Financial Institution Letter
FIL-109-2006
December 21, 2006
LARGE-BANK DEPOSIT INSURANCE
DETERMINATION MODERNIZATION PROPOSAL
Advance Notice of Proposed Rulemaking
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
Summary: The FDIC is seeking comments on whether and how the largest insured depository
institutions should be required to modify their deposit systems so that the FDIC may calculate
deposit insurance coverage quickly in the event of an institution’s failure. Attached is the
Advance Notice of Proposed Rulemaking (ANPR). Comments are due by March 13, 2007.
Distribution:
All Insured Depository Institutions
Suggested Routing:
Chief Executive Officer
Chief Operations Officer
Related Topics:
Deposit Insurance Coverage
12 C.F.R. Part 330
Attachment:
Advance Notice of Proposed Rulemaking
Contact:
James Marino, Project Manager, Division of
Resolutions and Receiverships, at
jmarino@fdic.gov or 202-898-7151; or Joseph A.
DiNuzzo, Counsel, Legal Division, at
jdinuzzo@fdic.gov or (202) 898-7349
Highlights:
• The FDIC is modernizing its current business
processes and procedures for determining
deposit insurance coverage in the event of a
failure of one of the largest insured depository
institutions (i.e., the 159 institutions with more
than 250,000 deposit accounts and more than $2
billion in domestic deposits, or at least $20 billion
in total assets and $2 billion in domestic deposits,
regardless of the number of deposit accounts).
• The proposed approach in the attached ANPR
would require the largest institutions to modify
their deposit systems so that the FDIC may
calculate deposit insurance coverage quickly in
the event of failure.
• The FDIC originally solicited comments on this
topic in December 2005. Based on its review of
the comments, the FDIC has decided to seek
additional comments on a new approach that
would divide the larger insured institutions into
two tiers, each with different requirements.Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2006/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters
may be obtained from the FDIC's Public
Information Center, 3501 Fairfax Drive, E-1002,
Arlington, VA 22226 (1-877-275-3342 or 703-562-
2200).
FIL-109-2006
December 21, 2006
LARGE-BANK DEPOSIT INSURANCE
DETERMINATION MODERNIZATION PROPOSAL
Advance Notice of Proposed Rulemaking
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
Summary: The FDIC is seeking comments on whether and how the largest insured depository
institutions should be required to modify their deposit systems so that the FDIC may calculate
deposit insurance coverage quickly in the event of an institution’s failure. Attached is the
Advance Notice of Proposed Rulemaking (ANPR). Comments are due by March 13, 2007.
Distribution:
All Insured Depository Institutions
Suggested Routing:
Chief Executive Officer
Chief Operations Officer
Related Topics:
Deposit Insurance Coverage
12 C.F.R. Part 330
Attachment:
Advance Notice of Proposed Rulemaking
Contact:
James Marino, Project Manager, Division of
Resolutions and Receiverships, at
jmarino@fdic.gov or 202-898-7151; or Joseph A.
DiNuzzo, Counsel, Legal Division, at
jdinuzzo@fdic.gov or (202) 898-7349
Highlights:
• The FDIC is modernizing its current business
processes and procedures for determining
deposit insurance coverage in the event of a
failure of one of the largest insured depository
institutions (i.e., the 159 institutions with more
than 250,000 deposit accounts and more than $2
billion in domestic deposits, or at least $20 billion
in total assets and $2 billion in domestic deposits,
regardless of the number of deposit accounts).
• The proposed approach in the attached ANPR
would require the largest institutions to modify
their deposit systems so that the FDIC may
calculate deposit insurance coverage quickly in
the event of failure.
• The FDIC originally solicited comments on this
topic in December 2005. Based on its review of
the comments, the FDIC has decided to seek
additional comments on a new approach that
would divide the larger insured institutions into
two tiers, each with different requirements.Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2006/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters
may be obtained from the FDIC's Public
Information Center, 3501 Fairfax Drive, E-1002,
Arlington, VA 22226 (1-877-275-3342 or 703-562-
2200).
2
Financial Institution Letter
FIL-109-2006
December 21, 2006
LARGE-BANK DEPOSIT INSURANCE DETERMINATION MODERNIZATION PROPOSAL
Advance Notice of Proposed Rulemaking
The Federal Deposit Insurance Corporation (FDIC) has issued the attached Advance Notice of Proposed
Rulemaking (ANPR) to seek comments on proposed improvements to the process of determining the
insurance status of depositors of larger institutions in the event of a failure. The FDIC originally solicited
comments on this topic in December 2005. Based on its review of the comments, the FDIC has decided
to seek additional comments on a new approach.
The FDIC's ability to rapidly determine the insured status of deposit accounts is essential to resolving
bank failures in the most cost effective and least disruptive fashion. While the banking industry today is
healthier than at any point in the nearly 75-year history of the FDIC, consolidation in the industry has
resulted in larger, more geographically diverse and complex institutions. Some of these institutions have
millions of deposit accounts, far more than any institution that the FDIC has resolved in the past. Because
of these recent changes in the industry, the FDIC is seeking to update and modernize the deposit claims
process. This is an appropriate time to consider such modernization because there are no perceived or
imminent problems facing any of the large institutions.
For purposes of the ANPR, a large institution would have more than 250,000 deposit accounts and $2
billion in domestic deposits, or at least $20 billion in total assets and $2 billion in domestic deposits,
regardless of the number of deposit accounts. Currently, 159 institutions out of the more than 8,700
insured by the FDIC meet the criteria.
The FDIC reviewed and considered the 28 comments received from the first ANPR. Based on its
deliberations, the FDIC is soliciting comments on the following proposed new approach, which divides
large institutions into two tiers:
• Tier 1 would include the most complex of the large institutions. They would be required to:
o Identify the owner(s) of each account by using a unique depositor identifier.
o Provide the FDIC a standard data framework; the format and content of the data structure
for this framework will be developed in cooperation with insured institutions.
o Provide the FDIC a standardized data structure to compute a trial balance or supply the
institution's actual closing trial balance.
o Calculate and place provisional holds automatically in the event of failure.
o Remove provisional holds to be replaced by the FDIC-supplied holds/debits as reflected by
the deposit insurance determination results.
• Tier 2 would include the remainder of large institutions. Requirements for this tier would be
similar to Tier 1, except that a unique depositor identifier would not be required.
The ANPR also requests comment on whether large institutions should be encouraged or required to
know the insurance status for each new account opened and/or notify the customer of this status. Further
comment is requested on whether a unique depositor identifier and insurance category should be required
for new accounts.
Financial Institution Letter
FIL-109-2006
December 21, 2006
LARGE-BANK DEPOSIT INSURANCE DETERMINATION MODERNIZATION PROPOSAL
Advance Notice of Proposed Rulemaking
The Federal Deposit Insurance Corporation (FDIC) has issued the attached Advance Notice of Proposed
Rulemaking (ANPR) to seek comments on proposed improvements to the process of determining the
insurance status of depositors of larger institutions in the event of a failure. The FDIC originally solicited
comments on this topic in December 2005. Based on its review of the comments, the FDIC has decided
to seek additional comments on a new approach.
The FDIC's ability to rapidly determine the insured status of deposit accounts is essential to resolving
bank failures in the most cost effective and least disruptive fashion. While the banking industry today is
healthier than at any point in the nearly 75-year history of the FDIC, consolidation in the industry has
resulted in larger, more geographically diverse and complex institutions. Some of these institutions have
millions of deposit accounts, far more than any institution that the FDIC has resolved in the past. Because
of these recent changes in the industry, the FDIC is seeking to update and modernize the deposit claims
process. This is an appropriate time to consider such modernization because there are no perceived or
imminent problems facing any of the large institutions.
For purposes of the ANPR, a large institution would have more than 250,000 deposit accounts and $2
billion in domestic deposits, or at least $20 billion in total assets and $2 billion in domestic deposits,
regardless of the number of deposit accounts. Currently, 159 institutions out of the more than 8,700
insured by the FDIC meet the criteria.
The FDIC reviewed and considered the 28 comments received from the first ANPR. Based on its
deliberations, the FDIC is soliciting comments on the following proposed new approach, which divides
large institutions into two tiers:
• Tier 1 would include the most complex of the large institutions. They would be required to:
o Identify the owner(s) of each account by using a unique depositor identifier.
o Provide the FDIC a standard data framework; the format and content of the data structure
for this framework will be developed in cooperation with insured institutions.
o Provide the FDIC a standardized data structure to compute a trial balance or supply the
institution's actual closing trial balance.
o Calculate and place provisional holds automatically in the event of failure.
o Remove provisional holds to be replaced by the FDIC-supplied holds/debits as reflected by
the deposit insurance determination results.
• Tier 2 would include the remainder of large institutions. Requirements for this tier would be
similar to Tier 1, except that a unique depositor identifier would not be required.
The ANPR also requests comment on whether large institutions should be encouraged or required to
know the insurance status for each new account opened and/or notify the customer of this status. Further
comment is requested on whether a unique depositor identifier and insurance category should be required
for new accounts.