click to close
help
edit

Forums ›
Finance

Know your FDIC/NCUA limits and dont cause Bank Runs (Pics linked)

  • filter:
  • Tell A Friend
  • Text Only
  • Search this Topic »
  • switch to 'Classic' view
  • Go to Page :
  • 1 2345…8
rated:
   posted: Jul. 15, 2008 @ 6:12a
alert mods    

This isnt intended to be another thread on Indymac, just had to post this picture of people lining up for hours to get their deposits out of a bank already under FDIC control

Topic of this thread: KNOW YOUR FDIC LIMITS SO YOU DONT LOOK LIKE THESE IDIOTS. Hint: Once FDIC has already taken over, the bank isnt going to fail AGAIN , and AGAIN and AGAIN. Its over. You dont need to run to the bank. Bank runs are easily avoidable if you know your FDIC limits, structure accounts properly at inception, and you can avoid standing in line, flying into a local branch, etc.

FDIC Estimator
NCUA Estimator

Message edited by: SUCKISSTAPLES on 2008-07-15 07:32:16 CDT
   posted: Jul. 15, 2008 @ 6:12a

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

*Very* basic information about FDIC/NCUA Insurance Limits:


Single-owned account:  $100K
Joint-owned account:   $200K
Owner-POD account:     $100K

IRA account:           $250K


Note that FDIC/NCUA insurance coverage on these categories is calculated separately. For example, a husband and wife can attain up to $600K in FDIC/NCUA insured funds at a single financial institution as follows (example partially "borrowed" from gwu1986 in another thread):


Husband-Wife's Joint account: $200K
Husband's account:            $100K
Wife's account:               $100K
Husband-POD Wife account:     $100K
Wife-POD Husband account:     $100K
Total insured amount:         $600K


Here's a useful link from Bank Deals: Preparing for Bank Failures

Message edited by: dragob on 2008-07-25 10:35:19 CDT
rated:
   posted: Jul. 15, 2008 @ 7:06a
alert mods    

USAToday had a story on this. One lady was using her 'day off' to stand in line - she had $160,000 in the bank.

Obviously, for the $60,000 she may lose, she should've taken a sick day LAST week.

rated:
   posted: Jul. 15, 2008 @ 7:52a
alert mods    

We are already seeing panic threads, from those with

$5,000 in the bank
http://www.fatwallet.com/forums/finance/844040?newest=1#last

to those with $90,000 in the bank
http://www.fatwallet.com/forums/finance/844129/

PLEASE educate yourself on FDIC and NCUA coverage, and do not post new threads asking whether every amount and every bank out there is "safe".

rated:
   posted: Jul. 15, 2008 @ 8:38a
alert mods    

Good thread, should be sticky while bankruns are happening...

rated:
   posted: Jul. 15, 2008 @ 8:44a
alert mods    

Preaching to the choir... I hope! In light of the above threads, perhaps not. Perhaps Schumer should be reading this, too.

Message edited by: glxpass on 2008-07-15 08:57:05 CDT
rated:
   posted: Jul. 15, 2008 @ 12:38p
alert mods    

Never amazes me on the amount of stupidity in the world. Who was the one who said the average person isn't stupid?

rated:
   posted: Jul. 15, 2008 @ 12:42p
alert mods    

This is an honest question that I'm not even sure could happen, but...what happens if FDIC's $53 billion allocation for insuring banks gets used up by 5 or more of the largest banks failing? First IndyMac, next could be Wachovia? and maybe some of the smaller banks, too? Thanks for this discussion.

Message edited by: bjg31483 on 2008-07-15 12:45:03 CDT
rated:
   posted: Jul. 15, 2008 @ 12:49p
alert mods    

Then the government steps in and funds them some more.

See: Savings and Loan crisis.

rated:
   posted: Jul. 15, 2008 @ 2:06p
alert mods    

glxpass said:Preaching to the choir.I agree and although the sentiment of this thread is noble, FW is far too small a crowd to make much of a difference. If you're lucky, this thread will get 5,000 views which maybe equates to about a couple thousand different people, but probably less than 1,000. Of those couple thousand, most FWFers are already knowledgeable about these rules.

Now, if the mainstream media tries to educate people....

rated:
   posted: Jul. 15, 2008 @ 2:18p
alert mods    

I agree with educational intent of the thread.

But some cynical part of me just wishes to grab some popcorn while watching dummies waste their time and nerves waiting in line for hours in the sun. I mean stupidity and ignorance should have its cost, no?

Besides, how are we gonna keep getting our supply of fine drama stories on CNN money? I'm waiting for an article soon on the poor victim with less than $100k in the bank who waited in line on bank run, got a heat stroke or something like that, and had no health coverage so they ended up losing their home and/or car to pay medical bills. The article would conclude by the victim swearing that from now on, they'll keep all their money in cash hidden in his/her appartment since the banks can't be trusted with it. Better be safe and not earning a penny of interest than sorry.

rated:
   posted: Jul. 15, 2008 @ 2:38p
alert mods    

Here's a reasonable question I got on my mind.

Lets say a bank with 20b on deposit fails. It has 19b in insured deposits and 1b in uninsured (over the limit, etc). OTS sees that the bank has only 19.5bil in assets and shuts it down.

Wouldn't this mean that the bank has assets to cover the 19b in insured deposits, plus about 500 million leftover to cover half of those deposits over insurance limit? Those people with uninsured funds would get half of their money, and FDIC reserves end up untouched.

I know I am simplifying as there are plenty of other costs, such as salaries for temporary staff, all kinds of organizational expenses to set things up, etc.

If FDIC is saying their cost of this failure will be 4-8b, wouldn't that mean that the bank has only about 19 minus (4-8) = 11-14 billion of assets? If so, why would those who are uninsured get anything, such as 50% advanced dividend being given out?

I tried to research this and look at FDIC historical payouts and assets but ran out of lunch time

Message edited by: lampy2k4 on 2008-07-15 15:46:42 CDT
rated:
   posted: Jul. 15, 2008 @ 2:58p
alert mods    

seventy-five years later, history repeats itself.

http://www.madisonavenuejournal.com/images/Bank%20Run%20New%20York%20April%201933.JPG

notice IndyMac raises interest rate to 4.00% (for balances over 75K). what a coincidence.

Message edited by: thinnwallet on 2008-07-15 15:21:11 CDT
rated:
   posted: Jul. 15, 2008 @ 3:41p
alert mods    

Can someone actually explain the nitty gritty of a bank failure.

lets say you're smart, did your homework, and have a max of $100K in IndyMac today. The bank failed last week and you can't access your funds at this time.

1. what happens to interest? FDIC articles say "PRINCIPLE" is protected.

2. what happens during the interim, do you continue to earn interest

3. does nothing change, and one day the bank gets renamed and you get a statement from a new instituion?

4. what is the average time it takes to receive funds after a bank failure? Days? Weeks? Months? Some articles suggest up to 90 days.

What is the flow? Does anyone know?

SUCKISSTAPLES points out a good detail about insurance, but what about liquidity? What if you need your money fast? i.e. how and when do you actually get your money back from the FDIC.

rated:
   posted: Jul. 15, 2008 @ 3:44p
alert mods    

sailmaster1955 said:Can someone actually explain the nitty gritty of a bank failure.

lets say you're smart, did your homework, and have a max of $100K in IndyMac today. The bank failed last week and you can't access your funds at this time.

1. what happens to interest? FDIC articles say "PRINCIPLE" is protected.

2. what happens during the interim, do you continue to earn interest

3. does nothing change, and one day the bank gets renamed and you get a statement from a new instituion?

4. what is the average time it takes to receive funds after a bank failure? Days? Weeks? Months? Some articles suggest up to 90 days.

What is the flow? Does anyone know?

SUCKISSTAPLES points out a good detail about insurance, but what about liquidity? What if you need your money fast? i.e. how and when do you actually get your money back from the FDIC.

In a typical case, including IndyMac situation, it's #3 and thus all of your other questions are not relevant.

rated:
   posted: Jul. 15, 2008 @ 3:46p
alert mods    

lampy2k4 said:Here's a reasonable question I got on my mind.

Lets say a bank with 20b on deposit fails. It has 19b in insured deposits and 1b in uninsured (over the limit, etc). OTS sees that the bank has only 19.5bil in assets and shuts it down.

Wouldn't this mean that the bank has assets to cover the 19b in insured deposits, plus about 500 million leftover to cover half of those deposits over insurance limit? Those people with uninsured funds would get half of their money, and FDIC reserves would be untouched.

I know I am simplifying as there are plenty of other costs, such as salaries for temporary staff, all kinds of organizational expenses to set things up, etc.

If FDIC is saying their cost of this failure would be 4-8b, wouldn't that mean that the bank has only about 19 minus (4-8) = 11-14 billion of assets? If so, why would those who are uninsured get anything, such as 50% advanced dividend being given out?

I tried to research this and look at FDIC historical payouts but ran out of lunch time
I wondered the same yesterday? To my simple mind, if the uninsured get paid 50% right away (with the possibility of more down the road), FDIC should not have to dig into their pocket AT ALL.

rated:
   posted: Jul. 15, 2008 @ 3:47p
alert mods    

What happens to credit cards with a 0% promotional rate?

rated:
   posted: Jul. 15, 2008 @ 3:50p
alert mods    

lampy2k4 said:sailmaster1955 said:Can someone actually explain the nitty gritty of a bank failure.

lets say you're smart, did your homework, and have a max of $100K in IndyMac today. The bank failed last week and you can't access your funds at this time.

1. what happens to interest? FDIC articles say "PRINCIPLE" is protected.

2. what happens during the interim, do you continue to earn interest

3. does nothing change, and one day the bank gets renamed and you get a statement from a new instituion?

4. what is the average time it takes to receive funds after a bank failure? Days? Weeks? Months? Some articles suggest up to 90 days.

What is the flow? Does anyone know?

SUCKISSTAPLES points out a good detail about insurance, but what about liquidity? What if you need your money fast? i.e. how and when do you actually get your money back from the FDIC.

In a typical case, including IndyMac situation, it's #3 and thus all of your other questions are not relevant.


Ok... what about the timing? How long before your money is liquid and in your hands? Countrywide locked up my money for 10 days when they had a run several months ago and they didn't even fail!

rated:
   posted: Jul. 15, 2008 @ 3:58p
alert mods    

sailmaster1955 said:Ok... what about the timing? How long before your money is liquid and in your hands?

There is no timing... you can get your money from an ATM, write a check or do an electronic transfer at any time. The reason FDIC steps in on Friday is so that changes are implemented over the weekend when certain transactions (teller window, checks) are not processed anyway.

rated:
   posted: Jul. 15, 2008 @ 4:12p
alert mods    

sailmaster1955 said:
Ok... what about the timing? How long before your money is liquid and in your hands? Countrywide locked up my money for 10 days when they had a run several months ago and they didn't even fail!
The bank was closed late Friday afternoon.
All insured deposits were available Monday morning.
All checks and ATM cards still worked as if nothing had happened.
Electronic transfers and billpays are not processed over the weekend anyway and all electronic transfers and billpays scheduled for Monday went through as normal.
The web site was up and running Monday morning.
All insured accounts kept earning interest as usual and are still earning interest.
If your deposits were all within the insurance limits, it's as if nothing had happened.
The people lining up all night outside the bank this week are idiots.

Countrywide Bank had a ten day hold on all incoming transfers initiated through their web site until sometime last year. Then they changed it to a five day hold. The hold is disclosed on their web site and in the Application Disclosure Handbook (page 17) which you acknowledge having read when you submit your application and a copy of which is then also mailed to you. It is not uncommon. Most (but not all) banks have a 3 to 5 day hold on ACH transfers initiated from their web site.

 Close

Sign Me In
Nickname: 
Password: 
Remember My Login Information:

Forget your login information?

Not Already A Member?
Sign Up Now!