Posted by Matt from CT on July 18, 2008 at 18:47:55 from (68.244.108.167):
In Reply to: OT: Indymac bank posted by gun guru on July 18, 2008 at 15:32:26:
1) 1. How do depositors get their money back?
The ones I've seen (we had a few go under in the early 90s recession in CT) was like the other examples posted...bank closes on Friday, bank opens on Monday. Life goes on.
2) 2. How do depositors prove how much they have in account(s). bank statements?
Have your statements if you're worried. Whoever takes over the bank just keeps using their computers for a while till they can get the accounts converted over to their system.
3) 3. Have any you guys had money in an accout at a bank that failed? (what did you do)?
I pulled mine out shortly before they failed, it wasn't much but it was next semester's tuition plus my living expenses. In hindsight, I would've been fine not having it for a weekend. I was afraid if it wasn't available for a couple of weeks I'd be hurting. (I worked my way through college with summer time and christmas time jobs...I didn't work during most of the school year so I depended on savings).
4) 4. Is the FDIC a bankrupt entity like all other federal government agencys
No, and we'd just have more inflation by printing money before they let FDIC not reimburse the $100,000. IndyMac will end up costing about $5 Billion out of the $52 Billion the FDIC has in it's insurance fund.
They sell the assets of the failed bank to cover the amounts > $100,000. In IndyMac's case, if I read the newspaper article right, they also covered 50% of the amount over $100,000 and issued "receivership certificates" for the rest.
That means they're quite confident they can get that 50% from selling IndyMac's assets.
So let's say you're a small organization that had $200,000 in an account on Friday morning.
Monday morning you could write checks for $150,000, but found yourself with a piece of paper that said if the FDIC can get enough money for the remaining assets, you'll receive a proportional amount of the $50,000 that is no longer in your account. So if they eventually recover enough to cover 60% of deposits over $100,000, you'll get another 10% ($5,000) from FDIC.
There have been some bank failures in the past where it was short-term liquidity that put the bank under...and when all was said and done FDIC had sold the bank's assets for enough money to pay 100% of deposits back, the creditors, AND actually had a profit (not sure if that goes to FDIC or the Treasury).
For most people, with under $100,000 and maybe more (talk to your accountant for the specific rules), I wouldn't worry about your own money.
Now for municipalities, businesses, good size farms, etc that may have more then $100k, it could cause issues. I know in the early 90s in Connecticut the State & Towns where worried about losing their tax receipts deposited in the banks that were in trouble. Or think about payroll. Those are the things that could set off reprecussions.
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