The economic situation, closing of some banks and purchasing of others has caused many questions and concerns regarding the security of funds. Late last week, in a quick move, the FDIC took over Washington Mutual only to sell it to JP Morgan Chase for $1.9 billion. While this will give JP Morgan a presence in California and Oregon they do not now have, they will also inherit WaMu’s mortgages and commercial real estate, many of them in a troubled state.
What does this mean for those who have accounts ast WaMu? It will be business as usual. Nothing is expected to change in the near future. Depositors will be able to continue doing business as usual. Hours and phone numbers will remain the same. WaMu stayed open through the process.
The following information comes from the Federal Deposit Insurance Corporation (FDIC) and is offered as an explanation of what happens when banks are sold or when they close.
When there has been a purchase and assumption of deposit, insured depositors immediately become depositors of the assuming bank and have access to their insured funds. The assuming bank may also purchase loans and other assets of a failed bank.
According to information from the FDIC, if a failed bank is acquired, all direct deposits, including Social Security payments, will automatically be redirected to the deposit accounts at the acquiring boxes.
When the failed bank’s deposits are assumed by an open bank, some or all of the offices typically reopen the next business day and there is usually no interruption in the processing of checks drawn on the failed bank. An exception may include checks that were drawn against a deposit account that was determined to be uninsured or an account that the deposit insurance determination is pending.
When there is a bank acquiring a failed bank, the new bank will accept checks and deposit slips of the failed bank for a short time. Information about new checks and deposit slips will be sent from the acquiring bank.
Usually a change in ownership may mean the failed bank will close for a day. When it opens, you will have access to safety deposit banks.
If a bank fails and has no buyer, that is when the FDIC steps in and pays the depositor directly by check up to the insured balance in each account. These payments usually begin within a few days after a bank closes. There are standard procedures that the FDIC follows in making the payments and it is their goal to make payments within two business days.
Some deposits, such as those linked to a formal written trust agreement, or those placed by a fiduciary on behalf of an owner, may require additional documentation and take longer for the FDIC to complete.
If a bank has closed, any outstanding transactions or checks presented after the bank closed cannot be paid or charged against the account. The FDIC freezes all deposit accounts at the time a bank closes. Any outstanding checks or payment requests will be returned unpaid and will be marked to indicate the bank has closed. This does not reflect on your credit standing. However, it is your responsibility to make the payments.
If you have a safety deposit box and a bank is closed, the FDIC will notify you how you can remove the contents of your box. Generally box holders are granted access the day after closure.
The above information includes highlights of information available by going to www.fdic.gov/deposit/deposits
by Nancy Leonard
Of the Independent