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Your Bank Has Failed

March 8, 2009 6:10 PM

What would happen if your local bank failed? Scott Pelley and "60 Minutes" were given extraordinary access, as the Federal Deposit Insurance Corporation moves in to take over a failed bank in Chicago.

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by Hardyman1966 August 2, 2009 11:36 AM EDT
As a former wholesale mortgage underwriter, I was just recruited by a company working with the FDIC on these projects. I'm looking forward to being able to help with trying to fix some of the problems that were directly created by greed and irresponsible lending that peaked in 2006. There is no quick-fix for years of damage, but if nothing else, this financial crisis has weeded-out a substantial amount of riff-raff, effectively killing (finally) wholesale lending and returning to normal, reasonable lending practices.

In the meantime, NO ONE has lost money on any FDIC-insured account in 75 years, as long as each individual account did not exceed the covered limit, currently set at $250,000..... which everyone should know about if their balances are approaching that figure.

Or would everyone prefer just boarding up a bank with a note that reads, "Tough luck"?
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by m.condie April 4, 2009 8:56 PM EDT
My husband worked for Heritage Community Bank for 16 years. It has always been a very succesful bank for the last 46 years. Only in the last year did they become an interest to the FDIC,as did many banks. I liked how the 60 minutes segment had the head of the FDIC stating that only the huge banks got bailout money, and the small community banks which had formerly been profitable are left to be closed. However, to film the bank as it was being closed was very difficult to watch since my husband has worked ther for 16 years and had a very bright carrer until this year. 60 Minutes took over his office to film this segment, but no one considered all the lives and families this affected. My husband is now unable to ge an interview after a successful career and 6 figure salary. What about showing how this affects peoples lives?
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by Fizdoid March 16, 2009 1:55 AM EDT
I don't feel sorry for stupid people. They're the ones ruining this country.
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by ELHS1084 March 12, 2009 9:18 PM EDT
While I feel for Kathy, the woman whose husband received a lump-sum settlement at retirement and they deposited it all into one bank, I do have a question for her. Have you not heard of the old adage, "Don't put all your eggs in one basket"? My parents were raised during the Great Depression and two things they taught me was to never put money in a bank that was not federally insured and to always know the limit of the money covered by the FDIC. However, the bank that you had your money in was also at fault and should have warned you of the FDIC insurance limits and encouraged you to talk to a financial adviser (another thing my parents taught me) or put some of that money in another bank to make sure that everything was insured. While you don't have much recourse in recovering your lost funds, you do have a voice to let others know what happened to you and not make the same mistake. You should especially tell those in the younger generation who will not hear the stories of the Great Depression or World War II and the sacrifices that generation made.
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by ELHS1084 March 12, 2009 9:13 PM EDT
While I feel for Kathy, the woman whose husband received a lump-sum settlement at retirement and they deposited it all into one bank, I do have a question for her. Have you not heard of the old adage, "Don't put all your eggs in one basket"? My parents were raised during the Great Depression and two things they taught me was to never put money in a bank that was not federally insured and to always know the limit of the money covered by the FDIC. However, the bank that you had your money in was also at fault and should have warned you of the FDIC insurance limits and encouraged you to talk to a financial adviser (another thing my parents taught me) or put some of that money in another bank to make sure that everything was insured. While you don't have much recourse in recovering your lost funds, you do have a voice to let others know what happened to you and not make the same mistake. You should especially tell those in the younger generation who will not hear the stories of the Great Depression or World War II and the sacrifices that generation made.
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by ELHS1084 March 12, 2009 9:13 PM EDT
While I feel for Kathy, the woman whose husband received a lump-sum settlement at retirement and they deposited it all into one bank, I do have a question for her. Have you not heard of the old adage, "Don't put all your eggs in one basket"? My parents were raised during the Great Depression and two things they taught me was to never put money in a bank that was not federally insured and to always know the limit of the money covered by the FDIC. However, the bank that you had your money in was also at fault and should have warned you of the FDIC insurance limits and encouraged you to talk to a financial adviser (another thing my parents taught me) or put some of that money in another bank to make sure that everything was insured. While you don't have much recourse in recovering your lost funds, you do have a voice to let others know what happened to you and not make the same mistake. You should especially tell those in the younger generation who will not hear the stories of the Great Depression or World War II and the sacrifices that generation made.
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by Intrepid_Iconoclast March 12, 2009 1:37 PM EDT
Kathy,

Your husband was rather lucky to receive a rather generous departing gift in the first place. There are many others who work the same careers and who depart with little, if nothing. Entire generations coming forward will never see the generosity your husband saw, let alone a 41 year career with the same company. Welcome to the real world.

If you lost more than 100,000, then why was all the money kept at the same bank? Why was it not distributed more?

You are complaining about the loss of money above and beyond the insured limit that was caused by your own actions, over a nest egg future generations will never be able to build.

A reality check is in order.

Just be glad Madoff wasn't your go-to guy. There's significantly more financial injustice happening out there compared to what you have experienced.
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by MRSKMIROLLA March 11, 2009 6:56 PM EDT
I am soooo disappointed that they never mentioned about the 10,000 people who inadvertly was uninsured and have lost thousands of dollars. After seeing this on TV I feel it was really misrepresented. They made it sound like noone loses anything. Oh sure there was one statement from FDIC stating no one lost any funds who were insured but I really would like you to go into more depth as what is going to happen to those who lost money.

We have been told we will not get one more dollar. My husband worked for a great company for 41 years and when he retired he took lump sum. Well we put it all in IndyMac Bank and lost over $100,000.00 as others did.

So please show the whole story on IndyMac Bank!!!

Kathy Mirolla
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by medfacs March 11, 2009 3:59 PM EDT
The FDIC pushing community banks into failure.
The new FDIC program of holding A&D and other loans from failed banks, sounds like a good ideal, but it is causing a major problem for community banks who have participation loans with the failed banks. You ask how? Banks are rated on percentages of capital, NPL, etc. so when the FDIC holds and does nothing with a loan that another bank has a participation in it becomes an Non Performing Loan which makes the percentages bad. So these loans which the participating bank cannot sell, trade, or forclose on become a domino effect to the banks who have participations, and almost every community bank has participation loans.
THIS MUST CHANGE QUICK OR THOUSANDS OF COMMUNITY BANKS WILL BE CLOSED BECAUSE OF THESE PERCENTAGES.
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by ed_c_in_ok March 9, 2009 4:24 PM EDT
Allowing any bank to become a Mega Bank that could destablize the financing industry is the foundation of neglect that has created the present disaster. Big money and huge corporations were given such advantage during the era of republican majority under the pretense of capitalism that we now face a period where the government is the only thing large enough to secure their folly. The republicans risked destabilizing our entire economic base to create enormous wealth for a few. Those few should now be investigated and prosecuted to the full extent of the law for malfeasance and mismanagement white collar crimes committed in this feeding frenzy of greed. If Congress fails to investigate and prosecute the people at the top who were being paid huge salaries as the experts in the industry, America will begin self destructing from the bottom up. The honest and responsible will not sit by while big money and high paid executives have so obviously robbed these institutions and go forth wealthy and unpunished. If Congress makes this fatal mistake it may be the catalyst for chaos in the streets. The stories of those who have been bankrupted by white collar crime will most likely instigate radical feelings and acts by the even more impoverished who have nothing left to lose. That sector of our society could begin ravaging our communities in a criminal mentality wave never imagined within America. The basic solution to containing this crisis is to investigate and punish white collar crimes or the authorities have made clear there is a major difference in robbing a bank while wearing a suit and tie. If these crimes go unchecked Congress has simply changed fashion, creating a get out of jail free card for the well dressed bank robbers.
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by quinn_13_1999 March 9, 2009 4:15 AM EDT
NCUA? What about credit unions?
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by monster98-2009 March 9, 2009 1:51 AM EDT
Excellent piece by CBS news.
It makes perfect sense to "downsize" the super financial groups, like CITI, JP, etc...
Once a financial institution has become large, they have unprecidented power over all of us that we become their beotches, in effect ---even the Feds!!!
That shouldn't be what America is all about.
How many more recession turned depressions must we go through before we realize the Federal Govt is essential at regulating those in control of our money?
One way of regulating this is to ensure NO single financial institution, if they fail, will ever again take us down like they have this time around.
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by bluntfacts March 9, 2009 1:03 AM EDT
"To make sure there is no needless panic"

That "panic" is coming to a town near you, but not today, this week, or this month.

In some public forums, topics like this are argued every single day. And my main point to all that challenge me is that the system as we know it MUST function every day. The consequences would be dire; ask anyone that has lived through a tornado or hurricane when their entire reality is wiped out in one day. No goods and services; no ATM; even no drinkable water.

We cannot have that on a national basis. I give 60 Minutes a solid B plus to A minus on this report, except not pressing the F.D.I.C. chief on how many banks she thinks will fail in 2009. Watch the video; she pulls the old eyes look away routine, which is at least better than lying.
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by wmorris1966 March 9, 2009 12:34 AM EDT
This story is very informative. I have wondered for a while how these weekend transitiions unfolded. However, I would still like to know more about what criteria the FDIC tracks and uses to select a bank for such a takeover.
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by sensual_eros March 8, 2009 10:20 PM EDT
If this was suppose to inspire confidence in the FDIC, they are wrong. I saw holes in alot of statements made. You should never guarentee anything is safe with absolute certainty. No one can promise that, unless it comes from Jesus Christ himself. The rest are just lying or arrogant.
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by lookingagain March 8, 2009 9:29 PM EDT
That was the worst story of a bank takeover I have ever heard of. I worked at one of the banks who was closed this year. You didn't even talk about how much this effects the employees. We are in the Central Valley in California, Stockton the number one forclosure town is in our district. Tell me how 600 employees are going to find new jobs. Yes some branches will stay open but what aboout the people behind the scences. Whoever is deciding which bank is going to close needs to do a better job. They need to work with the bank instead of against it. The big banks got the TARP money over and over again, if we had gotten a chuck of it we would have been just fine. And now there will be more people who can't afford there homes and more people out of a job. Gee Thanks FDIC!!!
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by becauseiam1 March 8, 2009 9:04 PM EDT
Very informative - thanks so much
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by cg37102006 March 8, 2009 8:04 PM EDT
If Citi or B of A had to be taken over by the FDIC, well, lets just say that the taxpayers would be footing the bill. Both of these institutions have hundreds of billions of dollars
of deposits, way more than the FDIC has in its insurance fund.
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