By Eileen Alt Powell THE ASSOCIATED PRESS When the $2.5 billion NetBank was closed by federal regulators last month, some 1,500 accounts in the online bank had balances that exceeded federal deposit insurance limits. The owners of those accounts, with deposits totaling $109 million, won’t necessarily lose all their money because federal insurance may cover some, and they’ll share in the proceeds of the sale of the failed bank’s assets. Still, it could take time for the bank to be liquidated, and they may not get 100 percent of their money back. “That has renewed interest in looking at how deposit insurance works and what the limits are,” he said. “And that’s healthy.” According to the FDIC, the basic insurance amount is $100,000 per depositor per insured bank. This limit applies to individual and joint accounts as well as some trust accounts. Earlier this year, Congress approved an increase to $250,000 in coverage for some retirement accounts, including Individual Retirement Accounts. Kathy Nagle, chief of the deposit insurance section in the consumer protection branch at the FDIC in Washington, D.C., said small savers generally don’t have to worry. “If the sum total of all your money at a bank is $100,000 or less, you don’t have to worry about all these categories. You’re fully insured,” Nagle said. “If it’s more than that, you can be fully insured – but you need to get into asking questions about whether you’re allocating your money to different categories of coverage.” When looking at those categories, she said, “it’s best to think about it per account owner, not by type of account.” She gave this example of a married couple and their insurance coverage at their hometown bank. The wife has $100,000 in her name in several savings accounts. The husband has $100,000 in his name in a separate savings account. The couple has $200,000 in a joint account with equal withdrawal rights. Each of them has an IRA, with $250,000 in each account. In this case, everything is covered by FDIC insurance, she said. Things get more complicated if the deposits are in so-called revocable trust accounts, also known as payable-on-death accounts or living trusts. “The owner is insured up to $100,000 for the interest of each qualifying beneficiary,” Nagle said. These beneficiaries can include spouses, children, siblings and some others. Savers can check on their coverage by going to the FDIC Web site at www.fdic.gov and using the Electronic Deposit Insurance Estimator, or EDIE, to check on whether their accounts qualify for insurance coverage, she said. “If it involves setting up a living trust, which can be quite complex, people can always call us for help,” Nagle said. The FDIC’s toll free hotline is 877-275-3342 (877-ASK-FDIC). The limits are the same for credit union accounts. The National Credit Union Share Insurance Fund, which is an arm of the National Credit Union Administration, maintains an insurance estimator at www.ncua.gov. Ely, the banking consultant, said that savers “need to be prudent about this, particularly in smaller banks because they’re the ones most likely to fail.” Consumers have choices, he added. “Spread your money around – put it in different institutions so you’re not over the limit,” he suggested.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREGame Center: Chargers at Kansas City Chiefs, Sunday, 10 a.m.The fact is that consumers don’t have to take that kind of risk. The Federal Deposit Insurance Corp., which insures bank and savings bank deposits, and the National Credit Union Share Insurance Fund, which covers credit union accounts, make sure consumers get all of their money immediately if a bank fails – if savers abide by the deposit limits. This is increasingly important as consumers’ accounts grow in size, especially those earmarked for retirement, and as financial institutions nationwide struggle amid rising mortgage loan delinquencies and tighter credit markets that have made it harder for banks to raise cash. Bert Ely, a banking consultant and specialist in deposit insurance who is based in Alexandria, Va., noted that in recent years, the strong economy has made it possible for faltering banks to be purchased by sound banks, with no losses to depositors. In the current financial climate, however, troubled institutions will probably be left to fail, Ely said.
AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREGift Box shows no rust in San Antonio Stakes win at Santa Anita The Romano children – Janet, 14; Adrianna, 12; Kevin, 8; Rosie, 7; and Jessica, 6 – live in the apartment with their parents, Bombilia Sanchez and Joaquin Romano. When the fire broke out, the children’s mother was at the store and their father, a mechanic, was at work, Romero said. Romero was outside her downstairs apartment visiting when she saw Janet and Kevin come in from playing. “I stepped aside so they could get by, but as soon as they got upstairs, the little boy turned around and asked for help,” she said. “By the time I got up the stairs, the whole bunk bed was on fire. We made sure to get all the kids out. “Thank God, I was there for them when they needed me. I don’t usually go outside, but something inside of me was kind of worried.” The sisters want to help. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! “We should be helping the people up there,” Lucero Romero said. “They lost everything. I want to find out where they can get help; even telling people they need help will do something.” The staff at nearby McGrath Elementary School, where three of the Romano children attend, were able to help Sanchez find assistance. “She came in this morning for suggestions and we gave her agencies to call and places to go,” said Angelica Harris, the school’s office manager. “School is still in inter-session, but we’ve e-mailed all the teachers so they know about it. We’ll probably do something when school gets back on Tuesday.” The Romanos’ apartment was destroyed, and three other units were damaged by water and smoke and declared uninhabitable. Anyone wishing to help can contact Concilla Torrez or Javier Sanchez at (661) 284-6839. Carol Rock, (661) 257-5252 [email protected] NEWHALL – Rosario Romero sat at a folding table on the patio of her apartment complex Friday morning trying to find help. Never mind that she is being forced to move after a fire in the apartment above hers left her and her family with significant water and smoke damage. She knows the building management will find another apartment for them in the same complex. She and her sister, Lucero, along with other neighbors from the Valle del Oro building were hoping to find assistance for the Romano family, whose home went up in flames Thursday night, leaving eight family members homeless. Fire officials said Thursday night they suspect the blaze might have been started by an unattended candle, although the investigation is continuing. It was reported that electricity to the apartment had been disconnected.