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  4. Has Anyone Here At DA Had More Than 250K In A Bank/CU That Failed?

Has Anyone Here At DA Had More Than 250K In A Bank/CU That Failed?

racecar
  |     |   616 posts since 2014

I had CDs at 3 places that failed (1 bank, 2 CUs) back in the 2008-09 crisis. They were thankfully all taken over by other institutions, and I had less than 250k at each anyway, so I've always been curious: Has anyone here ever had more than 250k at any bank or CU that failed -- and it was the PODs/beneficiaries specifically that saved the day? (or not?)

I'm sure a lot of us around 2008-09 dealt with banks that failed, but in all my time at DA I don't remember anyone posting whether having those extra PODs/beneficiaries actually helped or not in a situation where, without the PODs, they would have lost uninsured money.

Just trying to gauge if one could really count on those extra beneficiaries/PODs if you have more than the limit at a place that closes, or the new owner won't honor over the usual 250k insured limit. I know what FDIC/NCUA says is supposed to happen if you have properly-structured PODs/beneficiaries... but I'm wondering if anyone here at DA ever went thru a situation where the PODs specifically saved the day or not -- that would not have been saved except for having the PODs?

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4


Answers
MAKNYC
  |     |   323 posts since 2015
I had over the then limit of $100k P.O.D’d at Washington Mutual when it failed. But they were assumed by JP Morgan. But to answer your concerns, the beneficiary strategy is not just an aggressive interpretation by someone to gain an advantage. This is a very well documented aspect of deposit insurance which is widely discussed on the FDIC/NCUA websites and documents. They even provide calculators and examples of how to maximize one’s insured funds this way. The bigger issue is making sure the depository institution correctly codes your accounts on their systems. Obviously if an error is made and a failure materialized it would be an uphill battle in receiving full insurance when you thought you had it all along.
As for where POD’s ‘actually saved the day’, I guess we’ll see if anyone else comments, but I’ll suspect not likely.  Actual bank liquidations as a result of a bank failure are very rare and that’s when this would come into play.  Deposits at a failed bank generally have value to other banks and they are relatively easily marketed and sold off quickly.  The loan book is far more complicated and might require a plug from the insurance fund to get someone else to assume them.
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8
JeffinEasternFL
  |     |   744 posts since 2020
It's amazing that congressmen, etc., do NOT know the law (as well as most consumers) in regard to FDIC/NCUA coverage. One hope is just maybe, the law can be simplified: 1 SSN per bank/CU insured to $1M. Have the insurance paid by banks/CUs updated to reflect a reasonable loss and coverage. A Million $$ per SSN regardless of beneficiary's title, etc., per institution. Simple as that...
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txFish1
  |     |   476 posts since 2023
My sister and brother in law had just under 1 million in a bank in the Houston TX area that went under in 2009. There accounts were not POD/Beneficiaries but there accounts were styled as a joint (495K) account, she had a single (245K) account and he had a single (245K) account. I seem to remember it took FDIC almost a week to find another bank to take over the failed bank but they were told by the FDIC they were completely covered (985K) which they were. The acquiring bank did not honor the remaining term of the CD,s that they had.
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Confused1
  |     |   87 posts since 2018
I can't answer your question but I assume that you are aware that you can buy FDIC insured CD's in a Fidelity brokerage (or any brokerage) and be insured up to $250,000 for each bank you invest with so you can be covered for millions. No fees on new issue CD's and far easier to buy than opening new accounts all over the place. This morning they have 171 new issue CD's starting at 5.10% for 1 month and highest yield 5.45% for a 1 year callable JP Morgan Chase CD.
It literally takes less than a minute to buy a CD assuming the funds are already on deposit at Fidelity. I am slowly moving everything over there for simplicity. They also offer a new customer deal, open an account with $50 and Fidelity will deposit $100 more within 25 days using the code FIDELITY100. That was the hook they used to get me and it worked, if not for that I would never have considered opening an account. I played around in the account for a few months just learning before I transferred more funds in to open a 1 month $1000 CD as a trial and now I have both an IRA and a Cash Management Account and will only be buying CD's.
If interested more details here.

https://www.fidelity.com/go/terms-conditions
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3
racecar
  |     |   616 posts since 2014
Thanks folks (and I'd love to hear stories from others as well).

I've seen the calculators on the FDIC/NCUA websites, but was just trying to gauge if there were any cases where PODs didn't work, or numerous problems were thrown at the depositer to get them to work. I know some places I deal with actually show the PODs right on their printed or online statements, while others simply promise the depositer that they have your information in their back office somewhere. I do have over 250k at one place that doesn't have a great health rating, but does show the PODs on their printed statements each month, and have some decisions to make, so was curious if anyone last time around had a situation where they had to actually rely on the PODs (like yourselves, the banks I dealt with back then were taken over by other institutions; their favorable CD terms were thrown out but even if I'd had over the limit the money would've been insured and depositers could take it out no penalty because of the change). I just know if the place I have my excess funds at goes under, the gov't won't insure their uninsured deposits like they did with SVB if a buyer can't be found. I do have the proper # of PODs, which are shown on the monthly statements, so.... hm....
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TTL1
  |     |   9 posts since 2020
If you have several cd's at one cu do you have to have a pod on all of them to raise the limit another 250,000 or will just having a pod on one of them do it ?
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