All deposit accounts offered by Arvest Bank, including Money Market Accounts, are eligible for deposit insurance provided by the Federal Deposit Insurance Corporation (“FDIC”) to the extent allowed by law. You can find more information on FDIC coverage at a new and very consumer firendly website, www.myfdicinsurance.gov
Many customers have also asked Arvest about the difference between the Money Market deposit accounts we provide as opposed to the Money Market Mutual Funds, which are not FDIC insured. The information below may be helpful to you in addressing these inquiries.
1. What is a money market deposit account?
According to the Federal Financial Institutions Examination Council (www.ffiec.gov), a money market deposit account is a type of bank savings account. Interest is paid by the bank at a rate established by the bank.
Money market deposit accounts may be named differently from bank to bank. Arvest refers to these accounts as Money Market Accounts.
2. What is a money market mutual fund?
A money market mutual fund is a special type of investment company subject to regulation by the U.S. Securities and Exchange Commission and that, by law, can invest in only certain, short-term investments issued by the U.S. Government, U.S. Corporations and state and local governments.
Investors in a money market mutual fund are shareholders in the associated investment company. Dividends are paid by a money market mutual fund based on the earnings of the underlying investments held by the mutual fund.
3. What is meant by “breaking the buck”?
A money market mutual fund seeks to maintain a constant net asset value of $1 per share. Losses incurred by the fund can result in a lowering of the net asset value below the $1 level. This reduction below $1 per share is referred to as “breaking the buck”.
A money market deposit account is a bank deposit account covered by FDIC deposit insurance and is not subject to value fluctuations.
4. How does the temporary program recently announced by the Secretary of the Treasury affect money market mutual funds?
On September 19, 2008 Secretary of the Treasury Henry Paulson announced a temporary program to guarantee qualifying money market mutual funds for one year. Funds qualifying for coverage are those regulated by Rule 2a-7 of the federal Investment Company Act of 1940 and are registered with the SEC for public offering and pay a fee to participate in the temporary guaranty program and have not “broken the buck”. On September 21, 2008 the Treasury Department clarified that only balances in qualifying money market mutual funds at the close of business on September 19, 2008 are eligible for the guaranty. Therefore, money transferred to qualifying money market funds after September 19 are not eligible for the guaranty. The guaranty, where applicable, is scheduled to expire after one year.