If you have under $100,000, you money is safe. Since FIDC started, it has not lost a penny of any depositors money under the $100,000 threshold. Either your deposits will be transferred to another FIDC insured bank or FIDC will send you a check.
If you have over $100,000 in one account (there are multiple type of accounts you can have and I think each one has the 100k limit), the acquiring bank can buy the deposits in full or a percentage (even 0%) of the uninsured deposits. So even though, the deposit is uninsured, you have a good chance of getting something. Of course, I would recommend you keep within those insured limits.
FDIC has its own fund. All FDIC banks pay a premium to the fund. If the fund were to run out, FDIC has the ability to borrow as much money as it needs directly from the Treasury. There is interest charged to the loan.
Most of the bank failures do not cause the FDIC to take a loss. Indy Mac is an example of one where the FIDC will need to pay money. It currently looks like FIDC will need to pay 8.9 billion for the 32 billion bank failure.
All the talk about the FIDC fund drying up is because the reserve ratio (the funds balance divided by insured deposits) fell to 1.01 in June form 1.19 in March. The FDIC is forced to restore the ration back to 1.15, meaning banks will need to pay a higher premium in 2009.
The decline from 1.19 to 1.01 was mainly due to 10.2 set aside for insurance losses. (This number does include 8 billion set aside for Indy Mac.)
This was the lowest level since 3/31/1995 when it was 0.98.
FDIC
September 22nd, 2008 at 01:22 pm
September 22nd, 2008 at 02:57 pm 1222095460
But yeah, thanks for sharing this. I hope it helps put people at ease.
September 22nd, 2008 at 03:52 pm 1222098771
From the FDIC web page:
The basic insurance amount is $100,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $100,000. The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.
September 22nd, 2008 at 04:38 pm 1222101496
September 22nd, 2008 at 04:52 pm 1222102332
"Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.
The following sections describe the eight ownership categories recognized by FDIC regulations and the requirements that must be met to have coverage beyond the basic $100,000 insurance amount
Single Accounts
Certain Retirement Accounts
Joint Accounts
Revocable Trust Accounts
Irrevocable Trust Accounts
Employee Benefit Plan Accounts
Corporation/Partnership/Unincorporated Association Accounts
Government Accounts"
Source: http://www.fdic.gov/deposit/Deposits/insured/basics.html
For a husband and wife joint account, that could be insured up to $200k via FIDC.
September 23rd, 2008 at 02:03 am 1222135424
Also some types up retirement accounts are covered up to 250,000 regardless of the number of depositors.