Over the past few months, there have been several bank failures which underscore the challenging economic conditions currently faced. While the collapse of Silvergate Capital, Silicon Valley Bank, and Signature Bank were triggered by different conditions, the result was the same for each. The federal government was forced to step in, manage the sale of remaining assets, and provide assurance to accountholders no money would be lost as a result of the failure. Unfortunately, the scenario repeated itself again on May 1st, when First Republic Bank was seized and sold to JP Morgan Chase. A recurring theme in these failures was the large number of uninsured deposits and short-term demandable liabilities held by each institution. In the end, it was an uninsured depositor run that caused two of these failures.
Many Atlanta families and companies have become increasingly concerned about the existing situation.To bolster confidence in the banking system and to assuage account holder concerns, the Federal Deposit Insurance Company (FDIC) has proposed an increase in the deposit insurance amount. A report issued earlier this month, Options for Insurance Deposit Reform, outlines three potential reforms to boost confidence. Included are important details about three programs which include Limited Coverage, Unlimited Coverage, and Targeted Coverage. Each varies on the type of eligible accounts and insurance coverage offered. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
It is clear from the report that the FDIC believes targeted coverage would be the best option to provide confidence, program flexibility, and cost management. Although the FDIC can make some changes independently, Congressional approval is required to move to one of these proposed coverage models.. If you have a question about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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