Off-topic: Economy

[DTS]

John

You have it right on the POD account, in regards to only certain relatives that qualify you for that. Here's a link to check out from the FDIC:

http://www.fdic.gov/deposit/deposits/insuringdeposits/index.html

D

[S T]

Fdic

John H,

I have been all over the FDIC insurance coverage for the last couple of days, and finally resorted to contacting one of my existing clients that used to work for FDIC and worked all of the California Bank Failures in 1989-1999, so I know she knows.

She provided a lot of clarity. My issue in asking was all of the phone calls I received on a joint ownership account and obtaining the $200,000 FDIC limit. Other limits as well on POD accounts, etc.

Yes POD accounts depending could qualify or not qualify for the $100,000 limit depending on relationship of berneficiary

But it seems like all of the accounts if you ask the bank where you have your $$ will tell you it depends!

My husband and I were at the bank today and had a lengthy discussion with the Account Mgr, and finally called the Bank Mgr in, to receive clarity. I am beginning to wonder if anyone knows the FDIC rules, including the FDIC. I believe, it is for sure none of the Bank personnel know. They only know $100K limit but not sure of the actual titling, so don't rely on that information. And all the actual Bank Personnel quote (account mgr or new acct mgr) is $100K for the most simple facts.

The banks will quote limits as much as a $1 million coverage depending on various titles on account in one bank, but when you question them on how you want to title your accounts , you actually can not receive the information. Every depositor needs to know "exactly" what the FDIC rules are and they should be simple and straigtht forward!

My thought is that if the Banks have FDIC Insurance Coverage and are paying for it, they should be able to advise the depositor or account owner! No one seems to have been trained in this field at all. Safety would be not to have more than $100K deposited at any one bank, and then the depositor knows without at doubt that they would be insured for the $100K without any doubt.

The bank account representative for new accounts, could ony make the "canned pitch" about $100K on certain titles, and then I challenged and I actually had them online at the FDIC site, so maybe they could try to represent the facts straight. That Is scarry!

Everyone needs to be aware of the titling to the account when it is opened. The FDIC insurance is totally separate from what some clients might perceive to be an issue with their own State Probate Laws (Estate). They are not the same! Never the "twain shall meet"

As if interpreting tax law is not enough, now either for personal reasons or advising clients to seek out additional information on their own regardng their investment and the titling to those investments. I am going to seek out an estate/probate attorney to do some referrals!

I guess I will become wiser after this research project! Still gathering information from the banks in our area!

I will post more after the next few visits to our local banks!

Sandy

[JohnH]

One thing which became apparent at the banks was that they are getting flooded with questions about FDIC coverage in the wake of the IndyMac failure. One banker told me they had just attended a seminar a few days ago to refresh them on the FDIC rules - and then gave us exactly the wrong information!

Maybe we should start a string dedicated to FDIC issues, just to help all of us sort through the maze and hopefully point out traps for our clients. I know I left the meetings yesterday thinking we had everything hashed out, and today am now having to contact the client to inform them that $150K was left unprotected because we accepted what two bankers told us as being correct. Fortunately no money has been lost, but we were lulled into a sense of false security by well-meaning but uninformed bankers and we now know what changes are still needed.

I'm grateful for this forum & all the professional help being willingly shared. And thanks to Dennis for starting this topic.

[DTS]

JohnH

Later on, I will start a new thread and post what few links I have been sent and found on my own. The rules are very confusing, depending how you read them, speaking for myself of course.

I've come to the conclusion that the interest I lost mentioned in an earlier post had to be bank error. My wife and I have all accounts "joint" and should have been insured up to $200K. So, some discussion here will be good.

You can't ask too many questions. I believe the more you ask, you'll eventually get to the answer you don't want to hear and there will be the protection.

D

[erchess]

Simple Questions

Is the 100K limit per account or per institution. If it is per account then is there a per institution limit?

Is interest insured if principal and interest are below the limits?

How long does it take to get your insured money when a thrift fails?

How can someone evaluate the soundness of a bank? Remember that the balance sheet and other financial statements could be a lie.

If you are going to invest in T Bills does it make more sense to do it through a bank, through a broker, or by contacting the Treasury Department directly?

[JohnH]

I understand that there is no "per institution" limit provided the accounts are owned in the various ways that enable you to have FDIC coverage on each account. The proper owneship is the crucial point.

I understand that both interest and principal are combined to determine the $100K maximum, so if an account has exactly $100K in it, then any unpaid interest over & above the $100K is at risk. The way to avoid this is to have the interest paid out and deposited into a separate covered account, rather than accrued & added to the existing account. Or else start the account far enough below $100K to allow for anticpated accrual.

Somebody please correct me if any of the above is wrong or needs tweaking.

Don't know about the time frames - maybe someone else can help, or you could contact some IndyMac account holders and they may be able to give you the latest info firsthand.

I think the best way to buy Treasury Bills is through the Treasury Direct program. It's fairly simple once you get the account set up. No need to pay a middle man to do the work, and besides, using a bank or a broker introduces unnecssary risk back into the process.

Here's a starting point for more info:

http://www.treasurydirect.gov/tdhome.htm

[erchess]

What's this about owning in various ways?

I am a single individual and there is no one with whom I intend to co own my money. Could I not have an unlimited number of accounts each with no more than 100K including unpaid interest in one bank under my own name, and have FDIC Insurance on all of it?

Thank you for the post on the Treasury website.

How can someone evaluate the soundness of a bank?

[S T]

Fdic

Erchess,

One single owner has FDIC coverage for !00,000 at ONE financial institution.

Joint owners havw FDIC for 200,000 at ONE financial institution.

One single owner could have FDIC insurance for !00,000 at more than one institution, so you could have $1,000,000 which is deposited $100,000 at 10 different FDIC institution and have FDIC coverage for $1,000,000.

But if you have $1,000,000 all deposited at one FDIC institution, your FDIC coverage is only $100,000.

Sandy

[JohnH]

Sandy covered it.

You can also have an additional $100K in an account owned in your own name only which is Payable on Death to someone else and it will be insured. However, as we pointed out earlier, that "someone" else cannot be just anyone - they must be a "qualified beneficiary." The POD individual doesn't enjoy any ownership rights while you're living, but they get the $ if you die.

On the other hand, if you choose to co-own another $100K with someone else, that account enjoys and additional $100K of FDIC insurance EVEN IF they are not a "qualified beneficiary". This is where it gets a little sticky, because the co-owner can excercise control over the $ when you are still living.

Here's the link to the FDIC web site for more info:

http://www.fdic.gov/deposit/deposits/index.html

[S T]

Fdic

John,

I think your prior post about starting a new FDIC topic would be great. Then we can post questions and examples.

As I am finding out as well as you are this week, titling accounts for FDIC coverage is tricky, and this can be a separate issue from the Probate/Estate issue on how to pass bank accounts through titling.

An example today in talking with a banker.

Joint Account (co-owners)- deposits covered for up to $200,000 FDIC, since right of survivorship will automatically pass to survivor without probate.

Question was how to obtain higher FDIC coverage if we wanted to deposit with that institution.

Husband could open a Single Owner account and be covered for deposits up to $100,000. You could add an additional signer to the account to be able to withdraw and make deposits, etc, but upon death the account would be frozen and would have to be processed through probate. The additional signer has no ownership rights, to claim the account balance, only the right to deposit and withdraw.

Now what I am not sure in the above scenario, is whether or not a Single Account can be a POD with the beneficiary as an additional signer on the account, still no ownership rights. That would be the best of all worlds, would it then meet an additional $100K for FDIC coverage and also avoid Probate?


Sandy

[DTS]

Now what I am not sure in the above scenario, is whether or not a Single Account can be a POD with the beneficiary as an additional signer on the account, still no ownership rights. That would be the best of all worlds, would it then meet an additional $100K for FDIC coverage and also avoid Probate?

Sandy,

I don't know if this is exactly what you're asking, but if you are asking if an account holder can have a POD account, in addition to the other accounts in an institution, the way I read it was the POD account insured the beneficiary for $100K. The account holder is not insured, so only $100K on each POD account. I don't have children, so this POD scenario does not apply to me. Anyone doing this should check the rules very carefully before opening multiple accounts in one bank. I have made the decision not to have more than $100K in any bank, regardless of the vesting. That is just my decision.

When I was researching links and the FDIC site the other day, most info on coverage did not pertain to me or my wife's situation. Here are the links I looked at. Obviously, the one link someone would have to follow would be the FDIC's, as there may be some misinformation in the other links and the FDIC is going follow their own rules. Here are the links:

http://www.querycat.com/faq/7f05f9dc4cc5398f78a7a148e16f8a39

http://www.24hgold.com/viewarticle.aspx?langue=en&articleid=257497_Ensure_You_Are_FDIC-Insured&contributor=Michael+J.+Panzner&lastpublishingyear=2008&filter=latest

http://www.bankersonline.com/articles/bhv03n02/bhv03n02a8.html

D

[drdino]

Ira

Ira's covered up to $250,000 FDIC coverage for singles!

[DixieEA]

Ira

drdino, Is the $250,000 FDIC insurance good only if the IRA is invested in cash or does the insurance cover an IRA invested in only stock as well?

Thanks, DixieEA

[S T]

IRA accounts and FDIC

From the FDIC website

What is not insured by the FDIC?
The FDIC does not insure the money individuals invest in stocks, bonds, municipal bonds, or other securities; mutual funds, (including money market mutual funds, and mutual funds that invest in stocks, bonds and other securities); annuities (which are contracts underwritten by insurance companies that guarantee income in exchange for a lump sum or periodic payment); or insurance products such as automobile and life insurance even if these products were purchased at an insured bank or through an affiliated broker/dealer/insurance agent that is offering these products on behalf of a bank.

The FDIC does not insure U.S. Treasury bills, bonds, or notes, but these are backed by the full faith and credit of the U.S. Government.

Also, the FDIC insurance doesn't cover valuables in safe deposit boxes. These contents, however, may be covered either by the bank's private insurance or the box holder's personal homeowner's insurance.

Furthermore, the FDIC does not insure against loss of funds due to robberies and other thefts. Stolen funds may be covered by what's called a bank's Hazard and Casualty insurance, which is a policy a bank purchases to protect itself from fire, flood, earthquake, robbery, and physical damage. In those rare instances where a bank employee may tamper with a customer's account, the bank's blanket bond insurance (also called fidelity bonds) may cover the loss and the funds would be returned to the customer. Consumer protection laws such as the Electronic Funds Transfer Act offer protections if a third party somehow gains access to a customer's account

If taxpayer invested IRA money through the Bank's Investment Dept and placed in annuities or stocks/mutual funds, it would not be insured for FDIC coverage.

[JohnH]

I looked for a place to put the following link, and the title of this thread seemed appropriate. Even though we veered off the main topic a few times, the discussion was very informative & helpful on several levels. It's hard to believe this conversation is a year old!

Anyhow, I've been following Simon Johnson for some time now, mainly by reading the Baseline Scenario (something well worth subscribing to). He's insightful and makes the entire topic of finance easier to understand. This article is especially worth reading:

http://economix.blogs.nytimes.com/2009/09/03/finance-gone-wild/