Banks Taken Over by FDIC in 2008

IndyMac Bank, the California-based bank specializing in mortgage lending, became the latest, yet largest so far, bank to fail in 2008 after the bank’s customers withdrew more than $1.3 billion since June amid crisis in the financial and housing market. Last Friday, July 11, 2008, IndyMac Bank was taken over by the Federal Deposit Insurance Corp (FDIC). Tomorrow, July 14, the bank will reopen its door under the supervision of the FDIC and a new name IndyMac Federal Bank, until a buyer is found.

IndyMac is the fifth bank to fail in 2008. According to the FDIC, the other four banks are:

• January 25: Douglass National Bank, Kansas City, Missouri
• March 7: Hume Bank, Hume, Missouri
• May 9: ANB Financial, Bentonville, Arkansas
• May 30: First Integrity Bank, Staples, Minnesota

In 2007, only three banks were seized by the FDIC.

Since there won’t be any advanced notice on whether a bank is going to close (unless you followed New York Senator Charles Schume’s comments in June), it’s almost impossible to know when to get out. In any event, it’s better to keep depoiste with any bank under $100,000 because that the limit insured by the FDIC ($250,000 for retirement account).

And more banks may fail.