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4000 - Advisory Opinions

Expanded or Extended Deposit Insurance When Two or More Corporate Depositors in Bank Mergers


November 25, 1988

J. William Via, Jr., Counsel

This is in response to your letter of November 4 to Chairman Seidman concerning a question of deposit insurance coverage that was the subject of my letter to you of October 20 and of my letter of November 3 to ***.

By section 8(q) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(q)), Congress has provided for the carryover for a limited time of separate (or dual) insurance for the benefit of a depositor who owns deposit accounts in two or more insured banks when there is a merger or similar amalgamation between or among those banks. However, Congress has made no similar provision for expanded or extended insurance protection for the case in which two or more corporate depositors, each owning a deposit account in a given insured bank, become one legal entity (and thus one depositor) through merger or consolidation, and the FDIC has no authority to provide expanded or extended insurance protection in such cases.

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