Wow, this is a such a huge story. The people I talked to about this with accounts at IndyMac didn't seem too worried about their money, but most didn't have more than 100,000 in their different accounts. But there are plenty with questions still, evidenced by the number of people who showed up Monday morning. The Federal Office of Thrift Supervision shut down the bank on Friday, and the Federal Deposit Insurance Corporation took over operations. They're reassuring most people with funds in the bank that it's business as usual for them, but anyone with more than 100,000 will have access to half their uninsured funds, and the rest they'll get back when they sell off the bank in about 90 days. David Barr with the FDIC told me that it's possible they'll sell off the bank piece by piece.
IndyMac was worth about 32 billion and had about 19 billion in deposits. But customers made a run on the bank for about 1 billion dollars over two weeks. It all has to do with home mortgage loans given to people with questionable credit. Accounts of customers with credit lines for home equity are still frozen, but most others will have access to their funds.
Feds say IndyMac is the 5th FDIC Insured Failure this year, and that the last one was Southern Pacific Bank February in Torrance.
I'd like to know from you if you'll change the way you do your banking in light of this IndyMac takeover. If you have or had more than 100,000 would you split it into chunks under 100,000 and spread it out to different banks, so you're covered if there's a failure?
Reply with comments to this post and you may hear me read your response on TV on CCN - Crown City News.
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If I had more than a hundred thousand dollars, yes I would split it up between several banks, but in a deep crisis this may not help as the law allows in case of a severe failure for the FDIC to cap the amount to 100,000 period. Also, they have something like 20 years to pay you back.
But the tragedy here is that Indy bank was no more or less solvent than many American banks, it was brought down by Senator Schumer singling it out in written comments and this caused a run on the bank. While generally I agree with the Senator on most political issues this was a profoundly iresponsible act on his part. I half wish someone would do the same for a bank headquartered in his state, just so he's understand what he has done, but of course that would be bad for the nation and bad for the depositors.
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