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FDIC Consumer News - Spring 1998 |
Simpler is Better The FDIC clarifies
the rules for the benefit of consumers and bankers The FDIC knows that the deposit insurance rules can be confusingfor consumers and for bankersand thats a concern for everyone. Why? When an insured institution fails, this confusion can mean, in some cases, a substantial loss of funds for depositors who think that they are fully insured but discover too late that they are at least partly uninsured, says Chris Hencke, an attorney in the FDICs Legal Division in Washington. To help solve this problem, the FDIC Board of Directors recently adopted changes that will make the rules easier to understand. The major change inserts into the rules a variety of straightforward examples that will help a depositor read the rules and quickly understand the scope of insurance coverage at an FDIC-insured bank or thrift. The FDIC also adopted three substantive changes that: Provide a six-month grace period after a depositors death for the survivors to rearrange the accounts if necessary to avoid going over the $100,000 insurance limit. Grieving families often need time to put their affairs in order after a death. But under existing rules, for example, a joint account for a husband and wife likely would automatically become the surviving spouses money when the other dies. That alone could put some of the survivors insurance coverage over the $100,000 limit. To reduce the chances this might occur, the FDIC is adding the grace period. Give the FDIC more flexibility to insure deposits made by agents (such as escrow companies or title companies) on behalf of their customers. Money from the sale of your home may be temporarily deposited by a real estate agent in an escrow account he or she maintains at a bank, perhaps for you and other clients, too. If the banks records clearly indicate that the agents account is for several clients, the account would be insured to $100,000 for each client, not just to $100,000 in total. The new rule makes it easier for the FDIC to reach that conclusion in the absence of clear records on file at the bank.
The FDICs new rules will go into effect July 1, 1998. For more information about the insurance rules in general or the changes in particular, you may contact the FDICs Division of Compliance and Consumer Affairs. |
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