[emersonbiggins]

Anybody got any information for those of us that use certain banks for our primary accounts and are watching the failure of those banks occur as we speak? (WaMu)

Principally, I am trying to determine the best way to get money out without filling a briefcase at my local branch (way-y-y too showy). My WAG is a cashier's check, followed by maybe a personal check.

I am living through some lean times here until the fall anyways, so I really can't wait for the FDIC to reimburse me weeks after the fact. I'm talking about missing some serious payments if a bank failure is imminent, FWIW.

[Leanan]

My bank failed last fall. (Yes, it was due to the mortgage crisis.) At the time, it was the largest bank failure since the S&L crisis.

It was pretty scary to see the headline on CNN that Saturday morning. I immediately went to my bank's web site. There was a notice saying the FDIC had taken it over, and no transactions would be possible until 5pm Sunday night.

Luckily, I hadn't been planning to do any transactions. And I had some money in other banks. They were a little late coming back online, but by Monday morning, access to my accounts was restored. The FDIC found another bank to take it over, and all my accounts were automatically transferred there.

The new bank was ING Direct. It is probably pretty safe, all things considered. It's pretty big, and based in Europe. And it hasn't been much affected by the mortgage mess. (Apparently, they gave out mortgages the old-fashioned way: to people who could afford them. And they didn't re-sell them.) Of course, if there's a major financial crash, who knows what will happen.

Anyway, as long as the FDIC is still backing banks, you don't have too much to worry about. It won't take weeks to get your money if your bank goes under.

I do recommend having more than one bank. Just in case. (Also remember that you're not insured for more than $100,000 per bank. Doesn't matter how many accounts you have, $100,000 is the max you're covered for per bank.) And make sure you have online access to your funds. That is probably the best way to get your money out, if necessary. Transfer it to another bank with a click. Or write yourself an electronic check.

[TreeFarmer]

Spreading your money is a good idea, ESPECIALLY if you have over 100k in a single bank.

If you have accounts in other banks go down to WaMu with a check or statement for one of those accounts and have them wire the money over, I think that would be the fastest.

Baring that, what is wrong with a backpack full of cash. That you you KNOW you have your money.

TF

[Twilight]

Receiving your money "weeks after the fact" would be the end. I can understand a fear that the bureaucracy may find itself overstretched one week and ask that people be patient for a few days, but the consequences would be such that it will be avoided at all costs. There may be little point storming the paperwork, and certainly none after a takeover. You might actually be at greater risk from something going wrong with direct debit / standing order transfers, such ending up with a duplicate*. But I can equally understand a principled objection to dealing with a company that cannot run its affairs.

Do you have a private business that takes you over insurance limits sometimes? If that is a consideration, I would hope everyone has got it sorted by now.

How fast does a cashier's cheque clear in the US? Maybe arranging a wire transfer would be better.

* Whatever you choose to do, remember to get physical proof of everything and store copies at a secure, physically separate location.

[seahorse2]

Historically, the FDIC always closes a bank after COB on Friday and tries to have most deposit accounts up and running at another bank by the following Monday morning. So far, this pattern has continued even up and until this last closing with Indy.

Also, as Leanan points out, the FDIC finds another bank to buy the deposits and have them seemlessly open by the next Monday. Usually, this works. But, if the system were to have multiple failures or systemic collapse, as feared during the Bear Sterns crisis, who knows if the FDIC could keep it all going.

Therefore, multiple bank accounts cannot hurt.

However, FDIC does not help with business loans and lines of credits. Not knowing your situation, if you depend on open lines of credit or other business type loans, funding for these is often stopped, for a period of months, until another institution can be found to purchase those loans. This wreaks a lot of havoc and is never reported by the MSM. The ANB failure literally destroyed a lot of small businesses in my area bc their lines of credit were cut off or other loans were stopped (like construction loans).

[Leanan]

Remember Northern Rock? That was in the UK, so the rules are different. Still, it was interesting. They put a limit on how much you could withdraw per day. So people kept coming back, day after day. Some of them camped outside the bank.



Many also tried to get their money out electronically, but so many were trying that the bank's servers couldn't handle the load.

[Tyler_JC]

You have money in WaMu?

I'd suggest moving it to someplace safe and keeping a record of every transaction.

WaMu is in serious trouble. Their stock is down over 30% TODAY.

It's down from $48 a year ago to around $3.40 today.

Also, I suggest having a week's wages in cash hidden under a mattress. That way if it takes them a week to reopen the accounts, you can still buy food, pay the bills, etc.

[jlw61]

Spreading your money is a good idea, ESPECIALLY if you have over 100k in a single bank.

If you have accounts in other banks go down to WaMu with a check or statement for one of those accounts and have them wire the money over, I think that would be the fastest.

Baring that, what is wrong with a backpack full of cash. That you you KNOW you have your money.

TF

What's wrong is that it's a risk from both bad guys and cops. RICO allows a cop to take your money without question and YOU have to prove to a judge that you were doing nothing nafarious with it.

If you have enough money for at least 6 months of no income, open an account in a few different banks, write a check from your main account for a month or two's worth of expenses, and get a check card. That way, you can run out and pull cash from more than one account in a hurry. Also, think seriously about keeping a month's worth of cash in the house (some place safe, there are lots of ideas on the internet on how to do it). This is a good article for starting the thought process.

I hate to say it, but the matress is beginning to looking better than banks.

[emersonbiggins]

Thanks for the replies, all. Yes, I was checking that WaMu stock today, noting that it was heading for pennies in no time. And, of course, the requisite press release from WaMu stating "All's well. We are adequately capitalized." If that isn't an alarm bell going off, I don't know what is.

[TheDude]

I see in the news that they're going to lay off more employees in September, so you can see they have a long-term business plan laid out.

Have over a grand in cash on hand and am going to withdraw a bit more from my WFC account. Wells Fargo. They were sailing along smoothly 6 months ago but now are seeing some losses along with everyone else.

[Leanan]

CNN is interviewing some people who are camped out in front of Indymac. Some drove for hours to find out what's happening to their money.

Some got bad news. Anything over $100,000 per person is not covered, of course. And retirement accounts aren't covered. Those people have been told they might get fifty cents on the dollar. If they're lucky.

[hope_full]

Retirement accounts are not covered? I don't understand. What exactly is a "retirement account"?

On a related note, I was talking to a friend who's a stocker at Wal-Mart and he reported with some surprise that there's one item they can not keep in stock: Small home safes.

You joke about people putting money in mattresses, but I think lots of people are losing faith in the banks and going with home safes.

[Leanan]

Retirement accounts are not covered? I don't understand. What exactly is a "retirement account"?

I assume that means IRAs, Roth IRAs, etc.

[mos6507]

retirement accounts aren't covered. Those people have been told they might get fifty cents on the dollar. If they're lucky.

I looked up the FDIC rules online and they say nothing about IRAs not being covered. Obviously, there are limits. What's going on here?

[smallpoxgirl]

Are there any national banks that are doing well that one might put their accounts in?

[Kingcoal]

I don't have more than a few grand in my bank and they are very small, only about 6 branches. My Grandfather warned me about banks. He lost everything during the Great Depression so he kept all his money at home in a safe.

[Leanan]

If it really hits the fan, I doubt any bank will be safe.

But as I said, most of my money is now in ING Direct. Very few of their mortgages have gone bad. (ING Direct does most of their business online, so it's available all over the US.)

I really think it's best to spread your money around. I have my money in ING Direct (large European bank), HSBC (large Hong Kong-based bank), and a local credit union.

And yeah, some cash might not be a bad idea. The Bank of Serta, so to speak.

[Leanan]

I looked up the FDIC rules online and they say nothing about IRAs not being covered. Obviously, there are limits. What's going on here?

Hmm. CNN didn't go into details on TV, but according to this, IRAs are covered, but some other accounts are not.

When a bank shuts down, traditional accounts are insured to at least $100,000. Some accounts, such as annuities and mutual funds, are not insured at all. Individual Retirement Account (IRAs) funds are insured to $250,000.

[ONeil]

Open a new account at a bank that you do have confidence in. Then have your two banks coordinate a wire transfer. Since you are not asking for physical cash there shouldn't be any limit on monies transferred per day, unless you are already too late.

[Twilight]

FDIC - Self-Directed Retirement Accounts - this might help? Research at own risk, etc.

As an aside, one story that cropped up in the Northern Rock fallout was the possibility of banking under two different brands belonging to the same banking group with one license. So a person might have assumed accounts at two institutions to be separately insured by FSCS, but in fact they could have been considered as a single sum in the event of a failure. The practical implications were never properly thought through by regulators and this type of realisation of ignorance by many ordinary people (myself included) was one of the many reasons the government announced a blanket guarantee of everything in the immediate aftermath.

This may be irrelevant to US readers, but make sure you are with completely separate banks which will be treated separately for these purposes and not just misleadingly named local varieties of the same.