FDIC Scolds Banks for Manipulating Deposit Data
When Silicon Valley Bank ran into financial trouble, its customers ran for the exits because most of their deposits weren’t insured. In the weeks after, dozens of banks tweaked their numbers to reduce the portions of their deposits that they said were uninsured. On Monday, the Federal Deposit Insurance Corp.
sent a warning to U.S. banks not to take liberties with their deposit numbers. A Wall Street Journal analysis of the banks’ filings with the FDIC shows that Bank of America and Huntington National Bank had among the biggest revisions to their uninsured-deposit numbers.
Since Silicon Valley Bank’s collapse in March, 47 banks restated their Dec. 31 uninsured-deposit figures downward by a total of $198 billion, the Journal analysis showed. At Silicon Valley Bank, 88% of the deposits were uninsured at year-end.
Many of the banks that changed their numbers tried to include an unusual type of account in the category of deposits insured by the FDIC. Typically the FDIC insures deposits up to $250,000. These accounts, often from government entities, generally exceeded that amount, but the banks put collateral behind them, effectively guaranteeing the depositors would be paid back if the bank failed.
In a letter to banks, the FDIC said that only deposits that it insured could be called insured deposits. “The existence of collateral has no bearing on the portion of a deposit that is covered by federal deposit insurance," the FDIC said. Additionally, the FDIC said some banks incorrectly showed lower numbers “by excluding intercompany deposit balances of subsidiaries." The FDIC declined to comment on specific banks.
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