This week's news hits very close to home and is a very important reminder about just how important a role insurance companies play in protecting the retirement savings of our clients. Columbian Bank, a local Topeka bank, and the bank where Advisors Excel banked until about 2 months ago, was closed on Friday by the Kansas Bank Commissioner. The FDIC was named receiver and on Saturday starting withdrawing money from accounts to get the balances below $100,000.
We still had about $135,000 in a bank account at Columbian as we waited for outstanding checks to clear. On Saturday, the FDIC made a withdrawal from our account of $35,000!!! Derek went down to Columbian on Monday to talk to a representative from the FDIC and he said our money was pretty much gone with little chance of receiving it back. $35,000 is a lot of money to lose, but we'll survive. The scene at the bank was one I hope nobody ever has to experience. Take a guess who the majority of people waiting to talk to FDIC employees were? Conservative retirees!!! People that had trusted the bank with their safe money were shocked, dismayed, confused, depressed, you name it. There were multiple stories of retirees that had $500,000 plus invested at the bank that is GONE FOREVER!!!
But it's going to get worse, check out these three paragraphs from the article in our local paper, the Topeka Capital- Journal:
The FDIC has been beefing up its staff of examiners to handle the anticipated spike in bank failures this year. The largest bank failure by far this year has been that of savings and loan IndyMac Bank, which was seized by regulators on July 11 with about $32 billion in assets and deposits of $19 billion.
FDIC chairwoman Sheila Bair, a native Kansan, said recently she expects turbulence in the banking industry to continue well into next year and more banks to appear on the agency's internal list of troubled institutions.
Of the 8,500 banks in the country, 90 were considered to be in trouble in the first quarter. The FDIC doesn't disclose the banks' names.