FDIC plan would affect banks issuing stored-value products

Northwestern Financial Review, May 1-May 14, 2004

The FDIC is floating a plan that would treat the money behind stored-value cards as deposits. Up until now, the FDIC has considered such funds deposits only in certain cases. The FDIC's plan would count money in a single account or pooled funds for such products to be deposits. The plan would apply to stored-value products that some companies use for payroll.

The FDIC's plan would be significant for banks because if the funds are considered deposits, they become subject to additional regulations, such as Reg E. The additional deposits also would affect the amount of capital a bank needs.