Government Accounts
(12 C.F.R. § 330.15)

Definition
Government accounts are also known as public unit accounts. This category includes deposit accounts of:

• The United States



• Any state, county, municipality (or a political subdivision of any state, county, or municipality), the District of Columbia, Puerto Rico and other government possessions and territories



• An Indian tribe

In addition, demand deposits maintained in a bank in the same state as the public unit are separately insured up to $100,000. Thus, the same official custodian may receive up to $200,000 in insurance coverage — $100,000 in time and savings deposits and $100,000 in demand deposits — provided the deposits are held in a bank located in the same state as the public unit. Demand deposits maintained by an official custodian of the United States are insured separately from any time deposits maintained by the same custodian at the same bank, regardless of the state in which the bank is located.

Insurance coverage of public unit accounts maintained in any out-of-state bank — whether time, savings or demand deposits — is limited to a maximum of $100,000 per official custodian.

Official Custodian
One person may serve as official custodian (government depositor) of the funds of more than one public unit. In addition, a public unit may have two or more official custodians, all of whom will have separate insurance coverage for the funds in their control.

To qualify for separate insurance coverage, the official custodian must have plenary authority, including control, over the funds owned by the public unit.

If the exercise of authority or control over the funds of a public unit requires action by or the consent of two or more custodians, the two custodians together will be treated as one official custodian for the purpose of calculating deposit insurance coverage.

Deposit insurance coverage cannot be increased by dividing funds among several official custodians who lack plenary authority over such funds. Likewise, coverage is not increased by dividing funds among several accounts controlled by the same official custodian for the same public unit.

Separate Coverage for Political Subdivisions
If a public unit has political subdivisions, the deposits of each subdivision will be separately insured if each subdivision meets all of the following requirements:

• It was created under express authority of law.
• It has some functions of government delegated to it by law.
• It can exercise exclusive control over funds for its exclusive use.

Accounts Maintained by a Public Unit in Fiduciary Capacity
When a public unit is holding deposits for others in a fiduciary capacity, the deposits will be insured as the funds of the principals for whom the custodian is acting, assuming the requirements for fiduciary accounts are met. For example, if a Clerk of the Court receives court-ordered child support payments for later distribution to the custodial parent/guardian, the deposit will be insured as the funds of the parent/guardian, not as public unit funds.

Special Rules for Bond or Other Public Debt Indentures
A special rule applies to deposits held by an officer, agent or employee of a public unit under a law or bond indenture that requires the funds to be set aside to discharge a debt owed to the holders of notes or bonds issued by the public unit. A deposit of such funds in a bank is insured up to $100,000 for the beneficial interest of each bondholder.

This coverage is separate from the coverage for other deposits owned by the public unit at the same bank. In order to obtain this special coverage, however, the deposit account must satisfy certain disclosure requirements applicable to deposits held by agents or fiduciaries. Specifically, the deposit account records of the bank must disclose the existence of the fiduciary relationship or the fiduciary nature of the deposit.

In addition, the details of the fiduciary relationship and the interests of the bondholders must be ascertainable from the records of the bank or the records of the depositor maintained in good faith and in the regular course of business. See 12 C.F.R. § 330.5(b).

Special Rules for BIA/Indian Tribe Funds
Deposit accounts held by the Bureau of Indian Affairs (BIA) for individual Native Americans. Deposit accounts held by the BIA and deposited into a bank are insured up to $100,000 for each Native American for whom the BIA is acting. Unlike other types of fiduciary accounts, however, these funds are not aggregated with other funds that the same Native American also may hold at the same bank.

Funds held directly by a tribe. Native American tribes are considered separate public units for the purposes of deposit insurance coverage, and are insured pursuant to the requirements described in this section.

Funds held directly by Native Americans. The personal funds deposited by Native Americans are insured like any other depositor's personal accounts.

Collateralization of Public Unit Deposits
Depending on applicable state or federal law, public unit accounts may be secured by collateral or assets of the bank. In the event of the failure of the bank, the FDIC will honor the collateralization agreement if the agreement is valid and enforceable under applicable law. The FDIC does not guarantee, however, that the collateral will be sufficient to cover the amount of the uninsured funds.