Consumers are worried about the shaky state of the nation’s financial service firms and its potential affect on their savings. BauerFinancial, a Coral Gables, FL-based bank rating service, says it has been fielding thousands of inquiries a week about the safety of bank deposits.

Misinformation fuels many of the calls. Representatives at BauerFinancial’s call center say options range from “It’s all FDIC insured so it doesn’t matter where I deposit my money,” to “I’m taking all my money out of the bank and hiding it under my mattress!”.

In reality, the rating service said, neither view is very prudent. “The the majority of the banking industry is weathering the current downturn just fine,” it reports.

More than 65 percent of the nation’s banks still have four or five star ratings. “Granted, that’s down from 78 percent a year ago, but it still gives depositors a very large pool of recommended banks to choose from,” it stated.

But consumers are obviously concerned about the rapid increase in bank failures. “I thought this only happened to my grandparent’s generation, during the Great Depression,” Nicole Garber wrote. “So of course I’m worried to hear about the failure of one bank after another.”

A bank failure is the closing of a bank by a federal or state banking regulatory agency. Generally, a bank is closed when it is unable to meet its obligations to depositors and others.

Not a single bank failed in the 19 months between July 2004 and Jan. 2007. There were three bank failures in the last 11 months of 2007 and 15 already this year. More than 100 are at risk of failing, experts say. “People are beginning to panic,” BauerFinancial concedes. “Some even believe we are headed into another savings and loan crisis like we had in the 80s. We’re not. What we are faced with is the cleanup of a housing mess perpetuated by nothing more than good old fashioned greed-the ultimate stimulator, made worse now by fear-the ultimate stagnater.”

Before it’s over, more banks will fail. “That’s a fact,” BauerFinancial reports. “But you don’t have to hide your money under your mattress to protect yourself.”

Bank deposits are protected by the Federal Deposit Insurance Corp. protects bank deposits. The National Credit Union Share Insurance Fund protects shares in a credit union.

Whether your money is in a bank or credit union, the basic insurance amount is $100,000 per depositor, per insured institution. This includes principal and accrued interest up to a total of $100,000. The $100,000 amount applies to all depositors of an insured institution except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured institution.

If you have more than $100,000 in savings, split it among several banks or credit unions. Deposits in separate branches of an insured institution are not separately insured, but deposits in one insured bank or credit union are insured separately from deposits in another insured institution.

• Pick a well-rated financial institution. Click here to look-up the rating of a bank. Click here to check on a credit union.
• Make sure your deposits are fully insured. Try the FDIC’s Electronic Deposit Insurance Estimator or the NCUA’s Share Insurance Estimator to find out.
• For more information on individual bank closings, how accounts and loans are affected when a bank fails, how to claim unclaimed funds from bank failures, and how to file a claim or obtain a lien release, go to www.fdic.gov/bank/individual/failed. You can get information on about share insurance at http://webapps.ncua.gov/ins/InsuredFunds/Assistance.htm.

Bookmark: