Even Banks Have Money Troubles

As you look at bankruptcy alternatives, remember that money is tight everywhere. Not unlike the rest of the economy, U.S. banks are also taking a toll. The Federal Deposit Insurance Corporation, or FDIC, recently announced 117 banks on their watch list, the highest number in five years. Sean Ryan, a banking analyst with Sterne Agee, expects more than 100 bank failures before the end of 2009.
In addition to watching banks in trouble, the FDIC insures bank deposits of up to $100,000 at about 8,500 of the nation’s banks. The FDIC was created in 1933 during the Great Depression to help restore the public's confidence in the nation's banking system and receives no federal tax dollars and is funded through the institutions that it insures. With the projected number of failures, Ryan and other analysts “expect the FDIC insurance fund to be depleted.”
When a bank fails, the FDIC has to pay money out to depositors immediately while it takes time to sell off the bank's remaining assets to replenish those funds. Sean Egan, who heads the ratings desk of Egan Jones, said in that circumstance, the U.S. Treasury might be forced to loan the FDIC money.
Although we want to keep our economic situation in check, the FDIC doesn't publicize the names of the banks on its watch list for fear of customers would pull their money out of the troubled banks, causing them to fail.
What you should know is the FDIC protects checking and savings accounts, money market deposit accounts, and certificates of deposit up to the federal limit. You can be protected up to $100,000 for each type of account at a single bank, meaning you could be insured for a single account as well as a joint account with someone else. The FDIC has a separate $250,000 limit amount for retirement accounts like IRAs, Section 457 plans, and Keogh plans. The insurance does not cover products such as stocks, bonds or mutual funds, even if they are sold by your bank.
Ultimately though, Ryan said bank customers with less than $100,000 in the bank shouldn’t worry.
If you are looking for bankruptcy alternatives in the hard economy, consider U.S. Financial Management’s debt negotiation service. Call for a consultation, free of charge and free of obligation at 1.800.738.5213.

Source: ABCNews.com

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