Wall Street worries at the bank

March 17, 2008 3:27:40 PM PDT
Wall Street worries grow in response to the Bear Stearns buyout.A shiver went down Wall Street's spine today after the nation's fifth largest bank went out of business in a ripple effect from the credit crisis.

Bear Stearns was sold for $2 per share to JP Morgan today; a huge drop from its $84 per share last Wednesday.

The Bear buyout impacts no one more so than some major shareholders right here in the Delaware Valley and while this is not a time for consumers to panic, this is just further proof you do need to take steps to ensure your bank accounts are as well-protected as possible.

"Bear Stearns employees and their shareholders are taking a real bath here," Professor William Dunkelberg of Temple University said.

Bear Stearns' largest shareholder is right here in the tri-state area. Wilmington Trust holds 27.3 million shares for its clients, although it tells Action News, it can't comment on how its clients will be affected.

"Every year there are some banks that fail; they're usually very small and we don't really notice them. In this case, the liquidity problem is coming from big banks on Wall Street and, of course, now we notice," Professor Dunkelberg said.

Some analysts predict Bear's demise is just the beginning of a long series of bank sales and even bank failures.

The federal agency that insures U.S. bank deposits is projecting losses from bank failures this year and next to top the 10-year average.

"So it's important for people to make sure they're covered. I think it's critical," Professor Dunkelberg said.

The Federal Deposit Insurance Corporation does not insure money invested in stocks, bonds, mutual funds, or annuities.

However, it does insure deposits in checking, NOW, and savings accounts, as well as money market accounts and CDs

"That means any deposits you have on hand at the bank will be covered by the FDIC within a few days if a bank would go under," Bob Yoder of Morgan Stanley said.

So look for the FDIC sign. All insured banks will display it.

Also, make sure your accounts are not over the FDIC insurance limit. If they are, move the money that is over the limit into another FDIC insured bank account.

The FDIC insures up to 100,000 for individual accounts. Up to 200,000 dollars for joint accounts.

For certain retirement accounts, it insures up to 250,000 dollars.

You should also check out the financial strength of your bank.

Here are some helpful links:

Federal Deposit Insurance Corporation

Bauer Financial

Institutional Risk Analytics

Financial Information Systems

Bank Rate

Certificate of Deposit Account Registry Service