SUPPLEMENTARY INFORMATION:

Table of Contents

I. Policy Objectives

II. Background

A. Section 360.9

B. Part 370

III. Rescission of Part 370

IV. Amendments to Section 360.9

A. Scope and Purpose

B. Modified and New Definitions

C. Posting and Removing Provisional Holds

D. Depositor and Customer Data in a Standard Format

E. Actions Required by Larger Covered Institutions for Certain Deposit Accounts With Transactional Features

F. Implementation Requirements

G. Extensions, Exemptions, and Release

H. Records Retention

I. Indexing Thresholds

V. Expected Effects

A. Introduction and Baseline Assumptions

B. Scope of Affected Entities

C. Effects Specific to Part 370 IDIs

D. Effects on Covered Institutions, the Deposit Insurance Fund, and Depositors

E. Indexing Thresholds

F. Conclusion

VI. Alternatives Considered

VII. Regulatory Analysis

A. Regulatory Flexibility Act

B. Paperwork Reduction Act

C. Riegle Community Development and Regulatory Improvement Act

D. Plain Language

E. Executive Orders 12866 and 14192

I. Policy Objectives

The policy objective of the proposal 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 (IDI). Specifically, the proposal would remove 12 CFR part 370, the FDIC's rule entitled “Recordkeeping for Timely Deposit Insurance Determination” (part 370), and no longer require IDIs subject to that rule to configure their information technology systems (IT systems) to be capable of calculating deposit insurance coverage, while preserving measures intended to enable the FDIC to calculate deposit insurance coverage for such IDIs “as soon as possible” in the event of their failure.^[1]

The FDIC also proposes to amend 12 CFR 360.9, the FDIC's rule entitled “Large-Bank Deposit Insurance Determination Modernization” (§ 360.9) in order to improve the FDIC's ability to meet its statutory obligations, particularly its obligation to pay deposit insurance as soon as possible either by cash or by making available to each depositor a transferred deposit in a new insured depository institution.^[2] This proposed amendment would not add additional burden or affect the requirements applicable to IDIs currently subject to § 360.9, but would, among other things, require an IDI having at least $2 billion in deposits and two million or more deposit accounts (generally, IDIs currently subject to part 370) to maintain and provide to the FDIC certain depositor and customer data needed for the FDIC to calculate deposit insurance in the event of the IDI's failure.^[3]

Since first adopting part 370 in 2016, the FDIC has enhanced its own systems and capabilities related to calculating deposit insurance and making deposit insurance determinations. The FDIC believes that with this improvement to ( printed page 69643) its internal capacity, the FDIC can reduce regulatory burden by rescinding part 370 without materially impeding the FDIC's ability to calculate deposit insurance. Part 370 is generally a more burdensome regulatory framework than § 360.9, especially for new entrants to part 370, who must build and maintain their own IT systems capable of calculating deposit insurance in-house and maintain a broader set of information in deposit account records than is required under § 360.9.

II. Background

A. Section 360.9

When the FDIC began the rulemaking process to develop the current § 360.9, the FDIC recognized that the increased number of deposit accounts, greater geographic dispersion of depositors, more diversity of data systems, and potential data consistency challenges at larger institutions created challenges for the FDIC in conducting a deposit insurance determination in the event of failure. In addition, the FDIC understood that the process of deposit insurance determination was inherently complex and dependent upon the complete and accurate deposit account records of the failed IDI. Consistent with the statutory requirement to provide access to insured deposits “as soon as possible,” the FDIC has typically been able to allow most depositors access to their insured deposits on the next business day after a bank's failure. In an effort to maintain this standard, the FDIC began considering new methods to modernize the deposit insurance determination process and stated in a 2005 advance notice of proposed rulemaking (ANPR) that its goals were to “minimize disruption to depositors and communities, and maximize recoveries” for the Deposit Insurance Fund (DIF) in the event of a failure of a large IDI.^[4] The FDIC considered the limitations of its then current processes in light of the larger institutions resulting from mergers and internal growth.

The 2005 ANPR requested comment on options for enhancing the speed at which depositors at more complex IDIs would receive access to their funds in the event of failure.^[5] In response to public comment, the FDIC published a second ANPR focusing on less costly and less burdensome alternatives.^[6] In January 2008, the FDIC then published a notice of proposed rulemaking composed of two parts addressing (1) issues involving the FDIC's practices for determining deposit and other liability account balances at a failed IDI, and (2) a requirement for certain IDIs to adopt mechanisms that would, in the event of the IDI's failure, provide the FDIC with standard depositor and customer information and allow the FDIC to place and release holds on liability accounts, including deposits.^[7] In July 2008, the FDIC adopted a final rule in a form similar to the proposal.^[8] Currently, § 360.9 applies only to an IDI if, based on its Reports of Condition and Income (Call Report), it has at least $2 billion in deposits and at least either: 250,000 deposit accounts or $20 billion in total assets, regardless of the number of deposit accounts (these IDIs are defined as “covered institutions” in § 360.9).^[9] Section 360.9 requires covered institutions to have in place mechanisms that would, in the event of the IDI's failure, provide the FDIC with depositor and customer information in a standard data format and allow the automated placement and release of provisional holds on liability accounts, including deposits.^[10]

The FDIC's ability to provide depositors prompt access to insured deposits and determine the insurance status of depositors in a failed IDI in a timely manner is a critical element for ensuring a least-costly resolution and maintaining public confidence. The requirements of § 360.9 provide essential support for the FDIC to meet its statutory obligations, including paying deposit insurance “as soon as possible” following the failure of an IDI and resolving the IDI in the manner least costly to the DIF.^[11] The FDIC believes that the proposed amendments to § 360.9 will help the FDIC to continue to meet these objectives, especially for larger and more complex IDIs.

B. Part 370

In 2015, the FDIC issued an ANPR seeking comment on whether certain IDIs such as those that have two million or more deposit accounts should be required to take steps to ensure that depositors would have access to their FDIC-insured funds in a timely manner (usually within one business day after failure) if one of these institutions were to fail.^[12] Specifically, the FDIC sought comment on whether these IDIs should be required to enhance their recordkeeping to maintain, and be able to provide, substantially more accurate and complete data on each depositor's ownership interest by right and capacity for all, or a large subset, of the institution's deposit accounts. The FDIC also sought comment on whether these IDIs' IT systems should have the capability to calculate the insured and uninsured amounts for each depositor by deposit insurance category for all, or a substantial subset of, deposit accounts at the end of any business day. The FDIC then published in the Federal Register a notice of proposed rulemaking,^[13] considered all of the comments received, and adopted a final rule in 2016 to facilitate prompt payment of FDIC-insured deposits when IDIs with two million or more deposit accounts fail.^[14] This 2016 final rule required each IDI that has two million or more deposit accounts to configure its IT system to be capable of calculating deposit insurance in the event of the IDI's failure and maintain complete and accurate information needed by the FDIC to determine deposit insurance coverage with respect to each deposit account. These IDIs were released from the requirements of § 360.9 upon complying with the requirements of part 370.

In April 2019, the FDIC issued a notice of proposed rulemaking soliciting public comment on its proposal to make certain substantive revisions to part 370 to clarify the requirements, better align its burdens with its benefits, and make technical changes.^[15] The FDIC then promulgated a final rule seeking to address many of the issues identified by commenters regarding components of part 370 that were unclear or unduly burdensome.^[16] Part 370 requires each IDI that has two million or more deposit accounts to develop its IT systems to be capable of calculating the insured and uninsured amount in each deposit account by ownership right and capacity, which would be used by the FDIC to make deposit insurance determinations in the event of the IDI's failure.^[17] Part 370 also requires these IDIs to maintain complete and accurate information needed by the FDIC to determine deposit insurance coverage with respect to each deposit account.^[18] However, alternative recordkeeping standards are permitted for certain types of accounts for which the covered institution does not otherwise maintain complete information needed for a ( printed page 69644) deposit insurance determination.^[19] Part 370 also prescribes the file types, data fields, and allowable values the IDIs' IT systems must produce.^[20] Additionally, part 370 provides for regular certification of compliance and periodic FDIC compliance testing.^[21] Once an IDI submits its compliance certification under part 370, it is automatically released from having to comply with § 360.9.^[22]

The FDIC adopted part 370 to enhance the FDIC's ability to pay deposit insurance “as soon as possible” as required under section 11(f) of the Federal Deposit Insurance Act (FDI Act) for these larger and more complex IDIs. Though section 11(f) of the FDI Act does not specify a time limit for paying insured deposits, the FDIC strives to pay deposit insurance promptly after an IDI failure and expects to make most insured deposits available by the next business day after IDI failure.^[23] The FDIC adopted part 370 to address concerns that, at the time of an IDI's failure, deposit account records and data may be inconsistent, incomplete, or otherwise insufficient to support timely and accurate deposit insurance determinations. The rule also was intended to mitigate limitations in FDIC systems to process the volume of accounts associated with the failure of a large IDI. To address these concerns, part 370 requires covered institutions to develop and maintain the recordkeeping and information technology capabilities necessary to support the FDIC's resolution functions in the event of failure. The dual problems of incomplete depositor records and a much larger and more complex IDI could result in deposit insurance determinations being significantly delayed, particularly if a very large IDI fails with little warning.^[24]

As discussed below, the FDIC believes that the significant advancements in the FDIC's capabilities and systems, together with planned expansion of those capabilities, have improved the FDIC's ability to promptly determine deposit insurance coverage for depositors of large and complex failed IDIs to the point that, when coupled with the requirements in the proposed revised § 360.9, the FDIC would be able to perform the deposit insurance determination promptly without the need for the requirements set forth in part 370.

III. Rescission of Part 370

The FDIC is proposing to remove and reserve part 370 of the FDIC's regulations. The FDIC believes that advancements in the FDIC's own capabilities and systems related to deposit insurance determinations render it unnecessary for the largest IDIs to build and maintain their own IT systems capable of calculating deposit insurance coverage if they comply with the provisions of § 360.9 as outlined in this proposal. When combined with the revision of § 360.9 as outlined in this proposal, part 370 can therefore be removed from the FDIC's regulations without materially impeding the FDIC's ability to calculate deposit insurance. The FDIC believes that removing part 370 would also reduce the net burden on the IDIs currently subject to part 370. For example, these IDIs will no longer have to maintain certain depositor and customer data and operate, maintain, continuously enhance, and remediate deficiencies in their IT systems to be capable of calculating deposit insurance coverage within 24 hours after the appointment of the FDIC as receiver.^[25] As described in greater detail below, specified recordkeeping requirements for certain deposit account information under part 370 would be preserved for larger and more complex IDIs under the proposal.^[26]

Part 370 provides that an IDI that is subject to part 370 is released from the provisional hold and standard data format requirements of § 360.9 upon submitting to the FDIC its part 370 compliance certification.^[27] Such an IDI that is released from § 360.9 under part 370 remains released for so long as it is subject to part 370. If part 370 were to be removed as the FDIC is now proposing, then an IDI that was a covered institution under part 370 would no longer be subject to part 370 and would need to comply with § 360.9 despite its prior release, including the development or redevelopment of provisional hold capabilities (provided such IDI is a covered institution as defined under § 360.9).

The FDIC invites comments on all aspects of the proposed rescission of part 370. In particular, the FDIC seeks comment on the following aspects of the proposal:

(1) What are the anticipated impacts of transitioning to a § 360.9 format and data structure?

(2) Are there any reasons why the FDIC should consider not rescinding part 370? If so, please explain.

IV. Amendments to Section 360.9

A. Scope and Purpose

The FDIC is undertaking this notice of proposed rulemaking to amend § 360.9. Section 360.9 would apply to all IDIs that have at least $2 billion in deposits and at least either: 250,000 deposit accounts; or $20 billion in total assets, regardless of the number of deposit accounts (covered institutions). The proposal would add a new defined term, larger covered institution, to § 360.9. A larger covered institution would be defined as a covered institution with at least $2 billion in deposits and two million or more deposit accounts.^[28] The proposal would, among other things:

• Apply the requirements of § 360.9 to larger covered institutions;
• Require larger covered institutions to collect and maintain complete and accurate depositor and customer data for certain mandatory data fields unless otherwise provided for;
• Provide for a larger covered institution to request an exemption from the standard data requirements;
• Include a safe harbor provision for covered institutions that have submitted a request for exemption or extension while awaiting the FDIC's response;
• Provide for automatic release from the requirements of § 360.9 if it falls below the covered institution threshold for three consecutive quarters;
• Clarify the definition of foreign deposits and related terminology to conform with12 CFR part 330; and
• Make corrections and technical and conforming changes.

The proposal would index, but not otherwise change, the thresholds for an IDI to become a covered institution. The proposal would neither include any new requirement nor impose any additional burden on any IDI currently subject to § 360.9.

The FDIC proposes to include IDIs that are currently subject to part 370 within the scope of the revised § 360.9 to facilitate prompt payment of FDIC-insured deposits should one of these institutions fail and to reduce compliance burdens for these IDIs. As noted above, these IDIs would no longer be required to operate and maintain IT systems capable of promptly calculating deposit insurance coverage, as the FDIC would instead rely on its own internal IT system to calculate deposit insurance. These IDIs would also become subject to the recordkeeping ( printed page 69645) and provisional hold requirements of § 360.9 if revised as proposed.

The FDIC invites comments on all aspects of the scope of the proposal. In particular, the FDIC seeks comment on the following aspects of the proposal:

(3) Do commenters agree with the proposed threshold for larger covered institutions? Should the FDIC consider an alternative threshold? If so, why and how should the larger covered institution threshold be changed?

(4) Should the FDIC consider changing the threshold for covered institutions that would not be larger covered institutions? If so, why and how should the threshold be changed?

B. Modified and New Definitions

Section 360.9(b) contains the definition of terms used throughout § 360.9. The proposal would add or revise the following definitions:

Deposit. The term “deposit” would be added as a defined term and would have the same meaning as provided under section 3( l) of the FDI Act (12 U.S.C. 1813( l)).

Deposit account records. The term “deposit account records” would be added as a defined term and would have the meaning given that term in 12 CFR 330.1(e).

Foreign deposits and related terminology. The FDIC proposes to revise the definition of foreign deposits and add new definitions for “dually payable deposit,” “domestic deposit,” “domestic deposit account,” and “foreign deposit account.” Subsequent to the promulgation of the current § 360.9, the FDIC clarified the treatment of liabilities in foreign offices of U.S. IDIs for the purpose of insurance coverage and priority in resolution.^[29] That rulemaking clarified the treatment of a “dually payable deposit,” which is a liability held in a foreign office of a U.S. IDI that (1) would be a deposit if carried on the books and records of the IDI in the United States and (2) is expressly payable in the United States. Such dually payable deposits receive treatment as deposits for purposes of priority in resolution, but do not receive deposit insurance coverage. Under this proposed rulemaking, “foreign deposits” would include any dually payable deposit together with any liability held in a foreign office of a U.S. IDI that (1) would be a deposit if carried on the books and records of the IDI in the United States and (2) is not expressly payable in the United States. Foreign deposits that are not dually payable are not treated as deposits for purposes of priority in resolution and do not receive deposit insurance coverage.

The term “domestic deposit” in this proposal would be defined as any deposit other than a dually payable deposit. New definitions have also been added for “deposit account,” “domestic deposit account,” and “foreign deposit account.” These new and revised terms correspond to reporting requirements throughout the rule, including in § 360.9(c), “Posting and removing provisional holds;” Appendix C, “Deposit File Structure;” and Appendix D, “Sweep/Automated Credit Account File Structure.” The distinction between domestic deposits, foreign deposits, domestic deposit accounts, and foreign deposit accounts is intended to correspond to how covered institutions maintain their deposits and deposit accounts within the United States and at foreign offices, and therefore how covered institutions can most easily report on such activities for purposes of Appendices C and D.

Transactional features. The term “transactional features” would be added as a defined term and would have substantively the same meaning as the definition contained in 12 CFR 370.2(j). Transactional features with respect to a deposit account would mean that the account holder or the beneficial owner of deposits can make a transfer from the deposit account to a party other than the account holder, beneficial owner of deposits, or the larger covered institution itself, by a method that may result in such transfer being reflected in the end-of-day ledger balance for such deposit account on a day that is later than the day that such transfer is initiated, even if initiated prior to the larger covered institution's normal cutoff time for such transaction. A deposit account also has transactional features if preauthorized or automatic instructions provide for transfer of deposits in the deposit account to another deposit account at the same institution, if such other deposit account itself has transactional features. Notwithstanding the proposed rescission of part 370, the FDIC continues to recognize the importance of timely deposit insurance determinations for accounts with transactional features and proposes to require larger covered institutions to take actions for certain deposit accounts with transactional features, as discussed in Section IV.E.

Account holder. The term “account holder” would be added as a defined term and would have the same meaning as in 12 CFR 370.2(a), and would, therefore, mean the person or entity who has opened a deposit account with a covered institution and with whom the covered institution has a direct legal and contractual relationship with respect to the deposit.

The proposal would make technical edits to the definitions, including “covered institution” and “international banking facility deposit” (IBF deposit), but these changes would not substantively affect the definitions or the requirements of § 360.9.

The FDIC invites comments on all aspects of the proposed definitions. In particular, the FDIC seeks comment on the following aspects of the proposal:

(5) Are there any other terms that should be defined or clarified in the proposal? If so, how should the term be defined and how would it provide clarity to the proposal?

C. Posting and Removing Provisional Holds

The proposal would not change any of the provisional hold requirements of § 360.9 for covered institutions. However, the proposal would require IDIs currently subject to part 370 to transition to complying with § 360.9. Therefore, the proposal would require larger covered institutions to be able to place and remove provisional holds in the manner specified under § 360.9.

One of the FDIC's chief objectives in adopting § 360.9 was to require covered institutions to develop a mechanism to facilitate the FDIC's ability to provide liquidity to the failed bank's depositors soon after the IDI's failure while the FDIC completed its deposit insurance determinations. All IDIs currently subject to part 370 that would become larger covered institutions were previously subject to the requirements of § 360.9 and therefore should be familiar with this requirement. However, since becoming part 370 covered institutions, these larger institutions have not been required to maintain the provisional hold capabilities required under § 360.9.^[30]

When the FDIC adopted part 370, the FDIC did not retain the provisional hold requirements for part 370 IDIs in light of the facts that (1) IDIs covered by part 370 would be subject to substantial additional burden to develop and maintain IT systems capable of calculating deposit insurance and (2) the FDIC believed provisional hold ( printed page 69646) capabilities would be less likely to be needed due to an enhanced ability to complete prompt deposit insurance determinations. However, under part 370, IDIs still are not able to calculate deposit insurance for all accounts promptly upon failure, suggesting that provisional hold capabilities may still be relevant. As noted below, the FDIC is seeking comment on applying the provisional hold requirements to larger covered institutions.

The FDIC invites comments on the proposal to apply the requirement to post and remove provisional holds to larger covered institutions. In particular, the FDIC seeks comment on the following aspects of the proposal:

(6) Should the FDIC consider any changes to the provisional hold requirements? If so, how should the provisional hold requirements be amended?

(7) Do commenters agree that larger covered institutions should be subject to the provisional hold requirements of the proposal? Should larger covered institutions be subject to a different hold requirement that is similar to part 370? If so, why?

D. Depositor and Customer Data in a Standard Format

The proposal would not change the “standard” ^[31] depositor and customer data required under § 360.9 for covered institutions. However, the proposal would require larger covered institutions to meet the standard data requirements as well as additional data requirements, as more fully described below.

Section 360.9 requires a covered institution to have in place practices and procedures to provide the FDIC with depositor and customer data in a standard format following the close of any day's business. Consistent with the description in the 2008 final rule preamble, the FDIC expects the depositor and customer data to be provided as soon as practicable, but no later than the following calendar day, and to reflect the end-of-day ledger balances customarily shown on the covered institution's books and records as of the day the data are requested.^[32] Additionally, all other depositor and customer data provided must be current as of the close of business on that day. As stated in the 2008 final rule preamble, “[c]overed [i]nstitutions are not required to collect or generate new depositor or customer information. The standard data files are created through a mapping of pre-existing data elements and internal institution codes into standard data formats.” ^[33] Under § 360.9, covered institutions must provide the depositor and customer data in the required standard data format prescribed by the FDIC if the covered institution has the information, but it does not need to collect this information if it does not already maintain it. Data is to be provided on all non-closed domestic deposit accounts or foreign deposit accounts as well as sweep account arrangements and automated credit account arrangements. Under the proposal, the data files still must be provided to the FDIC in the most expeditious manner. Additional data that may be helpful to the FDIC's deposit insurance determination process but not required by the regulation may also be provided by a covered institution.

Larger covered institutions would be required to comply with additional standard data requirements; specifically, 26 data fields would be mandatory for these IDIs. These data fields are the ones that are most critical for the FDIC to conduct a prompt deposit insurance determination. Of the 26 data fields, 21 fields are currently required to be populated in the part 370 output files. The remaining five mandatory data fields are currently included in § 360.9 but are not explicitly required by part 370. Considering that part 370 generally requires banks to maintain complete and accurate information needed to calculate deposit insurance coverage with respect to each deposit account except as otherwise provided in the rule, the FDIC expects that larger covered institutions already have this information readily available as part of their customary banking operations. These five data fields are: (1) deposit type indicator (domestic vs foreign deposit); (2) customer ownership indicator at the account level (which is very similar to a part 370 requirement); (3) account title (as titled on the bank records); (4) relationship code to identify how customers are related to the account; and (5) beneficiary code to identify the type of account used for agent, custodian, or trustee relationships. Overall, the FDIC expects that the aggregate data reporting requirements under revised § 360.9 would be materially less burdensome than under part 370.

These mandatory data fields would be required only for larger covered institutions under the proposal.^[34] If a larger covered institution does not have the required depositor and customer data needed to populate these 26 mandatory data fields, then the larger covered institution must collect and maintain such data in its deposit account records for each account, except for certain types of accounts. The FDIC believes that given the size and complexity of the larger covered institutions, obtaining this information will facilitate the FDIC's ability to calculate deposit insurance using its own internal IT systems and make a deposit insurance determination. A larger covered institution should, in the normal course of business, already have in its deposit account records the necessary information to populate these mandatory data fields for, among others, deposit accounts that would be insured as: single ownership accounts; joint ownership accounts; accounts owned by a corporation, partnership, or unincorporated association; or informal revocable trust ( i.e., “payable-on-death” or “in-trust-for”) accounts.

Although this proposed requirement to populate fields in the additional column would not apply to covered institutions that are not larger covered institutions, historical experience suggests covered institutions will generally have most or all of the information for these 26 mandatory data fields. A covered institution that is not a larger covered institution would not be required to collect additional information that it does not already have in its deposit account records in order to populate any of the § 360.9 data fields. Covered institutions must provide information for all the data fields if the covered institution already maintains the information needed to populate the data fields. Similarly, a larger covered institution would be required to provide the information in the standard data format for the non-mandatory data fields if the larger covered institution already has this information. The larger covered institution does not need to collect any information that it does not already have in order to populate these non-mandatory data fields.

The proposal recognizes that under the FDIC's deposit insurance coverage rule, 12 CFR part 330, if an IDI's deposit account records disclose the existence of a relationship that might provide a basis for additional deposit insurance, then the details of the relationship must be ascertainable from either the IDI's deposit account records or from records maintained by the depositor or by a ( printed page 69647) third party that has undertaken to maintain such records for the depositor.^[35] Accordingly, under the proposal, to the extent that a larger covered institution does not already maintain the information needed to populate the mandatory data fields in the files required under § 360.9, the larger covered institution would not be required to collect additional depositor and customer data to populate the mandatory data fields for: (1) deposit accounts for which a larger covered institution's deposit account records disclose the existence of a relationship which might provide a basis for additional deposit insurance in accordance with 12 CFR 330.5 or 330.7; and (2) formal revocable trust accounts and irrevocable trust accounts insured as described in 12 CFR 330.10 and irrevocable trust accounts insured as described in 12 CFR 330.12. This proposed provision is similar to the alternative recordkeeping provision of part 370.^[36] Larger covered institutions would populate the data fields in Appendices C through G with the information they already maintain for these types of deposit accounts and would not need to collect additional information. If a larger covered institution maintains the information needed to populate the 26 mandatory data fields for these accounts, then § 360.9(d)(1)(iii) would not apply and the larger covered institution would be required to report in the appendices the information necessary for deposit insurance determination in accordance with § 360.9(d)(1)(ii).

The proposal also adds two new non-mandatory data fields that would apply only to larger covered institutions in Appendix C of part 360. IDIs that would be larger covered institutions under the proposal are currently required to maintain this information in their deposit account records under part 370, so these fields would not be new to the initial larger covered institutions. These fields are indicators showing (1) whether a customer owes debt to the covered institution for FDIC offset purposes and (2) for government customers, whether the institution has pledged securities to cover any deposit-insurance shortfall. If a larger covered institution does not maintain the information in its deposit account records to populate these non-mandatory data fields, then the institution does not need to collect this information solely for compliance with § 360.9.

The FDIC proposal does not change the existing § 360.9 requirements for covered institutions currently subject to those requirements. The FDIC also has added a standard data exemption provision for larger covered institutions as described below in Section IV.G.

The FDIC invites comments on all aspects of the proposed standard depositor and customer data requirements. In particular, the FDIC seeks comment on the following aspects of the proposal:

(8) Should the FDIC require larger covered institutions to maintain any other data fields in the proposal? If so, what data fields should be included and how would this information be useful? Are there any data fields the FDIC should not require?

(9) Are there any data fields that the FDIC should consider revising or clarifying without adding burden on covered institutions? If so, how should these fields be changed?

(10) Are there any other types of deposit accounts for which the FDIC should change the requirement for larger covered institutions to populate mandatory data fields? What types of deposit accounts would those be? How should they be described or defined to ensure clarity?

E. Actions Required by Larger Covered Institutions for Certain Deposit Accounts With Transactional Features

The proposal would require that larger covered institutions take certain actions reasonably calculated to ensure that account holders who have certain types of deposit accounts with transactional features are aware of the requirement to promptly provide to the FDIC the information needed for the FDIC to calculate deposit insurance with respect to each of those accounts in the event of the larger covered institution's failure. This proposed requirement would be similar to the requirement set forth in 12 CFR 370.5, but it would be less burdensome and narrower in scope. Its focus would be on providing depositors instruction for claiming deposit insurance. It would not obligate larger covered institutions to validate data format and delivery capabilities. Larger covered institutions could satisfy the proposed requirement by either (1) making a good faith effort to enter into contractual arrangements with the account holder that obligate the account holder to deliver information needed for deposit insurance calculation to the FDIC in a format prescribed in a new Appendix I of part 360 within 24 hours after the appointment of the FDIC as receiver; or (2) providing the account holder with a written disclosure specifying the information and format requirements of new Appendix I to part 360 and stating that, if the larger covered institution fails and the FDIC is appointed receiver, then the account holder might not have access to deposits before the account holder delivers information to the FDIC in the format prescribed in that new appendix. Although part 370 currently requires both actions, the FDIC believes that a less burdensome requirement focused on informing these account holders that they will likely need to provide additional information to the FDIC in a predefined format in order for the FDIC to make prompt payment of deposit insurance, and that access to deposit insurance may be limited before that information is provided, would be sufficient. These actions are intended to inform larger covered institutions' account holders that the process for calculating deposit insurance can be dependent upon receipt of information that is not in the larger covered institutions' deposit account records and production of that information to the FDIC is the account holder's responsibility. New Appendix I would be added to part 360 to demonstrate the deposit information and format for submission to the FDIC. Larger covered institutions would be required to include or reference the elements of Appendix I in their agreements with, or disclosures to, account holders who have accounts with transactional features.

This requirement would be limited to certain types of deposit accounts with “transactional features” because prompt calculation and payment of deposit insurance on those deposit accounts is vital to orderly payment processing. Delays to deposit insurance calculation and payment on those deposit accounts could delay or disrupt the payment instruction clearing and settlement process for “in flight” transactions. If depositors are aware of this fact and are proactive in facilitating the FDIC's prompt payment of deposit insurance, then this disruption could be minimized. That is the intent of this proposed requirement.

New Appendix I would be completed by account holders who hold deposits on behalf of others ( e.g., a deposit broker, a deposit placement service, or some other agent who acts in a representative capacity for the beneficial owner of the deposit) and who expect their deposit accounts to be insured on a pass-through basis. Appendix I would be filled out by the account holder (not ( printed page 69648) by the IDI) and only in the event of failure. The FDIC anticipates that, for these deposit accounts, there will be a full set of subaccounts represented in Appendix I naming the beneficial owners of deposits in the account.

Under the proposal, larger covered institutions would not need to take these actions with respect to certain types of deposit accounts with transactional features. Among these would be: deposit accounts maintained by a mortgage servicer, in a custodial or other fiduciary capacity, which are comprised of payments by mortgagors; accounts maintained by real estate brokers, real estate agents, or title companies in which funds from multiple clients are deposited and held for a short period of time in connection with a real estate transaction; accounts established by an attorney or law firm as Interest on Lawyers Trust Accounts, or functionally equivalent accounts; accounts held in connection with an employee benefit plan (as defined in 12 CFR 330.14); and accounts maintained by account holders for the benefit of others, to the extent that the deposits in the account are held for the benefit of a formal revocable trust or irrevocable trust that would be insured as described in 12 CFR 330.10, or an irrevocable trust that is insured as described in 12 CFR 330.12. The FDIC believes that the account holders who have authority and control over these types of accounts have a responsibility to the principals for whom they serve as agents to diligently maintain records of deposit ownership in good faith and in the regular course of business, and to understand the conditions for FDIC deposit insurance coverage sufficiently to take the actions needed to claim deposit insurance promptly.

The FDIC invites comments on all aspects of this proposed requirement that larger covered institutions take specified actions for certain types of deposit accounts with transactional features. In particular, the FDIC seeks comment on the following aspects of the proposal:

(11) Should this proposed requirement apply to all deposit accounts for which larger covered institutions may have less information than is needed for a complete deposit insurance determination or should it be limited to only those with transactional features?

(12) Would a disclosure requirement alone be sufficient to accomplish the FDIC's objective to ensure account holder awareness of FDIC's deposit information and format needs? To what extent would larger covered institutions make an effort to enter into contractual arrangements with the account holder that obligate the account holder to deliver information needed for the FDIC to calculate deposit insurance with respect to each of those accounts in the event of a larger covered institution's failure?

(13) What challenges would larger covered institutions face in taking the actions described in this aspect of the proposal?

(14) Are the types of accounts excepted from this requirement sufficiently described? Should other types of accounts be added to this list of exceptions? Should any be removed from this list of exceptions because the account holder would benefit from a larger covered institution taking those actions intended to make account holders aware of the need to promptly provide to the FDIC the information needed for the FDIC to calculate deposit insurance in the event of a larger covered institution's failure?

F. Implementation Requirements

Section 360.9 currently provides that an institution must comply with the requirements of § 360.9 no later than 18 months following the end of the second calendar quarter for which it meets the criteria to be a covered institution. The proposal would generally maintain this 18-month implementation timeframe for institutions that become covered institutions. Any IDI that is a larger covered institution as of the effective date of the revised rule would be required to comply with (1) all requirements of § 360.9 other than the provisional hold requirements no later than six months after the effective date of the revised rule and (2) the provisional hold requirements within 18 months after the effective date of the revised rule. An IDI that is not a covered institution as of the effective date of the final rule and that becomes a larger covered institution after the effective date of the final rule would be given an 18-month implementation period following the end of the second calendar quarter for which it meets the criteria for a larger covered institution.

The FDIC is proposing that, for IDIs that (1) became covered institutions before the effective date of the final rule and (2) have a compliance date that occurs after the effective date of the final rule, the 18-month implementation period would not be shortened or extended as a consequence of a revision of § 360.9. Each such covered institution would be required to comply with the requirements of § 360.9 no later than 18 months following the end of the second calendar quarter for which it met the criteria for a covered institution because the proposal would not impose any new requirement on such an IDI. The FDIC also does not expect that any of these covered institutions would become a larger covered institution as of the effective date if § 360.9 is revised as proposed. However, such IDIs would be permitted to submit an extension request, as described below.

The proposal would provide a 12-month implementation period to a covered institution that becomes a larger covered institution after meeting the larger covered institution threshold for two consecutive quarters. The FDIC understands that it may take time for such a covered institution to obtain the additional information required for the mandatory data fields and to take actions required for certain deposit accounts with transactional features, as described in Section IV.E. The FDIC believes that one year would be sufficient time for a covered institution to comply with these requirements after becoming a larger covered institution. Most covered institutions already provide the information for the mandatory data fields, so the FDIC does not expect the transition to be a significant burden. The FDIC also believes that no implementation time would be needed for a larger covered institution to adjust its compliance efforts after the number of its deposit accounts falls below two million accounts because the larger covered institution would already be complying with the requirements of § 360.9.

The FDIC invites comments on all aspects of the proposed implementation requirements. In particular, the FDIC seeks comment on the following aspects of the proposal:

(15) Do commenters agree with the proposed implementation period for larger covered institutions? Should larger covered institutions be given more or less time to comply? Do commenters agree with bifurcating the implementation period for the provisional hold requirements and other requirements? Are there any specific requirements other than the provisional hold requirements that commenters believe would take longer than six months after the effective date for larger covered institutions to comply with? Please explain.

( printed page 69649)

(16) Do commenters agree that 12 months would be a sufficient amount of time for a covered institution to comply with the additional requirements after it becomes a larger covered institution? If not, how much time would be needed and why?

(17) Should a covered institution that merges with either another covered institution or a non-covered institution and becomes a larger covered institution be given 12 months or 18 months to comply with the requirements of § 360.9? Why would the recommended implementation timeframe be required?

G. Extensions, Exemptions, and Release

Section 360.9 permits a covered institution to request relief from certain requirements. Covered institutions may request that the FDIC extend the deadline for complying with the requirements of § 360.9. Covered institutions may also submit a request for an exemption from certain of the automated provisional hold requirements.^[37] This request may be to develop a provisional hold process involving memo holds or alternative account mechanisms or to exempt from the provisional hold requirements those account systems servicing accounts where the manual application of provisional holds is feasible. Additionally, § 360.9 allows a covered institution to request an exemption from its requirements if the institution has a high concentration of deposits incidental to credit card operations.^[38] The proposal would not change these exemption provisions or previously granted exemptions. Any covered institution can submit such requests, including larger covered institutions.

The FDIC is aware of the challenges IDIs subject to part 370 experienced in obtaining missing depositor information and complying with part 370's recordkeeping requirements. The FDIC intends to publish certain existing applicable part 370 frequently asked questions as § 360.9 guidance that would address some of these challenges for larger covered institutions. The FDIC also proposes to enable larger covered institutions to seek relief where necessary and appropriate in the form of a full or partial exemption from the requirements of § 360.9(d)(1) for a relatively small number of accounts if circumstances exist that would make it impracticable or overly burdensome to meet those requirements with respect to certain types of accounts. As with any exemption request, the FDIC would consider such requests on a case-by-case basis in light of the objectives of the rule.

With respect to covered institutions, including larger covered institutions, that submit a request for an exemption or extension, the proposal would provide that such covered institutions would not be considered to be noncompliant with § 360.9 with regard to the requirements from which relief is sought while awaiting the FDIC's response to such request. The FDIC intends to respond to such requests promptly and covered institutions would not be penalized while a request for relief is pending.

Section 360.9 currently does not have a codified provision that releases an IDI from the requirements of § 360.9 when it no longer satisfies the criteria to be a covered institution. The FDIC has been notifying IDIs when they fall below the threshold for a covered institution for three consecutive quarters that they are no longer subject to the requirements of § 360.9. The proposal would codify a provision that would automatically release a covered institution from the requirements of § 360.9 if it does not meet the criteria to be a covered institution for three consecutive quarters. Moreover, the proposal would automatically release a larger covered institution from the additional requirements of § 360.9(d)(1)(ii) and (iii) and (d)(5) if it does not meet the criteria to be a larger covered institution for three consecutive quarters. The FDIC would not expect a larger covered institution to be released directly from the requirements of § 360.9 without first becoming a covered institution. The FDIC believes that a covered institution's release after three quarters of not meeting the criteria to be a covered institution would provide greater certainty that the institution will remain below the threshold for coverage. From past experience with both § 360.9 and part 370, the FDIC is aware of circumstances in which an IDI has moved in and out of scope of one of these rules over the course of one or two quarters. The FDIC may still inform a covered institution when it is released but the release would occur automatically regardless.

Like any other IDI, an institution released under § 360.9(j)(1) could become a covered institution again if it were to have at least $2 billion in deposits and at least either 250,000 deposit accounts, or $20 billion in total assets (regardless of the number of deposit accounts), for two consecutive quarters. Similarly, a covered institution released under § 360.9(j)(2) from the additional requirements applicable to larger covered institutions could become subject to those requirements again if it were to have at least $2 billion in deposits and two million or more deposit accounts for two consecutive quarters.

The FDIC invites comments on all aspects of the proposed exemption and release provision. In particular, the FDIC seeks comment on the following aspects of the proposal:

(18) Do commenters agree with the proposed standard data exemption provision for larger covered institutions? What types of data or information would larger covered institutions have difficulty collecting in order to comply with the requirements of the proposal?

(19) Do commenters agree with the proposed provision regarding effect of pending requests? Are there any other considerations that the FDIC should evaluate in providing this safe harbor?

(20) Do commenters agree with the proposed approach to automatically release a covered institution if the IDI does not meet the criteria of a covered institution for three consecutive quarters? Should covered institutions be required to request release that could be granted or denied by the FDIC? If so, what standards should apply to a decision by the FDIC to grant or deny release?

(21) Do commenters agree with the proposed approach to automatically release a larger covered institution from the additional requirements under the proposal applicable to larger covered institutions if it reports below the larger covered institution threshold for three consecutive quarters?

(22) Which part 370 guidance, including frequently asked questions, should be reframed and published as § 360.9 guidance? Why would this guidance be helpful?

H. Records Retention

Alongside the proposal, the FDIC intends to change its practice with respect to retaining depositor and customer data that it receives from covered institutions, including larger covered institutions, in connection with the FDIC's § 360.9 compliance reviews. Currently, this data is retained by the FDIC for each covered institution until the next § 360.9 compliance review. The FDIC has maintained this data to compare results from previous compliance reviews and to assist the FDIC in having baseline data in the event of a covered institution's failure. For part 370 compliance tests, the FDIC has been retaining deposit account data up to 120 days after providing testing results via the final management letter, with most data being deleted in practice within 60 days of distribution of the ( printed page 69650) letter. Once deleted, the FDIC maintains a summary of the data to support the testing results.

The FDIC recognizes the importance of minimizing the volume of sensitive information it holds and ensuring that it only holds such information when needed. As a result, first, effective immediately, the FDIC will fully delete all depositor and customer data no later than 60 days following a § 360.9 or part 370 compliance review. The FDIC believes that this would reduce the risks and sensitivity associated with maintaining sensitive information while still providing the FDIC with the opportunity to validate results for purposes of achieving the goal of prompt deposit insurance determinations.

Second, the FDIC will no longer require covered institutions to provide the FDIC with customers' social security and tax identification numbers (SSN/TINs) in connection with § 360.9 compliance reviews, given the highly sensitive nature of such information. Instead, the FDIC would assign synthetic SSN/TINs to each individual customer, to replicate the FDIC's deposit insurance determination process. The FDIC would then validate the bank's process of assigning unique customer identification numbers to ensure that individual customers are each assigned one unique identification number.

The FDIC will also, upon request, engage with covered institutions on a bilateral basis to address any additional concerns related to sensitive information.

The FDIC invites comments on all aspects of data retention for § 360.9 compliance reviews. In particular, the FDIC seeks comment on the following:

(23) Should the FDIC consider a different approach to the retention of depositor and customer data in connection with FDIC conducted § 360.9 compliance reviews for covered institutions and larger covered institutions? If so, in what aspects and why?

I. Indexing Thresholds

The FDIC proposes to index the dollar amounts used in the definitions of covered institution and larger covered institution. As noted by the FDIC previously, the use of thresholds allows the FDIC to differentiate and tailor regulatory requirements based on an institution's size, risk profile, and level of complexity. However, static dollar-based thresholds can lead to unintended policy consequences if threshold levels are not periodically updated or indexed to inflation. For this reason, the proposal would provide for indexing of the baseline dollar threshold to be a covered institution and a larger covered institution. This is consistent with the FDIC's agency-wide initiative to index dollar values in the FDIC's Rules and Regulations to ensure the FDIC's regulatory expectations are appropriately tailored.

The thresholds would also be measured from a baseline date. The baseline date would be the effective date on which the proposal becomes a final rule. The first adjustment would be effective on October 1, 2029. Thereafter, biennial adjustments would be effective on October 1 following each consecutive two-year period ending on August 30. Adjustments would be calculated by multiplying the applicable baseline threshold value by one plus the cumulative percentage change in the non-seasonally adjusted Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). An annual adjustment would occur if the non-seasonally adjusted CPI-W increased by more than 8 percent over the 12-month period ending August 30 of the year following the year in which the most recent adjustment was made. No adjustment would be made if multiplying the applicable baseline threshold by one plus the cumulative percentage change in non-seasonally adjusted CPI-W from the applicable baseline date, and rounding the result as prescribed, would not increase the then-current threshold.

Under the proposal, the FDIC generally would announce threshold adjustments pursuant to the indexing methodology by publishing a final rule in the Federal Register . Such final rules would amend the Code of Federal Regulations to reflect the adjusted thresholds for the definitions of covered institution and larger covered institution and would not be subject to a notice and comment period. Although the FDIC would fully expect to publish a final rule in the Federal Register , the adjustment would occur even in the absence of a publication in the Federal Register .

The FDIC invites comments on all aspects of indexing in the proposal. In particular, the FDIC seeks comment on the following aspects of the proposal:

(24) Should the proposed rule index the dollar amounts for purposes of the definitions of covered institution and larger covered institution in the proposed rule? Why or why not? Should the FDIC consider alternate approaches for indexing these definitions?

V. Expected Effects

A. Introduction and Baseline Assumptions

As discussed above, the proposal would rescind part 370, subject larger covered institutions to the requirements of § 360.9, and clarify certain § 360.9 requirements to reduce regulatory burden and relieve larger covered institutions of the requirements to build and maintain deposit insurance calculation systems. The FDIC estimates the impact of these proposed changes by comparing economic outcomes under the proposal relative to a baseline in which the proposal is not adopted and the current regulations are in effect. For its estimates under both the proposal and the baseline, the FDIC is utilizing all other relevant laws and regulations in effect, as well as the financial and economic conditions of affected entities, as of March 31, 2026.

Although not all of the effects of the proposal can be quantified, the analysis provides monetary estimates of the most material effects based on current and historical labor burden estimates for part 370 and § 360.9.^[39 40] To convert labor burden (as measured in hours) to 2026 dollars, the FDIC uses an estimated labor compensation rate of $125 per hour.^[41] Given that the most material effects of the proposal would fall upon IDIs that are currently subject to part 370 (part 370 IDIs), much of the discussion will focus on the quantified effects on this group of IDIs. To account for the variation of compliance costs across IDIs, this analysis classifies each part 370 IDI as either a Lowest Complexity, Middle Complexity, or Highest Complexity IDI.^[42] This ( printed page 69651) classification allows the analysis to account for the fact that larger and more complex IDIs are expected to incur more labor hours and other costs than smaller or less complex IDIs.

The FDIC analyzes the monetized effects of the proposal, relative to the baseline, over a 10-year period. The 10-year analysis horizon is sufficiently long to illustrate the net expected effects of the proposal, while avoiding potential uncertainties related to future economic conditions that may arise with longer time horizons.

Given the uncertainties involved in estimating costs and benefits to IDIs across a 10-year horizon, this analysis assumes the financial conditions of affected IDIs are fixed to those reported as of the quarter ending March 31, 2026. In addition, any new IDI qualifying for part 370 under the baseline is assumed to be a Lowest Complexity IDI under the baseline and the proposal and to maintain those conditions throughout the 10-year period. To the extent that this assumption is violated and deposit accounts grow, the estimates of burden under the baseline would be larger than estimated, and the resulting cost savings would be higher than estimated. As such, this assumption provides a conservative estimate of the monetized cost savings provided by the proposal.

This section also discusses the qualitative effects of the proposal on all affected institutions, as well as on the FDIC, the DIF, and the public at large.

B. Scope of Affected Entities

As of March 31, 2026, the FDIC insures 4,287 IDIs.^[43] Of these, the FDIC estimates that 148 IDIs would be affected by the proposal, including 31 part 370 IDIs that would be affected by the proposed rescission of part 370. Of these IDIs, 29 would be “larger covered institutions” ^[44] and be subject to the proposed revisions to § 360.9. Proposed amendments to § 360.9 would also affect 117 IDIs currently subject to § 360.9.

As noted above, this analysis separately accounts for the effects of the proposal across three classifications of part 370 IDIs. Of the 31 part 370 IDIs, five—with approximately $6.8 trillion in domestic deposits—are considered Highest Complexity, 13—with approximately $3.6 trillion in domestic deposits—are considered Middle Complexity, and 13—with approximately $1.4 trillion in domestic deposits—are considered Lowest Complexity.^[45]

Under the baseline, all 31 IDIs currently subject to part 370 would remain subject to it. The FDIC estimates that, under the baseline, one Lowest Complexity IDI would become newly covered each year.^[46] Under the baseline, a newly covered part 370 IDI has three years to comply with part 370 requirements and would incur implementation costs during that period. All IDIs that have passed the implementation period would continue to incur ongoing costs.

The proposed coverage criteria of § 360.9 would subject all but two of the part 370 IDIs to § 360.9 requirements as larger covered institutions.

Based on the assumption that the financial conditions of affected IDIs are fixed to those reported as of the quarter ending March 31, 2026, the total number of IDIs subject to part 370 or § 360.9 would remain the same under both the baseline and the proposal.^[47]

The estimated populations of part 370 IDIs under the baseline and under the proposal are summarized in Table 1:

C. Effects Specific to Part 370 IDIs

The proposal would directly benefit the 31 part 370 IDIs by eliminating compliance costs associated with part 370. These benefits would be attenuated by the additional requirements of amended § 360.9 for the 29 part 370 IDIs that would be larger covered institutions. These 29 larger covered institutions would also incur one-time costs to implement § 360.9 provisional hold and recordkeeping requirements. This section calculates the benefits or costs of each of these effects and totals them to estimate the total net monetized effect of the proposal on part 370 IDIs.

Benefits

Under the proposal, larger covered institutions would benefit by experiencing a reduction in annual compliance costs. For purposes of this analysis, the FDIC conservatively estimates that these IDIs would experience savings equal to approximately $625 thousand per year for a Lowest Complexity IDI, $875 thousand per year for a Middle Complexity IDI, and $2.125 million per year for a Highest Complexity IDI due to the rescission of part 370 under the proposal, relative to the baseline. The FDIC expects the actual cost savings to be much greater than these estimates.

The proposal would also benefit certain IDIs in future periods by removing the need to newly comply with part 370 and thereby reduce associated compliance costs. As noted above, the FDIC estimates that, under the baseline, one Lowest Complexity IDI ( printed page 69652) each year would meet the criteria to be subject to part 370. The proposed rescission of part 370 would eliminate the implementation burden of one Lowest Complexity IDI each year, at an average estimated implementation cost of approximately $3.5 million per Lowest Complexity IDI per year.^[48] As above, the FDIC expects these estimates to substantially understate the actual compliance costs associated with part 370.

Costs

As noted in Table 1, 29 of the 31 part 370 IDIs would be subject to § 360.9 under the proposal, if adopted. This analysis conservatively assumes all 29 would incur one-time costs to update their IT and recordkeeping systems to comply with § 360.9.^[49] Given the disparities in both size and complexity between the average current § 360.9 IDI and the average current part 370 IDI, the FDIC does not expect transition costs for the 29 larger covered institutions to be similar to implementation costs for other covered institutions. To estimate transition costs, this analysis uses historical hourly burdens for the Data Extraction and Reporting components of the implementation costs of part 370.^[50] The scope of some of these part 370 implementation activities is likely similar to § 360.9 implementation activities, while other components (such as Insurance Calculation) would not be part of § 360.9 compliance. Based on these historical burdens, the FDIC estimates transition costs would average approximately $210 thousand for each of the 12 transitioning Lowest Complexity IDIs, $254 thousand for each of the 12 transitioning Middle Complexity IDIs, and $1.7 million for each of the five transitioning Highest Complexity IDIs. Aggregate transition costs for the industry would total approximately $14 million.^[51] As noted above, the FDIC acknowledges these estimates likely understate actual expected costs. Although the proposal provides 18 months for the transition, this analysis assumes all 29 IDIs would incur all of their transition cost in the first year that the proposal would be effective. The FDIC estimates that annual ongoing costs for larger covered institutions subject to amended § 360.9 would be approximately $23 thousand per IDI.^[52]

These estimates are summarized in Table 2:

Net Annualized Benefits

As detailed above, the FDIC estimates that the proposed rescission of part 370 would result in aggregate industry savings of approximately $33 million per year. In the first year that the proposed rule would be effective, these savings are offset by $14 million of implementation costs to transition to § 360.9, for a net savings of $19 million.^[53] In each subsequent year after the larger covered institutions fully transition, net industry savings from the proposal would total approximately $32 million per year. To estimate the total net benefit resulting from the proposal, the FDIC annualizes these values using a discount rate of 3.7 percent across a 10-year analysis horizon.^[54] Based on these calculations, the FDIC estimates that the proposal would result in annualized savings of approximately $31 million. Details are provided in Table 3.

( printed page 69653)

D. Effects on Covered Institutions, the Deposit Insurance Fund, and Depositors

In addition to the effects on current part 370 IDIs described above, the proposal would have effects on all covered institutions, the DIF, and depositors.

The proposal would revise certain provisions in § 360.9 to clarify definitions and codify existing practices. These revisions are expected to provide modest benefits to covered institutions. Covered institutions may pass along some or all of the cost savings provided by the proposal to their customers through lower fees or higher deposit interest rates.

Direct costs of the proposal on covered institutions include minor updates of systems or practices to align with the proposed revisions. While it is difficult to quantify these effects, the FDIC expects that these effects are much less material than the effects discussed above.

If the proposal were to result in delays in insurance determinations in the event of the failure of a part 370 IDI, this would result in indirect costs. Any such delay may result in either inaccurate deposit insurance payouts, which could lead to a loss in the DIF, or prolongation of the waiting period before the payouts, which could lead to disruptions for account holders and a loss in consumer confidence. However, such an outcome would be highly unlikely under the proposal; since part 370 was adopted in 2016, the FDIC has significantly enhanced its own claims processing and deposit insurance determination capabilities, so the FDIC can now readily process many more insurance determinations than it could in 2016. In addition, the proposed requirements for larger covered institutions in § 360.9 would incorporate those requirements in part 370 most critical to such insurance determinations.

E. Indexing Thresholds

The proposal would index the dollar amounts in § 360.9. The indexing provision would preserve the level of thresholds set forth in the proposed rule in real dollar terms, thereby avoiding the undesirable and unintended outcome where the asset threshold changes due solely to inflation rather than actual changes in an institution's size, risk profile, or level of complexity.

F. Conclusion

Based on the analysis described above, the FDIC has determined that the expected benefits of the proposal justify its expected costs. The FDIC invites comments on all aspects of the supporting information provided in this analysis, and, in particular, whether the proposal would have any material effects that the FDIC has not identified.

VI. Alternatives Considered

The FDIC considered alternatives to the proposal to meet the objectives of this rulemaking. For the reasons described below, the FDIC views the proposal as the most appropriate and effective means of achieving the policy objectives described in Section I. The FDIC considered not promulgating any regulatory action to amend § 360.9 and rescind part 370. As previously discussed, however, the FDIC has determined that the rescission of part 370 and amendment to § 360.9 would reduce regulatory burden for IDIs subject to part 370 while maintaining measures that facilitate the FDIC's ability to promptly make a deposit insurance determination by relying on its own IT systems to accurately calculate deposit insurance. As discussed above, the proposal would provide cost savings and other benefits relative to this no-action alternative.

The FDIC also considered modifying the threshold for coverage under § 360.9 but concluded that the requirements of § 360.9 promote the FDIC's ability to meet its statutory obligations in resolving institutions covered at the current thresholds. The FDIC considered requiring all the data fields in Appendices C through G of part 360 as mandatory for all covered institutions. The FDIC did not pursue this approach because it believes the benefits would not outweigh the additional burdens on covered institutions. The FDIC has determined that the proposal strikes an appropriate balance by removing the requirement for an IDI subject to part 370 to maintain an IT system to calculate deposit insurance and enhancing the FDIC's ability to meet its statutory obligation to pay deposit insurance “as soon as possible” following failure. The proposal would help enable the FDIC to resolve IDIs subject to § 360.9 in the manner least costly to the DIF by preserving franchise value through prompt deposit insurance determination and maintenance of continuity of a failed covered institution's deposit operations.

The FDIC invites comments on all possible alternatives to the proposal and will reconsider all of its preliminary determinations in the proposal after review of comments.

VII. Regulatory Analysis

A. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency, in connection with a notice of proposed rulemaking, to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of the proposal on small entities.^[55] However, an initial regulatory flexibility analysis is not required if the agency certifies that the proposal would not, if promulgated, have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has defined “small entities” to ( printed page 69654) include banking organizations with total assets of less than or equal to $850 million.^[56] As detailed in the following statement of factual basis, the FDIC certifies that the proposal would not, if promulgated, have a significant economic impact on a substantial number of small entities.

As of the quarter ending March 31, 2026, the FDIC insures 4,287 IDIs, of which 2,954 are small entities for the purposes of RFA.^[57] The proposal would apply to all small entities that meet the criteria for being subject to either § 360.9 or part 370, which include minimum thresholds of at least $2 billion in deposits or two million deposit accounts.

There is currently a single small entity that meets the criteria for being an IDI subject to part 370.^[58] This IDI would benefit from the rescission of part 370. In addition, this IDI would not meet the criteria for being a covered institution under § 360.9. As such, the proposal would impose no direct costs on this small entity. Even if the impact to this single IDI were significant, this single IDI, constituting less than a tenth of a percent of regulated small entities, would not be a substantial number.

Based on the preceding statement of factual basis, the FDIC certifies that the proposal would not, if promulgated, have a significant economic impact on a substantial number of small entities. Accordingly, an initial regulatory flexibility analysis is not required.^[59]

The FDIC invites comments on all aspects of the supporting information provided in this RFA section. The FDIC is particularly interested in comments on any significant effects on small entities that the agency has not identified.

B. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (PRA) ^[60] states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The FDIC has reviewed this proposal and determined that it revises or removes certain information collection requests previously cleared by OMB under the following OMB Control Nos.:

Title of Information Collection: Recordkeeping for Timely Deposit Insurance Determination.

OMB Control No.: 3064-0202.

Affected Public: Insured Depository Institutions subject to 12 CFR part 370.

Proposed Action: Upon publication of the final rule, the FDIC will submit a request to discontinue this information collection request.

Description: The FDIC has reviewed this proposed rule and preliminarily determined that rescinding part 370 would eliminate all recordkeeping and reporting requirements approved under OMB Control No. 3064-0202. Because this rule proposes to remove part 370 in its entirety, the FDIC expects that the information collection associated with part 370 would no longer be necessary. If the rule is finalized as proposed, the FDIC would submit a discontinuance request to OMB to retire OMB Control No. 3064-0202.

The FDIC estimates that rescinding part 370 and discontinuing OMB Control No.3064-0202 would eliminate an annual paperwork burden of approximately 10,169 hours, as reported in the most recent ICR inventory.

Title of Information Collection: Large-Bank Deposit Insurance Programs.

OMB Control No.: 3064-0162.

Affected Public: Insured depository institutions having at least $2 billion in deposits and at least either: (a) 250,000 Deposit accounts; or (b) $20 billion in total assets, regardless of the number of deposit accounts.

Proposed Action: The proposal would revise the currently approved information collection as follows:

Description: The proposal would expand § 360.9 to require IDIs having at least $2 billion in deposits and two million or more deposit accounts to maintain and provide to the FDIC certain depositor and customer data needed for the FDIC to calculate deposit insurance in the event of the IDI's failure. Accordingly, the FDIC would add additional information collections to account for the new PRA requirements imposed on larger covered institutions, and revise the existing information collections to better align with the proposal as follows:

Based on the expansion of § 360.9 to include institutions currently covered by part 370, and the PRA burden of implementing the appropriate technology systems to comply with § 360.9, FDIC estimates an increased PRA burden of 12,022 hours under the most recent OMB submission for § 360.9. Rescission of part 370 would eliminate the PRA burden of 10,169 hours reported under OMB Control No. 3064-0202. Based on these estimates, the net increase across both collections would be 1,853 annual burden hours. The increased overall burden is caused in part by the implementation costs of institutions adjusting their information technology systems to § 360.9 requirements. However, after larger covered institutions complete a one-time implementation of the requirements of this proposal, the estimated ongoing burden of this information collection request will be reduced on a long-term basis relative to the ongoing burden of the previous information collection requests under § 360.9 and part 370.

The FDIC will submit the proposed revisions to these information collections to the OMB for review under section 3507(d) of the PRA,^[61] and 5 CFR 1320.11 of the OMB's implementing regulations.^[62]

Comments are invited on:

(a) Whether the revisions to existing collections of information are necessary for the proper performance of the FDIC's functions, including whether the information has practical utility;

(b) The accuracy of the estimate of the burden of the information collections, including the validity of the methodology and assumptions used;

(c) Ways to enhance the quality, utility, and clarity of the information to be collected; and

(d) Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.

All comments will become a matter of public record. Comments on aspects of this document that may affect reporting, recordkeeping, or disclosure requirements and burden estimates should be sent to the address listed in the ADDRESSES section of this document. Written comments and recommendations for this information collection also should be sent within 60 days of publication of this document to www.reginfo.gov/​public/​do/​PRAMain. Find this particular information collection by selecting “Currently under 60-day Review—Open for Public Comments” or by using the search function.

C. Riegle Community Development and Regulatory Improvement Act

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA),^[63] in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on IDIs, each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on affected depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of the RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. The FDIC invites comments that further will inform its consideration of the RCDRIA.^[64]

( printed page 69656)

D. Plain Language

Section 722 of the Gramm-Leach-Bliley Act ^[65] requires the Federal banking agencies to use plain language in all proposed and final rulemakings published in the Federal Register after January 1, 2000. The FDIC invites your comments on how to make this proposal easier to understand, including the following:

• Has the FDIC organized the material to suit your needs? If not, how could the proposal be more clearly stated?
• Are the requirements in the proposed rule clearly stated? If not, how could the proposal be more clearly stated?
• Does the proposal contain language or jargon that is not clear? If so, which language requires clarification?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the proposal easier to understand? If so, what changes to the format would make the proposal easier to understand?
• What else could the FDIC do to make the proposal easier to understand?

E. Executive Orders 12866 and 14192

Executive Order (E.O.) 12866, titled “Regulatory Planning and Review,” as amended, requires the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget to determine whether a proposed rule is a “significant regulatory action” prior to the disclosure of the proposed rule to the public. If OIRA finds the proposed rule to be a “significant regulatory action,” E.O. 12866 requires an agency to conduct a cost-benefit analysis of the proposed rule. E.O. 12866 defines “significant regulatory action” to mean a regulatory action that is likely to: (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in E.O. 12866. OIRA has determined that this rulemaking is not a “significant regulatory action” under section 3(f) of E.O. 12866 and therefore is not subject to review under E.O. 12866.

E.O. 14192, titled “Unleashing Prosperity Through Deregulation,” was issued on January 31, 2025. Section 3(a) of E.O. 14192 requires an agency, unless prohibited by law, to identify at least ten existing regulations to be repealed when the agency publicly proposes for notice and comment or otherwise promulgates a new regulation. In furtherance of this standard, section 3(c) of E.O. 14192 requires that the new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least ten prior regulations. This proposal, if finalized as proposed, is expected to be a deregulatory action under E.O. 14192.

Authority and Issuance

For the reasons set out in the preamble, title 12 of the Code of Federal Regulations is proposed to be amended as follows:

1. The authority citation for part 314 is revised to read as follows:

Authority: 12 U.S.C. 378, 1464, 1813, 1815, 1817, 1818, 1819, 1819(a) (Seventh and Tenth), 1820, 1821, 1821(p), 1823, 1828, 1829, 1831a, 1831e, 1831m, 1831o, 1831p-1, 1831w, 1835a, 1843(l), 3103, 3104, 3105, 3108, 3109, 3207, 5385(h), 5389, 5390(s)(3), 5390(b)(1)(C), 5390(a)(7)(D), 5381(b), 5390(r), 5390(a)(16)(D), 5412, 5414, 5415, and 15 U.S.C. 78j-1, 78l(i), 78m, 78n, 78p, 78w, 1601-1607, 7241, 7242, 7243, 7244, 7261, 7262, 7264, and 7265; Pub L. No. 111-203, section 939A, 124 Stat. 1376, 1887 (July 21, 2010) (codified 15 U.S.C. 78o-7 note).

2. In § 314.1, revise paragraphs (a) through (c) to read as follows:

3. The authority citation for part 360 continues to read as follows:

Authority: 12 U.S.C. 1811 et seq., 1817(a)(2)(B), 1817(b), 1818(a)(2), 1818(t), 1819(a) Seventh, Eighth, Ninth, and Tenth, 1820(b)(3) and (4), 1820(g), 1821(d)(1), (4), (10)(C), and (11), 1821(e)(1) and (8)(D)(i), 1821(f)(1), 1823(c)(4), and 1823(e)(2).

4. Amend § 360.9 by revising paragraphs (a), (b), (c)(1), (c)(2), (c)(4) introductory text, (c)(5) through (7), (d)(1) through (4), (e)(1), and (e)(2), and adding paragraphs (d)(5) and (6), (i), and (j) to read as follows:

5. Revise the table in appendix A to part 360 to read as follows:

Appendix A to Part 360—Non-Monetary Transaction File Structure

6. Revise the table in appendix B to part 360 to read as follows:

Appendix B to Part 360—Debit/Credit File Structure

7. Revise the table in appendix C to part 360 to read as follows:

Appendix C to Part 360—Deposit File Structure

8. Revise the table in appendix D to part 360 to read as follows:

Appendix D to Part 360—Sweep/Automated Credit Account File Structure

9. Revise the table in appendix E to part 360 to read as follows:

Appendix E to Part 360—Hold File Structure

( printed page 69677)

10. Revise the table in appendix F to part 360 to read as follows:

Appendix F to Part 360—Customer File Structure

11. Revise the table in appendix G to part 360 to read as follows:

Appendix G to Part 360—Deposit-Customer Join File Structure

12. Add new Appendix I to part 360 to read as follows:

Appendix I to Part 360—Pass-through and Broker Deposit Data Structure

This is the structure for the data file to provide passthrough deposit insurance data to the FDIC. Third parties would need to provide this data only in the event of a larger covered institution's failure. This data will facilitate the timely payment of funds. If data or information are not maintained or do not ( printed page 69683) apply, a null value in the appropriate field should be indicated. The file will be in a tab- or pipe-delimited ASCII format. Each file name will contain the third party's name or common abbreviation and the date of the extract. The files will be encrypted using an FDIC-supplied algorithm. The FDIC will transmit to the covered institution the encryption algorithm over FDIC connect.

This data file will have one or more records for each deposit account at the bank, depending on the number of broker customers assigned to each account. Therefore, multiple records may have the same Bank_Acct_Identifier. Furthermore, if an account held by customers at the broker is owned by more than one person, multiple records could contain the same Bank_Acct_Identifier and Customer_Account_Number; these records would be differentiated by the Customer_Tax_ID and various Name fields. This file could also contain other records associated with the broker customer accounts to designate, among other things, beneficiaries, custodians, trustees, and agents as identified in field 30. This methodology allows the FDIC to know all the possible relationships for an individual account and whether a single customer is involved in many accounts.

13. Under the authority of 12 U.S.C. 1819(a) Tenth, remove and reserve part 370.

91 FR 69642