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Did anyone ever have to use the FDIC insurance on a CD?
Old 06-10-2008, 03:12 PM   #1
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Did anyone ever have to use the FDIC insurance on a CD?

I have some local banks that offer CD's that have a decent rate and they are FDIC insured but I don't have a lot of faith in these banks.

What I'm curious about is if anyone actually bought a CD and had the bank of whoever issued it fail for whatever reason. Then had to rely on the FDIC insurance how that it worked out as far as if you actually recovered your money and if so how much of if and how long that it took?

Thanks

Jim
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Old 06-10-2008, 03:32 PM   #2
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Usually, when a bank is failing, the FDIC finds a merger partner so this is not an issue. Otherwise, you will be covered by FDIC deposit insurance. Just make sure you keep within the insured limits - $100,000 for regular accounts and $250,000 for IRAs. The insured limit is higher if you have several accounts with qualified family members. Check the FDIC website to calculate your total insurance coverage here: FDIC: Electronic Deposit Insurance Estimator (EDIE) – Online Version
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Old 06-10-2008, 05:28 PM   #3
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Basically, bank A (where your money is) closes at COB Friday and on Monday morning the accounts of closed bank are at the successor bank. Your money should be fine and available to you at the successor bank on Monday. Works the same way for Credit Unions. I understand that if within the limits, as previously mentioned, your money is immediately available - if outside the limits it is not gone, but it will take some time to get back to you.
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Old 06-10-2008, 06:51 PM   #4
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No experiences with FDIC, but I had some acquaintances who went through the transfer drill with a Texas savings & loan that went belly up. The federal insurer at the time (FSLIC?) stepped right in and sent the accounts to a new institution.

I remember that access to funds was restored with little or no delay. What I don't recall is whether the outfit inheriting the CD honored the original term and rate.
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Old 06-10-2008, 07:27 PM   #5
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Yes, We had a CD in a local bank in the late '80s. When it came due I stopped by to pick up a check and was met at the door by a federal agent wearing a side arm. When I stated my business, to pick up my money, he said "not today". We received a check for our full balance from the FDIC in less than a week.
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Old 06-10-2008, 10:11 PM   #6
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Just this week!

We had a few clients with brokered CDs in ANB Financial. They went belly up about a month ago. FDIC paid out all the principal and interest last Friday.
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Old 06-11-2008, 12:11 AM   #7
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Quote:
Originally Posted by saluki9 View Post
Just this week!

We had a few clients with brokered CDs in ANB Financial. They went belly up about a month ago. FDIC paid out all the principal and interest last Friday.
Did the interest include the time between the failure and when the check was actually received. In other words, were your clients out a months-worth of interest while the check floated to them?
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Old 06-11-2008, 07:01 AM   #8
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Did the interest include the time between the failure and when the check was actually received. In other words, were your clients out a months-worth of interest while the check floated to them?
no, but that usually isn't a very long time.

When Netbank bought it a year or so ago our clients had their checks in 10 days or less. ANB was a tricky one and it took them a little longer. I've heard from some other people at our custodian that the FDIC has actually paid out some people in full who had more than 100K.
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Old 06-11-2008, 01:57 PM   #9
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Wow thanks everyone!

I would not have guessed that you would get your money back so quick...it looks like you do get some really good protection with the FDIC!

Jim
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Old 06-11-2008, 03:07 PM   #10
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The true test of the FDIC and it's ablity to provide protection can only be evaluated if there is a banking crisis. What is going on now cannot be considered a problem period.
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