The FDIC issued a final rule on processing deposit accounts in the event of a bank failure. The rule establishes the FDIC's practices for determining, for deposit insurance and receivership purposes, deposit and other account balances at failed banks. Effective July 1, 2009, the rule requires banks to inform their sweep account customers of the nature of their swept funds and how those funds would be treated if the bank should fail. Excluded from the requirement are sweep arrangements where funds are moved between deposit accounts and the deposit insurance available to the customer is unchanged. The preamble to the rule provides examples of commonly used sweep transactions indicating in each case how the swept funds would be treated in the event of failure. The rule is effective on March 4, 2009, except for the customer disclosure requirements, which are effective July 1, 2009. Click here for the rule.
Alert February 10, 2009