The financial crisis of 2008 brought several institutional collapses that were unanticipated in both scale and speed. While existing processes were deemed suitable to handle smaller or slower bank failures, the FDIC realized that it might struggle to pay depositors if a complicated bank failed rapidly.
The FDIC is required by law to pay depositors “as soon as possible” after a depository institution fails, while also resolving claims at the lowest possible cost to the Deposit Insurance Fund. The FDIC believes that the largest institutions, which in the case of this rule are defined as those with over two million deposit accounts, are inherently more complex than smaller institutions that the FDIC covers due to several factors:
- Multiple IT systems, often grown from acquisitions, create a patchwork of different recordkeeping standards and formats across different accounts
- Geographic dispersion among the largest institutions leads to differing data quality in different locales due to both local laws and standards about what data to gather and maintain
- A large number of deposit accounts increases the possibility for data gaps due to the sheer volume of potential customer and account data
Since the financial crisis of 2008, the FDIC has relied on the standardized data sets described in rule 360.9 to be prepared for a covered institution entering receivership. However, after years of working with banks to implement and validate rule 360.9, the FDIC believes that further measures are necessary to allow it to fulfill its obligations to depositors in the event that a very large bank fails. These further measures are defined in Part 370.
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If you are interested in learning more about FDIC Part 370 and how we can help you comply with the rule, please download our comprehensive guide or complete the contact form below.
