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September 22nd, 2008 at 01:22 pm

If you have under $100,000, you money is safe. Since FIDC started, it has not lost a penny of any depositors money under the $100,000 threshold. Either your deposits will be transferred to another FIDC insured bank or FIDC will send you a check.

If you have over $100,000 in one account (there are multiple type of accounts you can have and I think each one has the 100k limit), the acquiring bank can buy the deposits in full or a percentage (even 0%) of the uninsured deposits. So even though, the deposit is uninsured, you have a good chance of getting something. Of course, I would recommend you keep within those insured limits.

FDIC has its own fund. All FDIC banks pay a premium to the fund. If the fund were to run out, FDIC has the ability to borrow as much money as it needs directly from the Treasury. There is interest charged to the loan.

Most of the bank failures do not cause the FDIC to take a loss. Indy Mac is an example of one where the FIDC will need to pay money. It currently looks like FIDC will need to pay 8.9 billion for the 32 billion bank failure.

All the talk about the FIDC fund drying up is because the reserve ratio (the funds balance divided by insured deposits) fell to 1.01 in June form 1.19 in March. The FDIC is forced to restore the ration back to 1.15, meaning banks will need to pay a higher premium in 2009.

The decline from 1.19 to 1.01 was mainly due to 10.2 set aside for insurance losses. (This number does include 8 billion set aside for Indy Mac.)

This was the lowest level since 3/31/1995 when it was 0.98.

5 Responses to “FDIC”

  1. Broken Arrow Says:

    Yeah, I was once told by my bank rep that each account type is covered by FDIC for up to 100k. So, both checking, saving, and money market I think has 100k each. With two checking accounts, the FDIC would only cover the total between those two accounts.

    But yeah, thanks for sharing this. I hope it helps put people at ease.

  2. debtfreeme Says:

    I was told that it is not the number of accounts that are covered but $100,000 total in the bank not $100,000 in each account.

    From the FDIC web page:

    The basic insurance amount is $100,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $100,000. The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.

  3. Broken Arrow Says:

    Hmm. Now you got me wondering if I heard it wrong. Thanks for letting me know. I'll have to look into that later.

  4. merch Says:

    For the insured piece, you can be insured for over 100k through FIDC, if you have different type of accounts like the ones listed below:

    "Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.

    The following sections describe the eight ownership categories recognized by FDIC regulations and the requirements that must be met to have coverage beyond the basic $100,000 insurance amount

    Single Accounts
    Certain Retirement Accounts
    Joint Accounts
    Revocable Trust Accounts
    Irrevocable Trust Accounts
    Employee Benefit Plan Accounts
    Corporation/Partnership/Unincorporated Association Accounts
    Government Accounts"


    For a husband and wife joint account, that could be insured up to $200k via FIDC.

  5. debtfreeme Says:

    correct up to 100,000 per depositor regardless of how many accounts you have. Co depositors (husband/wives,etc) are covered for 200,000.

    Also some types up retirement accounts are covered up to 250,000 regardless of the number of depositors.

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