We opted out of the TAG program. Would we be required to notify our current customers of the change?

The proposed rules include three notice requirements. The first is a lobby poster that all insured institutions will need to have in each lobby. The second is a notice that TAG participating banks have to provide to IOLTA and covered NOW customers as of 12/31/10. The third is for banks that use sweeps or add interest to DDA accounts next year. The proposed language is posted in BOL's FDIC Insurance Regulations copy (Part 330) in Alphabet Soup. I will replace that language with the final wording once it's published in the FR. Look for section 330.16.

The lobby notice has been shortened in the final rule. If you haven't already posted the model notice from the proposed rule, you'll probably want to use the more user-friendly one in the final rule.

"If a bank decides to start paying interest on demand deposits on or after 7/21/2011, it will have to notify affected accounts of the fact that their FDIC insurance will drop to the $250,000 SMDIA. [Proposed §330.16(c)(3)]."

If we close their account in July 2011 and reopen with a new terms & conditions, would we still need to give them notice of their FDIC insurance coverage?

Just wondering how we're going to remember to do this in 6 months...

Deciding to pay interest on demand deposits won't be a ho-hum thing. It will be momentous for your institution. You should remember to send the notice to affected customers.

Set yourself up a reminder to look at this again in July.

We do not participate in the TAG program, so we would only have to post the lobby/online notices correct? Unless of course we were to start paying interest on demand deposit accounts then we would have to send out that notice. If we are a non participating TAG institution we would be exempt from the mailing notice correct? I'm so confused!

We do not currently participate in TAG so it is my understanding from reading the final rule that we will not need to notify clients. We are posting a notice in our lobbies and website. We do have sweep accounts and will notify those clients regarding their swept funds.

So if we were participating in the TAGP, I'm assuming we need to keep that lobby notice up until 12/31/10? Now with the new temporary unlimited FDIC insurance, we'll have to also have that lobby notice posted before 12/31/10. That seems like FDIC notice overload to me! Is everyone going to have both notices posted at the same time or are you replacing the old one with the new one?

Does anyone know if there is a size requirement for the Lobby Notice? Help would be appreciated.

I don't believe there is, just as there was not for the TAGP lobby notice. I'm just making sure it is clear and conspicuous. I've got it on one-page and it's very readable type.

Where should we place the notice on the website? Should it be on a tab or link like to privacy policy,or should it be on the front page? Any ideas?

Ours will be on the front page, just as the TAGP now is.

Just to clarify a point that was made here. It was asked if you would need to give 30 days notice by zitch70 and John Burnett responded that it is not a contractual issue just an annoucing an act of congress. It was then stated later by Southern gal that we would have to give 30 days notice. Do you know which it would be?

The 30 day notice would be required if the changes involved the terms of the account. We aren't changing anything that would require an advance notice - fees, rate tiers, account requirements, etc.

The FDIC says to let them know of the insurance coverage change by 12/31/10 so we are starting with the end of November statement cycles to a make sure we catch everyone. Perhaps Southern Gal's bank is also starting this process now and that is what she meant.

John, we opted out of paying on NOW accounts and our notice stated that. However, it didn't say anything about IOLTAs. Were we not opting out of them when we opted out of the NOWs? I didn't set this up originally so am trying to make sure that we get all the notices done that we need.

If you opted out, you probably opted out of the whole TAG program. Someone in your institution knows the history, or you can review the three (yes, three) Excel spreadsheet lists of banks HERE that have opted out of TAG for each of the opt-out windows to see if your bank appears in one of them.

If you're on one of those lists, you don't need to send any notice under §330.16(c)(2).

If you aren't on the list, you may have accounts covered by the TAG coverage that won't have coverage under the temporary 330.16 rules. If you have any IOLTA accounts, they'd need to get a notice, and if you have any NOW accounts with rates capped at 0.25% or lower, they'd get one, too.

We had a meeting this morning to determine our action plan and which customers need to receive the notices. The topic of money markets came up, and we were fuzzy on what definition they fall under. Are they an account that was covered under TAGP (that would need a notice of no longer being covered)?

Under the original TAGP the definition of noninterest-bearing included NOW and IOLTAs. Can't remember if that included MMDA or not. We excluded the NOW accounts from ours and stated that on the notice. However we didn't specify IOLTAs so we just created a notice that we are mailing to our few IOLTA customers.

MMDAs were not covered unless they were zero-balance accounts that received "reserve sweeps" from a covered transaction account. You only have to notify NOW accounts and IOLTAs that are covered by the TAG presently.

I didn't see where there was an answer to this question. Is everyone posting both notices or replacing the old one with the new one?

We replaced the old one with the new one, but this is only because we thouhgt it would confuse the customer. I'm not sure what it required - haven't seen that specified anywhere.

We have sweep accounts but operations says it will be nearly impossible to get the notice out to every account account that sweeps due to the way they are coded. Would we be okay to send the model notice to everyone to ensure that sweep accounts are covered?

This is discussed in the other thread as well, but yes I believe it would be acceptable to include this notice in all account statements.