Your accounts in any given bank are likely covered for up to $250,000, so you needn't worry about losing everything. But there's still plenty to do to keep your money safe.
Bailout or no bailout, your money -- as long as you have $250,000 or less in insured accounts at any one bank -- is safe.
Yanking your money out does nothing other than feed the insecurity.
Consider the case of the now-defunct IndyMac Bank, whose customers sweltered in long lines outside branches last summer as word spread that regulators had shut down the once highflying institution. The scene -- folks fanning themselves in the July heat, some even bringing along beach chairs for the wait -- made great images for the media.
But the whole waiting-in-line thing was supremely pointless.
The vast majority of IndyMac depositors were fully insured and didn't lose a dime. Customers could still use ATMs, debit cards and checks to access their money over that weekend as the Federal Deposit Insurance Corp. sorted out the failed bank's business. By Monday, customers could resume all other transactions, including transferring their accounts to another bank if they wanted.
Bailout or no bailout, your money -- as long as you have $250,000 or less in insured accounts at any one bank -- is safe.
Yanking your money out does nothing other than feed the insecurity.
Consider the case of the now-defunct IndyMac Bank, whose customers sweltered in long lines outside branches last summer as word spread that regulators had shut down the once highflying institution. The scene -- folks fanning themselves in the July heat, some even bringing along beach chairs for the wait -- made great images for the media.
But the whole waiting-in-line thing was supremely pointless.
The vast majority of IndyMac depositors were fully insured and didn't lose a dime. Customers could still use ATMs, debit cards and checks to access their money over that weekend as the Federal Deposit Insurance Corp. sorted out the failed bank's business. By Monday, customers could resume all other transactions, including transferring their accounts to another bank if they wanted.
The fact is, we're out of practice when it comes to failing banks. Nearly two decades have passed since the savings and loan crisis took out more than 1,000 financial institutions at a cost to taxpayers of $125 billion.
Unfortunately, we're getting a refresher course:
* A staggering 26 banks failed in 2008 and six more have failed through January of 2009. The list includes Washington Mutual, by far the largest institution ever to fail.
* The FDIC's list of "problem" institutions jumped to 171 at the end of September 2008 (the latest total was released Nov. 25), compared with 117 at the end of June. The agency doesn't release the names of banks it worries about, fearing such disclosure will contribute to bank runs, but said assets held by the troubled banks swelled from $78 billion to $116 billion.
* Bank analysts predict dozens and perhaps hundreds more failures are to come, driven by bad mortgage loans, falling home prices, the credit crunch and a flagging economy.
Here's what you need to know about the safety of your bank accounts:
Don't expect to call it. It's virtually impossible to tell in advance which institutions will fail. Some can limp along for years and then recover; some can plunge from seeming strength into chaos virtually overnight.
You can (and should) consult ratings services such as Bankrate.com's Safe and Sound system or TheStreet.com ratings so that you have some idea of your institution's relative strength, said longtime banking analyst Bert Ely of Ely & Co. But you should understand that these ratings are largely based on the banks' own reports of their financial condition, known as "call reports." Fraud and other problems can be hidden for months or even years.
"I've been reading call reports for 25 years, and every once in a while I still get surprised," Ely said. "The rating services are not bad, but they're not foolproof."
Unfortunately, we're getting a refresher course:
* A staggering 26 banks failed in 2008 and six more have failed through January of 2009. The list includes Washington Mutual, by far the largest institution ever to fail.
* The FDIC's list of "problem" institutions jumped to 171 at the end of September 2008 (the latest total was released Nov. 25), compared with 117 at the end of June. The agency doesn't release the names of banks it worries about, fearing such disclosure will contribute to bank runs, but said assets held by the troubled banks swelled from $78 billion to $116 billion.
* Bank analysts predict dozens and perhaps hundreds more failures are to come, driven by bad mortgage loans, falling home prices, the credit crunch and a flagging economy.
Here's what you need to know about the safety of your bank accounts:
Don't expect to call it. It's virtually impossible to tell in advance which institutions will fail. Some can limp along for years and then recover; some can plunge from seeming strength into chaos virtually overnight.
You can (and should) consult ratings services such as Bankrate.com's Safe and Sound system or TheStreet.com ratings so that you have some idea of your institution's relative strength, said longtime banking analyst Bert Ely of Ely & Co. But you should understand that these ratings are largely based on the banks' own reports of their financial condition, known as "call reports." Fraud and other problems can be hidden for months or even years.
"I've been reading call reports for 25 years, and every once in a while I still get surprised," Ely said. "The rating services are not bad, but they're not foolproof."
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