A program referred to as CDARS, Certificate of Deposit Account Registry Service, offers additional insurance on deposits larger than the $100,000 insurance FDIC already provides.
LISA MUNGER/Lincoln Journal Star | Posted: Saturday, August 2, 2008 7:00 pm
The recent failure of IndyMac Bancorp left long lines of Californians scurrying to withdraw their money, in a run on the bank reminiscent of those in generations past.
Nebraska banking industry professionals said Nebraska banks remain secure. Some are even offering additional insurance deposits in excess of Federal Deposit Insurance Corp. protections.
A program referred to as CDARS, Certificate of Deposit Account Registry Service, offers additional insurance on deposits larger than the $100,000 insurance FDIC already provides.
CDARS representatives said Cornhusker Bank, Community Bank of Lincoln, Pinnacle Bank, Union Bank & Trust Company and West Gate Bank provide CDARS insurance in Lincoln.
Representatives of larger banks, including Wells Fargo, US Bank and First National of Omaha, all said they do not offer CDARS.
“At Wells Fargo we feel that we offer protection at the highest level for our customers’ investments,” said Christie Drumm, a Wells Fargo spokeswoman in Denver.
"The safest place for your money is in a Nebraska bank," said George Beattie, president of the Nebraska Bankers Association, a group that represents the banking industry. "The Nebraska economy is OK, even though we are dealing with inflation of food and painfully high gas prices, we are an island of envy."
CDARS breaks deposits into smaller amounts and places the funds with other banks that are members of a nationwide network, said Teresa Elliott, communications director at Cornhusker Bank in Lincoln.
“Member banks then issue certificates of deposit in amounts under $100,000, so the entire investment is eligible for FDIC insurance,” she said. “By working with one bank, you receive insurance from many."
Customers receive one regular account statement listing on all CDs, with issuing bank names, maturity dates, interest earned, she said.
Other local bank officials agreed with Elliott's assessment of CDARS's benefits.
"This gives our customers an option, if they want to place large deposit dollars, these funds are put into a national network," said Kevin Keller, first vice president of marketing at Union Bank & Trust Company. "It's a customer's preference where to deposit funds."
Not all banks qualify for the CDARS national registry, said Kevin Deaver, senior vice president at Cornhusker Bank.
"It depends on capital, liquidity, profitability and other specific standards of financial account-ability," he said. "Most people aren't aware of it, even though we've been offering at least a couple years now. We do a lot of education on this. There is no fee for the customer, the bank absorbs the cost."
Deaver said CDARS becomes a reasonable consideration when customers make deposits in excess of the FDIC's $100,000 coverage.
"We don't want to put people into CDARS if they don't need to be," he said. "People have be-come more aware since the Indy Bank situation. We've had a lot of calls about it."
Deaver said he thought Nebraska banks were in better shape, in general, than those on the coasts.
"I think we are more conservative by nature in the Midwest," he said.
Reach Lisa Munger at lmunger@journalstar.com or 473-7107.