Many people who had brokered CD deposits with the failed ANB Financial NA will be waiting several weeks for their insured funds.
ANB Financial's main source of funding was $1.6 billion in brokered CD deposits, which it gathered by paying some of the highest rates in the country.
A relative of mine who had a CD deposit with ANB Financial through his brokerage account with
was informed this week that it would take three to four weeks for his money to be received from the Federal Deposit Insurance Corporation.
Just to see if this was an unusually long timeframe, I called David Barr, the FDIC's Assistant Director for Public Affairs. Mr. Barr told me that 180 different brokers had deposits with ANB Financial. After the institution was closed down late on Friday, May 9, the FDIC mailed packages to all the brokers on Monday, May 12, instructing them to complete paperwork listing their customers and their deposit amounts.
Since brokered CDs are registered with a bank or S&L only in the name of the broker, the FDIC needs the brokers to provide detailed customer account information when an institution fails. The FDIC then cross-checks the information with other broker lists and the bank's retail deposits to make sure that a customer's total deposits with the failed institution don't exceed insurance limits.
As of the close of business on Wednesday May 21, the FDIC had paid out $425 million to brokers, leaving roughly $1.2 billion to be paid out.
"Clients really need to work with their brokers" to make sure they get their money back as quickly as possible, said Mr. Barr.
With Schwab customers waiting up to a month for their money, it's important to consider a few things:
. For starters, you can get some excellent CD rates through your broker, who can quickly check banks all over the country and open one or more CD accounts for you, all within your brokerage account. You can also check rates in your area or all over the country, at
. Depending on how your brokerage account is registered, you may have more than $100,000 in FDIC insurance coverage.
for a brief explanation of FDIC coverage, or for the full explanation, see the FDIC's guide to
The health of the bank or S&L
. When the broker suggests some institutions with attractive rates, you can check
for an objective, conservative financial strength rating of the bank or S&L. Even if your entire deposit is insured by the FDIC, you could be waiting several weeks for your money if an institution fails, and interest will not accrue while you wait.
Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.