Would the FDIC have any reason to encourage or discourage banks from purchasing excess deposit insurance?
In our view, there is nothing in the Federal Deposit Insurance Act (12 U.S.C. ยง 1811 et. seq.) or the FDIC’s Rules and Regulations (12 C.F.R. Part 301–Part 363) that would expressly prohibit banks from purchasing excess deposit insurance. Assuming that the proposed plan does not involve potential risk or liability to insured institutions3 and assuming no other laws are violated, the FDIC would generally not object to a private insurance arrangement of the type described in your letter. Of course, the FDIC’s failure to object should not be construed as an endorsement of X’s program or any other proposed or existing private insurance program. The foregoing notwithstanding, the FDIC does have certain concerns with respect to private deposit insurance arrangements generally. These concerns relate to (i) the manner in which the private deposit insurance is advertised or otherwise marketed, (ii) the possibility of disclosure to the private insurer of confidential documents prepared by the F
