• Why is the Challenge necessary?

• I heard that banks in the region are full of deposits.  Why do I need to join this initiative?

• What is the difference between Challenge Depositors and Sponsors?

• What is Promontory Interfinancial Network’s role?

• Does my company need to be a member of the CDARS network in order to participate?

• If I make a commitment to auto-renew a CD over the course of five years, will I benefit from any changes in interest rates?

• Interest rates seem to vary between Gulf Zone banks.  Is there a reason for this?

• If my company makes a deposit into one of the banks in the hurricane-affected region, what rate will I get for my deposit?

• What maturities are available for time deposits placed through CDARS?

• What is the process for making a CDARS deposit into the affected banks?

• What if I want to make a deposit larger than $5 million?  What is the limit that I can place into these banks through CDARS?

• Can I make multiple deposits into banks in the region without going through CDARS?

• Can I inform members of my local press that my company is participating in this initiative?

• I’d like my company’s name to appear on the list of Challenge participants.  How can I ensure that happens?

Q:  Why is the Challenge necessary?

A:  The Government cannot do everything to rebuild the stricken areas.  A true public-private partnership is required and through the Challenge, large, FDIC-insured deposits may be directed into the region and made available for the rebuilding effort.

Q:  I heard that banks in the region are full of deposits.  Why do I need to join this initiative?

A:  Many banks are experiencing a temporary inflow of deposits as people collect insurance checks. However, this influx is short-term and, as the funds are spent, banks will need stable funding sources against which they can make loans to improve their communities.  Some experts predict the rebuilding effort may require as many as 25 years, so making a five-year commitment gives the banks a level of certainty they need to make an impact.

Q:  What is the difference between Challenge Depositors and Sponsors?

A: Depositors deposit funds through banks in the affected area and pledge at the Platinum, Gold, or Silver levels.  The Sponsors have provided the resources that support the operations of the Challenge.

Q:  What is Promontory Interfinancial Network’s role?

A:  Promontory operates the CDARS^® service.  For banks in the region that are not yet participating in its service, Promontory is waiving certain fees for banks to participate in the Challenge.

Q:  Does my company need to be a member of the CDARS network in order to participate?

A:  No.  The members of the CDARS network are banks through which deposits are made.

Q:  If I make a commitment to auto-renew a CD over the course of five years, will I benefit from any changes in interest rates?

A:  A resubmission agreement permits the bank and the customer to specify in advance the rate and term at which each reinvestment will occur.  The rate can be specified as a particular number, or it can be specified as a spread over some base rate (e.g., connected to the bank’s posted rate or alternatively, a rate such as LIBOR).  Note that each bank determines whether it wishes to offer resubmission agreements and, if so, on what terms.

Q:  Interest rates seem to vary between Gulf Zone banks.  Is there a reason for this?

A:  Banks offer interest rates based on their current need.  Each bank sets its own interest rates.  Some banks offer low interest loans to help reach more members of their communities and, therefore, may not have as much income to pass along as interest to depositors.

Q:  If my company makes a deposit into one of the banks in the hurricane-affected region, what rate will I get for my deposit?

A:  You negotiate the rate directly with the participating bank.  Banks may ask organizations to show their support by making deposits at rates slightly lower than those they might receive elsewhere, but you and the bank are free to negotiate any rate you wish.  And the rate you negotiate for a particular maturity will apply to all CDs of that maturity.

Q:  What maturities are available for time deposits placed through CDARS?

A:  Maturities available are 4-week, 13-week, 26-week, 52-week, 2-year, and 3-year.

Q:  What is the process for making a CDARS deposit into the affected banks?

A:  Contact the bank directly, explain that you want to make a CDARS deposit as part of the Gulf Challenge, and negotiate the term and the rate.  You will need to sign a Deposit Placement Agreement (DPA) before transferring funds.  Deposits are placed through the CDARS network every Wednesday with funds settlement on Thursday.  To find participating banks, click here or call Jennifer Perkins at (703) 292-3395 or (866) 776-6426 ext. 3395 at Promontory.

Q:  What if I want to make a deposit larger than $5 million?  What is the limit that I can place into these banks through CDARS?

A:  The current limit by any individual depositor into the CDARS network is $50 million.  On any given week, when banks receive deposits, sub-limits may apply.

Q:  Can I make multiple deposits into banks in the region without going through CDARS?

A:  Yes, of course.  If you wanted all your deposit to be FDIC-insured, however, you would need to make sure that each deposit in each bank was $100,000 or less per insurable capacity, and (potentially) manually consolidate account statements and interest disbursements on a recurring basis.

Q:  Can I inform members of my local press that my company is participating in this initiative?

A:  We encourage you to show your leadership in the effort by informing members of your local press. To help you, we have pre-scripted release templates, which you can customize with your company’s information before distributing.  For more information, please contact Phil Battey at (866) 776-6426 ext. 3357 at Promontory Interfinancial Network.

Q:  I’d like my company’s name to appear on the list of Challenge participants.  How can I ensure that happens?

A:  If a depositor wants to be recognized for its effort, it will be asked to sign a form at the time of the deposit authorizing its inclusion on the Challenge list along with the names of other participants.