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Temporary Unlimited FDIC Coverage for Noninterest-Bearing Transaction Accounts (Including IOLTA Accounts)

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Implementation of the Dodd-Frank Deposit Insurance Provision
Section 627 of the DFA (Eliminating the Prohibition on the Payment of Interest on Demand Deposit Accounts)
Disclosure Requirements of the Dodd-Frank Deposit Insurance Provision
Notice Requirement for Account Modifications (including Modifications to Demand Deposit Accounts to Allow Interest Accrual) and Sweep Accounts
Termination of the TAGP

32) Did the FDIC extend the TAGP beyond its expiration date of December 31, 2010?

No.  The FDIC did not extend the TAGP beyond its sunset date of December 31, 2010.  On the same day that the TAGP expired – December 31, 2010 – the Dodd-Frank Provision became effective.  There was a one-day overlap of the TAGP and the Dodd-Frank Provision.

33) What are the disclosure requirements relating to the expiration of TAGP?

In order to avoid potential depositor confusion about the change in the FDIC’s treatment of NOW and IOLTA accounts, the November Final Rule originally required that all IDIs participating in the TAGP on December 31, 2010 provide individual notices to both IOLTA and NOW account depositors whose accounts were fully guaranteed under TAGP that those accounts would not be fully insured under the new Dodd-Frank Provision.  Pursuant to the December 29 Act, IOLTAs are now insured as noninterest-bearing transaction accounts through December 31, 2012.  Financial Institution Letter FIL-2-2011 provides for IDIs that were participating in the TAGP at year-end 2010 that:

  • if they have not already sent the required individual notice, they need not send such notice to any IOLTA depositors; and
  • if they have already sent the required individual notice, they are encouraged (but not required) to send a revised notice to IOLTA depositors explaining that IOLTAs will be fully insured through December 31, 2012.

Any notice sent should be by mail, except that IDIs may use electronic mail for depositors who ordinarily receive account information in this manner. 

34) What is the date by which the above notices should be transmitted to IOLTA and affected NOW account depositors?

The TAGP termination notice should have been transmitted to affected NOW account depositors by mail on or before December 31, 2010. 

35) Is there specific language that IDIs should use in providing the revised IOLTA notice?

No.  For IDIs that decide to send revised notices to IOLTA customers, there is no specific wording or mandated language associated with this notice.  In fact, the individual notices may be in the form of a copy of the amended Notice of Changes In Temporary FDIC Insurance Coverage For Transaction Accounts (the amended Dodd-Frank Notice) set forth in FAQ 17.

36) How are the revised IOLTA notices to be transmitted?

For IDIs that decide to send revised notices to IOLTA customers, there is no mandated form of delivery.  For example, IDIs may send the notice by including it with or printing it on their depositors’ statements or general account notices

37) Were IDIs participating in TAGP at year-end 2010 required to use specific language in providing the TAGP termination notice to affected NOW account depositors?

No.  There is no specific wording or mandated language associated with this notice.  In fact, the individual notices could have been in the form of a copy of the Notice of Changes In Temporary FDIC Insurance Coverage For Transaction Accounts (the Dodd-Frank Notice) required to be posted in all IDIs main offices, branches and websites.

38) Was a separate TAGP termination notice required for each individual accountholder of a jointly held NOW account?

No.  IDIs should mail the notice to the mailing address(es), as designated on the joint account.

39) Were multiple TAGP termination notices required if a single accountholder had more than one NOW account with a TAGP participating bank?

If depositors have more than one affected account, one notice is sufficient if it identifies (or otherwise references) all the applicable accounts.

40) Did all NOW account depositors of TAGP participating banks need to be mailed the notice?  What about NOW accountholders with less than $250,000 in deposits at a TAGP participating bank?

The November Final Rule requires that this notice was to be provided to NOW account depositors whose deposits were guaranteed in full by the TAGP as of December 31, 2010.  This would have included all NOW account depositors with an interest rate of one-quarter of one percent (.25%) or less, regardless of account balance.

41) Were the notices required for NOW account depositors earning interest in excess of one-quarter of one percent (.25%) at a TAGP participating bank?

No.  IDIs were only required to mail the notice to NOW accountholders whose accounts were guaranteed in full by the TAGP on December 31, 2010.  Since the TAGP fully guaranteed only those NOW accounts with interest rates of one-quarter of one percent (.25%) or less, NOW accounts earning more than one-quarter of one percent (.25%) were excluded from the notice requirement.

42) How were the individual notices to each affected NOW account depositor to be transmitted?

The notice was required to be by mail, except that IDIs could use electronic mail for depositors who ordinarily receive account information in this manner.

43) Could the TAGP termination notice to individual NOW account depositors have been mailed together with and included as part of the monthly account statements or with other account notices?

Yes.  The November Final Rule did not require this notice to be sent as a separate mailing.  In lieu of mailing the notice in a separate document, IDIs could have provided the notice by including it with or printing it on their depositors’ statements or general account notices.

 





Last Updated 01/21/2011 Online Customer Assistance Form