The Dodd-Frank Wall Street Reform and Consumer Protection
Act (The Dodd-Frank Act) retroactively increases the Standard
Maximum Deposit Insurance Amount (SMDIA) from $100,000 to $250,000
for the period of January 1, 2008 to October 3, 2008. The six
failed financial institutions affected by this retroactive increase
are:
- Hume Bank, Hume, MO;
- ANB Financial, N.A., Bentonville, AR;
- IndyMac Bank, F.S.B., Pasadena, CA;
- First Priority Bank, Bradenton, FL;
- The Columbian Bank and Trust Company, Topeka, KS; and
- Silver State Bank, Henderson, NV.
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The Dodd-Frank Act requires that, in applying the $250,000
ceiling amount retroactively to January 1, 2008, the FDIC must
subtract: (1) deposit insurance previously paid to depositors,
and (2) any dividend payments or offset made to depositors by
the FDIC as receiver of the failed insured institution. Thus,
for these six institutions, these amounts are subtracted from
the $250,000 insurance limit.
Below are several examples of how this retroactive coverage
works:
Payment of Additional Deposit Insurance
Example 1. If you had single-ownership deposits
of $300,000 at a bank that failed on January 1, 2008, you have
received $100,000 of insurance coverage (corresponding to the
$100,000 ceiling amount effective on the date of failure).
If the FDIC, as receiver of the failed bank, also paid you
a 50% dividend on the amount of your uninsured deposits, you
have received, to date, a cumulative amount of $200,000 (insurance
coverage of $100,000 plus a dividend of $100,000). Applying
the retroactive $250,000 coverage amount under the Dodd-Frank
Act, you are now entitled to an additional payment of $50,000.
Example 2. If you had single-ownership deposits
totaling $400,000 at a bank that failed on January 1, 2008,
the FDIC's deposit insurance determination provided you $100,000
of insurance coverage (corresponding to the $100,000 ceiling
amount effective on the date of failure). If the FDIC, as receiver
of the failed bank, also paid you dividends totaling $50,000,
you have received, to date, $150,000 (insurance coverage of
$100,000 plus $50,000 in dividends). Applying the retroactive
$250,000 coverage amount under the Dodd-Frank Act, you are
now entitled to an additional $100,000 in deposit insurance
thereby increasing the total payments to $250,000. The FDIC
also will issue you a revised Receiver’s Certificate
for $150,000.
No Additional Payment of Deposit Insurance
Example 3. If you had single-ownership deposits
of $400,000 at a bank that failed on January 1, 2008, you received
$100,000 of insurance coverage (corresponding to the $100,000
ceiling amount effective on the date of failure). If the FDIC,
as receiver of the failed bank, also paid you a 50% dividend
on the amount of uninsured deposits, you have received, to
date, a cumulative amount of $250,000 (insurance coverage of
$100,000 plus a dividend of $150,000). Because you have received
combined payments of $250,000, you are not entitled to any
additional payment under the Dodd-Frank Act.
Example 4. If you had single-ownership deposits
totaling $125,000 at a bank that failed on January 1, 2008,
the FDIC's deposit insurance determination provided you $100,000
of insurance coverage (corresponding to the $100,000 ceiling
amount effective on the date of failure). If the FDIC, as receiver
of the failed bank, also paid two dividends aggregating $25,000,
you would have received, to date, $125,000 (insurance coverage
of $100,000 plus $25,000 in dividends). Applying the retroactive
$250,000 coverage amount under the Dodd-Frank Act, you will
not receive an additional deposit insurance payment. You have
already received payments for the full account balance.
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