ABA: Allow Enough Time for Insured Deposit Determination Change

The new recordkeeping standards contemplated by the FDIC for banks with more than 2 million deposit accounts — intended to help the agency determine promptly whether deposits are insured or not after a bank fails — would require major upgrades to bank IT systems, ABA said in a comment letter yesterday.

The standards, estimated to apply to about three dozen of the country’s largest banks, would shift the burden of making determinations from the FDIC to the insured institutions, using the systems, data and staff of the failed bank to calculate the insured and uninsured amounts for each deposit account at the end of any business day.

Based on consultations with the covered banks, ABA said that the banks “believe they can ultimately be prepared to satisfy the FDIC’s intent,” provided they have sufficient time — at least four years — to implement the new systems and that the FDIC provides the information and support needed to implement the new standards.

ABA noted that banks should not be required to hold information on trust accounts and other accounts where confidentiality is required. ABA also urged the FDIC to be flexible in working with covered banks throughout the process. For more information, contact ABA’s Robert Strand.