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FDIC Policy Changes Offer Insurers Added Protection

Katherine Duckworth, Vice President
Citibank, N.A. Commercial Business Group
kathy.duckworth@citi.com, 312-­­­627-5024

With today’s economic conditions, everyone is worried about the safety and soundness of their financial assets. This concern has made commercial and consumer banking customers nationwide increasingly aware of the significant value of their bank deposits’ coverage by the Federal Deposit Insurance Corporation (FDIC). Most banks have responded to their customers’ needs by opting to take part in the recent FDIC program known as the Transaction Account Guarantee Program (the Program).

Protection increased

Last fall, in response to public need, the FDIC made policy changes to provide added coverage for both consumer and commercial bank accounts. Under the Program, FDIC deposit insurance is temporarily increased from $100,000 to $250,000 per depositor for all financial institutions through Dec. 31, 2009.

The FDIC is also providing unlimited coverage to noninterest-bearing checking accounts as defined by the FDIC. This is in addition to and separate from the $250,000 coverage (per account per insurable capacity) available under the FDIC’s general deposit insurance rules. The Program, effective Nov. 21, 2008 through Dec. 31, 2009, provides account holders with added security and peace of mind.

The FDIC’s unlimited coverage on noninterest-bearing transaction accounts is especially beneficial to large account holders including insurance companies that have significant-sized funds and are looking for extra account protection.

Many insurance companies have turned to their financial institutions to see whether they insure assets under the FDIC program. Many banks have opted out of the Program. To view a full list of banks that have opted out, go to www.fdic.gov.

Transaction Account Guarantee Program FAQ

Q. Will clients be charged fees for the new coverage?
A. Check with your financial institution to see if there are any fees involved. The answer can differ from bank to bank.

Q. How long will unlimited coverage be in effect?
A. Unlimited coverage on deposits in noninterest-earning checking accounts is already in effect for financial institutions that opted in to this coverage and will continue automatically until Dec. 31, 2009.

Q. How does the new unlimited coverage on checking accounts work? 
A. Many banks have sent communication to their customers about this important change in FDIC coverage and about their participation in the Program. Under the Program, all noninterest-bearing checking accounts are fully guaranteed by the FDIC for the entire amount in the account through Dec. 31, 2009.

Q. Does the new coverage replace the FDIC’s general deposit insurance?
A. No. Coverage under the Program is in addition to and separate from the coverage available under the FDIC’s general deposit insurance rules. 

Citibank, N.A. has opted in to the Program. The insurance industry is just one among many looking for added coverage under the Program. Citibank’s bankers across the country offer an array of services to both small and large publicly traded insurers.

Questions about FDIC policy changes? Contact Sarah Johnston at 312-419-3406 or Melinda Sherman Swift at 312-419-3275.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.