The FDIC's insurance may lose 17% of its capital as bank failures have drained it. It's expected to to the point where the FDIC may ask other banks to pay more to replenish the fund.
The FDIC's insurance may lose 17% of its capital as bank failures have drained it. It's expected to to the point where the FDIC may ask other banks to pay more to replenish the fund.
"The pace of bank closings is accelerating as financial firms have reported almost $495 billion in writedowns and credit losses since 2007. The FDIC's ``problem'' bank list grew by 18 percent in the first quarter from the fourth, to 90 banks with combined assets of $26.3 billion. A revised list is due this month. The insurance fund had $52.8 billion as of March 31.
The FDIC estimated its shutdown of California-based mortgage lender IndyMac, which filed to liquidate its assets last month, might drain as much as 15 percent from the fund. Seven other banks will take $1.16 billion, or about 2 percent.
The potential $9.16 billion in withdrawals would be the highest since the insurance account was created in 1933, Diane Ellis, the FDIC's associate director of financial-risk management, said in a telephone interview. Bank failures pulled a record $6.9 billion from the fund in 1988 during the savings- and-loan collapse, Ellis said."
Many analysts expect a rash of bank failures of the next coupe of years as the mortgage mess continues to wreck havoc on bank's balance sheets. This will further draw down the FDIC.
What happens if the FDIC insurance fund is drawn down to $0? In that case, the Federal Government will step in and allocate more money as it did with the S&L crisis in the 1980s.
While your FDIC insured money is safe, we could all be paying more in taxes, bank fees, interest rates on loans because of the poor lending decisions over the last 10 years.
PASADENA, Calif., Aug 01, 2008 (BUSINESS WIRE) -- On Friday, August 1, 2008, IndyMac Bancorp, the former holding company of IndyMac Bank filed for bankruptcy protection under the U.S. Bankruptcy Code (Title 11, Chapter 7 U.S.C). This action has no effect on the operations of IndyMac Federal Bank, FSB, which came into existence on July 11, 2008, when IndyMac Bank was removed from its holding company, IndyMac Bancorp, and IndyMac Federal Bank was placed into conservatorship by the Federal Deposit Insurance Corporation (FDIC). Other than a similarity of name, IndyMac Federal Bank has no relationship, nor does it share any employees, with IndyMac Bancorp.
Indymac Federal Savings Bank Press Release:
PASADENA, Calif., Aug 01, 2008 (BUSINESS WIRE) -- On Friday, August 1, 2008, IndyMac Bancorp, the former holding company of IndyMac Bank filed for bankruptcy protection under the U.S. Bankruptcy Code (Title 11, Chapter 7 U.S.C). This action has no effect on the operations of IndyMac Federal Bank, FSB, which came into existence on July 11, 2008, when IndyMac Bank was removed from its holding company, IndyMac Bancorp, and IndyMac Federal Bank was placed into conservatorship by the Federal Deposit Insurance Corporation (FDIC). Other than a similarity of name, IndyMac Federal Bank has no relationship, nor does it share any employees, with IndyMac Bancorp.
Of IndyMac Bancorp's bankruptcy filing, IndyMac Federal Bank CEO John Bovenzi said, "The announcement by the former holding company of IndyMac Bank has no impact on IndyMac Federal Bank or its customers. Our customers will continue to receive the same value and personal service they have come to expect from IndyMac, which, due to its FDIC backing is one of the safest banks in America and a great place for our customers to keep their funds."
IndyMac Federal Bank remains under the FDIC's conservatorship and, as such, is backed by the FDIC's approximately $53 billion deposit insurance fund, which is further backstopped by the full faith and credit of the U.S. government. IndyMac Federal Bank is one of the safest banks in America and its customers should know that today's news has no effect on them, their deposits or their relationship with IndyMac Federal Bank. The FDIC's stated goal is to return the bank to the private ownership of safe and sound financial institutions within the next three months.
WaMu now offers an online savings account with 4% APY.
On September 23, 2008, WaMu has raised their online savings rate to 4%, which is the best online savings offer with no minimum balance.
To get the 4% savings account you will need to first open a free checking account and then link the savings account to it. This can all be done together online.
Washington Mutual, however, is a very troubled institution and is considered by many to be unlikely to survive. Depositors are therefore reminded that especially in this case to keep deposits below FDIC limits.
Please note that WaMu has not adjusted all of the copy on its site and may still be listing the rate as 3.75% APY in some places.
