On December 19, 2007, the Federal Deposit Insurance Corporation proposed a two-part rule related to the deposit insurance in the event of an FDIC-insured institution’s failure.

The first part of the proposal covers 159 large banks in the United States that meet certain criteria. Under these provisions, such banks “would be required to adopt mechanisms that, in the event of a failure, would place provisional holds on large deposit accounts in a percentage specified by the FDIC; provide the FDIC with deposit account data in a standard format; and allow automatic removal of provisional holds once the FDIC makes an insurance determination.”

The second section of the rule relates to all FDIC-insured institutions regardless of size and proposes that the FDIC use an institution’s end-of-day ledger in determining account balances on the day of an institution’s failure. As noted in the proposal, these provisions impose no new requirements on depository institutions but are rather intended to establish a single standard for use by the FDIC in determining deposit account balances in the event of an institution’s failure.

In the press release accompanying the proposal, the FDIC noted that some of the larger banks have “more than 50 million deposit accounts.”