With the failure of Indymac Bank and the recent struggles of Freddie Mac and Fannie Mae, many people may be wondering, how safe is my bank?
Earlier this week Treasury Secretary Henry Paulson said the list of troubled banks will grow longer as they struggle to cope with big losses on bad mortgages, but overall he says the U.S. banking system is sound.
Wednesday morning on KARE 11 Sunrise, Steve Erdall, President and CEO of Western Bank in Edina, addressed the current banking situation. Erdall echoed Secretary Paulson's sentiments saying overall the banking system is in good shape.
Erdall says the overall number of banks failing is small. So far this year, Erdall says only four commercial banks and one savings and loan (Indymac) has failed. That's out of more than 10,000 institutions nationwide.
Despite the recent news of financial struggles for Indymac, Fannie Mae and Freddie Mac, Erdall says most banks have enough capital and large enough earnings to stay in business. He says banks have seen recessions before and they know how to handle it.
If you're concerned about the state of your bank, Erdall recommends going to the FDIC website and you can look up the financial condition of any bank. Erdall says if you do visit the FDIC website look for three things: See if the bank is making money, look to see if they have adequate capital and look at the bank's non-accrual loans.
Erdall says if you're worried about your money that is sitting in the bank, don't be. Banks and savings and loans are insured by the FDIC. Generally, individuals and corporations are insured up to $100,000. However, Erdall says that number could increase if you have multiple signers on the account or if you have an IRA.
Erdall says it's unfair to compare what's going on right now in the banking world to what happened in the 1980s during the Savings and Loan Crisis. Back then, more than 500 institutions failed, that's compared to five this year.
(Copyright 2008 by KARE. All Rights Reserved.)