Note: On Oct. 3, 2008, Congress raised the FDIC
insurance amount to $250,000. This change will be
in effect until Dec. 31, 2009, unless it is renewed.
pays quickly if bank fails
I'm currently researching banks that offer a decent APY for both
CDs and savings/money market accounts. GMAC Bank seems to meet my
needs. Should I be concerned with the overall financial shape of
GMAC? I realize it is FDIC insured but I don't want to face any
future challenges accessing these funds. Thanks,
-- Mark Muddle
GMAC Bank is owned by GMAC Mortgage, which is
an indirect, wholly owned subsidiary of General Motors Acceptance
Corporation (GMAC), which is a wholly owned subsidiary of General
Motors. The financial press has considered the sale of GMAC a way
to shore up GM's finances but the impact of a GM bankruptcy filing
on GMAC Bank's FDIC-insured deposits is easy to handicap -- the
FDIC would back those deposits.
Beyond the reserves held by the
FDIC, a FDIC-insured deposit is backed by the full faith and credit
of the United States government, so an insured deposit isn't at
risk. In the event of a bank failure there could be a delay in accessing
your insured funds. Here's what the FDIC says about the potential
length of this delay in its publication, "Your
- How long does the FDIC take to pay insurance
on deposits after an insured bank fails?
Federal law requires the FDIC to
make payment as soon as possible. Historically, the FDIC pays insurance
within a few days after a bank closing either by establishing an
account at another insured bank or by providing a check. Deposits
purchased through a broker may take longer to be paid because the
FDIC may need to obtain the broker's records to determine insurance
Customers with uninsured deposits
receive the insured portion of their account as described above.
They will wait longer to receive payment for some or all of their
uninsured funds. The amount of uninsured funds they may receive,
if any, is based on the sale of the failed bank's assets. Depending
on the quality and value of these assets, it may take several years
to sell the assets. As assets are sold, uninsured depositors receive
periodic payment on their uninsured deposit claim.
You can use Bankrate's Safe &
Sound, or CAEL, ratings
to research the financial integrity of a bank, savings bank, savings
and loan, or credit union. GMAC Bank has a CAEL rating of 2G and
a Safe & Sound rating of four stars. The addition of the G rating
to the CAEL rating speaks to rapid growth in the bank's asset base.
The Safe & Sound ratings are also provided for financial institutions
when you search
rates, either nationally or in your local market. Visit Bankrate's
to those ratings.
Your insured deposit isn't at risk.
You have to weigh your concern about having immediate access to
your funds in the event of a bank failure against the relative attractiveness
of the yield offered and the probability that this financial institution
might fail. I don't see any reason to avoid having an insured deposit
with this bank, but I also don't see a compelling reason to choose
this bank over others with similar yields and bank safety ratings.