the recent failure of indymac bank has brought attention to just what “fdic insured” means. the federal deposit insurance protects the first $100,000 of deposits that you may have in a bank. anything beyond that and, if your bank fails, it’s a loss. in the case of indymac customers, about 5% of the total deposits were uninsured. while i would suggest that people make sure their funds are fdic insured, the following article caught my eye....
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the recent failure of indymac bank has brought attention to just what “fdic insured” means. the federal deposit insurance protects the first $100,000 of deposits that you may have in a bank. anything beyond that and, if your bank fails, it’s a loss. in the case of indymac customers, about 5% of the total deposits were uninsured. while i would suggest that people make sure their funds are fdic insured, the following article caught my eye....
from seeking alpha:
Can you just imagine what would happen if everyone who is above the FDIC limits listens to the media’s public service announcement and strategically positions their deposits so every penny in banks is covered? Think about it. Think what happens to banks that are relying on these uninsured deposits for cheap financing if they are reallocated to another bank down the street. Are we sure that all banks will get a perfect balance of new insured deposits in exchange for the uninsured deposits they lost? Is it impossible to imagine a run on banks caused by everyone trying to avoid the consequence of a run on banks?
so let me say…
it’s not always necessary to spread your funds across different banking institutions in order to insure that they are covered by the fdic.
from Worried about your money after IndyMac’s failure? Don’t be.:
If you have more than $100,000 in deposits in a single bank, you may be able to structure your accounts in a way that all the money is protected.
It depends on the account’s ownership category, such as single accounts, joint accounts, certain retirement accounts and revocable trust accounts.
In addition, federal law provides for insurance coverage of up to $250,000 for certain retirement accounts per owner per insured bank.
personally, i’m longing for the day when i have to worry about my excess deposits over $100,000 :o
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