When Financial Businesses Fail: Protection for Account Holders (CRS Report for Congress)
| Release Date |
Revised July 7, 2009 |
| Report Number |
RS21987 |
| Report Type |
Report |
| Authors |
Walter W. Eubanks, Specialist in Financial Economics |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
After the onset of the current financial crisis and economic contraction, the 111th Congress increased some of the long-standing provisions that protect account holders from risk. Specifically, provisions in the Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343) and the Helping Families Save Their Homes Act of 2009 (HFSTHA; P.L. 111-22) increased account holders' protection. Both laws raised the maximum deposit account insurance to $250,000, and the HFSTHA extended the higher level of risk protection until 2013.
Lawmakers have long recognized the importance of protecting some forms of financial savings from risk. Such provisions apply to deposits in banks and thrift institutions and credit union "shares." Remedial and other safety net features also cover insurance contracts, certain securities accounts, and even defined-benefit pensions. Questions over how to fund and guarantee Social Security, along with the troubles of the Pension Benefit Guaranty Corporation, have renewed interest in these arrangements.
This report portrays the salient features and legislation of account protection provided by the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Share Insurance Fund (NCUSIF), state insurance guaranty funds, the Securities Investor Protection Corporation, and the Pension Benefit Guaranty Corporation. It provides a discussion of the FDIC's Temporary Liquidity Guarantee Program (TLG) , which extends unlimited temporary deposit guarantees to certain depositors and debt held in insured depository institutions. Overall, the report provides a summary of the major federal risk protections for account holders.
This report will be updated as appropriate.
