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How safe is your bank as financial markets melt?

Oct. 20, 2008 - 05:27PM   |   Last Updated: Oct. 20, 2008 - 05:27PM  |  

With all the screaming headlines about the recent earthquakes in the financial sector, have you been wondering about the safety of your money in banks and credit unions? Maybe considering whether it might be safer under your mattress?

Your money is safe up to $100,000 per insured bank or credit union. And it's $100,000 per depositor so if a husband and wife have a joint account of $200,000, that money is covered.

"You're not going to lose your money, provided it doesn't exceed the limit," said retired Navy Capt. Fred Becker, president and chief executive officer of the National Association of Federal Credit Unions.

In fact, depending on the type of account, it's possible to be fully insured even if you have more than $100,000 in one institution. If that describes you, go to"> or">, the Web sites of the two federal insurers of banks and credit unions, for more information. Certain retirement accounts of up to $250,000 are also insured.

How is your money insured? Banks and savings associations are insured by the Federal Deposit Insurance Corp., an independent government agency. FDIC officials note that in the agency's 75 years of existence, it has handled the failure of more than 2,200 insured "depository institutions," with zero customer losses.

If a bank fails, FDIC officials say, depositors usually can get access to their money by the next business day after the institution closes.

Credit unions are insured by the National Credit Union Share Insurance Fund, which is operated by the National Credit Union Administration, a federal agency that charters and supervises federal credit unions.

No one has ever lost a penny in these insured institutions, either. If a credit union fails, payouts usually are made to depositors within three days of the credit union's closing, according to the NCUA. Federally chartered credit unions, as well as most state-operated credit unions, are insured through NCUA.

With more and more Americans getting into investing in recent years, here's the most important thing to know: The insurance we're talking about here is for deposit accounts only, such as checking and savings.

The FDIC and NCUA do not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities.

There is no insurance against investment losses. But there is protection through the Securities Investor Protection Corp. for investors whose assets have been stolen or who have been victims of fraud when a brokerage firm fails, said John Gannon, senior vice president of the Office of Investor Education for the Financial Industry Regulatory Authority.

Federally insured institutions must display the FDIC or NCUA logo on their Web sites and in their branch offices. Most banks and credit unions in the U.S. are federally insured; if they operate on military installations, they must be federally insured.

You can get more information from NCUA's directory of federally insured credit unions at"> and by calling the FDIC at (877) 275-3342 or using "Bank Find" at">

Credit unions generally are more conservative than banks, Becker said, with most of their investments in federally backed securities.

And military banks tend to be more conservative than banks in general. "They don't deal in subprime lending, so they aren't vulnerable," said retired Air Force Maj. Gen. Andrew Egeland, president and CEO of the Association of Military Banks of America.

In fact, Egeland said, military banks have been a good source of conventional loans for service members looking to refinance adjustable rate mortgages.

Egeland also noted that military banks "are commercial banks, not investment banks." Most are nationally chartered and supervised by the Office of the Comptroller of the Currency.

Bottom line: Regardless of the health of your bank or credit union, if it is insured by the FDIC or NCUA, your money is safe up to $100,000 per depositor.

Questions or comments? E-mail staff writer from reader">Karen Jowers at">

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