Minding My Own Business

Not long ago I posted about the failure at IndyMac bank.  In that article I referred to both FDIC and NCUA insurance that protects depositors up to $100,000.  I’m doing OK with my investments, but I’m not sitting on cash that is greater than $100K, so FDIC/NCUA insurance easily covers my cash assets.

While that may be my situation, I know there are many investors out there with cash reserves that far exceed the $100K limits of these insurance programs.  You don’t have to look much past WAMU bank to see the effects of investors flight to quality and protection.  WAMU’s failure was partially influenced by a account holders withdrawing assets that exceeded the FDIC insurance limits.

I can’t blame the account holders for moving their money around to ensure their assets are protected.  But I am shocked at the large numbers of individuals and companies that have assets that are exposed above the FDIC insurance limits.

I have a relative that falls into this category of investors.  Assets well in excess of $100K and much of it parked in a bank as cash.  Just yesterday I learned this family member decided to spread their money across numerous banks to take advantage of the FDIC’s insurance program.  That may not seem like a daunting task, but imagine if you had two million dollars you were trying to protect with the insurance program.  That would require at a minimum more than 20 different accounts/banks.

I wish I’d have known about my relative’s intentions before they began spreading their assets across so many banks.  There is an alternative that will protect your assets, spread it around for you and allow you to easily keep track of it through one account rather than numerous accounts and banking institutions.

That alternative is the Certificate of Deposit Account Registry Service (CDARS).  CDARS makes use of a network of banks to spread your high value deposits around several institutions to take advantage of the FDIC insurance program without the hassle of working directly with numerous banks.  In fact, CDARS claims to be able to easily handle and protect up to $50 million through their networks of banks.

If you have a significant amount of cash reserves you desire to protect with insurance (and I think you’re wise to seek such protection) check out the CDARS program.

-Jeff

I’m protecting my assets, are you protecting yours?

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