Now that we are more than two years into our ever growing list of FDIC bank shutdowns, it should not be necessary to remind John and Jane Doe that they should know the limits on FDIC insurance. However, based upon the most recent reports provided to the FDIC, such a warning does seem prudent. So allow me to be prudent now—”Don’t put your money at risk, John and Jane. Know the limits on FDIC insurance.”
Exhibit 1 below shows information relating to insured and uninsured deposits as reported to the FDIC for the “last 10” most recent bank shutdowns (all within the last 40 days). Based upon these easily obtainable reports, nearly 10% of the more than $2 billion in deposits in those 10 banks were not insured by the FDIC.
Deposit Amounts Above FDIC Insured Levels
For Last 10 FDIC Bank Shutdowns
$ in Accts
per cent of
$ in 000’s
$ in 000’s
$ in 000’s
North County Bank
Haven Trust Bank
The Peoples Bank
First Commerce Comm
Bank of Ellijay
Sonoma Valley Bank
FDIC insurance covers all deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. FDIC insurance does not cover for deposits above these $250,000 limits.
So my question is this. Why put your money at risk at all, John? Why put your money at risk at all, Jane. Since the FDIC was established in 1933, no depositor has ever lost a single penny on FDIC “insured” funds. It says so right on their website.So why allow your money to sit in an “uninsured” position?Now here is some other information that you should be aware of, John and Jane. There are currently 829 active banks on the current FDIC problem bank list. This number represents a little more than 10 per cent of all active banks and approximately 3 per cent of all banking industry assets. In 2009 the FDIC shutdown 140 banks and looks to shutdown at least that number in 2010 (so far in 2010, 127 banks have already been shutdown).
Now John and Jane, if you do happen to be fortunate enough to have a current bank account with more than $250,000 in it, my advice is to get busy and check the status of your bank out. There probably is no reason to panic; however, here are some things you may want to consider doing:
Get in touch with your bank manager. Find out if the FDIC has given your bank any warnings or indication that could lead to a possible shutdown. There are many ways that FDIC coverage can be expanded to cover funds over the $250,000 limit at the same bank (e.g., spreading funds between accounts with a spouse, certain retirement accounts). The bank manager should advise you on how you can maintain complete coverage of your money, even if it means that you have to take some of your money out and distribute it into an entirely different bank or banks.
- Look at your bank through the eyes of the FDIC by checking out your bank’s most recent reports. Here is a direct link to the FDIC: http://www2.fdic.gov/idasp/main.asp which allows you to enter your bank’s name and look at all kinds of bank accounting information. I highly recommend the All Summary Information report. Go to the bottom of that report and check out the lines which show (1) the per cent of non-current assets plus other real estate owned to assets and (2) the equity capital to assets. If the former is greater than the latter, you should be especially concerned.
- See how others are rating your bank (the FDIC does not make their problem list available to the public), so here are two problem bank lists that I have looked at myself and consider quite reliable.
(1) The Weiss Bank Ratings at: http://www.weissratings.com/weakest-banks-and-thrifts-in-us.php Dr. Weiss takes a fairly dim view of the banking situation and is even more conservative in his evaluation of the banks than the FDIC; however, I would recommend you get active if your bank turns up with a Weiss grade of D- or E+ and highly active if the Weiss grade is an E, or E-.
(2) Bauer Financial Bank Ratings at: http://www.bauerfinancial.com/btc_ratings.asp Under the Bauer Financial bank rating system, I would recommend you get active if your bank gets a “one star” rating; and highly active if it gets a “no star” or “zero” rating.
Contact me for my own non-guaranteed opinion of your bank’s situation or ask for my free non-guaranteed list of 500 banks of concern to Quanta Analytics for 2010 and Beyond. 20 four of the last 20-five banks that have been shutdown by the FDIC have shown up on that list.
Nearly every Friday the FDIC goes after another group of bad performers, and there still are plenty out there, so don’t let the FDIC catch you with your deposits above their limits. There is plenty of information out there to keep you from losing your money. So don’t say that you were not warned.