A. Customers are ultimately responsible for ensuring that their funds are insured by listing where all of their deposits placed outside of CDARS are located. CDARS will not place funds in any institution listed by a depositor. If a depositor were to fail to list all such institutions, CDARS might place funds in a bank where the customer already has money, which may put the customer over the $100,000 per bank limit. It is vital that the customer disclose all accounts. Refer to the Deposit Placement Agreement for details.

A. Before their money is deposited, customers can identify banks where they do not wish to have their deposits placed.

A. Because CDs issued by other banks through CDARS are never for more than $100,000, every penny invested through CDARS is eligible for full FDIC insurance. In the event that the FDIC pays out funds to eligible customers, Promontory and The Bank of New York Mellon (BNY Mellon) would file a claim on behalf of your customers. We will also notify you of any affected customers within one business day. The typical timeframe for payout should be just a few business days.

A. In the majority of cases, the FDIC will sell the deposits (and deposit relationships) to another institution. Such was the case with the only CDARS institution that has been closed by the FDIC. The depositors were notified at the time of the closure of the name of the new institution and were able to commence doing business at that new institution the following business day.

In some cases, the FDIC establishes a bridge bank, while it tries to sell the deposits (and deposit relationships) to another institution. This is what the FDIC recently did in the case of IndyMac Bank. In such a case, there are no changes to the CDARS account and the customer would continue to look to its relationship institution (now legally owned and run by the FDIC) for its customer service needs.

In infrequent cases, the FDIC simply closes down a bank, paying off all of the depositors, insured or uninsured. Since the depositors’ CDARS funds are located in other banks, they would not be paid out. Instead, Promontory would work with the FDIC to transfer the CDARS deposit relationships to another local institution. The depositor would be promptly informed of this transfer. It would resemble the first example (the sale of deposits and deposit relationships to another example) except that any non-CDARS time deposits would be paid out immediately, before they matured.