87734 Federal Register / Vol. 81, No. 233 / Monday, December 5, 2016 / Rules and Regulations
1 12 U.S.C. 1821(f)(1); 12 U.S.C. 1823(c)(4).
2 12 U.S.C. 1819(a) (Tenth), 1820(g),
1821(d)(4)(B)(iv).
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 370
RIN 3064–AE33
Recordkeeping for Timely Deposit
Insurance Determination
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: The FDIC is adopting a final
rule to facilitate prompt payment of
FDIC-insured deposits when large
insured depository institutions fail. The
final rule requires each insured
depository institution that has two
million or more deposit accounts to (1)
configure its information technology
system to be capable of calculating the
insured and uninsured amount in each
deposit account by ownership right and
capacity, which would be used by the
FDIC to make deposit insurance
determinations in the event of the
institution’s failure, and (2) maintain
complete and accurate information
needed by the FDIC to determine
deposit insurance coverage with respect
to each deposit account, except as
otherwise provided.
DATES: Effective April 1, 2017.
FOR FURTHER INFORMATION CONTACT:
Marc Steckel, Deputy Director, Division
of Resolutions and Receiverships, 571–
858–8224; Teresa J. Franks, Associate
Director, Division of Resolutions and
Receiverships, 571–858–8226; Shane
Kiernan, Counsel, Legal Division, 703–
562–2632; Karen L. Main, Counsel,
Legal Division, 703–562–2079.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
With this final rule (‘‘final rule’’), the
FDIC adopts regulatory requirements
that will facilitate the FDIC’s prompt
payment of deposit insurance after the
failure of insured depository institutions
(‘‘IDIs’’) with two million or more
deposit accounts. These institutions are
typically large and complex. By law, the
FDIC must pay deposit insurance ‘‘as
soon as possible’’ after an IDI fails while
also resolving the IDI in the manner
least costly to the Deposit Insurance
Fund (‘‘DIF’’).1 The FDIC believes that
prompt payment of deposit insurance is
essential to the FDIC’s mission for
several reasons. First, prompt payment
of deposit insurance maintains public
confidence in the FDIC, the banking
system and overall financial stability.
Second, facilitating prompt access to
insured funds for depositors enables
them to meet their financial needs and
obligations. A delay in the payment of
deposit insurance—especially in the
case of the failure of one of the largest
IDIs—could harm the entire financial
system and national economy. For
example, the failure of such a large IDI
could cause disruptions to check
clearing processes, direct debit
arrangements, or other payment system
functions. Third, prompt payment can
help to avoid a reduction in franchise
value by expanding options for
resolution thereby decreasing potential
losses to the DIF. Fourth, the final rule
seeks to promote long term stability in
the banking system by reducing moral
hazard.
The final rule is expected to
significantly reduce the difficulties the
FDIC would face in making prompt
deposit insurance determinations at the
largest IDIs. While the FDIC is
authorized to rely upon the deposit
account records of a failed IDI to
determine deposit insurance coverage,
the institution’s records can be
voluminous and inconsistent. Moreover,
they may be incomplete for deposit
insurance purposes. Consolidation of
the banking industry has resulted in
larger institutions that have more
complex information technology
systems (‘‘IT systems’’) and data
management challenges. The final rule
generally requires IDIs with two million
or more deposit accounts (‘‘covered
institutions’’) to maintain complete and
accurate depositor information and to
configure their IT systems in a manner
that permits the FDIC to calculate
deposit insurance coverage promptly in
the event of failure.
The final rule will facilitate
consideration of the full range of
resolution options that can be invoked
by the FDIC to resolve a covered
institution in a manner that satisfies the
least-cost resolution requirement. These
resolution methods include: Purchase-
and-assumption transactions;
establishment of bridge depository
institutions; and payout and liquidation,
in which the FDIC pays depositors the
insured amount of their deposits and
liquidates the failed IDI’s assets to pay
remaining claims. Expanding the range
of resolution options and including
those that impose losses on uninsured
depositors can also improve market
discipline.
In order to resolve a bank under the
least-cost requirement, the FDIC must be
able to estimate the cost to the DIF of
each possible resolution type. As part of
this estimate, the FDIC must be able to
rapidly identify insured versus
uninsured deposits. Insufficient
information about a bank’s insured
deposits and the difficulties posed in
identifying relationships between
deposit accounts at the time of closing,
due in part to the large volume of
deposit accounts managed by the
institution, may impede the FDIC’s
ability to meet the least-cost
requirement or to ensure timely access
to insured funds.
Covered institutions often use
multiple deposit systems, which
complicates deposit insurance
determinations. Depending on the
structure of the deposit systems, data
aggregation and account identification
may be burdensome, inefficient, and
time-consuming, all adding to the cost
of resolution. For certain types of
deposit accounts, depositors need daily
access to funds, so prompt payment is
essential to providing confidence and
maintaining financial stability. While
challenges resulting from incomplete
information are present when any bank
fails, obtaining the necessary
information could significantly delay
the availability of funds when
information is incomplete for a large
number of accounts. Such delays could
lead to a decrease in public confidence
in the FDIC’s deposit insurance
program. Ensuring the swift availability
of funds for millions of depositors at a
large institution promotes financial
stability by increasing confidence in
deposit insurance and availability of
funds.
Another of the final rule’s policy
objectives is that depositors at both large
and small failed banks receive the same
prompt access to their deposits with full
recognition of and respect for the
deposit insurance limits, which should
reduce potential disparities that might
undermine market discipline or create
unintended competitive advantages in
the deposit market. Confidence in the
ability of the FDIC to promptly
determine insured amounts and provide
access to insured deposits should help
uninsured depositors realize that they
may face losses in a large bank failure.
This realization should mitigate moral
hazard and help to curtail excessive risk
taking on the part of the largest banks.
II. Background
A. Legal Authority
The FDIC is authorized to prescribe
rules and regulations as it may deem
necessary to carry out the provisions of
the Federal Deposit Insurance Act (‘‘FDI
Act’’).2 Under the FDI Act, the FDIC is
responsible for paying deposit insurance
‘‘as soon as possible’’ following the
VerDate Sep<11>2014 19:28 Dec 02, 2016 Jkt 241001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\05DER3.SGM 05DER3
sradovich on DSK3GMQ082PROD with RULES3
1 12 U.S.C. 1821(f)(1); 12 U.S.C. 1823(c)(4).
2 12 U.S.C. 1819(a) (Tenth), 1820(g),
1821(d)(4)(B)(iv).
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 370
RIN 3064–AE33
Recordkeeping for Timely Deposit
Insurance Determination
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: The FDIC is adopting a final
rule to facilitate prompt payment of
FDIC-insured deposits when large
insured depository institutions fail. The
final rule requires each insured
depository institution that has two
million or more deposit accounts to (1)
configure its information technology
system to be capable of calculating the
insured and uninsured amount in each
deposit account by ownership right and
capacity, which would be used by the
FDIC to make deposit insurance
determinations in the event of the
institution’s failure, and (2) maintain
complete and accurate information
needed by the FDIC to determine
deposit insurance coverage with respect
to each deposit account, except as
otherwise provided.
DATES: Effective April 1, 2017.
FOR FURTHER INFORMATION CONTACT:
Marc Steckel, Deputy Director, Division
of Resolutions and Receiverships, 571–
858–8224; Teresa J. Franks, Associate
Director, Division of Resolutions and
Receiverships, 571–858–8226; Shane
Kiernan, Counsel, Legal Division, 703–
562–2632; Karen L. Main, Counsel,
Legal Division, 703–562–2079.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
With this final rule (‘‘final rule’’), the
FDIC adopts regulatory requirements
that will facilitate the FDIC’s prompt
payment of deposit insurance after the
failure of insured depository institutions
(‘‘IDIs’’) with two million or more
deposit accounts. These institutions are
typically large and complex. By law, the
FDIC must pay deposit insurance ‘‘as
soon as possible’’ after an IDI fails while
also resolving the IDI in the manner
least costly to the Deposit Insurance
Fund (‘‘DIF’’).1 The FDIC believes that
prompt payment of deposit insurance is
essential to the FDIC’s mission for
several reasons. First, prompt payment
of deposit insurance maintains public
confidence in the FDIC, the banking
system and overall financial stability.
Second, facilitating prompt access to
insured funds for depositors enables
them to meet their financial needs and
obligations. A delay in the payment of
deposit insurance—especially in the
case of the failure of one of the largest
IDIs—could harm the entire financial
system and national economy. For
example, the failure of such a large IDI
could cause disruptions to check
clearing processes, direct debit
arrangements, or other payment system
functions. Third, prompt payment can
help to avoid a reduction in franchise
value by expanding options for
resolution thereby decreasing potential
losses to the DIF. Fourth, the final rule
seeks to promote long term stability in
the banking system by reducing moral
hazard.
The final rule is expected to
significantly reduce the difficulties the
FDIC would face in making prompt
deposit insurance determinations at the
largest IDIs. While the FDIC is
authorized to rely upon the deposit
account records of a failed IDI to
determine deposit insurance coverage,
the institution’s records can be
voluminous and inconsistent. Moreover,
they may be incomplete for deposit
insurance purposes. Consolidation of
the banking industry has resulted in
larger institutions that have more
complex information technology
systems (‘‘IT systems’’) and data
management challenges. The final rule
generally requires IDIs with two million
or more deposit accounts (‘‘covered
institutions’’) to maintain complete and
accurate depositor information and to
configure their IT systems in a manner
that permits the FDIC to calculate
deposit insurance coverage promptly in
the event of failure.
The final rule will facilitate
consideration of the full range of
resolution options that can be invoked
by the FDIC to resolve a covered
institution in a manner that satisfies the
least-cost resolution requirement. These
resolution methods include: Purchase-
and-assumption transactions;
establishment of bridge depository
institutions; and payout and liquidation,
in which the FDIC pays depositors the
insured amount of their deposits and
liquidates the failed IDI’s assets to pay
remaining claims. Expanding the range
of resolution options and including
those that impose losses on uninsured
depositors can also improve market
discipline.
In order to resolve a bank under the
least-cost requirement, the FDIC must be
able to estimate the cost to the DIF of
each possible resolution type. As part of
this estimate, the FDIC must be able to
rapidly identify insured versus
uninsured deposits. Insufficient
information about a bank’s insured
deposits and the difficulties posed in
identifying relationships between
deposit accounts at the time of closing,
due in part to the large volume of
deposit accounts managed by the
institution, may impede the FDIC’s
ability to meet the least-cost
requirement or to ensure timely access
to insured funds.
Covered institutions often use
multiple deposit systems, which
complicates deposit insurance
determinations. Depending on the
structure of the deposit systems, data
aggregation and account identification
may be burdensome, inefficient, and
time-consuming, all adding to the cost
of resolution. For certain types of
deposit accounts, depositors need daily
access to funds, so prompt payment is
essential to providing confidence and
maintaining financial stability. While
challenges resulting from incomplete
information are present when any bank
fails, obtaining the necessary
information could significantly delay
the availability of funds when
information is incomplete for a large
number of accounts. Such delays could
lead to a decrease in public confidence
in the FDIC’s deposit insurance
program. Ensuring the swift availability
of funds for millions of depositors at a
large institution promotes financial
stability by increasing confidence in
deposit insurance and availability of
funds.
Another of the final rule’s policy
objectives is that depositors at both large
and small failed banks receive the same
prompt access to their deposits with full
recognition of and respect for the
deposit insurance limits, which should
reduce potential disparities that might
undermine market discipline or create
unintended competitive advantages in
the deposit market. Confidence in the
ability of the FDIC to promptly
determine insured amounts and provide
access to insured deposits should help
uninsured depositors realize that they
may face losses in a large bank failure.
This realization should mitigate moral
hazard and help to curtail excessive risk
taking on the part of the largest banks.
II. Background
A. Legal Authority
The FDIC is authorized to prescribe
rules and regulations as it may deem
necessary to carry out the provisions of
the Federal Deposit Insurance Act (‘‘FDI
Act’’).2 Under the FDI Act, the FDIC is
responsible for paying deposit insurance
‘‘as soon as possible’’ following the
VerDate Sep<11>2014 19:28 Dec 02, 2016 Jkt 241001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\05DER3.SGM 05DER3
sradovich on DSK3GMQ082PROD with RULES3
87735Federal Register / Vol. 81, No. 233 / Monday, December 5, 2016 / Rules and Regulations
3 12 U.S.C. 1821(f)(1).
4 12 U.S.C. 1823(c)(4).
5 12 U.S.C. 1821(a)(1)(C), 1821(a)(1)(E).
6 12 U.S.C. 1822(c), 12 CFR 330.5.
7 12 U.S.C. 1817(a)(9).
8 12 CFR 360.9. See 73 FR 41180 (July 17, 2008).
9 12 CFR 360.9(b)(1).
10 In their final Call Reports (2Q–08) Washington
Mutual reported 42 million deposit accounts and
Wachovia reported 29 million deposit accounts.
failure of an IDI.3 It must also
implement the resolution of a failed IDI
at the least cost to the DIF.4 To pay
deposit insurance, the FDIC uses a
failed IDI’s records to aggregate the
amounts of all deposits that are
maintained by a depositor in the same
right and capacity and then applies the
standard maximum deposit insurance
amount (‘‘SMDIA’’) of $250,000.5 As
authorized by law, the FDIC generally
relies on the failed institution’s deposit
account records to identify deposit
owners and the right and capacity in
which deposits are maintained.6 The
FDIC has a right and a duty under
section 7(a)(9) of the FDI Act to take
action as necessary to ensure that each
IDI maintains, and the FDIC receives on
a regular basis from such IDI,
information on the total amount of all
insured deposits, preferred deposits,
and uninsured deposits at the
institution.7 Requiring covered
institutions to maintain complete and
accurate records regarding the
ownership and insurability of deposits
and to have an IT system that can be
used to calculate deposit insurance
coverage in the event of failure will
facilitate the FDIC’s prompt payment of
deposit insurance and enhance the
ability to implement the least costly
resolution of these institutions.
B. Current Regulatory Approach
Although the statutory requirement
that the FDIC pay insurance ‘‘as soon as
possible’’ does not specify a time period
for paying insured depositors, the FDIC
strives to pay depositors promptly in the
event of an IDI’s failure. Indeed, the
FDIC strives to make most insured
deposits available to depositors by the
next business day after a bank fails. For
the reasons set forth earlier, the FDIC
believes that prompt payment of deposit
insurance is essential.
The FDIC took an initial step toward
ensuring that prompt deposit insurance
determinations could be made at large
IDIs through the issuance of § 360.9 of
the FDIC’s regulations.8 Section 360.9
applies to IDIs with at least $2 billion
in domestic deposits and at least
250,000 deposit accounts or $20 billion
in total assets.9 Currently, there are 155
IDIs that meet those criteria. Section
360.9 requires these institutions to be
able to provide the FDIC with standard
deposit account information that can be
used in the event of the institution’s
failure. The appendices to 12 CFR part
360 prescribe the form and content of
the data files that those institutions
must provide to the FDIC. Section 360.9
also requires these institutions to
maintain the technological capability to
automatically place (and later release)
provisional holds on deposit accounts if
an insurance determination could not be
made by the FDIC by the next business
day after failure. Additionally, large
volumes of deposit account data must
be transferred from the IDI to the FDIC
pursuant to § 360.9, which could cause
further delay.
While § 360.9 would assist the FDIC
in fulfilling its legal mandates regarding
the resolution of a failed institution that
is subject to that rule, the FDIC believes
that if the largest of depository
institutions were to fail with little prior
warning, additional measures would be
needed to ensure the prompt and
accurate payment of deposit insurance
to all depositors.
C. Need for Further Rulemaking
The FDIC is authorized to rely upon
the deposit account records of a failed
IDI to determine the amount of deposit
insurance available on each account.
However, in the FDIC’s experience, it is
not unusual for a failed bank’s records
to be ambiguous or incomplete. For
example, an account may be titled as a
joint account but may not qualify to be
insured as a joint account because
signature cards are missing or have not
been signed by all joint account holders.
A further complication is that bank
records on trust accounts are often in
paper form or electronically scanned
images that require a time-consuming
manual review.
In addition to problems with
ambiguity or incompleteness of an
institution’s records, it is also possible
that an institution simply is not
required to maintain record of the
beneficial owners of deposits with
respect to certain types of deposit
accounts under the existing regulatory
framework. For example, under part
330, a deposit may be insured even if
record of beneficial ownership is
maintained outside of the IDI by an
agent or third party that has been
designated to maintain such record.
Under each of these circumstances, in
order to ensure the accurate payment of
deposit insurance without imposing risk
of overpayment by the DIF, the FDIC
would need to delay the payment of
deposit insurance while it manually
reviews files and obtains additional
information. Such delays in the
insurance determination process could
increase the likelihood of disruptions to
an assuming institution’s or an FDIC-
managed bridge depository institution’s
payment processing functions, such as
clearing checks and authorizing direct
debits.
While these challenges to accurately
determining and promptly paying
deposit insurance may be present at any
size of failed institution, they become
increasingly formidable as the size and
complexity of the institution increases.
Larger institutions are generally more
complex, have more deposit accounts,
greater geographic dispersion, multiple
deposit systems, and more issues with
data accuracy and completeness. The
largest IDIs which grew through
acquisition have inherited the legacy
recordkeeping and deposit account
systems of the acquired banks. Those
systems might have inaccurate or
incomplete deposit account records.
Additionally, acquired records might
not be automated or compatible with the
acquiring institution’s deposit systems,
resulting in use of multiple deposit
platforms.
Although some of the largest
institutions are able to conduct their
banking operations without integrating
these inherited systems or updating the
acquired deposit account records, the
state of their deposit systems would
complicate and prolong the deposit
insurance determination process in the
event of failure. Because of the potential
problems posed by delays in
determination and payment of deposit
insurance, improved strategies must be
implemented to ensure that deposit
insurance can be paid promptly.
The FDIC’s experiences during the
most recent financial crisis, which
peaked in the months following the
promulgation of § 360.9, indicated that
failures can often happen with very
little notice and time for the FDIC to
prepare. Since 2009, the FDIC was
called upon to resolve 47 institutions
with 30 days or less to plan the
resolution (which includes review of
deposit account records). While these 47
institutions were smaller, the financial
condition of two banks with a very large
number of deposit accounts—
Washington Mutual Bank and
Wachovia—deteriorated very quickly,
also leaving the FDIC little time to
prepare.10 If a large bank were to fail
because of liquidity problems rather
than capital deterioration, for example,
the FDIC would anticipate having less
lead time to prepare to make deposit
insurance determinations, which could
result in the need for more time post-
VerDate Sep<11>2014 19:28 Dec 02, 2016 Jkt 241001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\05DER3.SGM 05DER3
sradovich on DSK3GMQ082PROD with RULES3
3 12 U.S.C. 1821(f)(1).
4 12 U.S.C. 1823(c)(4).
5 12 U.S.C. 1821(a)(1)(C), 1821(a)(1)(E).
6 12 U.S.C. 1822(c), 12 CFR 330.5.
7 12 U.S.C. 1817(a)(9).
8 12 CFR 360.9. See 73 FR 41180 (July 17, 2008).
9 12 CFR 360.9(b)(1).
10 In their final Call Reports (2Q–08) Washington
Mutual reported 42 million deposit accounts and
Wachovia reported 29 million deposit accounts.
failure of an IDI.3 It must also
implement the resolution of a failed IDI
at the least cost to the DIF.4 To pay
deposit insurance, the FDIC uses a
failed IDI’s records to aggregate the
amounts of all deposits that are
maintained by a depositor in the same
right and capacity and then applies the
standard maximum deposit insurance
amount (‘‘SMDIA’’) of $250,000.5 As
authorized by law, the FDIC generally
relies on the failed institution’s deposit
account records to identify deposit
owners and the right and capacity in
which deposits are maintained.6 The
FDIC has a right and a duty under
section 7(a)(9) of the FDI Act to take
action as necessary to ensure that each
IDI maintains, and the FDIC receives on
a regular basis from such IDI,
information on the total amount of all
insured deposits, preferred deposits,
and uninsured deposits at the
institution.7 Requiring covered
institutions to maintain complete and
accurate records regarding the
ownership and insurability of deposits
and to have an IT system that can be
used to calculate deposit insurance
coverage in the event of failure will
facilitate the FDIC’s prompt payment of
deposit insurance and enhance the
ability to implement the least costly
resolution of these institutions.
B. Current Regulatory Approach
Although the statutory requirement
that the FDIC pay insurance ‘‘as soon as
possible’’ does not specify a time period
for paying insured depositors, the FDIC
strives to pay depositors promptly in the
event of an IDI’s failure. Indeed, the
FDIC strives to make most insured
deposits available to depositors by the
next business day after a bank fails. For
the reasons set forth earlier, the FDIC
believes that prompt payment of deposit
insurance is essential.
The FDIC took an initial step toward
ensuring that prompt deposit insurance
determinations could be made at large
IDIs through the issuance of § 360.9 of
the FDIC’s regulations.8 Section 360.9
applies to IDIs with at least $2 billion
in domestic deposits and at least
250,000 deposit accounts or $20 billion
in total assets.9 Currently, there are 155
IDIs that meet those criteria. Section
360.9 requires these institutions to be
able to provide the FDIC with standard
deposit account information that can be
used in the event of the institution’s
failure. The appendices to 12 CFR part
360 prescribe the form and content of
the data files that those institutions
must provide to the FDIC. Section 360.9
also requires these institutions to
maintain the technological capability to
automatically place (and later release)
provisional holds on deposit accounts if
an insurance determination could not be
made by the FDIC by the next business
day after failure. Additionally, large
volumes of deposit account data must
be transferred from the IDI to the FDIC
pursuant to § 360.9, which could cause
further delay.
While § 360.9 would assist the FDIC
in fulfilling its legal mandates regarding
the resolution of a failed institution that
is subject to that rule, the FDIC believes
that if the largest of depository
institutions were to fail with little prior
warning, additional measures would be
needed to ensure the prompt and
accurate payment of deposit insurance
to all depositors.
C. Need for Further Rulemaking
The FDIC is authorized to rely upon
the deposit account records of a failed
IDI to determine the amount of deposit
insurance available on each account.
However, in the FDIC’s experience, it is
not unusual for a failed bank’s records
to be ambiguous or incomplete. For
example, an account may be titled as a
joint account but may not qualify to be
insured as a joint account because
signature cards are missing or have not
been signed by all joint account holders.
A further complication is that bank
records on trust accounts are often in
paper form or electronically scanned
images that require a time-consuming
manual review.
In addition to problems with
ambiguity or incompleteness of an
institution’s records, it is also possible
that an institution simply is not
required to maintain record of the
beneficial owners of deposits with
respect to certain types of deposit
accounts under the existing regulatory
framework. For example, under part
330, a deposit may be insured even if
record of beneficial ownership is
maintained outside of the IDI by an
agent or third party that has been
designated to maintain such record.
Under each of these circumstances, in
order to ensure the accurate payment of
deposit insurance without imposing risk
of overpayment by the DIF, the FDIC
would need to delay the payment of
deposit insurance while it manually
reviews files and obtains additional
information. Such delays in the
insurance determination process could
increase the likelihood of disruptions to
an assuming institution’s or an FDIC-
managed bridge depository institution’s
payment processing functions, such as
clearing checks and authorizing direct
debits.
While these challenges to accurately
determining and promptly paying
deposit insurance may be present at any
size of failed institution, they become
increasingly formidable as the size and
complexity of the institution increases.
Larger institutions are generally more
complex, have more deposit accounts,
greater geographic dispersion, multiple
deposit systems, and more issues with
data accuracy and completeness. The
largest IDIs which grew through
acquisition have inherited the legacy
recordkeeping and deposit account
systems of the acquired banks. Those
systems might have inaccurate or
incomplete deposit account records.
Additionally, acquired records might
not be automated or compatible with the
acquiring institution’s deposit systems,
resulting in use of multiple deposit
platforms.
Although some of the largest
institutions are able to conduct their
banking operations without integrating
these inherited systems or updating the
acquired deposit account records, the
state of their deposit systems would
complicate and prolong the deposit
insurance determination process in the
event of failure. Because of the potential
problems posed by delays in
determination and payment of deposit
insurance, improved strategies must be
implemented to ensure that deposit
insurance can be paid promptly.
The FDIC’s experiences during the
most recent financial crisis, which
peaked in the months following the
promulgation of § 360.9, indicated that
failures can often happen with very
little notice and time for the FDIC to
prepare. Since 2009, the FDIC was
called upon to resolve 47 institutions
with 30 days or less to plan the
resolution (which includes review of
deposit account records). While these 47
institutions were smaller, the financial
condition of two banks with a very large
number of deposit accounts—
Washington Mutual Bank and
Wachovia—deteriorated very quickly,
also leaving the FDIC little time to
prepare.10 If a large bank were to fail
because of liquidity problems rather
than capital deterioration, for example,
the FDIC would anticipate having less
lead time to prepare to make deposit
insurance determinations, which could
result in the need for more time post-
VerDate Sep<11>2014 19:28 Dec 02, 2016 Jkt 241001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\05DER3.SGM 05DER3
sradovich on DSK3GMQ082PROD with RULES3