Comments on: FDIC and Corporate accounts

Question: FDIC and Corporate accounts

readery — Wed, 01 Oct 2008 05:24:57 -0800

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?

By: Ironmouth

Ironmouth — Wed, 01 Oct 2008 06:17:13 -0800

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.

By: halogen

halogen — Wed, 01 Oct 2008 07:12:41 -0800

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.

By: readery

readery — Wed, 01 Oct 2008 07:28:55 -0800

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?

By: onshi

onshi — Wed, 01 Oct 2008 09:03:17 -0800

I think escrow accounts would be privately insured.

By: wangarific

wangarific — Thu, 02 Oct 2008 10:59:19 -0800

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.

By: grouse

grouse — Thu, 02 Oct 2008 11:02:30 -0800

A few colleges might have some difficulty making payroll this year due to this liquidity restriction. Uh-oh.