Increased FDIC insurance - now permanent

Since Obama signed the Financial Reform Act, should we be changing our FDIC signs and disclosures immediately to reflect the permanent $250,000 amount of insured deposits? Is there any reason to wait to do so (i.e. - directive from the regulators or FDIC)?

I would not until FDIC officially changes the official logo sign.

That's what I was initially thinking, but started to doubt myself after I received the press release directly from the FDIC stating that the $250,000 is permanent.

When I go on the FDIC's site to order signs, they all show the $250,000 coverage amount - no reference to the 12/31/2013 expiration date. It looks like they already updated the signs. Also, the FDIC brochures have all been pulled for updating and are currently unavailable. I think we're going to go ahead and update our disclosures/signs.

thanks for the heads up, AK

I'm waiting for the official FIL.

Georgia, it is out and available on their publications section...I just ordered my electronic version and am gathering numbers for the actual teller stations for our branches.

Yep - glad they pulled the order section out of FDIC Connect. I sent the new link to our retail staff to handle getting new signs ordered and distributed.

Welcome to your FDIC Online Product Catalog

Here's the FIL.

HA! I just got the e copy...it's the old "temporary" sign.

She just responded back and said the new sign hadn't been released to them yet!

At least the official FIL just came out!

I don't know where you all are seeing the new stuff. Everyone I have looked at still show the temporary language. And FDIC says on their site they have not yet updated the material and it will be coming soon.

Is this the new one?
https://vcart.velocitypayment.com/fdic/product_info.php?cPath=126&products_id=563

No temporary or expiration date. Looks new to me.

I guess we'll also need to update our TLGP - Transaction Account Guarantee lobby disclosure as well. This has been changed with the reform bill's signing. According to the chart on this webpage:

FDIC Deposit Insurance Summary

Beginning 12/31/10 through 12/31/12, deposits held in noninterest-bearing transaction accounts will be fully insured, regardless of the amount in the account, at all FDIC-insured institutions (regardless of whether they were participating in the TAG program).

Auditor K,

Other than the chart that is on the FDIC Summary website page, have you seen any other publication regarding the non-interest bearing checking accounts being fully insured through 12/31/12?

We are not participating in the TAG program due to our denovo status and currently disclose that non-interest bearing checking accounts are insured up to $250,000. It sounds like I should change our sign to read these are fully insured with no expiration date. Would that be a correct interpretation?

I was just wondering if the TLGP notice needed to be updated. We do not participate either but I was thinking we would need to add a section that says the 12/31/12 depostis will be fully insured in non-interest accounts and after that time will remain insurned under the standard 250,000.

Any thougths?

BNKO,

I think if you chose not to participate in the TAG program, then the unlimited coverage won't start until 12/31/10 (at least that's the wording from the FDIC's chart). Having said that, it does seem odd to not make that unlimited coverage begin immediately as well.

I did see reference to this unlimited coverage now applying to all banks, not just those participating banks, in a summary put together by the ICBA. I can't seem to find that document right now - not surprisingly lost in the mountain of information on my desk!

Thanks, AuditorK. I'll go out to the ICBA and see if I can find it. As long as I've been in Compliance, I still question why "they" can't send out information in a manner that actually makes sense!

I just have to vent about the fact that they made the increase RETROACTIVE to January 1, 2008 and applicable to deposits in banks that failed all the way back to that date.

Those depositors put their money in at a time when the deposit insurance rules were clear and the limit (per right and capacity) was $100,000. What possible justification is there for going back and giving them more insurance than they had anticipated and qualified for? It's like when someone spots an item at an estate sale for $50, decides to buy it at that price, takes it up to pay, and the person says "I'll give it to you for $35." Why? It is stupid, stupid, stupid and costs the FDIC deposit insurance fund precious dollars -- which then translates to existing banks having to pay more in premiums.

I would like to know who authored that provision in the law.

good grief. That is ridiculous.

I'm guessing that's another affect of looking out for the poor consumer who needs protection from their own self?

You can probably guess it was someone in the district of the depositors in one of the six banks that are covered under the retro provisions. IndyMac had a $1B in uninsured deposits - I would probably start there.

MBG: Perhaps we should compare the list of senators to the list of Indymac depositors?

I'm sure you are all right on target. This cracked me up, Turtle. With rampant self-dealing going on, it's not beyond the realm of possibility, which is just too gross to contemplate.

Randy's reply is certainly more probable and, as usual, he types faster than I!

Let see one of IndyMac's founders was Angelo from Countrywide that gave a FOA mortgage to Dodd.....

The TARP GUARANTEE for non-interest bearing accounts expires 12/31/10. It currently includeds NOW and IOLTA accounts. As of 12/31/10 there be unlimited INSURANCE for all non-interest bearing transaction accounts but this will NOT include NOW or IOLTA accounts. Note Guarantee v. Insurance, as FDIC was always stressing TARP was guarantee. So if you currently do NOT particpate in TARP guarantee, you will have to wait until 12/31/10 to have your non-interest bearing transaction accounts covered. Since TARP guarantee itself is not being extended, no need to add or change signage right now for it. This is sec. 343 of Dodd-Frank.

And the unlimited coverage provision in the Dodd-Frank Act has a sunset at the end of 2012.

We do not participate in the TAG program and our lobby disclosures currently state that the Bank is not participating in the FDIC's Transaction Account Guarantee Program. Customers of the Bank with non-interest bearing transaction accounts will continue to be insured through December 31, 2013 for up to $250,000 under the FDIC's general deposit insurance rule (this is the required verbiage from the FDIC - Temporary Liquidity Guarantee Program FAQs).

Should I delete the 12/31/13 expiration date in this disclosure and replace with 12/31/10? Then in January update the disclosure again, to show the unlimited coverage for non-interest bearing transaction accounts from 1/1/11 - 12/31/12?

That wording does need to be updated. The FDIC is working on amendments to 12 CFR 330. I think you can eliminate the "Customers of the bank with non-interest .... " sentence from your disclosures if you have updated other information to removed any reference to "temporary" or "revert to $100,000."

FDIC states that the increase is effective 7/22/10, does anyone know if current signage in branches is compliant until new signs can be obtained?

We have new signage on order and are keeping our current signage until then. Since the insurance is at least good through the date on the signage, and it doesn't say that it reverts to any other amount on that date, it is still technically compliant, no?

I would think that would be the rule. They have to give us time to obtain the new signage.

Not sure I am getting the picture here. We do participate in the TAGP and we have the required disclsures posted (Bank ____ is participating in the FDIC's Transaction Account Guarantee Program. Under that program, through
December 31, 2010, all non interest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account. Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules.. DO I need to remove or change the signs?

You do have le-way in the time period it takes to order new signs. However, your sign is not compliant because it states the coverage will expire, thus a customer may refrain from opening a 3 year CD because it would not be covered the final year.

I just spoke to a representative from the FDIC and he stated that the current signage not the (TAGP) would be sufficent for the time being because they are not able to complete all the orders that they are receiving based on the passage of the Dodd, Frank bill. I would hope that branch personal would know to communicate to the customer the change.

Keep your TAGP notices in place if you are still participating. The TAGP won't expire until 12/31/10, and the extra non-interest bearing transaction account insurance coverage for banks kicks in on 12/31/10.

Yes, I have changed my mind on this. Will keep the TAGP notices as is until 12/31/2010, then wait to learn how to address the FDIC insurance extended coverage notice when the time gets closer.