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#1104519 - 12/31/08 10:30 PM FDIC Insurance, Sweep Accounts, and Customer Notic
Runreb Offline
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Runreb
Joined: Apr 2002
Posts: 480
This question pertains to sweep accounts under TAG. How are you handling disclosures with respect to sweep accounts? For example, are you sending a notice to existing customers in the mail and providing with your Reg DD account disclosures for new customers?

With regard to FDIC insurance notices for TAG participants, are you posting two notices (or a combined notice) in the branches (e.g., one notice for the October 3rd increase from 100k to 250k and one notice for participation in TAG)?

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General Discussion
#1104638 - 01/02/09 02:28 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic Runreb
ATLbanker Offline
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Joined: Sep 2005
Posts: 332
Georgia
We have two different notices in the lobby. we put a small notice at each teller window and customer service desk explaining about the increase in coverage to $250,000. Then there is one notice in the lobby about the increase in coverage for DDA.

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#1105310 - 01/05/09 02:41 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic ATLbanker
ahkcompliance Offline
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Posts: 2,470
Midwest
We put a signs at the teller stations and also customer service desks. We then put a notice in our lobbies about our partcipation in TAG.

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#1105438 - 01/05/09 05:24 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic ahkcompliance
Runreb Offline
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Runreb
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Posts: 480
How detailed are your notices with respect to sweeps?

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#1105584 - 01/05/09 07:50 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic Runreb
Compliance Heifa Offline
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Joined: Sep 2001
Posts: 182
Up on the Roof in Texas
Since it only applies to certain types of sweeps, we sent letters to those customers effected and posted updated lobby notices with the model language for TAG and we added the sweep language that we composed since there was not model language for that section:

____Bank is participating in the FDIC's Transaction Account Guarantee Program. Under that program, through December 31, 2009, all noninterest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account.

Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules.

In addition, NOW accounts with low interest rates (paying no higher than 0.50%) and Interest on Lawyers Trust Accounts are considered noninterest bearing transaction accounts and are eligible for this program.

Funds automatically swept into an interest bearing Money Market account are not eligible the Transaction Account Guarantee Program and void the FDIC's guarantee with respect to the transferred funds.

Hope this helps.

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#1106844 - 01/07/09 05:37 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic Compliance Heifa
Ice Man Offline
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Joined: Jul 2002
Posts: 325
Texas
I reviewed the Q&A on the FDIC website and understood that the sweep account disclosure was for institutions not participipating in the TAGP...

We are participating in the TAGP and have put the notice in our lobby and branches...

I am confused

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#1106868 - 01/07/09 06:00 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic Ice Man
ktac MITCH Offline
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ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
1. Change to current FDIC Insur signage - to add the 1 setence blurb for $250k, temporary thru 12-31-09

2. Lobby sign / poster indicating if your are or are not participating in the TLGP = unlimited guaranty on "non-int bearing" accounts (includes IOLTA and NOW with rate < .50)
[FDIC uses the term guaranty rather than insurance - - to try and seperate the concepts ???]

3. If you participate in TLGP then some accounts that would get unlimited on their non-int bearing, will have limit of $250,000 when the funds are swept into an int-bearing account.
SO, you must inform those customers but no model language was included. . . our sample is below

You are receiving this required notice because you have a “Sweep” account arrangement with XXX Bank.

This notice is to inform you of the effect that this sweep arrangement can have on the FDIC Insurance coverage of you funds.

A sweep arrangement that moves funds from a noninterest bearing transaction account into an interest bearing account puts the funds in the interest bearing account into a category of lesser FDIC Insurance coverage.

Under the “Transaction Account Guarantee Program” of the FDIC, funds held in noninterest bearing transaction accounts are guaranteed in full by the FDIC. However, the “normal” FDIC insurance limits apply to funds held in interest bearing accounts.

The “Transaction Account Guarantee Program” is effective through December 31, 2009.
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#1106968 - 01/07/09 07:25 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic ktac MITCH
Ice Man Offline
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Joined: Jul 2002
Posts: 325
Texas
Thanks for the information neighbors!

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#1106987 - 01/07/09 07:42 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic Ice Man
Tesla Offline
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Posts: 3,681
Now I am confused (sorry!) - is there a requirement to post a notice about the sweep "problem"?? We just send those customers a letter - is that not enough?
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#1106995 - 01/07/09 07:47 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic Tesla
ktac MITCH Offline
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ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
You are correct - it doesn't apply to all customers so no need to put that info in lobby, just inform those it applies to.
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#1112358 - 01/16/09 04:01 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic ktac MITCH
E. Lavenza Offline
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Joined: Apr 2004
Posts: 111
laboratory
In addition, NOW accounts with low interest rates (paying no higher than 0.50%) and Interest on Lawyers Trust Accounts are considered noninterest bearing transaction accounts and are eligible for this program.

Is this piece required on the sign?

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#1112621 - 01/16/09 06:41 PM Re: FDIC Insurance, Sweep Accounts, and Customer Notic E. Lavenza
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,641
Cape Cod
From the FDIC's FAQ on the TLGP:
Quote:
Should the required lobby/website disclosure notice (for institutions participating in the Transaction Account Guarantee program) indicate whether the bank's NOW accounts are covered under the Transaction Account Guarantee Program?

If the bank offers a NOW account product that does not qualify as a noninterest-bearing transaction account under the Transaction Account Guarantee Program, then, yes, the lobby/website disclosure notice should indicate that such accounts are not eligible for the guarantee. The purpose of the disclosure requirement is to ensure that depositors of an insured institution understand the nature and scope of the FDIC protections afforded to their transaction accounts, and situations where some NOW accounts may not qualify for the guarantee are inherently confusing to account holders. To properly notify customers, the bank could add an explanatory sentence or two to the sample notice provided by the FDIC in the TLGP final rule. Such disclosures must be provided in simple, readily understandable text.
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