Today, the FDIC issued a final rule on “Processing Deposit Accounts in the Event of an Insured Depository Institution Failure” (“Final Rule”). The Final Rule replaces an interim rule on this subject issued by the FDIC in July 2008. The Final Rule establishes the FDIC’s practice for determining deposit and other liability account balances at a failed insured depository institution. In pertinent part, the Final Rule:

  • Provides examples of sweep accounts and how those sweep accounts will be treated in the event of an institution failure;
  • Articulates general principles underlying the FDIC’s existing and future practices and procedures for determining account balances in the event of an institution's failure;
  • Determines that the FDIC will use the end-of-day ledger balance to make deposit insurance determinations in institution failures;
  • Provides that, upon failure, the FDIC will use “cutoff” rules previously applied by the institution in establishing the end-of-day ledger balances for deposit insurance determination purposes;
  • Indicates how uncollected deposited checks and swept funds will be treated, for deposit insurance purposes, at failed institutions; and
  • Imposes requirements, effective July 1, 2009, that insured depository institutions inform their sweep account customers of the nature of their swept funds and how those funds would be treated if the institution should fail.  

The Final Rule becomes effective 30 days after it is published in the Federal Register, and applies to all FDIC- insured institutions.