Deposit Accounts Under the New World Order

Abstract

The new world is upon us. Repent. Revised Article 9 is the law in every state. Commercial deposit accounts are now available as original collateral. Bringing commercial deposit accounts into the Article 9 fold significantly complicates the planning of an Article 9 secured transaction. Attorneys for banks, non-bank creditors and debtors need to understand the new world order and the risks it poses to their clients. They need to develop strategies to minimize those risks so as to protect their clients' positions. Part II of this article describes the new legal framework and some of the risks it creates. Part III explores ways to manage those risks. Appendix A contains an annotated deposit account control agreement form that tries to balance the needs of a secured party holding a security interest in a deposit account with the rights of the bank maintaining the deposit account.