Money | 09/17/2008 9:55 am

Is My Money Safe? Three Ways to Check if Your Money Is Safe With the FDIC, SIPC and State Insurance Guarantees

By The Staff at wowOwow.com

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The dramatic events on Wall Street are making us on Main Street nervous about the safety of our money. Is my savings account safe? What about my investment accounts? What about my IRA account? Who administers my 401-K? And what about my annuity with AIG? Or my life-insurance plan with one of the other insurance companies?

In other words, "Is my money safe?"

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Consumers need to take control and find out if their money is safe. Here are a few tips on what you can do in these tumultuous financial times to educate yourself:

SAVINGS: Check to see whether your bank or savings association is FDIC-insured by calling 877-275-3342 or using the agency’s online "Bank Find" tool. Small businesses, in particular, which often keep large deposits in banks, should check to see if their deposits are above the insurance limits.

The Federal Deposit Insurance Corporation (FDIC), an independent agency of the U.S. government that protects depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails, offers information on your insured deposits. You can also read the FDIC insurance basics here.

If your money at one FDIC-insured bank or savings association totals $100,000 or less, your deposits are fully insured. Someone can have more than $100,000 at one insured bank or savings association and still be fully insured provided the accounts meet certain requirements.

If your deposits exceed the insurance limits, spread your money around to a few different banks. You may also want to open accounts in the names of different family members.

You can use the FDIC’s Certificate of Deposit Account Registry Service, or CDARS, which splits deposits into chunks under the $100,000 insurance limit and funnels the money out to 2,000 banks in the network. Only banks considered "well capitalized" by the FDIC are included.

INVESTMENTS: Both the bankrupt Lehman Brothers and the just-acquired Merrill Lynch are brokerage firms. What happens to your money when your investment house is in trouble? Visit the website of the Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms. The SIPC has an “Investor’s Guide to Brokerage Firm Liquidations: What You Need to Know … and Do.”

Check if your broker is an SIPC member. Nearly all brokerages are but if yours isn’t, consider moving to a more-established firm. Make sure your advisers are working with SIPC members, too.

Lehman Brothers participates in the SIPC. The SIPC’s website says it protects “the cash and securities – such as stocks and bonds – held by a customer at a financially troubled brokerage firm."

INSURANCE: Is my insurance money safe? What about my annuity and life-insurance policy if my insurance company gets in trouble? Insurance companies are insured by the individual state where the policy was written, so there are 50 different answers to this question. Every state now offers at least $100,000 in cash for annuities and $300,000 in death benefits. In the event a consumer has a larger policy than the state guarantees, they become a creditor for the difference. The National Conference of Insurance Guaranty Funds has a website with information on these rules. You can also search "<name of your state> insurance guaranty."

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66 Reader Comments (so far…) Sign In or Register to comment

Thank you this is great information. I knew about the amount that is covered by FDIC in a bank. Not that I have that kind of money in a bank. Did not know about the brokerage firms. That I’ll check into. I heard this, not sure if it’s true. Even though your money is covered by FDIC, if the bank fails, you may not get your money right away. It could take several years. Does anyone know if this is true or not?

By Barbara Taylor on 09/17/2008 9:55 am

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No matter what anyone says, Barb, if we fall into another depression, all bets are off the table regarding the safety of anything - money, properties, whatever. FDIC won’t be worth the powder to blow to blazes. Cheers.

By James the Game on 09/17/2008 10:15 am

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Every time you - or Frank - make a baseless claim that may cause panic - which will exacerbate this situation - I will challenge you on it. What basis to you claim that we will fall into a depression?

By K O on 09/17/2008 11:09 am

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Oh my word, Kit. Do I need to list all the record-setting things that are going on right now, in terms of unprecedented mortgage failures, skyrocketing unemployment, record gas prices, record number of manufacturing-job losses, bailouts, banks going belly up….get a clue already.

By James the Game on 09/17/2008 4:31 pm

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James, as a financial professional with 30 years experience who worked on Wall St. with some extremely foul mouthed young male traders, you have been more disrespectful to me than anyone I’ve ever worked with - and that’s saying something. I’m on a site trying to converse with women my age and find you - and Frank - to be, not only ill informed, but outright rude. At least traders acknowledged that I had backround, experience and education. You want me to give you a clue? Okay, James. I’ll fill you in. Skyrocketing unemployment? It’s 6.1%. Let me go back a few years and give you a lesson in unemployment figures. The last two recessions - where we actually had two consecutive quarters of contracting GDP had 7.4% unemployment. Skyrocketing? Not even close. It’s going up, but it’s nowhere near where it was in the last two recessions. And you’re calling this a DEPRESSION? Get serious. Do your homework. Record gas prices? Light, sweet crude went from $147 to $95, and spiked recently because a hurricane hit refineries in the Gulf of Mexico. Commodity prices are going DOWN, James. Grab a paper. Look at the CRB index. It’s going down. And, if you want to know what a CRB is, is Commodity Research Board. Look at the number. Banks going belly up? You’re referring to IndyMac and Lehman, I’m assuming. More banks - a LOT more banks - went bankrupt in the S&L crisis in the 90’s. Was THAT a DEPRESSION? No, it wasn’t. It was a recession. Number of manufacturing job losses? Hey, James. Let’s look at some data, shall we? 97/98 -2.3% 98/97 14.8% 98/99 4.7% 99/00 6.7% 00/01 -3.5% 01/02 -1.3% 02/03 0.85% 03/04 4.23% 04/05 2.65% 05/06 4.07% 06/07 0.95% 07/08 -1.3% There is the percentage of change industrial output since 1997. We’re down 1.3% this year. Call that a DEPRESSION? Well, then we had a pretty bad depression in 2000 - 2001, then, didn’t we? Oh, wait. That was a recession, wasn’t it? Bailouts? Did you say that we were in a depression when LTCM was bailed out? How about Chrysler? Did you call it a depression when Chrysler was bailed out? Oh, but now, it’s a depression because YOU say it is. Young man, I have a clue. And this is what I have a clue about. Standard and Poors released this statement yesterday, Take a read: “Washington Mutual’s credit has been lowered to BB- ‘Increasing market turmoil and the related impact from managing its concentrated mortgage franchise in this troubled housing and credit cycle led to the downgrade. It increasingly appears that market conditions could overtake credit fundamentals and leave the company with greatly diminished financial flexibility. Washington Mutual nevertheless has “adequate capital positions from a regulatory perspective, with a stable deposit base. Last week, the thrift said retail deposits as of August 31 were ‘essentially unchanged’ from $143.6 billion at the start of the year.’ Do you know what that means, James? That means that WaMu is adequately capitalized and because people who don’t know what they are talking about sell the stock in spite of that fact, WaMu could go under. That’s what “It increasing appears that market conditions could overtake credit fundamentals” means. And every time I see some baseless generalization contribute to making this problem worse, I’m going to say something about it. Get a clue? YOU get a clue. “if we fall into another depression, all bets are off the table regarding the safety of anything” is a baseless, ill informed statement, and I’ll challenge it every time you say it because it’s based on nothing.

By K O on 09/17/2008 5:12 pm

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To the irreplaceable Kitty O’Keefe, Thank you very much for the great information! Every time I read you, I learn more. James lives in Michigan, and unemployment up there is 8.5%, and he is in a very stressed economy, so his viewpoint comes from hard times all around him.

By Frannie Em on 09/17/2008 6:57 pm

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You’re the pot calling the kettle black, Kitty. Merely look at the above posts. You start with an insult, and then have the audacity to say I have been disrespectful to you, when you were the one who started with the insults. YOU were the one who derided Frank and my opinions as being “baseless”. When I turn around and give it back to you, you can’t take it. You can brag about your financial experience all you want, but the bottom line is the bottom line. This country’s in enormous trouble, and your number-crunching can’t mitigate that fact, no matter how you twist it. I stand by my statement, and consider you to be the most disrespectful person on this site, with your condescending comments.

By James the Game on 09/17/2008 7:34 pm

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James, I have to wholeheartedly disagree. Do you get upset at Kitty because you think she is a republican or something? I don’t know what party she is from, nor do I know who she is voting for, nor do I care. She presents solid information and research. She has been doing this for 30 years. She knows that many people on this site are very worried and concerned, so he comes on, takes a lot of time and explains what is happening, and answers many peoples questions regarding it. She doesn’t have to do that. She used to get paid for it, and she is doing it now for free. She is mostly doing this to help people on this site with financial issues. Many women come on and look for her to see if they should do something different with their retirement funds. Give her room to help those who need help. We all have a rudimentary understanding of dollars and cents, but I don’t know where and how the regulatory system needs to be changed and reinforced. I got good answers from her so that when I read other articles and learn more, I have more focused complaints when I email Barbara Boxer and Dianne Feinstein, and a couple more local yocals. She seldom has condescending comments.

By Frannie Em on 09/17/2008 11:01 pm

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Fran, when someone disparages someone else’s remarks as “baseless”, and some of the other terms that have been used, that is being rude and condescending, no matter how you slice it. It’s all fine and dandy that someone has professional financial experience, but it doesn’t take a financial guru to read the newspapers and hear about record-setting mortgage failures, multi-billion-dollar bailouts, record-setting gas prices, on and on, and not come to the conclusion that we could be heading for a depression, if this trend continues. I’ve got business-reporting experience, so I’m not totally naive, either. There are a whole lot of financial and economic experts right now who are saying the same thing; I’m certainly not alone. If I’m wrong, fine. Posters are welcome to state their disagreement. But when they resort to denigrating my comments or looking down their noses, that’s a whole ‘nother thing.

By James the Game on 09/18/2008 8:59 am

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James I don’t know how to respond to this. We are definitely in troubled times, this will not be easy to get out of and I don’t know how long the recovery will take, but it is also a paradigm shift for our government. The level of displeasure of the citizens about illegal immigration, jobs being shipped overseas causing unemployment and contaminated product exported from those countries, corruption and laziness of our government representatives, and of course the financial crisis, are hopefully getting the attention of congress, and if not there will be a lot of explaining to do. Many things are changing, but some things will not. We have a $13 trillion economy that if will not fall off of the face of the earth. We have been through recovery periods and recessions before and we can get through this.

By Frannie Em on 09/18/2008 10:45 pm

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Fran, I suspect you’re right. I don’t believe in panicking, but I think it’s prudent to be prepared for worst-case scenarios, and to spend/invest wisely during crises, that’s all.

By James the Game on 09/19/2008 2:17 am

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James, Here is a good article from one of my very favorite resources, Yale Global. They also have Yale 360, which deals with environmental issues. At any rate, this is a good overview of the banking crisis. http://yaleglobal.yale.edu/display.article?id=11338

By Diana T on 09/17/2008 8:03 pm

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Interesting article, Diana, thanks. Donald Trump just said on “Larry King LIVE” that this has the absolute potential to be the worst economic crisis since 1929 - right before the Great Depression.

By James the Game on 09/17/2008 8:09 pm

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Well, we can’t worry about it because it’s too huge to worry about. All we can do is to learn as much as possible about how it happened and refresh ourselves in Economics 101. And vote the SOBs out of there, not put them back in… Go to google and look at Phil Gramm and Mrs. Gramm(Wendy).

By Diana T on 09/17/2008 8:35 pm

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James Maybe that is because he is one who is heavily leveraged. He may lose a lot of money, so right now he is in the deep ca ca. I am not trying to say that this is not serious. It is extremely serious, but it will get worse if everyone panics. When I was a kid they called 1929 “The Great Panic of 1929”. Panic fueled the flames.

By Frannie Em on 09/17/2008 11:06 pm