If you haven’t heard by now, the Federal Government closed down IndyMac Bank late last week. Most (dare I say all?) banks and credit unions insure depositors up to $100K with either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) and IndyMac was no exception. Regardless of my confidence, you should do your due diligence and check with your financial institution to determine the specifics of any deposit insurance you may have.
But who’s getting their money back? Drumroll please…………..
The answer is everyone who’s accounts were fully covered by the FDIC.
IndyMac’s depositors with less than $100K in their accounts need not fear the bank’s closure. They WILL get their deposits back. According to the FDIC’s information page, principle and interest through July 11th, 2008 is fully insured and will be paid to to depositors. Additionally, IRAs are insured separately and are covered up to $250K. So in theory you should be safe if you have less than $100K in general accounts (savings, checkings, CDs etc.) and less than $250K in IRA accounts at IndyMac.
That situation may be a bit more complicated for those individuals whose accounts were worth more than the insurance limits mentioned above. According to the FDIC press release on July 11th, “At the time of closing, IndyMac Bank, F.S.B. had about $1 billion of potentially uninsured deposits held by approximately 10,000 depositors.”
DOOH!!!!
The math is pretty simple to determine how much that averages out to per person, but does involve determing how many zeros to lop off the end of that $1 Billion. By my math the answer is an even $100,000 per affected individual. I don’t know about you, but $100K is a lot of money to me.
I consider myself fortunate to not be one of the 10,000 people affected. I’m sure there will be many sleepless nights for them until this is resolved. For now it appears “business as usual” for those customers who are fully insured by the FDIC. The Feds have made them customers of a new institution (”IndyMac Federal Bank”) which will operate out of 33 branches starting Monday July 14th. I would assume you’ll see many of the same employees in working in the same branch offices of the former IndyMac Bank.
As for its broader affect on the financial markets, it will be interesting to watch this situation unfold. This is the fifth FDIC-insured failure this year, one of the largest FDIC failures ever, and it’s occurring at the same time as the two of the biggest mortgage backers are having troubles (both Fannie Mae and Freddy Mac had a wild ride last week). Sounds like Mr. Market is going start discounting stocks even more.
I take advantage of both the NCUA and FDIC insurance and am fully covered for all my accounts. Are you fully insured?
Take some time and mind your own business, by reading more about both the FDIC and NCUA insurance plans to ensure you are adequately protected.
-Jeff
I’m Minding My Own Investments, are you minding yours?
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3 responses so far ↓
1 John Wilcox // Jul 13, 2008 at 10:44 pm
Sen Schumer should be thrown out of the US Senate for causing a “run” on this bank. IndyMac may have been heading to the grave, but Sen Schumer put the final nail in the coffin.
I wonder if any of his staffers sold IndyBank short. I wish I did.
2 Monthly Commander’s Call - July Edition | Military Finance Network // Jul 20, 2008 at 10:25 am
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3 How to Protect Assets in Excess of $100,000 | Minding My Own Business // Sep 27, 2008 at 10:47 am
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