With the exception of FDIC advertising requirements, FDIC insurance rules are generally not our area of expertise. However, we have been receiving so many questions from our clients about changes to the FDIC’s Transaction Account Guarantee Program (TAGP) that I decided to put together some information.
Due to the Frank-Dodd Reform Act, your bank may need to post a new lobby disclosure and possibly be required to provide new disclosures within the next 45 days. What am I talking about? Well, if your bank offers noninterest-bearing transaction accounts you will need to post a notice in your lobby that explains from December 31, 2010 through December 31, 2012 all noninterest-bearing transaction accounts are fully insured. In addition, this temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000.00 available to depositors under the FDIC’s general deposit insurance rules.
Here is the sample lobby notice:
NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION ACCOUNTS
All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.
The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, money-market deposit accounts, and Interest on Lawyers Trust Accounts (“IOLTAs”).
For more information about temporary FDIC insurance coverage of transaction accounts, visit http://www.fdic.gov/.
In addition, if your bank participates in the TAGP, a notice is required to be mailed to customers with negotiable order of withdrawal accounts that are fully insured as of the date under the TAGP program and to depositors with Interest on Lawyer Trust Accounts that, as of January 1, 2011, these accounts will no longer be eligible for unlimited protection. This notice must be provided prior to December 31, 2010.