Is Your Money Safe?

Last week we had a conversation with Jane Kamensky about the U.S.'s rich history of bank runs. While it definitely put the IndyMac failure in context, it left y'all with quite a few questions about the safety of your money, and specifically, credit unions. So today, Liz Pulliam Weston will take your calls... but first, here's a preview from the personal finance columnist herself. Take it away, Liz...

With the high-profile failure of IndyMac bank, many people are worried about the safety of their savings. Here's what you need to know:
Bank accounts are typically insured by the Federal Deposit Insurance Corp. (FDIC), an independent federal agency, with a basic insurance amount of $100,000 per depositor. Certain retirement accounts, such as individual retirement accounts, are insured up to $250,000 per depositor. For more information, visit the FDIC's Web site.
Most credit unions are insured by the National Credit Union Administration, which is also an independent federal agency. Like the FDIC, the NCUA is backed by the full faith and credit of the U.S. government, with a basic insurance amount of $100,000 per depositor per credit union, with coverage of up to $250,000 for certain retirement accounts. For more information, visit the NCUA Web site.

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Just as this segment was ending, a caller asked about starting a credit union for an underserved segment of the population. First of all, I would like to point out that the question points to a difference between credit unions and banks - the caller didn't ask, and very few individuals would ever think - "how can I start a bank" but rather, how can I start a credit union, which is, indeed, possible. The caller was referred to the NCUA.gov site, which is a good resource, but I would suggest a better resource for "underserved" populations - The National Federation of Community Development Credit Unions, www.cdcu.coop. CDCUs
A community development credit union (CDCU) is a credit union with a specialized mission of serving low- and moderate-income people and communities.
The Federation can help people look into starting a CDCU, or tell him if there is one already serving the callers area.

Sent by Leni Hochman | 4:25 PM | 7-29-2008

I heard this program a few weeks ago. I cannot remember if they implied that Credit Unions are less likely to fail due to bad mortgages.

I came across the fact that a credit union in my area failed due to mortgage problems. Quoting the Sacramento Business Journal on May 23, 2008:

Cal State 9, which lost $46 million on adjustable rate mortgages gone bad in the first nine months of 2007, was taken over by the California Department of Financial Institutions and the NCUA in November.

Sent by Ken | 1:12 PM | 8-21-2008