FDIC adopts final rule on signage, deposit insurance misrepresentation

The FDIC board today unanimously voted in favor of a final rule to modernize requirements regarding the display of the official FDIC sign in banks and bank digital channels, with an emphasis on ensuring consumers can easily differentiate between those products that are covered by deposit insurance and those that are not.

Among its provisions, the final rule will require the display of the official sign, a new official digital sign and other signs differentiating between deposits and non-deposit products across all banking channels, including physical bank branches, non-branch locations, ATMs, and digital channels such as bank websites and mobile applications. Banks will be required to maintain policies and procedures on compliance, and those policies must include provisions on monitoring activities by third parties that provide deposit-related services to a bank or on behalf of a bank. It also would clarify rules regarding misrepresentations of deposit insurance coverage by nonbanks, such as by amending the definition of “non-insurance products” to include crypto assets. Banks will be required to comply with the rule starting on Jan. 1, 2025.

The final rule includes several improvements from the original proposal earlier this year, according to FDIC Vice Chairman Travis Hill, who voted in favor of the rule despite having reservations about it. For example, the final rule allows banks with existing ATMs that don’t offer non-deposit products to display a physical sign rather than the new digital sign. It also clarifies the FDIC’s expectations for circumstances where it is challenging to physically segregate the offering of deposit and deposit products at a physical location. “I support the goals of promoting awareness of FDIC insurance, ensuring clear delineation between FDIC insured deposits and uninsured non-deposit products, and providing additional clarity regarding the FDIC expectations for nonbanks that make representations or misrepresentations of deposit insurance,” he said.

FDIC to bolster supervisory, resolution staff

The FDIC board also unanimously approved a nearly $3 billion budget for 2024 that includes funding for 189 new positions, primarily in bank supervision and resolution. The new positions will focus mainly on large banks, which is partly in response to bank failures earlier this year, according to the agency.

The 2024 budget represents a 6% decrease from the FDIC’s current operating budget, according to the agency. The new positions come after the General Accountability Office and an independent investigator issued reports earlier this year that found missteps in the FDIC’s supervision of Signature Bank before its failure. A separate independent report found similar problems in its supervision of First Republic Bank. With the increase, the FDIC will have a total authorized staffing level of 6,817 full-time equivalent positions, although the agency has not been able to fill all its available job openings in recent years. Read a board memo on the 2024 budget.