Bank Failures: 25 Things Everyone with a Bank Account Needs to Know

No Size is Immune

Big and small, tall and large, wide and skinny, banks of all shapes and sizes are susceptible to failure. More assets do not necessarily mean more security when it comes to bank insolvency. Washington Mutual had over $100 billion in deposits when the FDIC brought it into receivership in 2008. On the other hand, Sunrise Bank, which failed this year, had less than $60 million in deposits.

Banks Are Usually Closed Quietly

Unlike the case of IndyMac’s bankruptcy, most bank failures happen quietly by design. The FDIC’s ideal bank closure process consists of the agency closing down the bank on a Friday, reorganizing it over the weekend, and handing it over to new ownership on Monday. After a letter was publicized from a United States Senator about the likelihood of IndyMac going bankrupt, depositors began quickly retrieving their funds. This semi-panic forced the FDIC to take over the bank instead of giving it time to recover.

Pay Attention to Bank Health Ratings and Texas Ratios

While it’s true that bank failures often come as a surprise, regularly monitoring a Bank Health Ratings and Texas Ratio list will give you a good grasp of whether a bank is thriving or surviving. As a bank’s number approaches 100%, it becomes more likely to end up insolvent, and you could end up with more of a headache tracking reassigned loans or waiting for a check from the FDIC for your deposits.

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