FDIC FAQs-If an IDI offered a sweep-account product providing for an overnight sweep of funds from an interest-bearing account to a noninterest bearing transaction account, would the noninterest-bearing account qualify for unlimited coverage?

Compliance > Deposit Operations > FDIC FAQs on Insurance and Payment of Interest on Demand Deposit Accounts

Q: If an IDI offered a sweep-account product providing for an overnight sweep of funds

from an interest-bearing account to a noninterest-bearing transaction account, would

the noninterest-bearing transaction account qualify for unlimited deposit insurance

coverage under the Dodd-Frank Deposit Insurance Provision?


A:  No. The Dodd-Frank Deposit Insurance Provision provides unlimited deposit insurance

coverage (through December 31, 2012) only with respect to accounts for which interest is

neither accrued nor paid. Deposit products involving the overnight transfer of funds from

an interest-bearing account (for which interest is credited to the account before the funds are

transferred to the noninterest-bearing account) to a noninterest-bearing transaction account

are, in substance, one deposit product on which the IDI pays interest. As such, viewed as a

whole, the funds involved would not qualify for coverage under the Dodd-Frank Deposit

Insurance Provision.

This can be found in - FAQ#15 of FDIC’s FAQs.  FDIC’s FAQs can be found at: http://www.fdic.gov/deposit/deposits/unlimited/faq.pdf

 

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