Article 155 Financial Tune-Up - 1c. Is Your Bank Healthy?

Article 155 Financial Tune-Up - 1c. Is Your Bank Healthy? Bank account news on failures from the Federal Deposit Insurance Corporation had you worried? Don't be concerned too much anyway because even if your bank is on the list of those in trouble, it does not mean it is going to fail. In fact. FDIC itself said that only 13% of those on the list end up failing.

The trouble is FDIC does not let the public know the list of the troubled banks. So looking for the name of your bank in that list is not going to help you find whether your bank is healthy or not. You have to find other ways to check the financial health of the institution that is holding your bank accounts.

Regarding Problem Banks, this what the Federal Deposit Insurance Corporation has to say: "The FDIC creates reports on problem or troubled banks in the aggregate. We do not make the details of this list publicly available. The FDIC does not, at any time, comment on open financial institutions."

So for anyone who is thinking of opening a bank account, how can he be sure the bank is healthy enough to keep his deposits safe? He might as well just put it under his mattress if the bank will fail. Despair not though for there are ways to determine the financial health of the bank, whether it is online bank accounts or not.

Hopefully, the worst is over or failures of the bank have reached the peak. That is what Sheila C. Bair, the F.D.I.C. chairwoman, said and added that they have the cash to cover any loss although they may have to cover $20 billion in more failure by 2013. The FDIC has sufficient resources and won't even need to use their emergency credit line.

Anyway, after the FDIC had been on the red, they moved fast for replenishment by enforcing a special assessment on the banks. This gave them an extra $5.6 billion in cash in addition to the usual payments the banks had to make to the FDIC. The banks were also ordered to pay in advance the quarterly assessments that was supposed to be due the following year.

Little by little they will add this to the funds during the next 13 quarters. This explains why the current balance is still negative. This will give the FDIC time to determine what more they can do. It is either ask the banks to chip in more dough or make them prepay their quarterly payments or increase the premium. There are no plans to do any of the three.

So you see there is no problem about the chance of losing the money in the bank even though it is on the list of problem banks. When a bank fails, the FDIC will get another bank to take over the operation of the failed bank. So as long as the account is only at $250,000 or less the cash is safe.

Here are the other ways to check if the bank is healthy or not:

1. BauerFinancial’s Bank Star Rating ranks the banks and recommends all the banks that are rated four to five stars. The readers will see the ratings for free but theyhave to pay to see the details. They have been ranking the banks since 1983 and the ratings are independent. No bank has ever paid them for the ranking.

2. Bankrate.com’s Safe and Sound ratings ranks credit unions and banks quarterly employing the one-star to five-star rating system. One is the lowest rating while five is the highest. A bank with a three-star rating has satisfactory performance. The rating is based on asset quality, capital adequacy, level of cash available and profitability.

3. BankTracker is where you can check up the bank's asset ratio. Both MSNBC and the American University's Investigative Reporting Workshop think the asset ratio is a strong sign of persistent stress in the bank as it shows how the bank can withstand loan losses.

4. F.D.I.C. and Government Resources is where to go to find if a bank is insured and how it is performing. If the bank has failed and is now closed, the Federal Reserve site is where to find the bank it has sent enforcements to.

There you have the resources where to see if the bank is healthy or not. All these resources will make anyone contemplating to open a bank account, online or not, to feel safe and secure. For whether it is online banks or not, there is a way to check its financial health. Tweet Google +1 Sign up for our monthly ezine “Save Money Today Newsletter” at the top of this page. This is a free newsletter that will give you an update on http://www.debtchallenges.com/

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