Americans have $6.9 trillion in bank deposits. $4.2 trillion of that is FDIC insured

[NNN0LHI]

http://www.suntimes.com/business/currency/1053590,savage071308article.article

<snip>America has $6.9 trillion in deposit institutions. But only $4.2 trillion of that is insured, according to the FDIC, which has taken over IndyMac. That leaves a staggering gap of more than $2.6 trillion in uninsured bank accounts.

[Phoebe Loosinhouse]

1. Which means that there SHOULD be at least a mini run on banks

as people just sort out their various accounts and redistribute funds to get full safety, not that they are panicked or resorting to their mattresses.

But those activities might have some unintended consequences if they are not interpreted and reported correctly which would cause a REAL panic and run on the banks.

[tammywammy]

2. My money isn't FDIC insured

I used a credit union, it's NCUA insured. How much of that 2.4 trillion is in credit unions.

[NNN0LHI]

3. I think this explains it

$2.6 trillion in uninsured bank accounts

[pampango]

4. I read somewhere that much of these uninsured bank account funds are large corporate

accounts. In most cases, while the FDIC does not insure the excess balances, the businesses have other insurance to cover themselves.

I am not sure how true that is and how much of the uninsured deposits belong to individuals with more than $100,000 in a single account. We may find out soon enough. If these deposits largely belong to corporations, nothing much will happen, but if they belong largely to individuals, there will be a major shakeup.

[NNN0LHI]

5. What happens if some of these corporate funds are for paying retirements and such?

nothing much will happen?

Don

[pampango]

6. As I indicated these "uninsured" corporate accounts are, in fact,

insured by other means, just not by the FDIC.

Any company that keeps hundreds of thousands of dollars in accounts that are uninsured and can disappear overnight are probably not very effective companies regardless of whether those accounts were designed to cover retirement pensions, medical coverage, wages, taxes, operating capital or anything else.

All I meant by "not much will happen" is that if the uninsured (by the FDIC) accounts are held by corporations that already know the accounts are there and are insured by other means, they won't be in a panic to move the funds around to get them "insured". If the people running these companies were not smart enough to know about the $100,000 FDIC insurance limit or did know and took no measures to deal with this insurance gap, then they will probably panic and start moving funds around, just like individuals might.

We shall see what happens.

[TreasonousBastard]

11. There's another Federal pension insurance scheme...

independant of the FDIC should a pension fund or two go belly up.

Again, though, vast amounts of this "uninsured" corporate money is simply whizzing through the system, stopping only every so often to catch a breath. There are all sorts of accounts, like payroll, that have their own "insurance" systems, and there are wierd little things like 48 hour notes to park cash over the weekend when checks aren't expected clear.

It would take one ginornmous catastrophe to wipe out a significant amount of this cash.

Cyclical liquidity crunches, like what we're seeing now, are not the end of the world.

[TreasonousBastard]

7. So what? It only makes a difference if...

a lot of banks fail. Not just a few banks failing (we went through that already-- ask Shrub's brother how it worked out) but massive failures across the board.

Since banks have less than 10% of depositors' money available for them to take out, I would worry more about an hysterical run on the sound banks because of all this gloomy talk than mass failures for other reasons.

If, for some reason, we do see this massive collapse, there ain't a damn thing we can do about it and we're all screwed, (you really think the FDIC will pump out 3 or 4 trillion in time to pay the electric bill?) so I would prefer to think it won't happen, or it won't be all that bad. That's not avoiding the issue, it's more like the attitude you have to have living by a live volcano or on a huge fault.

[Virginia Dare]

9. I worry about mass hysteria as well..

all it would take is a crazy rumour circulating the Internets and within hours we'd see a mass run at the banks. The Chinese could do that just to fuck with us if they wanted to. They probably don't fortunately, not at this particular point in time.

I just came out of a Wachovia Bank, and there were all sorts of suits there keeping an eye on things. There was a negative article about them in the Washington Post yesterday, and clearly they are very nervous.

[KG]

8. whew! thanks goodness i don't have any money! nothing to lose!

[Virginia Dare]

10. You've got to have cash to survive..

unless you're living on the streets. Short-term cash shortages would be a problem for everybody, not just those with lots of money in the bank.