Opinion ID: 564423
Heading Depth: 2
Heading Rank: 2

Heading: FDIC's Determination

Text: 10 Under an extensive regulatory scheme, the FDIC insures deposit accounts on either a per account or per depositor basis. In determining which is more appropriate, the FDIC looks to who owns and benefits from the funds on deposit. 12 C.F.R. Sec. 330.3(a) (1991). If the deposit accounts in question are maintained in the same right and capacity; that is, are maintained by or for the benefit of a particular depositor or depositors, then they will be aggregated and insured only up to $100,000. Id. If, however, the deposits are maintained in different rights and capacities, then they shall be insured separately from each other. Id. 11 Because ownership of deposit accounts is a necessary precondition for insurance coverage, the FDIC normally evaluates the ownership laws of the state in which the deposit accounts are located. See 12 C.F.R. Sec. 330.3(h) (1991). Such laws, however, do not alone dictate deposit insurance coverage. Rather, to determine deposit account ownership, the FDIC will also evaluate the deposit account records of the depository institution. Id. Although it is presumed that deposit account records reflect true ownership of the amounts on deposit, see 12 C.F.R. Sec. 330.4(a) (1991), that presumption can be rebutted if the depository records disclose a fiduciary relationship between the depositor and other parties that might provide a basis for additional insurance. 12 C.F.R. Sec. 330.4(b)(2) (1991). The details of such a fiduciary relationship between the depositor and others can be ascertained, however, only from the deposit account records themselves, or from business records maintained in good faith and in the regular course of business. Id. 12 Unfortunately, the FDIC has failed to follow this regulatory scheme in making its determination regarding Freedom Bank's not-for-profit depositors. Rather, the FDIC's cursory two-page letter to the Attorney General demonstrates that the FDIC simply concluded, without explanation, that because these deposit accounts were not held as trust funds or trust interests, they would not be insured on a per account basis. In our view, this perfunctory analysis is wholly inadequate, and provides very little, if any, basis upon which to conduct a meaningful review the agency's determination. 13 Thus, pursuant to Federal Rule of Appellate Procedure 16, we remand this case to the FDIC for a full, written explanation as to why it denied Freedom Bank's not-for-profit depositors insurance on a per account basis. Specifically, the FDIC should address the following matters: (a) whether the not-for-profit depositors hold their accounts in the same right and capacity or different rights and capacities, 12 C.F.R. Sec. 330.3(a) (1991); (b) whether the not-for-profit depositors' ability to identify the beneficiaries of their deposit accounts affects this determination, and if so, why; (c) whether the not-for-profit depositors' legal ownership of the deposit accounts in question precludes the funds in those accounts from being treated like trust funds or other fiduciary accounts, and if so, why; and (d) whether and to what extent New York's restrictions on nor-for-profit deposit accounts affects insurance coverage. In addition, the FDIC should include in the record those deposit account records and other business records that it has reviewed in coming to its determination. 14 The FDIC is to submit its explanation within sixty (60) days of the filing of this opinion. Jurisdiction is retained. 15 So ordered.