On January 18, 2011, the FDIC approved a final rule to include Interest on Lawyer Trust Accounts (IOLTAs) in the temporary unlimited deposit coverage for noninterest-bearing transaction accounts. By no later than February 28, 2011, each depository institution that offers noninterest-bearing transaction accounts must prominently post the following notice in the lobby of its main office, in each domestic branch and, if it offers Internet deposit services, on its website:
NOTICE OF CHANGES IN TEMPORARY FDIC INSURANCE COVERAGE FOR TRANSACTION ACCOUNTS
All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules. The term “noninterest-bearing transaction account” includes a traditional checking account or demand deposit account on which the insured depository institution pays no interest. It also includes Interest on Lawyers Trust Accounts (“IOLTAs”). It does not include other accounts, such as traditional checking or demand deposit accounts that may earn interest, NOW accounts, and money-market deposit accounts.
For more information about temporary FDIC insurance coverage of transaction accounts, visit ww.fdic.gov.
On a side note, the FDIC just issued FIL-2-2011 which advises insured depository institutions that these changes will affect the completion of December 31, 2010 Call Reports. The 12/29/10 amendment did not change NCUSIF coverage. Call reports are not our area of expertise but we felt this information would still be beneficial.