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Tuesday, June 28, 2016

ABA Urges FDIC to Revise Deposit Recordkeeping Proposal

In a joint letter with three other financial trade associations, ABA responded to an FDIC proposal that would require banks with more than 2 million deposit accounts to collect extensive depositor information and develop systems that would allow the FDIC to close the bank and use the bank’s system to make deposit insurance determinations. The requirements are designed to facilitate rapid repayment of insured deposits to customers in the event of a large bank failure.

The letter pointed out that the cost analysis for the proposal understates its impact on affected institutions and does not take into account the ongoing costs to covered institutions that would arise from regularly collecting and maintaining current account information, IT systems and fulfilling exam requirements. Nor, the letter added, did the FDIC’s assessment take into account the effect on deposit account holders and the deposit markets in general. The groups offered suggestions to make the proposed processes more cost effective and less disruptive.

They also recommended that the FDIC exempt a number of deposit accounts, including certain trusts, employee benefit plans, brokered deposits, lawyers’ trust accounts and prepaid cards from the requirements, as banks would have no way to compel these accountholders to provide personal identification information on the ultimate owners of the funds.

Read the letter.

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