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#1734764 - 08/24/12 03:51 PM TAG Expiration, What are other Banks (You) Doing?
westernbanker Offline
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I've been spending a lot of time reviewing the possible sunsetting of unlimited FDIC insurace expiring at this year's end, and it seems as though there is a 50/50 chance on it expiring and Congress extending it... (On any given day depending upon what you read it seems like you get different answers). With the end of the year 4 months away, I was hoping to generate some discussion as to what other banks may be doing in order to safeguard themselves against deposits leaving their banks and going to TBTF banks. I've had numerous clients with larger balances bring the topic up, so I can only assume other bankers are facing the same problem. With there being some strong broker solutions, are other community banks looking to onboard products that would break up deposits to handle customer's insurance needs on their balances? Or is everyone betting on Congress extending the program in some capacity?

Thanks in advance, looking forward to what other bankers have to say...

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#1734868 - 08/24/12 05:53 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
NotDoneYet Offline
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PA
We are hoping Congress extends. Otherwise, I have spent zero time on this since the onslaught of all the proposals from the CFPB.
You make a valid point of there being little time before it does happen and I better get someone within operations or accounting to consider the implications if it should.
Thanks for the little wake up call!

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#1734963 - 08/24/12 07:08 PM Re: TAG Expiration, What are other Banks (You) Doing? NotDoneYet
westernbanker Offline
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We were surprised to hear a few prospective clients outwardly admit that they were going to take deposits to a TBTF bank if we weren't able to insure their funds with a product after December 31st of this year...so we're looking at all possible solutions now rather than be holding the short end of the stick later. Between implementing a new product into our bank and having it work with our current bank software we're looking at a 2 month lead time/trial period. So with just that we're pushing a solution through now. I'm really curious to see what other banks are doing as it seems things might "bottleneck" here towards the end of the year.

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#1735001 - 08/24/12 07:43 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
Ski Offline
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I'm sure that, like many other things that should be looked at now, this is one that is overlooked due to this being an election year.

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#1735003 - 08/24/12 07:46 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
Dani York, CRCM Offline
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I'm confused as to what kind of product you could develop that would increase their FDIC insurance coverage beyond what the FDIC allocates per ownership type? If the unlimited non-interst bearing coverage is not extended, and the customer is an entity, they can only get 250,000.00 per institution regardless. WHat kind of product are they expecting you to offer?
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#1735032 - 08/24/12 08:12 PM Re: TAG Expiration, What are other Banks (You) Doing? Dani York, CRCM
LFTbanker Offline
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Maybe something like a CDAR product (if that is the right acronym)where deposits are distributed through the network so that no bank is holding more than $250k of the customers' deposits. We haven't explored this, but I have heard of it.

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#1735040 - 08/24/12 08:18 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
John Burnett Offline
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That's a CD product and it could work for customers who don't need immediate access to liquid balances.
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#1735305 - 08/27/12 02:40 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
westernbanker Offline
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So there are a few products, (2) of the more popular ones are Deposit Demand Marketplace and Insured Cash Sweep. They take deposits and split them up into $245,000 pieces and place them at other banks. Much like CDARS, but instead of them being time deposits they are placed into money market deposit accounts across the network of banks that participate in the program (so customers can draw on them like a checking account). There are limitations to both products, Insured Cash Sweep is actually offered by the same company that does CDARS.

Also, I should note that I am not affiliated with either of the (2) companies that sell these products, I am simply just passing along information I've collected for our bank in our due diligence process of determining what is best for our needs. Hopefully this information is helpful to someone else though!

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#1735317 - 08/27/12 03:02 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
Dani York, CRCM Offline
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I didn't know those types of arrangements existed. Thanks for sharing.
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#1735323 - 08/27/12 03:08 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
westernbanker Offline
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Absolutely! Luckily there are discussion forums like this that allow us to help one another

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#1740606 - 09/13/12 03:46 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
westernbanker Offline
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Just as an update, our bank has been following the lobbying efforts of the ABA and ICBA very closely and as of this most recent session of Congress (Sept. 10-30th) there has been no movement to bring about an extension of TAG past its expiration date of December 31, 2012. The next opportunity to get an extension will be after November elections during the "Lame Duck" session of Congress, and the possibility <as expressed by these organizations lobbying> of getting an extension is pretty slim.

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#1743492 - 09/24/12 06:03 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
Snowgirl Offline
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So if the TAG does in fact expire, do we have to give 30-day notice to the customer's of it's expiration date?

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#1743616 - 09/24/12 09:48 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
John Burnett Offline
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Not under current rules, since the information is in your lobby and website postings. Of course, the FDIC could issue a last-minute change to its rules.
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#1755750 - 11/06/12 11:08 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
westernbanker Offline
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Haven't updated this in awhile as election season is upon us, so there hasn't been any movement in Congress on the issue. It seems with a lot of the articles that are being written as of late that TAGP/Section 343 is going to be left to expire. Has anybody been taking steps at their bank to deal with the expiration? Or are banks not concerned with the lapsing unlimited coverage?

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#1755751 - 11/06/12 11:13 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
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#1755790 - 11/07/12 01:16 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
SWFLBanker Offline
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We used the short model notice and posted a message on all of our statments for the November cycles. If it is renewed we will just post another statement message letting the customers know.I am also going to post a sign in the branch lobbies using the model long format.

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#1756117 - 11/07/12 06:26 PM Re: TAG Expiration, What are other Banks (You) Doing? SWFLBanker
Queen Mum Offline
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Originally Posted By: jennsawyer
We used the short model notice and posted a message on all of our statments for the November cycles. If it is renewed we will just post another statement message letting the customers know.I am also going to post a sign in the branch lobbies using the model long format.


We did the exact same thing.

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#1756501 - 11/08/12 07:20 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
PStateBank Offline
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Do we need to notify all of our customers, or only the ones impacted by this change?
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#1756971 - 11/09/12 08:01 PM Re: TAG Expiration, What are other Banks (You) Doing? PStateBank
westernbanker Offline
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Originally Posted By: PStateBank
Do we need to notify all of our customers, or only the ones impacted by this change?




That's a great question actually. We are currently sending notification out just to our non-interest bearing deposit base.

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#1756974 - 11/09/12 08:04 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
John Burnett Offline
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I'd suggest targeting your NIBTA customers, not just those with balances that might make the change relevant. Even a NIBTA customer with only $100,000 in the account might have more in the account later, and the fact that the full-insurance law is expiring might be important to that customer.
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#1757126 - 11/10/12 02:22 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
Deputy Dawn Offline
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We are including a notice with all our mailed statements, sending a message to our electronic statement customers, and posting the notice on our website.

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#1757354 - 11/13/12 03:29 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
Always In Training Offline
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Where the Green Grass Grows
Getting ready to put it as a statement message. I have to use the super short notice because I only have 174 characters (including spaces). It doesn't seem like anybody will get anything out of that notice. The long notice has been posted in all our lobbies and to our website.

Last edited by Always In Training; 11/13/12 03:35 PM.
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#1757457 - 11/13/12 05:29 PM Re: TAG Expiration, What are other Banks (You) Doing? Always In Training
Data Offline
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Houston
What is the super short notice?
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#1757460 - 11/13/12 05:31 PM Re: TAG Expiration, What are other Banks (You) Doing? westernbanker
manimal Offline
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If you click on the link that rlcarey provided above, the FIL has sample wording you can use, both a longer notice and a short one for statement messages.
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#1757526 - 11/13/12 07:21 PM Re: TAG Expiration, What are other Banks (You) Doing? manimal
Data Offline
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Thanks. Am I reading that correctly the the only difference between the two notices is the last sentence in the notice? I have the same statement message constraint as AIT. 252 characters including spaces. It looks like the short message is longer than what I have room for.
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