FDIC Ins temp tp $250,000

Assuming the $250 is temporary (12-31-09)

Do you think that we will have to post temporary notices and change our FDIC signage to reflect the insurance increase?

When the sign verbiage changes last year it took us 8 months to get our new signs from the FDIC. If that is the case this time, the temp increase will be nearly over.

Any comments?

I doubt it. The new signs say that funds are insured for AT LEAST $100,000 instead of UP TO. I think they did that so that they could raise the amount in future with the cost of living adjustment they were given the ability to do without having to change the signs every time.

Any idea what the effective date of the change to $250,000 is?

I just spoke to FDIC and all he could say is that it wasn't official yet, and no word on when it would be. Believe it or not, we've already had some customer inquiries!

I know--marketing wants to run an ad right away to promote. Just got an email from FDIC press release from Sheila Bair on this, but no effective date.

If you look at the section of H.R. 1424 that addresses the temporary increase, it says "Effective only during the period beginning on the date of enactment of this Act and ending on December 31, 2009 ..."

http://thomas.loc.gov/cgi-bin/query/F?c110:1:./temp/~c1107hKu4h:e116130:

The FDIC has not posted any guidance yet on this.

BOL just sent out a "Breaking News" bulletin that says it's effective immediately - that FDIC changed it as of today.

Didn't get an announcement bulletin from FDIC, but on their Are My Deposits Insured? page, it says, "On October 3, 2008, FDIC deposit insurance temporarily increased from $100,000 to $250,000 per depositor through December 31, 2009."

How do you all feel about the increase being temporary? If my customer is now suddenly protected or they even bring more money over because of the insurance and the increase is decreased after the allotted time period, now i tell them by the way your not covered? This could give many customers a false sense of security because once it changes back their right back where they started. I see how it helps now but i also see it as potential for more problems after the end of December 2009. I would like to see it as permanent. Maybe it's just me :)(I know, stop thinking about it)

So we get lots of new deposits coming now, but have to plan on what to do when they may go out next December?I agree, this bandaid is not the best if they don't make it permanent.

FDIC has a FIL on their web site about the changes. http://www.fdic.gov/news/news/financial/2008/fil08102.html

It says we can order stickers to put up next to the official signs and they have a one page document that it says you can display in your offices to explain the changes to consumers.

I wonder how the brokered deposit market will handle the temporary increase - will deposits of 14 months or less be available in $250M increments, or will they stick with $100M?

So, is it may as in you may post something additonal if you wish and here are some options, or may as in you must choose from one of these two options?

Also, for PODs... are we assuming 250k per owner per beneficiary?

Edited to add...
According to EDIE, yes!

Living Trust account owners with more than $500,000 and more than five (5) beneficiaries named in the trust(s) are insured for the greater of either: $500,000 or the total aggregate amount of all beneficiaries' ownership interests in the trust(s) limited to $250,000 per beneficiary. Has anyone heard if the $500,000 limitation will increase on Living Trusts?

For revocable trusts with six or more beneficiaries, it will be insured to the greater of either $1,250,000 or the aggregate amount of all the beneficiaries' actual proportional interests up to a maximum of $250,000 per beneficiary.

Where did you find that posted?

There is information on this within EDIE. Click on the following link http://www.fdic.gov/edie/fdic_info.html#10 and then scroll down the page and look at the explanation under the bullet point for revocable trust accounts with six or more beneficiaries.

Also try this link http://www.fdic.gov/edie/fdic_info.html#11d and scroll down the page.

I also found similar wording on this page of the FDIC web site. http://www.fdic.gov/deposit/deposits/insured/ownership4.html#revocable It is the online version of the "Your Insured Deposits" brochure. Click on the link for revocable trust accounts and then scroll down the page and look at the section for living trust accounts. There is a section that has a series of bullet point items. The wording is from one of the bullet points.

You mean the end of NEXT year. The temporary increase lasts until 12/31/2009.

Good find. I don't think they could have done any better job at hiding this information if they tried!

The 500k is a floor limit for trust with assets over 500k with unequal beneficial interest. 500k or actual aggr. amount the greater of the two.

If the beneficiaries have equal interest it is 250k max per owner to bene. i.e one owner 7 bene 250k x 7 = 1.75mm

Anything 500k or less will be considered equal bene interest even if not.

Isn't that what I said? Oh well, if there's a mistake in there somewhere, you can't edit a poll anyway!

So, is it may as in you may post something additonal if you wish and here are some options, or may as in you must choose from one of these two options?

JustJay, do we know yet if we MAY or MUST post these stickers? What's everyone else doing - waiting for stickers?

I went ahead and had marketing create discreet professional table tents to display along with the curent signs.

Yes I did the same. But I still wonder if it's something we are required to do? I can't see that it is, based on the wording of the changes to the coverage. But as you said earlier, is this may as in "do it", or is it optional? Another time to CYA, I guess.

Basically was my thought as well.

What about Rules and Regulations and other marketing material (web site) besides branch signs. Are we suppose to update our verbiage on everything, and then switch it back?

We color printed the FDIC one page document on heavier card stock and displayed them under the FDIC sign on our entry windows and in the lobby. I didn't want "stickers" cluttering up the teller area and the announcement advised that we "may post" the statement so that's what we're doing in case examiners look for it. We too have had a number of customer inquiries but we also use CDARS so that's another option.

If we are ging to place an ad in the paper today and want to state the fact that the insurance has been increased temporily, does anyone have an opinion about how the ad should read. Should we use the exact wording they suggest "On October 3, 2008, FDIC deposit insurance temporarily increased from $100,000 to $250,000 per depositor through December 31, 2009."

I read may as what it means; you may, but you are not required to. The FDIC would have stated you must, if you must display the increase statement. Yet, this raises a question for me: Does this temporary increase apply only to interest bearing accounts? and if so, wouldn't this new statement be misleading to a customer? Until the FDIC FIL temporary liquidity guarantee program on non interest bearing transaction accounts came out today, I was under the impression that all accounts types were covered; checking, savings, CD's and IRA's. Interest bearing or non interest bearing? I need to know.

No. The increase applies to all accounts to which the $100,000 limit applies. The only thing that changes through 12/31/09 is the amount of the SMDIA.

The "extra" coverage under the latest announcement only applies to non-interest bearing transaction deposit accounts. It covers the amount in excess of $250,000 for those accounts only.

SMDIA?

Standard Maximum Deposit Insurance Amount. It's set at $250,000 until the end of 2009, then it will revert to $100,000.

I'm not sure why you think the $250,000 increase applies only to interest bearing accounts. I don't read it that way, even with the unlimited coverage on non-interest bearing transaction deposit accounts. But I agree, it is a bit confusing. However, when you calculate coverage it really comes down to looking at the non-interest bearing transaction deposit accounts as a different animal. If you have multiple accounts at a bank, I think the easiest way to calculate coverage is to set the non-interest bearing transaction deposit accounts to the side, and calculate coverage based on all your other accounts at a bank using the $250,000 SMDIA.

FYI, the NCUA is amending its rules to reflect the temporary increase in the standard coverage amount, and to mirror the change that the FDIC made to section 330.7 concerning mortgage servicing accounts.

There are 1500+ banks in the U.S. using a deposit reclassification program (example: CETO & Associates) to transfer (sweep) daily, excess non-interest bearing transaction account balances to/from non-interest bearing "savings sub-accounts" as a technique to lower reservable balances at the Fed. Do you know if this transfer affects the non-interest bearing transaction account's FDIC Insurance? Without the transfer the balance would be insured in full. With the transfer to the "savings sub-account" does the depositor lose the "insured-in-full" and be subject to the $250,000 limit in the savings sub-account? I asked the FDIC and CETO but no one has an answer.

If you look at the written transcript from the FDIC's 10/16 technical briefing, you'll see this discussed but the FDIC did not provide an answer on the subaccount issue. They did provide an answer regarding sweep arrangements. Here's a link to the written transcript. http://www.fdic.gov/regulations/resources/TLGP/101608.html

I listened to the first 15 minutes of the archived audio file of the 10/20 briefing and heard similar questions being posed. The FDIC did not have answers regarding the subaccount issue. They did provide guidance regarding sweep arrangements.

The FDIC Board is meeting today at 2 pm. One of the items they will be discussing is an interim rule regarding the temporary liquidity guarantee program. Perhaps the rule will address the issue. After the meeting is over, the FDIC usually updates the meeting notice posted on their web site to include links to the draft documents discussed at the meeting. You might want to check the following web page around 2:30 pm or later.
http://www.fdic.gov/news/board/noticeoct232008.html

The FDIC just clarified the issue for us regarding the deposit reclassification sweep program. An exception is being allowed to insure in full all deposits in the non-interest bearing savings sub-accounts as though they were still in the non-interest bearing transaction accounts. Amazing! How quickly the FDIC responded! A year ago this request would have taken months of study and public comment. Now they are desperate to make the system work. Hurray for them! See Interim Rule Implementing the Temporary Liquidity Guarantee Program http://www.fdic.gov/news/board/noticeOct232008.html or http://www.fdic.gov/news/board/TLGPreg.pdf

"The Interim Rule includes a provision relating to sweep accounts. Under this provision, the FDIC will tre at funds in sweep accounts in accordance with the usual rules and procedures for determining sweep balances at a failed depository institution. Under these procedures, funds may be swept or transferred from a noninterest-bearing transaction account to another type of deposit or nondeposit account. The FDIC will treat the funds as being in the account to which the funds were transferred. An exception will exist, however, for funds swept from a noninterest-bearing transaction account to a noninterest-bearing savings account. Such swept funds will be treated as being in a noninterest-bearing transaction account. As a result of this treatment funds swept into a noninterest-bearing savings account will be guaranteed by the Transaction Account Guarantee Program."

Has the FDIC addressed internal accounts or related accounts? Our holding company is our largest non-interest bearing depositor.

It covers a bank's official checks account and the checks themselves. There is nothing in the regulation or the materials with it that would exclude the account of a holding company for a bank, as long as the account fits the definition of a non-interest bearing transaction account.

There is also some clarification on NOW accounts. NINOWs (non-interest NOW accounts) are not covered by the "full coverage" provision.

The interim rule indicates that the assessment (10 bps) will be paid "on any deposit amounts exceeding the existing deposit insurance limit of $250,000, as reported on [the bank's] quarterly RC and RI or TFR in any noninterest-bearing transaction accounts, including any such amounts swept from a noninterest bearing transaction account into a noninterest bearing savings deposit account... This assessment shall be in addition to an institution's risk-based assessment imposed under part 327."

So, I am assuming that the calculation will be based on balances at quarter-end, not an average quarterly balance or anything like that. The normal assessments are based on RC-E/RC-O snapshots, so I assume these will be, too, with a line added to allow calculation of this premium. Anyone have any reason to see it differently?

Does anyone have disclosures for the temporary liquidity guarantee program they would like to share? Or can someone tell me what they did to satisfy the disclosure requirements?