What does FDIC cover?

The failure of IndyMac Bank has depositors worrying about what funds are insured by the Federal Deposit Insurance Corporation.  The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation created by the Glass-Steagall Act of 1933.  It provides deposit insurance which currently guarantees checking and savings deposits at member banks up to $250,000 per depositor (previously $100,000).

Specifically, the FDIC insures deposits in checking, savings, money market and time deposits such as certificates of deposits (CDs) up to $250,000 per depositor per insured bank.  A joint account would be insured up to $500,000.  Most retirement accounts are insured up to $250,000.

The FDIC does not insure investments in stocks, bonds, mutual funds, life insurance policies and annuities even if these products were purchased from an insured bank.  The FDIC also does not insure U.S. Treasury bills, bonds or notes.  These government issued investments are backed by the U.S. government.

It is important to know that deposit accounts at different banking institutions are insured up to $250,000 at each banking institution.  So an individual that banks at institution A and also banks at institution B would be insured up to $250,000 at each institution.  (Note: Institution A and B are not branches of the same banking institution.)

Also important to know is that accounts held in different forms of ownership may be separately insured up to $250,000 for each account.  For example, an individual that has a personal checking account and a revocable trust account at the same bank would be insured on $250,000 for each account.  Therefore, it is crucial that accounts are titled properly in order to receive insurance protection.

When a bank fails, as in the case of IndyMac Bank, uninsured accounts over $250,000 can be partially reimbursed after some time, with the money coming from sales of the failed bank's assets.  In the case of IndyMac, the FDIC plans to give customers at least 50 percent of their uninsured deposit amounts.

To verify that all accounts are FDIC insured, contact the FDIC consumer hotline at 1-877-275-3342 or use the deposit insurance calculator at www.fdic.gov.