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#1063825 - 10/14/08 01:06 PM FDIC to temp. cover ALL funds in certain accounts
Mary Beth Guard Offline
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Mary Beth Guard
Joined: Oct 2000
Posts: 797
Oklahoma City, OK
FDIC just announced a new Temporary Liquidity Guarantee program.

-- All banks and some holding companies are eligible;
-- part of it entails FDIC guaranteeing newly issued senior unsecured debt;
-- the other part involves providing FULL COVERAGE of non-interest bearing deposit transaction accounts REGARDLESS OF DOLLAR AMOUNT.

Participation in the plan is voluntary and automatic for the first 30 days. A company may opt out within the 30 days if it doesn't want to participate on a go-foward basis. We have a call in to the FDIC to learn more about the process of participating versus opting out.

No fee for the first thirty days. Fees after that.

The guarantee of the deposit accounts is temporary. It expires at the end of 2009.

We're putting out a special briefing later today with more details and I'll be covering this (and the increase to $250,000 and all the other recent changes by FDIC and NCUA) in a webinar tomorrow morning -- 10:30 a.m. central time, Wednesday, October 15, 2008.

[url=Webinar info]http://calendar.bollearningconnect.com/main.php?view=event&eventid=1223402341172[/url]


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#1063910 - 10/14/08 02:14 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Mary Beth Guard]
Pale Rider Offline
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under the Lone Star
and there is a pot of $125 billion for equity injections for potentially any bank seeking a capital injection; that will take care of the first $250 billion of the rescue package

won't President Bush be required to seek approval for the next $100 billion?

what a time to be alive!!!!
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#1063943 - 10/14/08 02:54 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Pale Rider]
RR Joker Offline
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The Swamp
and their conferece was already at capacity 15 mintues before start time (at least)
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#1063946 - 10/14/08 02:55 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: RR Joker]
Mary Beth Guard Offline
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Mary Beth Guard
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Oklahoma City, OK
Originally Posted By: RR joker
and their conferece was already at capacity 15 mintues before start time (at least)


Tell me about it! We thought we were calling in EARLY and look what happened.

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#1063948 - 10/14/08 02:57 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Mary Beth Guard]
Jokerman Offline
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Originally Posted By: Mary Beth Guard
-- the other part involves providing FULL COVERAGE of non-interest bearing deposit transaction accounts REGARDLESS OF DOLLAR AMOUNT.

Participation in the plan is voluntary and automatic for the first 30 days. A company may opt out within the 30 days if it doesn't want to participate on a go-foward basis. We have a call in to the FDIC to learn more about the process of participating versus opting out.

No fee for the first thirty days. Fees after that.

The guarantee of the deposit accounts is temporary. It expires at the end of 2009.

The fee is 10bps - is that 10bps on your entire assessment base, or 10bps of non-interest bearing demand deposits, or 10bps of the insured amount (which could fluctuate wildly)? If it's 10bps of the assessment base, who would not opt out of that?!

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#1064003 - 10/14/08 03:53 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Jokerman]
Jokerman Offline
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It appears to be the insured amount:
Quote:
For non-interest-bearing transaction deposit accounts, a 10 basis point surcharge would be applied to non-interest-bearing transaction deposit accounts not otherwise covered by the existing deposit insurance limit of $250,000. This surcharge will be added to the participating bank's existing risk-based deposit insurance premium paid on those deposits.

I don't think they can get this from anything that is currently on the call report, so they'll be asking us to track it differently somehow.

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#1064064 - 10/14/08 04:57 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Mary Beth Guard]
Reads Regs Offline
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The FDIC updated their press release about the temporary liquidity program to include a link to the technical briefing they gave this morning for the media. Here's a link to the press release.

http://www.fdic.gov/news/news/press/2008/pr08100.html Scroll down the page and you'll find a link to the video. I'm having trouble getting it to load on my PC.
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#1064213 - 10/14/08 06:48 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Reads Regs]
Kay Offline
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Posts: 248
Midwest
Does anyone know if the verbiage for the FDIC signage will change based on today's action?

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#1064233 - 10/14/08 07:08 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Mary Beth Guard]
Marnie Offline
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What is definition of "senior unsecured debt"?
Last edited by Marnie; 10/14/08 07:08 PM.
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#1064256 - 10/14/08 07:32 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Mary Beth Guard]
Mary Beth Guard Offline
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Mary Beth Guard
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Oklahoma City, OK
Here is the special briefing BankersOnline put out earlier today that summarizes:
-- the temporary coverage of non-interest bearing transaction accounts;
-- the basics of the debt guarantees;
-- the changes FDIC made last week to deposit insurance coverage of mortgage servicing accounts.

Plus, it has a link to some coverage-related signage that we created and put into our Banker Tools section AND a compilation of threads on insurance coverage issues.

We also have new e-cards in a new Bailout section.

BankersOnline Special Briefing

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#1064261 - 10/14/08 07:37 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Mary Beth Guard]
John Burnett Offline
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Cape Cod
There is currently no guidance from the FDIC on signage changes for this latest wrinkle.
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#1064268 - 10/14/08 07:46 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Mary Beth Guard]
Marnie Offline
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What is definition of "senior unsecured debt"? Senior versus what?

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#1064349 - 10/14/08 09:18 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Marnie]
rhurlbert Offline
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Spokane, WA
I am wondering how this will impact coverage amount if there are interest and non-interest bearing accounts in the same category of coverage at the same bank.
For example, if a bank opts out of the coverage, it is simple - it is just $250,000 in that category, regardless of account type. But what if a bank chooses to participate and there is two sole owned, non-pod accounts: one certificate of deposit with $200,000 and one non-interest checking with $200,000. Does it all get covered because the interest bearing account gets to use the regular coverage first and the non-interest account gets covered under the new rule - - or - - does the non-interest bearing account get covered first and there would be $150,000 of the interest bearing account uncovered? Hopefully it is the first of those two possibilities.
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#1064367 - 10/14/08 10:01 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: rhurlbert]
RBanker Offline
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Poor EDIE will be pulling her hair out..............
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#1064582 - 10/15/08 01:57 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Marnie]
Jokerman Offline
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Originally Posted By: Marnie
What is definition of "senior unsecured debt"? Senior versus what?

"Seniority" refers to the priority of the debt (who gets paid first) and would be addressed in the issuing documents. It's senior to the subordinate debt - clear? The seniority of unsecured debt can impact whether you get to count it as regulatory capital.

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#1064696 - 10/15/08 03:27 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: rhurlbert]
Reads Regs Offline
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Originally Posted By: rhurlbert
But what if a bank chooses to participate and there is two sole owned, non-pod accounts: one certificate of deposit with $200,000 and one non-interest checking with $200,000. Does it all get covered because the interest bearing account gets to use the regular coverage first and the non-interest account gets covered under the new rule - - or - - does the non-interest bearing account get covered first and there would be $150,000 of the interest bearing account uncovered? Hopefully it is the first of those two possibilities.


I think it would be the first of those two possibilities.
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Opinions expressed are my own and not necessarily those of my employer. They are not legal advice.

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#1065074 - 10/15/08 08:13 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Reads Regs]
Tesla Offline
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Has anyone heard if the FDIC is going to issue anything on this besides the Press Releases? My bank is waiting for "something" before they take any action.
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#1065253 - 10/16/08 03:03 AM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Tesla]
Mary Beth Guard Offline
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Mary Beth Guard
Joined: Oct 2000
Posts: 797
Oklahoma City, OK
Originally Posted By: SkiDoo
Has anyone heard if the FDIC is going to issue anything on this besides the Press Releases? My bank is waiting for "something" before they take any action.


FDIC has announced that they have created a special web page on which they intend to post additional information on the recordkeeping, billing and reporting aspects of the program, including the procedure for how institutions may opt out. The address is
http://www.fdic.gov/tlgp/

All that's up there right now is the fact sheet, the press release, Chairman Bair's statement, and the audio file of the technical briefing. More to come . . .

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#1065489 - 10/16/08 03:12 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Mary Beth Guard]
CalifDreamin Offline
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Far from Calif
I can't get the briefing to load...we are listening in to the one today. Has anyone heard what the opt-out procedures are going to be? I didn't see anything yet on that link above.
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#1065621 - 10/16/08 05:01 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Reads Regs]
ktac MITCH Offline
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Giant side of TX
Originally Posted By: Reads Regs
Originally Posted By: rhurlbert
But what if a bank chooses to participate and there is two sole owned, non-pod accounts: one certificate of deposit with $200,000 and one non-interest checking with $200,000. Does it all get covered because the interest bearing account gets to use the regular coverage first and the non-interest account gets covered under the new rule - - or - - does the non-interest bearing account get covered first and there would be $150,000 of the interest bearing account uncovered? Hopefully it is the first of those two possibilities.


I think it would be the first of those two possibilities.


I would agree with the first
Surely, the logic of different categories of coverage that has been in place (indiv / POD / Trust / etc) would apply and this new "Non-Int with No Limit" is a separate category.
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#1069581 - 10/23/08 07:07 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: ktac MITCH]
Night Train Offline
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Night Train
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Down South
I have a question about the fact all eligible entities will be covered under the program and may choose to opt out. Does this mean we're automatically "IN" and must "OPT OUT"? This is a question from a member of Sr. Mgmt. My FI does not want to participate in this program.

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#1069757 - 10/23/08 08:56 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Night Train]
Reads Regs Offline
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Everyone that is an "eligible institution" is in for the first 30 days without a fee. You must opt-out on or before 11/12/08 if you don't want to participate. You opt-out via FDIC connect. See today's FDIC Board Meeting notice. http://www.fdic.gov/news/board/noticeOct232008.html

Follow the links to the draft of the interim rule. I would think that the FDIC wouldn't have posted links to the document if the Board didn't approve them today. The FDIC has yet to send out an e-mail on this.
Last edited by Reads Regs; 10/23/08 08:58 PM.
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Opinions expressed are my own and not necessarily those of my employer. They are not legal advice.

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#1069834 - 10/23/08 10:39 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Reads Regs]
Reads Regs Offline
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Here's a link to the FIL they just issued. http://www.fdic.gov/news/news/financial/2008/fil08110.html
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#1070493 - 10/24/08 06:36 PM Re: FDIC to temp. cover ALL funds in certain accounts [Re: Reads Regs]
RR Sarah Offline
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Up North
I read in ICBA's Newswatch that if we opt out not only will our name be on the list on the FDIC's website but that we would then have to notify our customers that we would not be participating.
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