A proposal aimed at clarifying and easing the burden associated with a rule affecting large federally insured depository institutions’ (IDIs) responsibilities for helping facilitate timely deposit insurance determinations by regulators is out for comment until May 13.
The proposal by the Federal Deposit Insurance Corp. (FDIC), published in the Federal Register Thursday, would revise Part 370 of the FDIC rules that relate to the deposit insurance agency’s ability to promptly determine deposit insurance coverage in the event a covered institution fails.
The FDIC proposes to establish the option to extend the part 370 compliance date (by up to a year, for example) for certain institutions; simplify the process for requesting exception from the rule’s requirements; amend the scope of certain provisions; and make technical amendments.
Part 370 requires each IDI with 2 million or more deposit accounts (each a covered institution) to (1) configure its information technology system (IT system) to be capable of calculating the insured and uninsured amount in each deposit account by right and capacity, for use by the FDIC in making 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.
The proposed rule addresses concerns raised by covered institutions, industry consultants, information technology service providers, and agents placing deposits on behalf of others, who identified rule provisions that are unclear or unduly burdensome. The FDIC says the proposed amendments are likely to reduce compliance burdens for covered institutions “while still ensuring that covered institutions implement the recordkeeping and IT system capabilities needed by the FDIC to make a timely deposit insurance determination for an IDI of such size and scale.”