Regulators Close Washington Bank

Free Financial Strength Ratings for Banks and Thrifts

Although it was another costly day for the FDIC, Westsound's failure created no losses for depositors.

Still, the likelihood of losses to depositors with uninsured deposits is higher when the FDIC is unable to find a buyer for a failed institution. The agency has been unable to line up buyers for five failed banks since March 20.

The failure of Westsound also highlights the inconvenience faced by customers with brokered deposits in a failed bank. These depositors usually wait several weeks for their money, since the brokers must provide information to the FDIC and then receive payouts from the agency. The depositors then need to shop for new parking places for the cash, probably at much lower rates than the ones they have locked in.

The FDIC has temporarily increased the basic individual deposit insurance limit to $250,000 on non-retirement balances and has waived insurance limits on non-interest-bearing checking accounts, but the waiver is set to expire at the end of the year, with most other balances reverting to their usual $100,000 limit.

Another thing to consider is that even if your personal deposits are under FDIC insurance limits, you or someone you know are probably associated with a business, organization or government entity (such as a school district) with large deposits of somebody else's money in a local bank. In this environment, it is a very good idea to look into the health of your bank.

TheStreet.com Ratings issues independent and very conservative financial strength ratings on each of the nation's 8,500 banks and savings and loans. They are available at no charge on the Banks & Thrifts Screener. In addition, the Financial Strength Ratings for 4,000 life, health, annuity, and property/casualty insurers are available on the Insurers & HMOs Screener.

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