Are Your Bank Deposits Really FDIC Insured?
With 9 bank failures just this year, the Federal Deposit Insurance Corporation is considering borrowing money for “working capital”. The failure of Indy Mac will, according to CNN, require $9 billion of the FDIC Bank Insurance Fund’s $54 billion that guarantees deposits of up to $100,000 in FDIC insured banks. Many people do not realize that amounts over $100,000 (even among several accounts) in any one bank are usually not insured. According to the FDIC website: “If a depositor's accounts at one FDIC-insured bank or savings association total $100,000 or less, the deposits are fully insured. A depositor can have more than $100,000 at one insured bank or savings association and still be fully insured provided the accounts meet certain requirements. In addition, federal law provides for insurance coverage of up to $250,000 for certain retirement accounts.”
In most cases non retirement account deposits over $100,000 are not insured. Most of the depositors at Indy Mac with more than $100,000 have to await the sale of the bank's assets to recover more than $100,000 and will probably not receive their full deposits.
One key issue for outfitters is the FDIC insured status of their credit card processing accounts. Outfitters should verify that their deposits, while being processed, are FDIC insured and not deposited with a third party processor without FDIC insurance. In the 90's when some uninsured processors went under, several outfitters lost substantial deposits because these deposits were withheld and not FDIC insured when the processor began having trouble. Some processors promising unbelievably low rates may be offering teaser rates or may not have insured deposits. We recommend that you read the fine print of any processing agreement. One outfitter who joined another program learned later that he had to have an invoice for every charge in order to get the low rate promoted. His actual processing rates were significantly higher. Lesson: read the fine print.
For a fact sheet on FDIC insurance go to: http://www.fdic.gov/deposit/Deposits/insured/faq.html. Or call 1-877-ASK-FDIC (1-877-275-3342 from 8am until 8pm (Eastern Time) Monday through Friday.
You will likely hear a lot about “troubled” banks in the near future, although the number is still relatively small at this point. On August 26, 2008, Federal Deposit Insurance Corporation Chairwoman Sheila C. Bair said the FDIC’s list of troubled banks grew to 117 institutions from 90 at the end of the first quarter and that she expected the number to rise even higher. The FDIC thinks most future bank failures will be smaller banks. Currently, the number of troubled banks is small compared to the 8,431 insured by the FDIC. But the FDIC is raising premium rates to banks to rebuild their reserve fund for depositor’s insurance.
The Federal Deposit Insurance Corporation is required by law to maintain a reserve ratio of no less than 1.15% of total insured deposits. According to CNN Money.com that ratio fell to 1.01% of deposits in July after the failure of Indy Mac, prompting the increase in premiums to shore up the FDIC insurance fund. The $44 billion reserve fund to cover insured deposits from failed banks is relatively small compared to the $4 trillion in total insured deposits. Some critics claim the FDIC reserve fund will not be adequate and will have to be re-capitalized by Congress.
From the FDIC website:
"The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities. With insurance funds totaling more than $44 billion, the FDIC insures more than $3 trillion of deposits in U.S. banks and thrifts – deposits in virtually every bank and thrift in the country."
The FDIC does not release the list of “troubled banks”, but publicly-traded companies and banks do have ratings of the accounting and governance risks that can be found on Forbes.com and other sites. For larger outfitting operations with several hundred thousand in cash, managing several accounts can be a hassle, so discuss the situation with a trusted, certified financial advisor before taking any action.
This article is not meant to provide financial or legal advice. Decisions regarding investments or banking should be made after consulting qualified, certified financial advisors.
Forest Service Not Using Recreation Fees in Transfer of $400 Million to Fire Program
As you know, the transfer of $400 million to fire program is requiring the Forest Service to withdraw funds for other programs until the end of the current fiscal year (October 1). The programs impacted do not include recreation fees, however. Those fees should remain intact for recreation related projects although some rangers complain that they are transferred to non recreation uses in some Forests. Projects impacted by the withdrawal of funds include:
* Rescinding or delaying grants and agreements and canceling contract awards made to stakeholder groups, non-profits, communities and States, resulting in programs not delivered to citizens and loss of jobs; and
* Unable to fund 168 joint venture agreements with universities, and postponing the hiring of graduate students and researchers who assist with priority Forest Service research;
* Delaying data collection for on-going research and project analyses scheduled for this specific time of year, thus affecting project deadlines and targets into the next year;
* Discontinuing work on many construction, research and natural resource improvement projects including watershed restoration, water quality and habitat improvement, thinning to reduce fire risk, and evaluating oil, gas and other energy requests.
AO Members Save 20% on QuickBooks Retail Management and Point of Sale Software
To save 20% on QuickBooks Point of Sale Software and Hardware go to: QuickBooks.Intuit.com.
Check out the Free Business Reports in Member Resources
AO Members Save 10% on Adventures in Travel Expo Exhibitors
America Outdoors has partnered with Adventures in Travel Expo to offer a 10% discount on exhibit space for new exhibitors. To inquire about the shows and booth space call 203-878-2577 x 108 or email firstname.lastname@example.org. Visit www.adventureexpo.com for dates and locations. **Discount does not apply to already contracted exhibitors in 2008/2009 Adventures in Travel Expo shows.
Save 20% on Registration for AO’s 20th Anniversary Marketing and Management Conference
Register now and make your airline reservations for AO 20th Anniversary Marketing and Management Conference (Confluence) and save $75. All the information you need to make your travel arrangements can be found at http://www.americaoutdoors.org/confluence.htm
AO Members Featured in USA Today
Today’s issue of USA Today includes a feature on multi-sport family vacations provided by AO member The World Outdoors. Additional AO members were listed in the side bar of the article. http://www.usatoday.com/travel/destinations/2008-08-28-multisport-vacations_N.htm Pocono Whitewater is cited in another article in the Travel Section on “stay vacations”. Pocono reports that their business is up 5% over last year due to travelers staying close to home. http://www.usatoday.com/travel/news/2008-08-28-staycation_N.htm