WASHINGTON -- The Federal Deposit Insurance Corp. has put its stamp of approval on a new deposit account that could help the banking industry recover billions of dollars lost to annuities.

The tax-deferred account, dubbed the Retirement CD, officially won deposit insurance late Friday. A nine-page letter to Washington lawyer Dennis Gingold, who co-developed the deposit, detailed one limit on the insurance.

The Comptroller of the Currency sanctioned the account last Thursday in a 12-page letter to Jack Kelly, president and chief executive of Blackfeet National Bank. That "no-objection" letter came with 17 conditions.

Mr. Gingold and his partner Richard E. Fasold have a patent pending on the CD and have licensed the product to Blackfeet, an American Indian-owned bank in Browning Mont

Regulators have been considering approval of the new deposit product for six months. Officials confirm that many banks are interested in adding the Retirement CD to their line of deposit products.

"Our phones are lighting up," Claude A. Rollin, FDIC senior counsel, said in an interview Monday.

Insurance Up to $100,000

The FDIC said it would insure the money deposited in a Retirement CD and the interest those funds earned up to $100,000. If the bank fails or the depositor dies before that total is paid out, the FDIC would cover the balance.

But the FDIC said it would cover only the amount of money deposited and interest earned up to the maturity date, Mr. Rollin explained.

"Under no circumstances would FDIC insurance extend to the bank's commitment to make lifetime payments, as the value of such payments is uncertain and may exceed the total account balance," the FDIC's letter said.

Minimum $5,000 Deposit

Customers may open a Retirement CD with a minimum $5,000 deposit; deposits of $1,000 or more may be made after that once a year.

The interest rate is set for the first few years, but may fluctuate above a 3% floor after that. The interest income is not taxed as it accumulates.

The customer selects a maturity date, when up to two-thirds of the principal and interest may be withdrawn. The bank then pays out the balance in monthly payments that are guaranteed to continue as long as the customer lives.

It is this feature that the FDIC refused to insure. If the bank fails after a depositor has received all he or she paid in, the FDIC would not continue those monthly payments.

Mr. Fasold said Monday that the Retirement CD came through the regulatory wringer unharmed.

"We were vindicated, I guess, because a lot of people didn't think we were quite on the mark," Mr. Fasold said.

The product is being sold through a company called American Deposit Corp. in Pine, Colo.

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