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Money Market vs. Checking Account: How Do They Differ?A Bank Customer's $321K Loss from a Bank Failure
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BY Ken Tumin
This is a good example of the importance of keeping your deposits under the FDIC insured limits. This Pittsburgh Post-Gazette article described the loss of over $321K from a 77 year-old customer of Metropolitan Savings Bank. This bank was shut down by state regulators in February due to unsafe and unsound operations. I posted about this in February.
The article mentioned that the man had a total of $521K of his lifetime savings in the bank. $200K was insured. The extra $100K of coverage was due to his son also being an account holder. According to the FDIC spokesman quoted in the article, some money "possibly" could be returned later this year, but he doesn't "want to get people's hopes up."
It looks like this man could have had all of his money insured if he had structured the accounts properly through joint accounts and trust accounts. As the article mentions, all of the responsibility of structuring the accounts properly falls on the depositor and "Bankers are known to get it wrong."
One thing that should be noted is that bank failures are rare. This FDIC list of bank failures shows only 26 since October 1, 2000.
For more info on the FDIC and NCUA insurance coverage, please see my Facts about FDIC and NCUA.
The article mentioned that the man had a total of $521K of his lifetime savings in the bank. $200K was insured. The extra $100K of coverage was due to his son also being an account holder. According to the FDIC spokesman quoted in the article, some money "possibly" could be returned later this year, but he doesn't "want to get people's hopes up."
It looks like this man could have had all of his money insured if he had structured the accounts properly through joint accounts and trust accounts. As the article mentions, all of the responsibility of structuring the accounts properly falls on the depositor and "Bankers are known to get it wrong."
One thing that should be noted is that bank failures are rare. This FDIC list of bank failures shows only 26 since October 1, 2000.
For more info on the FDIC and NCUA insurance coverage, please see my Facts about FDIC and NCUA.