FDIC approves temporary unlimited coverage

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Today, the Federal Deposit Insurance Corporation approved temporary unlimited insurance coverage for noninterest-bearing transaction accounts.

For accounts such as traditional checking accounts – for individuals or businesses – the coverage is effective Dec. 31 through the end of 2012.

This insurance is separate from, and in addition to, coverage provided for deposits on other accounts.

Although the new temporary provision is similar to the FDIC’s Transaction Account Guarantee Program, or TAGP, it differs significantly in the definition of “noninterest-bearing transaction account.” The TAGP, which expires Dec. 31, includes low-interest negotiable order of withdrawal, or NOW, accounts and Interest on Lawyer Trust Accounts, or IOLTAs.

The final rule states that NOW and IOLTA accounts are not covered under the Dodd-Frank Act definition of noninterest-bearing transaction accounts, and thus do not qualify for temporary unlimited coverage.