Brokered Cds No FDIC Insurance?

SF_City_101 | Mar 13, 2023 | 2 posts since 2023

Hello Community,

Does anyone understand the comment boxes at this FDIC website under each bank that has failed. While perusing them I'm noticing a lot of wording in regards to brokered assets not covered or only covered/transferred non-brokered assets. What does that mean? Some of the banks seem too small to have brokerage services so does this mean the Brokered CDs issued against these banks were not covered or insured? Or maybe SIPC picked something up like 401k products the bank offered? Hard to find info on what they mean by Brokered in these comments. Has anyone lived through a bank failure holding a Brokered CD? I had a Washington Mutual CD when it failed and Chase just gobbled it up but it was a traditional via a branch visit.

https://www.fdic.gov/bank/historical/bank/bfb2009.html

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Answers

RickZ | Mar 13, 2023 | 218 posts since 2010

I've had two failed bank brokered CDs with Vanguard in 2008 - the banks were Corus Bank and IndyMac Bank. In each case I received my principal and all interest up to the date of failure within approximately three weeks. I've also had one non-brokered CD fail and in that case I received my funds within a week or so.

alan1 | Mar 13, 2023 | 877 posts since 2015

to SF_City_101 -- You ask: "Does anyone understand the comment boxes at this FDIC website under each bank that has failed."

I have poor vision and I simply do not see any "comment boxes" under each bank. I do see a column called "Acquirer and Transaction" on the same line as each bank. For some of the failed banks, there is an indication to the effect that Bank Y has assumed [failed] Bank X's deposits, "excluding certain brokered deposits."

If the FDIC can't find a bank to take over brokered deposits, the FDIC pays insured amounts to the brokerages, which should place the funds in their customers' accounts. The brokered CDs issued _by_ (not "against") the failed banks were insured and covered; the SIPC did not "pick... something up".

SF_City_101 | Mar 13, 2023 | 2 posts since 2023

Thank you, that makes sense. You are correct there is no comment section. I meant the "Aquirer and Transaction" furthest to the right column. Thanks again.

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