Section 136. Temporary Increase in Deposit and Share Insurance Coverage. Raises the FDIC and the National Credit Union Share Insurance Fund deposit insurance limits from $100,000 per account to $250,000 until December 31, 2009. Temporarily raises the borrowing limits at the Treasury for the FDIC and the National Credit Union Share Insurance Fund.
On page 91 of the the full copy of the law (pdf) it states that this becomes "effective only during the period beginning on the date of enactment of this Act." So it seems that this new insurance limit is now in effect. If a bank is closed this afternoon, we might see if this $250K limit really does take effect today. However, I would guess it's going to take the FDIC and NCUA a few days to work out the details. Bot the FDIC and NCUA issued press releases with statements from their chairmen. Here's an excerpt from the FDIC press release:
Temporarily raising the deposit insurance limits should address public confidence issues and provide additional liquidity to banks. As always, any potential borrowings from Treasury to support this additional coverage would need to be paid back from the FDIC's traditional funding mechanism - industry assessments.
And here's an excerpt from the NCUA press release:
The final version of the Act incorporates language that allows NCUSIF insurance level to be increased while recognizing the unique elements of the fund that make it different from FDIC.
Update: The FDIC has just issued a Financial Institution Letter with the news that this new limit is now in effect:
On October 3, 2008, President George W. Bush signed the Emergency Economic Stabilization Act of 2008, which temporarily raises the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. The temporary increase in deposit insurance coverage became effective immediately upon the President's signature. The legislation provides that the basic deposit insurance limit will return to $100,000 on December 31, 2009.
This summary page describes the details of this change. $100K is replaced with $250K for all cases. IRA limit remains at $250K.
Update: The NCUA has just issued this press release. Just like the case of the FDIC, the new coverage limit now applies to NCUA-insured accounts:
Today’s passage of the Emergency Economic Stabilization Act of 2008 will require NCUA to immediately increase share insurance protection to $250,000 on all types of accounts until December 31, 2009.
This CNN article looks into potential effects of this new deposit insurance limit. It looks mostly at the effects to banks rather than the consumers. In my opinion, this will make it easier for those with large balances to take advantage of savings account and short-term CD deals. The downside may be that deals will end quicker as banks can bring in deposits faster. Then there is the question about what will happen at the end of next year when this new insurance limit ends. I can see both banks and consumers pushing hard for this to be extended. The shape of the deposit insurance fund at the end of next year could be a big factor. If the fund is able to hold up, there will likely be a better chance we'll see this continued.