Ask the Reader: How Safe is My WaMu Bank Account?

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?


  1. I wouldn’t bank with them (or any of the other failing financials in the news) because they are either incompetent or crooks, but you don’t have to worry about losing your money if you have already signed on.

  2. My husband and I do all our banking with WaMu and we started to get nervous ourselves with the state of the bank. I can’t say whether it will fail or not, but we are leaving most of our money there. We’re under the FDIC insurance limits, it still has one of the better interest rates out there, and besides, after banking there for years and years now, it would be a hassle to switch.

    However, we did open up another checking account (electric orange checking with ING) and are keeping a month’s expenses in that account so that we’ll have a relatively seamless transition if and when WaMu does go under. We’re losing a little bit of interest, but it’s worth it for the peace of mind.

  3. The worst thing people can do at this point is rush to pull their money out of WaMu, IMO. If everyone did that, the bank would go under for sure! The money they have on deposit is what’s keeping them afloat. A run on the bank would be disastrous.

    As for FDIC insurance, there are many ways you can increase the amount you have insured by changing your account ownerships – add beneficiaries, use joint accounts… it’s really quite easy. They can explain the rules in the branch.

  4. We took our $ out of WaMu last year when they would not match a competing bank’s CD rate (they had in the past or gotten close to it). My Mother-in-law has a large account there and called very depressed about the whole situation.
    I think for the elderly it can cause a lot of
    anxiety. While I think they may be close to FDIC limits of coverage.

  5. I’m leaning more and more towards a bag-of-money under the bed.

    That goes for the 401k, IRA, et. al. too. After 10 years of contributions, and not watching my balance ever increase (unless I’m contributing)…I’m in favor of cash-on-hand.

    I’d have more in the bank had I done that, instead of letting wallstreet bleed my savings dry.

    There’s a book called “Gotcha Capitalism” that exposes all the hidden fees associated with the scam put into play. What’s to gaurantee that I’ll have a few dollars to retire on? I have no pension, no assets…just my retirement accounts. And if those are bled dry by fees and/or market crashes…then I’ll have zip.

  6. There was an actual point made on CNN that if there were a massive amount of banks that went under the FDIC would not be able to afford to pay back policy holders. It is insurance and their plans don’t include massive bank failures only maybe 1 or 2.

    It is just insurance consider if half the policy holders of say Allstate turned in a huge claim. Allstate may go belly up because they do not have the funds at hand to pay that amount at one time. Some of the policy holders would be left high and dry on their claims.