Memphis, TN - Ten days have passed since the California-based bank, IndyMac, went belly up. IndyMac is the seventh U.S. bank to fail since the credit meltdown started last summer. It is the 5th bank to go under this year.
And on Sunday, July 20, 2008, Treasury Secretary Henry Paulson announced more banks are at risk of collapsing.
The news footage of frantic bank customers lined up outside IndyMac, desperate to get their hands on their life savings, makes 60 year-old Memphian Ernestine Harris wonder if her bank and her money are safe.
"If something happened, I really wouldn't know if I could get to my money," she says, "but I hope that I could. After working long years and I'm trying to retire, I sure hope I wouldn't have a problem getting to it."
In a tough economy, one where banks are threatened, people can get panicky. Stashing cash under a mattress or burying it in the backyard starts to look like an attractive alternative to putting it in a checking or savings account.
But Mid-South bank officials say leave your money where it is because Uncle Sam has your back.
"I understand that customers are concerned," says David Popwell, the President of Mid-South Banking for First Tennessee. "But people should have confidence in our banking system and in the FDIC insurance process."
FDIC is a government program created during the Great Depression. And for the last 75 years, it's been protecting Mid-Southerner's assets.
"Banks are insured by the FDIC," says Popwell, "which is the Federal Deposit Insurance Corporation. And banks like ours pay premiums to the FDIC that helps build reserves to come in to pay depositors in the event of a bank's failure."
The FDIC covers savings and checking accounts, NOW accounts, Certificates of Deposit, Christmas Club accounts and even Traveler's Checks.
Popwell says FDIC insures individual accounts up to $100,000. Joint accounts are covered up to $200,000. Certain retirement accounts are insured up to $250,000. And Popwell says some accounts that are payable upon death are covered up to $100,000 per beneficiary.
The Mid-South's largest banks, including First Tennessee, Regions, and SunTrust all offer FDIC protection. To find out if your banking institution is FDIC-friendly look for the FDIC sign or simply ask the teller.
"I truly believe that you're better off having your money in the system with FDIC insurance," says Popwell, "than you are hiding it in your backyard or your coffee can."
Ernestine Harris, a longtime First Tennessee customer, believes that too. She says she has faith that her money is in good hands.
"I feel like I can trust my bank," she says. "Just use your instincts and trust in God."
After taking over IndyMac, the FDIC is now keeping an eye on 90 other troubled banks around the country. FDIC won't identify those banks. But Mid-South financial experts tell Eyewitness News Everywhere they do not believe any of the area's major banking institutions are on the watch list.
The FDIC currently has $53 billion available to pay off customers at failed banks. The federal agency estimates it will cost between $4 billion and $8 billion to bailout IndyMac. Other banks will likely see their insurance premiums go up to keep FDIC fully funded.
