FDIC Adopts Final Rule on Signage to Safeguard Deposit Insurance
The Federal Deposit Insurance Corporation (FDIC) has unanimously voted in favor of a final rule that aims to modernize the requirements for displaying the official FDIC sign in banks and bank digital channels. The rule places an emphasis on ensuring that consumers can easily differentiate between products that are covered by deposit insurance and those that are not.
New Signage Requirements for Banks
Under the final rule, banks will be required to display the official FDIC sign, a new official digital sign, and other signs that differentiate between deposits and non-deposit products across all banking channels. This includes physical bank branches, non-branch locations, ATMs, and digital channels such as bank websites and mobile applications.
In addition to the signage requirements, banks will need to establish and maintain policies and procedures on compliance. These policies must include provisions for monitoring activities by third parties that provide deposit-related services to or on behalf of the bank. The rule will take effect on January 1, 2025.
Clarifying Misrepresentations of Deposit Insurance Coverage
The final rule also aims to clarify rules regarding misrepresentations of deposit insurance coverage by nonbanks. It does so by amending the definition of “non-insurance products” to include crypto assets. This change ensures that consumers are aware of the potential risks associated with non-insurance products and can make informed decisions.
Improvements in the Final Rule
The final rule incorporates several improvements from the original proposal. For instance, banks with existing ATMs that do not offer non-deposit products will be allowed to display a physical sign instead of the new digital sign. The rule also provides clarity on situations where it may be challenging to physically segregate the offering of deposit and non-deposit products at a physical location.
While FDIC Vice Chairman Travis Hill expressed reservations about the rule, he ultimately voted in favor of it. Hill acknowledged the importance of promoting awareness of FDIC insurance, ensuring clear delineation between insured deposits and uninsured non-deposit products, and providing additional clarity for nonbanks making representations or misrepresentations of deposit insurance.
FDIC to Bolster Supervisory and Resolution Staff
In addition to adopting the final rule on signage, the FDIC board approved a budget of nearly $3 billion for 2024. This budget includes funding for 189 new positions, primarily in bank supervision and resolution. The increase in staff is a response to recent bank failures and aims to strengthen the FDIC’s supervisory capabilities.
The new positions will primarily focus on large banks, which have faced increased scrutiny following the failures of Signature Bank and First Republic Bank. Reports from the General Accountability Office and independent investigators highlighted missteps in the FDIC’s supervision of these banks.
With the additional staffing, the FDIC will have a total authorized staffing level of 6,817 full-time equivalent positions. However, the agency has faced challenges in filling all available job openings in recent years.
Frequently Asked Questions (FAQs)
1. What is the purpose of the FDIC’s final rule on signage?
The FDIC’s final rule on signage aims to modernize requirements to ensure consumers can easily differentiate between products covered by deposit insurance and those that are not.
2. When will banks be required to comply with the rule?
Banks will be required to comply with the final rule starting on January 1, 2025.
3. How will the final rule clarify misrepresentations of deposit insurance coverage?
The final rule amends the definition of “non-insurance products” to include crypto assets, ensuring that consumers are aware of the potential risks associated with such products.
4. What improvements were made in the final rule?
The final rule allows banks with existing ATMs that do not offer non-deposit products to display a physical sign instead of a new digital sign. It also provides clarity on situations where physically segregating deposit and non-deposit products is challenging.
5. Why is the FDIC increasing its supervisory and resolution staff?
The increase in staff is a response to recent bank failures and aims to strengthen the FDIC’s supervisory capabilities, particularly for larger banks that have faced increased scrutiny.
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