Economy

IndyMac Attack

Listen to today's story

As we heard on today's show, people were waiting in line early in the morning to withdraw their money at the Santa Monica branch of failed bank IndyMac. One man arrived at 4:30 in the morning.

Last Friday, IndyMac was taken over by federal regulators with no advance notice to its customers. That's the standard operating procedure according to the FDIC. This is from their website:

Typically, a bank that has failed will be closed on a Friday. The FDIC will then work the weekend to complete deposit insurance determinations for most deposits and be prepared on Monday to either transfer the insured portion of a deposit to another FDIC insured institution or provide deposit insurance payment checks.

It appears, though, that the process is taking longer for IndyMac customers. Hundreds of them have waited in line for hours to withdraw their money or get some information. Many complained that they don't have access to all their money. Here are some answers to commonly asked questions:

Should you be afraid your bank will go under?

Banks go under with no notice, as we see from the FDIC's explanation above. The good news is that relatively few banks fail, about 4-5 a year. The bad news: 5 have failed so far this year, and it's only July.

What can you do to protect yourself?

First, don't have more than $100,000 in one bank account. The FDIC won't insure a penny more than that, and that includes the original deposit, plus any interest that's accrued.

If you have more than $100,000, split it up, either under different names (your husband's or wife's or children's) or in different banks. The FDIC will insure all $1 million if it's in 10 $100,000 accounts.

What's insured and what's not?

Check out this handy FAQ from the FDIC.

If you have more questions, post them in the comments section. We're going to interview a financial analyst on Day to Day, and I'll ask him/her some of your questions.

Comments

 

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It is heartening to finally see a news article that publishes facts and information without resorting to sensationalism and scare tactics. I'm disgusted with the articles that are irresponsibly practically encouraging their readers to run to their banks and withdraw their deposits. I wonder what percentage of the downturn of this economy is media driven with their scare mongering?

Sent by CD Lewis | 6:33 PM | 7-16-2008

So let me see if I am understanding this correctly. We have banks that are either refusing a federally issued cashiers check or placing a hold for 6-8 weeks to make sure that the funds are verifiable. So, are they holding Social Security checks, as well? How about tax refunds? I would think that since the Feds have taken over there should be no question if the funds are good. I mean, isn't that why they rolled in in the first place. The other banks have it backwards, their logic would make sense if their policy was not to accept the checks prior to the Federal takeover. After all, that would have been the time to worry. These banks are only perpetuating the mass hysteria. Haven't these poor misled customers been through enough?

Sent by Mike and Stephani | 10:59 PM | 7-17-2008

Countrywide the mortgage company that has been at the forefront of the "mortgage meltdown" was founded by Angelo Mozillo. Mr. Mozillo was also a founder of Indymac bank! This was apparently a shell game to be used as cash instument to fund the questionable mortages. I do hope the $ 120 million plus severance Mr. Mozillio got for his departure from and sale of Countrywide has been frozen by federal investigators. This guy is a thug.

Sent by M. Speed | 1:25 PM | 7-18-2008

I was told years ago that if every person went to their US bank today and asked for their monies in cash, basically a run on the banks, they would receive .03 cents for every dollar on deposit. Is this true.

Sent by Bob | 9:13 AM | 9-23-2008