Skip to content
BOL Conferences

Page 1 of 2 1 2
Thread Options
#1429492 - 08/16/10 03:12 PM FDIC Best Practice Ques. Rolling 12 month Period?
Always In Training Offline
Diamond Poster
Joined: Jul 2006
Posts: 1,115
Where the Green Grass Grows
We have this issue currently with limited withdrawal accounts-- and this OD "guidance" and pending lawsuits whatnot has got me thinky proactively...

How sticky is the example: "6 per rolling 12 month period"?

Rolling 12 months is next to impossible to monitor with a system that cleans/resets itself at the end of a calendar year.

Return to Top
Operations Compliance
#1429514 - 08/16/10 03:29 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Always In Training
Doug Hendrickson Offline
Power Poster
Doug Hendrickson
Joined: Oct 2009
Posts: 3,927
I wouldn't say impossible, but it does make it harder. If you're sending out 1st, 2nd and then 3rd (final) letters to those who meet the conditions, you can then use each of the monthly letter reports to see who has already gotten a letter within the rolling 12-months. Hopefully the letters each month are few and it makes it somewhat easier to track.
_________________________
I hear and I forget. I see and I remember. I do and I understand.--Confucius

Return to Top
#1429594 - 08/16/10 04:46 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Doug Hendrickson
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Doug, I think Always is talking about the new FDIC guidance on overdrafts, not MMAs and savings accounts.

Always, I haven't gottena chance to look at the new guidance yet. Once I do, I can possibly opine. But based on what i have seen others post, it appears that the regulators are going to start looking heavily at the bank's practices of montiroing ODs on their customers. How strict will probably depend on the examiner that you get.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1429605 - 08/16/10 04:58 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Dani York, CRCM
Doug Hendrickson Offline
Power Poster
Doug Hendrickson
Joined: Oct 2009
Posts: 3,927
Apologies for the confusion. Whenever I hear 12-month rolling I automatically think of excessive withdrawals.
_________________________
I hear and I forget. I see and I remember. I do and I understand.--Confucius

Return to Top
#1429632 - 08/16/10 05:26 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Doug Hendrickson
waldensouth Offline
Power Poster
waldensouth
Joined: Nov 2001
Posts: 7,988
FINALLY ABOVE the gnat line
We'll have to have a report just like we have for excessive transactions that will monitor the number of ODs in a rolling 12-month period. then we'll have to document that we counseled the customer and gave them an opportunity to change their OD protection.

Folks with excessive ODs don't always qualify for credit and banks who have given EVERYONE and OD line of credit have paid the penalties in charged off loans.

Folks with excessive ODs will soon turn their savings/MMDA into a checking account with excessive transactions.

What options will some folks realistically have if they can't handle the DDA they already have?
_________________________
"Once you learn to read, you will be forever free."

- Frederick Douglass




My Opinion Only.

Return to Top
#1429676 - 08/16/10 06:04 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? waldensouth
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Originally Posted By: waldensouth
What options will some folks realistically have if they can't handle the DDA they already have?


the new pilot checking account that the FDIC is pushing.....

Honestly, this new guidance in conjunction with the pilot checking account is going to push banks to give everyone a checking account and not charge for any ODs.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1429723 - 08/16/10 07:01 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Dani York, CRCM
Sheldon Hendrix Offline
Diamond Poster
Sheldon Hendrix
Joined: Jun 2006
Posts: 1,194
South
Originally Posted By: Dani York
Originally Posted By: waldensouth
What options will some folks realistically have if they can't handle the DDA they already have?


the new pilot checking account that the FDIC is pushing.....

Honestly, this new guidance in conjunction with the pilot checking account is going to push banks to give everyone a checking account and not charge for any ODs.


Can we say "plain vanilla?"

Return to Top
#1429884 - 08/17/10 11:56 AM Re: FDIC Best Practice Ques. Rolling 12 month Period? Sheldon Hendrix
Getting_Grayer Offline
100 Club
Joined: Oct 2007
Posts: 194
USA
Pilot checking account? Is this what you are referring?

http://www.fdic.gov/news/board/10AugPilot.pdf

Thanks.

Return to Top
#1429938 - 08/17/10 01:49 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Getting_Grayer
Always In Training Offline
Diamond Poster
Joined: Jul 2006
Posts: 1,115
Where the Green Grass Grows
I live in a rural area. Internet service is hit or miss at best. Dialup coverage in some places is still long distance. Most small businesses in the area are starting to pull back on accepting plastic at all. The people that would qualify for the "pilot" program don't have internet or often time phone lines. I don't see how their pilot would be that great a service to our non-conforming/ low to moderate income folks.

I agree. They are pushing us to offer the same product regardless of the differences in our regions/localities. Uniform products may help them examine banks and punish us - but it doesn't help consumers.

Return to Top
#1429959 - 08/17/10 02:11 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Always In Training
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
http://www.fdic.gov/consumers/template/

Here's a link to the description. Note the following bullet point:

•There are no overdraft or non-sufficient fund fees for these checkless accounts

Right now the program is voluntary, but with the environment we are in and all the pending changes, rules being spit out en masse....I forsee a day when the regulators require all banks to have some form of free, no OD fee account for the "unbanked", to which all customers will eventually turn to because it's free. And of course the customer STILL won't have to learn to balance a checkbook!
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1430051 - 08/17/10 03:45 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Dani York, CRCM
~*HappyGirl*~ Offline
Junior Member
~*HappyGirl*~
Joined: Jun 2010
Posts: 37
In the sauna...
"Checkless" accounts give me future visions of "Branchless" banking, and it is not a happy picture. sick
_________________________
Don’t gain the world and lose your soul, wisdom is better than silver or gold. – Bob Marley

Return to Top
#1430071 - 08/17/10 03:55 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Dani York, CRCM
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Originally Posted By: Dani York
And of course the customer STILL won't have to learn to balance a checkbook!


And in the words of one of my former customers...."The practice of keeping a check register is antiquated."

(This said when we were opening up her 16 yr old daughter's first checking account and also insisting on getting her a debit card. Luckily we couldn't issue her a check card.)
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1430077 - 08/17/10 04:02 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Dani York, CRCM
Bob The Banker Offline
Platinum Poster
Bob The Banker
Joined: May 2010
Posts: 958
Originally Posted By: Dani York
Originally Posted By: Dani York
And of course the customer STILL won't have to learn to balance a checkbook!


And in the words of one of my former customers...."The practice of keeping a check register is antiquated."

(This said when we were opening up her 16 yr old daughter's first checking account and also insisting on getting her a debit card. Luckily we couldn't issue her a check card.)

Should have told her, it looks like common sense is too!

Return to Top
#1430271 - 08/17/10 07:14 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Bob The Banker
Georgia Plum
Unregistered

Be happy to comply with the new checkless accounts and no OD fees as soon as they make everything real-time.

Return to Top
#1430340 - 08/17/10 08:10 PM Re: FDIC Best Practice Ques. Rolling 12 month Period?
Derwood Offline
100 Club
Joined: Nov 2009
Posts: 179
The question that comes to my mind with these accounts is how will the institutions cover the costs of the inevitable Reg E claims? If everything is electronic it stands to reason that there would be a high occurrence of inquiries/disputes on these accounts.
_________________________
"The mountains are calling and I must go." - John Muir

Return to Top
#1430551 - 08/18/10 01:21 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Derwood
Georgia Plum
Unregistered

Interchange fees

Return to Top
#1430656 - 08/18/10 02:56 PM Re: FDIC Best Practice Ques. Rolling 12 month Period?
Derwood Offline
100 Club
Joined: Nov 2009
Posts: 179
Georgia - Could be, but those are in the regulatory crosshairs as well.
_________________________
"The mountains are calling and I must go." - John Muir

Return to Top
#1430818 - 08/18/10 05:05 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Derwood
Georgia Plum
Unregistered

DYunck, I agree. Before it is over with they are going to require banks to offer everything to everyone for nothing. Sounds to me like the government wants to take over banking. They may be the only player left after they force us all out of business.

Return to Top
#1435801 - 08/27/10 08:07 PM Re: FDIC Best Practice Ques. Rolling 12 month Period?
Always In Training Offline
Diamond Poster
Joined: Jul 2006
Posts: 1,115
Where the Green Grass Grows
Okay, so I'll resurrect this topic for the original intent.

Best way to monitor rolling 12 month...

Spool a report re: my OD'ers from core system into a spreadsheet in a certain time intervals (every 2 weeks, @ end of month) and compare month to month going forward?

(Like we do now for Red DD)?

Return to Top
#1435928 - 08/28/10 09:42 AM Re: FDIC Best Practice Ques. Rolling 12 month Period? Always In Training
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
The guidance is "proposed" and open for comment. Anyone who thinks that a rolling time period is nonsensical or impractical, for example because overdraft fees are accumulated on the periodic statement on a calendar year basis, should note their position in a comment letter.

The letters do make a difference and make more sense than spending the same amount of time trying to figure out how to do something you may not be required to do if you talk them out of it. wink
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1437366 - 09/01/10 01:33 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Elwood P. Dowd
CalifDreamin Offline
Diamond Poster
CalifDreamin
Joined: Mar 2002
Posts: 2,299
Far from Calif
The guidance states that you should have a monitoring program taking meaningful steps if a customer overdraws the account on more than 6 occasions where a fee is charged in a rolling 12-month period. Follow-up action being contacting the customer and presenting less costly alternatives, giving the customer opportunity to opt out of fee based coverage or choose another alternative, etc. So, does this basically mean that if the customer does not have or is not eligible for another option, you will need to close out the account? Or, is the idea that after 6, the Bank will simply just have to stop charging the consumer for the ODs?
_________________________
The opinions expressed are mine and do not necessarily reflect those of my employer
_._._._._._.
A.S.A.P.
Always
Say
A
Prayer
<><

Return to Top
#1448966 - 09/27/10 09:51 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? CalifDreamin
Gigi03 Offline
Member
Joined: Feb 2008
Posts: 78
I'd like to run this one around again, if I may.

In a recent FDIC compliance exam, we were told to develop a threshhold of measurement for excessive overdrafts and a system of monitoring that activity, and reference was made to FIL -47's numbers of 6 in 12 mo rolling period. We were told we could develop our own threshhold, and do not have to comply with these suggested numbers. They told us FDIC was looking at all "bounce" programs for any evidence of unfair and deceptive practices and really stressed the importance of the monitoring. The Reg E opt-in scenario was also highly reviewed.

I'm interested in what other FDIC banks are doing to monitor the excessive overdrafts. How often? What's your threshold of fees....$1000, 2000, or use number of times YTD? Have you had similar discussions in recent exams?

Return to Top
#1449003 - 09/28/10 09:26 AM Re: FDIC Best Practice Ques. Rolling 12 month Period? Gigi03
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Okay, so the comment period on the "Guidance" closed yesterday, but you have an examination team citing it to you as some sort of "authority" and asking for a compliance plan right now?

At this point, there is no "Guidance." The FDIC's power grab has not yet taken effect. Being asked how you intend to respond is like being asked how you intend to respond to a "proposed" regulation. The only intelligent reply to such a query would be that you won't know what you are going to do until the regulation is published in final form and incorporates a mandatory compliance date.

That analogy is accurate to an extent, but it actually overstates your responsibilities. Any guidance, once official, still lacks the authority of a regulation. The FDIC seems to have have sort of read over the fact that its the FRB that has rulemaking authority in connection with Regulations E and DD. Failure to "comply" with the guidance is destined to serve as nothing but a pretext for UDAP accusations. That's the kicker. This bureaucracy is in the process of writing itself a blank check for "enforcement" by individual examiners one bank at a time.

Your exam team has put the cart before the horse. My initial response would be to write to the regional office and question whether it is even appropriate for an examiner to make such a query right now. Note that if and when any guidance becomes official you will seriously evalute your response based on its specifics and your capabilities.

It is most likely that your examination team is simply untrained. They can see the prototype for a new toy on the shelf and they want to play with it NOW! I think it's a local problem and there won't be any respondents who've heard the same drivel unles their examiners are from the same office.

As noted a month ago, banks should have comented on the aspects of the guidance they felt questionable. The comments posted as of this morning contain very few from banks. Of those, fewer still address the specific points of the proposed guidance. Most simply complain that they don't like it.

An opportunity has been missed...
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1449018 - 09/28/10 12:34 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? Elwood P. Dowd
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
I can only second Ken's plea that you or someone at your bank has the right -- I'll make it stronger and say it's a responsibility -- to stand up to the FDIC in the person of your examiner and to the regional office and challenge the authority of the examiner to impose on your bank the plan you've described. We have said time and time again in these Bankers' Threads that bankers who do not take a stand against such overreaching by examiners end up the losers because if left unchallenged, a subsequent exam can result in being written up for not meeting a commitment, regardless of the fact the commitment was unwarranted and unjustified. To quote my wife's late (and very wise) grandmother, "No good will come from this!"

Ken has noted that most banks that commented on the FDIC's proposed Guidance did so in a rather generic way. The ABA has filed its comment letter arguing that the guidance would be usurping the role of legislators, and that it would serve to create a separate and more onerous rule for FDIC-insured nonmember banks (among other things). They also noted that surveys of bank customers suggest that the FDIC is ignoring the public's preference to have access to overdraft services if wanted.

At least back in 2005 when the first Guidance on Overdraft Protection was issued, the Agencies attempted to craft a unified position. That the OTS issuance was separate really resulted from that agency's view of overdrafts and credit, and the thrust of both issuances was fairly uniform. I had hoped that when the OTS in April issued its proposal to supplement the 2005 Guidance, it was a "warning shot" that all the regulators would get "on board." So far, that's not the case.

Enough about what I think is a completely misguided FDIC proposal. Let's get back to the question at hand, and that is this bank's response to what it was "told" in its last FDIC exam. I cannot recommend strongly enough that the bank kick that proposal as far up the FDIC's chain of command as necessary to get it quashed. Your examiner sounds like an anxious techie nerd who is always the first to install alpha-test software and then wonders why his system keeps crashing.
Last edited by John Burnett; 09/28/10 12:39 PM.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#1449090 - 09/28/10 02:10 PM Re: FDIC Best Practice Ques. Rolling 12 month Period? John Burnett
Gigi03 Offline
Member
Joined: Feb 2008
Posts: 78
Thanks, Ken and John for your comments. I'll share with management here.

We have not received our written final report yet, and since it was not in the exit report itself, I'm not sure what to expect in the final version. The EIC asked for consent that we'd develop the monitoring, to which Management verbally agreed. Reviewing the threads for ideas on what other banks are hearing and doing currently for monitoring their overdraft programs.

Return to Top
Page 1 of 2 1 2

Moderator:  Andy_Z, John Burnett