| Bank failures! Who would ever have thought that we | | | | When the bank is helping troubled companies. Also pay |
| would be talking about bank failures? We aren't living in | | | | special attention to the amount of real estate the bank |
| the wild West or the depression era when banks | | | | owns or has lended out. |
| routinely went out of business and depositors lost all | | | | If your bank is a publicly traded company then you can |
| their money! The FDIC was created to stop bank runs | | | | check with the SEC, the Securities and Exchange |
| after all... | | | | Commission, to get all of their current financial |
| But then the recession of late 2008 and 2009 struck. | | | | statements. Take a look at the investments that the |
| 100 banks went out of business in 2009, and some | | | | bank has made, are they safe investments or do they |
| authorities believe that number could increase in 2010. | | | | seem shaky to you? |
| And it's not just little banks; major banks have also | | | | Take a look at the bank's track record over a long |
| gone out of business within the last year. Some of | | | | period of time. What you're looking for here is the |
| these banks get bought up by larger banks, but some | | | | growth rate. Has the bank grown quickly? If so this |
| of them simply fade away... | | | | may be a warning signal since fast growth rates can |
| Yes, we have FDIC insurance that will pay you back | | | | be interpreted as the bank taking Too many risks. |
| all the money you lose up to a certain amount. But! It | | | | Finally you should ask about the banks "at-risk" loans. |
| may be years before you see that money! And what | | | | At-risk loans are loans that have been in default for |
| happens if you have more then the FDIC minimums? I'll | | | | two months to four months, that is sixty to one |
| tell you what happens, you're out of luck! | | | | hundred and twenty days. Obviously the more of |
| So how do you make sure your bank isn't about to go | | | | these at risk loans your bank is carrying, the higher the |
| out of business? Here is a list of several questions you | | | | risk that the bank could go out of business. |
| can ask your banker that are appropriate and not at all | | | | The best thing that you can do is to make sure that |
| pushy that will give you a pretty clear indication of how | | | | you keep less money in your account than the |
| financially firm and solvent you bank really is... | | | | minimum FDIC payout rate. This used to be $100,000, |
| First, ask for your bank's financial statement. Any bank | | | | but has been raised recently. Check with the FDIC to |
| or thrift will be able to provide you with their most | | | | see what the current rate is and make sure you keep |
| current financial statement. Most of them publish them | | | | less than that in any one bank. |
| either annually or semiannually. Try to get the most | | | | And be sure to keep up on current events. Most of |
| current up-to-date financial statement. | | | | the time newspapers like the Wall Street Journal begin |
| When looking at the financial statement, pay special | | | | to sniff around a bank if they feel it may be in trouble. |
| attention to the net worth of the bank and also look | | | | Spotting warning signs early can ensure that you get |
| and see how many workouts are listed. A workout is | | | | your money out in time. |