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Top 10 FDIC Misconceptions and Proving FDIC/NCUA Coverage

In their Spring 2006 consumer news, the FDIC has an article titled Misconceptions: A Top 10 List. Some of the more common misconceptions include that there's no way to insure over $100K, it can take a long time for the FDIC to pay depositors of a failed bank and FDIC may only pay a percentage of your insured funds.

It should also be noted, that most credit unions have a very similar federal insured program through NCUA. The NCUA has kept their insurance inline with the FDIC including the latest increase in the IRA limits. I've never come acrosss a bank based in the US that's not FDIC insured. However, I've come across many credit unions that are not NCUA insured. Most of these have decided to use a private insurer like from ASI.

To confirm that a bank or credit union that you find online is legitimate and federally insured, both the FDIC and NCUA provide a database that includes the website address of the institution.

Finding the bank or credit union can sometimes be difficult. The parent bank or credit union may be the one that's listed in the database. UmbrellaBank is one example of this. You have to search for Umbrella's parent, New South Federal Savings Bank in the FDIC database.

I have to admit that this is one hole in this check. Many banks that are creating online divisions are not providing a way for people online to verify their FDIC status. The FDIC database only points to the parent bank, not the online division. At the very least, the bank should include a link on their main website pointing to the new online division. Emigrant Savings Bank has done this with EmigrantDirect. The FDIC only lists Emigrant Savings Bank along with the emigrant.com web address. However, there's a link at emigrant.com pointing to emigrant-direct.com. This allows me to say with confidence that EmigrantDirect is FDIC insured.

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