IndyMac collapses, do you know if your bank is safe?

Is it time for us all to run to our bank, withdraw our money and stash it under the mattress? Some people are doing exactly that, the IndyMac’s failure caused chaos with customer queuing outside the bank demanding their money.

Customers are being reassured that their money is safe from bank and federal officers, analysts are being sued for reporting certain banks are the next in line to go. So where does that leave all us, with rumours flying around isn’t it better to know what is happening. The Treasury Secretary Henry Paulson to bureaucrats at the Federal Deposit Insurance Corp. have run to the media to reassure depositors their money is safe since the IndyMacs failure.

The federal guaranty behind every deposit up to $100,000, even in cases where a bank collapses. Joint accounts, retirement accounts, and trusts are also insured, up to a limit to send the message to their depositors that they do not need to worry.

There are 90 (out of 8,494) banks that are on shaky grounds according to the FDIC watch list of troubled banks. The banks are assessed on the quality of its assets, capital position and its management team, its liquidity position, its earnings, and the bank’s sensitivity to broader market forces.

It’s said that due to the stresses we have on the market place the list of troubled banks will grow. Lajuan Williams-Dickerson a spokes women for FDIC said that “they could not discuss the names of the banks on the list as it would be unfair to expose them publicly; it would also raise undue alarm, for any of them to fail would be unlikely”.

Although it seems that the FDIC are contradicting their stated goal, saying that they want to create customer awareness and then hold vital information back from the consumer, but the FDIC say that they are making enough information available to the customer to let them determine if their bank is healthy and indeed to let them see if they feel safe with depositing money there.

There have only been 7 banks that have failed in this downturn, hundreds failed back in the late 1980s and 1990s.

businessweek.com

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