Dozens of banks have failed this year. What do you need to know if yours is next?
The number of bank failures has reached 115 since January — more than four times the total for 2008 and the most since the savings and loan crisis in 1992. And most experts expect problems caused by unpaid loans to force many more closures in the coming years, mostly among small, community-based banks.
Banks are typically shut down late Friday afternoon. That gives the Federal Deposit Insurance Corp. time over the weekend to handle the shutdown, which most often involves transferring deposits to another bank that is taking over the failed institution. The first sign of failure consumers see may be a closure notice on the bank’s door.
The impact of the bank failures on consumers has been minimal, but rumors about what can happen are rampant. The FDIC has also warned of dozens of scams that try to take advantage of consumers who don’t understand the process.
So what do bank customers need to know, in case their bank goes under?
Here are some questions and answers.
Q: Why would a bank be closed by regulators?
A: State or federal regulators can decide to close a bank if it is in danger of being unable to meet its obligations to depositors and others — basically, if it looks like it’s going to run out of money.
Most of the banks closed in the past year have suffered because the housing crisis and the recession have led consumers and businesses to stop paying off mortgages, credit cards and other loans. Banks must set aside money to cover such losses, and they become unstable if these reserves fall.
Q: How does a customer know if a bank is covered by FDIC insurance?
A: Banks usually have a sign on the door with the FDIC logo, and also frequently use the logo on account statements and other correspondence.
The FDIC has a tool called “Bank Find” on its Web site, http://www.fdic.gov, where a customer can enter a bank name and address to make sure it is insured. Internet-based banks are eligible for FDIC insurance, and are listed on the Web site as well.
Q: What exactly does the FDIC insure?
A: The FDIC covers money deposited in savings accounts, checking accounts and certificates of deposit up to $250,000. But that limit can apply to the same person in several different ownership categories, like single, joint, held-in-trust and retirement accounts.
So, for example, if a woman has two savings accounts totaling $200,000 in her own name, plus two joint accounts that each have $100,000, plus two accounts with $75,000 held in trust for her children, and a $90,000 IRA, all of these deposits would be covered because no one ownership category tops the limit.
Q: What doesn’t the FDIC insure?
A: Money in mutual funds, annuities, stocks, bonds or other investment products is not covered, even if those investments were bought through an insured bank.
The contents of a safe deposit box are also not FDIC insured, but may be covered through a homeowner’s or renter’s insurance policy.
When a bank fails, in most cases, the bank that takes over will keep branches operating and allow access to safe deposit boxes. If no other bank acquires the failed bank, the FDIC will send a letter to boxholders with instructions for removing their property.
Q: How long does it take for the FDIC to pay people back?
A: In most cases, another bank takes over the closed bank’s deposits, and ATM cards, debit cards and checks continue to work until the new bank transitions customers to its systems.
If the FDIC can’t find another bank to take over, the agency uses its insurance fund to make payouts to the failed bank’s customers. The law requires that deposits be paid out “as soon as possible” after an insured bank fails. That has typically been just a few days after the bank closes. In most of these cases, the FDIC will provide new accounts at another insured bank, but it will issue a check to each depositor if new accounts can’t be arranged.
Q: Will the FDIC contact customers of a failed bank?
A: The FDIC notifies each depositor in writing when a bank fails, using the depositor’s address on record with the bank. This notification is mailed immediately after the bank closes. The FDIC never sends e-mails directly to consumers, and has warned about numerous scams sending fraudulent e-mails that appear to be sent by the agency. The FDIC also sets up a toll-free number and a Web site for customers to access.
When the failed bank is acquired by another bank, depositors get a notice in the mail from the new bank as well, usually with the first bank statement after the takeover.
Q: What if someone “banks” at a credit union?
A: The National Credit Union Administration, a U.S. government agency, provides members of these nonprofit institutions insurance up to $250,000 through the National Credit Union Share Insurance Fund, much the way the FDIC covers bank deposits. So far this year, 19 credit unions have failed.
Like the FDIC, the NCUA will assume control over a federal credit union that is unable to continue operating on its own, if it cannot find another credit union to serve the failed institution’s members. There are a handful of state-chartered credit unions that are not covered by NCUSIF, but have their own insurance.
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What to know if your bank fails
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- the government agency that makes sure that customers money is safe if a bank fails
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- the government agency that make sure that consumer money is safe if a bank fails
- the government agency that makes sure customers money is safe if a bank fails
- the government agency that makes sure that customers money is safe if a bank fails?
- what government agency that makes sure that customers money is safe if a bank fails
This may be a simple question for you to answer but it’s one that’s plagued me ever since I got married 22 years ago.
The real difficulty answering this question came to light when my daughter and I bought tickets to see the Dodgers who will beat the Marlins this coming Saturday . We aren’t big baseball fans….we don’t really care who wins…..but we have fun when we go out to a game. Usually, that’s only once a year at most.
This ticket purchase expedition confirmed that either my memory is fading or ticket prices have skyrocketed. I was shocked at how high the prices were for decent seats.
In any event, when my daughter and I were looking for seats and she saw how high the prices were, she asked me if we could afford it.
I must tell you that I was very happy that she even thought of asking this question. I was relieved knowing that I had raised, in effect, a ‘frugal Frankle”! A “Mini Me” if you will…..
But I digress…..
Truth be told, when my little darlin’ asked me this question, I really didn’t know how to anwer her.
I explained that we had enough money to buy tickets to the game even though they were expensive – $65 each. I explained that we had money to send her to college and we had the money for my wife and youngest daughter to visit family overseas.
But I went on to say that just because we had the money to do it, didn’t mean we could afford it.
It was at this point that my daughter started rolling her eyes – wishing she were back home watching re-runs of “Law and Order”.
Right or wrong, I saw this as a teachable moment so I forged ahead.
I told her the amount of money we need to save in order for my wife and I to retire someday. I told her how far along the path we were and what we needed to save each year in order to reach those goals. Given the recent drop in the market and how that’s impacted everyone’s income and savings…..my wife and I will both be working for quite a few years to come.
So when she asked “can we afford those tickets” the answer seemed complicated to me.
We had the cash to buy the tickets – we wouldn’t go in debt in order to see the Dodgers trounce their Floridian foes.
But could we afford to spend $130 (plus parking and refreshments) for one night on entertainment? Is it the best use of that money? Wouldn’t it be better to use that money towards our bigger goals?
It’s a tough question to answer. I’ve always focused on security – for my family and my clients. I refuse to ignore the future and just “live for today” financially. But I am trying hard not to be a slave to the future at the expense of not being present and failing to enjoy life right now.
At that point, I think my daughter wanted to change the subject. She told me she needed to go shopping for clothes. I ignored the hint, tagged along and continued our discussion.
I asked her how she decides if she can afford something or not. She told me how simple that question was to answer.
If she had the money in her pocket – she could afford it. If not, she couldn’t.
I was starting to squirm a little at that point but fortunately, she redeemed herself by continuing. She told me that if she has $30, she has to decide which was more important; two lunches out with friends or a nice outfit. (A born economist. Milton Freedman would be proud.)
I explained that her process was approriate for her but not for me or her mother. We have to think about the best use of the money and hope we make the right decision.
And that is the rub. That is the juncture where the emotions fly. The guilt. The fear. The shame.
When someone asks me if we can afford something……they might think the question is ” do we have money “. The answer could be yes. But I might be thinking the real question is ”do we have a budget for this”. Unless we agree on our terms, we’re in trouble.
If I say, “no, we can’t afford this because we don’t have a budget for it” and my family sees that we have the money,dad comes out looking like a tight wad. Then, dad defends himself, emotions start flying and it’s down hill from there.
The solution is to explain the difference between having the cash to do something and having the budget to do it. I never would have even thought about this subtle difference unless my daughter explained what she meant by being able to afford something.
I guess I should go shopping with her more often.
Excerpted from:
Can We Afford It?
know most of us are working nowadays. Most of us start with the E-Employee Quadrant and the main source of our income are our jobs. Robert Kiyosaki suggested that if you are working, you need to be experienced in three essential skills to become financially free. These three skills are LEADERSHIP, MANAGEMENT and SALES AND MARKETING.
Let’s discuss it one by one:
Leadership: Leadership is one of the most critical skill that you need to learn in your job. Most businesses fail because of lack of good leadership. Leaders are instrumental to the success of a business. Every company is in search for the best CEO who will lead the business to success.
One of the things that I learned is that the highest form of leadership is servanthood. We can distinguish a good leader vs. a bad leader:
A good leader is the one who serves his people while a bad leader wants to be serve.
A good leader is the one who empowers his people while a bad leader wants to have that power.
A good leader wants his people to grow and become greater than him while a bad leader becomes insecure when someone grows because he always want to be the greatest one.
Management: To become financially free, you also need to learn the skill of management. Management involves two things; management of cash flow and management of business systems.
To manage a company’s cash flow properly, you have to know how to read financial statements. You need to take a deep thought on income statement. You have to analyze sales and accounts receivable and expenses and accounts payable. If you can learn to run a business on the basis of the numbers revealed on its financial statements, you’ll be positioning yourself for success.
To manage business systems properly, you have to understand that a company is a complex network of interdependent systems, everything from product or service development to computer systems to human resources. For the business to grow, all systems have to operate with maximum efficiency—a leak in any single one can cause the entire ship to sink.
Sales and Marketing: Sales and marketing is the last thing that you should need to learn in your job if you want to become financially free. To be good in sales and marketing, you have to learn how to communicate effectively. If you can’t speak or write well, you won’t convince people that your product or service is worth buying.
Remember that you need to work to learn something and not just to earn. If you want to become financially free, these are the skills that you should learn from your job.
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Skills You Need To Learn In Your Job
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Everybody has a financial hero. It might be a wealthy uncle. Perhaps it is your parents who struggled mightily but managed to keep food on the table and provide for their family.
We all have that person or persons we look up to when we think of wealth or money management.
Here are a few of my financial heroes. My top financial heroes are my parents. They raised six boys while starting a company and managed to avoid going broke. It took a great deal of ingenuity and effort to win financially. We raised nearly two acres of gardens to feed the family. At the height of the summer vegetable production, we would can more than 100 quarts of green beans and freeze more than 200 bags of sweet corn in a single day. My dad took chances. Some worked out, and others did not. Yet we all learned from the less-successful attempts.
Another financial hero is Dave Ramsey. Dave went bankrupt nearly 20 years ago and learned several key lessons as he walked out of his financial mess. He became so passionate about teaching others about these lessons that he wrote a book about it called “Financial Peace.” The message connected with so many people that he has now written several N.Y. Times bestsellers, has a TV show on Fox News and a radio show with millions of listeners. Dave was instrumental in being the catalyst for Jenn and I to pursue debt freedom.
Bank Lady’s Dad is another financial hero. I was sitting in a bank one day waiting to speak to a personal banker, and there was quite a line waiting for the teller. A very old lady came in and was chatting with everyone. I heard her ask someone where they were from. She said, “Kenya.” The old lady said, “Well, Ken Ya help me? Ha. Ha. Ha!” She immediately followed that lovely joke with this statement, “Seriously, though. I’ve been there,” and proceeded to tell the story of how her father loaded the family on a boat when she was just 12 years old and took them on a trip around the world for nine months. Her father is one of my financial heroes; he left a legacy that had his little 12-year-old still talking about it at least 70 years later.
I have many other financial heroes. Most of them have written books. David Chilton, author of “The Wealthy Barber,” heavily impacted me when I was 12. The book was written about how compound interest can seriously help me fund my dreams. Robert Kiyosaki, author of several books including my favorite, “The Cash Flow Quadrant,” is another hero. He has seriously challenged my thoughts on business and employment as well as how I view assets.
Originally posted here:
Look to your ‘heroes’ in your drive toward financial freedom
We all need to have mentors if we have to reach some goals. Mentors are there to guide us along the way. They have achieved success in their endeavors and so they can teach us the do’s and don’ts that we should accomplish in order to mimic their success.
Now that you’ve chosen your business, it’s time to choose your business mentors and your team. If you were planning to climb Mount Everest next year, wouldn’t you want to speak with someone who had survived the journey to the top? You’d be surprised how many people, starting to climb up their own financial mountains, ask the advice of people who are languishing below sea level. It doesn’t occur to these climbers that their advisors have little or no firsthand experience.
Kiyosaki said that the world is full of S- Self Employed quadrant types trying to tell others how to enter the B or I quadrant. Seek out a mentor who “walks the talk”—someone who has already achieved what you would like to achieve. For instance, you would not want someone who achieved his or her success in real estate to necessarily become your mentor for building a business to sell car supplies.
As you begin, you’ll also need a team of business mentors and advisors. You should not risk the ordeals of building or investing in businesses without the expert help of others.
Rich Dad Tip:
“You don’t need to know every answer, but you do need to know who to call for the answer.”
Find a Business Mentor
Amateurs might not have mentors, but professionals do. One of the most important steps you can take upon entering the B- Big Business Owner quadrant is to set aside any discomfort you might have about asking for help. Seek out role models and learn from them.
Fishing for prospects isn’t all that difficult. It’s a matter of swallowing your pride, working up your courage, and approaching people. Business people are busy but they are generally willing to share their success stories. Many talented folks in the B and I quadrants are willing to lend a helping hand. You can find them out through the following avenues:
- Successful business people that you know. They may know someone who has succeeded in the business you have chosen and be willing to introduce you.
- Your local civic and volunteer organizations. Join several organizations and you will meet others who may have experienced success in the very business you are starting.
- Your local newspaper and local TV news station. Start by looking for successful people in your own backyard. Which of them do you admire and would you like to approach?
- Your local chamber of commerce. Your chamber of commerce and other local business organizations sponsor classes, seminars, and social events for you to meet potential mentors.
- The business department of a community college near you. Community colleges often offer mentoring programs in association with local businesses.
Perhaps the easiest way to convince someone to mentor you is the direct approach. Don’t hesitate to call or write. Be polite. State clearly what you want and why you’ve thought of this person. You may be surprised at the response. Chances are your candidate mentor will be flattered by your interest and, like most people, will enjoy talking about what he or she knows best. You might suggest having lunch together. If this pans out, go prepared, and pay the bill. You’re conducting an interview of sorts. Do what the professionals do and write your questions out beforehand.
Once you’ve found a business mentor. . .
You probably won’t get all the information you need after a single meeting. What you want to do is establish an ongoing relationship. You want a business mentor who will teach you everything, then be available for support once you’re on your own. The problem is, what’s in it for the mentor? Why should this person bother to take you under his or her wing? While it may be true that at this time your resources are limited, that doesn’t mean you have nothing to offer.
Rich Dad Tip:
“What are you willing to give in exchange for receiving guidance? Your relationship with your mentor is based on the simple concept of exchange.”
Find out what your mentor needs. Fortunately for you, it’s unlikely to be money, since this person is already financially successful. Feel out your mentor. In exchange for information and training, offer whatever you can in the way of help. The possibilities are endless, and of course depend on the nature of the business and your own field of expertise.
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How to Find Business Mentors
