How much of our funds were insured by the FDIC?

Question

My mother has a CD at IndyMac that totaled $280,000. As we all know, the bank went under and now we are left confused as to how much money we are entitled. The CD is solely in her name, but she has four beneficiaries listed on it. Does the amount of insured money increase with each beneficiary?

Answer 1

My mother is in a similar situation, so I did a little digging...

Listing beneficiaries does not increase the insurance coverage available on a single account since adding beneficiaries does not convert a single account into a joint account:

http://www.fdic.gov/deposit/deposits/ins...

However, there is a chance that your mother will get the lion's share of her money back.  Please have a look at the the following:

http://www4.fdic.gov/DIVWEB/index.asp?de...

It shows the uninsured depositor dividends that the FDIC has paid out for bank failures since 2000 or so.  The FDIC appears to be very good at preserving the value of bank portfolios for eventual distribution to uninsured depositors.  Note that in most cases, when the FDIC paid a dividend of 50% or higher within a couple of months of the taking over a bank, the total dividend payout approached or exceeded 90%.

The FDIC declared an initial dividend of 50% for IndyMac.  If history is any guide, your mother might get back around 90% of her uninsured deposits when the dust settles -- 50% now and 40% over the coming months.  So, $100K + 50% * $180K = $190K should already be available to her, and 40% * $180K = $72K might arrive in the form of dividends for the next few quarters.

Let's all keep our fingers crossed that the FDIC can keep IndyMac's Alt-A mortgage portfolio performing by modifying loan terms...

P.S. You should encourage your mother to list you and your siblings as account owners in the future.  An account owned by three people jointly, for example, is insured for $300K.

Answer 2

Here is the FDIC estimator for how much insurance is provided for your account. Since the account is only in her name, that would make the CD insurance limited to $100,000. But there may be other settlements that could increase the amount that will be returned.

Answer 3

Ocean Bank claims CD's are insured to $100K.  The FDIC says that they will give depositors up to 50% of their money on uninured deposits.  The way I interpret this info, you would get your $100K plus 1/2 of the other $180K so $190K.  It also sounds like they are looking for another bank to take over IndyMac.  I imagine that if that happens, you'll get all your money.

Hope so.  Good luck.

Answer 4

If it's a retirement account, like an IRA, then she's in luck. The insurance in that case goes up from $100,000 to $250,000. I'm guessing this may be the account type based on the fact that she has named beneficiaries. The number of beneficiaries makes no difference, however. From the FDIC site:

"Naming beneficiaries on a retirement account does not increase deposit insurance coverage."