Q: For government/public fund depositors, do IDIs need to pledge collateral on
noninterest-bearing transaction accounts?
A: The requirement that collateral be pledged to secure public deposits at IDIs is imposed by
state law and not by the FDIC; there is no provision in the FDIC regulations requiring
collateralization of government/public fund deposits. Although the FDIC provides
temporary unlimited deposit insurance coverage for noninterest-bearing transaction
accounts, the amount of collateral, if any, required to be pledged on such accounts will
depend upon the applicable state law. As a result, questions about this matter should be
presented to the responsible State regulator or State Department of Banking.
This can be found in - FAQ#23 of FDIC’s FAQs. FDIC’s FAQs can be found at: http://www.fdic.gov/deposit/deposits/unlimited/faq.pdf