FDIC retirement account insurance upped: $250K

Filed under: Banking & Finance |

The Federal Deposit Insurance Corp. Board of Directors has approved increasing the deposit insurance coverage on certain retirement accounts at a bank or savings institution from $100,000 to $250,000.

The increase, the result of a new law boosting federal deposit insurance coverage for the first time in more than 25 years, will become effective on April 1. The basic insurance coverage for other deposit accounts will remain at $100,000.

“The increase in deposit insurance coverage on certain retirement accounts is a significant change,” said Martin J. Gruenberg, acting chairman of the FDIC. “The FDIC is committed to helping depositors understand clearly the change that has been made and how it will affect the deposit insurance coverage for which they are eligible.”

Under the FDIC’s new rules, up to $250,000 in deposit insurance will be provided for the money a consumer has in a variety of retirement accounts, primarily traditional and Roth IRAs (Individual Retirement Accounts), at one insured institution. Also included are self-directed Keogh accounts, “457 Plan” accounts for state government employees, and employer-sponsored “defined contribution plan” accounts that are self-directed, which are primarily 401(k) accounts. In general, self-directed means the consumer chooses how and where the money is deposited.

In addition, the IRAs and other retirement accounts that will be protected under the new rules to $250,000 are insured separately from other accounts at the same institution that will continue to be insured up to at least $100,000.

New online resource center

Compass Bank has launched a new online resource center for small and mid-sized businesses.

The Compass BusinessClass Resource Center will offer a variety of news and management information about topics of interest to owner-managers.

“This new resource center is an important addition to our BusinessClass service platform,” said Chris Sakaguchi, executive vice president and director of business banking and national sales. “BusinessClass services – such as dedicated teller lines and special telephone assistance lines – are designed to enhance the efficiency and competitiveness of clients, and the information provided within the resource center will add significantly to this mission.”

The BusinessClass program was launched in March 2005 and includes information about management topics such as finance, marketing and human resources, as well as business news.

Great Southwest expands

Great Southwest Mortgage has expanded into Colorado with 12 branches.

“When the opportunity presented itself to expand into Colorado, the move just seemed natural. When something seems that natural, it tends to be right,” said Erik Lutz, president of Great Southwest Mortgage.

Great Southwest Mortgage will have branches in Denver, Colorado Springs, Fort Collins, Loveland, Englewood, Highlands Ranch and Centennial.

The company has grown from five employees in 1995 to nearly 1,200 today. In 2005, Great Southwest Mortgage funded more than $3 billion in loans.

GSM funded more than $3 billion loans in 2005, and is the largest underwriter of government-backed residential loans in Arizona.

Lawmakers vs. Wal-Mart bank

According to published reports, a group of more than 30 members of Congress sent a letter last week to the acting chairman of the Federal Deposit Insurance Corp., Martin Gruenberg, asking that Wal-Mart’s application to open an industrial bank be rejected. Wal-Mart is proposing to create the Wal-Mart Bank, an industrial loan company that would be headquartered in Salt Lake City.

The lawmakers say that allowing the world’s largest retailer to start the ILC could threaten the stability of the U.S. financial system, drive community banks out of business and create potential losses for the FDIC if Wal-Mart should face financial troubles that migrate into its banking division.

The FDIC insures deposits at banks.

Wal-Mart has said it would use the bank to handle electronic payment processing.

Industrial banks are state-chartered and state-regulated, but fall under the supervision of the FDIC. Commercial companies may own them because federal laws that bar non-financial companies from engaging in banking activities do not classify them as banks.

Wal-Mart’s request to open the industrial bank has generated a record number of public comments. The FDIC will hold public hearings about the application next month.

On April 10 and 11, hearings will be at the FDIC’s Virginia Square auditorium (Building C), located at 3501 Fairfax Drive, Arlington, Va. On April 25 and 26, hearings will be held at the Overland Park Convention Center (Courtyard Rooms four and five), 6000 College Boulevard, Overland Park, Kan.

This is the first time that the agency has ever scheduled formal public hearings about a bank application.

Written statements will be accepted by the FDIC until March 28. Attendance at the hearing is not required to submit a written statement. Written statements can be delivered to the FDIC by e-mail: publichearing@fdic.gov or mail: Robert E. Feldman, Executive Secretary, 550 17th Street, N.W., Washington, D.C. 20429.

Wal-Mart has said it welcomes the public hearings.

Information about the Wal-Mart Bank federal deposit insurance application, including the public portion of the application and the more than 1,900 comment letters received about the application, is available on the FDIC’s Web site, www.fdic.gov/regulations/laws/walmart/index.html.