Wow, I work at a Credit Union and I'm glad we're not having these issues...

scary..

Aren't credit unions covered by the FDIC? Wouldn't the FDIC go bankrupt if there was a run on the bank? I can't imagine that they have that much sacked away....it'd be like if every person's house burnt down in the country...every insurance company would go bankrupt...

it's really scary to think about how this is possibly going to affect not only investment firms but personal accounts as well. i've always paid attention to FDIC firms and that's always been reassuring to know that i have security with my personal money but now i'm just worrying about my investments that are being managed by morgan stanley - one of the FEW remaining banks that are still standing. we'll have to see how this shakes out.

it's good to know what the limitations are on insurance on my accounts -and i guess that it means that i'll have to be aware of what my balances are to insure that i don't lose my $$

Well part of the beauty of the FDIC is that it practically eliminates the need for itself. Like, just the fact that the FDIC exists means that a bank run is very unlikely to occur because people know that their accounts are insured and that they are guaranteed that money, so they don't have to worry about running to the bank to get it.

SugarKat- Credit unions are covered by a separate entity called the National Credit Union Administration (NCUA). Here is the link to its website: http://www.ncua.gov/

ilanac - I got this from my Morgan Stanley financial advisor this AM.

Account Protection

Clients have protection of 100 percent of the net equity balances (securities and cash) held in your Account. Coverage is provided by Securities Investor Protection Corporation (“SIPC”) and Customer Asset Protection Company (“CAPCO”).

SIPC is a nonprofit member organization of U.S. broker-dealers created in 1970 by the U.S. Congress. SIPC coverage protects customers of a U.S. registered broker-dealer in the event the broker-dealer becomes financially insolvent and cannot return the full value of a customer’s securities and cash in the broker-dealer’s possession or control. SIPC covers each customer’s account up to $500,000, of which up to $100,000 may be cash.

We have purchased excess coverage from CAPCO, an insurance company registered in New York and founded and controlled by Morgan Stanley and 13 other of the largest brokerage firms in the United States. Excess coverage follows the terms of SIPC coverage but covers each Account up to its full net equity value, including all cash balances. CAPCO is rated A+ by Standard & Poor’s.

SIPC and excess coverage apply to securities and cash in the exclusive possession or control of Morgan Stanley. For this purpose, mutual funds—including Money Funds, which may be redeemed only through Morgan Stanley—are covered by Morgan Stanley’s SIPC and excess coverage. Certain securities such as mutual funds, including Money Funds, annuities, life insurance and limited partnerships, which may be redeemed or liquidated by direct contact with the issuer, carrier,
distributor, transfer agent or another third party (e.g., by letter, telephone, Internet or checkwriting), generally are not covered by SIPC or our excess coverage. It is also important to note that the asset protection offered by SIPC and CAPCO does not protect against losses of value due to market fluctuations.

Thanks Savvy! I have my money in a credit union and I was worried there for a while.

FINRA and SIPC insure clients at investment banks. Now clients are at risk because of his or her equity holdings.

FDIC insures the over-the-counter checking and savings accounts up to $100,000. A real world example of how the FDIC handles deposits at a failed bank is that of IndyMac.

The FDIC can go out and print money to save the back of every depositor, but then the US Dollar will lose value against every currency, the price of good will go through the roof, and gasoline will be unaffordable. Getting your $100,000 will seem like the least of your problems.

There was a great episode of Duck Tales where Huey, Dewey, and Louie stole Gryo's invention that cloned items every time a bell rang. The boys used it to clone money, and soon, money was falling from the sky. The citizens went nuts, but after a while they were literally sweeping coin out of their homes. Scrooge refused to accept the cloned money since it wasn't earned. Scrooge went out for lunch, and found that a hamburger now costs $10,000.

Savvy, do you have any links or advice for those of us across the pond (UK)? Cheers

I currently bank with Bank of America hopefully their negotiations and purchase of Merrill Lynch will be good for my money.

This article is simply addressing banking, not investing. SIPC covers investments, FDIC covers deposits.

Wow, thanks. As long as they're insured, I'm not worried. I don't have that much to lose anyway...

Basically if we spread our money out then we're covered.

Isn't the FDIC guarantee based only on SSN? So even if you have 100,000 quantities spread out over 4 banks (sigh, that would be nice!) you wouldn't be insured for all that money?

I heard something like that on the news... please correct me for I hope that is wrong.

Thanks for the post Savvy. I'm leaning more and more toward the credit union route these days.

That is a good question syako - Savvy, is that correct?

No, that isn't correct. FDIC coverage is per depositor, per insured bank and is not based on SSN. If you have a ton of money, the best way to protect yourself is to not keep all of your assets under one roof. You can find all FDIC facts by vising their website, http://www.fdic.gov/consumers/banking/facts/index.html

Good to know. Not that I'm even close to being bugged with that problem, but I heard a commentator on the news mention opening accounts with tons of SSN so all her assets would be covered and I thought - WTF!

This worries me since I bank at Washington Mutual. I think I'm going to put more money in my credit union account to be on the safe side.

Thanks Savvy for your answer, appreciate it and thanks for the FDIC link. I wanted to put some of my funds with my local credit union because that's where I have most of my accounts but the interest rate for their MM account is considerably lower than what I'm getting at my local bank.

Thanks Savvy!

Washington Mutual worries me, but I also try to keep half of my money at a credit union.