FDIC Unveils Fintech Account Proposal to Stop Synapse Repeat (2)

Banks will have to closely monitor accounts maintained by fintech partners to prevent customers losing access to their money should a fintech fail under a new proposal from a key federal banking regulator.

The Federal Deposit Insurance Corp. wants all banks to either maintain a ledger of “for benefit of” accounts that third-party fintechs open to pool customer accounts, or have direct access to a ledger maintained by a fintech so they can reconcile the accounts each day.

The proposed rule released Tuesday would apply only to FBO accounts that have “transactional features,” meaning the customers use the money in ...