HomeInvestmentsIncrease in FDIC Limits? Who Cares?

Increase in FDIC Limits? Who Cares?

CNBC has highlighted the major pork add-ons in the 2nd bail out bill bumping it up to a slim 400 pages!  There is one that is getting a lot of press, but I am confused why.  CNBC highlights that,

The Federal Deposit Insurance Corp’s current insurance limit on bank deposits would rise to $250,000 per account from $100,000. The FDIC also would receive temporary unlimited borrowing authority from the Treasury under the bill. The measure is intended to boost banking system confidence and could be well-received in wealthier Republican congressional districts.

I think the interpretation of the Federal Deposit Insurance Corporation’s have been discussed ad nauseum in personal finance blogs (herehere, and here) and on your fav. newspaper/website – heck, even the Federal Government has hired a spokeswoman (who I am NOT a fan of) to pump up their calculator here.    But for purposes of efficiency lets just look at the main purpose (as it stands today) provided by the FDIC,

The basic insurance amount is $100,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $100,000. The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.

Read carefully, per depositor, per insured bank by simply altering title you could have hundreds of thousands of dollars protected at each bank!  This doesn’t even take into Retirement Accounts (which are covered up to $250,000) or revocable trusts (recently updated up to a maximum of $500,000!)

With all that being said – doesn’t America have a low to no savings rate?  I found the following graph at theBureau of Economic Analysis:

Personal Savings Rate
Personal Savings Rate

Luckily, savings has been increasing but with less than 3% of income being saved – how many Americans have over $100,000 in a liquid savings (take note that this has nothing to do with investments that is SPIC)? So why is this getting any press!?



  1. Steve,

    Thanks for the comment (nice blog by the way). 30% of all deposits not being insured is absolutely press worthy, but I don’t think most people understand how uneffected they are by the increase in the limit.

    I guess my point is – the owners of that 30% are probably the top 4% of Americans in terms of wealth…so there is no reason for 70% of Americans to care about the issue (similar to the Estate Tax). Those %s are made up just trying to make a point.


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