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What if my bank fails?

September 26th, 2008 at 08:27 pm

Well, Broken Arrow's entry this morning about Wachovia possibly being at risk for failing got me going this morning to research what'll happen if my bank fails. I bank with Wachovia and since we don't have any savings (not yet anyway, just opened an ING account!), I'm mainly concerned about accessing my account to pay bills. I know that FDIC will cover any money I do have in checking since I definitely don't have more than their limit.

Anyway, from what I've read, my money may be unavailable for several days if something did happen so I am preparing just in case. I have filled my car with gas and we are taking some money out today. We're taking enough to cover our rent (due on the 1st) and to have some cushion. We're fine on food. I am not too worried about anything horrible happening, I think my money will be fine overall, but I feel better knowing I'm prepared and won't be late on any bills. (I don't have any other bills due for about two weeks.)

I just saw on CNBC that Wachovia is in early talks about a deal with Citigroup so who knows, maybe it's good I'm preparing, either way, I feel better now.

10 Responses to “What if my bank fails?”

  1. merch Says:

    Usually, the FDIC takes over a bank on Friday and opens it on Monday.

  2. Personal Finance Student Says:

    Thanks Merch! That's good to know. CNBC now says that Wachovia are in talks with Wells Fargo, Citigroup and a bank in Spain.

  3. baselle Says:

    I bank with the now-defunct WaMu. In these first few hours its been a non-event. I've been able to get money this afternoon from the machine.

  4. skydivingchic Says:

    I also have accounts with Wamu - a checking account I use mainly to make cash and check deposits before it gets transferred out to other accounts, an online savings account, several online CDs, and our mortgage. As with baselle, the Chase takeover has been completely uneventful for me. My direct deposit from my employer went into the savings account this morning as usual and I went into a branch today and paid the mortgage with no issues.

    I understand that it might have been different had a buyer not been found, but I was never concerned.

  5. Broken Arrow Says:

    Oh man, see, I feel terrible now. I feel as though I am fanning panic or at least anxiety. It certainly wasn't my intention so I apologize.

    On the other hand, I'm just reporting what's out there, and I've always believed that it's better to be armed with knowledge (even if it's anxiety-provoking) than to be live blindly, not knowing what dangers may be lurking nearby....

    Skydivingchic brings up something that I think is worth noting. Although nothing is for sure, I also believed that WaMu would be bought-out rather than just fold entirely, and personally, I believe it's the same situation with Wachovia. Worse case, Wachovia will follow WaMu's footsteps, but even if that does happen, I'm betting that the interference to your banking should be nominal.

    At this point, I also want to re-emphasize that I really don't know what's going to happen with Wachovia. The stock is at an expected all-time low, but unlike WaMu, it's also holding steady whereas WaMu progressively weakened. What's more, there was a massive bank run on WaMu, but I have yet to hear reports of such a thing happening with Wachovia. And I for one hope that there will be no more bank runs....

    Anyway, their position appears to be stronger than WaMu if that means anything.

  6. baselle Says:

    Ooooh, be careful BA - Wachovia could be undergoing a bank run this moment. The WaMu bank runs were virtual and electronic and could be done from the comfort of your own home. There weren't any lines in this bank run, just a lot of folks in jammies moving money away from WaMu in the middle of the night.

  7. fruitbowlk Says:

    I'm also with wachovia and it's only for bill pay. I'm not concern.

  8. scfr Says:

    PFS - I think you are taking a very reasonable and balanced approach by neither pulling all of your money out nor sticking your head in the sand. When you have one primary bank and there are some rumblings about it, having enough cash on hand to cover yourself for a few days is prudent. Sounds to me like you are taking care of your family without over-reacting.

    As merch says, when a bank is taken over it usually reopens the following business day, but the scenario that is more uncertains is when a bank fails and there is no buyer.

    If you have not read it already, you may find this interview with an FDIC spokesperson helpful:
    http://www.bankrate.com/brm/news/chk/20080509-bank-failures-...

  9. Personal Finance Student Says:

    Thanks everyone for the information. That's great to hear the WaMu transfer was so seamless. We have my husband's paycheck set to direct deposit Monday night.

    Don't worry Broken Arrow, I'm not panicking in the least, I just wanted to be prepared for the worst case scenario, which I figure is not having access to my money for a few days. I really do think everything will be ok, but don't want to be hit with penalities for late rent.

    Thanks scfr, being prepared is really just what I'm trying to do. I haven't read that interview yet, but will; it sounds interesting.

  10. Broken Arrow Says:

    Good point, baselle. It could be happening as we speak, but for the moment, I have yet to get any sense that it's happening. Hopefully that will turn out to be true.

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