noninterest-bearing demand deposit accounts Notice

Does anyone know how "Internet deposit services" is defined by the FDIC for the proposed rule requiring an IDI to post, prominently, a copy of the notice in the lobby of its main office, in each domestic branch and, if it offers Internet deposit services, on its Web site?

This is from the FAQ's on the FDIC's website:

For institutions that offer internet banking services, does the entire transaction account guarantee program disclosure have to appear on a bank's homepage (or other website that accesses online banking services), or can the institution simply add a link on the homepage that takes accountholders to an appropriate disclosure?

Internet deposit services are defined broadly to include not only deposit taking, but any activity related to a deposit account, such as the ability to pay bills, transfer funds, view account balances, or obtain any account specific information. "Internet deposit services," "online banking services," and "internet banking services" are used interchangeably in these questions and answers. Consistent with the requirements of the Final Rule, the bank's homepage and/or other access point to online banking services must contain the disclosure that the bank is (is not) participating in the transaction account guarantee program. Following such disclosure of participation, an appropriately titled link to additional disclosures would be acceptable. A link titled simply "transaction account guarantee program" does not ensure that accountholders will see the required disclosure. A link titled "FDIC insurance" is even more deficient in that the FDIC transaction account guarantee program does not involve FDIC insurance. Something like "Important disclosures regarding the guarantee program" would seem to be appropriate.

when do the notices have to go out?

The PROPOSED regulation section 330.16 includes requirements for three different forms of notice, one of which is a lobby notice for all insured banks, the second of which would be sent by TAG-participating banks by 12/31/10 to its customers as of that date who have accounts guaranteed under the TAG program. The third is a notice that would be given or sent to customers with non-interest paying DDA accounts if a change made by the bank under a sweep program or to account contracts (such as paying interest on DDAs after 7/21/11) any time between 12/31/10 and 12/31/13) that will change the insurance coverage of the DDA account.
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I'm guessing that FDIC will want banks to notify DDA customers with full coverage in advance of the 12/31/13 sunset date, although that's not seen in the proposed rules.

that's what I thought - thanks John!

After seeing the final rule this morning, wondering when others plan to start posting their main office, branch, and website notices? Sooner or closer to Dec. 31?

I think it would be wise to wait until 12/31 gets closer.

I am wondering if allowed to place this notice in customer statement or required a direct mailing to the customer?

Juby - did the final rule come out? Would you point me to it, please?

The final rule was just release today. It's on the FDIC website

The mailing requirement is to NOW and IOTA customers that were covered under the TAGP advising them that their funds are now subject to the $250,000 general insurance coverage.

The other mailing requirement is to customers to notify them of any action that may affect the coverage. For example, if your bank decides to pay interest on business accounts, which they will be allowed to due effective 7/21/11, then the bank would have to notify the customers that their funds would be subject to the $250,000 general insurance coverage.

SO bottom line:

1. Have to send to Iolta and Now accounts
2. Need a Lobby and/or Website sign using model language
3. If applcable, notices to DDA if this is a change for them.

Does this sound right?

Yes.

We are having a discussion regarding the required mailing to NOW and IOLTA customers. In the esence of time, Management wants mail the verbiage required for the lobby notice.

Is anyone else doing this? Would this be compliant?

Here's the rule. http://www.fdic.gov/news/board/Nov9no4.pdf

Here's an FDIC FIL about the rule. http://www.fdic.gov/news/news/financial/2010/fil10076.html

Does anyone have a bill number for the legislation that the FDIC said some commenters mentioned was pending in Congress that might amend the FDIC Act to have the definition of noninterest-bearing transaction accounts include IOLTAs?

Compliance4521, the reg specifically states that you can use the lobby notice. Seems like an easy solution.

Yeah, you can use the lobby notice, however, how do you do that if you have customers that have more than one account and on page 23 (bottom paragraph) it specifically says

(2) if depositors have more than one affected account, one notice is sufficient if it identifies all the applicable accounts.

So, it's not a matter of just stuffing this notice in an envelope, we've also got to identify the account(s) that's impacted.

If you put a notice in each account statment I wouldn't think you would need to add the account information. If you were going to only send one notice, then you would need to add all of the accounts impacted.

Has anyone considered a statement message or must it be a separate piece of paper?

It says "by mail", including electronic mail. We are limited on how long our stmt messages can be - so it's not an option for us.

MarieR - The lobby notice already identifies the accounts impacted...so wouldn't this already be taken care of not matter how you mailed it???

Sorry, I am somewhat dense about this

We will post our lobby notice and website on 12/31/2010. OUr customer mailings will occur beginning 11/30/2010, this will ensure notices are received prior to 12/31/2010.

I take it to mean that you have to identify specific accounts not just the general account type.

Here is the language from page 23 of the rule that tells about the required notification to NOW and IOLTA account holders.


Because of the potential depositor confusion about this change in the FDIC's treatment of NOWs and IOLTAs, the final rule requires IDIs currently participating in the TAGP to provide individual notices to depositors with NOW accounts currently protected in full under the TAGP and IOLTAs that those accounts will not be insured under the new temporary insurance category for noninterest-bearing transaction accounts. IDIs are required to provide such notice to applicable depositors by mail no later than December 31, 2010. To comply with this requirement, IDIs may use electronic mail for depositors who ordinarily receive account information in this manner. The notice may be in the form of a copy of the notice required to be posted in IDI main offices, branches and on Websites.

This is exactly what I have planned, and will just send a notice in each statement to cover all. Just have to come up with a plan to those whose statements are suppressed due to eStatements.

For our eStatement customers, we usually put a short message telling them that there has been a change affecting their account and then add a link directing them to our website where the full disclosure is located.


The more I read this thread, the more I'm confusing myself... do we have to send this notice to ALL deposit account customers (interest bearning & non-interest bearing, checking, savings, etc) or just to the customers who have NOW and IOLTA accounts?

Adding to the above post: we put the message on their statement notification email.

1. You have to send to IOLTA and NOW accounts (And can use the model language)
2. Need a Lobby and/or Website sign using model language
3. If applicable, notices to DDA if this is a change for them.



That sums it up. You do not need to send to all checking customers, but you may do it as a BP or Opperationaly it may be easier to send to all, depending on your shops capabilities.

But why would you want to mail to all consumers rather than those just impacted? Our statements aren't separated by account type so we'd have to mail to all consumers or identify and mail only to those impacted.

I have another question on the FDIC change concerning "official items". I am wondering if we need to give any notification as the FDIC notice when we sell these items or is the FDIC lobby notice all that is required.

We are removing the TAG disclosure on December 31, 2010.

If you have a lame dp like Bankway that cannot separate account statements so that only certain items go into certain acct type statements, leaving you with two options, put a notice in all statements or use a separate software system to distinguish the account types and then do a direct mailing.

The FDIC posted a summary of the notice requirements as well as the text of the notice on the following page. http://www.fdic.gov/deposit/deposits/changes2.html

Trying to understand this:

Is this notice a replacement for the current notice we have in our lobbies and on website OR an additional notice?
Our current notice is a "not participating" notice.

Thanks in advance for any clarification forthcoming.

It will replace the current notice after 12/31/10.

If we offer any type of internet banking service do we have to post the notice online? Our Internet banking is just for inhouse transactions, they can't pay bills or transfer money in or out of the bank through internet banking. All they can do is make online transfers from one account to another account as long as both are under the same customer name.

From my understanding is that if you have a transactional internet site (which it sounds like you do) the notice is required.

The final rule says that "if depositors have more than one affected account, one notice is sufficient if it identifies all the applicable accounts." I understand that to say if you send the notice in a statement with 3 accounts of which 2 are affected you must identify the 2 affected accounts. What if you want to send the notice with a statement that has 3 different accounts but only one of the accounts is affected. Do we have to identify the one account although they do not have more than one affected account? How about if we want to send individual notices to customers who have only one affected account and two other accounts. Would the separate notice have to identify which of their accounts the notice is referring to? The rule only refers to having more than one affected account, it does not say anything about having more than one account, but only one is affected.

I must have missed something. If Money Markets are included in the model notice language as not covered, why are we only required to send notices to NOW and IOLTA accounts?

Because Momey Markets weren't covered under TAGP.

The purpose of the mailed notice is to call special attention to the change to the eyes of the accountholders who are currently fully covered under the TAG program and will not be fully covered under the DFA section 343 temporary insurance.

Will the model notice suffice in complying with #2 of the notice requirements?

2. IDIs currently participating in the Transaction Account Guarantee Program ("TAGP") must notify Negotiable Order of Withdrawal ("NOW") account depositors and Interest on Lawyers Trust Accounts ("IOLTA") depositors (currently protected under the TAGP) that, beginning January 1, 2011, those accounts no longer will be eligible for unlimited protection;

That notice even if mailed only to NOWs and IOLTAs does not state THIS account will only be covered for $250M, or your account #### will only be covered for $250M. So the customer may still not understand which of their 3 accounts has what coverage.

Although the FDIC says in the Federal Register document that you can use the lobby notice language for your notice to current TAG-protected accounts, I see your point. You could add to the notice language to make it clearer, if you think it's needed.

Can you tell me if you feel that if we use the model notice as a statement message on the statement is ok or not? We would like to do this verses a statement stuffer.

If you have the ability to put all that verbiage in a statement message, sure. The requirement is that you mail the notice. There's no requirement that it be on a separate sheet of paper.

We do not participate in the TAGP. The only thing we are required to do is post a notice in our lobby and website. Currently, NOW and IOTLAs are limited to $250,000. If we decide to pay interest on business checking accounts, then we would need to send a notice??

You're correct if you decide in July next year to pay interest on business checking accounts then you will need to provide the notice to the customers that their coverage has changed.

So - to make sure I understand all of this.
We can send the required customer notice as part of the account statement and it can be a shorter version of the "notice" that we are posting in our lobby?????

Yes. If you use the lobby notice wording, you'll know your mailed notice is sufficient from FDIC's perspective. If you have to alter it for space or character count, be careful to ensure the key info is included.

The following is from the FDIC's site and I just want to make sure this is the language for the new notice to be posted in the lobby, on our website and the language that needs to be given to NOW & IOLTA Customers?


NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE
COVERAGE FOR TRANSACTION ACCOUNTS

All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.

The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, money-market deposit accounts, and Interest on Lawyers Trust Accounts ("IOLTAs").

For more information about temporary FDIC insurance coverage of transaction accounts, visit www.fdic.gov.

You could have found the same wording in the BOL ABC Soup copy of the regulation (12 CFR Part 330), in section 330.16.

ABC Soup can be found at http://www.bankersonline.com/abcsoup/abcsoup.html

Yes, that's the wording for the lobby notice and your website. You can also use it for the notice you may have to send to IOLTA and NOW account customers under §330.16(c)(2).

For those who are posting this on their websites how are you posting it?

Just listing it on your disclosure page?

A link from your home page like "Important FDIC insurance inforation:, then the link takes you to a page showing the FDIC notice?

Just curious how others are placing on their sites.

Big Ol' Banner accross the front page for us.

Does anyone see any problem with sending the notice to all checking account customers even if their account is currently covered and will continue to be covered? The customers with accounts that will be covered until 2013 will receive the same notice that customers with accounts that will not be covered will receive.

If we send the same notice we post in the lobby and on the website, does the notice need to be sent on our bank's letterhead? And do we need to send any kind of explanation for the notice?

We are going to post the notice on our home page with a link "Important FDIC Insurance Information."

We will have a link to the notice on the front page. The link is an icon of the FDIC sign

Input on this? We want to use a notice on our statement but we do not have the capability to separate our account types so we have to either send to all or manually do separate mailing.

Same issue, we are sending to all.

Ditto.

We are sending to all.

We have limited character space on our statements so the entire disclosure will not fit. Is there a condensed version available?

There's no condensed version that's been blessed by the FDIC. You know that the lobby notice language is acceptable. Any departure from that language should be checked carefully to ensure it gets across the same essential message.

You might consider revisiting that decision. The FDIC set up a pretty good "one click away" standard in its FAQ on the almost-outa-steam TGLP. The pertinent Q&A reads:

For institutions that offer internet banking services, does the entire transaction account guarantee program disclosure have to appear on a bank's homepage (or other website that accesses online banking services), or can the institution simply add a link on the homepage that takes accountholders to an appropriate disclosure?

Internet deposit services are defined broadly to include not only deposit taking, but any activity related to a deposit account, such as the ability to pay bills, transfer funds, view account balances, or obtain any account specific information. "Internet deposit services," "online banking services," and "internet banking services" are used interchangeably in these questions and answers. Consistent with the requirements of the Final Rule, the bank's homepage and/or other access point to online banking services must contain the disclosure that the bank is (is not) participating in the transaction account guarantee program. Following such disclosure of participation, an appropriately titled link to additional disclosures would be acceptable. A link titled simply "transaction account guarantee program" does not ensure that accountholders will see the required disclosure. A link titled "FDIC insurance" is even more deficient in that the FDIC transaction account guarantee program does not involve FDIC insurance. Something like "Important disclosures regarding the guarantee program" would seem to be appropriate.

My point is that you might consider substituting text for the FDIC logo: "Click here for important information about FDIC insurance coverage for noninterest-bearing checking accounts."

I missed something small/big.

We haven't participated in the TAG program, so I'm comfortable knowing I don't have to mail anything to anyone other than Santa in December.

I know I have to have a new notice as of 1-1-11.

I missed the commercial checking interest. I found it with Google, but I still need a little help. Is 204.130 being repealed? Or will the law simply be more confusing and now still prohibit NOW account ownership from x, y, and z - but allow DDAs to earn interest? Sorry to take this OT.

The law repealing the sections of the U.S. Code that prohibit the payment of interest doesn't do anything directly to NOW accounts. But it will eliminate the NOW account's raison d'être, and they could fade away. Banks will be able to pay interest on demand deposits on and after 7/21/11, without regard to ownership restrictions. What will go away is Regulation Q.

Thanks John.

when we update our website with the new notice, do we remove the old TAG notice?

FYI...

"Big victory for Florida bankers tonight, by a voice vote, the U.S. House of Representatives passed H.R. 6398 - To require the Federal Deposit Insurance Corporation to fully insure Interest on Lawyers Trust Accounts (Rep. Doggett - Financial Services). We still need the Senate to act on this bill, but passage by the House was a big step in a positive direction.

The FBA has been working the phone lines, has been in Washington several times pushing this bill with U.S. Senators friends of the FBA and with our House delegation as well. Tonight we have been in contact with our House delegation advocating passage of this bill. I want to thank our House members for their support. I also want to thank the American and Florida Bar Associations and our trade groups in DC, it has been pleasure working with them on this, but of course we are not done.

Thanks for supporting the FBA, without you, we would be a paper tigers. Our support has been tremendous this year from bankers who view the FBA as an investment not an expense, even though we are in these challenging times. We will update you again soon on this issue."

The ICBA just communicated that the House has approved a Bill to include IOLTAs in the unlimited insurance coverage. Should we continue with our notification of IOLTAs? We were going to use a statement message notifying NOW and IOLTAs that they would no longer be eligible for unlimited protection as of 12/31/10.

House Approves Bill to Include IOLTAs in FDIC Guarantee
The House passed ICBA-advocated legislation to add Interest on Lawyer’s Trust Accounts to the extension of the Transaction Account Guarantee Program, though the Senate still needs to act before the current TAG Program expires on Dec. 31. With the Senate focused on addressing high-priority budget and expiring tax measures in the short lame-duck session, it is unclear whether the chamber will act on the IOLTA issue. ICBA will continue working with Congress on the issue and will keep community bankers informed of the latest developments.

I guess my thoughts are that we keep going with the statement stuffer/statement message and if need be, notify IOLTAs that they are still covered if need be. What are others planning on doing?

We are doing a smt stuffer for the month of Dec - too late for us...we have already started.

I'm also doing the statement stuffer this month to all deposit accounts since we can't isolate the NOW/IOLTA for statement stuffer/message purposes.

My bank is considering underlining the sentence in the model notice "This temporary unlimited coverage is in addition to, and seperate from the coverage of at least $250,000..."

Would we still have 'safe harbor' if we altered the notice in that way?

You cannot assume that the Senate is going to go along with it. With pass-through coverage, most IOLTA balances, I imagine, are fully covered even under the $250,000 limit. Don't change course in your plans. You can always go back and notify the IOLTA customers if Congress does pass the amendment.

FYI,

Financial Institution Letter
Deposit Insurance Coverage for
Noninterest-Bearing Transaction Accounts
Free Nationwide Seminars for Bank Officers and Employees FIL-83-2010
December 6, 2010

Summary: The FDIC will host two identical telephone seminars for bank officers and employees that will explain the insurance coverage rules and disclosure requirements regarding the new temporary unlimited insurance coverage for noninterest-bearing transaction accounts at all FDIC-insured depository institutions. Each seminar will consist of a 30-minute audio and slide presentation, followed by a one-hour question-and-answer period. The seminars, which are free to officers and employees of FDIC-insured banks and savings associations, will be conducted on December 14 and December 16, 2010.

Distribution:
FDIC-Insured Institutions
Complete Financial Institution Letter: http://www.fdic.gov/news/news/financial/2010/fil10083.html

The FDIC does not send unsolicited e-mail. If this publication has reached you in error, or if you no longer wish to receive this service, please unsubscribe.

I have a question regarding the website notice. Is there a specific font size required for the notice?

Also, would we post this notice IN ADDITION to the previous FDIC notice regarding the permanent increase in insurance?

As far as I'm aware, there is no font size requirement. However, I'm sure the examiners will comment if they feel that it's not being displayed 'conspicuosly'.

Thanks Doug. Are you posting the new notice in addition to the previous notice about the permanent increase in the FDIC insurance?

We will be posting the new notice at the same time we replace the TAGP information on our web-site and in the lobbies. The FDIC Insurance is also on the web-site in the form of the 'sticker' or sign that appears at our teller stations.

Thanks Doug!

Is anyone send a cover letter with the Frank Dodd notice to all defined NOW acct and IOLTA account holders when sending a seperate notice (not inclusing in statement msg) or are you just sending the Frank Dodd model notice that has been provided ?

Help! I thought I understood this new requirement but one of my collegues listened to the webinar today and is telling me that even though we do NOT participate in the TAGP program we still have to give written notice to all of our customers who choose to do a auto transfer from a non interest checking to a interest bearing savings. That is not what I read and understood from the FDIC, this thread or from a lawyers recap. Our lobby notices are all set to go. Can someone please help me understand quickly whether I need to do this or not

There was a lot of conflicting information in the 12/16 FDIC call, according to my sources (I listened on the 14th). Go back to the FAQ page on the FDIC site at http://www.fdic.gov/deposit/deposits/unlimited/index.html and click on the link in the left column for the sweep account discussion. It was updated on 12/16, and it appears to apply only to "target balance" type sweeps.

So, John, do you think we can just disregard the discussion from yesterday's conference call? I was on the call and they stated over and over again that if the customer signs a form to set up recurring automatic transfers from a DDA to an interest-bearing account, that a notice (one-time) would be required. We're thinking of putting a couple sentences on our next cycle of DDA statements and also putting the notice on the transfer set-up form. I'd love to not have to do that, so I hope the FDIC posts more guidance.

Thanks for the info John. I'm so glad they came back and clarified that on the sweep accounts. That phone conference yesterday was a mess. The bankers all understood it one way and the presenters were giving very different information and I think we were all stressing a little and totally disagreeing with how they interpreted it.

If your FDIC examiner has read and sticks to the FAQ, I think you're OK applying it only to "target balance" sweeps. And, of course, to any decision to start paying interest on DDAs.

Of course, if your examiner goes "off message"....

I, too, hope the FDIC is watching our discussions here and takes the time to put a finer point on its FAQ definition of sweeps.

Spoke with FDIC this afternoon. They will be releasing more FAQs next week. The assured us we would not have to send notices to our customers that have preauthorized transfers to interest bearing accounts unless it is a feature of the product itself.

Thanks John for the clarification.

FAQ updated 12/20/2010 http://www.fdic.gov/deposit/deposits/unlimited/faq.pdf

Sorry to open an old thread. Are there any banks that still include this disclosure on bank statements? Thank you.

Good heavens! I certainly hope not! That rule has been dead and buried for a few years now.

Thank you.