The FDIC Board of Directors today adopted changes that will make
it easier to understand the agency's deposit insurance rules. The
changes will benefit consumers and bankers.
"Deposit insurance simplification is one more example of the FDIC's
efforts to eliminate burdensome regulations without reducing protections
for consumers or safety and soundness standards for institutions,"
said FDIC Chairman Andrew C. Hove, Jr. "The public can only benefit
from having a better understanding of the deposit insurance rules."
The Board approved inserting into the rules a variety of straightforward,
easy-to-understand examples illustrating how deposit insurance applies
to the three basic types of accounts owned by consumers. The examples
will help the depositor read the rules and quickly understand what
insurance coverage he or she has (or would have) at an FDIC-insured
bank or thrift.
The three basic types of accounts are individual accounts (owned
only by one person, including a sole proprietor of a business),
joint accounts (owned by two or more people and all parties have
equal rights to withdraw money) and payable-on-death accounts (where
the owner indicates that upon his or her death the funds will pass
to a spouse, child or grandchild).
In addition, the Board today adopted three substantive revisions
to the insurance rules. These changes:
Give the FDIC more flexibility to insure third-party deposits
made by law firms, real estate agents, title companies and other
businesses on behalf of their customers;
Provide a six-month grace period after a depositor's death for
beneficiaries to rearrange inherited accounts if necessary to
avoid going over the $100,000 insurance limit; and
Clarify the insurance coverage of "living trust accounts," a
type of trust account that an owner can cancel or change during
his or her lifetime.
The new rules, which go
into effect July 1, 1998, are substantially the same as a proposal
the Board authorized for public comment in April 1997. When the
original proposals were announced last year, the Board also instructed
FDIC staff to study the implications of revising the rules governing
joint accounts and payable-on-death accounts as part of the overall
simplification effort. The results of that study are expected to
be presented to the Board in the near future.
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created the Federal Deposit Insurance Corporation in 1933 to restore
public confidence in the nation's banking system. The FDIC insures
deposits at the nation's 11,027 banks and savings associations and
it promotes the safety and soundness of these institutions by identifying,
monitoring and addressing risks to which they are exposed.
releases and other information are available on the Internet at
www.fdic.gov , and may also be
obtained through the FDIC's Public Information Center (800-276-6003
or (703) 562-2200).