The Federal Deposit Insurance Corporation (FDIC) says large customers of recently closed banks could collectively lose millions of dollars in uninsured deposits.
Banking regulators said at least $7.1 million at Lindsay First National Bank in Oklahoma was uninsured and held in accounts that exceeded the agency’s insurance coverage limit of $250,000.
For now, the agency says customers can access 50% of their uninsured deposits, but that number could remain the same or change as the FDIC sells the assets of failed banks.
The news sends a message that balances above the limit can still evaporate after uninsured depositors were paid back in full in the past four bank failures.
The FDIC’s $250,000 cap was put to the test last year during the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank.
For the first time in history, all deposits at the first two banks are protected by the federal government through a combination of FDIC insurance and special use of the systemic risk exception, giving the FDIC, Federal Reserve, and Treasury a backstop for everything. I have been given the authority to do so.
In two subsequent bank failures, both lenders were acquired by rival banks and all assets, including uninsured deposits, were taken over.
Regulators say the closure of Lindsay First National Bank last week came after they identified false and deceptive bank records and other information suggesting fraud had depleted the bank’s capital.
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