Civil Money Penalties Update

So, in October the FDIC brought the hammer down on Civil Money Penalties coverage for banks.

No, No, and double No. An FDIC bank cannot have civil money penalties attached to their insurance.

I’d had conversations a few years prior with FDIC and legal people telling me that the issue was going to be addressed. I started conversations with several insurance brokers who were interested in building a civil money penalties product. None have come up with anything.

A few months ago I got another nibble. The sticking point was the FDIC and a possible ban on an individual director who buys civil money penalties coverage – a policy not connected with the bank’s insurance and purchased by the director with personal funds.

I emailed the guys who wrote the October FIL. No response. Emailed again. No response.

I picked up the phone and the guy answered. He told me without hedging that the FDIC would not be going after individual directors or officers who buy civil money penalties insurance outside the bank’s insurance program. No, I could not have a letter – but that was the FDIC’s position.

Yesterday I got an email from a big-wig at an insurer I think a great deal of in the bank insurance world. He says they are coming out with a Civil Money Penalties product for individual directors. I’ll hold back the name for now.

I’m hopeful. Civil Money Penalties insurance is a coverage many directors want to buy. Frankly, it seems to be the good directors who want it (directors who will probably never ever ever need the coverage). We need good directors. Making good directors more comfortable with their directorship is a very good thing. If individual civil money penalties insurance helps, it should be on the market.

More soon.