| Do you know what FDIC stands for? Most people | | | | The FDIC can come in to take over control of the |
| don't. You are not alone. | | | | bank and remove present management. |
| It is important because the Federal Deposit Insurance | | | | Every bank pays a premium to the FDIC for this |
| Corporation is the one that guarantees your money | | | | insurance. Part of the money is supposed to be set |
| in the (hopefully) unlikely event your bank might go | | | | aside to create a reserve in the event of any bank |
| out of business. | | | | failure. Let's hope this "reserve" is not like the Social |
| Ten years ago the amount of the guarantee was | | | | Security Trust Fund which is spent every year by |
| only $10,000. Today it is $100,000. What worries | | | | the Washington politicians. There Is no Social Security |
| many about this very high amount is does the FDIC | | | | Trust Fund with your money in it. |
| have enough money to pay everyone if that awful | | | | Is your bank on the hit list? You can ask your bank |
| calamity should occur? Well, don't worry Uncle Sam | | | | manager, but it is doubtful he will know. That will be |
| can turn the printing presses up another notch so | | | | in the far reaches of big corporate headquarters. Will |
| everyone will be paid. Of course, it might take a year | | | | a call there get the answer? Doubtful. Try the FDIC |
| to get your money, but at least you will get it. | | | | to see what kind of run around is gotten. Maybe an |
| In January the FDIC said they were going to do an | | | | inquiry through the Freedom of Information Act |
| "update" on the protection of customer savings | | | | might do it, but how long will that take? |
| accounts at many banks. They said they were going | | | | As usual the little guy will be pushed around by the |
| to investigate 65 large banks that had assets of | | | | bureaucrats. They don't want him to know what a |
| more than 18 Billion. (Yes, that's a B). They did not | | | | poor job they are doing. |
| say what or how they were going to do, but these | | | | Don't be "snowed" when your banker tells you they |
| 65 banks were cited as "problem institutions". They | | | | have billions in deposits and not to worry. It is some |
| also did not clarify what the problems might be. | | | | of the largest banks that are having the worst |
| Usually this type of "problem" refers to capitalization | | | | problems. |
| requirements. Banks should have at least 10% in | | | | About the only action a small investor can take is to |
| reserves to pay off any customer(s) who present a | | | | spread his money into more than one bank - maybe |
| demand for their money. Below 8% is considered | | | | 3 or 4 depending how much he might have. |
| undercapitalized and under 6% is significantly | | | | No mater how small a savings account a person |
| undercapitalized. Red flags go up and bank examiners | | | | might have it would be a good idea to separate it |
| show up (I hope). | | | | into more than one bank. |