January 8, 1990
TO: PENSION MEMBERS NO. 1-90
UNIT INVESTMENT TRUST MEMBERS NO. 1-90
SEC RULES COMMITTEE NO. 2-90
RE: FDIC PROPOSES AMENDMENTS TO REGULATIONS CONCERNING
PASS-THROUGH INSURANCE
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The Federal Deposit Insurance Corporation ("FDIC") has
proposed amendments to its deposit insurance regulations which
clarify and define the extent of insurance coverage afforded by
the FDIC to deposit accounts maintained with FDIC-insured banks.
Set forth below is a summary of the relevant proposals.
As stated in the attached release, the FDIC is proposing to
withdraw the rule that was proposed last year which would have
resulted in unit investment trust deposits being insured on a
"pass-through" basis in the amount of up to $100,000 for the
interest of each beneficiary in the deposits. One of the reasons
provided for withdrawing the proposed rule is that the FDIC was
mandated by Congress to prepare a report of the FDIC's findings
and recommendations concerning the pass-through of deposit
insurance to individual investors in unit investment trusts.
Therefore, the FDIC believes that it would be inappropriate to
proceed with the rulemaking until the study has been completed.
Depending on the conclusions of the study, the FDIC may repropose
the rule to extend pass-through treatment to unit investment
trusts.
With respect to deferred compensation plans which qualify
under section 457 of the Internal Revenue Code ("457 Plan"), the
FDIC has proposed to codify its existing staff position that 457
Plan deposits will be insured in the amount of $100,000 in the
aggregate, and will not be insured on a per-participant basis.
The proposal is based on the fact that the funds of such plans
are required under section 457 to "remain (until made available
to the participant or other beneficiary) solely the property and
rights of the employer...subject only to the claims of the
employer's general creditors." The proposal applies to all
deposits that were previously insured by the former FSLIC, which
had insured such accounts on a per-participant basis.
The comment period for the FDIC's proposed revisions of its
regulations expires on February 20, 1990. Please provide me with
any comments that you would like included in the Institute's
comment letter by February 10, 1990.
Amy B. Rosenblum
Assistant General Counsel
Attachment