What happens if my bank fails?

Answer: The FDIC's got my back because I'm poor and shit, and I don't have over $100k in the bank.

via Yahoo Finance:

Amid the recent collapse and government seizure of savings and loan giant IndyMac Bank and heightened anxiety this week over the financial stability of No. 1 thrift Washington Mutual Inc., consumers are concerned about the safety of their bank deposits.

As of June 30, Seattle-based WaMu and its subsidiaries had assets of $309.73 billion and $181.92 billion in deposits. By comparison, Pasadena, Calif.-based IndyMac had $32 billion in assets and $19 billion in deposits when it was shut down by federal regulators on July 11.

If Washington Mutual were to tumble, the magnitude of its failure would dwarf the largest bank collapse in U.S. history -- that of Continental Illinois National Bank in 1984, with $33.6 billion in assets.

Besides IndyMac, 10 more federally insured banks and thrifts have failed this year and were closed by regulators, compared with three in all of 2007. Federal banking officials say more institutions are in danger of collapsing as turbulence from the housing slump, mounting defaults on mortgages, and the yearlong credit crisis continues to pile on soured loans for banks.

But officials also are assuring depositors that accounts are secure: Some 98 percent of the 8,450 government-insured U.S. banks and thrifts are strong, and $45.2 billion is in the federal deposit insurance fund -- replenished by premiums paid by the institutions.

Still, Federal Deposit Insurance Corp. Chairman Sheila Bair has said she will propose next month to FDIC directors an increase in premiums charged to banks and thrifts.

Some questions that bank customers may be asking:

Q. What is the maximum dollar amount that can be insured at my bank? Does it vary based on the type of accounts involved?

A. The basic insurance amount is $100,000 per depositor per bank. Individual retirement accounts, or IRAs, held in banks are insured up to $250,000. In addition, you may qualify for more than $100,000 in coverage at one bank if you have deposit accounts in different ownership categories, such as single accounts, retirement accounts, joint accounts and revocable trust accounts.

Q. What if my family has multiple individual accounts of those types, but our total deposits exceed the limits?

A. If the accounts are properly structured, a married couple could have as much as $1.1 million in deposits fully insured at one bank, according to the FDIC. With accounts for two children added, up to $1.5 million could be covered.

Q. If my bank closes, what happens to my money in deposit accounts that exceeds the insured limits?

A. You become essentially a creditor of the failed bank. You will eventually recover some of your money, but the amount can range anywhere from 40 cents on the dollar up to a full 100. Recovery of the money could take months. At IndyMac, there are an estimated $541 million in deposits of the total $19 billion that exceed the insurance limits.

Q. How has that worked out for past bank failures?

A. The average return for a depositor in that situation has been about 72 cents on the dollar, according to the FDIC. The amount that depositors recoup can depend on the amount and quality of the failed bank's assets.

Q. What else happens if my bank is shut down: Will the ATMs work? Will my automatic payments for mortgages, utilities and the like be affected?

A. Automated teller machines normally remain available after a bank closure. Checks will be processed as usual, services such as online banking and safe deposit boxes will continue to be available, and interest on accounts will accrue at the current rates. Terms of loans from the bank won't change, according to the FDIC.

Q. What can I do now, before any possible closure of my bank, to protect my assets?

A. The best way is to structure the accounts carefully. The FDIC has a calculator on its Web site, called the electronic deposit insurance estimator, or EDIE, that can help determine how much money, if any, in deposit accounts exceeds the insurance limits.