What to do now: How safe is my bank?

Bad news has been coming out of big banks. There were 117 problem banks across the U.S. at the end of June, up from 90 three months earlier, according to the Federal Deposit Insurance Corp. Washington Mutual, which holds more deposits than any other bank in Clark County, is apparently looking for a buyer. Financially solid Vancouver-based banks have laid off workers, stopped issuing mortgages and scaled back growth. It’s nerve wracking, but for most bank customers it’s not as bad as it sounds. Here’s what you need to know to make sure your money is safe.

-- CASH DEPOSITS: Certificates of deposit, as well as savings, checking and trust accounts are insured for up to $100,000, said LaJuan Williams-Dickerson, spokeswoman for the FDIC, which backs these accounts with the full faith and credit of the U.S. government.

-- MORE INSURANCE: “Because it’s $100,000 per account and per depositor, if a husband and wife have a joint account it’s insured for $200,000. If the wife has a separate account, that’s another $100,000,” Williams-Dickerson said. “If they have four daughters and they set up a trust, that’s another $400,000 insurance - $100,000 for each on that account.”

-- RETIREMENT CASH: Cash deposits in individual retirement accounts at banks are FDIC insured for up to $250,000. The FDIC does not insure against retirement account losses in the stock market.

-- MONEY MARKET: Money market deposit accounts are insured for up to $100,000 by the FDIC. Money market mutual funds are not. After one of the world’s largest money market mutual funds lost value, the U.S. Treasury Department announced on Friday that it will guarantee the U.S. mutual funds for the next year. After that, the guarantee is gone.

-- THE MONEY IS STILL THERE: Customers will still have access to FDIC-insured money, with no freeze and no delays, Williams-Dickerson said. ATM and debit cards will still work, and customers can still write checks.

-- LONG LINES: After a bank failure, expect big crowds at local branches. “Panic sets in, and people want a story about what is going to happen,” Williams-Dickerson said. FDIC-insured money is safe, no matter how many people line up at the bank, she said.

-- UNINSURED MONEY: If you have deposits that were not FDIC insured, you could lose money and you may have to wait to receive what cash you are due. In a savings account with $120,000, $100,000 is safe – but the additional $20,000 might be frozen for months.

-- POSSIBLE LOSSES: Owners of uninsured deposits will get a “certificate of receivership.” These entitle their holder to a share in the proceeds from the sale of the bank’s assets. Customers of IndyMac Bancorp, the Pasadena, Calif.-based bank that failed in July, could get as little as 50 cents back for every uninsured dollar in deposits, and might have to wait months to see that money.

-- NO EASY ANSWER: “The FDIC does not make public information about problem banks,” and banks are not allowed to release their FDIC rating, Williams-Dickerson said. There is no clearinghouse with up-to-date public bank ratings.

-- TEXAS RATIO: A formula devised by bank analyst Gerard Cassidy of RBC Capital Markets has been gaining traction as one way to assess banks, according to business news site MarketWatch.com. No banks with a big Clark County presence rank as severely troubled on the Texas Ratio scale. See the “Texas Ratio” box at right for how the area’s top banks fare on Cassidy’s scale.

-- CHECK YOUR DEPOSITS: If you have more than $100,000 in the bank, make sure that money is all insured. Gather bank statements and go to the Electronic Deposit Insurance Estimator at www.fdic.gov/edie, or visit your local branch.

-- MOVE MONEY: Find out which kind of money market account you have - mutual fund or deposit. Leave the deposit accounts alone. The mutual funds are safe for the next year because of the U.S. Treasury guarantee, and even without a government guarantee money market funds are very safe, said Seth Gitter, assistant professor of economics at Towson University in Maryland.

-- DON’T HOARD CASH: “If your bank goes under, the federal government will refund your money,” Gitter wrote on his Blog of Diminishing Reserves. “What if all the banks go under? Then the money under your mattress is probably not worth much either.”

Courtney Sherwood covers business and the economy for The Columbian. Reach her at 360-735-4553 or courtney.sherwood@columbian.com.