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4000 - Advisory Opinions

"Indexed Deposit Account" Bearing Interest Based on Standard and Poor's 500 Stock Index Regarded as a Deposit


December 24, 1986

Roger A. Hood, Assistant General Counsel

This responds to your December 2 letter to Douglas H. Jones regarding a proposed "Indexed Deposit Account", an account which would bear interest based, in part, on the Standard and Poor's 500 Stock Index.

This is to advise you that we concur in your conclusion that the account described in your letter would be regarded by the Federal Deposit Insurance Corporation as a deposit. Accordingly, it would be insured along with other deposit liabilities of the bank within the limits prescribed by the Federal Deposit Insurance Act. The extent of such insurance coverage would depend upon the amount of the deposit and whether the owner of the deposit maintained any other deposits in the same right and capacity in the same bank.

The funds received by *** (or its bank affiliates) will be credited to deposit accounts, and will be carried by the banks on their books as deposit liabilities. The funds will be received by the banks at their banking offices in the usual course of business and likewise will be used by the banks in the usual course of their business. Accordingly, the obligations come within the definition of the term "deposit" contained in section 3 (l) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (l)). The method by which interest on a deposit is calculated does not determine whether an obligation is a "deposit" within the meaning of section 3(l).

You noted that questions of safety and soundness were being discussed with the Office of the Comptroller of the Currency because *** is a national bank. We do not take any position on this issue in connection with our response to your question as to the status of the obligation as a deposit.

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