Today on a local show in so cal it was stated that under FDIC rules they have 99 years to pay you back for Deposits under 100,000. Is this right???????????

Well if we don't live that long our heirs will get it...

If a bank fails, what is the timeframe for payout of the funds that are insured if the bank cannot be acquired by another financial institution?
Federal law requires the FDIC to make payments of insured deposits "as soon as possible" upon the failure of an insured institution. While every bank failure is unique, there are standard policies and procedures that the FDIC follows in making deposit insurance payments. It is the FDIC's goal to make deposit insurance payments within one business day of the failure of the insured institution. Typically, a bank that has failed will be closed on a Friday. The FDIC will then work the weekend to complete deposit insurance determinations for most deposits and be prepared on Monday to either transfer the insured portion of a deposit to another FDIC insured institution or provide deposit insurance payment checks. (Note: Some deposits that require supplemental documentation from the depositors, such as accounts linked to a living trust agreement or funds placed by a deposit broker, may take a little longer. The timing of the completion of the deposit insurance determination is based solely on the depositor providing the documentation needed by the FDIC to determine insurance coverage.)
This was taken direstly from the FDIC website. Can't believe someone stated 99 years for payout without researching it.

Mike

quote:

Originally posted by Tcloud:
Today on a local show in so cal it was stated that under FDIC rules they have 99 years to pay you back for Deposits under 100,000. Is this right???????????

Fear mongering by some uninformed person.

All it takes is a visit to the FAQ's at the FDIC website. Question #5 answers this concern:

How long does the FDIC take to pay insurance on deposits after an insured bank fails?
Federal law requires the FDIC to make payment as soon as possible. Historically, the FDIC pays insurance within a few days after a bank closing either by establishing an account at another insured bank or by providing a check. Deposits purchased through a broker may take longer to be paid because the FDIC may need to obtain the broker's records to determine insurance coverage.

Customers with uninsured deposits receive the insured portion of their account as described above. They will wait longer to receive payment for some or all of their uninsured deposits. The amount of uninsured deposits they may receive, if any, is based on the sale of the failed bank's assets. Depending on the quality and value of these assets, it may take several years to sell the assets. As assets are sold, uninsured depositors receive periodic payment on their uninsured deposit claim.

Fear mongering is exactly right.

The cornerstone of the banking system today is the FDIC. The one thing that our country can not afford is to have depositors who by losing confidence in the banking system in general to have a mass rush to withdraw funds from banks all over the country.

So I have no doubts that any "runs" or insured accounts will be promptly dealt with, with a high degree of urgency by the FDIC. Any serious lack of confidence in the FDIC would be disastrous and the FDIC wont let that happen.

Good Day

Your exactly right Rick and Cheryl, the fed will be right there to insure that this doesn't get out of hand, and people make a run on the banks.

The fed will gladly replace your losses with more worthless money that they just freshly printed.

Green Lights
Badwater Bill

Hmmm,,my dollars are still valuable. Just the other day the supermarket accepted my dollars.

One thing to be careful of is the $100k limit ($250k for IRA accounts) on insured accounts.

If you buy a $100k CD that accrues interest until maturity, your accrued interest will be over the 100k limit, and therefore not insured.

So, if you buy a CD that will pay about $4k of interest at maturity, only put $95k into that CD. That way all the accrued interest will be insured.

Also, if you have a high yield CD that you have had for awhile, there is no guarantee that the rate will be honored going forward. This happened to me in the 80's. I had several 13%+ CD's in different retirement accounts at the same Savings Bank. When the bank failed, I received my principle and accrued interest at the agreed rate. However, the rate going forward was lowered to about 6% and I was given the option to cash out without penalty.

Good Day

Thats true Rick and Cheryl, however if you peek in your grocery bag you will notice that there are 40% fewer groceries than there was 2 yrs ago.

Your valuable dollar is south bound. You may be satisfied with that, but many including me are not. We still haven't reached bottom yet.

Green Lights
Badwater Bill

There's a big difference between a worthless dollar and a less valuable one. I for one have believed we were headed for a recession since late summer 07. Now nearly a year later, I believe we are now in the midst of one. Unfortunately we are also experiencing stagflation as well, which makes the recession even worse.

So I am perfectly aware that my dollar is being devalued and the only way I see to strengthen our dollar is for the Fed to raise interest rates, which is in conflict with "bailing" out of some our largest financial institutions by keeping interest rates low. I suspect that soon the inflation monster will get large enough that the Fed will have little choice but to raise interest rates.

Tom and Rocki bring up a good point about CD's growing above $100,000 with accrued interest. There are ways around the issue by using a different naming convention on the CDs.

You can get around the issue by opening several smaller CDs at the bank (open 2 at $50K rather than 1 at $100K) so that accrued interest does not go over the $100K limit for a single naming convention.

You can have up to $600,000 in one bank FDIC insured if you have a spouse and you follow the FDIC rules. The CDs have to be opened or can often be changed to reflect the proper ownership convention:

FDIC limits:
$100,000 in your name
$100,000 in your wife's name
$200,000 in both names
$100,000 in your name POD (Pay on Death) your wife
$100,000 in spouse name POD your name

Check with the bank to see if you change the ownership convention. If you have an existing single CD you would need to have a spouse to set up the joint option to go from $100k to $200K. They will not let you take a single owner CD and set up the other options. If you are single, in the future you might want to set up 50% as a single owner and another 50% as a single owner with POD (to some relative) to have a $200,000 limit.

Never trust the banks solvency and go over the above FDIC limits even with the interest dividends.

In the AP news wire this morning is a story about a lady who cashed in a Indy CD this week, obtained a check and tried to deposit the check into a Washington Mutal bank.

WU first refused the check then changed there mind and told her it would be 8wks before the check cleared and funds would be available. FDIC said they'd "look into it".