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May 20, 2009

FDIC 250k Insurance Limit Extended Through 2013

The $250,000 temporary FDIC insurance limit, which was set to expire on 12/31/09, has now been extended through 12/31/2013.  On January 1, 2014 the insurance limit will revert back to $100,000, except for certain IRA accounts and other certain retirement accounts, which will remain at $250,000.  The Legislation was signed into law on Wednesday May 20, 2009 by the President.  Among other things, the legislation increases the FDIC's borrowing capacity from $30 billion to $100 billion from the Treasury, with emergency funding of up to $500 billion.  































December 16, 2008

Fed Slashes Key Rate in Unexpected Fashion

At its last meeting of this year, the FMOC surprised the markets by slashing the fed funds target rate from 1% to a range of 0.0% to 0.25%. Typically, the Fed cuts or raises rates to a specific level, not a range. This range is something economists did not envision as a possible outcome. In addition, the Fed cut the discount rate by 75 basis points to 0.50%. Although, the new target rate range leaves the Fed with little room for additional moves to stimulate the economy, the Fed said it will use "all available tools" to combat a severe financial crisis and prolonged recession. The committee also made it clear that its key interest rate will likely remain at extraordinarily low levels for some time, given the weak economic environment.

The full FOMC statement can be found at:
http://www.federalreserve.gov/newsevents/
press/monetary/20081216b.htm

October 29, 2008

The Fed Cuts Rates by 1/2 point

As expected, Federal Reserve policymakers cut the fed funds rate today by a half-point, to 1.00%.  In addition, the Fed unanimously agreed to lower the discount rate by a half-point as well to 1.25%.  The last time the fed funds rate was cut to 1.00% was back in June 2003 and remained there until June 2004.  Prior to 2003, the fed funds target rate has not been below 1.00% since 1958 when Dwight Eisenhower was president.  This recent cut is the ninth time the FMOC has reduced the target rate since September 2007.

Below are excerpts from the Federal Reserve's press release:

"The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."

The full press release can be found at:
http://www.federalreserve.gov/newsevents/

October 8, 2008

Emergency Rate Cut by the Fed: .50%

Working in coordination with central banks worldwide, the Federal Reserve cut interest rates by a half percentage point, bringing the fed funds target rate down to 1.50%.  This latest move by the fed was in response to the worsening crisis in the financial markets.

The Fed also lowered the discount rate (the rate at which it lends money to banks and other depository institutions) by a half-point to 1.75%. 

The ECB (European Central Bank) cut its interest rate by a half-point to 3.75%; its first cut in five years.  In addition, central banks in the U.K., Sweden, Switzerland, and Canada also made rate cuts.Working in coordination with central banks worldwide, the Federal Reserve cut interest rates by a half percentage point, bringing the fed funds target rate down to 1.50%.  This latest move by the fed was in response to the worsening crisis in the financial markets. 

The rate cut will lower short term interest rates, thus we will see a steepening of the yield curve.

October 6, 2008

FDIC/NCUA Deposit Insurance Temporarily
Increased to $250,000

Congress has passed the much anticipated financial bailout bill known as the Emergency Economic Stabilization Act of 2008.  The Act includes provisions that temporarily increase the FDIC & NCUA standard maximum deposit insurance amount from $100,000 to $250,000. 
 
The legislation is effective as of October 3, 2008 and ends on December 31, 2009, unless extended.

What this means to you:
 
Whether you're an institution or individual, deposits are insured up to $250,000 per account at FDIC & NCUA insured institutions through 12/31/09.

The full press releases can be found at fdic.gov & ncua.gov.

Basic FDIC Deposit Insurance Coverage Limits

















September 26, 2008

Press Release from the FDIC:
FDIC Simplifies Coverage Rules for Revocable Trust Accounts

The FDIC's Board of Directors today adopted changes to simplify the rules for determining the coverage available on revocable trust accounts – commonly called payable-on-death accounts or living trust accounts. The interim rules, which are effective immediately, eliminate the concept of qualifying beneficiaries, so that coverage is based on the naming of virtually any beneficiary.

Under the revised rules, coverage for the vast majority of account owners generally is based on the number of beneficiaries named in a depositor's revocable trust account(s). The insurance limit will still be based on $100,000 per named beneficiary. For revocable trust account owners with more than $500,000 in such accounts naming more than five beneficiaries, the coverage is the greater of either $500,000 or the sum of all the named beneficiaries' proportional interest in the trusts, limited to $100,000 per different beneficiary.

"We believe the interim rule will not only result in faster deposit insurance determinations after bank closings, but will help improve public confidence in the banking system," said FDIC Chairman Sheila C. Bair. "We strongly encourage owners of revocable trust accounts to make certain that the names of their beneficiaries are included in the bank's records."

The new rules are effective as of today and apply to all existing and future revocable trust accounts at FDIC-insured institutions.