Facts about FDIC and NCUA

[randomness]

It seems like a good time to post this.

From http://bankdeals.blogspot.com/2006/05/facts-about-fdic-and-ncua.html:

The top 2 FDIC misconceptions that I've encountered include: 1) You do not get the interest earned, only the principal when a bank fails, and 2) It may take years before they release all your funds.

If you keep below the insured limits, neither of these are true.

See the FDIC's article on the Top 10 FDIC Misconceptions.

That article also includes links to both the FDIC, which insures accounts in banks, and the NCUA, which insures accounts in credit unions.

It's simple enough to make sure your accounts are under the insured limits. This would be a good time to do that.

Comments

[frotz.livejournal.com]

Any thoughts either way on the DIF?

[r-ness.livejournal.com]

I'm going to caveat this by saying I have no particular expertise on the DIF.

However, a couple of things I can observe offhand:

It's a private insurance fund, and thus is subject to the usual risk of private insurance: the company may default. It seems like it's another one of those quasi non-governmental organizations, this time on a state level, as it was originally created by the state of Massachusetts. How much one feels the state actually stands behind the fund is a matter of opinion, but to the extent that it does, the fund may have more resources than it appears. On the other hand, it's not as if Massachusetts is swimming in money, either.

Aside from any implied state guarantee, officially it's backed by the member banks, so it's as good as the banks are collectively. In this case, they're local savings banks, so it really depends on how exposed they are to the current crisis. The fund isn't particularly big: it's got about $350 million in assets and another $100 million in reinsurance (which, in turn, is worth whatever the insurance company standing behind it is worth). Then again, the banks whose deposits the fund guarantees aren't very big, and the only deposits the fund is insuring are the deposits over the FDIC limit, so their exposure may not be very great.

Those last numbers are ones I'm not sure are easy to obtain. While I'm sure you could fairly easily come up with a figure for total deposits in the member banks, I don't know how easy it would be to get the figure for that portion of deposits which are not insured by the FDIC in those member banks. (I don't know that anyone knew that exact number for IndyMac, for example, until the FDIC auditors went in over last weekend.)

[frotz.livejournal.com]

Ahh, there it is. "Insured Excess Deposits: $9,460,279,318, Gross Coverage Ratio: 3.59%." Hrm.

Elsewhere they note that 19 member banks failed in the early 90's, requiring $50M in payouts. That sounds like a lot of banks, though I expect the banks were very small, and there are some pretty big small banks on the roster nowadays.

My impression of Patrick is that he wouldn't go out of his way to save the DIF if it was in trouble, though maybe he owes a banker or two some favors.

[r-ness.livejournal.com]

That number seems awfully exact to me. But anyway, "Hrm", yes. :)

My impression of Patrick is that he wouldn't go out of his way to save the DIF if it was in trouble, though maybe he owes a banker or two some favors.

That seems fair.