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There Are 6,458 (or 7.9%) Fewer US Bank Branches Now Than in 2020 — Here Are the States, Metros That Lost the MostA Bank Customer's $321K Loss from a Bank Failure
POSTED
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.
I have a quick question. Since this is a forum of bank and credit experts, I guess this is the right place to ask.. If that guy had saved that $521k in 6 individual accounts in 6 different banks, that are solely listed in his name and if all these 6 banks were FDIC insured, then would that guy get back all of his money from FDIC. Is the FDIC insurance of $100k for an account or for an individual person? Please let me know. Thanks...
While I feel sorry for the guy who lost his savings I have trouble understanding why he entrusted his money to the bank in question (look at the picture), why he didn't read the disclosures, etc.
BoA won't fail because the Fed would bail it out to keep confidence in the banking/financial system. That's also why they bailed out the long term hedge fund in the 90s (arranged a bailout really without financing it).
Don't forget that Enron, Worldcomm and others were too big to fail too. Ask the investors who lost billions where their money is now and you'll see the light.
Single and joint accounts are two examples of ownership categories. Simply stated, if Mr. & Mrs. John Doe held titles to separate accounts in their individual names and one jointly, they could be covered for up to $300K, per insured bank.