Destiny Survival

            It’s Friday, and that means there’s a possibility that, if you listen closely and are really lucky, you might hear an item on the news over the weekend about another bank or six that failed.  Or maybe not.  The media might not want to dampen the holiday spirit.

            Isn’t it odd the past couple of years or so that bank failures occur on Friday?  And, unless it’s a huge bank, they really don’t get much news coverage at all, if any.  What would you do if your bank failed?

            An article in Mary Hunt’s “Everyday Cheapskate” newsletter tackled this subject recently.  I’d like to summarize a few of its points here and add my own thoughts.  If you have anything to add, please leave a comment below, especially if you’ve survived a bank failure or reorganization.

            Four times as many banks have failed this year than in 2008, more than the number that closed during the savings and loan scandal of the early 1990’s.  Supposedly you will come through a bank failure OK if the bank or credit union is insured by the FDIC or NCUSIF.  Considering the big changes we’ve seen in the past year and a half, does that bolster your confidence in the system?

            If a bank closes, it will likely do so on a Friday afternoon.  It may reopen Monday under a new name, depending on which larger bank took it over.  Meanwhile, over the weekend government officials are there to oversee the transition.

            Your ATM and debit cards and checks should work until the new bank replaces them with the cards and checks they want you to use.  Your checking accounts and Certificates of Deposit are protected  up to $250,000.  Incidentally, that limit was raised from $100,000 in 2008, and it’s possible it could revert back to that limit someday, depending on Congress.

If you have money in mutual funds, annuities, stocks, bonds or other investments purchased through your bank, they’re not covered through an insured bank or credit union when the bank closes.  

            What you have in your safe deposit box isn’t covered by FDIC or NCUSIF either.  The new bank ownership should allow you to get your things out of it though.  If the FDIC takes over the bank instead of another bank, you’ll be issued a letter with instructions on accessing your safe deposit box.

            In the event the FDIC is who takes over your bank, they’re supposed to make good on your accounts up to the $250,000 limit.  However, it might take a few days, especially if there are multiple bank failures.  Have cash and food at the ready and gas in the car to get by on your own during that time because you’ll need to function without the bank.

            You may want to call your bank or credit union to be sure your money is insured, especially if there’s any question of it being over the insured limit.  Be vigilant if you’ve spread your money into several accounts as well.

            While it’s hoped that a bank failure will have minimal effect on you and me, to me this raises several concerns.  For one thing, it’s a good idea to have survival kits and supplies at the ready with things you’ll need if you can’t use your debit card or checks for a while.

But what about the contents of your safe deposit box?  I’d suggest having copies of important documents stashed in a strong box at home or somewhere else you consider trustworthy.  If you move valuables to your home temporarily, be prepared to defend yourself against robbery.  Of course, you’re not going to tell anyone what you’re doing in order not to invite thieves.

            Larger questions loom in the background.  How trustworthy is any bank?  How trustworthy is our money for that matter?  If you keep cash on hand for emergencies, will it be any good in the event of a major financial breakdown?  Do you have items on hand for bartering?  Will others be capable of bartering?

            I can’t answer those questions.  Here’s hoping that things go smoothly if your bank does fail and reopen under new ownership.  Do what you can now to make it happen from your end at least.