Officials say that some insurance companies are telling families of late military personnel that they’re putting life insurance policy money into an interest-bearing account. But what really happens, according to some officials, is that the insurance company is benefiting from most of the interested earned– some times taking as much as 4.8 percent while the families receive just .5 percent of the interest. Another issue Cuomo is raising is that the insurance money is being put in banks that are not insured by the Federal Deposit Insurance Corporation, or FDIC. “It is shocking and just plain wrong for these multi-national life insurance companies to pocket hundreds of millions in profits that really belong to those who have lost family members and have already suffered immensely,” Cuomo told CNN.

Officials say the accounts being targeted in the investigation include Prudential’s Alliance Account and MetLife’s Total Control Account. However, the attorney general’s office says they’re looking into the entire life insurance industry. According to CNN, Prudential’s Chairman and CEO John Stangfield released a written statement saying, “It is important that the beneficiaries of our fallen service men and women are treated with dignity and respect during a very difficult time. Given the questions raised over the life insurance program we administer for the Department of Veteran Affairs, we welcome an opportunity to address the concerns and to set the record straight.” Stangfield denied doing anything wrong. “Prudential does not in any way take money from beneficiaries,” the company said according to CNN.

MetLife also commented. According to CNN the company’s spokesman John Calagna released a written statement saying, “However we strongly disagree with many misleading statements in recent media reports and want to be clear regarding several important features of MetLife’s Total Control Account (‘TCA’). Our materials carefully explain the TCA to our customers so that they understand that they can use their checkbooks to withdraw all of their benefits immediately or over time as they choose,” Calagna told CNN. “They have full access to their funds and earn a guaranteed minimum interest rate that exceeds what they could earn on most money market accounts.”

Secretary of Defense Robert Gates told CNN he had no idea many military families were being treated this way. “Until today, I actually believed that the families of our fallen heroes got a check for the full amount of their benefit,” Gates told CNN during a Pentagon briefing. “So this came as news to me. And so I will just say I will be very interested in the outcome of an investigation.

Investigation Looks Into Life Insurance Policies Of Fallen Military is a post from: Peppercoin Insurance

The potential crisis that could result from a banking run has largely been averted, and the banks are reacting accordingly. Bank of America Corporation had previously announced that it would opt out on October 16.

According to various spokesmen for Citigroup Inc., JPMorgan Chase & Co., and Wells Fargo & Co., the banks will exit the Transaction Account Guarantee Program on December 31, 2009. The Transaction Account Guarantee Program was set up by the FDIC (Federal Deposit Insurance Corporation) as an emergency response last October, intending to ameliorate the damage that a collapse of major investment banks such as Bear Stearns would have otherwise caused. Without the measure, consumer and investor panic might have resulted in a much more severe banking crisis.

The FDIC announced in August that it would be increasing fees for any banks that remain in the TAG Program past December 31. It is clear that U.S. officials are deliberately trying to encourage banks to return to self-sufficiency, and that by instituting fees on the emergency program, they are sending a message that the measure was intended to be a temporary one to avert financial disaster, not a permanent solution. Fortunately, most U.S. banks are back on track, if not already there, and it is good news when major banks can confidently remove themselves from government insurance programs.

However, not all banks have received bailouts like America’s biggest banks, and not all banks will be fully recovered by year’s end. Some smaller banks have announced partial exit plans from the TAG Program. This is a compromise meant to demonstrate progress, and the motivation for compromising is so they can avoid signaling some kind of weakness in their companies. By going halfway, these banks are able to recover without the risks they would otherwise face.

Emergency measures aren’t restricted just to TAG, though. The checking account insurance program is scheduled to terminate on June 30, 2010, and the FDIC has also ended its guarantees of bank bonds, as of October 31. These all signal a return to normalcy, if not growth, in the banking industry.

According to Citigroup spokesman Alex Samuelson, “As the economic environment normalizes, and with Citi now one of the best-capitalized financial institutions in the world with a deliberately liquid and flexible balance sheet, certain temporary programs have served their intended purpose.”

This news comes at a time when consumer lending has been tight and the unemployment rate continues to climb. There is no guarantee that these economic factors will significantly improve in the near future, but one thing is certain: they are not able to improve without a stable banking system behind them.

Consumers Beware – Big Banks To Abandon Extra Checking Insurance is a post from: Peppercoin Insurance

The standard maximum insured amount was initially increased from $100,000 to $250,000 in fall of 2008 and was set to return to the previous number at the end of 2009. With the terms of the new FDIC extension, the increase, though still temporary, would be available until 2013.

This extension was a result of the so-called Helping Families Save Their Homes Act, a bill that was signed in to law back on May 20.

In an additional announcement, the FDIC would levy a special assessment amounting to five basis points for every FDIC-insured financial institution’s assets. This would be minus its Tier 1 capital and the assessment would take effect on June 30, 2009.

The FDIC assessment would be collected by September 30 and it will be used to strengthen the weakened deposit insurance fund. The goal would be to retain a high level of public confidence in the overall banking system.

According to FDIC Chairman Sheila Bair, the “Assessments are a significant expense, particularly during a financial crisis and recession when bank earnings are under pressure.”

Bair went on to say that, “We recognize that assessments reduce the funds that banks can lend in their communities to help revitalize the economy. On the other hand, deposit insurance provides a benefit for which banks have always paid.”

The FDIC is not funded by federal tax dollars. Rather its expenses are provided through the sales of premiums and assessments, which are paid by the financial institutions that receive coverage.

As previously stated, the assessment will be assessed against all assets except for the Tier 1 capital rather than domestic deposits. Additionally, the assessment will have a cap of 10 basis points, or 01%, of the bank’s domestic deposits.

FDIC Offers $250K Deposit Insurance is a post from: Peppercoin Insurance