As discussed in our recent seminar entitled "The Financial Crisis - What Every Board Member Needs to Know," the FDIC Insurance limit on bank accounts was increased from $100,000 to $250,000. This increased limit was set to expire on December 31, 2009. However, the FDIC recently extended the higher insurance limit of $250,000 through December 31, 2013. An association's board would be wise to make certain that no more than $250,000 of association funds are in any one FDIC Institution.
It is also crucial that all association funds are deposited in an FDIC insured account. As of July 11, 2009, fifty-three (53) banks have failed nationwide. If a bank fails and its accounts are FDIC insured, the FDIC will reimburse the account holder for the amount in the institution, up to $250,000. If funds are placed in non-FDIC insured accounts, when a bank fails, the account holder could lose all deposited funds.
In light of the above, association boards are clearly fulfilling their obligation to the owners by making certain that association funds are deposited only in FDIC insured accounts and in an amount no greater than $250,000 in any one institution.