FDIC Guidance On Expiring Insurance Coverage

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.

Published
2012/11/21

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