More than 400 banks have failed since 2009. In nearly every case, the Federal Deposit Insurance Corporation (FDIC) has played a critical role in the successful resolution of the failed institutions. If the FDIC cannot facilitate the sale of failed bank to a healthy bank, the FDIC promptly pays the failed institution’s depositors the full amount of their insured deposits. Depositors’ ability to rely on the FDIC for protection provides financial stability and maintains confidence in the U.S. banking system.

The FDIC strives to pay depositors within one business day of a bank failure. For some time, the FDIC has been concerned that the size and complexity of the largest banks would preclude it from maintaining this level of efficiency . Deposit insurance coverage is necessarily based on an individual bank’s data. In large banks, the relevant data is frequently maintained in multiple information technology systems, and the insurance coverage calculations may be complicated (e.g., with certain types of accounts) or delayed (e.g., when data is missing). To mitigate this risk of delayed payment, the FDIC issued a new rule in February 2017 specifying recordkeeping and compliance requirements.

The new rule – Recordkeeping for Timely Deposit Insurance Determination – has significant implications for affected banks. The rule specifies that banks must reach compliance by April 1, 2020, and large banks will likely need the entire three years to address the requirements fully. This white paper provides information on the rule, presents a framework for response and outlines how Capco are uniquely positioned to support this effort.