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#1049157 - 09/24/08 02:33 PM
FDIC Ins & loans
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Power Poster
Joined: Apr 2001
Posts: 4,828
Between the lines
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I had a lender ask me this, "If a customer has deposits and loans with the bank, and the deposits exceed FDIC coverage and the bank fails and the customer takes a loss, they may offset the loss against their loans?"
Interesting question, any takers???
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#1049734 - 09/24/08 08:18 PM
Re: FDIC Ins & loans
SMQ, CRCM
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100 Club
Joined: Feb 2007
Posts: 225
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I haven't run across anything like this in all the material I've read regarding FDIC coverage - but am also interested in knowing the answer to this one!
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#1050005 - 09/25/08 02:39 AM
Re: FDIC Ins & loans
ComplyWithMeToo
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Joined: Mar 2001
Posts: 828
USA
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Don't know if this may fully answer your question, but it would be my understanding that the loans would be taken over by another bank so there wouldn't be an offset. This was a Q&A I read in an online article.
Q. If my bank closes, what happens to my money in deposit accounts that exceeds the insured limits?
A. You become essentially a creditor of the failed bank. You will eventually recover some of your money, but the amount can range anywhere from 40 cents on the dollar up to a full 100. Recovery of the money could take months. At IndyMac, there are an estimated $541 million in deposits of the total $19 billion that exceed the insurance limits.
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#1050010 - 09/25/08 02:54 AM
Re: FDIC Ins & loans
Jan94
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Platinum Poster
Joined: Aug 2006
Posts: 879
Dallas, TX
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I don't see how that could work. I mean, loans and deposits are separate unless the bank is using the right to offset.
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#1050136 - 09/25/08 01:40 PM
Re: FDIC Ins & loans
Ray_
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Posts: 27,750
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The excessive deposits can be setoff against the loans owed the bank. So a customer with $140,000 on deposit, and a $40,000 loan, can have the loan setoff and the remaining $100,000 are insured deposits.
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#1050153 - 09/25/08 02:13 PM
Re: FDIC Ins & loans
Andy_Z
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Posts: 27,750
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Knew I'd find this. http://www.fdic.gov/regulations/laws/rules/4000-6100.htmlAnd from the brochure, "When a Bank Fails" Borrowers Either the FDIC sold your loan at closing or the FDIC has retained it temporarily. In either case, your obligation to pay has not changed. Within a few days after the closure, you will be notified by the FDIC, and by the purchaser, as to where to send future payments. In the case of a delinquent loan, the FDIC will “set off” the loan against the borrower’s deposits (if any) before paying deposit insurance. In the case of a non-delinquent loan, the depositor might elect to “set off” the loan against his/her deposits in order to receive full value for any uninsured funds (i.e., funds in excess of the $100,000 insurance limit).
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#1050196 - 09/25/08 02:43 PM
Re: FDIC Ins & loans
John Burnett
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Power Poster
Joined: Apr 2001
Posts: 4,828
Between the lines
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WOW, you guys are good, I bow to the gurus. Thanks.
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#1053464 - 09/30/08 01:14 PM
Re: FDIC Ins & loans
lucyc
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Joined: Jul 2007
Posts: 1,074
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#1055078 - 10/01/08 02:38 PM
Re: FDIC Ins & loans
lucyc
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Joined: Jul 2007
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#1056227 - 10/02/08 01:29 PM
Re: FDIC Ins & loans
lucyc
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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How big of a loan? See Andy's previous post regarding offsets.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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