FDIC Proposes Rule on Non-Bank Failures’ Records Retention Requirements

    Nov 11, 2014

    The Federal Deposit Insurance Corporation (FDIC), the agency that insures deposits at banks and thrift institutions, proposed a new rule in October that seeks to implement a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) that requires the agency to establish schedules for the retention of records of failed non-bank financial companies.

    Title II of Dodd-Frank establishes a new orderly liquidation process that allows banking regulators to place bank holding companies and significant non-bank institutions into an FDIC-operated receivership structure similar to that of insured depository institutions. The goal is to allow the government to respond more quickly to potential liquidity crises similar to the one that threatened the financial system in 2008.

    A key provision of Title II requires the FDIC to establish schedules for the retention of the records of a financial company for which the FDIC has been appointed receiver, as well as the records generated by the FDIC in the exercise of its orderly liquidation authority with respect to the institution in receivership. When the FDIC is appointed as receiver of a failed institution, the agency assumes ownership of its books and records.

    The proposed rule would require the retention of records from a failed institution for six years from the date of the FDIC’s appointment as receiver. Records that are 10 or more years old as of the appointment date will not be required to be retained. Records generated or maintained by the FDIC during the exercise of its authority will be subject to a six-year retention requirement starting from the date of the termination of the receivership. According to an internal memo from the FDIC’s legal division to its board of directors, there is a strong rationale for having two categories of records with six-year retention schedules that commence at different points.

    “In the case of inherited records generated or maintained by the failed financial company, the retention period of six years measured from the date of the appointment of the receiver is modeled after the Federal Deposit Insurance Act's (FDIA’s) six-year minimum record retention period,” the memo states. The proposed rule “builds upon the concepts developed in the FDIA regulation, including the discretionary factors for determining which documentary material constitute records subject to the rule and the express exclusions from records.”

    The memo further notes that the six-year retention requirement for inherited records has proved to be a reasonable and workable timeframe since the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act in 1989. “The proposed rule reflects the current practice of the FDIC that measures minimum retention periods for the receiver's records from the date of termination of the receivership.”

    The FDIC is seeking comments on all aspects of the proposed rule, and written comments must be received no later than December 23, 2014. Send comments to: http://www.fdic.gov/regulations/laws/federal or to Comments@FDIC.gov. Include ‘‘RIN 3064–AE25’’ in the subject line of the message.

    The Washington Policy Brief is an online advisory that contains brief summaries of recent legislative and regulatory issues that may affect the records and information management profession. Further information about the issue is accessed by clicking on the link provided at the end of each summary.


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