MarketWatch reports that the FDIC is hiring more bank examiners:
The Federal Deposit Insurance Corp. is planning to beef up its division of resolutions and receiverships, which handles failed banks, by 40% this year. The division currently has 233 employees. Considering that only three banks failed last year, why do they need more examiners?
For now, the FDIC is looking to bring back 25 retired employees with experience in the bank closures of the 1980s and 1990s. No, it’s not just a reunion of hard-nosed accountants who closed banks and savings and loans in notorious Friday night raids and liquidated their assets.
This is a real search for tough, experienced “lone rangers,” who set upon a bank or thrift institution on a Friday to take over as much of the assets as possible and open the following Monday with full assurances for insured depositors and firm answers for uninsured depositors. The latter group will get 100% on their insured deposits, probably 50% on the uninsured portion and “well, we can talk about it, and we’ll send you some more later.”
This week Fed Chairman Ben Bernanke put it bluntly: “There probably will be some bank failures.” Regulators have some real work ahead of them. The FDIC had 76 banks on its problem bank list at Dec. 31, down from 136 problem banks in 2002 and 213 banks in 1990. This past year’s three failures were the first since 2004. Apparently the FDIC expects to have a busy year.
The FDIC’s challenge means you should confine your bank accounts to insured deposits exclusively. Other safe harbors are Treasury-only money-market funds, money funds owned by large institutions (even banks) and maybe short-term Treasury bills.
The gist of this story is in the last paragraph. Not only should you confine your bank accounts to insured deposits only, you also have to make sure that your bank account assets remain below the $100,000 insured limit. If you have CDs or other bank deposits, be sure to spread your wealth around several non-related banks. You think this might be obvious, but I know of some people, who are handling family money and have exposure far above the insurance limit.
Don’t get caught in this trap. Make the effort and move your money as outlined—now! You will thank me later.