Bankin’ Bits

Recent bank failures across the country have fueled a lot of discussion regarding the safety and security of deposits at financial institutions. Ensuring bank customers that their deposits are safe is key to the health of our banking system. To that end, the FDIC, in their Summer, 2008, issue of FDIC Consumer News (now available online), has published some helpful tips and information regarding FDIC deposit insurance. In addition, this fall, the agency will host free telephone seminars regarding its deposit insurance rules. Listed below are a few key points regarding FDIC deposit insurance coverage:

• Deposits within the FDIC’s insurance limits are safe regardless of the bank’s financial condition.
• The FDIC’s guarantee is ironclad. It has fully paid all insured deposits since its creation in 1933.
• Deposit accounts protected by the FDIC include checking accounts, savings accounts, money market deposit accounts, and certificates of deposit (CD’s).
• Non-deposit products, such as stocks, bonds, and mutual funds, are not protected by FDIC insurance.
• The FDIC’s basic insurance coverage is $100,000 per depositor, per institution. However, individuals may qualify for more than $100,000 of coverage at one insured bank if they own deposit accounts in different “ownership categories,” such as single accounts, joint accounts, certain retirement accounts, and trust accounts. Individual Retirement Accounts (IRAs) are insured for $250,000. By holding accounts in different ownership categories, the maximum FDIC insurance coverage that a married couple could qualify for at one institution is $900,000.
• Consumers wishing to estimate their deposit insurance coverage can access the FDIC’s Electronic Deposit Insurance Estimator by clicking here. A version for bankers is available here.
• When a bank fails, the FDIC provides quick access to insured funds, usually on the first business day after the failure. It is also possible to recover money over the FDIC’s insurance limits, depending upon how much the FDIC recovers by selling the bank’s assets.

What This Means To You
Financial Institutions should take an active role in maintaining customer confidence in the security of their deposits. Customer service personnel should be familiar with FDIC deposit insurance rules, and should be prepared to speak with concerned customers about the safety of their deposits. The FDIC materials referenced above will help financial institutions prepare their employees to handle this task.

For more information about FDIC insurance coverage, call the FDIC toll-free at 1-877-ASK-FDIC, or visit their website at www.fdic.gov. Issues of FDIC Consumer News are available here. More information regarding the FDIC’s telephone seminars can be viewed by clicking here.