A new Deutsche Bank survey found that over half of respondents expect cryptocurrencies to become an important asset class and a method of payment. In addition, 10% of respondents expect the price of bitcoin to be above $75,000 by year-end. Deutsche Bank’s Crypto Survey A recent Deutsche Bank survey of over 3,600 consumers, published this […]
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Elvira Nabiullina, head of the Russian central bank, has stated that the mass launch of the digital ruble will take five to seven years. This appears to contradict recent suggestions by the chairman of the State Duma Committee on the Financial Market that the launch will begin next year. No Decision Before 2025 Elvira Nabiullina, […]
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The European Central Bank is expected on Thursday to leave interest rates at record highs but to imply that a cut in borrowing costs is likely by the summer
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If you have more than $250,000 in deposits at a bank, you may want to check that all of your money is insured by the federal government.
The Federal Insurance Deposit Corporation, or FDIC, implemented new requirements for deposit insurance for trust accounts starting April 1.
While the FDIC’s move is intended to make insurance coverage rules for trust accounts simpler, it may push some depositors over FDIC limits, according to Ken Tumin, founder of DepositAccounts and senior industry analyst at LendingTree.
The FDIC is an independent government agency that was created by Congress following the Great Depression to help restore confidence in U.S. banks.
FDIC insurance generally covers $250,000 per depositor, per bank, in each account ownership category.
If you have $250,000 or less deposited in a bank, the new changes will not affect you.
Under the new rules, trust deposits are now limited to $1.25 million in FDIC coverage per trust owner per insured depository institution.
Each beneficiary of the trust may have a $250,000 insurance limit for up to five beneficiaries. However, if there are more than five beneficiaries, the FDIC coverage limit for the trust account remains $1.25 million.
“For those who do go above $1.25 million under the old system, they definitely should be aware that changed,” Tumin said.
That may cause coverage reductions for certain investments that were established before these changes. For example, investors with certificates of deposit that are over the coverage limit may be locked into their investment if they do not want to pay a penalty for an early withdrawal.
“If you’re in that kind of shoes, you have to work with the bank, because you might not be able to close the account or change the account until it matures,” Tumin said.
The FDIC is also now combining two kinds of trusts — revocable and irrevocable — into one category.
Consequently, investors with $250,000 in a revocable trust and $250,000 in an irrevocable trust at the same bank may have their FDIC coverage reduced from $500,000 to $250,000, according to Tumin.
“That has the potential of causing loss of coverage, too,” Tumin said.
The agency is also revising requirements for informal revocable trusts, also known as payable on death accounts. Previously, those accounts had to be titled with a phrase such as “payable on death,” to access trust coverage limits. Now, the FDIC will no longer have that requirement and instead just require bank records to identify beneficiaries to be considered informal trusts.
“The bank no longer has to have POD in the account title or in their records as long as the beneficiaries are listed somewhere in the bank records,” Tumin said.
To amplify FDIC coverage beyond $250,000, depositors have several other options in addition to trust accounts.
That includes opening accounts at multiple FDIC-insured banks; opening a joint account for two people, which would bring the total coverage to $500,000; or opening accounts with different ownership categories, such as a single account and joint account.
BV Bank, a Brazilian bank leader in vehicle loans, is running a pilot that uses tokenization to manage vehicle financing and sales operations. The first phase of the tests involves automating consumer-to-consumer vehicle sales processes, including the delivery of tokenized money in exchange for the ownership of the vehicle. Brazilian BV Bank Pilots Tokenization Model […]
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The Reserve Bank of Zimbabwe has introduced a foreign exchange and gold-backed “structured currency” to replace the struggling local currency. The structured currency banknotes will be “fully convertible into the reserve currency on demand.” The central bank has also reduced the annual interest rate from 130% to 20%. Structured Currency Supported by Solid Fundamentals The […]
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India’s central bank has announced that it will enable non-bank payment system operators to offer central bank digital currency (CBDC) wallets. Noting that “necessary changes will be made to the system to facilitate this,” the Reserve Bank of India (RBI) said the initiative is expected “to enhance access and expand choices available to users.” Non-Bank […]
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According to a regional report, Sony Bank of Japan is currently exploring the potential of a stablecoin tied to the yen that could be utilized by Sony Group along with its associated entities. Insiders revealed that this endeavor’s testing phase employs the Polygon blockchain, with the crypto firm Settlemint lending its support. Polygon and Settlemint […]
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Hokkoku Bank, a regional financial institution in the Ishikawa prefecture, launched Tochika, Japan’s first deposit-backed stablecoin. Customers of the bank will be able to purchase the currency using Tochitsuka, an app developed by Digital Platformer, that previously allowed users to earn points from city services. Hokkoku Bank Reaches Milestone With Deposit-Backed Stablecoin Tochika Hokkoku Bank […]
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As April gets underway, Bank of America (BAC -1.05%) stock trades around $37.50 per share, quite close to its 52-week high.
Although some analysts can get jittery when a stock approaches a near-term peak, one of Bank of America’s fellow lending giants doesn’t appear to be. In fact, it recently raised its price target on BofA stock by 10% and maintained its equivalent of a buy recommendation.
Is this enthusiasm realistic, though?
The banking peer providing the price target boost was Wells Fargo. As March came to a close, its prognosticator Mike Mayo upped his Bank of America price target to $44 per share over the next 12 months or so, from the preceding $40. In doing so, he kept his overweight rating intact on the stock.
Mayo’s move came on the back of the analyst’s uptick in his estimate for Bank of America’s current (first) quarter per-share earnings figure.
He said one factor in this was more-robust-than-expected capital markets — the company is energetically active in investment banking. In fact, it set new revenue records for both the fourth quarter and full year 2023 in its global markets division. Other bright spots, in Mayo’s view, include what he termed the bank’s “solid” credit and expense management. All should result in a return on average tangible common equity (ROTCE) of around 13%.
Banks are cyclical businesses, so if you’re a believer in the near future of the U.S. economy, Bank of America is a good stock play. It’s not the most efficient or dynamic of the big four — for my money, JPMorgan Chase tops it in both respects — but it’s an influential lender that’s effectively managed and should continue to do well as long as our economy keeps humming.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a disclosure policy.