A look at FDIC coverage

The IndyMac Bank failure got me thinking about something most of us take for granted: Federal Deposit Insurance Corporation, usually referred to as FDIC, protection of our bank accounts.

The FDIC is an independent U.S. governmental agency created to protect bank customers against loss of deposits held in an FDIC insured bank or savings association that fails.

According to the FDIC Web site, insured deposits usually are available to customers of a failed bank within a few days. Since the inception of the FDIC in 1933, no depositor has ever lost a penny of insured deposits.

The key phase is "insured deposits," which means the amount meets the agency's limits. The amount $100,000 is tossed about, but there are some specifics that need to be noted, primarily in regard to the various account categories.

Single accounts: For accounts owned by one person and titled only in that person's name, the money in all such solo accounts counts toward the $100,000 insurance limit. That means if you have a checking account and a CD at the same FDIC-insured bank, both account amounts are added together and that total is insured up to $100,000.

Remember, it's per person/account and per bank. So if you have $100,000 in ABC Bank and $100,000 in XYZ Bank and both FDIC-insured institutions fail, each account is fully recoverable.

Joint accounts: These accounts are owned by two or more people. If the owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $100,000 for each owner.

For a couple with a joint checking account and a joint savings account at the same insured bank, like the hubby and I have, each co-owner's shares of the two accounts are added together and insured up to $100,000, providing up to $200,000 in coverage for the couple's joint accounts.

For example, the hubby and I have a hypothetical $200,000 CD at an insured bank with equal access to the account funds. So the hubby has $100,000 and I have the other $100,000 and we're OK if our bank fails, since we each get $100,000 of coverage.

If, however, our CD earnings bumped our account total up to $220,000 -- since we're being hypothetical, we're getting a great interest rate on this CD! -- that would put each of us $10,000 over the insurance limit.

Retirement account added coverage: While the basic insurance amount is $100,000 per depositor
per insured bank, retirement accounts get added coverage. IRAs are insured up to $250,000 per depositor per insured bank.

Additional assets uncovered: But other assets aren't usually protected by the FDIC.

As the fine print on bank literature and Web sites notes, the FDIC does not insure money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased these products from an FDIC-insured bank.

Calculate your FDIC coverage: You can calculate your bank insurance coverage at EDIE, the FDIC's online Electronic Deposit Insurance Estimator.

You also can get download a copy of Your Insured Deposits: FDIC's Guide to Deposit Insurance Coverage, which has details on insured account ownership categories, or you can order a copy by calling toll-free 1-877-275-3342.

Bad banks: IndyMac is the fifth bank to fail this year. Between 2005 and 2007, only three banks failed.

However, that escalated failure pace is not a reason for worry, according to the head of the FDIC.

"All bank depositors should understand that their insured deposits are safe," said FDIC Chairman Sheila Bair (reported by Reuters). "The chance that your own bank will be taken over by the FDIC is extremely remote. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits."

According to FDIC records, in the past 15 years, the federal bank insurance agency has taken over 127 banks with combined assets of $22 billion.

The Pasadena, Calif.-based IndyMac, which was seized Friday, July 11, by regulators after a bank run in which customers withdrew $1.3 billion of deposits over 11 business days, will reopen Monday. It will have a new charter and a new name, IndyMac Federal Bank.

Still in a movie mode: Keeping with today's earlier post about accountant movies, the best bank failure flick is, obviously, It's a Wonderful Life.

If only real life were as wonderful as the reel life in some of these great old films.

But, alas, there aren't many bankers like George Bailey or towns like Bedford Falls anymore.

Book Review: Save Now or Die Trying

Mark Bruno’s book, Save Now or Die Trying is a modern, up-to-the-minute book on retirement. It was published in 2007. The author has been covering the retirement industry for Crain’s Pensions and Investments for the last few years. As a newbie who learned everything on the job, he can relate to most of his Generation Y compatriots. His examples are the Jacks and Jills making their way in the world. He delves into their attitudes towards retirement and their fears and aspirations for the future, a lot like Suze Orman does, but his examples aren’t quite as two dimensional. None of us are, but I think the examples he’s picked out are more realistic than you’ll find in other personal finance books.

His title is a strong start and so is the first page. He’s out there to emphasize to today’s 20-somethings that no one is going to pay for their retirement. The only person responsible for it is YOU. I’m right behind him on that concept. Another concept he revisits over and over is that you can borrow a money for nearly everything, except retirement. A better thing to do is to ‘buy your retirement’ now, by saving for the future. I think that’s a great way of putting it.

There weren’t too many new things in this book overall, but a few key things really stuck out at me. 1. Roth IRA’s and Roth 401k’s. I did not know that regular 401k and Roth 401k contributions have a combined limit. I’ll have consider that as I revisit next year’s savings plan. 2. His online resource list has some new websites and resources I’ve never heard of before.

This book is a great gift for a new college grad or anyone under 30.

Yay!

TIAA-CREF found my thousand dollars. All is well again.

I'm more heavily thinking about sinking most of my salary into the retirement plan.. I am going to pay SO MUCH in taxes this year that I am trying to stick as much of it into tax-sheltered accounts as possible. (Still filling the Roth though, since I can't retroactively fill it five years from now when I am in a lower tax bracket.)

Life is just chugging along. I am really incredibly busy with CashDuck.. and of course I am not making it any easier for myself by advertising so much and getting lots of new users, and working on new site doodads. :)

How Much Money Does Opec Make in 6 Days?

Enough to buy General Motors.

Morgan Stanley Commodities Head Retires

Morgan Stanley commodities chief John Shapiro has decided to follow Michael Lewis advice about what "the really shrewd people" do when times get tough on Wall Street. They "abandon the big firms for which they have happily worked for many years, and sneak off," according to Lewis.

Shapiro is stepping down from his positions as the head of Morgan Stanley's huge commodities trading desk. He's been with the firm since 1984, and gets credit for building its energy-trading business. But lately Morgan Stanley has seen a sharp decline in revenues from commodities. Shapiro's surprise retirement will inevitably be read as a signal that things haven't improved.

As the Wall Street Journal tells it:

The firm recently said a decline in commodity revenue from the first to second quarter of this year was due in part to wrong-way bets in the power sector. But a person familiar with the matter said the overall commodities business in the first half of 2008 is running on a par with the first half of the prior year.

Writing on the wall seen.



Morgan Stanley's Shapiro Resigns as Commodities Chief

You can get one thing

When my son was a little boy, I would regularly bring him to the grocery store with me. And as any parent knows, as soon as kids can point and talk, they want you to buy them things when you're at the store.

This is normal human behavior: see stuff, want it, try to get it. But of course no parent can buy everything; and even if you could, it wouldn't be a good idea. Sometimes getting stuff (even as adults) isn't in our best interests. Stuff may cost too much, it may be unhealthy, we may want to use our money for other things, we may not have the room or the means to care for the things, we may just be feeling a fleeting desire that we'll forget all about in 5 minutes, etc.

So I saw these trips to the grocery store as teaching moments. I wanted to teach my son about money, stuff, and how you really can get the things that you want most. I also wanted to preserve my sanity on the shopping trips. So I decided to tell him yes to everything he said he wanted, with one condition: he had to pick just one thing.

When we got to the grocery store, I'd tell him “You can buy one thing. You can get whatever you want, but just one thing.” He'd ask me if he could get pop tarts and I'd reply with sure. Gatorade? Sure. Ice cream? Gogurt? Gum? Candy? Yes, yes, yes, yes, if that's your one thing. You decide. It's up to you.

When he was really little, his one thing would change with practically every aisle. He was constantly putting stuff back and getting something different instead — sometimes even right up to the checkout line. But as he grew older he became more sure of what he really wanted. It appeared to get easier for him to decide. He could cut through the things that only looked good at the moment for what he wanted most.

Maybe this is an extreme way of thinking about things, because of course we can have more than one thing in our lives. But it's a good way to think about the power of choice. Every choice we make (and even the choice NOT to choose) affects our life. The choices add up. If we focus them on what we want MOST (whether it's retirement savings, to get out of debt, or a trip to Antarctica) we'll be much more likely to get them. We can't have everything, but we can have the things that mean the most.

Stock Screen for Tuesday 6-17-08

Today's screens give us an interesting mix of stocks that were higher on above average volume. I was specifically looking for stocks that were up at least 1% and had volume of at least 50% larger than the average. Several names, such as AAP, ABFS, ACM, EEP, ERES, FDS, GDI, IPHS, NDSN, OMI, PQ, TEVA, TITN, TOT and VIT, showed up on multiple screens. I will admit that not every one of these stocks look appealing after viewing the charts.