Bank Failures: Protect Your Cash Today!

In April, financial planner, economist and financial writer David McPherson said that bank failures were a "rare occurrence," that very few of us born since the Great depression, needed to worry about. Well, now he wonders, if he needs to rethink that position. Since April, there has been eight (8) bank failures. The most recent bank failure, I had heard about was Colombian Bank, here in Topeka. However, there was another one this past Friday(Aug 30).

The latest failure came Friday when the Federal Deposit Insurance Corporation seized control of Integrity Bank of Alpharetta, Ga. Integrity's five offices reopen today as branches of Regions Bank, a major Southeastern regional bank that assumed Integrity's $974 million in deposits. That means depositors will have full access to their money, even if their accounts exceed FDIC insurance limits.
- ABC News

As David points out, it is clear, from FDIC's announcement several days ago, that this won't be the last one either. With 117 banks listed on it's problem list of troubled banks. While, the FDIC won't publicly name those 117 banks, experts have put together a list of probable banks. The list includes, Bank of America, US Bancorp, HSBC and Washington Mutual. However, the list didn't include Integrity Bank, so I am not sure that I would completely trust it. (To see the complete list of banks that have already failed, click here.)

The first step, for us as consumers is to make sure all of our funds are safe.

Given the current turmoil in the banking industry, there is no good reason you should leave a single dollar uninsured by the FDIC or the National Credit Union Administration.

As most depositors know, the basic insurance limit on bank deposits is $100,000 at a single bank. That is why, I personally would never have more then $50,000-$75,000 at any one bank or credit union. However, David says it is possible to have up to $500,000 at a single financial institution and still be insured.

This can be done by utilizing multiple account ownership categories, since the $100,000 insurance limit applies by account category.

That doesn't mean savings, checking and CD accounts.

That means one person can be insured for up to $100,000 for a single account and another $100,000 in a joint account with a spouse or someone else. Other ownership categories include payable-on-death, irrevocable trusts, and corporate accounts.

Also, there is a $250,000 insurance limit for IRAs and other certain retirement plans containing bank deposits, rather than mutual funds annuities or other securities sold through a bank.

If you hold more than $100,000 in any combination at a single bank, I'd suggest you visit the FDIC's Electronic Deposit Insurance Estimator at www.fdic.gov/edie. It is an online calculator that will help you to be sure your deposits are fully insured.

One final note,

If the FDIC cannot find another bank to buy the insured deposits, one of two things can happen. One, the FDIC can transfer assets to a newly created bank it runs until a buyer is found. The other alternative is the FDIC can issue checks up to the insured limits directly to depositors. That process usually will not take more than three business days, says the FDIC.

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