Depositor Losses At Barnes Banking Unknown
On Friday, January 15, 2010, Barnes Banking Company was closed by the Utah Department of Financial Institutions which appointed the FDIC as receiver. Since no other institution could be found to assume the assets or deposits of failed Barnes Banking, the FDIC set up a Deposit Insurance National Bank (DINB) to protect depositors. At the time of closing all insured deposits were transferred to the DINB by the FDIC. In its initial press release on the closing of Barnes Banking the FDIC stated that “At the time of closing, there were approximately $100,000 in deposit funds that potentially exceeded the insurance limits. Uninsured deposits were not transferred to the DINB.”
On Sunday, January 17, 2010 the FDIC issued a revised press release for amounts of deposits exceeding the insurance limit which stated:
At the time of closing, the amount of deposits exceeding the insurance limits were undetermined. Uninsured deposits were not transferred to the DINB. The amount of uninsured deposits will be determined once the FDIC obtains additional from those customers. Customers with accounts in excess of $250,000 should contact the FDIC toll-free atto set up an appointment to discuss their deposits.
The press release was apparently hastily issued and not properly proofed as can be seen in the bold faced sentence above. In any event, this is another bank closing where careless depositors face a loss of their savings in a failed bank by not taking the necessary steps to ensure full FDIC deposit insurance coverage.
The first step to take in protecting your savings is to assess the financial condition of the banking institution that you keep your savings in. In its latest Quarterly Banking Profile, the FDIC disclosed that there are 552 institutions on its Problem Bank List, the largest number since the fourth quarter of 1993. The FDIC does not disclose the banks that are on the Problem Bank List but with some routine investigation, a consumer should be able to determine the basic health of a financial institution – see Is It Safe To Keep Your Money In An FDIC Insured Problem Bank?
Once a financial institution fails and the FDIC takes over as receiver, it is too late to do anything about uninsured deposits, but there are other actions that need to be taken – see What Should I Do When My Bank Fails?
In the case of Barnes Banking, depositors with funds transferred to the DINB have less than a month to transfer or withdraw their deposits since the FDIC will keep the DINB open only until February 12, 2010. After that date, the FDIC will send checks to depositors of record to the address on file.
Depositors at Barnes Banking with funds in excess of $250,000 can determine their insurance coverage by visiting the FDIC web page “Is My Account Fully Insured“. One small comfort for those having uninsured deposits at Barnes Banking, is that according to Federal Law, depositor claims have first priority at final settlement, followed by general unsecured creditors, subordinated debt and stockholders.