Local bankers explain F.D.I.C. amid California bank's troubles

BLOUNT COUNTY, Tenn. (WVLT) -- A California bank is now under the Federal Deposit Insurance Corporation after the bank was seized by federal regulators last week when it's stock price fell 90 percent. The F.D.I.C. insures up to $100,000, so how safe is your money if you have more than that?

Volunteer TV spoke with some Blount County banking officials who say all of your money can be insured if it's properly structured.

California based IndyMac Bank is now operating under the F.D.I.C. after a 90 percent stock drop last week and a run on the bank.

"They had made a lot of mortgage loans which were not performing and it created a crisis for them."

Citizens Bank of Blount County CFO Gaynell Lawson says IndyMac may not be alone in the banking crisis.

Lawson says, “The F.D.I.C. has announced that there are about 90 banks on their problem list."

The F.D.I.C. insures people up to 100-thousand dollars, so how safe do you feel about your money in your bank?

CBBC customer Greg Long says, "I think these folks can be trusted and it's a local bank, a community bank, and they're just good folks to deal with."

CBBC First Vice President Susan Phillips agrees and says subprime loans have been a problem for some banks.

"We're a conservative, you know, community bank and we didn't do any of that type lending."

But what about the $100,000 maximum insurance by F.D.I.C.? Phillips says it's all about how you structure the money in your bank to cover all of your money. If all the money is listed in your name only, then it's $100,000. The key, according to Phillips, is that creating separate accounts with separate identities creates separate $100,000 insurances, even for accounts transferred to others if you die.

Phillips says, "You would use that payable on death to separate people that were within your family."

Lawson urges people to come visit them or your bank if you have questions about whether or not you're bank holdings are structurally covered by the F.D.I.C.

She says there's also a tool on the F.D.I.C.'s website to help you determine that.

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