Indymac Failure Raises Important FDIC Questions

For years, FDIC coverage has been a fairly irrelevant concern in the personal finance area. But with the recent collapse of Indymac Bank, and with so many financial institutions teetering in this environment, it's a good time to get familiar with the risk of having large deposits with banks, and with how FDIC insurance works.

A history of the FDIC can be viewed here, and their main site is here. For up to $100,000 per depositor, checking and savings deposits are insured against institutional failure by the federal government. There are some particular nuances to this however, when you have multiple deposits with different institutions, or deposits in different types of accounts or with different joint ownership, etc.

A new tool published on the FDIC site will help you tally up your savings to find out what your protection is exactly.

With increased down payment requirements for mortgage financing these days, we are seeing more and more consumers with greater than $100k in savings. Even if it is a temporary position as you prepare to make your down payment, you don't want to get caught over-exposed with the wrong custodian.

And if you are someone who sits on this much cash for longer than short-term, you may want to run your strategy by a financial planner, especially in light of our current inflation.