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Via email
From: DeRosse, Stephanie A
Sent: Thursday, August 28, 2003 10:51 AM
To: Comments
Subject: RE: 12 CFR Part 30 RIN 3064-AC54 Deposit Insurance Regulations;
Living Trust Accounts
August 28, 2003
Robert E. Feldman, Executive Secretary
Attn: Comment/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
RE: 12 CFR Part 330 RIN 3064-AC54 Deposit Insurance Regulations;
Living Trust Accounts
MBNA America Bank, N.A., (MBNA) a national bank with $100 billion in
managed loans, is the largest independent credit card lender in the
world.
It also provides consumer deposits, consumer loans, small business
loans,
insurance, debt cancellation, and travel products. MBNA is the
recognized
industry leader in affinity marketing with endorsements from thousands
of
membership organizations and financial institutions around the world.
Our
products and services are sold and serviced almost entirely over the
telephone, through the mail, and the Internet. MBNA currently has $22
billion in Consumer Deposits.
Overview
The FDIC published for notice and comment two alternative proposed rules
to
amend its deposit insurance regulations for trust accounts. The
purpose of
the rulemaking is to clarify and simplify the regulations on the
insurance
coverage of living trust accounts.
It is MBNA's understanding that Alternative One would retain parallel
treatment of Payable on Death (POD) accounts and living trust accounts
providing coverage on the accounts up to $100,000 per qualifying
beneficiary
based on the depository institutions records. Alternative Two
would create
a separate category for treatment and coverage of living trust accounts
by
insuring such accounts up to $100,000 per owner of the account. In
each
Alternative the proposed rule would require the depository institution
to
title the account to reflect that the funds in the account are held
pursuant
to a formal revocable trust and certify in the deposit account records
the
existence of a living trust account at the time the account is opened.
Only
in Alternative One is the depository institution required to maintain
additional records of the names of the beneficiaries of the living trust
and
their ownership interests in the trust.
Recommendations
Overall MBNA prefers Alternative Two since there would be less of an
administrative burden in comparison to Alternative One.
While MBNA
acknowledges that this would impact the consumer by reducing the living
trust account coverage at an individual financial institution, we are
concerned with the inconvenience to the customer by requiring the
account
owners to redistribute the trusts among other FDIC insured institutions
in
order to ensure adequate coverage.
To the extent that Alternative One would require the institution to
simply
certify the existence of a living trust account and maintain record of
the
beneficiary and their ownership interest in the trust, this in itself is
not
overly burdensome. However, the proposal does not specify the
degree of
record keeping required. If the records were required to be
updated
periodically throughout the life of the account or if the institution
was to
be burdened with maintaining separate trust agreements or carry out
specific
provisions of the trust agreements, such as payments made at
pre-determined
intervals, this would create an overly burdensome situation.
If Alternative One is ultimately chosen, the rule should specify the
degree
of expected record keeping required. We are also assuming that the
record
keeping requirement would only extend to new accounts that are opened
after
the effective date of the rule and not retroactive to existing trust
accounts. If the rule requires that beneficiary information be
obtained
retroactively, the rule should so state.
Additionally, as the final rules are published, we would like further
clarification as to whether a formal trust is implied when it refers to
a
living trust.
We appreciate the opportunity to comment on this proposal.
Regards,
Joseph R. Crouse
Senior Executive Vice President
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