Holy crap!!
Financial Times
The new General Counsel’s Opinion No. 8 addresses the issue of whether the funds underlying stored value cards and other nontraditional access
mechanisms qualify as "deposits" as defined in the Federal Deposit Insurance Act.
Under the new opinion, the funds will be “deposits” to the extent that the funds have been placed at an insured depository institution.
Consequently, the funds will be subject to assessments. Also, the funds will be insured (up to the insurance limit).
In applying the insurance limit to a pooled custodial account, the FDIC will recognize the holders of the stored value cards (or other access
mechanisms) as the owners of the deposits if the FDIC’s standard requirements for “pass-through” insurance coverage have been satisfied.
Otherwise, the card distributor or other named accountholder will be recognized as the owner.
Freaking GIFT CARDS are now insured as deposits by the FDIC - up to the $250k limit!!!!
Seriously.
Here is the Fed's definition of "stored value cards" and
here is the report from the Fed. The important bit is down towards the bottom
of the page where they say
"Under the new opinion, all funds underlying stored value products will be treated as "deposits" to the extent that
the funds have been placed at an insured depository institution."
So when retailers go bust, the FDIC will be there to cover any funds in gift cards and such because it's assumed that the retailer deposited the
money you paid for the gift card into an insured bank. In other words - you buy your Mom a $50 gift card to Bath & Body Works, B&BW deposits that $50
into their bank account, and as such the gift card funds are insured.
No more need to be careful of giving gift cards this year.
Who's paying for this additional FDIC coverage, you may be asking?
Thanks to the bailout,
it sure ain't banks. I guess that leaves
only one group of people on the hook. You guess who that is.
[edit on 11/13/2008 by anachryon]
