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An account-sharing service designed to extend the limits of government deposit insurance has doubled its coverage to $10 million for a single customer by expanding the number of participating banks.

By signing up for the Certificate of Deposit Account Registry Service, or CDARS, a single customer can now deposit up to $10 million in a CD at one bank and have the entire amount covered by the Federal Deposit Insurance Corp. Previously, the limit was $5 million.

Locally, Greater Buffalo Savings Bank is the only institution offering the program, which includes 600 banks nationwide. Greater Buffalo currently has 9 CDARS accounts totaling $6 million, with three more pending for about $5 million.

The FDIC, a government agency, regulates banks and insures customer deposits up to $100,000 per customer per bank. The coverage level has not been changed since 1980, and recent efforts to raise it to $130,000, supported by the FDIC and community banks, have so far been unsuccessful.

CDARS, developed and run by consulting firm Promontory Interfinancial Network in response to a large increase in uninsured bank deposits, doesn't actually provide more insurance coverage. Rather, it takes the money from the customer's original bank and divides it into increments of less than $100,000, using as many banks as necessary to fall under the FDIC rules. But the overall account is still administered through the original bank, with one interest rate, and the customer gets just one statement.

It has not been endorsed by the FDIC, but has been declared valid by the agency. About $1.9 trillion, or one-third of total U.S. deposits, are currently uninsured.

The 20-month-old service had originally allowed just $200,000 in coverage before extending that to $1.5 million in July 2003 and to $5 million a year ago as the network added more banks. Officials said the coverage would be raised again as more banks join.


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