[The second installment in an ongoing series detailing strategies that investors can use to insulate themselves and their finances from the ongoing credit crisis.]
By Keith Fitz-Gerald
Money Morning/The Money Map Report
A Money Morning reader recently wrote to say:
“I’m panicked. After watching the news and several banks fail, how can I know if my bank is safe? I’m retired and can’t afford to ‘lose it all’.”
With about 120 banks on the Federal Deposit Insurance Corp.’s troubled list and rumors swirling that as many as 200 more are in deep kimchee, we don’t blame you for asking – particularly since the FDIC doesn’t publish the names of the banks on its watchlist.
Credit Crisis Safety Plays
Here are three quick and easy steps you can take that may help you determine if your bank is safe or not.
- Click over to Bankrate.com’s Safe & Sound ratings page. There you can plug in your bank’s name and see how it scores on the basis of 22 objective measures designed to gauge the capital adequacy, asset quality, profitability and liquidity of thousands of banks. If your bank doesn’t make the cut with a higher rating, then switch to one that does.
- Use the FDIC’s electronic deposit insurance estimator to see if your assets are covered in full. With the recent signing of the bailout legislation into law, the FDIC now covers accounts up to $250,000 at any one bank in any single account or $250,000 per co-owner for joint accounts. Traditional and Roth IRAs, SEPS and other retirement accounts on deposit at an FDIC-insured bank or savings institutions are insured up to $250,000 separately from any other deposits you may have at the same institution. But this is mainly deposit accounts and doesn’t include stocks, bonds, mutual funds or life insurance policies.
- Double-check your ownership. If a portion of your assets is uninsured, getting full coverage may just be a matter of changing ownership or spreading out your accounts to different banks. (But keep in mind, like most things the government doesn’t make this easy so that means more paperwork.) If you’ve got the big bucks, visit the Certificate of Deposit Account Registry Service, or CDARS, and learn how you can obtain full FDIC insurance on deposits up to $50 million – with a single interest rate on a single statement at a single bank. Ironically, a former U.S. Federal Reserve employee – someone who must have gotten “fed” up with the complicated FDIC insurance requirements and ownership restrictions – started this innovative service.
But what ever you do, do it quickly.
That way you won’t be one of hundreds who will probably be camped out at the front doors of the next IndyMac Bancorp Inc. (OTC: IDMC) when it hits.
[Editor’s Note: “Credit Crisis Safety Plays” is a new Money Morning series that will detail strategies that investors can use to insulate themselves and their finances from the ongoing credit crisis. The first installment explained how to make sure your bank deposits are FDIC insured. These personal finance missives will draw upon the experiences of such experts as Money Morning Investment Director Keith Fitz-Gerald.]
News and Related Story Links:
- Money Morning:
Credit Crisis Safety Plays: How to Make Sure That Your Bank Deposits are FDIC Insured
- Money Morning:
Banking Bailout Becomes Law With House Vote, Bush Signing
Safe & Sound rating
Electronic deposit insurance estimator
Certificate of Deposit Account Registry Service
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean, and he's also the founding editor of Straight Line Profits, a service devoted to revealing the "dark side" of Wall Street... In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.