Bank Failures are starting in 2009 – FDIC will be busy this year

The insurance fund is absorbing approximately $145 Million of the two failed banks, and uninsured deposits will total approximately $40 Million dollars.

With all the turmoil in the economy, it is inevitable that banks will fail this year or at least be "absorbed" by other banks. Experts predict that almost 200 banks are in jeopardy for 2009.

What I don't understand is why depositors are not protecting their money.

Almost, $40 Million dollars was uninsured between these two banks and will be lost, which means that depositors are still not listening to the rules put forth by the FDIC. The FDIC makes it perfectly clear what the rules are.

Unfortunately, some people had accounts in one bank in excess of $250,000 (the recently increased insured amount). 

Let's review the rules again. If you are lucky enough to actually have more than $250,000 – Please do not keep it in one bank!  Open an account in another bank, and I don't mean another branch, I mean another bank with a different name.

The FDIC makes it very clear that if you have excess deposits, over the recently raised limit of $ 250,000; put the excess over $ 250,000 in a different bank (with a different name). Be aware that  SIPC rules, the agency that covers your stocks are different, but we'll cover that next time.

By now, it should be obvious that no bank is too big to fail, it is expected that smaller banks are subject to failure at a higher rate.  I'll try and keep count for you.

It is up to you to protect your assets today !

Joseph Russo is the Executive Director of The National Council of Financial Education for Students and Consumers and is a host of a "Financial Self Defense" cable TV series.