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Columns: Dr. Don
Don Taylor, Ph.D., CFA, CFP   Expert: Don Taylor, Ph.D., CFA, CFP
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FDIC protects saver's deposits
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Bank failure costs customer great rate

Dear Dr. Don,
As you might know, ING recently took over Net Bank. I had a 12-month certificate of deposit, or CD, with Net Bank at a 5.5 percent annual percentage yield that was scheduled to mature in February. With no prior notice, ING closed my Net Bank CD last week, claiming there was "a prior security issue."

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Can ING just cut me off with no notification, even if I have two to three months left on that CD as a Net Bank customer and I cannot replace that rate in the current CD interest rate environment? Or, are they obligated to continue the banking relationship until the CD matures before kicking me out?
-- Bounced Bronson

Dear Bounced,
I provided an edited version of your message to ING's media relations department and asked them to weigh in on your situation. In addition, I asked a few questions of my own.

Here are the central points of ING's reply:
ING DIRECT acquired NetBank deposits from the FDIC in their role as receiver for the failed NetBank.
ING DIRECT is not bound by the failed institution's account terms related to the accounts that it acquired.
ING DIRECT is not compelled to open or maintain accounts for consumers who do not meet its requirements.

As part of its role in insuring bank deposits, the FDIC often seeks to find a financial institution willing to acquire the deposits of a failed bank, like ING did with Net Bank.

The acquiring bank needs to make business decisions concerning the deposit base it is acquiring. Those business decisions include whether to honor the terms of the failed institution's deposit agreements. The FDIC provides information about failed banks on its Web site. You can learn more about NetBank by visiting that site.

Take the cash and move on, grateful that the FDIC system worked in protecting your deposits. You can shop for new CDs on Bankrate using the Compare Rates feature.

Bankrate.com's corrections policy -- Posted: Dec. 11, 2007
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