The F.D.I.C. Insurance Limit Raised by authority granted in H.R.1424

Did you know, The F.D.I.C. Insurance Limit Raised by authority granted in H.R.1424
from $100,000.00 to $250,000.00 is only temporary?

As if to avoid panic and assure the safety in bank deposits,
increasing the insured amount per account, - (depends on type) -,
seems like a logicl revision as account balances exceeding
$100.000,00 are common place today compared to when the amount
was originally set.

It does make sense and one feels safer knowing more cash is insured,
so why would this coverage terminate on December 31, 2009?

The temporary insurance seems contrary to the invoking of a feeling of safety
that intices larger bank deposits.

Further, when NEWS articles and reports run segments on this legislation,
it seems that the "temporary status" of the increase is omitted from the
coverage and I would imagine there is a large segment of bank depositers
that are unaware of the termination at years end.

Others may also concur that people have taken advantage of the increase
by increasing their deposit holdings.

This would increase the position of the bank and add much more
liquid cash to the system and banks access that,
prior to had and otherwise, would most likely have been kept in a safe or
under a mattress just as prior to the change.

It is as if the bailouts, toxic instruments and pilfering are not enough.
To get more stored money returns as insurance warrants it safe,
raising the insurance cap would lure stores of cash back to bank deposits.

Once the increase is terminated, the F.D.I.C. will insure the first $100,000.00
once again, and the privately held stores of cash now back in the system will have
been lost, adding caustic salt to the working class's perpetual wound of
getting ripped off and further endangering the now almost extinct middle class.


One article I did manage to find that included the temporary status of the authority
here

Read the entire H.R. 1424 ACT.


Applicable citings:

H.R.1424
To provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy... (Enrolled as Agreed to or Passed by Both House and Senate)


DIVISION A--EMERGENCY ECONOMIC STABILIZATION


SeC. 120. TERMINATION OF AUTHORITY.


(a) Termination- The authorities provided under sections 101(a), excluding section 101(a)(3),and 102 shall terminate on December 31, 2009.

(b) Extension Upon Certification- The Secretary, upon submission of a written certificationto Congress, may extend the authority provided under this Act to expire not later than2 years from the date of enactment of this Act. Such certification shall include a justification of why the extension is necessary to assist American families and stabilize financial markets, as well as the expected cost to the taxpayers for such an extension.

SeC. 136. TEMPORARY INCREASE IN DEPOSIT AND SHARE INSURANCE COVERAGE.

(a) Federal Deposit Insurance Act; Temporary Increase in Deposit Insurance-

(1) INCREASED AMOUNT- Effective only during the period beginning on the date of enactment of this Act and ending on December 31, 2009, section 11(a)(1)(E) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(1)(E)) shall apply with `$250,000' substituted for `$100,000'.

(2) TEMPORARY INCREASE NOT TO BE CONSIDERED FOR SETTING ASSESSMENTS- The temporary increase in the standard maximum deposit insurance amount made under paragraph (1) shall not be taken into account by the Board of Directors of the Corporation for purposes of setting assessments
under section 7(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)).

The $250K limit really ticked off banks in Europe and other continents. Large depositors transferred money where it was guaranteed, and with shaky banks in Iceland, Ireland, UK, Italy, Spain, Russia, etc, money flowed into U.S. banks until other bank guarantees were raised. Singapore has no limit until the end of 2010.

Every dollar you withdraw from a bank (the banking system) reduces their assets by $20. They have to retain 5% depository reserves (somewhere between 4-6 percent these days from my recollection). When a few million flow out of one countries banks into another countries banks, the first country gets ticked.

Whoa, just checked the Federal Reserve depository requirements. It's 0 zero percent for small banks. www.federalreserve.gov...

indeed it's effect is world wide.
As small banks fail in 2010, the losses above 100K will be all the depositers, no matter if they are from other countries or another world.