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Home >> Keeping Your Money Safe
Proceeds from Insured Funds
If I have money in a bank that goes belly up, how long would it be before I can get my money? I heard it could take up to ten years!
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 In most cases, the FDIC quickly identifies another bank that can take over all or most of the failed bank's deposits. In those cases, assuming that your balances were insured at the failed bank, they will be insured in the new bank, and the transition should be seamless. You'll have a six-month period during which you can manage your balances to ensure they remain insured, if you had money in both banks at the time of the takeover.
Occasionally, the FDIC is unable to find a bank to assume the deposits and assets of the failed bank, and will, as it did with IndyMac, operate the bank as conservator until a sale of the bank can be completed. However, if the FDIC doesn't see that option as viable, it can simply allow the failed bank to close. In such cases, the FDIC begins paying insured depositors within one or two days.
The only depositor who have to wait for money from a failed bank is the one with account balances over the insurance coverage limits. Those deposit balances over the limits become unsecured claims on the bank's remaining assets (unsold loans, buildings and equipment, etc.), which may be paid on a percentage basis as those assets are sold off. That can take some time, and the payments are made in the form of dividends distributions by the FDIC. The best way to ensure that you won't be delayed in gaining access to your funds is to make certain you manage accounts so that all your balances are insured.
Published on BankingQuestions.com 2/18/09
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