Alert July 29, 2008

FDIC Issues Interim Rule on Insurance Coverage of Accounts at Failed Banks

The FDIC issued an interim rule establishing its practices for determining deposit and other liability account balances at failed banks. Under the rule, the FDIC will require banks to prominently disclose to sweep account customers whether the swept funds are deposits and the status of the swept funds if the bank were to fail. The FDIC is soliciting comment on all aspects of the rule. Comments are due by September 15, 2008. The rule becomes effective on August 18, 2008; however, the effective date of the sweep account disclosure requirement will be deferred until July 1, 2009, to allow the FDIC to consider comments. Click here for the rule. In related rulemaking, the FDIC also issued a proposed rule concerning recordkeeping requirements for qualified financial contracts held by banks in troubled condition. Click here for this proposal.