“Tell me,” I said to the WaMu employee with whom I have most of my financial dealings, “is my money safe?”
“As long as you don’t go over the FDIC figure in your name only,” she said. “It’s as safe with us as it is with any bank.“
This wasn’t the first time I had called with the same question. I called last spring when WaMu was in the headlines. Scary headlines like “Shock over WaMu’s moves” and “$7 billion gives shaky WaMu firmer footing for now” and “WaMu laying off 3,000.”
I became a customer when WaMu was Great Northwest Savings and Loan because I wanted to keep the money I earned from my column in a bank different from the one I write household checks out of, and which was fed by my husband’s and my salaries.
WaMu grew into the largest savings and loan in the country but ran into trouble as did many other financial institutions when it made risky loans during the national housing boom and the boom went bust.
Loans were being made to buyers who were not required to prove they could make the payments.
Some couldn’t and went belly up.
When WaMu’s income went from $784 million in 2007 to a loss of $1.1 billion in the first quarter of 2008, it laid off 3,000 employees, closed its home loan offices and cut the dividend to stockholders.
It made a deal with TPG, a private equity firm which put $1.54 billion in new money into WaMu. Other investors bought $5.5 billion in new stock.
I was still concerned enough to call the bank and inquire about my money.
FDIC stands for Federal Deposit Insurance Corp., whose mission is defined thus: “It protects you against loss of insured deposits in the unlikely event an insured institution fails.”
As I understand it, I told my banker, I’m protected by FDIC for up to $100,000. But if I have more than that in my CDs, IRAs, money markets, savings and checking accounts, I’m not covered for the overage.
What do I do if I have more than $100,000? Move it into another bank?
If I have a lot more, do I need to keep it in a string of banks?
“A lot of people have been misled by the words ‘up to,’” she said. “It’s how it’s structured. How it’s owned. People actually can have a lot of money in one bank as long as they don’t have it in one name only. You could have an account with your two daughters as beneficiaries then each of the three of you is insured for $100,000.”
It can be a single account in which only you can draw money from it, or a joint account where the beneficiaries also could could take money out. So that’s what we did, establish a single account for the three of us out of my larger CDs.
Things were fairly quiet on the WaMu front after that, until a week or so ago when the headlines were back.
“Wild day for WaMu.”
The chief executive of the bank had been canned and replaced with a new man, and there was a rumor J. Morgan Chase wanted to buy WaMu.
The rumor died.
So is my money safe? For one thing, money in my name only was now over the FDIC limit so we did another account with beneficiaries.
“If another bank should happen to take us over, nothing will happen,” my banker said.
“When WaMu bought Great Northwest, our doors were not locked,” she recalled. “Money was not held back from anyone. Nobody was told they could not have their money. We don’t try to sway anyone. We try to do the best for our customers. We are a holder of their money.”
WaMu’s stock has now been termed junk and analysts say the FDIC fund has been hit hard by failure of 11 federally insured banks.
Whatever happens, I’m sure FDIC will not renege on its obligations.
The integrity of the U.S. is at stake.
I’ll stick with WaMu.
Adele Ferguson can be reached at PO Box 69, Hansville, WA 98340.
