The FDIC deposit insurance limit is $250,000 per depositor.

Let's say I have $350,000 in my savings account and a loan with an outstanding principal of $200,000. The accounts are with the same bank.

If the bank folds, and depositors need to seek relief from the FDIC, what is my total balance afterward? Do I lose the excess $100,000 in my savings account, and I still owe $200,000 on the loan? Or is the excess deducted from the loan, so I end up with $250,000 in savings and $100,000 left on the loan?

  • 1
    Has a situation ever arisen where a borrower needed to seek relief from the FDIC. IIRC in ~2009 failed banks were simply chopped up (breaking off the bad debts) then sold leaving depositors alone. I'm actually not aware of any depositor who lost money regardless of deposit amount due to bank failure. However, my understanding is that your debt would not be changed if a bank failed and you had part of your deposits wiped out. – quid Apr 18 '17 at 20:11
  • Past performance is no guarantee of future results. But that is reassuring, thank you. – John Wu Apr 18 '17 at 20:14
  • There are ways to exceed the $250K. for one Open a joint account: A, B and A+B takes you to $750K; or just move the excess to a different bank. – mhoran_psprep Apr 18 '17 at 20:24
  • @quid I do not know how much was ultimately recovered, but if you had deposits in excess of insurance in IndyMac, you would have waited longer to get the excess than the insured funds, "You will eventually recover some of your uninsured funds." fdic.gov/bank/individual/failed/indymac_q_and_a.html#Uninsured – Shannon Severance Apr 19 '17 at 1:02
  • fdic.gov/consumers/banking/facts/borrowers.html. Not sure on the mechanics of “set off” that is mentioned. – Shannon Severance Apr 19 '17 at 1:10

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