The Federal Deposit Insurance Corporation (FDIC) is reporting a higher number of unprofitable banks and problem bank and savings institutions than in the past two years. Much of the problem stems from charge offs to industrial borrowers, bad mortgage loans, and home equity lines of credit.While the number of problem banks is not out of line if compared to historical data from the past five years, what is troubling is the sharp increase in home repossession and foreclosures and the impact that this can have on the banking industry. In a Fox news report on February 26, 2008 titled, Homes Facing Foreclosure jump 57% in January, the reporter stated that In January they witnessed a 90% spike in the number of homes going back to the bank. Homeowners can't meet their payment requirements and the homes can't even be resold at auctions. If your bank does happen to fail, what happens to your deposits and investments?If your bank does fail it will most likely be acquired by another bank or the FDIC will intervene.
The FDIC will insure up to $100,000 for checking accounts, savings accounts, certificates of deposits and IRA retirement accounts at Federally insured institutions.
The FDIC does not insure mutual funds, annuities, stocks, bonds, life insurance policies or the contents of safe deposit boxes.
The Securities Investor Protection Corporation does insure and replaces missing stocks of up to $500,000 if a bank fails.
Treasury bills, notes, and bonds are still safely owned by the investor. The holder can request a document showing ownership from the bank acquiring the failed bank or from the FDIC if the failed bank is not acquired by another institution. You can then take this proof of ownership to the nearest Federal Reserve Bank to redeem your T-bill.
The contents of your safe deposit box are not insured by the FDIC. If you are concerned about theft or fire you can obtain insurance through your home owners insurance. If your bank does fail the bank acquiring your bank will take over the offices and safety deposit boxes. If there is no acquiring bank ,the FDIC will notify safe deposit box owners to come pick up the contents of their boxes.
Credit Unions are insured by the National Credit Union Administration for deposits of up to $100,000 at Federally insured institutions.
If you would like to make sure that your bank or savings institution is Federally insured you can do so at the Federal Deposit Insurance Corporation.
Bank Find- http://www2.fdic.gov/idasp/main
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