Quick question on FDIC insurance.
In the unlikely event that my bank fails, is it spelled out anywhere how long the FDIC has to reimburse me the insured money? I know in most cases it just gets assumed by a new bank, but I’d love to know how long they could theoretically stretch out the payments. Do they have to cut the checks within 30 days, or legally could they spread out the payments over months or even years?
The FDIC has an FAQ that addresses this:
Thanks, I saw the FAQ on their site, but I must have missed that one.
I’m impressed - sounds like the FDIC does (or aims to do) quick work!
The FDIC couldn’t serve its purpose unless it was that quick.
Speaking from experience with FSLIC (well, Resolution Trust Corporation, which took over from FSLIC during the wave of S&L failures in the early 90s)… typically we shut the bank down at close of business Friday, got deposit information from the bank’s service provider by some time Saturday morning, and spent a boatload of time reviewing deposits to make sure they didn’t exceed the insured limit (if a person had more than one account and/or joint accounts, this was not always clearcut) Saturday, and started printing checks early Sunday morning. Usually we got no sleep on Saturday night.
So - most depositor’s checks got sent out Monday morning.
Brokered deposits (where the big brokerage houses pooled money from individual investors into large CDs that paid higher interest rates) were more complex - because the money was insured back to the individual depositor, not to the brokerage house. So if “Billy Bob’s Brokerage House” had, say, a 3 million dollar CD, they had to provide us with the details of who had how much in that CD. If you had 100,000 directly deposited in the bank, and another 100,000 in a Billy Bob CD, your Billy Bob money was most likely considered uninsured and too bad. IIRC, Billy Bob had to make up the loss in that situation, but I could be wrong. But the brokerage deposits typically got paid out anywhere from a few days to a month or more after the bank closed; we paid the brokerage house and they reimbursed their depositors (I was involved in wiring two BILLION dollars one night - no joke).
Our biggest hope with these closings was that they’d go “Purchase and Assumption”, where the individual depositors’ accounts would be transferred to a purchasing bank. We often didn’t find that out until Saturday night or Sunday morning and it was cause for much celebration as it meant a LOT less work.
This basically matches with Exapno Mapcase’s cite from the FDIC webpage, just thought you’d enjoy hearing a first-hand account.