Don’t worry, the FDIC has you covered

The Federal Deposit Insurance Corp. wants you to know that your money is safe.

Despite the 123 banks that have failed so far in 2009 (that’s as of Nov. 13), it’s the FDIC’s job to keep your deposits of up to $250,000 unharmed, even if the bank that houses that cash goes out of business.

According to Chairwoman Sheila C. Bair, “there’s no safer place in the world for their checking, savings or retirement money.” She says that the chances of bank failure are low. For example, there are more than 90 banks headquartered in Maryland, and only two have failed this year.

Six other Maryland banks — Colombo Bank, Waterfield Bank, Eastern Savings Bank, First Mariner Bank, K Bank and Bay National Bank — are under federal scrutiny, meaning that if they don’t shape up, they could close down.

Even if those banks do fail, the FDIC’s leader says that there’s really nothing to worry about. If you’ve got less than $250,000 in a federally-insured bank, you’ll be able to recoup all of it, making a bank failure “a non-event” to use Bair’s words.

Bair lays out why banks are safe in the fall 2009 edition of FDIC Consumer News:

  • Federal deposit insurance is backed by “the full faith and credit of the United States government.” That means that the U.S. government protects federally insured depositors. “In short, we cannot run out of money,” Bair said.
  • The FDIC can quickly borrow money from the U.S. Treasury in an emergency. But the FDIC expects to collect money from the banking industry to pay for its own problems, rather than using taxpayer dollars.
  • Federal law also requires that all insured deposits be paid asap. If a bank fails, the FDIC always repays depositors upĀ  to the legal limit. In most cases, customers can access their accounts on the next business day when the FDIC arranges for a healthy bank to assume the insured deposits.

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