Your money’s safe in the bank
Glenwood Springs, CO Colorado
I had a conversation in a barber shop the other day. Nope, this isn’t a story by Ring Lardner in a ’30s noir sportswriter style. It’s merely a clarifying note about your bank.
I’ll cut right to the chase. Your money’s perfectly safe in your bank, any bank, if it’s insured by the FDIC, and if your money is in a bank, it’s insured.
I did a column touching on this a few months ago, but it bears revisiting, given the high profile that bank failures have in the news.
The talk at The Barber Shop in Carbondale went like this: Kathy, the barber, asked what I was doing now, and I told her I was a consultant specializing in banking (for the uninformed, “consultant” is the term that we executive types use to say, “I’m out of a job”). I mentioned that banks need outside consulting because of the plethora of loan problems that they currently have.
This prompted a chorus of folks saying they were worried about their particular bank, and what would happen to their money if it failed. Here’s what I told them:
Nothing will happen. You’d hardly know that the bank failed. Typically, when the Federal Deposit Insurance Corp. takes over a bank, a highly trained and experienced SWAT team comes into the bank at 5 p.m. on Friday and works over the weekend. In most cases, the FDIC has already reached an agreement with another bank to take over the deposits and offices of the failed bank. On Monday morning, the depositors of the closed institution are customers of the bank taking over. They can leave their money with the new bank, or withdraw it. In the meantime, they can write checks on their account with no restrictions, even on the weekend their bank closes.
If the FDIC doesn’t negotiate a deal with another bank to step up, the agency operates an interim bank to wind down its affairs, and depositors have the same flexibility. Their money’s safe, and it’s available.
It’s quite possible that the two most efficient government entities are the FDIC bank closing teams and the United States Marine Corps. Both have had a lot of experience in mopping up messy situations, and the former is possibly busier than the latter right now.
As of now, the FDIC insures an amount up to $250,000 for single depositors. Families can have much more than that covered by using all family members.
Nobody has ever lost a penny in an FDIC insured account, and they won’t, as long there is a federal government.
Of course, if there’s no government, there’s no USA, and our money won’t be worth anything anyway.
Pat Dalrymple is a valley native. He’s been in the mortgage and banking business since 1961. He’ll be happy to answer your questions or hear your comments. His e-mail is firstname.lastname@example.org.
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