Heads up! The unlimited deposit insurance coverage for noninterest-bearing transaction accounts (NIBTAs), including Interest on Lawyer Trust Accounts, will be expiring on December 31, 2012. On January 1, 2013, they will fall under the current FDIC insurance coverage limits; which generally provides each depositor up to $250,000 in coverage.
The FDIC recently issued FIL-45-2012; which “encourages” banks to provide their NIBTA depositors an adequate advance notice of this change and how it will affect their coverage. Some frequently asked questions and answers regarding the NIBTA coverage expiration were also issued. Again, notification is encouraged not required.
According to the FDIC adequate notice would include:
- Providing NIBTA depositors adequate advance notice in writing that the temporary unlimited coverage for NIBTA deposits is scheduled to expire on December 31, 2012, and thereafter the FDIC will insure NIBTAs up to $250,000 per depositor. Model notice language is provided in the FIL.
- Remove from their main offices, branches and Web sites the “Notice of Changes in Temporary FDIC Insurance Coverage for Transaction Accounts” required by 12 C.F.R. §330.16(c)(1).
- Review NIBTA account agreements and related disclosure statements and modify the documents as necessary to reflect accurately NIBTA coverage on January 1, 2013.
Here’s our take. While you can certainly begin notifying your affected customers now, there’s still a chance Congress could extend the unlimited coverage beyond December 31st. If that happens, you may end up notifying your customers twice. Once to say the coverage is expiring and another to say it isn’t. Why do more work than you have to? We recommend waiting this out a bit. Since there are no “requirements”, you have some latitude. Maybe you only have a few affected customers. Why not call them if the program isn’t extended? In our minds this really comes down to customer service as much as compliance.
David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.
He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transforms the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM) and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.
David and his wife Karen have three adult children, four grandchildren (none of whom live at home!) and two cats (of which Dave is allergic … the cats, not the children!). They recently moved to an acreage outside of Lincoln, Nebraska where he gets to play with his tractor. When possible David can be found fishing, making sawdust in his shop, or playing the guitar and piano. He also enjoys leading worship at his church.