Deposits to Foreign Branches of U.S. Banks not to be FDIC insured?

Well this is interesting. How many people overseas invest with U.S. banks or have deposits with U.S. Banks thinking it gives them some level of protection or stability? This isn't talking about a Bank as a whole but branches. Hmm.. That makes it pretty specific. I wonder how broadly they plan on announcing this?

WASHINGTON (CN) - The Federal Deposit Insurance Corporation has proposed a change to its regulations on deposits made in foreign branches of U.S. banks.

The proposed rule would "explicitly state that an obligation of an insured depository institution that is carried on the books and records of a foreign branch shall not be an insured deposit for the purpose of the deposit insurance regulations, even if the obligation is payable both at an office within the United States and outside the United States. This would ensure that the FDIC will be able to carry out its critical mission in the United States, and the DIF will be protected from potential global liability."

Source

I'm not sure how large a change that represents to how it's been, as I'm hardly a Jet-setter, off on trips around the world where I need worry about foreign accounts or anything.

I imagine it's more than just rich folk in other nations who use branches of U.S. labeled banks in the belief of security though? I know the FDIC isn't doing well and an App on my phone is constantly showing new failed banks they've had to handle or assume control of on a regular basis.

This seems a harsh way to consider handling it unless it's announced very far and wide. What damage would that have on foreign deposits within U.S. banks if it were announced as widely as possible though? Something of a catch-22 I'd think?

reply to post by Wrabbit2000




Buddy....Does it even matter?

Check this out.........

Insured institutions are required to place signs at their place of business stating that "deposits are backed by THE FULL FAITH AND CREDIT OF THE UNITED STATES GOVERNMENT."[3]

en.wikipedia.org...

reply to post by solarstorm

I'd say it matters quite a bit to someone in London or Glasgow who has family or friends here by way of connection. Whatever that may be, actually. If the bank fails and they get stiffed for a life savings they mistakenly missed the rule change for protection on...I'd say it means a great deal.

I know it's easy to be cynical sometimes......but these little things tend to destroy real people who get caught in the cracks. Real people who didn't do anything to deserve or need to get squashed. This seems like a cheap way to cut liability to the FDIC.