B6_ Castlegar News August 31, 1991 Some savings not guaranteed, warn experts Failing financial institutions spark closer look at deposit insurance By MURRAY OXBY The Canadian Press As hundreds of U.S. savings and loan companies crumble, Canadians may be telling them- selves that their money is safe behind the stone walls and granite pillars of their financial institutions. But there have been some eracks in the facade. Since 1982; at least 13 Cana- dian trust and mortgage compa; nies and three banks — with bil- lions of dollars in deposits — have failed or been closed by regulators. Two of those cases occurred this year, with Standard Trust Co. being put into bankruptcy in April and the Bank of Credit and Commerce Canada shut down in July, And as some unhappy cus- tomers have discovered, the fed- eral government system designed to protect depositors has limits. However, by becoming famil- iar with how deposit insurance works, savers can easily reduce the risk of losing some of their money. In general, the Canada Deposit Insurance Corp. — set Canadian dollars, and be payable,on demand or within five years. That means, for example, a GIC with a term longer than five years is not cov- ered. Items that do not fall under deposit insurance include accounts held in a foreign cur- rency, and investments such as bonds and debentures, treasury bills, stocks and mutual funds. An RRSP or an RRIF must consist of insurable deposits for it to be covered by deposit insur- ance, When a fi ial i PHONE 365-5210 New insertions, copy copy changes end Castlegar News Dietary witb seeped Spot bot Tne yh 2, ne npabaorpdyrereee PHONE 365-5210 Brian L. Brown CERTIFIED GENERAL ACCOUNTANT 270 Columbia Avenue Castlegar * 365-2151 Certified General Accountant Office 368-6471 Residence 365-2339 1250 Bay Ave., Trail AIR CONDITION fails, the CDIC examines its books to determine how much each insured depositor is enti- tled to receive. It took two months for former Standard customers to get access to their ii d ARROW LAKES AIR CONDITIONING & MECHANICAL SYSTEMS © Plumbing © Air Conditioning However , the CDIC will make emergency payments to depositors who would suffer hardship without their money. Customers with uninsured d are idered unse- “You'd better not play cards with your wife for a while.”’ CONTRACTORS EXCAVAT DALE WILLNESS Building Contractor framing & project 365-8352 ADVERTISING IN THE BUSINESS DIRECTORY CAN: aA Increase store traffic amount of 24-HOUR EMERGENCY SERVICE 365-2485 cured creditors, along with the CDIC, which is- owed the amount it has paid out for insured deposits. This may be repaid from h is ilable after the up in 1967 after the coll of several financial institutions — guarantees deposits to a maxi- mum of $60,000 per individual in each financial institution. The system is aimed at pro- tecting small depositors, says Ronald McKinlay, CDIC chair- man. “The theory behind it is that the ordinary man in the street cannot possibly make an intelli- gent and informed assessment of the financial stability of a financial institution,” ‘McKinlay said from his Toronto office. Deposits at member institu- tions, which include banks and trust and loan companies, are insured automatically. In certain circumstances, an individual is eligible for more assets of the financial institu- tion are sold. Customers who have loans and mortgages with a failed insitution are expected to keep making their payments. The loans, which will be adminis- tered by the CDIC, a liquiditor or another institution, remains in force until they come due, Evans says. In Quebec, the CDIC provides deposit insurance at banks, while a similar insurance plan by the Quebec Deposit Insur- ance Board covers other finan- cial institutions, including credit unions. Deposit insurance for the 1,250 credit ‘unions outside Que- bec is provided by provincial says Fil Tam- AUCTIONS BUY or SELL by AUCTION * Bonkrupicies * Estates * Consign * Quivight Purcho: SSELL OPEN MON-SAT. 9-5 UCTION 2067.24 Thru BUILDING SUPPLIES HOME HARDWARE BUILDING CENTRE FOR ALL YOUR UILDING than $60,000. In addition, joint accounts are covered separately, again to a maximum $60,000. Depositors whose savings exceed these limits can make sure their money is insured by dealing with more than one company. “If people are really con- cerned, then they can be fully insured simply by spreading their deposits among different institutions so they don't have more than $60,000 in savings in any one institution,” says John Evans, president of the Trust Companies Association of Cana “Depbdtiors should be aware burri of the Canadian Co-opera- tive Credit Society. Coverage is at least $60,000 in all provinces, with Alberta providing 100 per cent coverage, she said. People with questions about deposit insurance can call the CDIC at 1-800-461-2342. that the $60,000 limit includes accrued interest, says Roy Firth, vice-president of marketing with Laurentian Bank of Canada. 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