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4000 - Advisory Opinions

Insurance Coverage Afforded Deposit Accounts Containing Rollover Funds Awaiting Investment in Securities When Insured Bank Fails

FDIC 91-47 May 24, 1991 Gerald J. Gervino, Senior Attorney

You have asked about the situation where a bank has been closed because of inability to meet the demands of its depositors, the FDIC has been appointed receiver of the bank, and some customers' accounts contain funds awaiting investment in securities on a rollover basis.

If at the time that the bank is closed there are unposted authorizations for the purchase of securities, it would appear that the customer would still maintain the proceeds from the previous sale in the customer's checking account, where it would remain a deposit and would be insured to the statutory maximum of $100,000 for each depositor. Any amounts in excess of $100,000 would be entitled to a claim against the closed bank's assets.

The above statement of facts may be somewhat unrealistic. In our experience, rollovers are normally effected prior to the closing of a bank, leaving no rollover funds in the deposit accounts, while allowing the return of purchased securities to the customer.

If we have not completely answered your inquiry or you have any further questions, please write or call us.

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