The FDIC is an independent agency created by the Congress to maintain stability and public confidence in the nation's financial system by insuring deposits, overseeing financial institutions, and managing receipt of deposits from failed institutions. In response to the credit crisis in 2008, the FDIC's Transaction Account Guarantee (TAG) Program extended and enhanced a number of insuring programs for United States deposits with financial institutions, most notably increasing the insurance level to $250,000 for each financial institution and providing unlimited insurance in non-interest bearing depository accounts. So, in the event of bank failure, qualifying deposits within each financial institution would be protected up to $250,000, with separate unlimited protection on non-interest bearing depository accounts -- payable from deposits in receivership, or by funds of the FDIC in excess of those deposits received from the failed institution.
The TAG program carry a built-in expiration on December 31, 2012 (after a 2010 extension), but it was believed upon enactment there was a good chance that it's provisions may be further extended. However, a procedural motion fell short on Friday in the Senate that would have extended the TAG program two years, which effectively kills it.
What does that mean for businesses, non-profits, and governments? Well, for governments, not much should change -- State laws in both Pennsylvania and Maryland provide that public funds be either fully insured or be secured with collateral equal to uninsured amounts deposited with the bank. For non-profits and businesses, it means that every one dollar over $250,000 held in any financial institution in a depository account (demand [checking] and time [certificates of deposit]) would not be insured, and, in the event of a bank failure, there would be no guarantee that the amounts exceeding $250,000 would be returned to the business or non-profit.
With the end of 2012 in sight, take some time to review your depository situations to ensure that you will be properly protected moving into 2013, and contact our offices if you wish to discuss your depository situations and related planning in more detail.
The TAG program carry a built-in expiration on December 31, 2012 (after a 2010 extension), but it was believed upon enactment there was a good chance that it's provisions may be further extended. However, a procedural motion fell short on Friday in the Senate that would have extended the TAG program two years, which effectively kills it.
What does that mean for businesses, non-profits, and governments? Well, for governments, not much should change -- State laws in both Pennsylvania and Maryland provide that public funds be either fully insured or be secured with collateral equal to uninsured amounts deposited with the bank. For non-profits and businesses, it means that every one dollar over $250,000 held in any financial institution in a depository account (demand [checking] and time [certificates of deposit]) would not be insured, and, in the event of a bank failure, there would be no guarantee that the amounts exceeding $250,000 would be returned to the business or non-profit.
With the end of 2012 in sight, take some time to review your depository situations to ensure that you will be properly protected moving into 2013, and contact our offices if you wish to discuss your depository situations and related planning in more detail.
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