2007 Departures: Netbank, granddaddy of online banking, goes under
Ken and Daria Dolan are widely known as America's First Family of Personal Finance.
The subprime mortgage mess claimed its first (and maybe not the last) bank victim when the Feds shut down Netbank in September 2007. One of the oldest and largest internet-only banks, Netbank failed due to excessive mortgage defaults and serious operating deficiencies.
With $2.5 billion in assests, Netbank is the largest savings and loan failure in 14 years.
Since Netbank was FDIC insured, customers with qualified accounts under the $100,000 FDIC limit are fully protected. But anyone with accounts worth more than $100,000 will, likely, be left in the cold.
Even if you've never considered using an online bank, there are two things you can learn from this mess...
- Bank safety matters -- whether it's internet-only or your local brick and mortar bank. You can check the safety of your bank through Veribanc (800/44-BANKS). Veribanc provides ratings on all U.S. federally insured financial institutions in easy to understand reports.
- If you are lucky enough to have more than $100,000 in your bank account, split that money up between different banks so you are fully protected by staying under the $100,000 FDIC limit per bank.
If you've been considering an internet-only bank, don't let this scare you off. Click here for some quick video tips to help you decide whether or not online banking is for you.
This post was written as part of a series on on 2007 departures. Read about more products, companies and people you won't see in 2008.
Ken and Daria Dolan have a national radio show and a comprehensive personal finance web site at Dolans.com.