Federal regulators say deposits in foreign branches of U.S. banks will not be covered by the government insurance fund.

The Federal Deposit Insurance Corp. on a 5-0 vote rejected the request from the banking industry seeking to extend the insurance of up to $250,000 to U.S. banks' deposits overseas. The FDIC estimates those deposits are worth about $1 trillion.

If a bank fails that has foreign deposits, the account holders would become creditors of the bank and would have to apply to recover their funds. Generally depositors recover some of their money, ranging from about 40 cents on the dollar up to the full amount.