The Mortgage Man

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Are We Looking At Nationwide Financial Collapse?

There are currently 90 banks listed on the FDIC problem list.

There is a lot of information being thrown at you in the media and in the blog-o-sphere about the pending doom in the financial markets and the banking sector.  I thought I would write a quick post for you to help lift the clouds of confusion.

The shut down of IndyMac Bank is a big deal because of the shear size of the company.  But, it is not a flag for the collapse of the entire banking system.  Right now there are approximately 90 banks that are listed with the FDIC as a concern for trouble.  This does not mean that they will fail, it just means that they are being watched because of their weakness for various reasons.  These banks are spread over many different states, and vary in size.  For obvious reasons, this list is a higher guarded secret, and should be.

Facts, Myths and B.S.

Fact – If you have less than $100,000 cash in your bank, you are protected by the FDIC for 100% of your deposit.  If you have more than that, might behoove you to diversify your accounts over a couple of different banks (diversification is a good idea in any market).

Myth – Monies deposited in stocks, bonds, mutual funds, insurance policies and municipal securities are insured by the FDIC as long as they are purchased through an FDIC insured bank.  This is not true!!  The insurance provided by the FDIC covers checking, savings, money market and CD accounts up to $100,000 per depositor, per financial institution.

Complete BS – If a bank fails, the FDIC can take up to 99 years to pay you the insured portion of your account balance.  This is not true.  It has been widely spread as rumor and urban myth, but it is 100% unfounded, and in 2007 it was debunked in writing by the FDIC.  In fact, federal dictates that in the event of bank failure, the FDIC is bound to repay money to the consumer “as soon as possible”.  In the past, it has happened as quickly as the next day.

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