Are “sweep” accounts included in the Transaction Account Guarantee Program?
Bank of Evansville offers business clients a sweep to repurchase agreements (repos). The FDIC considers funds that are generally swept to a repo to be repo funds. As such, they are collateralized, but are NOT covered under the Transaction Account Guarantee Program or under the basic FDIC deposit insurance program. However, any amount that is generally not swept from a non-interest bearing checking account is considered funds within the non-interest bearing account and is covered under the Transaction Account Guarantee Program. For example, if a business client has an account that sweeps balances greater than $200,000 into a repo each night – any funds over the $200,000 would be considered repo funds and would be collateralized, but NOT covered under the Transaction Account Guarantee Program. Any funds under the $200,000 would be considered non-interest bearing transaction account funds and would be covered under the Transaction Account Guarantee Program.
