IndyMac and the FDIC

The recent closure and subsequent takeover of the California-based IndyMac Bank by the FDIC not only sent shock waves through the markets, it also gave depositors a wake-up call to review their FDIC coverage. The FDIC will cover IndyMac depositors up to $100,000 per account and has said it will cover half of those deposits that are over the limit.

You shouldn’t count on that kind of generosity, however, if your bank fails. Basically, the FDIC coverage limit is $100,000 per depositor per account per bank. If you and your spouse have a joint account, you’re covered up to $200,000. If you have more than that to deposit, you can put it in a different account at the same bank or deposit it in a different bank.

For really big deposits, you may have to get creative. One solution is the Certificate of Deposit Registry Service (CDARS). A bank that is part of the CDARS network will take your cash, spread it among several $100,000 insured CDs in different banks, and give you a single statement, just as if you were dealing with that one bank. Using CDARS, you can put up to $50 million in deposits under the FDIC umbrella. CDARS is available through banks that are part of the Promontory Interfinancial Network, a group of small regional banks, which means you won’t find big names like Wachovia on the list. To find a CDARS bank, visit the web site at www.cdars.com.