The FDIC proposed to amend its deposit insurance coverage rules by (i) merging revocable trusts and irrevocable trusts under a newly established "trust accounts" category and (ii) providing consistent treatment for mortgage servicing accounts comprised of principal and interest funds.

For trust accounts, the proposed amendments would create a common rule in which a trust deposit would be insured for up to $250,000, per beneficiary, for up to five beneficiaries. This would mean a maximum coverage of $1,250,000, per owner, per insured depository institution.

For mortgage servicing accounts, the proposed amendments would insure servicers' advances of principal and interest funds on behalf of mortgagors for up to $250,000 per mortgagor.

FDIC Chair Jelena McWilliams stated the proposal is intended to ensure depositors have access to their insured deposits in the event of a large bank failure, citing the IndyMac Federal Bank failure in 2008 as an instance when insured depositors could not access insured funds for several months. Additionally, Ms. McWilliams said the proposed rulemaking would make the trust rules easier to understand for depositors and bankers, given that half of all insurance inquiries received by the FDIC are related to trust accounts.

Comments on the proposal must be submitted within 60 days of its publication in the Federal Register.

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