Bank depositors remain insured by government

Sep 30, 2008 (The Record - McClatchy-Tribune Information Services via COMTEX) -- WB | Quote | Chart | News | PowerRating -- Following the demise of Wachovia Corp., the second large national bank to be taken over in a week by another large financial institution with the assistance of the Federal Deposit Insurance Corp., all bank depositors are getting jittery.

"This is disturbing stuff," said Lodi certified financial planner Christopher Olsen, a veteran of 25 years of advising clients on money matters known for his collective cool and self-described "boring" investment advice.

According to information released Monday by the FDIC, Citigroup Inc. will acquire the banking operations of Charlotte, N.C.-based Wachovia Corp. All depositors are fully protected, and there is expected to be no cost to the Deposit Insurance Fund.

Wachovia did not fail, according to the FDIC. Rather, it is to be acquired by Citigroup on an open bank basis with assistance from the FDIC.

"For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits. There will be no interruption in services, and bank customers should expect business as usual," FDIC Chairman Sheila Bair said.

On Thursday, banking operations of Washington Mutual, Inc. were sold in a transaction facilitated by the Office of Thrift Supervision and the FDIC. All deposit accounts and all loans have been transferred to JPMorgan Chase Bank.

The FDIC, an independent agency of the federal government, protects bank depositors against the loss of their deposits if an FDIC-insured bank or savings association fails. As has been its motto since it was created in 1933 on the heels of thousands of bank failures in preceding years, FDIC insurance is backed by the full faith and credit of the United States government.

To check whether your bank or savings association is insured by FDIC, call toll-free (877) 275-3342 between 5 a.m. and 5 p.m. Monday through Friday, look for the official FDIC sign where deposits are received or go to its Web site at www.fdic.gov.

The FDIC has a tool on its Web site that allows failed-bank customers to verify whether their accounts are fully insured or they need to contact FDIC. A link to specific contact information will be provided.

The customer must enter each account number to determine that account's status.

This service will be available for use no later than the first business day after a bank failure. This service is only available for banks that failed after July 1 of this year.

The FDIC insures all deposits at insured banks, including checking, NOW and savings accounts, money market deposit accounts and certificates of deposit, or CDs, up to the insurance limit -- typically $100,000.

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if they were purchased from an insured bank.

The basic insurance amount of $100,000 is per depositor per insured bank. Certain retirement accounts, such as individual retirement accounts, are insured up to $250,000 per depositor per insured bank.

The FDIC provides separate insurance coverage for deposit accounts more than $100,000 held in different categories of ownership.

The most common ownership categories are single accounts, certain retirement accounts, joint accounts and revocable trust accounts.

Financial planner Olsen has always recommended diversification of investments, now more so than ever.

While half-jesting that he can't predict what is the best financial advice because "my crystal ball is broken, nobody is saying this is just par for the course. I always do what is prudent, and most of the time that works out really well. Stay diversified. The tried and true stuff tends to look pretty good."

Contact reporter Joe Goldeen at (209) 546-8278 or jgoldeen@recordnet.com.

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