Assessing Bank Safety

If you weren't scared enough of by the ways someone could get your money, this piece from Market Watch that details additional ways your bank can help you lose your money. They start by listing several ways banks can lose your money that aren't covered by federal insurance:

• Deposits of more than $100,000 per person, with certain exceptions -- often based on the way you structure account ownership. Pending legislation soon could increase retirement account coverage and index deposit insurance to inflation.
• Errors and omissions of bank directors.
• Internet fraud.
• Embezzlement by employees.
• Securities losses.
• Unauthorized access to your account.
• Contents of safe deposit boxes.
• Notes or debt obligations of a bank.
• Losses due to robberies.
• Catastrophes.

Yikes! Who would of thought all these things weren't covered? Ahhhhh, but they are -- just in a different way:

Fortunately, banks carry a "blanket bond," which may provide protection for some of these perils. This is a multipurpose insurance policy a bank purchases to protect itself from fire, flood, earthquake, robbery and embezzlement.

So, now that we're feeling secure again, they hit us with more bad news:

It's a good thing banks carry extra insurance. The fastest-growing area for claims is employee dishonesty, according to experts at two of the more prominent bank blanket-bond providers -- Progressive Group and Chubb Specialty Co. In fact, both report banks have been increasing insurance deductibles lately as they seek higher coverage limits.

The piece ends with some tips on what you can do to make sure you and your money are safe at a bank:

Call 1-877-ASK FDIC or visit www.fdic.gov to make sure all your deposit accounts are fully FDIC-insured in the event of a bank failure.

If you use a bank safe deposit box, don't expect the bank to insure its contents. Make sure your homeowners insurance covers anything valuable.

Consider avoiding bank branches during opening or closing times.

When you visit your bank branch, see different employees. Employee embezzlements frequently involve those who are most trusted.

Monitor your account statements.

Good advice to follow. Another option to consider is banking online -- at least as much as you can.

Overall, I don't think you have to worry about a major bank losing your money (for any reason) and not making you whole again. If they didn't, word would get out, their reputation would be ruined, and their business would really be hurt. However, you still need to monitor and take responsibility for your own financial security. A bank, no matter how protective, will never be as concerned with your finances as you are.

Comments

[David Mansfield]

I have recently begun to do a lot of research into how banks protect their assets. I found on gap in conventional wisdom. Banks are spending a lot on dye packs - which don't seem to work.