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FDIC Deposit Limitations (Time for CDARS)

By Brad Kaplan on March 30, 2009
Posted in Finance Issues, Legislative Update

How can you safely deposit the funds of a condominium association, development entity, municipality or any entity  which needs to know that there is little or no risk of loss to the deposited funds ? The Federal Deposit Insurance Corporation (FDIC) temporarily increased deposit insurance for individuals to $250,000.  The increased deposit insurance is scheduled to expire on December 31, 2009.  Carving up the deposit into separate entities is cumbersome and can be difficult to manage and maintain.

Along comes the Certificate of Deposit Account Registry Service (CDARS).  CDARS is owned and opperated by Promontory Interfinancial Network, LLC.  Participating banks enter into a CDARS agreement in which the lead bank serves as the account custodian. CDARS then distributes the funds around to its participating banks to be invested in certificates of deposit in amounts less than the FDIC limitations ($100,000 for deposits maturing after December 31, 2009 and $250,000 for deposits maturing prior to December 31, 2009). CDARS will permit the application of FDIC deposit insurance on single deposits up to $50 million.  The benefit to the depositor is working with one bank, one interest rate, one maturity date and one statement.

In these uncertain times for banks, all individuals, businesses, not for profits and municipalities should review their accounts and determine if there is a need to take advantage of the protections offered by CDARS.

Tags: CDARS, Certificate of Deposit Account Registry Service, certificates of deposit, FDIC limits, Finance Issues, Legislative Update
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Brad Kaplan

Brad assists Owners, Operators and Receivers of Hotel, Office and Industrial properties with their Real Estate, Finance, Leasing, Construction and Organizational challenges; specifically, negotiating and drafting hospitality, purchase, sale, financing, leasing, construction, franchise and management agreements. He has in the past and presently…

Brad assists Owners, Operators and Receivers of Hotel, Office and Industrial properties with their Real Estate, Finance, Leasing, Construction and Organizational challenges; specifically, negotiating and drafting hospitality, purchase, sale, financing, leasing, construction, franchise and management agreements. He has in the past and presently serves as general counsel and national real estate counsel to several domestic and internationally based public and privately held companies. Brad represents foreign businesses doing business in the United States and U.S. businesses doing business abroad; and is a former Chairman of World Services Group (www.worldservicesgroup.com) an international consortium of legal and other professionals. Brad has achieved the highest rating, AV Preeminent®, from Martindale-Hubbell®. He is an active member of the Illinois Bar and maintains an office in both the firm’s Cincinnati and Chicago offices. Brad is the editor of the Real Estate Advisor Law blog, a tool that highlights articles and observations of Ulmer & Berne attorneys on various trends and opportunities affecting the commercial real estate and construction industry, and is a frequent speaker on internet and social media issues.

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