FDIC Moves Again on Insurance
Yesterday, FDIC Chairman Sheila Bair announced that the FDIC will provide full deposit insurance for non-interest bearing deposit accounts. Ms. Bair indicated the following:
The second feature of the new program gives unlimited insurance coverage for non-interest bearing deposit transaction accounts. These are mainly payment processing accounts such as payroll accounts used by businesses. Frequently, they exceed the current maximum insurance limit of $250,000. Many smaller, healthy banks have been losing these accounts to their much larger competitors because of uncertainties in the financial system.
This new, temporary guarantee âÂÂ- which runs until the end of next year âÂÂ- should help stabilize these accounts, and help us avoid having to close otherwise viable banks because of deposit withdrawals.
This aspect of the program allows bank customers to conduct normal business knowing that their cash accounts are safe and sound. This is the fundamental goal of deposit insurance, safeguarding peoples' money, and vital to public confidence in the banking system.
Here's a linkto the FDIC press release, which has links to a fact sheet and Ms. Bair's speech. Will NCUA follow suit? At NCUA, Chairman Fryzel said NCUA is looking into the situation. As I've said before, stay tuned.