To the Editor:

The commentary by Professors Miles and Trefzger ["While They're at It, Can They Fix Deposit Insurance?" Aug. 15] brought to light the difficulty that bankers have in attempting to explain the FDIC insurance of accounts rules to the public.

If 100% FDIC insurance coverage is the goal of Mr. and Mrs. Average American, it is often necessary to carve out accounts in various ways simply to make certain that FDIC insurance is not compromised.

Raising the maximum insurance to $500,000, as Professors Miles and Trefzger have suggested, will help, but it will not solve the problem of eliminating the confusion that reigns as to account eligibility.

For example, if Mr. and Mrs. Average American want to open a revocable trust savings account for a niece or nephew, they will be shocked to learn that the account will not qualify for FDIC insurance coverage. To qualify, the beneficiary of a revocable trust account must be the owner's spouse, child/children, grandchild/grandchildren, parent/parents, brother/brothers, or sister/sisters.

Mr. and Mrs. Average American will have to open another form of deposit account, such as a joint ownership account, with the niece or nephew to qualify for full FDIC insurance coverage.

Increasing the amount of FDIC insurance coverage will serve to heighten the public confidence in the FDIC insurance fund, but making the qualifying rules simple, for both the public and bank employees, will be a much-welcome change.

The existing maneuvering of deposit accounts simply to gain full FDIC insurance coverage is confusing to the public and should be minimized, if not eliminated altogether.Barry Zadworny
Vice President
Roma Bank
Robbinsville, N.J.

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