- Customer Notices If Interest Paid on Formerly Noninterest-Bearing DDAs
The FDIC issued a reminder to insured depository institutions on May 25 that, if an institution modifies the terms of a demand deposit account (“DDA”) so that the account may pay interest going forward, the institution must notify affected customers that the account no longer will be eligible for unlimited deposit insurance coverage as a noninterest-bearing transaction account. The notice requirement does not apply to DDAs modified after December 31, 2012.
Nutter Notes: Section 627 of the Dodd-Frank Act permits insured depository institutions to pay interest on DDAs starting July 21, 2011. Section 343 of the Dodd-Frank Act provides unlimited insurance coverage only for noninterest-bearing transaction accounts at insured depository institutions from December 31, 2010 through December 31, 2012.
- Treasury Report Recommends Changes to the Small Business Lending Fund Program
The Office of the Inspector General of the U.S. Treasury Department issued a report on May 13 recommending that Treasury evaluate the reasonableness of small business lending plan goals before making investment decisions under the Small Business Lending Fund (“SBLF”) program. SBLF applicants are required to submit small business lending plans, but the Treasury report found that no regulatory agency planned to review the plans for the likelihood of success.
Nutter Notes: Treasury launched an audit of the SBLF to determine whether the decision process established by Treasury ensures that eligible institutions in need of capital or with the most potential for small business lending are approved, and whether investments are made in institutions with good track records relating to performance and regulatory compliance.