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Safety of Your Deposits in the COVID-19 Pandemic


It was apparent last Sunday when the Fed held an emergency FOMC meeting and announced drastic policy actions, the COVID-19 (coronavirus) pandemic has the potential of seriously impacting the financial system. Also, as we learned from the 2008 financial crisis, when the financial system is under stress, bank failures rise dramatically. Thus, it’s reasonable that savers would be concerned about the safety of their deposits. To help ease those concerns, the FDIC published this March 18th press release for bank customers, and the NCUA published a similar March 19th press release for credit union members to reassure the public that “insured deposits are safe.” The press releases also warned the public to beware of scammers who are taking advantage of people’s bank concerns in this pandemic. Here’s an excerpt of the FDIC press release:

In light of recent developments related to the coronavirus, the Federal Deposit Insurance Corporation (FDIC) is reminding Americans that FDIC-insured banks remain the safest place to keep their money. The FDIC is also warning consumers of recent scams where imposters are pretending to be agency representatives to perpetrate fraudulent schemes.

Since 1933, no depositor has ever lost a penny of FDIC-insured funds. Today, the FDIC insures up to $250,000 per depositor per FDIC-insured bank. An FDIC-insured account is the safest place for consumers to keep their money. Learn more about deposit insurance here. Some banks may have adjusted hours or services in compliance with Centers for Disease Control guidance on social distancing. Customers’ deposits remain safe in these banks, as does customer access to their funds. Banks continue to offer ATM, mobile, or online banking services, and many continue to provide services via drive-through windows.

The press release notes that some banks are following CDC guidance. That’s also the case for credit unions. Many financial institutions have been temporarily closing branches or closing their branch lobbies while keeping their drive-throughs open. For example, Regions Bank alerted customers on its website that “Region branches open by drive-thru or lobby appointment only as of March 19.” It was reported in the media on March 18th that Chase informed employees that it was temporarily shutting down close to 1,000 of its bank branches (about 20%) to reduce the spread of the coronavirus. As the FDIC advised, bank customers’ access to their funds remains safe even though they may not be able to walk into their bank branches to make withdrawals.

Combating False Claims That “Savings Confiscation” Is a Possibility

A March 19th FDIC press release has gone beyond providing general information. Instead, it targets two companies that the FDIC claims are publishing false information on the safety of the U.S. banking system. The FDIC is demanding that the company Monetary Gold “immediately stop and correct its misleading advertising that falsely claims consumers' FDIC-insured deposits are at risk of forfeiture.” The FDIC is also “calling upon Newsmax.com to stop publishing these misleading ads” in which Monetary Gold “falsely asserts that Federal law permits banks to take its depositors' funds.” I wasn’t able to find the specific sponsored ad mentioned by the FDIC, but I did find a similar one attributed to a “strategist at Monetary Gold” which mentioned “savings confiscation”. The article claimed that the government “could decline using taxpayer funds to bail out a failing bank, and instead allow banks to confiscate a portion of all deposits.” The FDIC press release emphatically states that:

These assertions are false. Federal law is clear that in the unlikely event of a bank failure, customers' insured deposits would be fully protected up to the $250,000 limit.

The FDIC appears to be hard at work to ensure that the public’s trust in the U.S. banking system remains solid. Pandemic fear has already caused Americans to engage in a lot of irrational behavior like hoarding toilet paper. This fear has the potential to cause bank runs in which people make massive bank withdrawals in fear that their money could be lost. The FDIC was created during the Great Depression after bank runs contributed to widespread bank failures in the early 1930s. These FDIC press releases are highlighting the effort underway to dispel these irrational fears before they get out of hand.

Financial Health of Banks

The March 18th FDIC press release reminded the public that “no depositor has ever lost a penny of FDIC-insured funds.” The NCUA also made a similar statement regarding credit union deposits. It’s important to note that this statement only covers “insured funds.” These are deposits that fall within the FDIC/NCUA coverage limits. Deposits above the coverage limits have been lost in the past after bank failures. That’s one reason to review your deposits to ensure they are below the coverage limits. Please see my article titled “Safety of Your Money - Deposit Insurance Coverage Limits” for more details.

Even if your deposits are under the coverage limits, there are still reasons to want your banks and credit unions to be financially healthy with very low odds of failure. For example, you could lose a high rate on your CD if your bank or credit union fails. There’s a list of downsides of doing business with a financially weak bank under the graph in the DA bank health page.

Latest Financial Health Data

The DA financial health grades are based on the FDIC and NCUA quarterly call reports. The FDIC and NCUA publish the call reports about two months after a quarter ends. Both have recently published the call reports for the fourth quarter of 2019. We have imported the data, but a technical issue is preventing updates for credit unions. However, the import was successful for banks. Thus, we now have the financial data and financial health grades for all banks based on call reports from December 31, 2019. Credit union data and health grades are currently based on September 30, 2019 call reports.

You can review the Texas Ratio of every bank and credit union by using DA’s Texas Ratio Look-Up Tool. The Texas Ratio is an industry-standard bank health metric. It indicates how much capital an institution has available compared to the total value of loans considered at risk. This is an important component of the health grade that DA assigns to each bank or credit union. To review the health grade and the other grade components in addition to the Texas Ratio, just click on the name of the institution in the table of the Texas Ratio Look-Up Tool. That will take you to DA’s profile page for that institution. Then click on the “health” tab which will take you to the institution’s health section. This provides the financial details in addition to the health grade and the health grade components.

FDIC and NCUA References:

DepositAccounts References:

Related Pages: bank health ratings
  |     |   Comment #1
Now may be a good time to review your bank accounts and verify that you have designated beneficiaries for all your accounts. I know when I opened some accounts I never followed up on that because some banks required me to mail in forms with the beneficiaries SSN and other personal information that I did not have readily available.
Predatory Depositor
  |     |   Comment #5
I had some correspondence with the NCUA several months ago. The purpose of my original query was to find out exactly what information the credit union would have to have on record with respect to beneficiaries to ensure that your funds were insured in the event of the credit union's failure. One thing that prompted the question was the observation that different credit unions require different kinds of information for each beneficiary. I think that should be standardized as it causes confusion for depositors. Some require social security numbers some don't, some require other information in addition to their names, some don't. So it begs the question, for purposes of insurance what exactly has to be in the record.

Most of the response I received talked about how I had nothing to worry about, and repeated that no one has ever lost any money in a credit union failure (the person responding did not even make the distinction between insured and uninsured deposits so I was immediately skeptical of everything they said).

I was forced to reply several times to try to get a definitive answer to the question, but in the end I was never convinced that I did. It was a disappointing exercise.

I was told that the only thing they need to have on record, to ensure NCUA coverage, for each beneficiary is their name. That may or may not be correct since I didn't have a high level of confidence in anything I was told.

I was disappointed by their "don't worry about it" attitude, especially when they didn't even know the specifics of my situation.
Predatory Depositor
  |     |   Comment #2
I don't get a lot of comfort out of the bank and credit union insurors telling me that they will have the ability to pay off in the event of bank failure. I already know that the US government owns printing press and can print as many dollars as necessary to pay off its debts and will never become "insolvent."

The risk is not that you won't receive back money. The risk is that government spending is so far out of control that the money you receive might be worthless.

When you deposit money in the bank, you are a lender. And lending always comes with risks. The FDIC and NCUA never warn depositors about this risk. They meticulously avoid talking about it. That's the part that makes me nervous. I'd be more comforted if they said nothing.
Gannie Fay
  |     |   Comment #4
That is the risk of not investing in STOCKS!
  |     |   Comment #7
Inflation risk vs. crash risk, - choose you're poison.
  |     |   Comment #6
"They meticulously avoid talking about it", - "I'd be more comforted if they said nothing".

  |     |   Comment #75
Unless they take many months or years to return your money, it wont become worthless overnight

What else would you suggest folks put it in?
  |     |   Comment #8
Get in writing from your FIs your account ownerships and beneficiaries. Statements sometimes show this and sometimes they don't.
  |     |   Comment #11
If a FI goes out of business, all previous statements, disclosures and written agreements are null and void.
David Marks
  |     |   Comment #13
You should learn how deposit insurance works.
  |     |   Comment #16
Who is talking about the deposit insurance, we are talking about the agreements between the depositor and the FI. If the FI goes out of business, the deposit insurance takes over with its own rules and regulations and nullifies those personal agreements.
  |     |   Comment #21
The insurance goes by the signature card. The beneficiaries are on the sig card with the acct. information.
  |     |   Comment #80
Ally6770, you assume that the FI did their home work, I would not count on it. If SS#'s are missing, good luck collecting on them from FDIC or NCUA. Watch out for fraud announced from a FI, it may take years to collect or never.
Predatory Depositor
  |     |   Comment #19
The FDIC or NCUA will look to the records of the failed FI to determine whether or not your deposits were covered by their insurance. Whether or not any agreement you had with the FI is void has no bearing on that.

You have no way of knowing if the FI is maintaining the proper records to protect you or deposits. So one of the questions I asked the NCUA was whether or not evidence that the credit union provided to the depositor listing the beneficiaries on record, that are provided to the NCUA by the depositor in the event of the failure of the credit union, when the credit union did not maintain search records properly, would be acceptable to establish insurance coverage.

Their answer was yes, but as I relayed in my above comment I did not have full confidence in anything they told me. I felt they became indignant anytime I asked them a question about what would happen in the event of a credit union failing. It was not the kind of response I expected.
  |     |   Comment #27
Predatory Depositor, you are correct, can not rely on CU or FI records, there might be a fraud involved from the upper management, what do you do then? NCUA or FDIC can not pay in full, if fraud detected,
  |     |   Comment #28
At what point do you conclude that given such anxieties you can longer participate in our financial system?
Predatory Depositor
  |     |   Comment #32
If the FI engaged in fraud, that in itself would not prevent the FDIC or NCUA from honoring a valid insurance claim.

The question is, in the event that the FI was maintaining fraudulent records or inadequate records, do you as a depositor have possession of the necessary records to establish your valid insurance claim to the satisfaction the insurer and will the insurer accept such records from you, the depositor, for that purpose.

In the case of the NCUA, I was told that they would in fact accept evidence of a claim from the depositor if needed to establish its validity if the credit union did not maintain the proper records.

If that's true, it's important for you to keep both statements and anything else you need to establish your insurance coverage such as a list of beneficiaries provided to you by the credit union. If you don't have those things, and the credit union fails, and they do not have adequate records, you may have no way to establish a valid claim.
  |     |   Comment #9
I've had excellent results discussing deposit insurance and other matters with NCUA representatives, including trying to understand things where different NCUA publications seem to be in conflict, or where one publication has inconsistent provisions. I have never felt a need to correspond with the NCUA, so writing to them may not produce the same results. Or maybe I've been very lucky.

One thing I avoid is asking to find out "exactly" what a requirement is. I just want to know the requirement. And there often is no "exact" answer. I suspect there is no "exact" answer to the query of "for purposes of insurance what exactly has to be in the record."

Agency personnel, including at least one staff attorney, have seemed pleased to discuss such matters with me. And there are times when I request a reference to a section or subsection of the regulations that supports their answer; I quickly receive a response that turns out to be correct. But I would never initiate a request demanding to know "exactly" or "precisely' whatever. It' strikes me as confrontational.

In my opinion (and it's just mine) there is no correct or exact answer to the question, with respect to beneficiaries, "for purposes of insurance what exactly has to be in the record." Additionally, in my opinion (and it's just mine), the answer (not the "exact" answer) can be found in the Code of Federal Regulations. (I have never bothered to see if there are relevant statutory provisions in the United States Code.)
  |     |   Comment #10
P.S. to Comment #9 -- it is possible that there have been changes since I last examined the CFR, whether via changes to the Regulations or otherwise. I stand by my statements in Comment #9, as of January 1, 2019. But we're now in 2020.
David Marks
  |     |   Comment #14
I think most FIs will opt for their 30 day letters, allowing the subject FI to convert the CDs to a longer term, say 10 years, and lower the interest rate, to say 0%.

The FI stays solvent, the executives keep their jobs and stock. Win win.
David Marks
  |     |   Comment #15
Of course, most credit unions already agree they will not have to pay dividends if they have a loss for the year, so no 30 day letter, or opt in,necessary.

Even smarter!
  |     |   Comment #18
Are you unaware, perhaps, that Credit Union members themselves own the Institution?
David Marks
  |     |   Comment #20
you might want to read how opt in works for credit unions.

your $5 member share savings account is just a start.
  |     |   Comment #22
Can you please elaborate on your comment about not having to pay dividends as it relates to CDs or CU Share Certificates and or provide a link to where this issue is addressed?
  |     |   Comment #42
Yeah, that's so not how it works....
  |     |   Comment #17
Kate Spears was always my go-to NCUA contact back (some years ago) when my mind was much exercised by these questions, who seemingly knew everything. I wonder if she's still there.
Predatory Depositor
  |     |   Comment #23
If there is no exact answer to simple questions like what information does an FI have to have on record about beneficiaries in order to assure they are counted for purposes of insurance coverage in the event of the failure of an FI, then depositors should have no confidence in the insurers or in the safety of their deposits.

The last thing depositors want to hear is that they're going to have to engage in some sort of legal wrangling to get their own money back, because there is no possible way for them to determine whether they can rely on the insurer's promises in the event of a claim since the rules are so fuzzy that they can't determine whether they are in compliance or not.
  |     |   Comment #24
The NCUA already informed you of the one piece of information that the credit union must have -- the name (or names) of the beneficiary (or beneficiaries). That seems to upset you.

What you regard as fuzziness is more accurately described as the absence of handcuffs or a straitjacket. Imagine that, in addition to the name(s), the credit union must have x, y, z, etc. If one part of one of those "must haves" is missing, then the burden could fall on the member to demonstrate that deposits are insured, simply because the credit union's records do not reflect one tiny portion of a required item..

Names alone are not sufficient. More is required, but fortunately there is not an "exact" answer. The regulations are replete with words and terms such as "or", "not limited to", "commonly accepted". All sorts of alternatives, some which are not explicitly mentioned. These protect the depositor and beneficiaries. Such language reduces the possibility of "legal wrangling".

Please locate and read pertinent provisions in the CFR before blasting the NCUA for providing you with what I regard as useful information. In view of your oft-proclaimed financial acumen, I leave it to you to determine which provisions of the CFR are relevant.
  |     |   Comment #26
P.S. to my Comment #24 -- It is conceivable that there could have been some recent change that is reflected somewhere else than the CFR. I am unaware of any such change and think it is unlikely that there has been such a change.
David Marks
  |     |   Comment #25
May God bless both of you.

Thank you for your service(s).
deplorable 1
  |     |   Comment #29
So what is the consensus here FDIC/NCUA/DIF? Where is the safest place to keep your money in a crisis? I have most of mine in various credit unions basically because of the add-ons and overall better CD rates. I remember thinking the big banks were the worst in a financial crisis when looking at the bail in laws during that long discussion a while back.
  |     |   Comment #30
Consensus here? Haha.
  |     |   Comment #34
I consider the large A rated CUs to be a very safe place for your money, unlike large banks. It's the stock market where there is massive speculation and overvaluation that is getting killed. Most CUs are very well-capitalized and have little risk of blowing up.
Predatory Depositor
  |     |   Comment #36
The safest place to keep your money crisis or not is in US Treasury securities. There is no possibility of default, they will simply print whatever money they have to to pay it back.

As long as you're within insurance limits, I think any bank or credit union, is nearly (nearly but technically not quite) as safe, because the government could not allow FDIC or NCUA to fail to pay a valid claim or the banking system would collapse. So again, they we print whatever money they have to to prevent that from happening.

Other investments like mutual funds that hold treasury securities, are similarly nearly as safe as directly holding the treasury securities (again it's nearly because nothing is technically as safe as holding the actual treasury securities).

The major risk with any of these instruments is the loss of value of the dollars. Getting your money back is one thing, preserving the buying power of the money you get back is another.
  |     |   Comment #81
deplorable 1, you already know that FDIC is covering CUs, so what is your point if most of your money are at CUs, follow the NCUA guide lines, not the CUs if you want to be safe.
  |     |   Comment #31
Move your individual accounts into trust accounts, keep the trust on file and make sure the trust is dated to reflect it is in effect at the time you indeed had a trust account on file with the FI. In case of a FI closure NCUA/FDIC will honor the trust document you held at time of FI closure.You may have to send a copy of the trust to FDIC/NCUA for insurance pay off of your accounts...$250k for each person named on trust. SS #'s of those named on trust do not usually have to be submitted to the FI you have accounts with ...although some may request a copy of the trust or a written statement from you that a trust does exist.
  |     |   Comment #33
What makes Trust accounts safer than individually owned accounts? You don't say.
Predatory Depositor
  |     |   Comment #35
If you have a trust account the FDIC or NCUA will presumably look to you the depositor to provide them with a copy of it in the event that it's needed to establish that you had beneficiaries.

That's only an advantage if you assume that they would not accept documentation you received from the FI that establishes beneficiaries on an individual account or if you failed to obtain such documentation.

Assuming they would accept documentation of the establishment of beneficiaries you obtained from the FI from you, it certainly would not be worthwhile setting up a trust just for that purpose. Just ask the FI to provide you with a copy of the names of the beneficiaries of your individual account that they have in their records.
  |     |   Comment #37
According to NCUA if a FI fails they will notify all Trust Account holders and inquire how many beneficiaries are named on the trust and provide $250K for each one.The FI that fails does not need to keep a copy of the trust on file for NCUA, however NCUA may need a copy of the trust from the depositor. The account holder holds the trust document and is not dependent on the failed FI to provide a list of beneficiaries, putting more control in the depositors hands in case of a FI failure. Also, beneficiaries listed on a trust Do Not need a social security number listed on the trust document for NCUA insurance. For those with significant assets over $250k a trust is worth looking at. Of course, there are numerous other reasons as well why a trust is a valuable tool.
  |     |   Comment #38
#37 -- Based on your comment, it seems to me (and I may be wrong) that having the funds in a Trust Account could be a significant disadvantage if a credit union fails. The procedure you describe is:

1. the NCUA "will notify all Trust Account holders and inquire how many beneficiaries are named on the trust"
2. additionally, the NCUA "may need a copy of the trust from the depositor."

So, at the very least, before the Trust Account holder can actually get funds: the NCUA would send a letter; USPS would deliver the letter; the Trust Account holder would respond to the letter; USPS (or other carrier) would deliver the response to the NCUA, unless the response could be faxed or e-mailed; NCUA would examine the response. The Trust Account holder might then be in a position to receive funds.

It seems that it would take significantly longer for Trust Account holders to receive money than schmoes like me. If the credit union's records show that the funds are insured, it should be very quick. If the credit union's records do not indicate that, only then would be there a need to submit documentation and for the NCUA to examine that documentation, and for the depositor to be in a position to receive funds.

But, as you describe it, Trust Account holders are going to have to wait a while in any case, in order to give then a shot at getting their money.

I'm basing this comment on what you wrote. I am not familiar with NCUA procedures re Trust Accounts at failed institutions. And it seems to me (and, again, I may be wrong on this) that it might be even more complicated if the NCUA doesn't send out checks and instead arranges for insured funds, or all funds, to be transferred to another institution. And if it's only insured funds that are to be transferred, it seems that nothing could be transferred for a Trust Account until the procedure described in your comment is completed.

If the procedure is as you described, it strikes me as a reason militating against using a formal trust.
  |     |   Comment #39
#38 as has been previously discussed a failed credit union may or may not have documentation that an account holder does indeed have beneficiaries listed on their account. There are many FI's that will not send written documentation listing all beneficiaries an account holder has, so it becomes a matter of trust beneficiaries are listed on the account. The Trust Account again puts the burden of proof on the account holder to prove beneficiaries were documented within the trust during the time the account was open.. Based upon my conversations with NCUA again they will contact the depositor, confirm the number of beneficiaries on the trust then process the claim....however if the bank upon failure failed to list ones beneficiaries( no record of beneficiaries) well, then the depositor is left with his/her word against the FI. As far as additional work entailed to recoup your money from NCUA if the account is in a trust, at least the trust account holder is responsible for providing the documentation, and not the failed credit union.
Predatory Depositor
  |     |   Comment #40
I agree with #39 but add that setting up a trust simply for this purpose is likely not necessary, and exposes you to the downsides of having to maintain a trust (yes I agree of course there may be other valid reasons for creating a trust).

Instead, if you intend to deposit an amount that would require beneficiaries in order for it to be covered by insurance, you should make sure in advance that the FI will provide you with documentation that the beneficiaries are on record. If not, don't open the account.

Also in response to #38, in almost every case, the trust accounts I have opened in both banks and credit unions required a copy of the full trust document for their records. So presumably (and I am also just speculating because I do not know with certainty), the insurers would not need to contact the depositor in such cases if they find the trust document in bank records. If this is true then there would be no disadvantage to a trust account in this regard versus a non trust account.
  |     |   Comment #41
Thanks, #39 and #40 -- I think I see what you're getting at. As I wrote earlier, I'm not at all familiar with NCUA rules and procedures re Trust Accounts in the event of a failure of a credit union.

I'm also not terribly knowledgeable (I do know some things), about the situation of a credit union failure with an informal trust such as a P/O/D -- I've designated beneficiaries in the past, but avoided doing so for the purpose of increasing deposit insurance. (And it's unlikely that I would ever use that path for the purpose of increasing insurance.) So, I haven't looked into that in any depth; haven't gone through the Regulations on that, since it has never affected me.

So, I'm not sure of how big an advantage there is in having a formal trust for these purposes, but your comments indicate that there may well be some advantage. Thank you.
  |     |   Comment #44
Had I the same concerns and suspicions as PD & Shelby (which I wouldn't discount in every case, given the occasional clerical incompetence of FI's in my experience) I'd simply refrain from holding more than $250,000 in any one Bank or Credit Union. That wouldn't prevent my heirs from having to wait out probate should I die and their beneficiary status not have been properly recorded (a separate complication from the issue under consideration), but in the event of a shutdown return of my total deposit would thereby be guaranteed. My own practice where I've named POD beneficiaries (which is always, whether for the purpose of increasing my insurance coverage or just avoiding probate)
is to call (sometimes periodically) the FI after establishing my account and ask them to name the beneficiaries I've designated. If they can do so I typically feel comfortable my wishes have been recorded and the appropriate documentation is in place.
  |     |   Comment #45
Precisely. I don't understand some of the concerns and am stunned by some of the complaints about NCUA insurance. For example, someone wants to know what information a credit union _must_ have with respect to beneficiaries; the NCUA accurately (as far as I know) informs the person that the only piece of information that it _must_ have is the name of the beneficiary. And then the person is upset that there is no additional piece of information that the credit union _must_ have. Would it be better if the credit union _must_ have six specific items of information?

The name of the beneficiary may not be sufficient to guarantee deposits are insured, but it's the only single piece of information that the credit union _must_ have. There may be additional requirements, but no single one is a "must have."

Aside from that, if having more than $250,000 in a credit union is unsettling because of the rules and procedures regarding deposit insurance, or for any other reason, no one is forcing anyone to keep more than that in one institution. And, yes, you'll miss out on a good CD rate that appeared a number of years ago that required a minimum deposit of $1,000,000.
  |     |   Comment #46
Clear understanding and due care are of course good objectives to pursue and exercise, - but with paranoid tendencies or just enough bad experiences likely insufficient to make you ever feel secure, hehe.
Predatory Depositor
  |     |   Comment #50
Right, because expecting the NCUA to definitively tell you whether your deposits are insured or not is a clear sign of paranoia and unreasonable expectations.
Predatory Depositor
  |     |   Comment #59
To demonstrate just how paranoid an unreasonable I am I'll take it even further. The FDIC and NCUA preside over something akin to a sham. They provide "insurance" for depositors who can't even determine whether or not they are insured. The entire system is flawed. It should be designed so that banks and credit unions will not accept deposits from consumers unless their deposits meet the insurance requirements. It's absurd that the onus is on the consumer to try to figure out the arcane rules of deposit insurance and gamble about whether or not they actually will be insured when the time comes that they need the insurance. Depositors should know that if the funds are in a bank or a credit union they are insured, period. That's the proper way to instill confidence in depositors which is the reason why the FDIC and NCUA exist.
  |     |   Comment #47
Navy fcu has put out a note that they are suspending peneltys on people that need the money on CDs they need to close early.

Just FYI
  |     |   Comment #48
As we continue to navigate and respond to COVID-19, we want you to know we’re here to help you through whatever the next weeks and months will bring. We were founded with a commitment to support our members in all types of economic environments, and this is no exception.

Our dedication to our members remains strong. Here's how we’re helping:

Waiving penalties for early certificate withdrawals1

Providing loans, extensions and deferred payments

Offering overdraft protection

Helping you help others with free money transfers
  |     |   Comment #49
Please Be Aware that this is not a unqualified Freebie
(copied from forum)

CapitalClimate | Mar 20, 2020

According to a CD specialist CSR, the operative word is "need". IOW, if someone has a legitimate financial emergency, i.e., loss of job or medical expenses, the waiver would apply. Otherwise, if the purpose is to chase other rate specials or gobble up muni bond bargains, normal penalties apply.
  |     |   Comment #51
Without completely objective (that is, measurable) criteria, "need" becomes a inextricable web of interpretations. Hope Navy has defined it in each of its specified applications very precisely.
  |     |   Comment #58
Nope..... its a total cr ap shoot.
  |     |   Comment #54
I have read that NCUA insurance beneficiaries have to be a member of the credit union for the insurance to be valid. Please Let me know if anyone else has heard that.
Predatory Depositor
  |     |   Comment #55
I think that's completely false. Frankly it sounds absurd.
  |     |   Comment #56
PD. What is your rationale for your thought process?

how106. Can you provide a citation for your reading source?

Thanks all!
Predatory Depositor
  |     |   Comment #67
How can I provide a citation for something that says "beneficiaries don't need to be members?" It would be like providing a citation that stipulates that animals cannot be beneficiaries.

Is there such a thing as some credit union that requires beneficiaries to be members? I can't say there isn't, but I've never heard of it, and I've had accounts with beneficiaries and dozens of credit unions around the country.

Let's see any citation that says that beneficiaries do have to be members.
Predatory Depositor
  |     |   Comment #68
#56... I apologize. I misinterpreted your comment.

You weren't asking me for a citation you were asking #54 for a citation.
  |     |   Comment #57
My gte account has me listed as the primary owner. The beneficiaries are listed. Does the account specificly have to be titled pod for the additional deposit insurance?
  |     |   Comment #60
Depends on who you ask in my experience, but generally the NCUA has expressed more leniency in that regard than the FDIC and not insisted the account be titled "POD" for insurance purposes as long as beneficiaries are clearly indicated in supporting documentation.
Predatory Depositor
  |     |   Comment #90
Leniency is possible, look what they did with extending tax filing dates. But do you really want to count on it? Here's what the NCUA has to say about it:

"The account title or other account records of
the credit union must indicate the account is held
pursuant to a trust relationship. This rule can
be met by using the terms payable on death (or
POD), in trust for (or ITF), as trustee for (or ATF),
living trust, family trust, or any similar language to
indicate the existence of a trust relationship. "

Seems likely that if beneficiaries are listed, their records show it's a trust account even if the title doesn't say it. But I don't like to rely on chances or leniency. I would do some more investigation. I also have a GTE add-on, but I'm not using it now so I haven't looked into that aspect yet.
  |     |   Comment #94
The following quote comes from Title 12, Chapter VII, Subchapter A, Part 745 of the Code of Federal Regulations. The italicized portions are as they appear in the CFR -- they have not been added for emphasis. Section 745.4 ("Revocable trust accounts") contains the following paragraph:

(b) Required intention and naming of beneficiaries. The required intention in paragraph (a) of this section that upon the owner's death the funds shall belong to one or more beneficiaries must be manifested in the title of the account or elsewhere in the account records of the credit union using commonly accepted terms such as, but not limited to, in trust for, as trustee for, payable-on-death to, or any acronym therefore, or by listing one or more beneficiaries in the account records of the credit union. In addition, for informal revocable trust accounts, the beneficiaries must be specifically named in the account records of the insured credit union. The settlor of a revocable trust shall be presumed to own the funds deposited into the account.
Predatory Depositor
  |     |   Comment #96
"In addition, for informal revocable trust accounts, the beneficiaries must be specifically named in the account records of the insured credit union. "

This is one of the rubs. The depositor has no control over the CUs records nor can they know if such records are being maintained by the CU. So a question arises.

In the event that the CU fails, and the beneficiaries are not specifically named in their account records, will NCUA accept documentation, provided by the depositor, that indicates that the CU represented to the depositor that the beneficiaries were maintained in their records?
  |     |   Comment #61
Contrary to some comments, FDIC and NCUA insured deposits are as safe as treasury securities because the solvency of those funds is backed by the full faith and credit of the US government. This welcome development arose from the savings and loan crisis in the 80s, when depositors were concerned about the solvency of FSLIC (remember them?) . Congress passed a statute putting the full faith and credit of the government behind the insurance funds.
Predatory Depositor
  |     |   Comment #91
The government cannot fail to honor valid deposit insurance claims or the banking system will fail and the economy would collapse. So they will create as much money as they have to to pay off any valid claims.

Provided you meet the insurance requirements, there is almost no chance that you won't get all your dollars back in the event of a bank or credit union failure. The main risk is that the dollars you get will be worth less than when you deposited them because they more money the government creates the less the buying power of each dollar. So even though you may get the same amount of dollars back, you may suffer an effective loss. It's the same as the inflation loss risk but has the potential to be accelerated in the event of a large number of bank failures.
  |     |   Comment #98
Are you being facetious?

PD as investment advisor?

That might get you sued.
  |     |   Comment #62
I did some research and I think the beneficiaries have to be a member of the credit union only if a irrevocable trust is opened. If it is a revocable trust than the beneficiaries do not have to be members. .Does that seem correct ?
  |     |   Comment #65
No, it seems arbitrary, irrational, and unlikely to be true. Could you document your "research" in some fashion?
  |     |   Comment #66
NCUA Revocable trust
Revocable trust accounts may qualify for insurance coverage of up to $250,000 per beneficiary named by the owner (if a member of the credit union) that is separate from the individual coverage available to the trust owner (also referred to as grantor or settlor). For example, if a person with a revocable trust for $750,000 names a spouse and two children as beneficiaries, the entire $750,000 would have separate NCUSIF coverage ($250,000 per beneficiary). This coverage is separate from the coverage provided to the other types of accounts held by the trust’s owner at the same federally insured credit union.
NCUA Irrevocable Trusts
Irrevocable trusts have separate coverage based on the beneficial interest. The interest of each beneficiary in an account (or accounts) established as an irrevocable trust has separate NCUSIF coverage of up to $250,000. In cases where a beneficiary has an interest in more than one trust arrangement created by the same owner, the interests of the beneficiary in all accounts established under such trusts are added together for insurance purposes and insured for a total of up to $250,000
Predatory Depositor
  |     |   Comment #73

Excellent citation. Would love to see similar information for both irrevocable and revocable trusts from the FDIC.
  |     |   Comment #69
Let’s try again... please share the wealth...where is a citation to what you think the rule is?
  |     |   Comment #71
to #62, 65, 66, and 69 -- in general, for reliable and detailed information re NCUA deposit insurance, you may wish to look at the material cited in my Comment #70.

What I write in that comment may or may not be reliable, but the cited NCUA publication is excellent.
Predatory Depositor
  |     |   Comment #74

Thank you for posting the link. Yes, this publication is excellent.

I would really love to find something equivalent for the FDIC.
Predatory Depositor
  |     |   Comment #78
And here it is.

Information about FDIC insurance coverage:

Summary information:

Detailed Information:

Less pomp and circumstance, drama and self absorbed hubris as some other posters, but just as useful. ;-)
Predatory Depositor
  |     |   Comment #79
The brochures in the links above from the FDIC have a date of 2014 on them and make reference to a new brochure in the process of being prepared in 2019. In the meantime they give a reference to this page:


I could not find any later version of the 2014 brochures so they may still be unpublished. Presumably the page reference above provides up to date information.
  |     |   Comment #83
Replying to #79's comment: "I could not find any later version of the 2014 brochures so they may still be unpublished. Presumably the page reference above provides up to date information."

The 2019 editions of the FDIC brochures can be found (surprise, surprise) on the website of the Federal Deposit Insurance Corporation. They're located in the section dealing with (surprise, surprise) "Understanding Deposit Insurance - Brochures"

"Deposit Insurance At A Glance" (last updated 07/03/2019)

[Spanish version at https://www.fdic.gov/deposit/deposits/brochures/deposit-insurance-at-a-glance-spanish.html]

"Your Insured Deposits" (last updated 11/12/2019)

[Spanish version at https://www.fdic.gov/deposit/deposits/brochures/your-insured-deposits-spanish.html]

Unlike the conclusion of Comment #79, I advise against presuming anything. It's very easy to locate the updated 2019 editions available on the FDIC website.
  |     |   Comment #63
Why is there a $250K limit at all? Why not just insure ALL deposits?
  |     |   Comment #76
The limit is ls already too high for comfort, you want it higher.

How about 5 billion per account. Still too low for Warren Buffet to put it all in an Ally cd , but hey
  |     |   Comment #111
It use to be lower. Before it was bumped up to $250K it was $100K. That must blow poor bob555's mind!
  |     |   Comment #82
bob555, who is going to pay the premiums for insuring the money?
It may be to expensive for a FI to pay it, never mind paying interest on your money. FDIC can only pay 5% of the insured accounts in USA, if 2 of the big banks collapse, nobody is safe anymore. The FDIC may not be able to pay you even a penny.
  |     |   Comment #85
The premium should be based on the total deposits of the bank. It shouldn't be based on "per person." For example, if the bank has 1 billion total deposits, what does it matter if 1 million people have $1k each vs 1 thousand people have $1 mil each. All deposits should be insured.
  |     |   Comment #110
Again, you don't seem to understand the purpose of insurance or how it works (such as where the money comes from to pay off when the insurance is invoked).

If all deposits are fully insured, then indeed it makes no difference # people vs amount held, and the premiums will be astronomical as a result. But since not all deposits are fully insured (there's a 250k limit), it does make a difference, and premiums are lower because of that difference.

All insurance involves a trade off between how much you are willing to spend for the premiums vs how much you want covered. Take car insurance. In many states it's very expensive and a lot of people get the minimum coverage allowed by their state so as to pay as little in insurance as possible because they either can't afford the price of "full coverage" or else just don't see the benefits being worth the cost (IE they could save/invest the difference and end up with more money to cover an accident with then if they paid the premiums and had the insurance cover it, and of course if they never have an accident, they'd have that saved/invested money in their account instead of the insurance companys).
  |     |   Comment #87
If you think that is bad...look at cash reserves for your ins company AND also know it does not have legal guarantee from fed government if it goes south!
  |     |   Comment #64
First time here. Scanned the posts above but did not read in detail. Has anyone mentioned/thought of that an FI is only as secure as its underlying holdings? Examples: If the FI has put your $$ into Treasuries, that's a good thing. But if they deposit at JP Morgan, Citibank, Wells Fargo, etc...if they fall, the dominoes will clubber smaller institutions down the line. I am not and expert, but that's my understanding. Comments encouraged.
  |     |   Comment #70
For people interested (genuinely interested) in the ins and out of NCUA deposit insurance, I have posted the following in the Miscellaneous section of the Forum, under the Thread "NCUA Publications: Your Insured Funds". That thread is at https://www.depositaccounts.com/community/misc/41311-ncua-publication-insured-funds.html

It reads:

NCUA Publications: Your Insured Funds

I believe the National Credit Union Administration publication "Your Insured Funds" is the best non-legal, non-technical guide to NCUA deposit insurance. I will provide a link at the end of this post, but first a couple of notes:

1. There may be inconsistencies between this publication and other material produced. by the NCUA. After examining other material, and discussions with knowledgeable specialists at the NCUA, I strongly believe that "Your Insured Funds" is more accurate than other NCUA materials

2. In many areas, and especially in these times, there are people who take advantage of other folks' good faith, and who may sound authoritative. Some of those people do so for financial gain; some for political gain; and others just because they get some sort of kick out of preying on people. Do not be taken in by such people, here or elsewhere. Watch out for those who repeatedly post falsehoods, and those who make false accusations against NCUA employees who provide accurate and useful information. Authoritative-sounding pronouncements, especially when combined with outbursts of splenetic fury directed at NCUA employees should not be taken at face value.

Folks -- please be careful out there (and in here); please try to be safe; please protect yourself and others.


And the link to "Your Insured Funds" is:


A Spanish version is available at:

Predatory Depositor
  |     |   Comment #77
"and those who make false accusations against NCUA employees who provide accurate and useful information."

Can you quote one of these false accusations?
  |     |   Comment #100
PD, I second your question.
  |     |   Comment #99
Has anyone looked on how seniors who are medically self-insured but in high risk age group can get COVID vaccine...I see where everything is merely a recommendation on what the queue should. be..no legal requirements...where is the capitalist system for getting shot in arm?  The radar needs to “see” or seek out these individuals 
  |     |   Comment #101
Choice - I absolutely mean no disparagement, but I'd like to know your precise definition of “medically self-insured”. Thanks.
  |     |   Comment #102
The person (US citizen) does not have any US medical insurance and therefore is not seen as a potential person for tracking purposes by traditional US medical providers/insurers...she spends most of her time overseas. She generally pays cash in US
  |     |   Comment #103
Choice, your comment (#99) is an interesting one. I've read quite a bit about the priorities re. who gets COVID vaccines, but I've not seen that addressed. What I've read indicates that the individuals states have quite a bit of say-so in this regard. I've also read that in general terms, health care workers (including EMTs) and nursing home residents will have first priority. They'll be followed by those with multiple comorbidities, including those elderly who have additional comorbidities besides their age. Then, perhaps those with single “morbidities” (let's say, elderly with no comorbidities, or non-elderly with a single issue, like diabetes). Then, everyone else except that those under 16 will not receive it.
  |     |   Comment #104
And can they miss someone...someone not in their system..street people! Yes... What about the rich/poor healthy person who merely wants to get a shot now...how does one do it? If the government wants “everyone” to get a shot...where is the line? At some point in time “the so-called” rules will be relaxed.

Remember last spring when everyone was told “you don’t need a mask,”. and then later the story changed to, “you don’t need a mask b/c we need them for health care providers and don’t have enough for everyone.” They don’t know what they don’t know!

How does one get a shot NOW? That is the question
  |     |   Comment #105
How does one get a shot NOW? That is the question

Right NOW, the supply is still ramping up, so shots will we rationed to those on the front lines (Doctors, Nurses, and other health care workers) and the most vulnerable (elderly, those with co-morbidities) so look to hospitals and nursing homes as the first places where the shot will be available. Eventually, you should be able to get the shot in the same places you can get any other shot (such as for the Flu).
  |     |   Comment #106
when the shots have been produced and distributed, the "self-insured" (along with everyone else) will be able to get them at all the usual places they get any other shot: CVS, walgreens, and other pharmacies, doctors offices, hospitals, etc. The shots have only just recently been approved for use, It takes time to produce and distribute enough for everyone. They don't magically appear at the drop of a hat, you know.
  |     |   Comment #107
They magically appeared to thousands of physicians at Stanford Medical Hospital that were not frontline! And now with no reported criminal charges for same...the question remains how to get the shots using a so-called Stanford distribution model.
  |     |   Comment #112
Choice, there was an issue at Stanford Medical. Looks like that issue is now resolved.

From the WSJ, 12/18 -
“Hospital administrators blamed an algorithm based on government guidelines that prioritized older people for vaccine doses, thus excluding a large portion of the younger people in training roles. David Entwistle, the chief executive of Stanford Health Care, spoke to the protesters and said changes would be made to address their concerns.” … “We are immediately revising our plan to better sequence the distribution of the vaccine.”


Tempest, meet teapot.
  |     |   Comment #113
Solved?...they gave the vaccine back? Right....they got shots that if a legal protocol precluded same would not have happened. There was no compliance program in place. When was David fired if he did something wrong?? That would be change!  What about those that were passed over...what added assurances/care is being provided to those thousands and their families?  No change!  We paid for their shots!  And the patients were continued to be treated by the unvaccined...great place to not be a patient!
  |     |   Comment #114
Who says he specifically did anything wrong? What do you think he specifically did wrong that was actionable by firing, (give details not just angry arm waving)? Mistakes happen, in this case the mistake apparently was relying on a poorly programmed algorithm (according to Hospital administrators per the WSJ article) that prioritized older people for vaccine doses.
  |     |   Comment #115
Older/senior MDs who were on home duty got the shots (over 5000),...the bosses, why apologize if everything is right, where is accountability, software is developed by individuals—-who tested that software, no meaningful beta test...on and on... People pay with their lives for mistakes (5000 and those in contact that didn’t get required shot) and software was intentionally developed, some are called out for negligence everyday  ...you go stay there!  Good Luck!
PS. if your CDs are incorrectly debited or credited...where there is smoke there is usually a fire near.  A couple of basis points here and there times the number of accounts is real $.  If not then the FI/you won’t miss such amount...as the case may be
  |     |   Comment #116
why apologize? because that's what you do when mistakes are made! no laws were broken, nothing that is a fireable offense happened (you certainly didn't name any) nor have you shown any evidence of involvement in those mistakes from the guy you were asking to be fired. If you have a job, best hope someone does not come along asking for you to be fired on equally flimsy grounds!

as for "people pay with their lives", name one individual who has died from this "mistake"? just one. What's that? you can't? no surprise there.
  |     |   Comment #118
Your car insurer may not be too enamored with apologizes after accident...have fun
  |     |   Comment #119
So you couldn't name one individual who died as a result. Thought so.
  |     |   Comment #120
It also hasn't gone unnoticed that you failed to name one thing he specifically did wrong or that was a fire-able offense on his part. Just more of the same angry arm-waving. If you are going to call for a specific person be fired, the least you should be able to do is list specifically and in detail what that specific person did to deserve being fired and prove that he's the one that did those things.

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