Monday, December 15, 2008
WASHINGTON, DC--Sheila C. Blair, (top right photo) chairman, Federal Deposit Insurance Corp., warns more bank failures are on the horizon, despite the Fed's $700 billion approved bailout for this country's financial institutions.
Writing in the December issue of AARP Bulletin, Blair says, "Despite what we hear about the credit crisis and the problems facing banks, the bulk of the U.S. banking industry is healthy and remains well capitalized."
She says, "While we will likely continue to see more bank failures, it is important for the American public to know that the FDIC stands ready to meet our sacred commitment to depositors. It is a golden promise that has been kept for 75 years and one that will not be broken."
Blair reminds individual depositors that "after going 2 1/2 years without a bank failure, many people had forgotten that banks do fail. Banking, like any other business, is cyclical.
"During the Great Depression (in the 1930s)--an era that gave birth to the FDIC--thousands of banks were shuttered." In 1989, a total of 534 FDIC-insured institutions closed their doors. And at the end of October 2008, "despite the seriousness of the credit crisis, only 17 banks had failed," Blair says.
She says recent changes in FDIC insurance limits temporarily raised protection from the familiar $100,000 level to $250,000 per qualified account category.
"This means that a married couple could each have individual accounts, two separate retirement accounts and a joint account at one bank, and be fully insured for up to $1.5 million," Blair says. "Structuring your accounts properly is the key to maximizing deposit insurance protection."
She adds, "In 75 years, no depositor has ever lost a penny of insured deposits. Not a penny."