Silver State depositors get checks from bill

About 1,000 large depositors who lost money at Silver State Bank of Henderson will each get up to $150,000 of their money back thanks to a provision of the financial reform bill.

When Silver State failed in September 2008, the Federal Deposit Insurance Corp. insured up to $100,000 for each bank depositor. That resulted in a total loss of $26 million to customers who had more than $100,000 in deposits at Silver State, according to TheStreet.com .

The financial reform bill, which President Obama signed on July 21, retroactively increased the deposit limits for Silver State and five other banks. These banks were shut down between January 2008 and October 2008 before the government increased the insurance limit.

As a result of the financial reform law, each customer at Silver State benefits from $250,000 in deposit insurance, not just $100,000. Those had more than $100,000 in deposits at Silver State will get a refunds up to $150,000.

The FDIC started mailing checks on July 22.

Recoveries will total $17 million for customers who lost deposits when Silver State was seized, according to Senate Majority Leader Harry Reid, D-Nev., who urged including the measure in the financial reform bill.

While critics question the fairness of giving bank customers a retroactive increase in deposit insurance, depositors at most other failed Nevada-based banks lost nothing. In most cases, the bank that took over the closed institution assumed all of the deposits, protecting customers from losses on uninsured sums, said Financial Institutions Commissioner George Burns.

Community Bank of Nevada was liquidated in August 2009, however, because no other institution wanted its deposits. Depositors recovered up to $250,000 of their deposits, and large depositors lost $4 million for amounts more than $250,000.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.