4000 - Advisory Opinions
Extent of Deposit Insurance For Deposits of the State of Texas 457 Plan
October 20, 1989
Roger A. Hood, Assistant General Counsel
I have been asked by *** of NCNB Texas National Bank, Dallas, Texas ("NCNB Texas") to provide you with a letter stating the extent of deposit insurance which would be afforded deposits of the State of Texas' deferred compensation plan ("the 457 plan").
I understand that the deposits in question originally were maintained by the 457 plan in University Federal Savings Association, Houston, Texas ("University") and were assumed by NCNB Texas in a recent transaction arranged by Resolution Trust Corporation. University was an institution, the deposits of which were insured by the Federal Savings and Loan Insurance Corporation prior to the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, P.L. 101-73 ("FIRREA").
Prior to the enactment of FIRREA, the 457 plan deposits in University were insured by the FSLIC with respect to the separate interests of the employees whose compensation was being deferred under the plan. 12 C.F.R. § § 561.4(b), 564.10. Upon the enactment of FIRREA the deposits in University became insured by the Savings Association Insurance Fund, administered by the Federal Deposit Insurance Corporation. The insurance of such deposits is to be determined in accordance with regulations and interpretations of the FSLIC which were in effect on the date of enactment of FIRREA (August 9, 1989) until the FDIC adopts uniform regulations governing insurance coverage applicable to all insured depository institutions.
These deposits have been assumed by NCNB Texas and are no longer obligations of University; however, they will continue to be insured to the same extent as they were in University until the earliest maturity date after the six-month period following the transaction whereby they were assumed by NCNB Texas. Section 8(q) of the Federal Deposit Insurance Act (12 U.S.C. 1818 (q)) provides that whenever the liabilities of an insured depository institution for deposits are assumed by another insured depository institution, whether by merger or by contract, the separate insurance of all deposits so assumed shall terminate, in the case of any time deposit, at the earliest maturity date after the six-month period following the date the assumption takes place. We interpret that provision to mean that the coverage of the deposits of University assumed by NCNB Texas will be insured to the same extent and in the same manner as they would have been insured as deposits of University until their first maturity following the six-month period following the consummation of the purchase and assumption transaction. As stated above, those deposits were insured in University on the basis of the amounts attributed to the individual employees up to the maximum amount of $100,000 per employee. That coverage continues in effect as indicated above.
I hope this adequately explains the present coverage provided to these 457 deposits. If you have further questions, please call me at (202) 898-3681.