FDIC
Transaction Account Guarantee Program
The
financial services industry has gone through a
lot of change and turmoil in the past few months!
Bank takeovers...mergers and acquisitions...mortgage
relief legislation...it's no surprise that
the general public still remains confused and
concerned.
In
response to this constantly changing environment,
the Federal Deposit Insurance Corporation (FDIC)
has made a few revisions to deposit insurance
regulations. These changes were implemented to
strengthen confidence and ensure liquidity in
the U.S. banking system.
Alliance
Bank is participating in the FDIC's Transaction
Account Guarantee Program.
Under
that program, through December 31, 2010 all noninterest-bearing
transaction accounts are fully guaranteed by the
FDIC for the entire amount in the account. Coverage
under the Transaction Account Guarantee Program
is in addition to and separate from the coverage
available under the FDIC's general deposit
insurance rules.
Alliance
Bank would like to take this opportunity to review
with you FDIC insurance eligibility as it currently
stands, including all recent changes to applicable
laws and regulations. We developed an FDIC
Coverage Guide
that was modeled from an FDIC publication. When
reading this guide, we would like to make you
aware of the following points:
- On
September 26, 2008, the FDIC changed the rules
for revocable trust accounts, commonly known
as payable-on-death (POD) or in trust for (ITF)
accounts. It is no longer necessary to have
a qualifying beneficiary on these types of accounts
as one of the conditions for deposit insurance.
Any person, charity or non-profit organization
(approved by IRS) can be designated as beneficiary.
For example, an account owner having POD accounts
that designate 5 different beneficiaries can
be insured up to $1,250,000 through December
31, 2013 and up to $500,000 after that date.
- On
October 3, 2008 President George W. Bush signed
the Emergency Economic Stabilization Act of
2008, which temporarily raises the basic limit
on federal deposit insurance coverage from $100,000
to $250,000 per ownership category. The FDIC
Coverage Guide will explain ownership categories.
The basic deposit insurance limit will revert
to $100,000 after December 31, 2013.
- The
standard coverage of Individual Retirement Accounts
(IRAs) and other certain retirement accounts
remains unchanged at $250,000, and has not been
affected by any recent legislation.
- On
October 14, 2008 the FDIC established the Temporary
Liquidity Guarantee Program (TLGP) the final
rule of which was made effective on November
21, 2008. A section of this program called the
Transaction Account Guarantee Program (TAGP)
provides that the following types of accounts
will have unlimited coverage until December
31, 2010:
- Non-interest
bearing checking accounts, personal and business;
- Interest
On Lawyer's Trust Accounts (IOLTAs), regardless
of the interest rate;
- Interest
bearing checking accounts with interest rates
at or below 0.50%,
- where
the institution has committed to maintain
the rate at or below 0.50% through 12/31/10*.
| *
As
per the Deposit Account Disclosure provided
to you at account opening, interest bearing
checking accounts have variable interest
rates
established by Alliance Bank. Thus, interest
bearing checking accounts held at Alliance
Bank are not covered by the TAGP. |
Participation
in TAGP was optional for every financial institution.
To provide our customers with the maximum FDIC
protection available, Alliance Bank decided
to participate and will be paying additional
insurance premiums into the FDIC fund. For more
information about the TAGP, please view our TAGP
Frequently Asked Questions (FAQ) page.
When
assessing your overall insurance coverage, make
sure to give special consideration to the non-interest
bearing accounts covered under the TAGP. These
account balances are guaranteed in their entirety;
your other accounts need to be grouped by ownership
category.
Notice
to Customers with Transfer or Sweep Account Arrangements:
This is to advise you Alliance Bank participates
in the FDIC's Transaction Account Guarantee
Program. Under the program, your noninterest-bearing
transaction accounts at this institution have
unlimited FDIC deposit insurance. This insurance
is in addition to the FDIC's normal deposit
insurance coverage of $250,000. However, if you
have noninterest-bearing transaction accounts
with a transfer or sweep arrangement to an interest
bearing transaction account or product, that transfer
could decrease your FDIC deposit insurance coverage.
Please
remember that this information is accurate as
of the date of this web posting. Alliance Bank
will
continue to communicate future changes in a timely
matter. Lastly, we would like
to
remind you that Alliance Bank is a profitable
and well-capitalized institution.
We
are always here to assist you with any questions
you may have about your FDIC coverage.
FDIC
Deposit Insurance Coverage
The
Federal Deposit Insurance Corporation (FDIC) is
an independent agency of the United States government
that protects against the loss of insured deposits
if an FDIC-insured bank or savings association
fails. FDIC deposit insurance is backed by the
full faith and credit of the United States government.
Since the FDIC was established, no depositor has
ever lost a single penny of FDIC-insured funds.
FDIC
insurance covers funds in deposit accounts, including
checking and savings accounts, money market deposit
accounts and certificates of deposit (CDs). FDIC
insurance does not, however, cover other financial
products and services that insured banks may offer,
such as stocks, bonds, mutual fund shares, life
insurance policies, annuities or municipal securities.
There is no need for depositors to apply for FDIC
insurance or even to request it. Coverage is automatic.
To
ensure funds are fully protected, depositors should
understand their coverage limits. The below information
has been provided to assist depositors in assessing
their FDIC coverage, including any temporary coverage
increases and/or special types of coverage made
available by recent changes in FDIC regulations.
Basic
FDIC Deposit Insurance Coverage Limits
(Including Temporary Coverage Amount
Increases)* |
Types
of Ownership Categories |
Coverage
Amounts Per Ownership Category |
Single
Account (one owner) |
$250,000
per owner |
Joint
Account (two or more owners) |
$250,000
per co-owner |
| IRAs
and certain other retirement accounts |
$250,000
per owner |
Revocable
or Irrevocable Trust Accounts
("in-trust
for" or ITF; "payable on
death" or POD)
|
$250,000
per owner per beneficiary subject
to sepcific
limitations
and requirements
|
Corporation,
Partnership and
Unincorporated
Association
Accounts |
$250,000
per corporation, partnership or
unincorporated
association |
Employee
Benefit Plan Accounts |
$250,000
for the non-contingent, ascertainable
interest of each participant |
Government
Accounts |
$250,000
per official custodian |
| *On
January 1, 2014, the standard coverage
limit will return to $100,000 for all
ownership categories except IRAs and certain
Retirement Accounts, which will continue
to be insured up to $250,000 per owner. |
Transaction
Account FDIC Deposit Insurance Coverage
(Special
and Temporary Type of Coverage)**
|
Types
of Transaction Accounts Covered |
Coverage
Amount |
Non-interest
bearing checking accounts, personal
or business |
Unlimited
coverage for total account balance |
| Interest
On Lawyers Trust Accounts (IOLTAs) |
NOTE:
Non-interest bearing account balances
are guaranteed on an account level.
Do not include these balances in your
assessment for all other types of accounts,
which must be grouped by ownership category
as shown in the Basic Coverage chart
|
Interest
bearing checking accounts with interest
rates at or below 0.50% where the institution
has committed to maintain the rate at
or below 0.50%*** |
| **Unlimited
deposit insurance coverage is available
through December 31, 2010 for non-interest
bearing transaction accounts at institutions
participating in FDIC's Transaction
Account Guarantee Program, established
under the Temporary Liquidity Guarantee
Program. Alliance Bank has chosen to participate
in this program. On January 1, 2011, this
law provides that the above special coverage
will no longer be available, however the
rule gives the Board of Directors of the
FDIC discretion to extend the program
to the end of 2011 without additional
rulemaking.. |
| ***As
per the Deposit Account Disclosure provided
to you at account opening, interest bearing
checking accounts have variable interest
rates established by Alliance Bank. Thus,
interest bearing checking accounts held
at Alliance Bank are not covered by the
TAGP. |
Transaction
Account Guarantee Program FAQs
What
is the "Transaction Account Guarantee Program"?
The
Transaction Account Guarantee Program (TAGP) is
part of the FDIC's Temporary Liquidity Guarantee
Program (TLGP). The program was created October
14, 2008. The FDIC approved a final rule for the
program on November 21, 2008. The program was
created to strengthen confidence and encourage
liquidity in the banking system. The TAGP is the
portion of the program that establishes rules
for the temporary and unlimited guarantee, by
the FDIC, of certain types of non-interest bearing
transaction accounts. The temporary guarantee
is in place through December 31, 2010 at participating
FDIC-insured institutions.
Alliance
Bank has opted to participate in this program.
What does that mean?
All
FDIC member banks were automatically enrolled
in the program on October 14, 2008 and were given
until December 5, 2008 to decide whether to remain
in the program or opt-out. Alliance Bank, in an
effort to provide its customers with every resource
available for governmental protection of their
deposits, made a decision to remain in the TAGP.
This program was subsequently extended to December
31, 2010.
Is
Alliance Bank in trouble, or is the bank seeking
assistance from the government through this program?
Alliance
Bank has chosen to participate in this program
to provide its customers with the maximum protection
offered by the FDIC. The TAGP is not an assistance
or "bail-out" program, nor does bank
participation imply that the bank is in trouble.
Alliance Bank is a "well-capitalized"
institution.
What
types of accounts are affected by the TAGP and
how much is covered?
- Non-interest
bearing checking accounts, personal and business;
- Interest
On Lawyer's Trust Accounts (IOLTAs), regardless
of the interest rate;
- Interest
bearing checking accounts with interest rates
at or below 0.50%,where
the institution has committed to maintain the
rate at or below 0.50% through 12/31/10.
When
can a customer obtain more information about the
TAGP or any provision of the parent TLGP program
or other changes to deposit insurance coverage?
Alliance
Bank is committed to providing customers with
the most up-to-date information about governmental
actions that may affect their accounts.
To
see information about recent changes to deposit
insurance, please visit the following web page:
http://www.fdic.gov/deposit/deposits/changes.html
To
see the FDIC's frequently asked questions
about the TLGP, please visit the following web
page:
http://www.fdic.gov/regulations/resources/TLGP/faq.html
Where
can Alliance Bank customers go for further assistance?
Call
the FDIC's Customer Assistance Center at 1-877-ASK-FDIC
(1-877-275-3342)
