FDIC to Limit High Paying Savings Accounts at Weak Banks

The FDIC, which controls the nation’s largest thrifts, voted to ban struggling banks from offering excessively high interest rates on savings accounts to lure in customer deposits.

It’s unclear what that exact number is, as it was characterized as those that “significantly exceed” prevailing market rates.

Most banks currently are offering rates around 1.50% APY, though more troubled banks like GMAC Bank are pitching savings accounts with yields of 2.25%.

Of course, the rule is only an issue for banks deemed not “well capitalized,” though those are the very institutions offering the highest savings account yields.

The bad news is borrowers won’t be able to take advantage of these high yields assuming the poorly capitalized banks are indeed the ones offering the highest rates.

Earlier this week, the FDIC said its “problem list” of banks grew 21 percent in the first quarter to a whopping 305 institutions, the highest number since the mid-1990s.

And so far this year, 36 banks have failed, up from 25 in 2008 and three in 2007; expect that number to rise even more as the months go by.

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