FDIC May Extend Coverage of Some Deposits

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According to American Banker, the Federal Deposit Insurance Corp. may extend its blanket coverage for noninterest deposits, currently scheduled to expire at year end. Business customers often keep checking account balances that exceed FDIC coverage limits on insured deposits in order to meet payroll and other large obligations. The FDIC provided this guarantee in the fourth quarter of 2008 as the financial crisis deteriorated. The FDIC is said to be concerned that if it fails to provide assurances that it intends to extend the program, business customers might begin to withdraw funds and split accounts across a number of insured banks, creating some unnecessary uncertainty in the banking and business systems. Small businesses that have accounts exceeding FDIC coverage requirements should watch the FDIC website for developments in this matter to ensure that their deposits remain within coverage limits.