Dic and liquidating a financial institution
The FDIC will mail checks directly to depositors of The Community’s Bank for the amount of their insured money,” according to a press release.
Ultimately, getting your money back is the biggest concern in a bank failure, and the FDIC is the reason no one has lost a penny of insured deposits since the agency was founded in 1933.
“Essentially, the FDIC comes in on Friday afternoon after closing, relieves the existing management of authority and takes everything over, and usually by the following Monday morning they’ve reopened under the banner of the acquiring bank,” says Rebel Cole, professor of finance at De Paul University in Chicago.
But in rare cases — about 6% of bank failures since 2000 — the FDIC has been unable to find a buyer for the bank.
Typically, customer accounts are closed and checks are mailed to account holders for the amount of their insured deposits.
Coverage extends to trust accounts and Individual Retirement Accounts (IRAs), but only the parts that fit the type of accounts listed previously.
For example, with the threat of the closure of a bank, small groups of worried customers rushed to withdraw their money.
After fears spread, a stampede of customers, seeking to do the same, ultimately resulted in the bank being unable to support withdrawal requests.
Direct deposits into your account at the failed bank may also need to be quickly rerouted to a new account to avoid bouncing back.
One bright spot: Former account holders who show up to branches will find FDIC staff inside, ready to answer questions and offer whatever assistance they can.The FDIC is most likely to pursue this option if the bank is very small or if most of the deposits are from institutional investors or large businesses, Cole says. Let help you find the best local savings account today. 13, 2013, when The Community’s Bank of Bridgeport, Connecticut, was closed down by the FDIC.