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August 27, 2008

117 More Banks In Trouble. Are Your Deposits Insured?

The FDIC reported that the number of banks on the “problem bank” list grew to 117 during the second quarter. That’s the highest level since the middle of 2003.

 There were 90 banks on the problem list in the first quarter of this year. The FDIC chairman also said that list is going to grow. In fact, analysts say that there could be up to 150 bank failures on the horizon. Unfortunately the FDIC keeps the list private and will not share the information with the public.

Let’s put this in perspective – the FDIC insures more than 8,000 thrifts and banks. And this is nothing like what we saw during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis (which John McCain was a part of).

Generally small and mid-size banks are more at risk – that’s because they may not be able to raise enough money if they are in trouble. If you’re looking to put your money somewhere safe, go with larger, more familiar banks.

Since the FDIC doesn’t release the names of banks that are in trouble, but you can check the health of your own bank. Check out bankrate.com. This site will have a safe & sound rating system that can help you get a picture of your bank’s health.

If you want more detailed information about your bank’s financials, you can go to ambest.com.

Some signs to look for:

Pay attention to massive job layoffs or cutback in services at your bank.

1.    If your bank doesn’t accept new loan submissions that’s a HUGE red flag.

2.    If you start to see generous CD yields advertised – that could be a sign that the bank is in trouble. That’s because banks are trying to entice people to keep their money at the bank and get new deposits. 

If you are within the limits of FDIC-insurance coverage with an FDIC-insured bank, you shouldn’t panic. The worst move you could make is pulling your money out of a regulated institution and holding the cash yourself.

The FDIC is not required to reimburse you for anything above the covered amount. But there are some cases where you’ll be ok. For example, you may qualify for more than $100,000 if there are accounts in different “ownership categories.”

For example, your share of any joint account at a bank is insured up to $100,000 separately from accounts you hold in your name alone.

And the bank can also choose to pay for uninsured deposits if it raises enough money after selling off the banks assets. 

Are your deposits insured?  Find out by going to: http://www.fdic.gov/deposit/deposits/index.html

 

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6 Comments »

  1. The population of totally safe people is growing.

    Those are the people with absolutely nothing in any bank, hence nothing to lose.

    But the tips here are good for those “unsafe” folk who still have anything.

    Comment by batguano101 — August 27, 2008 @ 3:19 pm | Reply

  2. Batguano – it is so scary out there. My money is under my mattress.

    Comment by Maddie — August 27, 2008 @ 3:34 pm | Reply

  3. Wow. Shocking. Thanks for this most helpful post.

    Astounding the shape our country is in after Bush’s 8 years.

    Comment by Bruce — August 27, 2008 @ 3:35 pm | Reply

  4. @mattie-

    I am fearless and carry mine in my pocket to hear it jingle.

    🙂

    Comment by batguano101 — August 27, 2008 @ 4:32 pm | Reply

  5. I have dug a hole and buried my money – I even have a ‘little’ treasure map. Folks be vigilant!!! Definitely check out bankrate.com and ambest.com. Look for the signs. Protect yourselves – we all work too hard to lose ANY of our money to more bank mismanagement!!!

    Comment by Paulette — August 27, 2008 @ 7:13 pm | Reply

  6. Batguano you are funny!

    Comment by Paulette — August 27, 2008 @ 7:23 pm | Reply


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