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4000 - Advisory Opinions

Insurance Coverage of Deposits of a Roman Catholic Diocese


February 2, 1988

Patti C. Fox, Attorney

Your letter of January 14, 1988, to Paralegal Lynn Thomas of the Dallas Regional Office has been forwarded to me for reply. You requested information as to deposit insurance of funds held in your bank by the Roman Catholic Diocese of ***, Texas. Because of the recent number of similar requests on behalf of Catholic organizations, the Washington Legal Division has undertaken to examine its regulatory interpretation regarding this matter.

In deposit insurance coverage decisions, Section 330.1(a) of FDIC regulations authorizes the consideration of rules of local law in determining the right and capacity in which an account is maintained by a depositor. Pursuant to Texas law, a bishop of the Catholic Church is recognized as a corporation sole or trustee who holds title to all real and personal property of the diocese. Deposit accounts of a Catholic diocese, including its local parishes or schools are therefore owned by the bishop; all such accounts held in an FDIC-insured bank would be aggregated together and insured to $100,000. 12 C.F.R. §§ 330.5 and 6. The deposit accounts maintained by the individual churches and schools of the Diocese of *** would be combined and insured to $100,000.

One exception to this rule is recognized. Where the bishop deeds or vests title in property to a church entity, that entity will hold the property in its own right and capacity. For example, in some cases, a parochial school has the exclusive use and control over its funds. Proof of such authority would be evidenced by the absence of the bishop's signature on deposit account records of the bank and a document indicating the bishop's relinquishment of control located in the deposit account records of the bank or the records of the depositor. A requirement of periodic accounting to the bishop would not diminish the school's authority under these circumstances.

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