I received the following email from a reader and wanted to toss it out as an “Ask the Reader” post. I’m certain there are people out there smarter than me on the subject, and can offer some solid advice for those holding money in banks such as WaMu or even an online bank that may be in trouble.. From my limited knowledge and experience in the banking industry I do know that the FDIC insures the first $100,000 of money on deposit with banks. Above that it gets dicey because while those with money on deposit in excess of $100,000 do get the opportunity to stake their claim to any remaining bank assets, so do creditors and a long list of other investors.
Unfortunately, I don’t have to worry about savings above $100,000 (yet). For the amount we do have in emergency savings we keep up with our last statement just in case we are required to show proof of our account balance in the event of a bank shutdown or data loss. In addition to the information savvy readers will share in the comments here, I recommend readers check out Trent’s recent post at The Simple Dollar, Will My Money Be Safe. It provides a nice run down on the rules for various types of investments.
Here’s a copy of the message I received:
I just started a WaMu savings account for my growing emergency fund. Now with the news they are next in line to be either bought out or bailed out should I be worried or moving my money? I know my money is protected by the FDIC but I don’t want to go through any processes like that to get it back if something happens. Should I just sit tight or should I be opening another account else where?
What advice do you have for this fellow reader? Are you in a similar situation?