FDIC Bad News Means What to Savings Investors
August 27, 2009
News reports that the FDIC has endured a 20 percent drop in its insurance fund may cause concern among savings investors.
Some analysts are predicting that the FDIC will be in the red by the end of the year. What does that mean for savings investors?
Not a Whole Lot, In Terms of Individual Accounts
The first part of the answer to that question might be best summed up as: not a whole lot, you're safe.
The FDIC is so crucial to confidence in the banking industry that there is no scenario under which the U.S. government would allow FDIC insurance to "run out" in a way that cost individual depositors their savings.
Insurance up to $250,000 per depositor per account--that's the FDIC promise and they're sticking to it.
FDIC Options If It Needs Money
The FDIC has two basic options if more banks fail and the FDIC therefore needs more money to cover depositors:
1. Borrow money from the U.S. Treasury.
2. Charge banks more fees to pay for FDIC insurance.
While it's certainly nice to have two options rather than no options, savings investors would rather not see either of these options exercised.
The borrowing option could be inflationary, and the more fees for banks option may lead to more fees being passed on to bank customers.
Mike
4 September 2009 at 9:52 am
Be careful with One West . don't believe what the claims managers say on the phone .I have had nothing but problems with that bank. I got over 100 G with them and they can't find my signature card and they are taking their time sending another one . I should have had a check in the mail for my account balance this Monday instead I was forced to take the mature CD and place it in a Money market with them at a low rate until I have another bank ACH .my money out.
I was also told that if I keep my money with One West they would give me a 2.25 - 10 month CD . Now One West said they cannot find that info attached to my account.
The manger I had problems with used the name Randy.
Be careful this was Indy Mac before it went under probably the same people working here.
Just sharing my unpleasant banking experience . Good luck everyone
M Thetman
27 August 2009 at 10:59 pm
Due to the large number of failed banks in recent months, there's an important issue regarding FDIC insurance depositors need to be aware of. There are specific time limits within which an insured deposit or safe deposit box must be claimed, after which the funds or property are forfeited.
Depositors should also note that due to the large number of mergers and acquisitions in the banking industry over the years, it is possible they - either as owner or rightful heir of a deceased family member - might well be entitled to an account or safe deposit box at a bank that has failed, and not even know it.
More than 1,400 banks and 700 savings institutions closed in the aftermath of the Savings and Loan crisis of the 1980s. The current credit crunch has put more than 80 banks into FDIC receivership in just the last two years, including the largest ever - Washington Mutual (WaMu) - with many more certain to follow.
The website www.failedbankreporter.com provides explanation of the rules for claiming insured deposits at banks that have closed, and a list of failed banks and those that they have acquired over the years.