Comments on: Are your deposits insured? How to avoid losing money in the coming bank Armageddon

By: Michael

Michael — Fri, 18 Jul 2008 02:49:17 +0000

I should also point out that $500m in uninsured deposits (50%) at Indymac has not been returned to depositors and may never be returned to them.

By: michael

michael — Sat, 28 Jun 2008 02:35:55 +0000

Even if an uninsured depositor receives all their money, it is likely that they will have to wait to get access to it. While some failed banks have all deposits (even non-FDIC insured deposits) transferred to an acquiring institution (like the bank you mention), it is not uncommon to have to go through the FDIC claims process (as with banks #2 (ANB Financial) and #4 (Hume Bank) on the FDIC failed bank list. In that case, uninsured depositors had to file claims with the FDIC. Oh, and this Marketwatch article lists two recent bank failures where some uninsured deposits were lost. These were Netbank, where 30% of uninsured deposits have not been paid, and Miami Valley Bank of Ohio, where only 94% of uninsured deposits have been paid (these data are from February). This recent balance sheet for Netbank indicates that there will be real losses for uninsured depositors. Same thing for Miami Valley Bank. Are you still so sure that I am uninformed? It is simple for depositors to spread money out across accounts to minimize their risk and ensure that all their deposits are FDIC-insured. Arguing as you do that losing uninsured deposits is "unrealistic", is wrong and it discourages people from acting in a prudent manner.

By: Andy

Andy — Sat, 28 Jun 2008 01:54:02 +0000

wow…you really don’t know what you are talking about. Sorry for the sarcasm but I think you need to be a little more realistic. Banks are not going to be dropping like flies, and I would like you to articulate the last time an uninsured depositor lost their money before indicating you should not have over $100,000 in any institution. First Integrity Bank in Staples, MN was recently closed by the FDIC.

Did uninsured depositors lose money? No.
Was there difficulty in accessing funds? No.
Was it a seamless transition to the new owners? Yes.
Did the FDIC know what they were doing and have it planned weeks in advance? Yes.

Please provide more facts to support your assertions.

*As a disclosure, I work for a community bank. A real estate bank, and we are doing quite all right. Are margins tight? Yes. Are there more asset quality issues? Yes. But that brings more blocking and tackling and less business development. I think you are over reacting. Usually there are unusual circumstances that create the bank failure.

If you are getting in the market now, it is not a good time to short banks, the risk return is not there right now. You missed the boat…