Under FDIC, how long does the government have to pay $ back if a bank goes under? I heard as long as they want

Question

Any truth to this?

Answer 1

Melli is correct in quoting the FDIC's website regarding FDIC protocol.

However the (real-world) truth of the matter is, that upon completion of an internal audit by an assigned FDIC examination team, determining the reason for the banks failure, the assets that where held by the bank along with all records determining balances owed and loans outstanding to all bank patrons.

These audits are usually completed within 30 days after FDIC's has initiated the examination process. Most times, these audits are completed sooner and upon the FDIC team's finalization, the report is than sent to their local Regional offices for review and then forwarded on to the FDIC offices in Washington D.C. where funds can then be dispersed to all customers owed, with a maximum payout of $10,000 per account.

So, in whole, the entire process can be as short as one week or as long as 60 days. There are however exceptions, based on unusual circumstance. During the 1980's Savings and Loan Crisis, Washington was over run with bank closings and some depositers waited as long as 6 months for FDIC account benefit reimbursement. However this is by no means the norm.

In regards to the FDIC being able to take as long as they want, they may take as long as the audit takes. This is for your protection, so that funds go to those that are actually owed, instead of paying your benefits to someone that isn't rightfully owed.

Hope that helps with your question and that this is purely academic and that you aren't currently waiting on a pending FDIC examination. If so, Good Luck.

Answer 2

The truth is that federal law requires the FDIC to pay the insured deposits "as soon as possible" after an insured bank fails. Historically, the FDIC pays insured deposits within a few days after a bank closes, usually the next business day. In most cases, the FDIC will provide each depositor with a new account at another insured bank. Or, if arrangements cannot be made with another institution, the FDIC will issue a check to each depositor.

Last Updated 05/09/2006 [e-mail]


http://www.fdic.gov/consumers/consumer/news/cnspr06/leadstory.html