What does it mean when a bank "fails"?

Question

What does that mean for people with money in the bank? What does FDIC protection mean? I'm clueless here and have been reading some scary articles. Please help me understand the implications of banks potentially closing.

Thanks!

Answer 1

FDIC will insure funds under 100,000.00 any money above that amount will not be fully insured by the bank and there is a possibility that if the bank close those people with more than 100,000.00 in their account will not receive all of their money the FDIC will give the about of .40 of each dollar amount it has been determined that about 150 bank will fail go under or close if you research the GREAT DEPRESSION these things happened then and that was back in 1929 so be very frugal with your spendings

Answer 2

I'ts like companies going bankrupt.

If you have deposits lesser than 100,000 then you should not be concerned since FDIC's insurance covers amount up to $100,000.

If you have let's say a million dollar, that means you stand to lose $900,000.

Answer 3

A "failed" bank is one that does not have enough assets to cover the total amount of deposits (checking, savings, etc). FDIC protection covers you for up to $100,000 deposited per bank. If you have $50,000 in your checking and $60,000 in savings (or more than $100,000 combined in any number of accounts) at the same bank, you will not be able to withdraw any more than the $100,000. Now, if you had those accounts split between 2 banks (not exceeding $100,000 in any one bank) the entire amount would be covered and available for withdrawal. There is also a $250,000 limit for retirement accounts. There really isn't too much to worry about unless you have hundreds of thousands of dollars stashed in one bank. IndyMac was an incredible fluke(?) Using it as an example, hopefully, other banks close to that situation will have learned a lesson and look for increased financial backing or sell themselves before the doors close.