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4000 - Advisory Opinions

Insurance Coverage of Items in Process of Being Collected Through a Correspondent Account When a Bank is Placed in Receivership


March 9, 1988

Roger A. Hood, Assistant General Counsel

This is in reply to your March 7 letter asking that I confirm my statements made to you in our March 2 telephone conversation. Those statements, as summarized in your letter, are as follows:

1. Any risk that federal deposit insurance will not cover the amount of an item in the process of being collected through a correspondent account, if the collecting bank or payor bank is placed into receivership, prior to the provisional credit on the item becoming final, will be borne by the owner of the item.

2. Items that are in the process of collection through the correspondent account when the institution is placed into receivership and later are finally paid, will be given full credit even if the items individually or in the aggregate exceed the amount of federal deposit insurance. The amount of the full credit will be deposited into the correspondent account.

3. Any provisional credit given for an item deposited in the correspondent account that becomes final prior to the implementation of the receivership, will be aggregated with the other funds in the correspondent account and will only receive the maximum amount of federal deposit insurance, presently $100,000.

By this letter, I confirm that the foregoing statements represent my opinion as to the treatment of items deposited for collection under the circumstances described.

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