FDIC regulation
FDIC: Is Your Savings Account Secure?
With the current financial crisis affecting banks and the stock market, in addition to reports that many more banks may be in financial trouble, the question many of you may ask is: What about my savings account? Is it secure?
In answer to your question, we have to look to the Federal Deposit Insurance Corporation (FDIC) for answers.
What money is insured? According to the FDIC, the following accounts are secured “up to the legal limit of $100,000, and possibly more for special accounts.” The insured accounts include: checking, savings, trust, certificates of deposit, and IRA retirement accounts.
What isn’t insured? The FDIC states that “institutions who offer consumers a broad array of investment products that are not deposits, such as mutual funds, annuities, life insurance policies, and stocks and bonds are non-deposit investment products and are not insured by the FDIC.”
To determine the amount your bank is insured for, it may be a good idea to contact them and ask about your accounts.
The FDIC also advises that “You can – and should – obtain definitive information about any mutual fund before investing in it by reading a prospectus, which is available at the bank or brokerage where you plan to do business. The key point to remember when you contemplate purchasing mutual funds, stocks, bonds or other investment products, whether at a bank or elsewhere are that: Funds so invested are not deposits, and therefore are not insured by the FDIC – or any other agency of the federal government.”
In addition, if you own securities or mutual funds, FDIC states that they “are held for your account by a broker or a bank’s brokerage subsidiary and are not insured against loss in value. The value of your investments can go up or down depending on the demand for them in the market. The Securities Investors Protection Corporation (SIPC), a non-government entity, replaces missing stocks and other securities in customer accounts held by its members up to $500,000, including up to $100,000 in cash, if a member brokerage or bank brokerage subsidiary fails.”
This is critical information considering the recent bail-out of AIG and other well-known banks in recent days.
In these troubling economic times, the more you know about your bank and its affiliation with FDIC, the more prepared you will be for any eventuality.