FYI: What a Bank Failure Would Mean for Depositors

[tannybogus]

The Federal Deposit Insurance Corp. this week launched a Web site -- http://www.myfdicinsurance.gov-- to explain to consumers exactly how much of the money they have in deposit accounts is protected.

As the financial crisis worsens, many consumers have been asking what would happen if their bank fails. The FDIC, an independent government agency, has 117 banks on its list of troubled institutions. That is up from 90 in the first quarter of this year. Most of those banks will not fail, said FDIC spokesman Andrew Gray. Each year only 13 percent of the problem banks fail, he said.

Here are answers to some questions you might have:

Q: How safe is the money I've deposited into my bank account?

A: If you have $100,000 or less in your name at any FDIC-insured bank or savings association, you have nothing to fear. If you have certain types of retirement accounts, such as an individual retirement account, you're eligible for even more coverage -- up to $250,000 per account owner, per insured bank. Deposits at credit unions have similar coverage through the National Credit Union Administration, an independent government agency.

Q: What if I have more than $100,000 in deposits? Is there any way to get more coverage?

A: Yes. If you keep your deposits in accounts under different ownership categories, you will be fully insured even if the sum of all the different pots of money exceeds $100,000. There are eight different ownership categories, including single accounts, joint accounts, revocable trust accounts and employee benefit plan accounts.

The FDIC has a tool called the Electronic Deposit Insurance Estimator, known as EDIE, that helps you calculate your coverage. The agency debuted a more user-friendly version of it this week on its new web site. You can also call 1-877-ASK-FDIC.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/17/AR2008091703183_pf.html

[ananda]

1. Revocable Trust CD

I closed out a CD last August and then put some
of the money in a new CD called a Revocable Trust
where I named a beneficiary to be POD.

That is insured separately, and is not part of
the 100K.

Sue

[Hugabear]

2. Yeah, but how long would it take?

For many people who live paycheck to paycheck, they can't wait weeks or months for the FDIC to get their money to them.

[ET Awful]

3. In theory, it doesn't take weeks or months, the feds take over, the bank continues to operate

on its regular schedule. Any checks you write would still be covered, etc.

[yodoobo]

4. I went through it late last year when Netbank failed

I found out when I went online to check my balances on that saturday. I was greeted with an FDIC notice of bank failure instead of my usual logon screen.

That kinda freaked me out to say the least.

I immediately went to an ATM and withdrew as much as the ATM would let me ($500 i think it was).

On Monday, all my money (a few thousand) was placed in a new account that had been setup in my name with INGDirect. Any checks written were directed to ING and they paid them.

All in all, it was really really well coordinated.

No checks were bounced, I never lost access to my funds. My ATM card even worked for about 3 months after the failure.

The only gap in the whole process, was that I lost any "view" into my account for a couple weeks as to what checks had already cleared.

I've seen bank mergers go far worse, when my bank was just purchased by another bank.