New General Counsels Opinion No. 8 The FDIC Provides Clarity on Deposit Insurance and Assessments on Funds Underlying Stored Value Cards
By Chris Daniel and Helen Lee
The Federal Deposit Insurance Corporation (FDIC) issued a new General Counsels Opinion No. 8 (New GC8) on November 13, 2008, to supersede a 1996 General Counsels Opinion (Original GC8). The timing of New GC8 is interesting and may, or may not, be tied to our current economic circumstances and the FDICs ongoing effort to maintain, and perhaps, restore public confidence in U.S. depository institutions including the FDICs Temporary Liquidity Guarantee Program.
The issue of whether FDIC insurance is available with respect to the funds underlying stored value cards (SVCs) may seem obvious to some as an issue that only arises upon the FDICs placement of the card-issuing bank into receivership. Nevertheless, given that numerous depository institutions have failed since January 1, 2008, the relevancy and immediacy of this issue has become more apparent.