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How safe is your bank?

By Tom Zucco, Times Staff Writer
In print: Wednesday, July 16, 2008

Some 200 anxious customers gather Tuesday outside an IndyMac Bank branch in Encino, Calif., demanding their money back during the second day of the failed institution’s federal takeover. Police were called to maintain order.
	[Associated Press]

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ADVERTISEMENT Related Links Database: Your bank's health PDF: FDIC's Guide to Deposit Insurance Coverage

America is nervous about its banks. Outside branches of California-based IndyMac Bancorp, people lined up Tuesday to withdraw money after the bank shut its doors last week, becoming the third-largest bank in U.S. history to fail. Stocks of prominent banks in Florida continue to be pummeled because of problem lending and weak earnings. Federal leaders are trying to bolster public confidence. Could some banks fail here? Here's a guide to protecting your money:

How can I tell if my bank is strong or weak?

For starters, go to our Web site at money.tampabay.com and click on the right hand side under "Your Bank's Health." You'll see Florida banks ranked by their financial condition. There's more information at bauerfinancial.com or bankrate.com, both services based in Florida.

I'm reading a lot about banks called Fannie Mae and Freddie Mac being in trouble. Does that affect me?

Probably not. Fannie and Freddie are government-created banks that specialize in buying and selling mortgages. Consumers do not have direct contact with them.

Is anybody protecting my deposits in a bank?

Yes. The Federal Deposit Insurance Corp. is a federal agency that guarantees consumer deposits up to $100,000 or $250,000 for most retirement accounts including interest accrued.

What is not covered by FDIC insurance?

Money invested in stocks, bonds, mutual funds, money market mutual funds (as compared with money market accounts, which are covered), life insurance policies, annuities or municipal securities, even if the investments were bought from an insured bank.

Since the FDIC limit is $100,000, could a depositor keep $100,000 in accounts at two separate banks (which are not branches of the same bank) and be insured for $100,000 on each account?

Yes. Accounts at different banks are insured separately.

If a bank fails, do depositors with more than $100,000 in one account lose that uninsured money?

Not always. Just as in a bankruptcy, some of the money over $100,000 can be recovered through the sale of the failed bank's assets. In general, depositors get 70 to 80 percent of their uninsured funds returned.

Is it possible to get an official warning that a bank will go under?

No. Federal regulators say they identify and work with "problem banks" behind the scenes so as not to set off a panic and cause a run on a bank.

Do experts think banks are in trouble?

FDIC Chairwoman Sheila C. Bair insisted Tuesday the current crisis in the banking industry is minor compared with the savings and loan crisis of the late 1980s and early '90s, when hundreds of financial institutions failed.

Should we trust the FDIC?

"If people pull out their money in one bank," advised Bart Narter, senior analyst at Celent, a Boston-based financial research and consulting firm, "they will put it in another bank. The FDIC works. I think that consumers can rest easy that their deposits are insured."

How can I tell if my bank is a member of the FDIC?

Not all banks are backed by the FDIC. Insured banks must display an official sign at each teller window or station where deposits are regularly received. To find out whether a particular bank or savings association has FDIC insurance coverage, contact the FDIC.

How can I get more information?

Visit fdic.gov, or call toll-free 1-877-275-3342. The Web site includes a Failed Bank List, a list of member banks, and industry reports.

What about Treasury bills? Are they FDIC-insured?

No. Treasury securities belong to the customer. The bank is merely acting as custodian.

Does the FDIC insure safe deposit boxes if a bank fails?

No. In the event of a bank failure, the FDIC usually arranges for an acquiring bank to take over the failed bank's offices, including locations with safe deposit boxes. If no acquirer is found, those who hold boxes would be sent instructions for removing the contents.