The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) has gotten a lot of press lately because it represents the biggest reform of Wall Street in quite some time. While the pundits will surely be debating the strengths and weaknesses of the bill, what it went too far on and what it erroneously avoided, one part of the bill touches each and every one of us in a meaningful way – deposit insurance limits.
For years, the FDIC and NCUA insurance limits were set at $100,000. During the economic crisis, this protection limit was raised to $250,000 (in October 2008) to help assuage the fears of many Americans who “ran” on their banks, not realizing in many cases it was the run itself that killed the bank. The limit was raised to $250,000 temporarily, set to expire by 2013, but the Wall Street Reform and Consumer Protection Act, signed on July 21st, 2010, has made this limit permanent.
In fact, the act made the limit retroactive to January 1st, 2008 to the benefit of 9,000 depositors who had more than $100,000 at banks that failed between January and October 2008.
It will be interesting to see how the other parts of the bill play out in the wild.