FDIC Insurance May Cover Previous Losses

Lawmakers worked on changes to FDIC insurance yesterday.  A highlight from discussions is a permanent move to $250,000 of coverage per account.

In addition, the $250,000 may apply retroactively, meaning failures during 2008 will be treated as if the higher limit was in place.  This would make former IndyMac account, among others, quite happy.  The LA Times reports that roughly $180 million in losses would be reimbused:

"Lawmakers estimated the retroactivity would funnel about $170 million in deposit insurance to IndyMac accountholders, with an additional $10 million to depositors at four small banks that also failed in 2008 before the limit was raised."

Congress is expected to approve the proposal this summer.

Further reading:

• How FDIC Insurance Works
• What Happens in a Bank Failure?