Why It Matters
Large banks would face revised deposit insurance requirements if a new Federal Deposit Insurance Corporation (FDIC) proposal replaces its 2016 large-bank deposit insurance rule.
The FDIC estimates the proposal would affect 148 insured institutions, 31 of them now under the 2016 rule, which requires banks with two million or more deposit accounts to build their own systems to calculate deposit insurance coverage. The proposal would remove that rule and move those banks under the "Large-Bank Deposit Insurance Determination Modernization" rule adopted July 17, 2008.
The FDIC says its goal is "to rebalance the FDIC's framework for making prompt deposit insurance determinations in the event of a failure of a large insured depository institution."
The Big Picture
The proposal creates a new tier, defined in its regulatory text as "a larger covered institution": a bank with at least $2 billion in deposits and two million or more deposit accounts.
These banks would have to keep depositor and customer data in a standard format, including 26 mandatory data fields, and be able to post and remove provisional holds on deposit accounts.
The FDIC says 21 of the 26 fields are already required under the 2016 rule. It says the other five are already in the 2008 rule.
It also says banks released from hold requirements after certifying under the 2016 rule would have to build that capability again. The FDIC would calculate insurance coverage on its own systems, using the data these banks supply.
The FDIC's estimates, as of March 31:
- 29 of the 31 banks under the 2016 rule would become larger covered institutions. The other two would not meet the covered-institution threshold and would face no new requirements.
- 117 banks are already subject to the 2008 rule. The FDIC says the proposal would impose no new requirement or additional burden on them.
- One small entity meets the 2016 rule's criteria. The FDIC says it would benefit and face no direct costs.
- Savings from rescission would be about $625,000 a year per lowest-complexity bank, $875,000 for middle-complexity and $2.125 million for highest-complexity.
- One-time transition costs would be about $210,000 per lowest-complexity bank, $254,000 per middle-complexity bank and $1.7 million per highest-complexity bank, about $14 million in aggregate.
- Ongoing costs under the 2008 rule would be about $23,000 per larger covered institution a year.
- Aggregate industry savings would be about $33 million a year, with net savings of about $19 million in the first year and about $32 million in each later year.
The FDIC also estimates a net increase of 1,853 annual paperwork burden hours across both rules, which it attributes to one-time implementation costs.
The FDIC proposes 18 months from the effective date for larger covered institutions to meet the provisional hold requirements and six months for the other requirements. It would also codify automatic release from the 2008 rule when a bank stays below the covered-institution threshold for three consecutive quarters.
Separately, the FDIC says it is immediately deleting depositor and customer data no later than 60 days after a compliance review and will no longer require customers' Social Security or taxpayer identification numbers during reviews.
The Bottom Line
The FDIC asks commenters whether there are any reasons why it should consider not rescinding the 2016 rule. Comments must be received by Jan. 4, 2027, on the proposal published Nov. 4 at 91 FR 69642 in the Federal Register.
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