First, there are two types of account control agreements: assets and liabilities. Even if a deposit-taking institution needs its own form of DACA, deposit-taking institutions must remain vigilant before signing when a lender or borrower and their advisor proceed with the DACA form. Often, other DACA parties will attempt to substantially amend the important provisions relating to the protection of the deposit-making institute, including the provisions relating to compensation, deposit and notice. Custodian institutions should review the amendments proposed by consultants familiar with the negotiation of DACAs from the perspective of a deposit-taking institution (i.e., includes banking, cash management transactions and deposits, as well as the importance of certain legal protections for depository establishment). Counsel for the conservation institute must inform the conservation institute of how the proposed amendments affect the respective rights and obligations of the parties under the DACA and the practical consequences of these changes on the relationship, business and operating teams of the custodian institution. In addition, the legal counsel of the deposit institute must have a deep understanding of what the market is and reject inappropriate requests from other parties that do not match the market. UCC No. 9-104 — The “Single Code of Trade” section that deals with deposit account control. This section enhances the security interests on deposit accounts as an original guarantee. A custodian institution that gives up a DACA is faced with significant obligations, both to the guaranteed party and to its deposit client. When a deposit-making institution fails to meet its obligations, this may reduce the value of the lender`s deposit guarantee funds.
If the rights and obligations of all parties to the DACA are not clearly defined or if changes to the DACA change the standard implementation process of a deposit-taking institution, a deposit-taking institution may inadvertently take action that could also reduce the value of the lender`s deposit guarantee amount.