Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Edit/Add. Bankrate's angle is for business account coverage, but it also mentions other coverages in passing. So, some details are overlooked - such as that the trust accounts (including POD/TOD) at the same bank are now limited to $1,250,000 as of 4/1/24. https://edie.fdic.gov/rulechange.html
FDIC is important in my world of investing, with my use of CDs and banks in general. I am now starting to venture into Credit Unions, where the SIF insurance is the FDIC counterpart for government protection. For older Fixed Income investors, there are vivid memories of the 2007/2008 financial crisis, and the many banking failures. I had CDs in numerous banks that failed during that financial crisis periods, and so now I try to use Deposit Insurance tools to evaluate the financial health of banks, in addition to making sure I stay within the limits of FDIC and SIF insurance, for each bank/credit union I use.
FDIC started in 1933, NCUA in 1934. While the FDIC has taken the lead in banking regulations that are more complex, the NCUA has followed with similar actions applicable for credit unions (CUs). The basic idea is not to create confusion or doubt among the consumers about the safety of banks & credit unions.
A recent example is the changes in coverage for trust accounts on 1/1/24 (see OP link). The NCUA has followed with corresponding actions in September 2024 (my bold text).
"Final Rule Simplifies Share Insurance Regulations; Aligns with FDIC Coverage of Trust Accounts The NCUA unanimously approved a final rule(Opens new window) that simplifies the NCUA’s share insurance regulations by establishing a “trust accounts” category. The trust accounts category would provide Share Insurance Fund coverage of funds in both revocable and irrevocable trusts deposited at federally insured credit unions in the accounts of members or those otherwise eligible to maintain insured accounts. The rule aligns the Share Insurance Fund coverage provided to federally insured credit union members’ revocable and irrevocable trust accounts with the coverage provided to consumers who maintain revocable and irrevocable trust accounts at federally insured banks.
“This final rule simplifies the share insurance regulations and brings the National Credit Union Share Insurance Fund and the Federal Deposit Insurance Corporation’s Deposit Insurance Fund into greater alignment,” Chairman Harper said. “That’s a positive change not only for credit union staff who will have streamlined procedures when working on such trust accounts, but it’s also a benefit for credit union members who will better understand their coverage options.”
The final rule also provides:
Consistent share insurance treatment for all mortgage servicing account balances held to satisfy principal and interest obligations to a lender. More flexibility for the NCUA to consider various records in determining share insurance coverage in liquidations. The changes to the trust account and mortgage servicing account provisions in the NCUA’s Share Insurance Fund regulations align with changes the FDIC previously adopted, which took effect on April 1, 2024.
The changes to the Share Insurance Fund coverage of trust accounts are effective on December 1, 2026. The changes related to the Share Insurance Fund coverage of mortgage servicing accounts and the records the NCUA considers are effective 30 days following publication in the Federal Register."
Comments
Thank you. Must know info for all.
FDIC started in 1933, NCUA in 1934. While the FDIC has taken the lead in banking regulations that are more complex, the NCUA has followed with similar actions applicable for credit unions (CUs). The basic idea is not to create confusion or doubt among the consumers about the safety of banks & credit unions.
A recent example is the changes in coverage for trust accounts on 1/1/24 (see OP link). The NCUA has followed with corresponding actions in September 2024 (my bold text).
"Final Rule Simplifies Share Insurance Regulations; Aligns with FDIC Coverage of Trust Accounts
The NCUA unanimously approved a final rule(Opens new window) that simplifies the NCUA’s share insurance regulations by establishing a “trust accounts” category. The trust accounts category would provide Share Insurance Fund coverage of funds in both revocable and irrevocable trusts deposited at federally insured credit unions in the accounts of members or those otherwise eligible to maintain insured accounts. The rule aligns the Share Insurance Fund coverage provided to federally insured credit union members’ revocable and irrevocable trust accounts with the coverage provided to consumers who maintain revocable and irrevocable trust accounts at federally insured banks.
“This final rule simplifies the share insurance regulations and brings the National Credit Union Share Insurance Fund and the Federal Deposit Insurance Corporation’s Deposit Insurance Fund into greater alignment,” Chairman Harper said. “That’s a positive change not only for credit union staff who will have streamlined procedures when working on such trust accounts, but it’s also a benefit for credit union members who will better understand their coverage options.”
The final rule also provides:
Consistent share insurance treatment for all mortgage servicing account balances held to satisfy principal and interest obligations to a lender.
More flexibility for the NCUA to consider various records in determining share insurance coverage in liquidations.
The changes to the trust account and mortgage servicing account provisions in the NCUA’s Share Insurance Fund regulations align with changes the FDIC previously adopted, which took effect on April 1, 2024.
The changes to the Share Insurance Fund coverage of trust accounts are effective on December 1, 2026. The changes related to the Share Insurance Fund coverage of mortgage servicing accounts and the records the NCUA considers are effective 30 days following publication in the Federal Register."
https://ncua.gov/newsroom/press-release/2024/board-approves-final-rules-fair-hiring-banking-and-simplification-share-insurance-trust-accounts
https://ncua.gov/newsroom/speech/2024/ncua-chairman-todd-m-harper-statement-ncuas-final-rule-simplify-share-insurance-coverage