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Deposits are insured, within limits

Q&A: INDYMAC BANK FAILURE

July 12, 2008|Kathy M. Kristof | Times Staff Writer

If you are an IndyMac Bank depositor, you probably have questions about the availability of your funds. Here are some answers:

Should I worry about getting my money back?

If you have less than $100,000 in your checking, savings and money market accounts or in certificates of deposit, you need not worry. The principal and interest are insured by the FDIC.

The bank's 33 branches will be closed over the weekend and reopen Monday. Online and phone banking will also be unavailable until Monday. Customers can use ATMs and checks to access their money today and Sunday.

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What if my deposits exceed $100,000?

Your FDIC coverage will depend on what types of accounts you hold and the legal ownership of your accounts.

Many retirement accounts, such as IRAs, 401(k)s, SEP-IRAs, Simple and Keogh accounts, are insured to $250,000 per person.

However, so-called 403(b) retirement accounts for teachers and employees of nonprofit companies do not get the same $250,000 protection.

Deposits maintained in different forms of legal ownership qualify for added protection.

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How does that work?

Consider a husband and wife who have a joint account of $200,000. It is fully insured because they each get $100,000 in FDIC coverage.

They also have a $300,000 account that's "payable on death" to their three children. That account is also fully insured because this structure gives each beneficiary the benefit of $100,000 in coverage.

If they have grandchildren and want to set up payable-on-death accounts for them, each of those grandkids qualifies for $100,000 in coverage.

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When do I get my money back?

Because the FDIC has taken over, depositors can continue doing business with the successor bank -- IndyMac Federal Bank, FSB -- as normal. The agency expects to operate the bank until it can be sold to another institution. For now, it's business as usual.

If you don't want to do business with the new bank, depositors with less than $100,000 are usually paid off immediately.

But if you have multiple accounts, it can take the agency a few weeks to check the account ownership and pay off the insured amounts exceeding $100,000.

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What if my deposits exceed the insurance limit?

The FDIC said that IndyMac had about $1 billion of potentially uninsured deposits held by about 10,000 depositors. It plans to begin contacting customers with uninsured deposits to arrange an appointment with a claims agent by Monday.

The FDIC said it would pay uninsured depositors an "advance dividend" equal to 50% of the uninsured amount.

The agency generally provides a "receivership certificate" for the total uninsured amount. You may be repaid all or a portion of that, if the bank's assets are sufficient to pay the cost of receivership and still have money left. But full repayment is rare, and any repayment of uninsured deposits can take years.

Customers can call (866) 806-5919 toll-free or go to www.fdic.gov/bank/individual /failed/IndyMac.html for more information.

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I have checks direct-deposited into my IndyMac account. What happens now?

If you don't mind doing business with the new operator of the bank, nothing. Your money will be delivered to your account, as usual.

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Do I still have to pay on my loans?

Make payments as usual, unless instructed otherwise.

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Will the bank continue to pay the same interest rates on deposits?

Regulators have the right to change deposit rates and existing contracts from the date of receivership. It is unclear whether they will cut rates.

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kathy.kristof@latimes.com

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