On Friday, IndyMac Bank’s assets had to be seized by the FDIC after the bank went into failure. IndyMac was the second largest financial institution to close in U.S. history. So what happens to all the people that had money in this bank? Since the FDIC had insured the bank, all the money will be safe, right?
Nope. The FDIC insures individual accounts up to $100,000 (combined checking, savings, CD’s), joint accounts up to $200,000 and most retirement accounts up to $250,000. Yes, most of the bank’s customers were below these thresholds and will not be affected. However, approximately 10,000 customers had money above those limits. What will happen to them? According to the FDIC, these customers will receive an advance dividend equal to half of the uninsured amount. So, worse case scenario, they would lose half of the uninsured amount. Wow–that would really stink! The FDIC will then immediately start looking for a buyer for the bank and use the proceeds to further pay back the banks customers.
Let this be a lesson for all us. If we are ever fortunate to have enough money to be above the FDIC insurance limits, we must spread out our money. I know I work way too hard for my money for even one cent to be lost by some mismanaged bank!!
I found that you can maximize your FDIC insurance through a couple of programs. CDARS (www.cdars.com) and MaxSafe (www.maxsafeaccount.com). That’s at least what I found out when looking around the web.
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Great article, I think its pretty safe in most banks although there are some that i would keep an eye on.
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I think it depends on the bank, there are some banks are’nt save
I guess it depends alot on the share and stakeholders. They can tell you alot about the compant they run or invest in.
These banks failed many times during economic depressions. If they fail to serve it’s customers at the most NEEDY times… how can they keep our money safe?
Sounds too skeptical, but it is better to buy assets like land and livestock for sustaining when worst things happen in future. I am doing that these days.