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.