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SFA Submits Comment Letter to the FDIC on Custodial Account Proposal

article by Structured Finance Association

On January 16, 2025, the Structured Finance Association (SFA) submitted a comment letter to the Federal Deposit Insurance Corporation (FDIC) on the agency’s proposed rulemaking regarding Recordkeeping for Custodial Accounts. The proposal seeks to enhance recordkeeping requirements for custodial deposit accounts with transactional features. The proposal aims to ensure that the FDIC can promptly make deposit insurance determinations and expedite the payment of deposit insurance claims following the hypothetical failure of an FDIC-insured institution which holds these custodial accounts.

SFA’s comment letter focuses on custodial accounts used in structured finance transactions that may be required to comply with the FDIC’s proposal, though raise none of the policy concerns cited in the proposal. The result of these unique custodial accounts complying with the proposal would increase compliance costs and subsequently raise costs for borrowers, with little to no benefit to the public.