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4000 - Advisory Opinions

Whether Letter of Assurance From Insured Depository Institution Is Adequate to Perfect Security Interest in Pledged Collateral


March 12, 1991

Martha A. Coulter, Counsel

By letter dated February 21, 1991, you requested from Alan Whitney, Director of the FDIC's Office of Corporate Communications, an opinion concerning the adequacy of a pledge of collateral to secure deposits. Your letter has been referred to the Legal Division for response.

In your letter, you indicated that you are the investment manager for a trust account consisting of public funds. You further indicated that in that capacity, when depositing funds in excess of the FDIC insurance limits, you are required to receive assurances from the depository institution that the funds are properly collateralized.

With your letter, you enclosed a copy of a letter received from an institution with which you have deposits. As I understand your inquiry, you ask whether the FDIC would consider such a letter sufficient for perfection of a security interest in the pledged collateral.

For purposes of determining whether an uninsured depositor has a perfected security interest in pledged assets, the FDIC looks to state law. If the depositor has such an interest under state law, it will be recognized by the FDIC.

You seem to have particular concerns with regard to what constitutes adequate identification of the assets selected as collateral, and with sufficient connection of such assets with the certificate of deposit. You noted that while the depository institution's letter refers to the trust account, it does not refer to the specific certificate of deposit involved and does not specifically identify the assets pledged.

In determining what assets of a failed insured institution are pledged to secure deposits, and specifically what deposits they are pledged to secure, the FDIC looks to the records of the failed institution. It is with what those records show that the FDIC is principally concerned, and not with what "assurance" letters such as the one you enclosed reveal. With regard to your inquiry, you may wish to ascertain whether the depository institution's

records identify with sufficient particularity which of its assets are pledged to secure the specific CD in which you are interested.

I hope this information is helpful to you. Should your require additional information as to similar concerns, you might wish to contact FDIC liquidation personnel in your area. You can address such inquiries to the FDIC's Regional Counsel for Liquidation, 452 5th Avenue, 21st Floor, New York, New York 10018. The telephone number for that office is 212-704-1200.

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