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4000 - Advisory Opinions

Ability of Deposits Other than Natural Persons to Qualify for Joint Insurance Coverage under Section 330.9


February 1, 1984

Roger A. Hood, Assistant General Counsel

Questions have arisen recently from different sources on whether depositors other than natural persons--primarily corporations--may be joint owners under section 330.9 of the FDIC's regulations in order to qualify for separate insurance coverage.

The Legal Division is of the opinion that it is highly unlikely that depositors other than natural persons would be true co-owners of a "joint account" as defined in section 330.9. Section 330.9 requires that the account be, in fact, jointly owned and that each co-owner possess withdrawal rights in the account. For example, in order for a corporation and a natural person to qualify as joint owners under section 330.9, each would have to possess the right to withdraw the proceeds from the deposit account. The vesting of withdrawal rights to a joint bank account by a corporation's board of directors in someone other than a person acting in a corporate capacity seems inexplicable and may evidence dereliction of directorship responsibility. Likewise, it would be extraordinary for two business entities or a public unit and someone other than the public unit to grant one another withdrawal rights in a joint account.

Even if a true joint account relationship did exist between a natural person and a non-natural person (or two non-natural persons), it is possible that such a joint ownership would be deemed outside the intended realm of section 330.9. Inasmuch as the expression "individual" is used throughout the regulation, section 330.9 might be interpreted to be limited to natural persons. The Legal Division, however, has not adopted this rationale at present. If a determination of the issue is deemed necessary in the future, we will give further consideration to this question and may wish to request an interpretation by the FDIC Board of Directors.

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