How bank failures happen and what they mean

Q: Why do banks fail?

A: Banks fail, and are taken over by federal regulators, when they are in danger of running out of cash to meet their financial obligations. In IndyMac's case, customers withdrew an average of $100 million a day — or more than $1.3 billion overall — from the savings and loan during an 11-day period, putting it at risk, says the Office of Thrift Supervision.

Q: Why does the Federal Deposit Insurance Corp. take over failed banks?

A: The FDIC takes control of failed banks to "preserve assets and protect insured depositors," it says. It seeks a buyer for troubled institutions or sells off assets to raise money to pay depositors and creditors. The FDIC wants to find a buyer for IndyMac in 90 days. In the meantime, it has transferred most of IndyMac's assets to an entity it created, IndyMac Federal Bank.

Q: Will I lose money I saved at a failed bank?

A: The FDIC says no depositor has ever lost a penny of insured funds. The government generally covers each individual for up to $100,000 in deposits you have at an insured bank. That includes CDs, savings, checking, etc. Retirement accounts, such as IRAs, are covered for an additional $250,000.

The FDIC is not required to reimburse you for anything above the covered amount. But it can choose to pay for uninsured deposits if it raises enough money after selling off the institution's assets. For IndyMac customers, the FDIC has said that it'll cover at least 50% of uninsured deposits. The agency estimates that IndyMac has about $1 billion of deposits that are potentially uninsured.

If you believe you have uninsured deposits, call the FDIC at 866-806-5919. You may have to fill out forms or schedule an appointment with an FDIC agent to discuss the account.

Q: Do I have to complete paperwork to transfer my account to the new bank?

A: You generally don't have to do anything to have your account turned over to the FDIC.

Q: How do I access my money?

A: When a bank fails, the FDIC will generally restrict customers' access to their money for a few days. Some services, such as ATM withdrawals, will still be available. Starting today, IndyMac's customers can resume online banking, access their safe deposit boxes and wire money.

Q: Can I deposit money to my account?

A: Yes. Any money deposited will be held with the new institution. Checking and savings account deposits to IndyMac Federal Bank will be insured for up to $100,000, while up to $250,000 in IRA retirement-account money will be covered.

Q: What about loans I hold with the bank?

A: Loan terms stay the same, and will be based on the contract you signed with the bank. Continue paying the loans on time, and to the same address, unless otherwise notified by the FDIC. With savings accounts, the FDIC reserves the right to change the interest rates.

Q: Where can I find more information?

A: Call the FDIC's toll-free number at 866-806-5919, or visit its website at

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