About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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ESI - Little Known Deposit Insurance for Credit Unions

Some credit unions offer ESI for deposit insurance. ESI is short for Excess Share Insurance. As the name suggests, it only covers deposits that exceed the level of coverage provided by the credit union's primary share insurer. For most cases the primary share insurer is the NCUA. In some states, it can be ASI.

An important thing to note about ESI is that it's provided by the private company, American Share Insurance. It's the same company that provides ASI coverage. In 2009 I reviewed ASI when a Texas credit union tried to replace NCUA coverage with ASI coverage.

As I described in my 2009 ASI review, there are many concerns that ASI coverage is inferior to NCUA coverage. For those not familiar with the NCUA, it stands for the National Credit Union Administration. And just like the FDIC which insures bank deposits, NCUA insurance is backed by the full faith and credit of the U.S. government. That is not the case for ASI. On ASI's website, they clearly state that "Members' accounts are not insured or guaranteed by any government or government-sponsored agency."

The ASI has an overview of Excess Share Insurance. Here's a brief description of the coverage:

Members exceeding the maximum level of insurance coverage provided by the NCUA may then be insured up to an additional $250,000 with ASI’s excess share insurance.

If your credit union has both NCUA and ESI coverage and you don't trust private deposit insurance, you can keep your deposits under the NCUA limits and forget about ESI. In this case the downside would be that your credit union is paying for insurance coverage that you're not using. That extra money could be going into higher deposit rates instead of insurance premiums. However, I would guess the premiums are small compared to primary insurance.

Other Private Deposit Insurance

In addition to ASI and ESI, there's another credit union private deposit insurer, but it's only available in Massachusetts. It's called Massachusetts Credit Union Share Insurance Corporation (MSIC), and it fully insures excess deposits above the federal insurance limit. Unlike ESI, the coverage isn't capped at $250K. It should be noted that MSIC only supplements the NCUA coverage.

Massachusetts also has excess deposit insurance for banks. One is the Deposits Insurance Fund (DIF) for Massachusetts-chartered savings banks, and the other is the Share Insurance Fund (SIF) for co-operative banks in Massachusetts. There are some banks like Salem Five Cents Savings Bank which allow people from any state to open accounts that will be fully insured by FDIC and DIF. The bank's internet division Salem Five Direct offers an internet savings account that pays 1.00% APY on balances up to $1 million (as of 9/28/2011).

ASI, ESI, MSCI, DIF and SIF are all of the private deposit insurers in the nation that I'm aware of. If you know of others, please leave a comment.

Maximizing Your Federal Deposit Insurance

As I described in my post Maximizing Your FDIC Coverage with Beneficiaries, there are many ways to federally insure over $250K in deposits at one bank or credit union. If you do go over $250K, you have to be careful to ensure your deposits meet the FDIC or NCUA requirements.

  |     |   Comment #1
Risk? Yes......we savers are risk averse. But I'm starting to look at this differently.....in this way: If we're only earning 1% or less in banks......who is the real risk taker??? Aren't we being "risky" for allowing our life savings to sit in an account earning this pathetic rate? Meanwhile.....inflation will destroy the principal.....forget that it's insured.....it's not insured against inflation, is it? No. Maybe it's time to look at gold,silver,real estate,etc.
  |     |   Comment #4
I agree with Anonymous #1.  We savers have been so risk averse that we aren't seeing things correct.  With Operation Twist and other forms of financial repression, including more money printing by Helicopter Ben, there is no choice but to look at gold, silver and platinum.  They seem to be under a concerted governmental attack, right as we discuss this, and are going on fire sale.  I, for one, will buy some.  Perhaps, 50% in savings and 50% in precious metals will even out the risk from either strategy.
  |     |   Comment #7
#4......You got it right........from what I have read....this current government's intention is to accumulate debt and then use massive inflation to pay it. As inflation causes the currency to become worthless.....it becomes pretty easy to pay off debt, doesn't it? I believe we are approching a crisis that we can't even imagine......and it terrifies me.
  |     |   Comment #6
I find it ironic that 100% of all our insurance products -- life on my loved ones, homeowners on my precious home, and automobile coverage on my SUV -- are all provided by private insurers. Name them: State Farm, NY Life, NorthWestern Mutual, GEICO, etc. Why not our deposits?! Just do your due diligence as you would on your homeowners' coverage. I believe this private insurer, ASI, has been around over 35 years, and according to their website, has over 145 credit unions they insure. They've paid all claims over that period of time. So I support it as an alternative in those states where it is allowed.
  |     |   Comment #8
txcrab-good point. Also....I think there are private insurance companies that insure things like bonds.....Not sure if it would work with huge, mega banks, though. From what I know.....FDIC is a pretty good government agency compared to others
  |     |   Comment #9
FDIC is going to guarantee 13 Trillion in deposits shouild the banking system fail.  Hello, I'll take a gamble with ASI just as I would with an insurance company selling annunities.
  |     |   Comment #10
We have already seen that the Government will not let a complete bank failure happen, like it or not the way they handled it two years ago worked. So think FDIC will continue without a problem covering banks. And living in MA with MSIC, DIF, and SIF does make things easier for me and they are in great shape since the banking crisis has not hit here, I think we have only had like two or three failures in the last few years.
  |     |   Comment #11
I'll take my chances with the FDIC or NCUA any time vs. a private insurer.  The US govt. will never let an insurer depositor lose 1 cent.  I am an Australian citizen, w/US deposits.  43 years in intl banking and treasury posts overseas.  I would trust the FDIC on this 100.000%.
  |     |   Comment #12
I'm not so sure about placing my trust in the FDIC.  For that matter, I wouldn't place my trust in any government agency or organization or anything backed by the federal, state or regional governments.  Misplaced trust can be very costly.  In any given moment of true crisis, anything can happen.  You get the wrong guy in the White House, such as Obama, and liberties, freedoms and backings can be reduced or even extinguished.  The only trust that can be assured of is that of the Lord.

That said, unless there's a significant run to convert funds at banks or credit unions, I wouldn't be concerned.  My concern is if there is a nationwide run to get bank deposit or CDs converted to cash.  With a socialistic form of government, such as what we now have, be on guard.  If in doubt, get counsel from students of history.

As for gold, silver, or any commodity, there's very high risk of decline.  Look back to the 80s and see what happened to gold and silver. 

I'm sure that many may not agree with my assessment, but that is your prerogative.


  |     |   Comment #13
George, do you know of any banks that are insured by the Lord?
  |     |   Comment #18
It is time that banks, insurance companies and investment banks be broken up.  This is Congress job.  Too much power is given to these companies.  We are turning from a Republic to a  Fascist state, thanks to the Roberts Court.  It is time that Supreme Court members leave when their personal lives and their politcal lives effect their rullings.  They are supposed to rule only when they protect the indivudal even when they are poor.

I may be time  to get rid of our congressmen.  All of them in every state.  They are all worthless.
  |     |   Comment #22
This is #13. George is the one that said his bank should be insured by the Lord. Not me.
james doohan
  |     |   Comment #32
the best credit union i have found is melrose
  |     |   Comment #33
I think the zero interest rate environment is seriously having an effect on the mental well-being of some of the posters.
  |     |   Comment #42
Those CD's went into PenFed 5% CD deal. Now would you stop trolling me and this site?

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