Bank Failures (Public Service Announcement)

[jman220]

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For those of you that don't know, a medium-sized Internet bank called NetBank has been shut down by the FDIC and forced into bankruptcy. There will likely be other banks that follow as a result of problems in the credit and mortgage sphere.

http://www.ajc.com/business/content/busi...age_tab_newstab

The FDIC insures up to $100,000 in deposits at any one institution. Any amounts above the $100,000 are subject to the risk of bank failures. Specifically, if the bank fails, you become one of its creditors, and have to wait for asset sales during the bankruptcy process to get the rest of your money back. And of course, you may never get that money back at all; most banks are not able to cover the full amount of uninsured deposits once they fail.

I'm sure that some of you guys have quite a bit of money in various sorts of online checking and savings accounts. The rule of thumb is very simple: never have more than $100,000 deposited at any institution you do not trust absolutely and 100% to the fullest. If you have more than $100,000 and want to deposit money at smaller banks because of their superior interest rates, you should split your money up between several such institutions, never with more than $100,000 in any one place at any given time. Large banks like Chase or Wells Fargo or HSBC are probably completely safe, but there are the smaller guys you should be doing a little due diligence on at this point in time.

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I was under the impression that you could also have multiple accounts at the same institution and each account would be insured for up to 100k.

[gobbomom]

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I was under the impression that you could also have multiple accounts at the same institution and each account would be insured for up to 100k.

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after the Aussie Millions, Jimmy and I went to the bank and asked for multiple accts. for his money and the bank retard said how unnecessary this was. It still pisses me off because I knew better.

[cosimaninja]

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I was under the impression that you could also have multiple accounts at the same institution and each account would be insured for up to 100k.

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after the Aussie Millions, Jimmy and I went to the bank and asked for multiple accts. for his money and the bank retard said how unnecessary this was. It still pisses me off because I knew better.

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lol. [img]/images/graemlins/wink.gif[/img]

[stoxtrader]

I'm pretty sure that FDIC is per depositor per bank, so multiple accounts at the same institution would NOT be covered over 100k in aggregate.

[rsigley]

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I'm pretty sure that FDIC is per depositor per bank, so multiple accounts at the same institution would NOT be covered over 100k in aggregate.

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if you have a wife you can technically have 3 accounts all insured up to 100k

your account, her account, your joint account

they count your account and your joint account as separate

[pig4bill]

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I thought everyone knew the $100k thing. Why would you keep that much money in a bank anyways? I keep several thousand in the "bank" at most, and the rest consistently gets shipped into a money-market paying ~5%. My bank only pays like 1.25%.

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A money market account with no insurance at all?

[pig4bill]

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FDIC has a long standing history of refunding people's money even if they have well over $100k on deposit.

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Maybe. Sometimes. The FDIC says on their website that people have lost money that had over 100k in their account.

[pig4bill]

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There will not be a widescale bank failure problem this time around due to the securitization markets. This is an isolated incident, in my opinion.

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LOL, securitization by whom? Many of the insurance companies that did MBS and CDO securitizations are leveraged to the hilt and on the brink of failure themselves. Insurance is no better than the organization providing the insurance.

[offthenuts]

Thanks a ton for the heads up Nate. I am definitely one of the ignorant poker players and this sort of reminds me to get my head out of my ass. Does anyone know if you are protected if you have 100k in savings with ING or emigrant or whatever and then additional money in CDs with the same bank? Thanks,
Ben

[KidCornelia]

I have a ton of money in ETRADE and I feel completely safe with it. Besides paying 5.05% on regular savings(no minimums, no fees, and withdrawals or transfers at any time) and 4% on max rate checking, I can transfer between my brokerage, savings, and checking accounts as well as link my other bank accounts from other institutions and transfer and there are absolutely no fees for any of this. You can also have billpay, and a check book and Debit card for each of these accounts. It is by far the best financial institution I've ever dealt with.