Tagline? We don’t need to stinkin’ tagline!

I’m Fed Up! (the IndyMac edition)

Anyone see the line in front of IndyMac to close accounts, now that it’s considered insolvent and taken over by the government?  

Did you know for FDIC insurance, the usual max insured at any one bank is $100,000?  Not multiple accounts at one bank with $100,000 each…all specified accounts with a total max of $100,000 (you can have a $100,000 account at differing banks (and make sure they are different, all the way up the corporate chain), and they will be covered up to $100,000 each).

Don’t believe me?  Here’s the official brochure:

http://www.fdic.gov/deposit/deposits/insured/yid.pdf 

Page 5:

“How Much Insurance Coverage Does the FDIC Provide?  

The basic insurance amount is $100,000 per depositor, per insured bank. 

The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank. 

Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank. 

Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.” 

So, all those people lined up in front of IndyMac will get a maximum of $100,000, plus 50 cents on any dollar above.  You have a million dollars sitting in qualified IndyMac accounts?  You’re getting a total of $550000.  Total.  You lost $450,000, almost 50% of your life savings.

Sucks, doesn’t it?

And another 100 banks are destined to fail this year according to the Fed and other analysts.  And the Fed has stated it will do nothing for these banks.  Granted, these are small, regional banks, but still.  Once word does get out about what FDIC means for each individual, this becomes a self fulfilling prophecy.  FDIC insures only a portion of your deposits over $100,000…maybe.  I’ll go run over beforehand and withdraw all my money.  Then I tell my friends.  They tell their friends.  Maybe someone on some no-name site starts a rumor that the bank is insolvent.  More people withdraw.  Then the bank becomes insolvent and we see yet another FDIC takeover and people lose money.  More people lose confidence, and so on, and so on.

Anyone remember when this happened before?  It might be on the quiz…

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