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Date: May 21, 2008
Ref No: SCC2008W-006073-0
Dear Mr. Hazel:
Thank you for contacting the FDIC.
FDIC deposit insurance only covers deposits in the event an insured bank is closed by its chartering authority. FDIC insurance coverage does not cover losses due to fire, theft, flood, or fraud, although these are subject to other protections, such as a bank's hazard and casualty insurance.
Federal law requires the FDIC to pay deposit insurance "as soon as possible" after an insured bank fails. The FDIC places a very high importance on ensuring that depositors have quick and easy access to their insured deposits immediately after a bank fails. Historically, the FDIC pays insurance within a few days after a bank closing, usually the next business day, by either (1) providing each depositor with a new account at another insured bank in an amount equal to the insured balance of their account at the failed bank, or (2) by issuing a check to each depositor for the insured balance of their account at the failed bank.
Some deposits that exceed $100,000 and are linked to trust documents or deposits established by a third party broker may have a short wait so that their accounts can be reviewed to determine the amount of deposit insurance coverage available to them. The amount of time involved depends on how long it takes for the depositor to provide supplemental information to the FDIC so that we can complete the insurance determination.
If a depositor has uninsured funds they receive the insured portion of their funds quickly, as described above. They may also, however, recover some portion of their uninsured funds (their remaining claim on the failed bank) from the proceeds from the sale of failed bank assets. It can take several years to sell off the assets of a failed bank. As assets are sold, however, depositors who had uninsured funds usually receive periodic payments (on a pro-rata "cents on the dollar" basis) on their remaining claim.
I hope this information is helpful.
Federal Deposit Insurance Corporation
Division of Supervision and Consumer Protection
550 17th Street, N.W.
Washington, DC 20429
As part of our ongoing efforts to improve our service to the public, we would appreciate it if you would complete a short questionnaire on the level of service you received from this office. The questionnaire form can be accessed at: www2.fdic.gov...