Insurability of Funds Underlying Stored Value Cards and Other Nontraditional Access Mechanisms
In 1996, the FDIC published General Counsel's Opinion No. 8 (``GC8''). Through that opinion, the Legal Division of the FDIC sought to clarify the meaning of the term ``deposit'' as that term relates to funds underlying stored value cards. Subsequently, the banking industry developed new types of stored value products with the result that GC8 is obsolete. For this reason, the Legal Division has decided to replace GC8. Under the new GC8, all funds underlying stored value products will be treated as ``deposits'' if they have been placed at an insured depository institution. As a result, all such funds will be subject to FDIC assessments. Also, all such funds will be insured up to the insurance limit. Whether the funds are insurable to the holders of the access mechanisms, as opposed to the distributor of the access mechanisms, will depend upon the satisfaction of the FDIC's standard requirements for obtaining ``pass-through'' insurance coverage. This treatment of the funds underlying stored value products does not differ from the treatment set forth in a proposed rule published by the FDIC in August of 2005. See 70 FR 45571 (August 8, 2005). The new GC8 will provide guidance to the public about the insurance coverage of funds underlying nontraditional access mechanisms. Also, the new GC8 will promote accuracy and consistency by insured depository institutions in reporting ``deposits'' for inclusion in an institution's assessment base.