#help.tut EXTRA HELP FOR TUTORIALS #define.stb ON LINE LEGAL GLOSSARY /* This is part 1 of the official text of the Federal Deposit Insurance Corporation's informational booklet on Federal Deposit Insurance. With banks failing, we thought you'd like to know if you are in an insured account what your rights are. */ FOREWORD This booklet provides examples of insurance coverage under Federal Deposit Insurance Corporation (FDIC) regulations on certain accounts commonly held by depositors in insured banks. The FDIC is an independent agency of the U.S. Government. It was established by Congress in 1933 to insure bank deposits and thereby help maintain sound conditions in our banking system and protect the nation's money supply in case of bank failure. As a depositor in an FDlC-insured bank, you do not pay for deposit insurance protection. Your bank pays for the cost of the insurance through semiannual assessments based on its volume of deposits. The deposit insurance fund consists of these assessments and income from investment of the fund's balances. FDIC OPERATION 1. Are all financial institutions insured by the FDlC? The FDlC insures deposits in national and most State banks, including commercial, savings and mutual savings banks. Deposits in some U.S. branches of foreign banks also are insured. insured banks are required to display the official FDlC sign, which appears on the last page of this booklet, at each teller's window or station. Most savings and loan associations are insured by the Federal Savings and Loan Insurance Corporation, another governmental agency. Insurance for savings in most credit unions is provided by the National Credit Union Administration. 2. How does the FDlC protect bank depositors against loss? Each bank approved for deposit insurance must meet high standards of safety and soundness in its banking practices. Adherence to these standards is determined through regular bank examinations by Federal or State agencies. If, despite these precautions, an insured bank gets into financial difficulties and must be closed for purposes of liquidation, the FDlC is on hand promptly with cash to protect insured depositors. The Corporation usually begins payments to depositors within a few days after the date of an insured bank's closing. 3. Does the insurance protection afforded by the Corporation cover losses sustained by depositors in any fashion other than through the closing of an insured bank? No. 4. What types of deposits are insured? All types of deposits received by a bank in its usual course of business are insured, including savings deposits, checking deposits, deposits in NOW accounts, Christmas savings and other open-account time deposits, time certificates of deposit, and uninvested funds. Certified checks, cashiers' checks, officers' checks, money orders, drafts, letters of credit and travelers' checks for which an insured bank is primarily liable also are insured when issued in exchange for money or its equivalent or for a charge against a deposit account. 5. Does Federal deposit insurance protect the interests of creditors or shareholders of a failed bank? No. Insurance protects only deposits, as described in response to Question 4. ACCOUNTS OF A SINGLE HOLDER 6. What is the basic insurance protectIon afforded a depositor? The basic insured amount for a depositor is $100,000. In determining the amount of an insured account, accrued or anticipated interest or earnings is included. Deposits maintained in different rights or capacities are each separately insured to $100,000. Thus, a person may hold an interest in more than one separately insured account in the same insured bank. 7. Is the insurance protection increased by placing one's funds in two or more of the types deposit accounts, mentioned in Question 4, in the same bank? No. Deposit insurance is not increased merely by dividing funds owned in the same right and capacity among the types of deposits mentioned in Question 4. For example, checking and savings accounts owned by the same depositor are added together and insured up to $100,000. 8. If a depositor has deposit accounts in several different insured banks, will the deposits be added together for the purpose of determining insurance coverage? No. The maximum insurance of $100,000 is applicable to each insured depositor of each insured bank, without regard to the deposits in any other insured bank. In the case of a bank having one or more branches, the main office and all branch offices are considered as one bank. JOINT ACCOUNTS 9. If a husband and wife, or any two or more other persons, have, in addition to the individually owned accounts of each, a valid joint account in the same insured bank, is each account separately insured? Yes. If each of the co-owners has personally signed a valid account signature card and has a right of withdrawal on the same basis as the other co-owners, the joint account and each of the individually owned accounts are separately insured up to the $100,000 maximum. (The execution of an account signature card is not required for time certificates of deposit or any other deposit obligation evidenced by a negotiable instrument, but the deposit must in fact be jointly owned.) However, the insurance protection on joint accounts is not increased by rearranging the names of the owners, changing the style of the names, or by establishing more than one joint account for the same combination of owners in the same insured bank. No joint account shall in any case be entitled to insurance coverage in excess of $100,000. 10. What types of joint accounts may be insured? Insurance covers joint accounts owned in any manner conforming to applicable State law, such as joint tenants with a right of survivorship, tenants by the entireties, tenants in common, or a deposit owned by a husband and wife as community property in States recognizing this particular form of joint ownership. 11. Is the answer to question 10 the same if funds in the individual and joint accounts of husband and wife all consist of community property? Yes. In those jurisdictions recognizing community property, community funds may be maintained in accounts in the individual names of each spouse and in a joint account in the names of both and each account is separately insured to $100,000.