ABA Urges FDIC to Modify Proposed Deposit Insurance Rules for Trust, Mortgage Servicing Accounts

The American Bankers Association and two other banking trade groups urged the FDIC yesterday to address concerns about proposed changes to regulations regarding deposit insurance rules for revocable trusts, irrevocable trusts and mortgage servicing accounts.

The groups told the FDIC that proposed amendments to the FDIC’s rule 12 CFR Part 330 would simplify complex deposit insurance calculations, but added that the changes “should incorporate clarifications and examples that would enhance the understanding of insurance coverage by bankers.”

To allow institutions time to perform the necessary compliance work, amend internal technology systems and revise customer disclosures, the compliance date should be delayed four years, the groups wrote. The groups also recommended that the FDIC qualify institutional trusts for pass-through insurance, interpret broadly the new scope of deposit insurance coverage for mortgage servicing accounts, and treat beneficiaries in the form of a “future trust” as another single type of “eligible beneficiary.”