Lessons from IndyMac: Stay under the FDIC limit

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line at IndyMacOver the past weekend it was announced that IndyMac was being taken over by the FDIC after customers began a run on the bank, which had denied any solvency issues. Many customers had their life savings in the bank, whose accounts are protected by the FDIC, but not all of their funds were insured. In one instance a man had been told if he simply added the names of several relatives to his account the insurance amount would be increased to cover his deposits of over $300,000. Instead he found out that initially the FDIC will fully cover the insured funds but only cover uninsured deposits to the tune of 50%.

Hopefully things will work out for everyone -- even those whose accounts went over the insured limit. If you have over the insured amount in your current bank account I highly suggest you take the needed steps to make sure you are fully insured. This could be creating a joint account with your spouse to gain coverage up to $200,000 or it could be creating several trusts for your children in order to gain the protection they are entitled to as beneficiaries. If neither of these options work, spread out your money at other institutions. As my colleague Zac Bissonnette pointed out recently, most banks are offering the same services these days.

If you have enough money to be over the FDIC limit, you should really spend some time with someone who can provide an expert opinion on keeping your money safe as well as growing it. The FDIC provides an explanation of the protections afforded to different accounts as well as how your protection changes based on the beneficiaries of the accounts. If you are an IndyMac customer the FDIC has also set up a specific site to keep you up to date on the fate of your loans and deposits. While I'm not predicting a huge bank run in the near future, why not take a few minutes to make sure your savings are covered? The FDIC insurance is free so take advantage of it!
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