Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I am having some trouble working out exactly what the case is for FDIC insured deposits. I seem to get one answer from searching on line - another answer from experts on the TV and a third from our bank (but I could barely understand him through the accent so that may have been the problem). If anyone knows for sure, please comment.
Here is how I understand it.
A husband and wife can have in one bank:
Husband: $100,000 INSURED
Wife: $100,000 INSURED
Joint Account in both names: $200,000 FULLY INSURED.
TOTAL INSURED: $400,000
Our banker made it sound like:
Husband: $100,000 INSURED
Wife: $100,000 INSURED
Joint Account in both names: $200,000 ONLY $100,000 INSURED.
TOTAL INSURED: $300,000
Does anyone know which of the above examples is correct? We need to spread some risk.
I know about the $250k retirement - but not worried about that for now.
Husband: $100,000 INSURED
Wife: $100,000 INSURED
Joint Account in both names: $200,000 ONLY $100,000 INSURED.
TOTAL INSURED: $300,000
Your banker did not lie.
Read the language of the law. It's $100,000 per account, not per person.
In reality, your accounts are not really insured. What would happen is if a bank collapses and no other bank is willing to take it over, the FDIC would take over and dispose of the bank's assets.
Cash assets are distributed to depositors up to $100,000 per account. Excess cash is pooled then redistributed equally to depositors. From there, real assets (property) are auctioned off and the money is pooled then distributed equally to depositors. Outstanding loans may be called if no other bank is willing to accept the loan risk. Loan money is pooled then distributed equally to depositors.
If there is insufficient cash assets, the proceeds from the auction of real property is distributed to depositors.
If that is not sufficient to cover the depositor's accounts up to $100,000 only then does the government step in and provide the money.
Mircea; thanks. per account makes sense - and is probably where I was getting stuck.
So we can safely have $300,000 in each bank if we divvy it up in the way I outlined.
Need to find some more bank options with high interest bearing accounts.
Any thoughts on ETrade and Everbank?
I'd call the FDIC at 1-877-275-3342 just to make sure your understanding is correct.
Etrade is on life support and their stock has fallen 80% over the past 12 months. I don't think you'll be very impressed with their customer service. Google "etrade customer service" and you'll see that the number of online complaints outnumber all other brokerage firms 10 to 1.
I would suggest spreading $100,000 at different banks. Check their CURRENTY ratings at bauers first. With online brokerages and many banks setup for online ACH transfers you can have your money spread around to safe and secure banks in just a few minutes. Even though you may be covered above the standard $100,000 based on joint this, or joint that, if the bank fails you don't want to be in doubt, or have to wait for access to your money.
It is already 100% in the cards that at least 220 banks will fail in the next 12 months. We could top 800 by the time this thing turns.
While my expertise is in mortgages, I have been working into the banking side over the last year. Here is my understanding: It is not per account, the basic insurance amount is $100k per depositor, per insured bank. Ex. if you (an individual) have 3 accounts at the same bank with $60k each ($180k total) you have $80k uninsured.
You can have a joint account with your wife with $200k and be fully insured, and then have your own accounts with another $100k each. "Deposits maintained in different catagories of legal ownership at the same bank can be seperately insured." I think your 1st example is correct.
Adding children, siblings, grandchildren as payable on deaths can increase your insured amount substantially.
Ex. Husband and wife have one joint account with 3 children listed as 'payble on death' listed on the account will get you $600k in coverage per the FDIC booklet (I can only come up with $500k for this. Not sure how they get $600k).
I would suggest spreading $100,000 at different banks.
Definitely a good idea. Never keep all of your eggs in one basket.
Quote:
Originally Posted by travelmate38
It is already 100% in the cards that at least 220 banks will fail in the next 12 months. We could top 800 by the time this thing turns.
I'm not sure I'd go that far. One thing that didn't cause the Great Depression but did exacerbate it was the Federal Reserve's failure to step in quickly enough to help banks that were failing. One of Roosevelt's first acts as president, if not the first act, was to order all banks closed. I think he was sworn in on March 4th and closed the banks on the 6th. About 20 states or so had already ordered banks closed prior to that between January and March 1933.
The Federal Reserve has drawn a lot of criticism for failing to take timely action, so I don't think you'll see a repeat of that. The Great Depression was already well under way, and many of the banks that closed deserved to be close because they were poorly managed and took unwarranted risks.
Ex. Husband and wife have one joint account with 3 children listed as 'payble on death' listed on the account will get you $600k in coverage per the FDIC booklet (I can only come up with $500k for this. Not sure how they get $600k).
It depends on the type of account. I think for the example you're using it's a revocable trust account, which is how they came up with $600,000.
Quote:
Originally Posted by Hobokenkitchen
So we can safely have $300,000 in each bank if we divvy it up in the way I outlined.
Need to find some more bank options with high interest bearing accounts.
I went and looked at some of the FDIC case law as well as FDIC advisory opinions (courts do not consider advisory opinions from federal agencies to be persuasive in all cases) and generally, as long as there is a right of survivorship, the FDIC may insure each depositor on an account.
The right of survivorship will depend on your state's laws, as well as the type of account. So, is it Mr. Hobokenkitchen AND Mrs. Hobokenkitchen or Mr. Hobokenkitchen OR Mrs. Hobokenkitchen and is there a right of survivorship attached to the account, or permitted by state law?
If there is, then yes, the FDIC should insure the account to $200,000.
If you have a mortgage, HELOC, auto note or other money owed to that particular bank, you might want to know that the FDIC might automatically offset your accounts to cover the loans (see [SIZE=2][SIZE=2]FDIC v. Mademoiselle of California, 379 F.2d 660 (9th Cir. 1967); Chase Manhattan Bank, N.A., v. FDIC, 554 F.Supp. 251 (W.D. Ok. 1983); Hibernia National Bank v. FDIC, 733 F.2d 1403 (10th Cir. 1984); InterFirst Bank-Abilene, N.A. v. FDIC (CA 5, No. 84-1840, 12/11/85); Essay, The Aftermath of Penn Square Bank: Protecting Loan Participants from Setoffs, 18 Tulsa L. J. 261.[/SIZE][/SIZE]
Quote:
The term "insured deposit" is defined in 12 U.S.C. §1813(m). This section provides, in part:
(m)(1) Subject to the provisions of paragraph (2) of this subsection, the term "insured deposit" means the net amount due to any depositor (other than a depositor referred to in the third sentence of this subsection) for deposits in an insured depository institution (after deducting offsets) less any part thereof which is in excess of $100,000. Such net amount shall be determined according to such regulations as the Board of Directors may prescribe, and in determining the amount due to any depositor there shall be added
{{4-30-91 p.4528}}together all deposits in the depository institution maintained in the same capacity and the same right for his benefit either in his own name or in the names of others except trust funds which shall be insured as provided in subsection (i) of section 1817 of this title.
Thus, deposits of individuals may be withheld pending settlement of their liability for having caused the bank's failure, and subsequently setoff.
If you have access to Lexis-Nexis, you'll find this interesting:
Quote:
There are five different types of legal ownership of a bank account, and each is treated differently when it comes to deposit insurance. The big differences involve accounts owned individually, jointly, as a business, as a retirement plan or as a trust of some kind.
Accounts set up under "individual" and "joint" ownership are added together to determine whether they exceed the FDIC's $100,000 per person, per bank limit on deposit insurance.
Thus, if Jane Smith has a $100,000 certificate of deposit in her name alone and shares another $100,000 account with her husband, $50,000 of her assets would be uninsured.The reason: The FDIC figures that each individual owns half of a joint account, unless they specify otherwise. In Jane's case, her $50,000 interest in the joint account, added to her $100,000 individual account, puts her $50,000 over the limit.The Smiths could get coverage for the full $200,000 if they took Jane's name off the joint account and left the second account in her husband's ownership alone. They could do the same by merging their two accounts into one joint account.
My bank manager told me it is also different if you have beneficiers added to your account. It will go up if you have.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
