<<Are you saying that what is in a box is the bank's, just like a deposit in a sivings account?>>
Tom, the short answer is no - and that is the reason why it is not covered. Only "deposits" are covered by the FDIC insurance plan and what you put inside your safety deposit box is not a "deposit" according to the FDIC. You will not find this information on the FDIC web site or in any of their brochures that I have seen. And my guess is that if you asked most bankers they would get the answer wrong.
What you put in your safety deposit box remains your property - the bank is only obligated for its safekeeping. This is not insured by the FDIC.
When you put money in a checking account or a savings account the bank is legally obligated to return that amount of money to you plus the amount of interest specified in your deposit account agreement. This is insured by the FDIC.
Look at it this way. If something happens to the money in your checking account (up to $100k) that is backed by the full faith and credit of the US Gov't even if the bank fails. If something happens to the contents of your safety deposit box (fire, theft, whatever) your remedy is solely against the bank itself. And if the bank is belly-up you have to go to the receiver and stand in line with the bondholders, shareholders and every other unsecured creditor.
I will post the language from the case I was talking about tomorrow from the office.
Here is some language from the FDIC website and a link:
<<. What types of deposits are insured?
All types of deposits received by a financial institution in its usual course of business are insured. For example, savings deposits, checking deposits, deposits in NOW accounts, Christmas Club accounts, and time deposits (including certificates of deposit, which are sometimes called "CDs") are all insured deposits. Cashiers' checks, officers' checks, expense checks, loan disbursement checks, interest checks, outstanding drafts, negotiable instruments and money orders drawn on the institution also are insured. Collectively, these types of instruments are referred to as "official checks." Certified checks, letters of credit, and travelers' checks, for which an insured depository institution is primarily liable, also are insured when issued in exchange for money or its equivalent, or for a charge against a deposit account.
5. Does federal deposit insurance cover Treasury securities?
Treasury securities (bills, notes, and bonds) purchased by an insured depository institution on a customer's behalf are not insured by the FDIC. However, they remain the property of the customer. When an insured financial institution is closed and the FDIC is named its receiver, the customer has two options. First, the customer can present a receipt documenting to the FDIC's satisfaction his or her ownership rights. The FDIC as receiver will give the customer a release that the customer can present to a Federal Reserve Bank or the Department of the Treasury to prove ownership. Alternatively, the FDIC as receiver can hold all Treasury securities and make a distribution upon maturity in the same manner and extent as the closed institution would have done.>>
fdic.gov |
