I read this Economist article today about the author going to his bank and asking about FDIC coverage on his account. When he saw that he had too much to be covered completely, he considered moving the excess to another bank. The banker finds a legal way to keep all his money with them, entirely covered. But he wonders whether such maneuvering will stand up if the financial market mess gets any worse. He writes at the end:
My first instinct is one of aversion…there’s no way that would ever happen! Your money is your money, and if it’s in a legally titled account, it’s covered under FDIC. Period.
I work in a bank, and I’ve gotten an insane number of questions on whether money is covered and how accounts can be opened and titled so more can be covered. I know there’s a lot of turmoil out there, and some giant companies have failed…but we shouldn’t have to ever worry about our covered assets, do we?
As for the Economist’s off the hip remark, they doesn’t really know jack when it comes to meeting payroll in a small business that pays out more than $100K per month and must have more than that amount in the bank.
I recall somebody calculating that you could have up to 8 separately insured accounts with FDIC protection in a single bank. The author of the Economist piece probably didn’t have access to the internet, but for those who do, the FDIC has a discussion:
Ok, what about the idea of raising the limit to $250,000? One blogger opines:
More seriously, if the FDIC fund is depleted, they have a credit line to the Treasury that they can tap. If that runs out, I strongly suspect that Congress will grant a refill: it would make sense on both political and economic grounds.