
FDIC Often Insures Much More Than $250,000
250,000 is rather common knowledge. 250,000 cap is, oftentimes, a fiction, because companies and savvy, wealthy depositors can circumvent it or avoid it altogether. Two examples of this “the-sky-is-the-limit” insurance are so-called TAG accounts and CDAR accounts. 1.5 trillion by March 31, based on the FDIC’s latest quarterly banking profile.
The FDIC is funded by the banking institutions it insures. When it closes a bank or investment company, it uses the money it has already set aside to protect depositors and absorb any losses from the failing. TAG accounts were forged in the fireplace of the 2008 financial meltdown by the FDIC, the U.S. Federal government, and Treasury Reserve Panel and revealed in a joint press meeting. In 2010 2010, The Dodd-Frank Act required all banking institutions to join the scheduled program.
Groups who favor an extension of the TAG program include the American Bankers Association (ABA) – which recently decided to support a two-year extension – and the Independent Community Bankers of America (ICBA), which favors a five-year extension. Two other arguments against an extension were made early this season by Edward Yingling, somebody in the Washington office of Covington& Burling LLP, and a previous chief executive and CEO of the American Bankers Association.
Writing in the American Banker last February, Yingling cited two “real world” factors. First, the legislation has absolutely no potential for being enacted. Second, these deposits will not in any case last; interest rates at some true point soon will rise, and the requirement these …