US bank regulator tightens recordkeeping requirements

[WASHINGTON] The Federal Deposit Insurance Corporation (FDIC), a major US bank regulator, on Wednesday tightened recordkeeping requirements for institutions with a large number of deposit accounts, to make sure customers are paid quickly if their bank fails.

The agency said in a statement that depository institutions with more than 2 million accounts would have to maintain complete and accurate data on depositors and put technology in place that could calculate the amount of insured money for each depositor within 24 hours of failure.

The FDIC's role is to step in when a bank is in trouble and rapidly decide which clients get their money back because they fall under the deposit guarantee program. It said that a bank with "unclear or incomplete" records could have to delay payments in the event of failure.

"Timely access to insured deposits is critical to maintaining public confidence in the banking system," FDIC Chairman Martin Gruenberg said in a statement.

"This proposal would bolster the FDIC's ability to provide depositors at banks with a large number of deposit accounts the same rapid access to their insured funds in the case of a failure as the FDIC does in smaller resolutions."

The agency first suggested the requirements last April and exempted smaller community banks. The threshold of 2 million accounts affects only one-half of one per cent of all the institutions the FDIC insures.

Among the banks affected are Bank of America Corp, JPMorgan Chase & Co and Wells Fargo & Co.

REUTERS