I have seen reference that the costs will be 10 basis points. The question that I have is whether this costs is applied only to the balance above the temporary $250M level or to the entire balance.

The extra 10 BP is on the balance over $250k

I was at a compliance group yesterday and a group member brought up the fact that we are supposed to have signage displayed indicating whether we are participating or not particpating in the program. She cited a date of December 1, 2008. Does anyone know if this is still in effect?

Yes, but the regulation was changed back on November 7 to postpone the date by which you have to have notices posted to 12/19/08. Take a look at our Alphabet Soup copy of the FDIC's Temporary Liquidity Guarantee Program regulation, 12 CFR Part 370, specifically at paragraphs 370.5(h)(2) through 370.5(h)(4). The posting requirements are in (2) and (3), and the compliance date is in (4).

Note that you have to provide the substance of those disclosures in a commercially reasonable manner before the 12/19/08 mandatory posting date.

What does "substance of those disclosures in a commercially reasonable manner " mean?

Well, there's no interpretation of that phrase, but I'd suggest that you create a written statement once your bank has decided whether or not it will opt out of the loan guarantee program or the transaction account guarantee program. You have to make that decision by December 5.

Since you started by asking about the posting, I presume you're asking about the TAG program disclosures. Your written statement should essentially say what your poster will have to say when it goes up:

Whether or not you participate in the TAG program. That could simply be "ABC Bank is participating in the FDIC's Transaction Account Guarantee Program. Funds held in noninterest-bearing transaction accounts at ABC Bank are insured in full by the FDIC through December 31, 2009." The regulation does not require that the ending date of the TAG program be disclosed, but I recommend that you include it to avoid any suggestion that you failed to clearly state that limitation.

If your bank opts out of the TAG, your statement should read something like "ABC Bank is not participating in the FDIC's Transaction Account Guarantee Program."

Not part of the required posting, there is also a written disclosure requirement for TAG participants that sweep funds from non-interest bearing transactions accounts into interest-bearing accounts or non-transaction accounts that funds are not covered by the TAG program while in the interest-bearing account. There is an exception to that requirement for sweeps into non-interest bearing savings accounts (such as those used by some banks to manage reserve account requirements). Note that if this disclosure is required it only has to be given to affected customers.

I simply cannot see any reason that you could not have any required written disclosures ready -- at least in draft form -- by December 5, when your institution has to "fish or cut bait" on participation. And I can't recommend delaying putting up the poster until 12/19, unless you need some extra time to get it professionally printed. It's commercially feasible to take care of the requirements pretty quickly after the opt-in/out decision is made.

Can someone give me an example of what they mean by sweeps accounts? Would this include normal sweeps in the course of the day to cover possible overdrafts? Or are they referring to things such as repo accounts? I guess I'm a little confused.

If a bank determines to opt-out and posts a statement similar in simplicity to the one you use as an example, in your opinion, do you think that it would confuse the consumer?

Our management has expressed concern as it relates to disclosure language in fear that customers/consumers will think that the banks decision to opt out of extra FDIC insurance may be out of ignorance or a decision to opt in may be driven by fear of a possibility of failure. This concern by management is generally based on the lack of understanding that the general public has as it relates to the TAG Program. Without setting someone down and explaining to them all the pros and cons, management fears that consumers could be mislead to presume, etc... In addition, a rural branch may have a relatively new customer service representative that would not be able to fully and accurately explain the TAGP. Requesting the consumer to contact someone else in the bank 100 miles away may not serve as an option to a 50 branch bank.

Any suggestions?