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Each depositor insured to at least $250,000 per insured bank

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4000 - Advisory Opinions

Procedures for Obtaining FDIC Insurance Coverage on "Deposit Notes"


June 23, 1988

Katharine H. Heygood, Senior Attorney

I have been asked to respond to your letter of March 21, 1988 asking what procedures are necessary in order to insure FDIC coverage on "deposit notes." The initial difficulty in responding to your letter is that the term "deposit note" has no fixed definition. Some of the offerings which are apparently generically being called "deposit notes" state that the issuers consider the offering to be a deposit, and some state that the offering is not a deposit. At a staff level, the FDIC has taken the position that if the issuance calls itself a deposit and embodies a statement to that effect, if it is shown by the issuer as a deposit in the call report, and if the issuer is paying assessments on it, then such a liability will be considered to be a deposit, and, therefore, eligible for FDIC insurance. The whole subject of such offerings is under review at the FDIC, and the question of what recordkeeping will be required has not specifically been considered. You should be aware, however, that 12 C.F.R. § 330.1(b) deals with required records for deposit insurance purposes, and, further, that 12 C.F.R. § 330.11 concerning deposits evidenced by negotiable instruments does not on its face cover the type of offering which I believe you have in mind.

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