I've gotten a number of requests for information about the scope of FDIC/SIPC coverage.
The FDIC protects you against the loss of your deposits if an FDIC-insured bank or savings association fails. FDIC coverage is limited to certain dollar amounts (see below).
The SIPC program is quite different in that the government insists it's not really insurance. Subject to certain limitations, SIPC will actually work to return your cash, stock and other securities if they go "missing" because your brokerage is closed due to bankruptcy or other financial difficulties.
With respect to either program, how you would benefit depends on your particular facts and circumstances. This blog entry will point you to the resources you need to have the confidence you seek.
FDIC: If you are interested in calculating your FDIC coverage, you can find everything you need by clicking the following link to the FDIC website. You'll see that in some circumstances, having an account in a living trust can multiply your insurance coverage. You'll also see that thanks to the law President Bush signed on October 3, 2008, the basic limit on FDIC coverage has jumped from $100,000 to $250,000 per depositor. The $100,000 limit will return on January 1, 2010.
In case you're wondering, the FDIC does not cover credit unions. Fortunately, that's not a problem because another independent federal agency, the NCUA, insures participating credit union deposits on precisely the same terms as the FDIC. Click the following link to go to the NCUA website and calculate your coverage if you have deposits at a participating credit union.
SIPC: If you want to know how the SIPC protects you, click on the following link to the SIPC website. You'll see that if the SIPC cannot get your property back after a brokerage goes bankrupt, it will supplement what it can get for you up to $500,000 for securities and $100,000 for cash.
© 2008 Brian D. Wyatt, A Professional Corporation (All Rights Reserved)
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