There are many changes coming down the pike from the recently enacted Wall Street Reform Bill. Some of them will be easier to understand than others. One change that makes a lot of sense isn’t really a change; it’s just a temporary regulation that was made permanent by the Wall Street Bill. The insurance protecting your bank deposits has been permanently increased from $100,000 to $250,000.
The Federal Deposit Insurance Corporation (FDIC) has been guaranteeing customer deposits since it was enacted in 1934. The original limit in 1934 was $2,500 per individual. The limit was raised six more times between 1935 and 1980, when the limit was increased to $100,000. After the increase in 1980, the insurance cap stayed the same until Congress voted to temporarily increase the individual limit to $250,000 in 2008 as part of the $700 Billion TARP (Troubled Asset Relief Program) Bill that was a response to the recent financial crisis. The TARP bill and the increase were both measures to designed to inspire confidence in America’s banking system and quell a growing concern with the national banking network.
One additional inclusion to the recent Wall Street Reform Bill was to make the increase permanent retroactive to any bank failures beginning January 1, 2008, before the temporary increase was enacted. So depositors who may have lost personal deposits in excess of $100,000 can now apply to get back deposits that were lost earlier in 2008.
Your coverage may actually be more than $250,000 depending on how your deposits are held at your local bank. Depending on ownership and type of account, you could be eligible for more than $250,000 in coverage. If you’re not familiar with FDIC coverage for your bank deposits there are many ways to get current. Your local First National Banker—and any community banker—is a good resource for helping you understand the limits and determine if you are fully covered. In addition, the FDIC has come out with several different resources including a deposit insurance calculator, a release detailing the increase with additional information, and a FAQ link for more answers.
The FDIC says depositors have never lost money on an insured deposit since the fund was created in 1934. I guess this increase should give people even more assurance that their money is safe and that community banks like First National continue to be the safest place for bank deposits.