In connection with the TLGP Transaction Account Guarantee Program, all depository institutions that offer noninterest-bearing transaction accounts will have new disclosures that must be made in the lobby of its main office and each domestic branch office, and, if the institution offers “Internet deposit services,” on its website.  The disclosures must be in place by December 19, 2008, and must have made adequate disclosures in a commercially reasonable manner before that time.

Standard Disclosures. The FDIC regulations provide the following sample disclosures.

For Participating Institutions:

[Institution Name] is participating in the FDIC’s Transaction Account Guarantee Program. Under that program, through December 31, 2009, all noninterest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account. Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC’s general deposit insurance rules.

For Non-Participating Institutions:

[Institution Name] has chosen not to participate in the FDIC’s Transaction Account Guarantee Program. Customers of [Institution Name] with noninterest-bearing transaction accounts will continue to be insured through December 31, 2009 for up to $250,000 under the FDIC’s general deposit insurance rules.

Disclosure of Sweep Arrangements. If the institution uses sweep arrangements or takes other actions that result in funds being transferred or reclassified to an account that is not guaranteed under the Transaction Account Guarantee Program, then the institution must disclose those actions to the affected customers and clearly advise them, in writing, that such actions will void the FDIC’s guaranteed with respect to the swept, transferred, or reclassified funds.  The FDIC’s FAQ further states that the “details regarding how to affect such notice are left to depository institutions to be accomplished in a commercially reasonable manner. So long as effective notice is given, whether it be a one-time disclosure or on-going is left to the institution.”

On-line Banking Disclosure. With regard to the requirement to post the disclosure on the institution’s website if the institution offers “Internet deposit services.”  The regulation does not define “Internet deposit services,” but the FDIC’s FAQ provides that website disclosure is required for any depository institution that “has on-line banking services.

Possible Official Check Disclosure. The FDIC’s FAQ also provide another example of when disclosure to customers is required: “Similarly, a participating institution should disclose to depositors special situations where the coverage provided under the Transaction Account Guarantee Program may or may not be available, as in the case where an institution issues official checks drawn on another insured depository institution. If the other institution is participating in the Transaction Account Guarantee Program, then the payee of the official check would be fully covered. If the other institution is not a participating institution, then whether the payee is insured for the amount of the official check would be based on the FDIC’s general deposit insurance rules. The institution that provides such official checks to its customers must disclose this information to those customers.”