file under :: you never know

About 6 months ago, my bank, NetBank, was taken over by the Feds. It made a bit of news, as at the time it was the biggest take over since the Great Depression. Shortly thereafter, it was sold to ING.

As the name implies, NetBank was Internet only banking. There was no physical bank that people could camp out at in the hot sun and drive the media into a frenzy. There were also very few people who had accounts worth over $100,000. This was one time where being "poor" paid off.

The takeover of IndyMac of Pasadena is slightly different in that it is a regional bank, and it had many people apparently who had lots of money in individual accounts. There have been stories on the news about the people lining up around the block and waiting in the hot sun for hours to get answers, and maybe even there money back. Many of these people are elderly and in various states of mobility.

Don't get me wrong, I feel for these people. But I think those with accounts under $100K need to take a chill pill. The Feds aren't lying when they say that customers can do everything business as usual - write checks, use your ATM card, bank online, etc. They should not have even have changed the terms with regard to account fees and so forth. My advice to you is to make sure you have copies of all your statements, especially if you are a primarily online customer. Print them out now. When ING took over NetBank, they eventually deleted all records.

For those with bigger problems, I offer this tidbit from a call in show on KPCC this afternoon. Patt Morrison had on a former big wig from the FDIC. You can listen here. A man called in and reported he had written a check and deposited it on Thursday (before the bank was seized) for over $100K. According to the FDIC representative, there is no reason this check should not clear. Essentially this guy saw the writing on the wall and transferred his funds to some other account, in essence saving his money. People who weren't this clever are looking at receiving as little as 50 cents on the dollar for everything not insured.

There are lessons for all of us in this. For starters, if you find yourself with over $100K in cash, make sure you deposit it such that it is insured by the FDIC. To date, the FDIC has never lost any insured funds. Also, if you have a joint account that is not with a legal spouse or child, be sure the documents protect you. The FDIC representative didn't go into details, but if you have a large joint account with someone other than these (partner, sibling, cousin, in-laws, friend), you want to check with your bank and make sure you are protected. If not, do what you need to do to insure your money is insured.