Bank Failures: Is your money safe? The skinny on FDIC insurance limits.

“The most serious financial crisis of our lifetime…” – George Soros on the US banking crisis

The New York Times recently noted this anecdote in relation to the economy, the current administration and the most recent bank closure:

This week a passing motorist shouted at a crowd waiting outside a branch of IndyMac, the failed bank, “Bush economics didn’t work! They are right-wing Republican thieves!” The crowd cheered.
Regardless of your political views, Elizabeth’s weekly roundup directs readers to the Consumerist where they offer these telling side-by-side photos of then & now and asks the question: What Does A Bank Run Look Like In 2008? A Lot Like 1912. Indeed… history repeats itself.

Is anyone worried there could be more incidents ahead? FDIC insurance is supposed to offer peace of mind. Well, at least up to $100,000 per depositor per insured bank. The rules are listed here in detail.

The FDIC also provides separate insurance coverage for deposit accounts held in different categories of ownership such as joint accounts and revocable trust accounts. Make sure you’re clear on the regulations. For example: coverage for a revocable trust account is based on an owner’s trust relationship with each qualifying beneficiary. In queerspeak, domestic partners don’t qualify as a possible beneficiary. Spouse is defined as a person of the opposite sex who is a husband or wife… thanks to the federal Defense of Marriage Act. Revocable trusts can be a complicated topic so it’s always best to consult your financial advisor for guidance on this one.

But for the simplicity of this post, let’s focus on individuals. Specifically, those individuals that want to have more than $100,000 sitting in a bank instead of other investments. Are you supposed to run all over town opening up accounts in different banks to make sure your money is insured? Well, there’s an easier solution. The Gay Financial Network ( has an excellent article about CDARS (the Certificate of Deposit Account Registry Service) and how to get FDIC insurance coverage for the full amount:

Although some 2,000 U.S. banks participate in CDARS it doesn’t seem to get much press… Here’s how it works: without having to place your money yourself in lots of different banks, with CDARS you sign one agreement with a participating local bank or other financial institution of your choice, earn one interest rate, and receive one regular statement. Your local bank divides the money among banks in the network, making sure no accounts exceed FDIC insurance limits. There is no fee, and all of the money is FDIC insured.
Of course, there are rules, so check out the CDARS website. But good to know there’s a solution.

Now for a few reader questions: How is the recent news about IndyMac affecting your confidence in the economy? Is the government’s bail-out of mortgage giants: Fannie Mae and Freddie Mac making you panic? Where are you putting your money these days? And does it feel safe? Please feel free to respond over at the Queercents version of this post.