FDIC Insurance...........

[FinanceDude]

I did some digging some time ago, and like all things government, it's UNDERFUNDED.................

Hmmmmm..............covers about $4 trillion in assets, yet has only somewhere around $98 billion in assets to cover............boy I feel safe now.........

I'm going to find the provision that allows the Treasury to "negotiate" payment of funds over long periods of time in the event the banking system fails.

I seem to remember 99 years or some goofy number like that..........

Even if it's 25 years, still a LONG WAIT to get your money back............

BTW, that little urban myth that "No bank has failed since FDIC was put into place"? Not true...............

 

[OAG]

Like all insurance, it is predicated, on the "few" going belly up. Can't handle the entire herd going "belly up" at the same time. Index and middle finger kind of program.

 

[Nords]

I did some digging some time ago, and like all things government, it's UNDERFUNDED.................
Hmmmmm..............covers about $4 trillion in assets, yet has only somewhere around $98 billion in assets to cover............boy I feel safe now.........

OK, so they're a govt agency and thus subject to taxpayer abuse.

But how do they compare to an AAA-rated insurer like General Re? I'm pretty sure that Gen Re doesn't carry enough funding to cover all their contracts, either.

Maybe FDIC ought to be rated like any other insurer.

 

[brewer12345]

Maybe FDIC ought to be rated like any other insurer.

Effectively, they are. Ginnie, Fannie and the Federal Home Loan Banks are all implicitly backed by the feddle gummint, and these entities are very highly rated (Aa to Aaa). In contrast, the FDIC is backed by the "full faith and credit" of the feddle gummint (i.e. explicitly guaranteed). Sounds like a Aaa credit to me.

But again, I think we are well into tinfoil hat territory here.

 

[lets-retire]

Like all insurance, it is predicated, on the "few" going belly up. Can't handle the entire herd going "belly up" at the same time. Index and middle finger kind of program.

If they all go belly up, I think we will have more pressing issues to worry about than getting our money out of the bank.

 

[FinanceDude]

If they all go belly up, I think we will have more pressing issues to worry about than getting our money out of the bank.

True.........but ask some folks who lived through the Depression, and you might hear a different tune.............

 

[wabmester]

Just keep your money out of the banks that do a big business in option ARMs. WaMu, IndyMac, etc.

 

[kaudrey]

Well, I worked at the FDIC for 15 years, and I never heard that "urban myth". It's very easy to find out what banks have failed in the past 10 or 20 years.

They are not in the red, and yes, they work like regular insurance companies. They are required to keep a certain amount of money on hand to pay for bank failures. The minimum is 1.25% of total insured deposits - that is their "reserve". When they fall below the required percentage, they can raise the premiums banks pay until they go back above the percentage.

When I started back in 1991, they were about $20 billion in the hole, on paper. Banks rebounded, and FDIC has been in the black ever since. They haven't fallen below the 1.25% since the early '90s.

All of this information is available to the public on their website.

 

[FinanceDude]

Well, I worked at the FDIC for 15 years, and I never heard that "urban myth".  It's very easy to find out what banks have failed in the past 10 or 20 years. 

They are not in the red, and yes, they work like regular insurance companies.  They are required to keep a certain amount of money on hand to pay for bank failures.  The minimum is 1.25% of total insured deposits - that is their "reserve".  When they fall below the required percentage, they can raise the premiums banks pay until they go back above the percentage.

When I started back in 1991, they were about $20 billion in the hole, on paper.  Banks rebounded, and FDIC has been in the black ever since.  They haven't fallen below the 1.25% since the early '90s.

All of this information is available to the public on their website.

I'm glad you're on here......... So what is the time period that FDIC has to reimburse affected accountholders if the banks all failed, or is there no provision for that?

 

[brewer12345]

I'm glad you're on here......... So what is the time period that FDIC has to reimburse affected accountholders if the banks all failed, or is there no provision for that?

Heh, as long as it took to run the gummint prnting presses...

 

[ash]

Heh, as long as it took to run the gummint prnting presses...

Exactly.

I think we'll all have bigger problems to worry about before the federal government allows mass insecurity in the banking sector.

 

[kaudrey]

I'm glad you're on here......... So what is the time period that FDIC has to reimburse affected accountholders if the banks all failed, or is there no provision for that?

Hi,

Well, thanks. The FDIC is quite efficient in this regard, actually. They'll have a check the next business day, unless something weird happens. From their website:

Federal law requires the FDIC to make payments of insured deposits "as soon as possible" upon the failure of an insured institution. While every bank failure is unique, there are standard policies and procedures that the FDIC follows in making deposit insurance payments. It is the FDIC's goal to make deposit insurance payments within one business day of the failure of the insured institution. 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.

So, as long as you keep less than $100K in each bank, you'll pretty much never lose access to your money.

Karen

 

[FinanceDude]

Hi,

Well, thanks.    The FDIC is quite efficient in this regard, actually.  They'll have a check the next business day, unless something weird happens.  From their website:

Federal law requires the FDIC to make payments of insured deposits "as soon as possible" upon the failure of an insured institution. While every bank failure is unique, there are standard policies and procedures that the FDIC follows in making deposit insurance payments. It is the FDIC's goal to make deposit insurance payments within one business day of the failure of the insured institution. 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.

So, as long as you keep less than $100K in each bank, you'll pretty much never lose access to your money.

Karen

Thanks for the info...........so other than a massive failing of the largest banks in America all at once, it would pay or let another bank take over the deposits through receivorship and transfer the deposits to FDIC coverage at the new bank?

 

[brewer12345]

Thanks for the info...........so other than a massive failing of the largest banks in America all at once, it would pay or let another bank take over the deposits through receivorship and transfer the deposits to FDIC coverage at the new bank? 

Pretty much. The massive failing thing would pretty much destroy the world capital markets and economic system, so I don't think I'd be too worried about FDIC insurance in that case.

 

[FinanceDude]

Pretty much.  The massive failing thing would pretty much destroy the world capital markets and economic system, so I don't think I'd be too worried about FDIC insurance in that case.

I feel so good............I think I'm putting all my money in CD's..................

 

[MJ]

Slightly of the subject, does anyone know if the FDIC or NCUA has increased the IRA max protection to 250k?

 

[OAG]

Both FDIC and NCUA have increased IRA accounts to $250K since April 2006.

 

[MJ]

Both FDIC and NCUA have increased IRA accounts to $250K since April 2006.

Thanks OAG.

 

[lets-retire]

So if you have a saving and IRA at the same bank you can be insured against a 350k loss?

 

[OAG]

IRA's have always been insured seperately. But, Yes, you can have up to 250K in an IRA (Both Traditional and ROTH types are combined in this number) and seperate non-IRA accounts up to 100K, for a total of 350K for an individual. You can also have a seperate JOINTLY Owned Account with other persons for additional amounts of insured funds. If this is a real concern you can get the documents to read in pdf format at www.FDIC.gov for banks and at www.NCUA.org for Credit Unions. As long as the institutions have the FDIC or NCUA logo they are insured institutions. I am not sure if there are still institutions that do not have insurance but maybe there are some small uninsured banks or credit unions around.

 

[lets-retire]

Cool thanks.