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Beware of Wrong Reports of FDIC Guarantee Changes


While watching NBC this morning, I heard the news anchor report that the FDIC will lower the deposit guarantee to $100,000 at the start of the new year. This was repeated twice on NBC's Early Today show. I then heard this repeated on my local NBC affiliate KXAN.

Don't worry. The $250,000 FDIC guarantee is not going away tomorrow. On May 20th, legislation was signed by the President which extended the temporary $250,000 coverage limit expiration from December 31, 2009 to December 31, 2013.

Here are the official details of the $250,000 guarantee from the FDIC:
Deposits at FDIC-insured institutions are now insured up to at least $250,000 per depositor through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except for IRAs and other certain retirement accounts (including IRAs) which will remain at $250,000 per depositor. (This supersedes the October 3, 2008 changes.)

This same $250,000 coverage limit also applies to federally insured credit unions. Refer to the NCUA website for details.

Confusion with FDIC's Transaction Account Guarantee Program?

Perhaps someone at NBC was reading an old report before May 20th. They may have also confused this $250K guarantee with the Full Guarantee Program for non-interest accounts. As this SFGate article describes, many banks are ending their participation at the start of the new year in the FDIC's Transaction Account Guarantee Program which provides depositors with unlimited coverage for noninterest-bearing transaction accounts. This program was designed mostly for businesses which require large balances in bank accounts to meet payroll and for other business needs. I hope individuals are not keeping this much money in non-interest accounts.

Here are the official details of the Transaction Account Guarantee Program from the FDIC:
The FDIC extended its temporary Transaction Account Guarantee Program through June 30, 2010. This program provides depositors with unlimited coverage for noninterest-bearing transaction accounts at participating FDIC-insured institutions. The unlimited coverage applies to all personal and business checking deposit accounts that do not earn interest (including Demand Deposit (DDA) accounts), low-interest NOW accounts (NOW accounts that cannot earn more than 0.5% interest), Official Items, and IOLTA accounts.

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Anonymous   |     |   Comment #1
Thanks for the "heads up" and recap.

As always' you seem to be on top of things. That is why I rely on this site so much.

I do wish the FDIC would make the higher limit permanent. Temporary extensions leave some us in limbo as to how much to put into long term CDs which run past the end of the extension period.
Anonymous   |     |   Comment #2
FDIC and the FEDs are conspiring against the savers, read this:

“What the average citizen doesn’t explicitly understand is that a significant part of the government’s plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread,” Bill Gross, co-CIO of Pimco, told The New York Times.
Anonymous   |     |   Comment #3
And the FDIC has a CAP on what member banks can pay over the "national average"
This is all a conspiracy to move American's savings into risky assets in the stock market, commodities, metals, in a plan to inflate assets to inflate the economy. Gross' comments were echoed by Tobias Leptovich(close enough)I think the analyst at Bof A, he leaked something like "we are only concerned with the top 40% who own 90% of stocks... their spending is 40-50% of the economy" I am paraphrasing this is pure TRICKLE-DOWN and it's by design. Actually, 5% the richest own about 62% of all stocks.
Anonymous   |     |   Comment #4
FEDs and FDIC are in bed with Wall Street, what other proof do you need.
Anonymous   |     |   Comment #5
This is no longer market economy, it is fascist state of dictatorship.
Make the middle class poor and rich richer, it seems to be the FED and FDIC aim.
Anonymous   |     |   Comment #6
I agree with all. But what can we working class citizens do about it?

Voting doesn't do it. Only the rich and powerful can get elected and hold any influential position.
I am afraid we are at the point of no return. Our country will soon have only two classes of people: Super Rich and dirt poor.
gordon   |     |   Comment #7
Here is more proof from the smartest money flow manager in the country, Charles Biderman@ Trim Tabs, he knows EXACTLY where money flows into stocks come from, he is saying WITH PROOF there is NO place except government intervention, using Goldman and JP Morgan primarily, they have been buying index cash futures in SPY and DIA in the premarket and after hrs(lately), the entire stock rally is a fraud, and now they are trying to suckin we savers, also know as "retail" or did you know the mutual funds call it "ROADKILL"??? That's true! They want grandma now who is having her CDs mature in stocks after a 65% fraudulent rally. Bidderman has the proof, READ this, just so we all know why rates are where they are. Banks could recapitalize if offering higher rates for depositers, the Fed, FDIC, Treasury are exchanging their toxic(un-salable)mortgages for Treasuries, and to borrow at .25% and buy Treasuries(3-10yr)paying around 3.5%, thus they are recapitalizing the banks by paying them interest, called the carry-trade, banks are encouraged NOT TO LEND OR PAY INTEREST ON DEPOSITS. This is the greatest fraud and conspiracy in US financial history, on top of the TARP$$$ investment bank bailouts and programs preceeding it. Sure, banks have bad loans, but they could recapitalize with depositor's money, right? This way,
ordinary savers will seek risky returns, and now Wall Street will sell the stocks at the top to Grandma and go to The Hamptons or Bahamas and the market will crash. Watch. Here's the Biderman link

Anonymous   |     |   Comment #8
Under the current temporary $250K FDIC insurance limit, anyone who buys a CD that has a maturity beyond 12/31/13 should keep the amount, including accrued interest until the maturity date, below 100K. Also, when deciding what bank to put you ,longer term money in, keep in mind the bank's strength, as the rate could be readjusted if the bank fails. I'd rather have a few basis points less and know that the rate will not reset.
Anonymous   |     |   Comment #9
Banking Guy with complete sincerity I've never had other than the utmost respect for you and for your writings . . . . until I read this post:

What in God's name are you doing watching NBC "news"! I am not in the least surprised they are broadcasting and disseminating specious information. This is commonplace for NBC news. They are liars and jackasses. I stopped watching NBC news several years ago when I could take no more.

Banking Guy, I offer this counsel as a fan: Stop polluting yourself with NBC "news" and find a reliable source for your news. NBC is the worst of the worst, the very bottom of the barrel. Avoid it! Think of the situation this way:

You are a leading expert on banking in the USA, so you knew instantly their story here was bogus. But there are other realms where you do not possess equivalent expertise. Rest assured, their failures and reporting errors in those other realms are equally egregious. Trouble is, you might not know. God forbid, you might actually BELIEVE some of the NBC propaganda. Far better it is simply not to watch their crap at all, thus giving them the full measure of respect they are due: none whatsoever.