Loans Don’t Go Away, but Can Be Helpful Cushions
If the bank holding your loan fails, the debt doesn’t just go away, unfortunately (if only consumers had the luxury akin to a retail store when a customer loses a gift card). The bank that ultimately assumes (or buys) your loan will send you a notice of where to send future payments. The good news is that if you were in the rare situation where your deposits at the same failed bank totaled over FDIC insurance limits, you may apply the excess to your loan balance and avoid the possibility of it blowing away like chaff in the wind.
Stocks, Bonds, Mutual Funds, and Safe Deposit Boxes
Though it is becoming more difficult in the Volcker Rule banking age to invest in securities through FDIC-insured banks, there are still institutions that maintain a brokerage arm off of their banking business through which they sell securities, or other non-deposit investment products, to consumers. It is important to know the difference between the various types of accounts that may be associated with a single banking institution. The FDIC does not insure stocks, bonds, mutual funds, or safe deposit boxes against a bank’s failure. This insurance function is provided by a non-governmental organization called SIPC (the Securities Investors Protection Corporation).
ATMs Still Work in the Midst of a Bank’s Closing
ATM transactions that you perform during the time between your bank being closed and reorganized (by the FDIC or the acquiring bank) won’t post immediately because the ATMs are taken offline for processing by the FDIC. Upon the bank’s reopening, all of the transactions you completed via an ATM will be updated to your account.