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#1755042 - 11/05/12 11:39 AM Temporary Unlimited FDIC Insurance Coverage
nlnorth Offline
Member

Registered: 08/02/02
Posts: 56
As of December 31, 2012, unlimited coverage for non-interest bearing transaction account will expire - thoughts on preparing for this such as will there be requirements to update post signs, and updates to banks website and such?

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#1755068 - 11/05/12 12:28 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
John Burnett Online
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Registered: 10/27/00
Posts: 30555
Loc: Cape Cod
Assuming that Congress doesn't step into this at the 11th hour and change things, here's my list:
  1. As of the close of business on 12/31/12, remove the 12 CFR 330.16(c) notice from lobbies and your website.
  2. As of COB 12/31/12, remove any link on your website home page to the notice in step 1.
  3. Update any front line and other customer-facing employee scripts that may refer to the temporary unlimited coverage. Add a question and answer (if you use them) something like this: "Q: Will my balances in this checking account be fully insured? A: Your balances in this and other accounts are insured on a per depositor, per capacity, basis to the FDIC's Standard Maximum Deposit Insurance Amount, currently $250,000. The FDIC's temporary unlimited coverage for non-interest bearing transactions accounts ended on December 31, 2012."
  4. Remove any reference to the temporary unlimited coverage in any brochures, ads or other customer communications.
There is currently no regulatory requirement to notify customers who have non-interest bearing transaction accounts of the termination of the extra insurance coverage. In fact, I imagine that many banks are hoping the change will not be noticed, lest balances start flying out the door. But watch to see if the FDIC issues any guidance on that point; every bank in the country with customers carrying fat DDA balances will be in the same boat; smaller institutions may well be more concerned than the largest banks.


Edited by John Burnett (11/05/12 12:28 PM)
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#1755128 - 11/05/12 02:29 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
arye23 Offline
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Registered: 03/09/11
Posts: 294
Funny this thread was posted today...hot off the press:

http://www.fdic.gov/news/news/financial/2012/fil12045.html?source=govdelivery
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#1755165 - 11/05/12 03:23 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
QCL Offline

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Registered: 05/23/02
Posts: 6185
Loc: NW IL
Great timing!
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#1755198 - 11/05/12 04:09 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
Trees Offline
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Registered: 04/22/05
Posts: 3697
I am inclined to wait a few weeks prior to changing all our notices and signage....esp. sending out notices on statements only to have them change their mind the eleventh hour. Reading between the lines they would expect us to send a notification to customers prior to 12/31....

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#1755201 - 11/05/12 04:12 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
John Burnett Online
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Registered: 10/27/00
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Loc: Cape Cod
Well, it appears that the FDIC is encouraging banks to notify their NIBTA customers -- including IOLTA customers -- of the termination of the DFA Section 343 coverage.

If your bank will do so, I think that any planned talking points or strategies for retaining balances should be thought out and ready to use before the notices are sent out.
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#1755390 - 11/06/12 10:22 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
MJoyner Offline
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Registered: 10/09/07
Posts: 127
Loc: Southeastern US
If we see that indeed Congress is not going to change their minds and we need to notify customers--Is a statement message sufficient?

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#1755414 - 11/06/12 10:47 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: MJoyner]
RR Sarah Offline
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Registered: 03/16/04
Posts: 2227
Loc: Up North
So what do you think adequate advance notice is? 30 days?
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#1755418 - 11/06/12 10:48 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: MJoyner]
RR Sarah Offline
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Registered: 03/16/04
Posts: 2227
Loc: Up North
Originally Posted By: MJoyner
If we see that indeed Congress is not going to change their minds and we need to notify customers--Is a statement message sufficient?


The link that arye23 provided above takes you directly to the FIL and gives you model language to use in the notice. And yes, statement message is sufficient.
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#1755439 - 11/06/12 11:08 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
RR Joker Offline
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IDIs may use any reasonable method of providing reminders to depositors, such as individual written notices to each NIBTA depositor or notices on regular account statements.
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#1755441 - 11/06/12 11:09 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
Trees Offline
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Registered: 04/22/05
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The model notice is too wordy for a statement message.

Would anyone like to share the message that they feel is sufficient and that could be added to a statement?

If there is a run off the customers have no place to go for this coverage for non interest bearing accounts as far as I know. They would have to break up amounts into interest bearing accounts, as EDIE provides in examples, if they want FDIC coverage.

Probably good to discuss the ramifications of a run off and whether or not we want to reduce the likelihood.

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#1755466 - 11/06/12 11:29 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
VMack, CRCM Offline
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Registered: 06/26/01
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Loc: United States
FAQ # 7 has a model shorter notice for statements:

Institutions placing notices on regular account statements with space limitations may wish to utilize a shorter notice to NIBTA depositors, such as:

NOTICE: By federal law, as of 1/1/2013, funds in a noninterest-bearing transaction account (including an IOLTA/IOLA) will no longer receive unlimited deposit insurance coverage, but will be FDIC-insured to the legal maximum of $250,000 for each ownership category. For more information visit http://www.fdic.gov/deposit/deposits/unlimited/expiration.html.
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#1755470 - 11/06/12 11:35 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: VMack, CRCM]
ItNeverEnds CRCM Online
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Registered: 10/27/06
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Originally Posted By: VMack, CRCM
FAQ # 7 has a model shorter notice for statements:




Even that is too long for my statements, I only have 4 lines, 73 characters per line, so I'm very limited. I was playing around with the wording yesterday and here's what I came up with. Just a first stab at it:

As of 1/1/2013 funds in noninterest-bearing transaction accounts & IOLTAs
will no longer receive unlimited deposit insurance coverage, but will be
FDIC-insured to the legal maximum of $250,000 for each ownership category.
Visit http://fdic.gov/deposit/deposits/unlimited/expiration.html

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#1755471 - 11/06/12 11:37 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
Soccer Online
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Registered: 01/05/10
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Loc: Utopia
We are going to most likely go with a statement message and state it with something like..Unless Congress extends the unlimited coverage for non-interest bearing accounts your unlimited coverage will expire on 12/31/12..... It needs work but we want to make sure that we are covered in the event of a last minute change.

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#1755474 - 11/06/12 11:39 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
VMack, CRCM Offline
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Registered: 06/26/01
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Loc: United States
I see. We may have the same issue. I haven't checked on it yet. Is anyone going to be in a "hold off" mode at least until Dec. 1, 2012 to see if anything changes? Is there a chance that it could change?
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#1755498 - 11/06/12 11:56 AM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
tdogz Offline
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Registered: 05/17/12
Posts: 222
If you're going to use statement messages, I would decide before December 1st. If you wait until then, none of your EOM accounts will receive the message before the new year. We'll decide what to do in the next week or two. It'll probably be a statement message similar to what Soccer mentioned above.

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#1755502 - 11/06/12 12:01 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
John Burnett Online
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Registered: 10/27/00
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Loc: Cape Cod
The FDIC has not made the notification of affected customers mandatory. I've seen suggestions (the ABA has even said so) that depositors could be confused by notices if Congress does, in fact, do something. In particular, remember what Congress did when there was so much noise made to get IOLTA accounts covered. They finally passed the bill on 12/22/10 and it was signed by the President on 12/29/10, just 3 days before the unlimited coverage provision took effect. A repeat of that scenario in a lame duck Congress could really confuse matters if banks sent out expiration notices too soon.

On the other hand, the ABA is saying it doesn't think the odds are good for an extension from Congress.

I'd delay sending notices to see if the oddsmakers are wrong, and send them out if Congress leaves for the holidays without acting.


Edited by John Burnett (11/06/12 12:08 PM)
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#1755503 - 11/06/12 12:01 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: tdogz]
RR Sarah Offline
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Registered: 03/16/04
Posts: 2227
Loc: Up North
That's what I was thinking as well tdogz. I'm planning on having a statement message ready for November's EOM statements.
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#1755511 - 11/06/12 12:07 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
VMack, CRCM Offline
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Registered: 06/26/01
Posts: 679
Loc: United States
Thanks John. I like that advice.
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#1755664 - 11/06/12 04:08 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
stevemccoyca Offline
Junior Member

Registered: 03/08/12
Posts: 25
What are some strategies for retaining balances? We were looking at the CDARS program for MMDA accounts as well as IDP. Has anyone used these? Also, we used to purchase 3rd party insurance for amounts over and above the FDIC limit.

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#1756261 - 11/07/12 04:53 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: John Burnett]
Deena Offline
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Registered: 11/02/00
Posts: 2648
Loc: PA
Originally Posted By: John Burnett
The FDIC has not made the notification of affected customers mandatory. I've seen suggestions (the ABA has even said so) that depositors could be confused by notices if Congress does, in fact, do something. In particular, remember what Congress did when there was so much noise made to get IOLTA accounts covered. They finally passed the bill on 12/22/10 and it was signed by the President on 12/29/10, just 3 days before the unlimited coverage provision took effect. A repeat of that scenario in a lame duck Congress could really confuse matters if banks sent out expiration notices too soon.

On the other hand, the ABA is saying it doesn't think the odds are good for an extension from Congress.

I'd delay sending notices to see if the oddsmakers are wrong, and send them out if Congress leaves for the holidays without acting.

We have decided to notify our customers via statement message. Unfortunately, in order to ensure that all affected customers receive a statement with the message prior to 12/31, we need to finalize the language very soon. Do you see a problem if we add to the model notice something along the lines of "Unless Congress extends the expiration date . . ." (as suggested above)?
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#1756471 - 11/08/12 01:12 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: Deena]
ilovebulldogs! Offline
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Registered: 09/18/07
Posts: 457
Loc: Mississippi, USA
We got this from another bank. The FDIC language has been tweeked a little for better clarification. We didn't mind adding the last sentence regarding contacting the customer because we feel sure the FDIC will require it.

NOTICE OF EXPIRATION OF THE TEMPORARY FULL FDIC INSURANCE COVERAGE FOR NON-INTEREST-BEARING TRANSACTION ACCOUNTS

By operation of federal law, beginning 1/1/2013, funds deposited in a non-interest-bearing transaction account (including IOLTAs) are currently scheduled to discontinue receiving unlimited deposit insurance coverage by the FDIC. The law currently declares that beginning 1/1/2013, all of a depositor's accounts at an insured depository institution, including all non-interest bearing transaction accounts, will be insured by the FDIC up to the standard maximum deposit insurance amount ($250,000), for each deposit insurance ownership category. If Congress extends the current expiration date of this program, we will notify you.


We will start this statement message 11/13/2012 and run it for one statement cycle.

Anyone see anything alarming about this that I should be made aware of?
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#1756977 - 11/09/12 03:06 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
ahkcompliance Online
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Registered: 09/10/08
Posts: 1776
Loc: Midwest
We plan on doing a statement message. We are planning on running at the end of November to get all the EOM accounts.

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#1757092 - 11/09/12 07:07 PM Re: Temporary Unlimited FDIC Insurance Coverage [Re: nlnorth]
Dolly Nugent Offline
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Registered: 11/02/00
Posts: 1808
Loc: Southern California
You might consider making some changes. I think you are going to need additional clarification to indicate that you will notify them if Congress decides to CONTINUE permitting unlimited deposit insurance coverage by the FDIC. The last sentence may be confusing to customers.
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