Aug 28, 2008 5:29 pm US/Pacific
ConsumerWatch: Are Your Bank Deposits Insured?
SAN FRANCISCO (CBS 5) ―
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Customers line up in front of an IndyMac Bank branch in Santa Monica on July 14th. Federally-seized IndyMac Bank suffered one of the biggest bank closures in U.S. history.
Gabriel Bouys/AFP/Getty Images
In July, customers of IndyMac Federal Bank in Southern California nervously lined up to cash out their accounts. The bank was taken over by the government. It is one line consumers don't want to stand in.
"I'm somewhat concerned. Yes, we do have an account at Citibank, and they're having a lot of problems," said one consumer.
For another consumer, his concerns go beyond his own bank. "I am worried about that, but I'm more worried about what brought that on," he said.
How do you know if your bank is on the trouble list? You don't because the information isn't disclosed until there's a takeover.
"In most cases, if the FDIC closes your bank on Friday night, if you walk in on Monday morning, you can have all of your insured deposit funds right then and there," said Jim Wilcox, Professor of Financial Institutions at UC Berkeley.
But the key word here is "insured" -- and don't assume all of your funds are insured. "The basic insurance coverage is $100,000 per person, per bank," said Wilcox.
In other words, if you keep all of your money in one bank and have $100,000 in your checking account, $100,000 in a 5-year CD, and $100,000 in a 10-year CD; and the bank closes, you are only insured for the first $100,000. "Of the uninsured amounts, you're likely to get some of it back," said Wilcox.
But if you have each of those insured accounts opened in three separate banks, all three are protected -- up to $100,000 each. There are ways to increase the insured amounts per bank by adding spouses or beneficiaries to the accounts. Each person is insured for $100,000.
And if you worry about the FDIC not bailing banks out, Wilcox said don't. "The FDIC itself is backed by the full faith and credit of the U.S. Treasury," he said.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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