain it on-site. 
Nevertheless, deposit insurance would not be withheld if the details of 
a fiduciary relationship and the interests of other parties in an 
account are not in the deposit account records of covered institution. 
This proposed rule would not change the standards for deposit insurance 
coverage set forth in 12 CFR part 330, and a covered institution's 
inability to obtain the necessary information or, alternatively, an 
exception from the proposed rule's requirements approved by the FDIC 
would not reduce pass-through deposit insurance coverage. It could 
impede the FDIC's ability to pay deposit insurance to those depositors 
promptly upon the covered institution's failure, however. The FDIC 
would still expect a covered institution to obtain sufficient 
information from depositors, or to obtain an exception, in order to be 
in compliance with the proposed rule, and a failure to do so could 
result in sanctions against the covered institution pursuant to section 
8 of the FDI Act.
---------------------------------------------------------------------------

    \35\ 12 CFR 330.5(a)(1).
    \36\ 12 CFR 330.5(b)(2).
---------------------------------------------------------------------------

    A covered institution would need to designate a point of contact 
for communication with the FDIC regarding implementation of the 
proposed rule's requirements. It would need to notify the FDIC of the 
designation within ten business days after the effective date of a 
final rule, or within ten business days after becoming a covered 
institution if it was not a covered institution on the effective date. 
The FDIC's staff would provide guidance and feedback to a covered 
institution through the designated point of contact in order to 
facilitate the covered institution's efforts to comply with the 
proposed new requirements. The FDIC believes that the ten business day 
time frame for designating a point of contact is appropriate because 
the FDIC intends to begin outreach efforts immediately after a final 
rule is adopted. Moreover, the three business day time frame for 
designating a point of contact under 12 CFR part 371, the FDIC's 
regulation concerning recordkeeping requirements for qualified 
financial contracts, has not presented any challenge for insured 
depository institutions that are subject to that rule, so ten days for 
a similar action under the proposed rule should not be unduly 
burdensome.
    In order to be able to calculate the deposit insurance available to 
a depositor for each of its accounts, a covered institution would need 
to be able to identify certain individuals and entities from which 
information is needed. Those individuals and entities, and the type of 
information needed from them, would vary depending on the right and 
capacity in which a deposit is owned. Under the proposed rule, these 
individuals and entities would need to be assigned a unique identifier 
in a covered institution's IT system so that the system can reference 
each as needed to calculate deposit insurance coverage in the correct 
amounts across the applicable ownership rights and capacities. A 
covered institution would be required to assign a unique identifier to: 
Each account holder; each owner of funds on deposit, if the owner is 
not the account holder; and, in connection with deposit funds that are 
held in trust, each beneficiary of the trust who could have an interest 
in the funds on deposit. Covered institutions already use unique 
identifiers associated with insured deposit accounts for tax reporting 
purposes so, to the extent the same unique identifiers are used for 
purposes of the proposed rule, the additional burden should be minimal. 
Assigning unique identifiers to beneficial owners of deposits held in 
the name of an agent and to trust account beneficiaries would be a new 
requirement, however. Unique identifiers would need to be assigned 
within two years after the effective date of a final rule, or within 
two years after becoming a covered institution. The FDIC believes that 
two years would be an appropriate time frame within which to meet this 
requirement based on the comments it received. The FDIC is seeking 
further comment regarding this two-year time frame and the challenges 
that could prevent a covered institution from meeting the requirements 
of the proposed rule within two years.
    A covered institution's IT system would need to be capable of 
grouping accounts by the appropriate ownership right and capacity 
because deposit insurance is available up to the SMDIA per each 
ownership right and capacity in which deposits are held. The proposed 
rule would require a covered institution to assign an account ownership 
right and capacity code to each deposit account within two years after 
the effective date of a final rule, or within two years after becoming 
a covered institution if it was not a covered institution on the 
effective date. Appendix A to the proposed rule lists the account 
ownership right and capacity codes with a corresponding description of 
each. Based on discussions with industry representatives, the FDIC 
believes that a substantial number of deposit accounts held at a 
covered institution can readily be assigned an account ownership right 
and capacity code because the covered institution already has all of 
the information needed to make the designation. Nevertheless, the FDIC 
is proposing a two-year implementation time frame for this requirement 
because a covered institution might not, on the effective date of a 
final rule, have sufficient information to assign an account ownership 
right and capacity code to certain types of deposit accounts. In such 
cases, the covered institution would need to obtain the missing 
information and, if it cannot, apply to the FDIC for an extension or 
exception if permitted pursuant to section 370.4 of the proposed rule.
    A covered institution would need to make its IT system capable of 
accurately calculating the deposit insurance coverage available for 
each deposit account. The IT system would need to be able to generate a 
record that reflects the calculation and would contain, at a minimum, 
the name and unique identifier of the owner of a deposit, the balance 
of each of an owner's deposit accounts within the applicable ownership 
right and capacity, the aggregated balance of the owner's deposits 
within each ownership right and capacity, the amount of the aggregated 
balance within each ownership right and capacity that is insured, and 
the amount of the aggregated balance within each ownership right and 
capacity that is uninsured. Appendix B to the proposed rule specifies 
the data format for the records that the covered institution's IT 
system would need to produce. The proposed rule would require that this 
expansion of a covered institution's IT system's capabilities would 
need to be completed within two years after the effective date of a 
final rule, or within two years after becoming a covered institution. 
The FDIC believes that two years would be an appropriate time frame 
within which to meet this requirement based on its experiences 
monitoring development and implementation of IT system changes by 
insured depository institutions. The FDIC welcomes comment regarding 
this two-year time frame and the challenges that could prevent a 
covered institution from meeting the requirements of the proposed rule 
within two years.
    If a covered institution were to fail, its depositors' access to 
their funds would need to be restricted while the FDIC makes deposit 
insurance determinations in order to avoid overpayment. Under the 
proposed rule, a covered

[[Page 10041]]

institution's IT system would need to be capable of placing an 
effective restriction, or hold, on access to all funds in a deposit 
account until the FDIC has determined the deposit insurance coverage 
for that account. Using the covered institution's IT system, the FDIC 
expects that deposit insurance determinations would be made within 24 
hours after failure and holds on those accounts would be removed. Holds 
would remain in place on deposit accounts for which a deposit insurance 
determination has not been made within that time frame and would be 
removed after the determination has been made. The deposit accounts for 
which a deposit insurance determination is not made within the first 24 
hours after a covered institution's failure would have been the subject 
of an FDIC-approved application for exception from the proposed rule's 
requirements. Under the proposed rule, covered institutions would be 
required, as a condition for the exception, to notify such account 
holders that payment of deposit insurance may be delayed until all of 
the information required to make a deposit insurance determination has 
been provided to the FDIC.
    A covered institution's IT system would need to be capable of 
adjusting the balance in each of an owner's accounts, if necessary, 
after the deposit insurance determination has been completed by the 
FDIC. Specifically, if any of an owner's deposits within a particular 
ownership right and capacity were not insured, the covered 
institution's IT system would need to debit the owner's deposit 
accounts for the uninsured amount associated with each account held in 
the relevant ownership right and capacity. Any uninsured amount would 
be payable to the depositor as a receivership claim against the failed 
covered institution. The FDIC's regulations and resources concerning 
deposit insurance that are available to the public on the FDIC's Web 
site are useful tools that covered institutions can use to develop the 
capabilities of their IT systems to meet the proposed rule's 
requirements.\37\ The FDIC also intends to offer guidance and outreach 
to facilitate covered institutions' efforts to meet this requirement.
---------------------------------------------------------------------------

    \37\ See 12 CFR part 330 and material on the FDIC's Web site at 
https://www.fdic.gov/deposit.
---------------------------------------------------------------------------

    A covered institution's IT system would need to be capable of 
calculating deposit insurance coverage and debiting uninsured amounts, 
if any, within 24 hours after the FDIC's appointment as receiver should 
the covered institution fail. As discussed above, the FDIC believes 
that a uniform time frame within which it should be able to complete 
the deposit insurance determination process using a covered 
institution's IT system should be measured from the time of the covered 
institution's failure and the FDIC's appointment. The ability to 
accomplish the deposit insurance determination within 24 hours after 
failure is essential to preserving continuity of operations for 
depositors. The inability to access deposits for day-to-day 
transactions could have an adverse impact on the financial stability of 
the banking system if enough depositors were to be denied access to 
their funds for more than a minimal period of time. Additionally, the 
FDIC's ability to determine deposit insurance coverage quickly should 
help preserve a failed covered institution's franchise value, which 
would lead to greater recovery for the Deposit Insurance Fund and, in 
turn, lessen the negative impact on industry deposit insurance 
assessments.

E. Limitations on the Applicability of the Proposed Rule

    Covered institutions may face challenges in their efforts to obtain 
the information needed to meet the requirements of the proposed rule. 
Recognizing that these challenges may be difficult to overcome in some 
cases, the FDIC is proposing several bases for limitation of the 
proposed rule's requirements. A covered institution would need to apply 
to the FDIC for relief from certain of the proposed rule's requirements 
and, if the application is granted, the covered institution would need 
to take certain other actions.
    The FDIC is proposing a narrow basis for exemption from the 
requirements set forth in the proposed rule. A covered institution 
could apply to be exempted from the proposed rule if it could 
demonstrate that it does not, and will not in the future, take deposits 
that would exceed a deposit owner's SMDIA regardless of ownership right 
and capacity. In other words, if each owner of deposits were to have an 
amount equal to or less than the SMDIA (currently $250,000) on deposit 
at a covered institution, then each owner would be fully insured. 
Additionally, there would be no need to analyze any other information, 
such as beneficiary identities and interests, to determine the extent 
of deposit insurance coverage because the aggregate amount that the 
owner has on deposit across all ownership rights and capacities would 
be equal to or below the SMDIA. The FDIC's deposit insurance 
determination would be simple for deposit accounts at covered 
institutions that meet this condition and, therefore, the FDIC does not 
believe that requiring such covered institutions to develop the 
capability to calculate deposit insurance coverage is necessary.
    A covered institution would be able to apply for an extension of 
the deadlines set forth in Sec.  370.3 of the proposed rule if it could 
not meet them based on a well-justified exigency. It could apply for an 
extension of the two-year deadlines for obtaining the information 
needed to determine deposit insurance coverage, assigning account 
ownership right and capacity codes, and developing IT system 
capabilities. The application would need to explain in detail why the 
deadline needs to be extended and would need to describe the type of 
accounts that would be affected, the number of accounts affected, and 
the total dollar amount on deposit in those accounts as of the date of 
the covered institution's application. Furthermore, the application 
would need to specify the amount of time the covered institution 
expects would be needed to meet the requirement for which it seeks an 
extension and provide any other information needed to substantiate the 
request.
    The proposed rule would allow a covered institution to apply for an 
exception from the requirements set forth in Sec.  370.3 of the 
proposed rule if it can satisfy one of the following three conditions. 
First, a covered institution would be able to apply for exception if it 
does not have the information needed to calculate deposit insurance 
coverage for an account or for all accounts of a specific type, that it 
has requested such information from the account holder, and the account 
holder has not been responsive to the covered institution's request. 
Second, a covered institution would be able to apply for exception if 
it can provide a reasoned legal opinion that the information needed 
from an account holder to calculate deposit insurance coverage is 
protected from disclosure by law. Third, a covered institution would be 
able to apply for exception if it can provide an explanation of how the 
information needed to calculate deposit insurance coverage changes so 
frequently that updating the information on a continual basis would be 
neither cost effective nor technologically practicable. The FDIC would 
consider the nature of the deposit relationship to determine how 
frequently the information would need to change in order for a covered 
institution to be granted an exception, but anticipates that the rate 
would need to be on a daily or near daily basis. A covered 
institution's application for

[[Page 10042]]

exception would need to describe the accounts that would be affected, 
state the number of accounts affected and the total dollar amount on 
deposit in those accounts as of the date of the covered institution's 
application, and provide any other information needed to substantiate 
the request.
    The FDIC anticipates that a covered institution would seek release 
from the proposed rule's requirements if the covered institution were 
to no longer meet the two million account threshold for coverage. Under 
the proposed rule, a covered institution could apply for release from 
the proposed rule's requirements when it has fewer than two million 
deposit accounts, as determined by reference to Schedule RC-O in its 
Report of Condition and Income, for three consecutive quarters. It 
would, like any other IDI, become a covered institution again if it 
were to have two million or more deposit accounts for two consecutive 
quarters.
    The objectives of the proposed rule overlap to an extent with the 
objectives of Sec.  360.9. The FDIC recognizes that a covered 
institution's compliance with the proposed rule's requirements may 
alleviate the need for the covered institution to continue to take 
certain of the actions prescribed by Sec.  360.9. Therefore, the 
proposed rule would allow a covered institution to apply for a release 
from the provisional hold and standard data format requirements set 
forth in 12 CFR 360.9, if it could demonstrate to the FDIC's 
satisfaction that it would comply with the proposed rule's 
requirements.
    The FDIC would review a covered institution's application for 
exemption, extension, exception, or release, and determine, in its sole 
discretion, whether to approve the application. The FDIC's approval 
could be conditional or time-limited, depending on the facts and 
circumstances set forth in the application. If a covered institution's 
application for an extension or exception were to be granted by the 
FDIC, then the covered institution would need to ensure that its IT 
system can, in the event of its failure, do three things. First, it 
would need to be capable of imposing a hold on access to all funds in 
every deposit account that the application concerns for so long as it 
cannot calculate the deposit insurance available to those accounts. 
Second, it would need to be capable of generating a record in the 
format specified in appendix B listing those accounts so that the FDIC 
could obtain the information needed from the account holder to 
determine the amount of deposit insurance coverage relevant to those 
accounts after the covered institution's failure. And third, it would 
need to be capable of accepting additional information post-failure and 
performing successive iterations of the deposit insurance coverage 
calculation process described in Sec.  370.3 of the proposed rule until 
the amount of deposit insurance available on every account has been 
determined. In addition to these IT system capabilities, a covered 
institution would also need to disclose to each account holder for whom 
its IT system cannot be used by the FDIC to facilitate the FDIC's 
deposit insurance determination that, in the event that the covered 
institution were to fail, access to funds in one or more accounts might 
be delayed. The FDIC would be unable to pay deposit insurance on those 
deposit accounts until after it received the information needed to make 
a complete deposit insurance determination. The purpose of this 
disclosure would be to moderate any expectation by an account holder or 
deposit owner that insured deposits would be immediately accessible 
after a covered institution's failure and to put them on notice that 
draw requests might not be honored until the deposit insurance coverage 
determination has been completed by the FDIC.

F. Accelerated Implementation

    The proposed rule provides for accelerated implementation of the 
rule's requirements, on a case-by-case basis and with notice from the 
FDIC to a covered institution, in three scenarios. The first would be 
when a covered institution has received a composite rating of 3, 4, or 
5 under the Uniform Financial Institution's Rating System (CAMELS 
rating) in its most recently completed Report of Examination. The 
second scenario would be when a covered institution has become 
undercapitalized, as defined in the prompt corrective action provisions 
of 12 CFR part 325. The third would be when the appropriate federal 
banking agency or the FDIC, in consultation with the appropriate 
federal banking agency, has determined that a covered institution is 
experiencing a significant deterioration of capital or significant 
funding difficulties or liquidity stress, notwithstanding the composite 
rating of the covered institution by its appropriate federal banking 
agency in its most recent Report of Examination. The FDIC is sensitive 
to concerns about the imposition of an accelerated implementation time 
frame during episodes of severe economic distress. Understandably, a 
covered institution's attention would be devoted to solving other 
critical problems that threaten the covered institution's financial 
health. However, providing depositors with immediate access to funds 
and preserving systemic stability is equally critical, and the ability 
to do that must be balanced against any hardship an accelerated 
implementation time frame might impose on a covered institution. Before 
accelerating the implementation time frame, the FDIC would consult with 
the covered institution's appropriate federal banking agency. The FDIC 
would evaluate the complexity of the covered institution's deposit 
systems and operations, the extent of the covered institution's asset 
quality difficulties, the volatility of the covered institution's 
funding sources, the expected near-term changes in the covered 
institution's capital levels, and other relevant factors appropriate 
for the FDIC's consideration as deposit insurer.

G. Compliance Testing

    The proposed rule sets forth a two-part approach for compliance 
testing. First, beginning two years after the effective date of a final 
rule, a covered institution would need to certify compliance with the 
rule on an annual basis by submitting an attestation letter signed by 
its board of directors along with a summary deposit insurance coverage 
report to the FDIC by the end of the first quarter of each calendar 
year. The attestation letter would confirm that the covered 
institution's IT system would be capable of calculating deposit 
insurance coverage and that the covered institution had successfully 
tested that capability. It would also describe the impact of the 
exceptions or extensions that the covered institution had been granted 
on the IT system's ability to calculate deposit insurance coverage 
available to depositors. The summary deposit insurance coverage report 
accompanying the attestation letter would list key metrics for deposit 
insurance risk to the FDIC and coverage available to a covered 
institution's depositors. Those metrics would be: The number of 
depositors, the number of deposit accounts, and the dollar amount of 
deposits by ownership right and capacity; the total number of fully-
insured deposit accounts and the dollar amount of deposits in those 
accounts; the total number of deposit accounts with uninsured amounts 
and the total dollar amount of insured and uninsured amounts in those 
accounts; the total number of deposit accounts and the dollar amount of 
deposits in accounts subject to an approved or pending application for 
exception or extension; and a description of any substantive change to 
the covered institution's IT system or deposit taking operations since 
the prior annual certification.

[[Page 10043]]

    Second, the FDIC would conduct an on-site inspection and test of a 
covered institution's IT system's capability to calculate deposit 
insurance coverage. The FDIC would provide data integrity and IT system 
testing instructions to covered institutions through the issuance of 
procedures or guidelines prior to initiating its compliance testing 
program, and would provide outreach to covered institutions to 
facilitate their implementation efforts. Testing by the FDIC would 
begin no earlier than two years after the effective date of a final 
rule in order to give covered institutions time to collect information 
from account holders and make changes to their IT systems by the 
deadlines prescribed in the proposed rule. On-site testing would be 
conducted by the FDIC no more frequently than annually, unless there is 
a material change to the covered institution's IT system, deposit-
taking operations, or financial condition. A covered institution would 
be required to provide assistance to the FDIC to resolve any issues 
that arise upon the FDIC's on-site inspection and testing of the IT 
system's capabilities. The FDIC anticipates that after a covered 
institution's IT system accurately demonstrates the capability to 
calculate deposit insurance coverage for a substantial number of the 
covered institution's deposit accounts, on-site inspection and testing 
would be needed only infrequently or when there had been a material 
change to the covered institution's IT system or deposit-taking 
operations.

H. Enforcement

    Under the proposed rule, a violation of the requirements set forth 
therein would be grounds for enforcement action pursuant to section 8 
of the FDI Act.\38\ A covered institution's appropriate federal banking 
agency would have authority to compel compliance by initiating 
enforcement action. Such action could include, but not be limited to, a 
cease-and-desist order or an order for a civil money penalty. If the 
FDIC were to decide that enforcement action would be necessary to 
compel compliance with the proposed rule's requirements and the 
appropriate federal banking agency were to elect not to take action, 
the FDIC could use its backup authority under subsection 8(t) of the 
FDI Act if it is not the appropriate federal banking agency.\39\
---------------------------------------------------------------------------

    \38\ 12 U.S.C. 1818.
    \39\ 12 U.S.C. 1818(t).
---------------------------------------------------------------------------

    A covered institution might not be able to comply with the proposed 
rule's requirements during the pendency of a covered institution's 
application for extension, exception, extension or release. It may not 
have information sufficient to calculate deposit insurance coverage for 
some or all of a certain type of account, or it may have difficulties 
implementing changes to its IT system. Given those contingencies, the 
FDIC is proposing a safe harbor from enforcement action for 
noncompliance while a covered institution's application is pending. 
Enforcement action against a covered institution for noncompliance 
during that time would not promote the covered institution's level of 
compliance or improve the FDIC's preparedness for the covered 
institution's failure.
    The FDIC is optimistic that covered institutions will recognize the 
benefits to be provided by this proposed rule and acknowledge that 
these improvements to the FDIC's ability to quickly and accurately 
determine deposit insurance will minimize costs to the Deposit 
Insurance Fund and increase confidence among depositors that they will 
have immediate access to their deposits in the event of a covered 
institution's failure. Enhanced public confidence in the deposit 
insurance payment process will, in turn, strengthen the banking system. 
The FDIC anticipates regular and continuous involvement with covered 
institutions during the implementation period and does not anticipate 
that an enforcement action would be taken unless a covered institution 
were to demonstrate persistent disregard for the proposed rule's 
requirements.

VII. Expected Effects

    The purpose of this proposed rule would be to strengthen the FDIC's 
ability to administer orderly and least-costly resolutions for the 
nation's largest and most complex financial institutions. As proposed, 
the rulemaking applies to 36 institutions, each with two million or 
more deposit accounts, which together comprise only one half of one 
percent of all FDIC insured institutions. In light of the large size of 
these institutions and the millions of account holders who would 
require immediate access to their funds in the event of failure, the 
estimated implementation costs are relatively modest. Prompt and 
efficient deposit insurance determination by the FDIC ensures the 
liquidity of deposit funds, enables the FDIC to more readily resolve a 
failed IDI, promotes stability in the banking system, reduces moral 
hazard, and preserves access to credit for the economy.
    While the FDIC's analysis estimates the expected costs of the 
proposed rule to covered institutions, the benefits of financial 
regulation are primarily shared by the public as a whole. Because there 
is no market in which the value of these public benefits can be 
determined, it is not possible to monetize these benefits. Therefore, 
the FDIC presents an analytical framework that describes the 
qualitative effects of the proposed rule and the quantitative effects 
where possible.

A. Expected Costs

    The FDIC anticipates that the relatively few large institutions 
that are subject to this proposed rule will incur significant costs in 
upgrading their information systems and internal processes in order to 
comply with its provisions. However, these costs are small relative to 
covered institutions' size, other expenses, and earnings.
    In order to estimate the expected costs of complying with this 
proposed rule, the FDIC engaged an independent consulting firm and 
provided that firm with information about 36 larger institutions that 
were likely to be subject to the proposed rule.\40\ Together, these 
institutions hold more than $10 trillion in total assets and manage 
over 400 million deposit accounts.
---------------------------------------------------------------------------

    \40\ As of the end of the fourth quarter of 2015, 36 
institutions would be ``covered institutions'' under the proposed 
rule.
---------------------------------------------------------------------------

    Based on this information and its own extensive experience with IT 
systems at financial institutions, the consultant developed cost 
estimates around the following activities:

     Implementing the deposit insurance calculation
     Legacy data clean-up
     Data extraction
     Data aggregation
     Data standardization
     Data quality control and compliance
     Data reporting
     Ongoing operations
    Cost estimates for these activities were derived from estimates of 
the types of workers needed for each task, the labor hours devoted to 
each cost component, the industry average labor cost (including 
benefits) for each worker needed, and worker productivity. The analysis 
assumed that manual data clean-up would affect five percent of deposit 
accounts, resolve ten accounts per hour, and use internal labor for 60 
percent of the clean-up. This analysis also attributed higher costs to 
individual institutions based on factors that make timely and accurate 
deposit insurance determinations more complex. These complexity factors 
include:

     Higher number of deposit accounts
     Higher number of distinct core

[[Page 10044]]

servicing platforms
     Higher number of depository legal entities or separate 
organizational units
     Broader geographic dispersal of accounts and customers
     Use of sweep accounts
     Greater degree of complexity in the bank's business lines, 
accounts, and operations
    Based on this analysis, the total projected cost for needed 
improvements at these institutions under the proposed rule amounts to 
just under $328 million (see Illustration 1, below, for a graphic 
portrayal of the cost model).
BILLING CODE 6714-01-P
[GRAPHIC] [TIFF OMITTED] TP26FE16.002

BILLING CODE 6714-01-C
    More than half of this cost estimate is attributable solely to 
legacy data quality improvement. However, some of the putative covered 
institutions are already undertaking efforts to improve their data 
quality to address their own operational concerns or other regulatory 
compliance efforts (e.g., efforts to comply with the Bank Secrecy Act). 
Therefore this cost estimate may be overstated.
    This estimate of the projected cost, while thorough in its 
treatment, may not perfectly account for the individual cost structures 
of the covered institutions. Consequently, the total estimated costs 
could be somewhat higher or lower than $328 million. The FDIC invites 
interested parties to comment on all expected costs or benefits of the 
proposed rule.
    At the same time, it is instructive to place this cost estimate in 
context with the size of these institutions and the annual income and 
expense amounts they regularly report. Table 1, below, compares the 
$328 million cost estimate to 2014 annual expense totals for these 
institutions.

                    Table 1--Cost Estimate Comparison
------------------------------------------------------------------------
                                                            Expected
                                    2014 Expenses for   compliance cost
           Expense item                banks in the     as a percent of
                                      study (000's)      annual expense
                                                            item  %
------------------------------------------------------------------------
Noninterest Expense...............       $268,778,648               0.12
Personnel Expense.................        119,579,601               0.27
Tax Expense.......................         48,353,250               0.68
Premises Expense..................         28,293,572               1.16
Interest Expense..................         27,223,308               1.20
------------------------------------------------------------------------

    As indicated in Table 1, if compliance costs for these institutions 
total $328 million, they would equal just over one tenth of one percent 
of the total noninterest expenses incurred by these institutions in 
2014. Given that these same institutions earned total pre-tax net 
income of just under $150 billion for the year, estimated compliance 
costs would be 0.22 percent of that amount.
    Expressed as an average cost per deposit account, the $328 million 
cost would be equal to 80 cents for each account managed by these 
banks. This low average compliance cost per

[[Page 10045]]

account reflects the fact that most of the more than 400 million 
accounts managed by these banks do not involve complex structures or 
incomplete data, and will not require extensive clean-up of existing 
data records.
    It is worth noting that even if actual compliance costs turned out 
to be $650 million, twice the amount estimated in the consulting firm's 
analysis, these costs would still be relatively small in the context of 
the size, annual income, and expenses of these institutions. If costs 
were to be as high as $650 million, they would be equal to 0.24 percent 
of 2014 noninterest expenses, 0.43 percent of pre-tax net income, or 
$1.60 per deposit account managed by these institutions.
    Clearly, not every institution would incur the same compliance 
costs in dollar terms or in relation to their annual income or 
expenses. Banks with more serious deficiencies in their current systems 
or with greater complexity in their business lines, accounts, and 
operations would be expected to incur above-average compliance costs. 
For example, some institutions that grew through acquisition have 
retained the legacy IT systems of the acquired banks. Multiple deposit 
platforms, missing and inaccurate depositor information, and the 
incompatibility of the IT systems would all contribute to higher costs. 
Banks with simpler operations and better systems would incur lower 
costs.
    Covered institutions could pass at least some of the costs of the 
proposed rule to their stakeholders (customers, creditors, 
shareholders). The proposed rule is crafted in a manner that affects 
only large banks, and the FDIC neither intends nor anticipates negative 
consequences for small banks.

B. Expected Benefits

    The FDIC expects that the benefits of the proposed rule would 
accrue broadly to the public at large, to bank customers, to banks not 
covered by the rule, and to the covered banks themselves. The primary 
benefits of the proposed rule are to ensure the liquidity of deposit 
funds in the event of the failure of one or more large banks, and to 
facilitate their orderly resolution. This outcome in turn would promote 
stability in the banking system, trust and confidence in deposit 
insurance, and access to credit for the economy.
    The recent financial crisis has demonstrated that large financial 
institutions can fail very rapidly, and that their failures can have 
outsized effects on the macroeconomy. In addition to the direct 
economic impact of a large institution's failure, such a failure can 
also have contagion effects on other financial institutions. 
Consequently, post-crisis reforms are aimed at preventing or mitigating 
such effects. This proposed rule bolsters the FDIC's ability to allow 
depositors timely access to their insured funds in the event of a 
covered institution's failure without the need for extraordinary 
government assistance.
    The failure of a covered institution would necessarily involve 
millions of deposit insurance claims. The inability to promptly settle 
these claims could lead to financial disruptions that could have 
effects on the macroeconomy as a whole. One recent study reported that 
government support for the financial sector in the 2008 financial 
crisis totaled more than $12 trillion, and the resulting loss of 
domestic output is estimated at $6 trillion to $14 trillion.\41\
---------------------------------------------------------------------------

    \41\ Luttrell, Atkinson and Rosenblum, ``Assessing the Costs and 
Consequences of the 2007-09 Financial Crisis and Its Aftermath,'' 
Economic Letter, Federal Reserve Bank of Dallas, v. 8, n. 7, Sep. 
2013.
---------------------------------------------------------------------------

    The public at large will be the primary beneficiaries of the 
proposed rule. An effective failed bank resolution maintains liquidity 
by providing timely access to insured funds, promotes financial 
stability by ensuring an orderly, least costly resolution, and reduces 
moral hazard by recognizing deposit insurance limits. Broadly, it 
facilitates the use of resolution transaction structures that would 
otherwise be unavailable. Making accurate and fair deposit insurance 
determinations for all insured institutions is a key component in 
carrying out the FDIC's mission of ensuring confidence in the banking 
system.
    Bank customers will also benefit from the proposed rule. Timely 
deposit insurance determinations supported by the proposed rule would 
delineate insured and uninsured amounts for bank customers, granting 
them access to insured amounts to meet their transaction needs and 
financial obligations. The proposed rule improves upon current 
resolution practices by providing a mechanism for timely access to 
funds for depositors at even the largest IDIs.
    Banks not covered by the proposed rule will benefit because the 
prompt payment of deposit insurance at the largest IDIs should promote 
public confidence in the banking system as a whole.
    The enhancements to data accuracy and completeness supported by the 
proposed rule should benefit covered institutions as well. Improvements 
to data on depositors and information systems as a result of adopting 
the proposed rule may lead to efficiencies in managing customer data. 
The processing of daily bank transactions may be less prone to data 
errors. Moreover, opportunities for cross-marketing of bank products 
may result from maintaining more accurate data on deposit account 
relationships.

VIII. Alternatives Considered

    A number of alternatives were considered in developing the proposed 
rule. The major alternatives include: (i) Thresholds above and below 
the proposed two million accounts; (ii) the FDIC's current approach to 
deposit insurance determinations (status quo); (iii) the FDIC's 
development of an internal IT system and transfer processes capable of 
subsuming the deposit system of any large covered IDI in order to 
perform deposit insurance determinations; and (iv) simplifying deposit 
insurance coverage rules. The proposed rule is considered by the FDIC 
to be the most effective approach relative to the alternative 
approaches in terms of cost to the industry, the speed and accuracy of 
deposit insurance determinations, access to funds, and reduction of 
systemic and information security risks. Development of the proposed 
rule was based on a careful evaluation of expected effects and 
expertise of staff on the challenges of resolving a large failed IDI.
    In deciding which institutions would be subject to the proposed 
rule, the FDIC considered thresholds above and below two million 
deposit accounts. Raising the threshold would decrease the costs of the 
rule on the industry because fewer institutions would be covered, but 
would also increase the risk of the FDIC being unable to make timely 
and accurate deposit insurance determinations for very large 
institutions. As described in VI. The Proposed Rule, above, the 
selection of two million deposit accounts as the threshold for this 
rule was based on this being a readily observable metric and on the 
large anticipated benefits relative to implementation costs for 
institutions over this threshold.
    Making a correct and timely deposit insurance determination always 
requires that the FDIC have access to accurate data on deposit account 
relationships. The FDIC has learned from prior experience that it is 
possible to rectify data quality problems at small institutions without 
delaying the deposit insurance determination. However, the ability of 
the FDIC to promptly remedy data quality problems at large institutions 
declines rapidly with the number and complexity of

[[Page 10046]]

deposit accounts. Therefore, resolving data quality problems at 
institutions with the largest number of accounts and most complex 
deposit account systems prior to failure, as required by this proposed 
rule, would substantially lower the risk of delay in making 
determinations.
    As described above in VII. Expected Effects, the FDIC estimates 
that the costs associated with the proposed threshold for these large 
IDIs are relatively modest compared to their net income and other usual 
costs of doing business. Decreasing the deposit account threshold below 
two million accounts would impose higher costs on the industry as a 
whole, and the marginal benefits of the rule would decline since 
smaller institutions present less risk to prompt deposit insurance 
determinations.
    The alternative of maintaining the status quo is defined by the 
existing deposit insurance determination process for large banks 
established in Sec.  360.9 of the FDIC regulations, which became 
effective in August 2008. Section 360.9 requires covered institutions 
to maintain processes that provide the FDIC with standard deposit 
account information promptly in the event of failure. In addition, 
Sec.  360.9 requires covered institutions to maintain the technological 
capability to automatically place and release holds on deposit 
accounts. Section 360.9 applies to insured depository institutions with 
at least $2 billion in domestic deposits and either 250,000 or more 
deposit accounts or $20 billion in total assets.
    Adoption of Sec.  360.9 was an important step toward resolving a 
large depository institution in an efficient and orderly manner. 
However, that rule does not adequately address two important problems 
that arise in the resolution of the largest and most complex 
institutions. First, it does not currently require institutions to 
maintain deposit account data that are accurate and complete for 
deposit insurance purposes. Addressing these data quality problems at 
the time of failure can introduce significant delays in making accurate 
deposit insurance determinations. Second, deposit insurance 
determination under 360.9 necessitates a secure bulk download of 
depositor data that introduces additional delays in making that 
determination. The FDIC's experience in resolving large institutions 
shows that the amount of time for a data download can vary widely based 
on the file size, complexity of the data, and the number of deposit 
systems among other things. Given the limited time available to the 
FDIC to make determinations these delays pose the risk of creating 
hardships on depositors and disruptions to financial markets.
    Another alternative considered was establishing a system to rapidly 
transfer all deposit data from the failed IDI's IT system to the FDIC 
for processing in order to calculate and make deposit insurance 
determinations. Although this alternative could leverage efficiencies 
in computing power, the challenge of absorbing the deposit system or 
systems of a large, complex IDI in a time period short enough to 
produce prompt insurance determinations is practically infeasible. The 
process of moving the data in a quick and organized fashion would 
require a great deal of skilled labor and pose information security 
concerns. FDIC staff, working with staff from each large IDI, would 
have to develop individualized data transfer solutions for each 
institution tailored to their IT systems and third party applications. 
Extensive initial and ongoing testing would be required to establish 
the viability of the data transfer process and the validity of the 
data. Transferring large volumes of personal identifiable information 
would pose some information security risk to bank customers. Finally, 
any major changes in the large IDI's deposit system would necessitate 
further testing and validation. The large development, testing, and 
recertification costs borne by the FDIC under this alternative would 
likely be passed onto insured depository institutions as ongoing 
insurance assessments.
    Simplifying the deposit insurance coverage rules was another 
alternative considered. Currently, deposit insurance can be obtained 
under different ownership rights and capacities, some of which have 
coverage levels that are set according to complex formulas. Reducing 
the number of rights and capacities or simplifying the coverage rules 
would reduce the costs associated with covered institutions' 
development of the capability to calculate deposit insurance coverage. 
However, most efforts to simplify the deposit insurance coverage rules 
would effectively reduce coverage to depositors at all FDIC insured 
institutions, an approach that would impose a cost on a wider range of 
institutions and bank customers. Further, these complex account types 
only present problems when the FDIC must analyze a significant number 
of those deposit accounts at the same time. The FDIC's established 
methods for dealing with these more complex accounts in smaller and 
mid-sized resolutions include manual processing, a process that could 
take too long in a larger resolution involving a significant number of 
these accounts. Consequently, the FDIC is not pursuing simplification 
of the deposit insurance coverage rules.

IX. Request for Comments

    The FDIC invites comments on all aspects of the proposed rule and 
requests feedback on the specific questions set out below.

A. Scope of Coverage

    The proposed rule, if adopted, would impose requirements on insured 
depository institutions that have two million or more deposit accounts. 
The FDIC has proposed this threshold based on its recent experience 
with actual failures and near-failures. This work indicates that the 
FDIC should first focus on improving its existing systems and processes 
to address the challenges presented by banks below the two million 
account threshold, and then pursue other approaches only if, and to the 
extent that, these efforts prove insufficient. The FDIC's experience 
indicates that a fundamentally different approach is needed to resolve 
large complex institutions. The volume of accounts held by such banks, 
coupled with the complexity typically found in these banks' deposit IT 
systems, necessitates that deposit records be organized in advance of 
failure in a way that facilitates rapid insurance determinations.
     Is the number of deposit accounts the appropriate metric 
for identifying insured depository institutions to be covered by the 
proposed rule's requirements? If not, what should the appropriate 
criteria be?
     Should the deposit account threshold be tiered based on 
the types of accounts offered by an insured depository institution?
     Should other factors or a combination of factors be used 
to determine which insured depository institutions would be subject to 
the requirements?

B. Requirements

    Covered institutions would be required to uniquely identify each 
account holder, each owner of funds on deposit if the accountholder is 
not the owner, and each beneficiary of a trust that has an interest in 
the deposits owned by the trust. The FDIC requests comments on all 
aspects of this proposed requirement. In particular:
     To what extent can covered institutions uniquely identify 
depositors using current systems, procedures, and identifying 
information (such as social

[[Page 10047]]

security numbers or tax identification numbers)?
     What would be the best methods(s) to use for depositor 
identification? Should the FDIC specify the format to be used for 
depositor identification or should this be left to the covered 
institutions to determine?
     How expensive would it be for covered institutions to 
supply a unique identifier for each deposit owner? Is this something 
that covered institutions are considering for internal business 
purposes? If not, how do covered institutions determine common 
ownership for relationship management, cross-selling, risk management 
or other purposes? How long would it take to implement a unique 
depositor identification process? To what extent is the answer to the 
previous question a function of having to run deposit accounts on more 
than one platform?
     To what extent are covered institutions able to identify 
account owners (as opposed to trustees, managers, beneficiaries, etc.) 
from source files being supplied to the FDIC for insurance 
determination purposes? Does this differ by types of accounts; for 
example, checking accounts versus (brokered) CDs?
     Could covered institutions uniquely identify depositors 
within a single legacy data system? Is there an accompanying Customer 
Information File available for each legacy data system? Could the 
covered institutions provide instructions or rules to assist the FDIC 
to integrate depositor records across these legacy data sources?
    Authorities in foreign jurisdictions have implemented similar 
initiatives since the financial crisis in 2008. Some covered 
institutions have branches in those countries.
     If covered institutions are already required to assign a 
unique identifier to each deposit owner in foreign jurisdictions, how 
would covered institutions integrate their efforts to meet those 
requirements with their efforts to meet the proposed rule's 
requirements?
     Could some of the systems development work, such as 
software programming, logic, data warehouse capabilities, be leveraged 
with the proposed U.S. implementation?
     Are there any best practices that should be considered in 
the U.S. proposal related to implementation, testing, or time frames?
    Under the proposed rule, covered institutions would be required to 
identify and separate foreign deposits from domestic deposits. Foreign 
deposits are not insured, but the FDIC, as receiver, would need to 
determine claims of foreign depositors. The proposed rule would require 
foreign and dually-payable deposits to be identified separately from 
the rights and capacities set forth in Appendix A.
     How difficult would it be to do this?
     How many foreign deposit accounts do covered institutions 
have as compared to domestic accounts?
     What is the relative dollar amount of foreign deposits 
versus domestic deposits?
     How long would it take to identify and code foreign 
deposits that are dually payable?
     If a covered institution failed today, approximately how 
long would it take to identify the dually payable foreign deposits in 
the covered institutions' IT systems?
     How would the costs of developing an IT system for all 
deposits be significantly impacted by the inclusion of deposits held in 
branches outside of the United States?
     How would the inclusion of foreign deposits in the 
requirements of the proposed rule impact the covered institution's 
ability to provide timely information on the covered institution's 
insured deposits?

C. Implementation

    The FDIC recognizes that substantial time may be needed to 
implement the requirements described in this NPR and has proposed a 
two-year implementation timetable.
     Are there particular requirements that would take less 
time to implement?
     Are there particular requirements that would take more 
time to implement? If so, which requirements would pose these delays? 
Why?
     Is a two-year time frame reasonable for obtaining the 
information needed to calculate deposit insurance available on all 
accounts? Is a graduated approach, such as 90 percent of all accounts 
within two years, preferable?
     Would the proposed availability of extensions to 
accommodate aspects of compliance that are expected to take longer than 
two years provide sufficient implementation flexibility? If not, why?
    The FDIC recognizes that covered institutions may need substantial 
guidance from the FDIC regarding deposit insurance coverage rules and 
application of those rules in various scenarios.
     The FDIC's regulations and resources concerning deposit 
insurance are available to the public on the FDIC's Web site. These are 
useful tools that covered institutions can use in their efforts to meet 
the proposed rule's requirements.\42\ Are these resources sufficient 
for that purpose?
---------------------------------------------------------------------------

    \42\ See 12 CFR part 330 and material on the FDIC's Web site at 
https://www.fdic.gov/deposit.
---------------------------------------------------------------------------

     Should the FDIC staff be available to assist with the 
initial implementation? If so, what would be the best approach?
     Should a one year check-in be mandatory or optional in 
order for covered institutions to obtain feedback before finalizing 
system enhancements?
     Are the standard FDIC deposit insurance coverage seminars 
and materials available at on the FDIC's Web site sufficient for 
covered institutions to accurately assign all of its deposit accounts 
with an account ownership right and capacity code? If not, how might 
the FDIC assist? Form letters? FDIC Declaration forms? Targeted 
outreach to certain constituencies?

D. Exceptions

    The proposed rule provides an exception from the requirements for 
certain types of deposit accounts.
     What types of deposit accounts do not fit within the 
proposed rule's parameters for exception as presently described, but 
should? Why?
     To what extent do depositors rely for day-to-day funding 
on accounts for which a covered institution could be granted an 
exception from the proposed rule's requirements?
     Could an institution experience a significant cost savings 
if it were able to obtain an exception from the requirements of the 
proposed regulation on the basis that deposit insurance coverage would 
not be calculated for those accounts--such as CDs or IRAs--for several 
business days after the institution's failure?
    In the case of accounts held by agents or custodians, the FDIC 
provides pass-through insurance coverage.\43\ This coverage is not 
available, however, unless certain conditions are satisfied. One of 
these conditions is that information about the actual owners must be 
held by either the insured depository institution or by the agent, 
custodian or other party.\44\ In most cases, the agent or custodian 
holds the necessary information and the insured depository institution 
does not, thus making it impossible to determine deposit insurance 
coverage before that information is obtained. The need to obtain 
information from the agents or custodians delays the determination of 
deposit insurance by the FDIC, which may result in delayed payments of 
insurance or overpayment of insurance.

[[Page 10048]]

At a bank with a large number of pass-through accounts, delays could be 
substantial. The FDIC is proposing that covered institutions may apply 
for and be granted an exception from the basic requirement to collect 
the information needed to determine deposit insurance coverage for 
deposit accounts entitled to pass-through coverage if certain 
conditions are met, namely that the account holder will not provide the 
information, the information is protected from disclosure by law, or 
the information changes so frequently that collecting it is neither 
cost effective nor technologically practicable.
---------------------------------------------------------------------------

    \43\ See 12 CFR 330.7.
    \44\ See 12 CFR 330.5.
---------------------------------------------------------------------------

     In addition to brokered deposits that are reported on the 
Call Report, how many accounts with pass-through coverage do covered 
institutions have (number of accounts and aggregate dollar value)?
     What types of brokered, agent or custodial deposit 
accounts would deposit owners likely need immediate or near-immediate 
access to after failure?
     How difficult would it be for covered institutions to 
maintain current records on beneficial owners of pass-through deposit 
accounts? Are there certain types of pass-through deposit accounts 
where maintaining current records might be relatively easy or 
relatively difficult?
     How difficult would it be for banks to maintain current 
records on beneficial owners of pass-through accounts where the broker 
is an affiliate of the bank?
     What would the challenges and costs be for covered 
institutions to obtain information from agents and custodians regarding 
each principal's or beneficial owner's interest and to update that 
information whenever it changes?
     Could a covered institution or a broker enter into account 
agreements where the institution or broker would be able to assure 
payment on an account on the business day following the failure of the 
institution through the availability of overdraft protection or 
otherwise? If so, would this be a reasonable basis to provide an 
exception for such an account?
     The FDIC's rules for pass-through insurance coverage also 
apply to deposit accounts held by prepaid card companies or similar 
companies. Cardholders might use these cards (and the funds in the 
custodial account) as a substitute for a checking account. In the event 
of the failure of the insured depository institution, the cardholders 
will likely need immediate access to the funds in the custodial account 
to meet their basic financial needs and obligations. Under the proposed 
rule, covered institutions could apply for an exception from the 
obligation to collect the information needed to determine deposit 
insurance coverage for prepaid card accounts as described above. How 
difficult would it be for covered institutions to regularly collect 
current information from prepaid card issuers regarding each 
cardholder's ownership interest?
     Would it be feasible to obtain and maintain the necessary 
depositor information on a significant subset of prepaid card accounts 
such as payroll cards or accounts through which federal benefits are 
paid?
    In the case of revocable and irrevocable trust accounts, the FDIC 
provides ``per beneficiary'' insurance coverage subject to certain 
conditions and limitations.\45\ Informal revocable trust accounts 
(payable-on-death accounts), covered institutions will have information 
about beneficiaries. With respect to formal revocable trust accounts, 
however, information needed to calculate ``per beneficiary'' coverage 
may not be available before obtaining a copy of the trust agreement 
(with information about the number of beneficiaries and the respective 
interests of the beneficiaries) from the depositor. The need to obtain 
and review the trust agreement delays the FDIC's determination of 
insurance. Under the proposed rule, covered institutions could apply 
for an exception from the requirement to collect the information needed 
to determine deposit insurance coverage for trust accounts if certain 
conditions are met, namely that the account holder will not provide the 
information, the information is protected from disclosure by law, or 
the information changes so frequently that collecting it is neither 
cost effective nor technologically practicable.
---------------------------------------------------------------------------

    \45\ See 12 CFR 330.10; 12 CFR 330.13.
---------------------------------------------------------------------------

     How many trust accounts do covered institutions have 
(number and dollar amounts)?
     How many trust accounts are transaction accounts that 
depositors will likely need access on the next business day after 
failure? Is the proposed handling of this problem (through the 
exception request process) reasonable?
     If a covered institution is granted an exception from the 
proposed rule's requirements as to trust accounts, deposit insurance 
would not be paid until all necessary information has been provided to 
the FDIC. How disruptive would denying access to trust accounts after 
failure be?
     How difficult would it be for covered institutions to 
maintain current records on each beneficiary's ownership interest? How 
much information do banks already collect and retain on beneficiaries?
     How difficult would it be for trustees to supply the 
information to banks and keep it current?
     What legal authority do trustees have to withhold 
information from a covered institution about the number of 
beneficiaries and the respective interests of the beneficiaries?
     Are there other reasons trustees would not provide such 
information to a covered institution?
     Would covered institutions or account holders be receptive 
to using the FDIC Declarations for trust accounts? \46\
---------------------------------------------------------------------------

    \46\ Available at https://www.fdic.gov/regulations/laws/FORMS/claims.html.
---------------------------------------------------------------------------

    Special statutory rules apply to the insurance coverage of certain 
types of accounts, including retirement accounts,\47\ employee benefit 
plan accounts \48\ and government accounts.\49\ In some cases, the FDIC 
cannot apply these special statutory rules without obtaining 
information from the depositor, which delays the calculation and 
payment of deposit insurance. Under the proposed rule, covered 
institutions would be required to obtain the information needed by the 
FDIC to make a deposit insurance determination for these types of 
accounts unless the conditions for exception can be met.
---------------------------------------------------------------------------

    \47\ See 12 U.S.C. 1821(a)(3).
    \48\ See 12 U.S.C. 1821(a)(1)(D).
    \49\ See 12 U.S.C. 1821(a)(2).
---------------------------------------------------------------------------

     Would any of these types of deposit accounts fit within 
the parameters for exception? How? Are there any that would not, but 
should?
     These accounts often have characteristics similar to 
accounts with pass-through coverage. The proposed rule would require 
covered institutions to identify deposit accounts by right and 
capacity. Can covered institutions reliably distinguish these special 
statutory accounts from accounts with pass-through insurance coverage 
that belong in other ownership rights and capacities?
     How difficult would it be for banks with a large number of 
deposit accounts to maintain full and up-to-date information on the 
owners of these accounts? How difficult would it be for depositors to 
supply the information and keep it current? For which types of accounts 
would it be relatively easy, or relatively difficult, to maintain 
current information for the purpose of determining deposit insurance 
coverage?

[[Page 10049]]

E. Compliance and Testing

    The proposed rule sets forth a framework for covered institutions 
to demonstrate compliance with the proposed rule's requirements.
     Do the agents have preferences for participating in the 
annual testing by the covered institutions or during the FDIC onsite 
compliance visit? Would masking the beneficiary information alleviate 
concerns about privacy or proprietary information? Could the agents 
estimate the time to submit the files?
     The FDIC staff would consider pulling a sample data set to 
check for completeness and accuracy against the covered institution's 
books and records during the onsite compliance review. Covered 
institutions would receive at least three months advance notice with 
detailed instructions. Would a minimum of three months be sufficient 
for preparation? However, some review could be conducted offsite.

F. Benefits and Costs

    The proposed rule would impose costs on covered institutions, but 
would also provide benefits to depositors, covered institutions and the 
banking system.
     To what extent would the proposed rule change insured 
depository institutions' deposit operations and IT systems?
     What would the costs associated with these changes be? 
Specifically, what would be the incremental cost of--
    [cir] Obtaining and maintaining the information needed for the FDIC 
to make a deposit insurance determination that a covered institution 
does not already have?
    [cir] Adapting its IT system to calculate the insured and uninsured 
amounts for all deposit accounts, other than accounts for which the 
covered institution would be granted an exception, within 24 hours 
after failure?
     In what ways could the implementation and maintenance 
costs be mitigated while still meeting the FDIC's objective of timely 
deposit insurance determinations?
     How could covered institutions' IT capabilities best be 
used to minimize the cost of the requirements?
     Banks have operational schedules for synchronizing systems 
for reporting at month-end, quarter-end and year-end. How disruptive or 
expensive would off-period reporting be? How long would it take to 
develop the ability for off-period reporting?

X. Regulatory Process

A. Paperwork Reduction Act

    The FDIC has determined that this proposed rule involves a 
collection of information pursuant to the provisions of the Paperwork 
Reduction Act of 1995 (the ``PRA'') (44 U.S.C. 3501 et seq.). In 
accordance with the PRA, the FDIC may not conduct or sponsor, and an 
organization is not required to respond to, this information collection 
unless the information collection displays a currently valid OMB 
control number. The FDIC will request approval from the OMB for this 
proposed information collection. OMB will assign an OMB control number.
    OMB Number: 3064-AE33.
    Frequency of Response: On occasion.
    Affected Public: Insured depository institutions having at least 
two million deposit accounts.
    Implementation Burden:
    Estimated number of respondents: 36.
    Estimated time per response: 10,300 to 747,700 hours per 
respondent.
    Estimated total implementation burden: 3.2 million hours.
    Ongoing Burden:
    Estimated number of respondents: 36.
    Estimated time per response: 1,300 to 1,700 hours per respondent.
    Estimated total ongoing annual burden: 53,500 hours.
Background/General Description of Collection
    The proposed rule would require insured depository institutions 
that have two million or more deposit accounts (1) to maintain complete 
and accurate data on each depositor's ownership interest by right and 
capacity for all of the bank's deposit accounts, and (2) to develop and 
maintain the capability to calculate the insured and uninsured amounts 
for each deposit owner by owner right and capacity for all deposit 
accounts to be used by the FDIC to determine deposit insurance coverage 
in the event of failure. These requirements also must be supported by 
policies and procedures, as well as notification of individuals 
responsible for the systems. Further, the requirements will involve 
ongoing costs for testing and general maintenance and upkeep of the 
functionality. Estimates of both initial implementation and ongoing 
costs are provided.
    Compliance with this proposed rule would involve certain reporting 
requirements.
     Not later than ten business days after the effective date 
of the final rule or after becoming a covered institution, a covered 
institution shall designate a point of contact responsible for 
implementing the requirements of this rulemaking.
     Covered institutions would be required to certify annually 
that their IT systems can calculate deposit insurance coverage 
accurately and completely within the time frame set forth in the 
proposed rule. This certification shall include all agent account 
files, but may be masked for testing purposes to maintain confidential 
or proprietary information. A covered institution shall provide the 
appropriate assistance to the FDIC when testing the IT system.
     Also on an annual basis, covered institutions shall 
complete a deposit insurance coverage summary report (as detailed in 
VI. The Proposed Rule) and file an attestation letter signed by the 
covered institution's Board of Directors. The letter shall confirm that 
the covered institution has implemented and successfully tested its IT 
system for compliance.
     If a covered institution experiences a significant change 
in its deposit taking operations, it may be required to demonstrate 
that its IT system can calculate deposit insurance coverage accurately 
and completely more frequently than annually.
Estimated Costs
    Comments on the ANPR provided little indication of implementation 
and ongoing costs for covered institutions. However, the FDIC conducted 
an analysis to estimate the various costs for covered institutions in 
the event that the requirements are adopted as proposed. The total 
projected cost of the proposed rule for covered institutions amounts to 
just under $328 million or approximately 3.2 million total labor hours 
over two years. The cost components of the estimate include: (1) 
Implementing the deposit insurance calculation; (2) legacy data 
cleanup; (3) data extraction; (4) data aggregation; (5) data 
standardization; (6) data quality control and compliance; (7) data 
reporting; and (8) ongoing operations. Estimates of total costs and 
labor hours for each component are calculated by assuming a standard 
mix of skilled labor tasks, industry standard hourly compensation 
estimates, and labor productivity. It is assumed that a combination of 
in-house and external services is used for legacy data clean up in 
proportions of 40 and 60 percent respectively. Finally, the estimated 
costs for each institution are adjusted according to the complexity of 
their operations and systems.
Implementation Costs
    Implementation costs are expected to vary widely among the covered

[[Page 10050]]

institutions. There are considerable differences in the complexity and 
scope of the deposit operations across covered institutions. Some 
covered institutions only slightly exceed the two million deposit 
account threshold while others greatly exceed that number. In addition, 
some covered institutions-- most notably the largest--have proprietary 
deposit systems likely requiring an in-house, custom solution for the 
proposed requirements while others may 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.
    The implementation costs for covered institutions are estimated to 
total just over $319 million and require approximately 3.1 million 
labor hours. The implementation costs cover: (1) Making the deposit 
insurance calculation; (2) legacy data cleanup; (3) data extraction; 
(4) data aggregation; (5) data standardization; and (6) data quality 
control and compliance. Costs for each covered institution are 
estimated to range from $1.5 million to $100 million and require 10,300 
to 747,700 labor hours.
Ongoing Reporting Costs
    Ongoing costs for reporting, testing, maintenance and other 
periodic items are estimated to range between $213,000 and $270,000 
annually for covered institutions. Approximately, 1,300 to 1,700 hours 
are estimated to be required for covered institutions to meet these 
requirements.
Comments
    In addition to the questions raised elsewhere in this NPR, comment 
is solicited on: (1) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the FDIC, 
including whether the information will have practical utility; (2) the 
accuracy of the FDIC'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 ``Recordkeeping for Timely 
Deposit Insurance Determination, 3064--AE33.'' Comments may be 
submitted by any of the following methods:
     Agency Web site: https://www.fdic.gov/regulations/laws/federal. Follow instructions for submitting comments on the Agency Web 
site.
     Email: [email protected]. Include ``Recordkeeping for 
Timely Deposit Insurance Determination, 3064--AE33'' 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).
     Public Inspection: All PRA-related comments received will 
be posted without change, including any personal information provided, 
to https://www.fdic.gov/regulations/laws/federal.
     A copy of the PRA-related 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.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 through 612, requires 
an agency to provide an initial regulatory flexibility analysis with a 
proposed rule, unless the agency certifies that the rule would not have 
a significant economic impact on a substantial number of small business 
entities. 5 U.S.C. 603 through 605. The FDIC hereby certifies that the 
Proposed Rule would not have a significant economic impact on a 
substantial number of small business entities, as that term applies to 
insured depository institutions.

C. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 113 
Stat. 12338, 1471) requires the Federal banking agencies to use plain 
language in all proposed and final rules published after January 1, 
2000. The FDIC has sought to present the proposed rule in a simple and 
straightforward manner.

Text of the Proposed Rule

Federal Deposit Insurance Corporation

12 CFR Chapter III

List of Subjects in 12 CFR Part 370

    Bank deposit insurance, Banks, Banking, Reporting and recordkeeping 
requirements, Savings and Loan associations.

Authority and Issuance

    For the reasons stated above, the Board of Directors of the Federal 
Deposit Insurance Corporation proposes to add part 370 to title 12 of 
the Code of Federal Regulations to read as follows:

PART 370--RECORDKEEPING FOR TIMELY DEPOSIT INSURANCE DETERMINATION

Sec.
370.1 Purpose and scope.
370.2 Definitions.
370.3 Requirements.
370.4 Limitations.
370.5 Accelerated implementation.
370.6 Compliance.
370.7 Enforcement.
Appendix A to Part 370--Account Ownership Right and Capacity Codes
Appendix B to Part 370--Output Files

    Authority:  12 U.S.C. 1819 (Tenth), 1821(f)(1), 1822(c), 
1823(c)(4).


Sec.  370.1  Purpose and scope.

    This part requires the information technology system of a ``covered 
institution'' (defined in Sec.  370.2(a)) to be capable of calculating 
the amount of deposit insurance coverage available for each deposit 
account in the event of the covered institution's failure. The purpose 
of this part is to improve the FDIC's ability to fulfill its legal 
mandates to pay deposit insurance as soon as possible after failure and 
to resolve a covered institution at the least cost to the Deposit 
Insurance Fund.


Sec.  370.2  Definitions.

    (a) A covered institution is an insured depository institution 
which, based on its Reports of Condition and Income filed with the 
appropriate federal banking agency, has 2 million or more deposit 
accounts during the two consecutive quarters preceding the effective 
date of this part or thereafter.
    (b) Deposit has the same meaning as provided under section 3(l) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(l)).
    (c) Ownership rights and capacities are set forth in 12 CFR part 
330.
    (d) Standard maximum deposit insurance amount (or ``SMDIA'') has 
the

[[Page 10051]]

same meaning as provided pursuant to section 11(a)(1)(E) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(a)(1)(E)) and 12 CFR 330.1(o).
    (e) Unique identifier means a number associated with an individual 
or entity that is used by a covered institution to monitor its 
relationship with only that individual or entity. A unique identifier 
could be the social security number, taxpayer identification number, or 
other government-issued identification number of an individual or 
entity so long as a covered institution consistently and continuously 
uses only that number as the unique identifier.


Sec.  370.3  Requirements.

    (a) Notwithstanding 12 CFR 330.5(b)(2) and (3), a covered 
institution must obtain from each account holder and maintain in its 
records the information necessary to comply with this section unless 
otherwise permitted in accordance with Sec.  370.4.
    (b) Point of contact. Not later than ten business days after either 
[EFFECTIVE DATE OF THE FINAL RULE] or becoming a covered institution, a 
covered institution shall designate a point of contact responsible for 
implementing the requirements of this part. The identity of that 
designee shall be sent, in writing, to the Office of the Director, 
Division of Resolutions and Receiverships, Federal Deposit Insurance 
Corporation, 550 17th Street NW., Washington, DC 20429-0002.
    (c) Unique identifier. Within two years after either the effective 
date of this part or becoming a covered institution, whichever is 
later, the covered institution must assign a unique identifier to each:
    (1) Account holder;
    (2) Owner, if the owner of the funds on deposit is not the 
accountholder; and
    (3) Beneficiary, if the funds on deposit are held in trust.
    (d) Assignment of account ownership right and capacity code. Within 
two years after either the [EFFECTIVE DATE OF THE FINAL RULE] or 
becoming a covered institution, whichever is later, the covered 
institution must assign one of the account ownership right and capacity 
codes listed and described in appendix A to part 370 to each of its 
deposit accounts.
    (e) Deposit insurance coverage calculation. Within two years after 
either the effective date of this part or becoming a covered 
institution, whichever is later, the covered institution's information 
technology system shall be capable of accurately calculating the 
deposit insurance coverage available for each owner and generating a 
record reflecting this deposit insurance coverage calculation upon 
request by the FDIC. Each record shall be in the data format and layout 
specified in appendix B to part 370 and must include:
    (1) The account holder's name or, if the owner of the funds on 
deposit is not the accountholder, the owner's name;
    (2) The account holder's unique identifier or, if the owner of the 
funds on deposit is not the account holder, the owner's unique 
identifier;
    (3) The balance of each of the account holder's deposit accounts 
within the applicable ownership right and capacity or, if the owner of 
the funds on deposit is not the accountholder, the balance of the 
owner's share of deposit accounts within the applicable ownership right 
and capacity;
    (4) The aggregated balance of the account holder's deposits within 
the applicable ownership right and capacity or, if the owner of the 
funds on deposit is not the accountholder, the aggregated balance of 
each owner's deposits within the applicable ownership right and 
capacity;
    (5) The amount of the aggregated balance in paragraph (e)(4) of 
this section that is insured; and
    (6) The amount of the aggregated balance in paragraph (e)(4) of 
this section that is uninsured.
    (f) Holds pending FDIC's determination. The covered institution's 
information technology system shall, in the event of the covered 
institution's failure, be capable of placing an effective restriction 
on access to all of the funds in a deposit account until the FDIC, 
using the covered institution's IT system to calculate deposit 
insurance coverage, has made the deposit insurance coverage 
determination for that account.
    (g) Process uninsured. The covered institution's information 
technology system must be capable of debiting from an owner's deposit 
accounts the amount of the aggregated balance of the owner's deposits 
within the applicable ownership right and capacity that is uninsured as 
calculated pursuant to paragraph (d) of this section.
    (h) Deposit insurance calculation time frame. The covered 
institution's information technology system shall be capable of 
completing the deposit insurance coverage calculation set forth in 
paragraphs (d) through (f) of this section within 24 hours after the 
FDIC's appointment as receiver for the covered institution.


Sec.  370.4  Limitations.

    A covered institution may apply for relief from the requirements of 
Sec.  370.3(a) as described in this section. The FDIC will consider all 
applications on a case-by-case basis in light of the objectives of this 
part. Applications should be submitted in writing to: Office of the 
Director, Division of Resolutions and Receiverships, Federal Deposit 
Insurance Corporation, 550 17th Street NW., Washington, DC 20429-0002.
    (a) Exemptions. A covered institution may apply to the FDIC for an 
exemption from this part if it demonstrates that it has not and will 
not take deposits from any account holder which, when aggregated, would 
exceed the SMDIA for any owner of the funds on deposit.
    (b) Extensions. (1) A covered institution may apply to the FDIC for 
an extension of the time frames set forth in Sec.  370.3 if the covered 
institution will require additional time to:
    (i) Complete the development of additional capabilities in its 
information technology system to complete the requirements set forth in 
Sec.  370.3; or
    (ii) Obtain the information necessary to comply with Sec.  370.3 
from the account holder.
    (2) The application shall provide a summarized description of the 
accounts affected including, at a minimum, the number of accounts 
affected, the amounts on deposit in affected accounts, the amount of 
additional time needed, and other information needed to justify the 
request.
    (c) Exceptions. (1) A covered institution may apply to the FDIC for 
an exception from the requirements of Sec.  370.3(a) if the covered 
institution:
    (i) Does not maintain the information needed to complete the 
requirements set forth in Sec.  370.3(a), has requested such 
information from the account holder and certifies that the account 
holder has refused to provide such information or has not responded to 
the covered institution's request for information;
    (ii) Provides a reasoned legal opinion that the information needed 
to complete the requirements set forth in Sec.  370.3(a) for accounts 
of a certain type is protected from disclosure by law; or
    (iii) Provides an explanation of how the information needed to 
complete the requirements set forth in Sec.  370.3(a) changes 
frequently and updating the information on a continual basis is neither 
cost effective nor technologically practicable.
    (2) The covered institution's application shall provide a copy of 
the information request letter sent to the account holder(s) and a 
summarized description of the accounts affected that includes, at a 
minimum, the number of accounts affected, the amounts on deposit in 
affected accounts, and any

[[Page 10052]]

other information needed to justify the request.
    (d) The FDIC's grant of a covered institution's application may be 
conditional or time-limited.
    (e) Notwithstanding Sec.  370.7, a covered institution will not be 
in violation of this part during the pendency of an application for an 
extension, exception or exemption submitted pursuant to this section.
    (f) If a covered institution's application for an exception or 
extension is granted by the FDIC, the covered institution shall:
    (1) Ensure that its information technology system is, in the event 
of the covered institution's failure, capable of placing an effective 
restriction on access to all funds in deposit accounts identified in 
the request for exception or extension;
    (2) Ensure that its information technology system is capable of 
creating files in the format and layout specified in Appendix B listing 
all accounts for which it is granted an exception or an extension under 
this section;
    (3) Ensure that its information technology system is, in the event 
of the covered institution's failure, capable of receiving additional 
information collected by the FDIC after failure and repeatedly 
performing the requirements set forth in Sec.  370.3; and
    (4) In the case of an exception, disclose to the account holder 
reported with the application that in the event of the covered 
institution's failure, payment of deposit insurance may be delayed and 
items may be returned unpaid until all of the information required to 
make a deposit insurance determination has been provided to the FDIC.
    (g) Release from this part. A covered institution may apply to the 
FDIC for a release from this part if, based on its Reports of Condition 
and Income filed with the appropriate federal banking agency, it has 
less than two million deposit accounts during any three consecutive 
quarters after becoming a covered institution.
    (h) Release from Sec.  360.9 of this chapter. A covered institution 
may apply to the FDIC for a release from the provisional hold and 
standard data format requirements of Sec.  360.9 of this chapter. The 
FDIC's grant of such a release will be based upon the covered 
institution's particular facts and circumstances as well as its ability 
to demonstrate compliance with the requirements set forth in Sec.  
370.3.


Sec.  370.5  Accelerated implementation.

    (a) On a case-by-case basis, the FDIC may accelerate, upon notice, 
the implementation time frame for all or part of the requirements of 
this part for a covered institution that:
    (1) Has a composite rating of 3, 4, or 5 under the Uniform 
Financial Institution's Rating System (CAMELS rating), or in the case 
of an insured branch of a foreign bank, an equivalent rating;
    (2) Is undercapitalized, as defined under the prompt corrective 
action provisions of 12 CFR part 325; or
    (3) Is determined by the appropriate federal banking agency or the 
FDIC in consultation with the appropriate federal banking agency to be 
experiencing a significant deterioration of capital or significant 
funding difficulties or liquidity stress, notwithstanding the composite 
rating of the covered institution by its appropriate federal banking 
agency in its most recent report of examination.
    (b) In implementing this section, the FDIC must consult with the 
covered institution's appropriate federal banking agency and consider 
the: complexity of the covered institution's deposit system and 
operations, extent of the covered institution's asset quality 
difficulties, volatility of the institution's funding sources, expected 
near-term changes in the covered institution's capital levels, and 
other relevant factors appropriate for the FDIC to consider in its 
roles as insurer of the covered institution.


Sec.  370.6  Compliance.

    (a) Annual certification. (1) Beginning on March 31 two years after 
[EFFECTIVE DATE OF THE FINAL RULE] and annually thereafter, a covered 
institution shall complete a deposit insurance coverage summary report 
and file an attestation letter signed by the covered institution's 
Board of Directors. The covered institution's annual certification 
shall pertain to the preceding calendar year. The letter shall confirm 
that the covered institution has implemented and successfully tested 
its information technology system for compliance with this part. The 
letter shall describe the effects of all approved or pending 
applications for exception or extension on the ability to determine 
deposit insurance coverage using the covered institution's information 
technology system.
    (2) The deposit insurance coverage summary report shall include:
    (i) The number of depositors, number of deposit accounts and dollar 
amount of deposits by ownership right and capacity;
    (ii) The total number of fully-insured deposit accounts and the 
dollar amount of deposits in those accounts;
    (iii) The total number of deposit accounts containing uninsured 
amounts and the total dollar amount of insured and uninsured amounts in 
those accounts;
    (iv) The total number of deposit accounts and the dollar amount of 
deposits in accounts subject to an approved or pending application for 
exception or extension under Sec.  370.4; and
    (v) A description of any substantive change to the covered 
institution's information technology system or deposit taking 
operations since the prior annual certification.
    (3) If a covered institution experiences a significant change in 
its deposit taking operations, the FDIC may require it to demonstrate 
that its information technology system can determine deposit insurance 
coverage accurately and completely more frequently than annually.
    (b) FDIC testing. (1) The FDIC will conduct periodic tests of 
covered institutions' compliance with this part. These tests will begin 
on or after March 31 two years after [EFFECTIVE DATE OF THE FINAL RULE] 
and will occur on an annual or less frequent basis, unless there is a 
material change to the covered institution's IT system, deposit-taking 
operations or financial condition.
    (2) A covered institution shall provide the appropriate assistance 
to the FDIC as the FDIC tests the information technology system's 
capability to meet the requirements set forth in this part.
    (3) The FDIC will provide system and data integrity testing 
instructions to covered institutions through the issuance of subsequent 
procedures or guidelines.


Sec.  370.7  Enforcement.

    Violating the terms or requirements set forth in this part 
constitutes a violation of a regulation and subjects the covered 
institution to enforcement actions under section 8 of the FDI Act (12 
U.S.C. 1818).

Appendix A to Part 370--Account Ownership Right and Capacity Codes

    A covered institution must use the codes defined below when 
assigning account ownership right and capacity codes.

[[Page 10053]]



------------------------------------------------------------------------
           Code                              Definition
------------------------------------------------------------------------
1. SGL...................  Single Account (12 CFR 330.6): An account
                            owned by one person with no testamentary or
                            ``payable-on-death'' beneficiaries. It
                            includes individual accounts, sole
                            proprietorship accounts, single-name
                            accounts containing community property
                            funds, and accounts of a decedent and
                            accounts held by executors or administrators
                            of a decedent's estate.
2. JNT...................  Joint Account (12 CFR 330.9): An account
                            owned by two or more persons with no
                            testamentary or ``payable-on-death''
                            beneficiaries (other than surviving co-
                            owners). An account does not qualify as a
                            joint account unless: (1) All co-owners are
                            living persons; (2) each co-owner has
                            personally signed a deposit account
                            signature card (except that the signature
                            requirement does not apply to certificates
                            of deposit, to any deposit obligation
                            evidenced by a negotiable instrument, or to
                            any account maintained on behalf of the co-
                            owners by an agent or custodian); and (3)
                            each co-owner possesses withdrawal rights on
                            the same basis.
3. REV...................  Revocable Trust Account (12 CFR 330.10): An
                            account owned by one or more persons that
                            evidences an intention that, upon the death
                            of the owner(s), the funds shall belong to
                            one or more beneficiaries. There are two
                            types of revocable trust accounts:
                              (a) Payable-on Death Account (Informal
                               Revocable Trust Account): An account
                               owned by one or more persons with one or
                               more testamentary or ``payable-on-death''
                               beneficiaries.
                              (b) Revocable Living Trust Account (Formal
                               Revocable Trust Account): An account in
                               the name of a formal revocable ``living
                               trust'' with one or more grantors and one
                               or more testamentary beneficiaries.
4. IRR...................  Irrevocable Trust Account (12 CFR 330.13): An
                            account in the name of an irrevocable trust
                            (unless the trustee is an insured depository
                            institution).
5. IRA...................  Individual Retirement Account or Certain
                            Other Retirement Accounts (12 CFR 330.14 (b)
                            and (c)): An individual retirement account
                            described in section 408(a) of the Internal
                            Revenue Code (26 U.S.C. 408(a)); or an
                            account of a deferred compensation plan
                            described in section 457 of the Internal
                            Revenue Code (26 U.S.C. 457); or an account
                            of an individual account plan as defined in
                            section 3(34) of the Employee Retirement
                            Income Security Act (ERISA) (29 U.S.C. 1002)
                            or a plan described in section 401(d) of the
                            Internal Revenue Code (26 U.S.C. 401(d)), to
                            the extent that participants under such plan
                            have the right to direct the investment of
                            assets held in individual accounts
                            maintained on their behalf by the plan.
6. EBP...................  Employee Benefit Plan Account (12 CFR
                            330.14): An account of an employee benefit
                            plan as defined in section 3(3) of the
                            Employee Retirement Income Security Act
                            (ERISA) (29 U.S.C. 1002), including any plan
                            described in section 401(d) of the Internal
                            Revenue Code (26 U.S.C. 401(d)), but not
                            including any account classified as an
                            Individual Retirement Account or Certain
                            Other Retirement Account.
7. BUS...................  Business/Organization Account (12 CFR
                            330.11): An account of an organization
                            engaged in an `independent activity' (as
                            defined in 12 CFR 330.1(g)), but not an
                            account of a sole proprietorship.
                           This category includes:
                              (a) Corporation Account: An account owned
                               by a corporation.
                              (b) Partnership Account: An account owned
                               by a partnership.
                              (c) Unincorporated Association Account: An
                               account owned by an unincorporated
                               association (i.e., an account owned by an
                               association of two or more persons formed
                               for some religious, educational,
                               charitable, social or other noncommercial
                               purpose).
8. GOV1..................  Government Account (12 CFR 330.15): All time
                            and savings deposit accounts of the United
                            States and all time and savings deposit
                            accounts of a state, county, municipality or
                            political subdivision depositing funds in an
                            insured depository institution in the state
                            comprising the public unit or wherein the
                            public unit is located (including any
                            insured depository institution having a
                            branch in said state).
9. GOV2..................  Government Account (12 CFR 330.15): All
                            demand deposit accounts of the United States
                            and all demand deposit accounts of a state,
                            county, municipality or political
                            subdivision depositing funds in an insured
                            depository institution in the state
                            comprising the public unit or wherein the
                            public unit is located (including any
                            insured depository institution having a
                            branch in said state).
10. GOV3.................  Government Account (12 CFR 330.15): All
                            deposits, regardless of whether they are
                            time, savings or demand deposit accounts of
                            a state, county, municipality or political
                            subdivision depositing funds in an insured
                            depository institution outside of the state
                            comprising the public unit or wherein the
                            public unit is located.
11. MSA..................  Mortgage Servicing Account (12 CFR 330.7(d)):
                            An account held by a mortgage servicer,
                            funded by payments by mortgagors of
                            principal and interest or taxes and
                            insurance premiums.
12. PBA..................  Public Bond Accounts (12 CFR 330.15(c)): An
                            account consisting of funds held by an
                            officer, agent or employee of a public unit
                            for the purpose of discharging a debt owed
                            to the holders of notes or bonds issued by
                            the public unit.
13. DIT..................  IDI as trustee of irrevocable trust accounts
                            (12 CFR 330.12): ``Trust funds'' (as defined
                            in 12 CFR 330.1(q)) account held by an
                            insured depository institution as trustee of
                            an irrevocable trust.
14. ANC..................  Annuity Contract Accounts (12 CFR 330.8):
                            Funds held by an insurance company or other
                            corporation in a deposit account for the
                            sole purpose of funding life insurance or
                            annuity contracts and any benefits
                            incidental to such contracts.
15. BIA..................  Custodian accounts for American Indians (12
                            CFR 330.7(e)): Funds deposited by the Bureau
                            of Indian Affairs of the United States
                            Department of the Interior (the ``BIA'') on
                            behalf of American Indians pursuant to 25
                            U.S.C. 162(a), or by any other disbursing
                            agent of the United States on behalf of
                            American Indians pursuant to similar
                            authority, in an insured depository
                            institution.
16. DOE..................  IDI Accounts under Department of Energy
                            Program: Funds deposited by an insured
                            depository institution pursuant to the Bank
                            Deposit Financial Assistance Program of the
                            Department of Energy.
------------------------------------------------------------------------

Appendix B--Output Files

    The output files will include the data necessary for the FDIC to 
determine the deposit insurance coverage in a resolution. A covered 
institution must have the capability to prepare and maintain the 
files detailed below. These files must be prepared in successive 
iterations as the covered institution receives additional data from 
external sources necessary to complete any pending deposit insurance 
calculations. The unique identifier is required in all four files to 
link the depositor information. All files are pipe delimited. Do not 
pad leading and trailing spacing or zeros for the data fields.

A. Customer File

    The Customer file will be used by the FDIC to identify the 
depositor. One record represents one unique depositor. The data 
elements will include:

[[Page 10054]]



                                      Table A1--Customer File Data Elements
----------------------------------------------------------------------------------------------------------------
            Field name                               Description                               Format
----------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID...................  Unique identifier. In most instances, this     Character (25).
                                     will be the tax identification number
                                     maintained on the account. In the rare
                                     instances where a tax identification number
                                     is not available the IDI should assign a
                                     number that is sufficiently distinct in
                                     composition that it will not be confused
                                     with a taxpayer identification number.
                                    For consumer accounts, typically, this would
                                     be the primary account holder's social
                                     security number (``SSN''). For business
                                     accounts it would be the federal tax
                                     identification number (``TIN'').
2. CS_First_Name..................  Customer first name. Use only for              Character (50).
                                     individuals, not for businesses or companies.
3. CS_Middle_Name.................  Customer middle name. Use only for             Character (50).
                                     individuals, not for businesses or companies.
4. CS_Last_Name...................  Customer last name or company name...........  Character (50).
5. CS_Name_Suffix.................  Customer suffix such as ``Jr''...............  Character (10).
6. CS_Street_Add_Ln1..............  Street address line 1. The current account     Character (100).
                                     statement mailing address of record.
7. CS_Street_Add_Ln2..............  Street address line 2. If available, the       Character (100)
                                     second address line.
8. CS_Street_Add_Ln3..............  Street address line 3. If available, the       Character (100).
                                     third address line.
9. CS_City........................  The city associated with the permanent legal   Character (50).
                                     address.
10. CS_State......................  The state abbreviation associated with the     Character (2).
                                     permanent legal address.
11. CS_ZIP........................  The U.S. Postal Service ZIP+4 code associated  Character (10).
                                     with the permanent legal address.
12. CS_Country....................  The country associated with the mailing        Character (50).
                                     address.
                                    Provide the country name or the standard IRS
                                     country code.
13. CS_Telephone..................  Customer telephone number. The telephone       Character (20).
                                     number on record for the customer.
14. CS_Email......................  The email address on record for the customer.  Character (50).
----------------------------------------------------------------------------------------------------------------

B. Account File

    The Account file contains the deposit ownership right and 
capacity information including allocated balances, and insured and 
uninsured amounts. Each customer may have multiple records within 
each account ownership category (right and capacity) if the customer 
has multiple accounts in an insurance category. The balances are in 
U.S. dollars. The Account file is linked to the Customer file by the 
CS_Unique_ID. The data elements will include:

                                      Table A2--Account File Data Elements
----------------------------------------------------------------------------------------------------------------
            Field name                               Description                               Format
----------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID...................  Unique identifier. In most instances, this     Character (25).
                                     will be the tax identification number
                                     maintained on the account. In the rare
                                     instances where a tax identification number
                                     is not available the IDI should assign a
                                     number that is sufficiently distinct in
                                     composition that it will not be confused
                                     with a taxpayer identification number.
                                    For consumer accounts, typically, this would
                                     be the primary account holder's social
                                     security number (``SSN''). For business
                                     accounts it would be the federal tax
                                     identification number (``TIN'').
2. DP_Acct_Identifier.............  Deposit account identifier. The primary field  Character (100).
                                     used to identify a deposit account.
                                    The account identifier may be composed of
                                     more than one physical data element to
                                     uniquely identify a deposit account.
3. DP_Right_Capacity..............  Account ownership categories. Additional       Character (4).
                                     information is provided in section 7.
                                    -- SGL--Single accounts......................
                                    --JNT--Joint accounts........................
                                    --REV--Revocable trust accounts..............
                                    --IRR--Irrevocable trust accounts............
                                    --IRA--Certain retirement accounts...........
                                    --EBP--Employee benefit plan accounts........
                                    --BUS--Business/Organization accounts........
                                    --GOV1, GOV2, GOV3--Government accounts
                                     (public unit accounts).
                                    --MSA--Mortgage servicing accounts for
                                     principal and interest payments.
                                    --DIT--Accounts held by a depository
                                     institution as the trustee of an irrevocable
                                     trust.
                                    --ANC--Annuity contract accounts.............
                                    --PBA--Public bond accounts..................
                                    --BIA--Custodian accounts for American
                                     Indians.
                                    --DOE--Accounts of an IDI pursuant to the
                                     Bank Deposit Financial Assistance Program of
                                     the Department of Energy.
4. DP_Prod_Cat....................  Product category or classification...........  Character (3).
                                    --DDA--Non-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.
5. DP_Allocated_Amt...............  The current balance in the account at the end  Decimal (14,2).
                                     of business on the effective date of the
                                     file, allocated to a specific owner in that
                                     insurance category.
                                    For JNT accounts, this is a calculated field
                                     that represents the allocated amount to each
                                     owner in JNT category.
                                    For REV accounts, this is a calculated field
                                     that represents the allocated amount to each
                                     owner-beneficiary in REV category.

[[Page 10055]]

 
                                    For other accounts with only owner, this is
                                     the account current balance.
                                    This balance should not be reduced by float
                                     or holds. For CDs and time deposits, the
                                     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).
6. DP_Acc_Int.....................  Accrued interest allocated similarly as data   Decimal (14,2).
                                     field #5 DP_Allocated_Amt.
                                    The amount of interest that has been earned
                                     but not yet paid to the account as of the
                                     date of the file.
7. DP_Total_PI....................  Total amount adding #5 DP_Allocated_Amt and    Decimal (14,2).
                                     #6 DP_Acc_Int.
8. DP_Hold_Amount.................  Bank hold amount on the account..............  Decimal (14,2).
                                    The available balance of the account is
                                     reduced by the hold amount. It has no effect
                                     on current balance (ledger balance).
9. Insured_Amount.................  The insured amount of the account in dollars.  Decimal (14,2).
10. Uninsured_Amount..............  The uninsured amount of the account in         Decimal (14,2).
                                     dollars.
----------------------------------------------------------------------------------------------------------------

C. Beneficiary File

    The Beneficiary file will be used by the FDIC to identify the 
beneficiaries for each account and account owner. One record 
represents one unique beneficiary. The Beneficiary file is linked to 
the Account file by CS_Unique_ID and DP_Acct_Identifier. The data 
elements will include:

                                    Table A3--Beneficiary File Data Elements
----------------------------------------------------------------------------------------------------------------
            Field name                               Description                               Format
----------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID...................  Unique identifier. In most instances, this     Character (25).
                                     will be the tax identification number
                                     maintained on the account. In the rare
                                     instances where a tax identification number
                                     is not available the IDI should assign a
                                     number that is sufficiently distinct in
                                     composition that it will not be confused
                                     with a taxpayer identification number.
                                    For consumer accounts, typically, this would
                                     be the primary account holder's social
                                     security number (``SSN''). For business
                                     accounts it would be the federal tax
                                     identification number (``TIN'').
2. DP_Acct_Identifier.............  Deposit account identifier. The primary field  Character (100).
                                     used to identify a deposit account.
                                    The account identifier may be composed of
                                     more than one physical data element to
                                     uniquely identify a deposit account.
3. DP_Right_Capacity..............  Account ownership categories applicable to     Character (4).
                                     have beneficiaries.
                                    --REV--Revocable trust accounts..............
                                    --IRR--Irrevocable trust accounts............
4. CS_Bene_ID.....................  Unique identifier for the beneficiary. In      Character (25).
                                     most instances, this will be the tax
                                     identification number maintained for the
                                     beneficiary. In the rare instances where a
                                     tax identification number is not available
                                     the IDI should assign a number that is
                                     sufficiently distinct in composition that it
                                     will not be confused with a taxpayer
                                     identification number.
5. CS_Bene_Name...................  Beneficiary name.............................  Character (100).
----------------------------------------------------------------------------------------------------------------

D. Pending File

    The Pending file contains the information needed for the FDIC to 
contact the owner or agent requesting additional information to 
complete the deposit insurance calculation. Each record represents a 
deposit account.

                                      Table A4--Pending File Data Elements
----------------------------------------------------------------------------------------------------------------
            Field name                               Description                               Format
----------------------------------------------------------------------------------------------------------------
1. CS_Unique_ID...................  Unique identifier. In most instances, this     Character (25).
                                     will be the tax identification number
                                     maintained on the account. In the rare
                                     instances where a tax identification number
                                     is not available, the covered institution
                                     should assign a number that is sufficiently
                                     distinct in composition that it will not be
                                     confused with a taxpayer identification
                                     number.
                                    For consumer accounts, typically, this would
                                     be the primary account holder's social
                                     security number (``SSN''). For business
                                     accounts it would be the federal tax
                                     identification number (``TIN'').
2. DP_Acct_Identifier.............  Deposit account identifier. The primary field  .............................
                                     used to identify a deposit account.
                                    The account identifier may be composed of
                                     more than one physical data element to
                                     identify a deposit account.
3. DP_Acct_Title..................  Account title line. Account styling or title   Character (100).
                                     of the account. This should be how the
                                     account is titled on the signature card or
                                     certificate of deposit.
                                    Data in this field can be used to identify
                                     the owner(s) and beneficiaries of the
                                     account. It is the statement name or account
                                     name to be used to issue checks or for the
                                     uninsured title.
4. CS_Street_Add_Ln1..............  Street address line 1. The current account     Character (100).
                                     statement mailing address of record.
5. CS_Street_Add_Ln2..............  Street address line 2. If available, the       Character (100).
                                     second address line.
6. CS_Street_Add_Ln3..............  Street address line 3. If available, the       Character (100).
                                     third address line.
7. CS_City........................  The city associated with the permanent legal   Character (50).
                                     address.

[[Page 10056]]

 
8. CS_State.......................  The state abbreviation associated with the     Character (2).
                                     permanent legal address.
9. CS_ZIP.........................  The U.S. Postal Service ZIP+4 code associated  Character (10).
                                     with the permanent legal address.
10. CS_Country....................  The country associated with the mailing        Character (50).
                                     address.
                                    Provide the country name or the standard IRS
                                     country code.
11. CS_Telephone..................  Customer telephone number. The telephone       Character (20).
                                     number on record for the customer.
12. CS_Email......................  The email address on record for the customer.  Character (50).
13. DP_Cur_Bal....................  Current balance. The current balance in the    Decimal (14,2).
                                     account at the end of business on the
                                     effective date of the file.
                                    This balance should not be reduced by float
                                     or holds. For CDs and time deposits, the
                                     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).
14. DP_Acc_Int....................  Accrued interest. The amount of interest that  Decimal (14,2).
                                     has been earned but not yet paid to the
                                     account as of the date of the file.
15. DP_Total_PI...................  Total of principal and accrued interest......  Decimal (14,2).
16. DP_Hold_Amount................  Hold amount on the account...................  Decimal (14,2).
                                    The available balance of the account is
                                     reduced by the hold amount. It has no impact
                                     on current balance (ledger balance).
17. Pending_Reason................  Reason code for the account to be included in  Character (5).
                                     Pending table.
                                     A = need agency, custodian, or
                                     nominee account information.
                                     B = missing beneficiary info........
                                     CAT = missing right and capacity
                                     code.
                                     F = foreign deposit.................
                                     OI = official item..................
                                    The FDIC needs these codes to initiate the
                                     collection of needed information post-
                                     closing.
----------------------------------------------------------------------------------------------------------------


    By order of the Board of Directors.

    Dated at Washington, DC, this 17th day of February, 2016.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.

[FR Doc. 2016-03658 Filed 2-25-16; 8:45 am]
BILLING CODE 6714-01-P