Several years ago, IndyMac Bancorp Inc., a Pasadena-based mortgage lender, failed and was taken over by federal regulators. Recently a couple of large banks also failed, resulting in instability in the banking industry. Federal regulators are now trying to determine how to stabilize the banking industry and restore depositor confidence.
The FDIC (Federal Insurance Deposit Corporation) protects many depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails. Generally speaking, if a depositor's accounts at one FDIC-insured bank or savings association total $250,000 or less, the deposits are fully insured. Unfortunately, many depositors had money in the failed banks that far exceeded the maximum FDIC insurance coverage amount.
Everyone should be aware of the FDIC insurance rules as applied to their own bank accounts. In determining coverage at a particular bank, all cash accounts owned by the same person at the same bank are added together for determining FDIC insurance coverage, whether they are held in a sole account, joint account, retirement account, or trust account. Investments in CDs, mutual funds, U.S. Treasury bonds, annuities, stocks, bonds, or other securities, life insurance policies, and contents of a safe deposit box are generally not insured, even if they were invested in or placed at an insured bank. If the investments are held with a brokerage firm (instead of at the bank) and the brokerage firm is a member of the SIPC (Securities Investment Protection Corp.), accounts are insured up to $500,000 per customer.
The foregoing discussion is a general overview of the rules regarding FDIC and SIPC coverage and it should not be relied upon as determinative of insurance coverage for any specific account at a given institution. Of course, you can always contact your bank, savings institution, or brokerage firm to have your accounts analyzed and obtain comfort and peace of mind that your money is 100 percent safe.
© 2023 by Marlene S. Cooper. All rights reserved.
(You may obtain further information at the website www.marlenecooperlaw.com, by email at MarleneCooperLaw@gmail.com, by phone at (626) 791-7530 or toll free at (866) 702-7600. The information in this article is of a general nature and not intended as legal advice. Seek the advice of an attorney before acting or relying upon any information in this article).