FDIC and Corporate accounts

October 1, 2008 5:24 AM

How do corporations deal with the FDIC insurance guidelines? Do corporations with large payrolls keep a payroll account at a different bank? Are businesses holding large amounts of cash moving accounts around now, looking for good stable banks? How are escrow accounts dealt with?
posted by readery to Work & Money (6 answers total)

The payroll money is often borrowed operating capital. It just doesn't sit there. Hence the problem.

I'm pretty sure these companies have private insurance deals covering their deposits.
posted by Ironmouth at 6:17 AM on October 1, 2008

This was discussed on NPR last night: apparently corporations (especially companies that need large amounts of cash at any given time, such as car dealerships) do have to split their funds into accounts under $100K each. That is rather inconvenient, hence the provision to raise FDIC deposit insurance limits in the latest version of the bailout bill.
posted by halogen at 7:12 AM on October 1, 2008

I had heard part of that as well, which is what got me to thinking. I had always kind of supposed as Ironmouth had answered that some kind of private insurance would hold. But for many mid-sized companies it's probably something they are looking into rather seriously now.

And I can't find a definative rule for escrow accounts. How are law firms dealing with this?
posted by readery at 7:28 AM on October 1, 2008

I think escrow accounts would be privately insured.
posted by onshi at 9:03 AM on October 1, 2008

You might remember a lot of news lately about companies buying short term Treasury notes for like 0% interest, well that's a case of a company protecting itself. If you don't trust the bank, lend it to Uncle Sam for free because Treasuries are backed with no limit.
posted by wangarific at 10:59 AM on October 2, 2008

A few colleges might have some difficulty making payroll this year due to this liquidity restriction. Uh-oh.
posted by grouse at 11:02 AM on October 2, 2008