by Betty Blake

Created on: October 30, 2009   Last Updated: November 09, 2009

The results are astounding. The financial world is still trying to keep afloat due to the closure of approximately one hundred banks nationwide. Everyone was very shocked and dismayed when the 100 year old Lehman Brothers failed. Last year alone, about twenty-five banks have failed or closed their doors. Undoubtedly, the economic conditions have caused havoc on these institutions. Many economists said the reason for this downturn was because several of these banks went into other areas like the housing market. Thus, when the housing market "bubble" exploded, it produced a domino effect. Moreover, when the Dow Jones constantly displayed a daily plummeting of stocks, it certainly did not help.

When customers observed that type of climate, panic and confusion stepped in. During that stressful and challenging period, one can feel rather out of control. Everyone can vividly recall the long lines that stretched around the perimeter of the failed Indy Bank on the West Coast last year. Statistics revealed that a recorded number of the population was withdrawing their money and placing it in safety boxes at home. Many hardware stores like Lowes and Home Depot saw an increase in the sale of these boxes. It was evident that many lost confidence in the banking system. Coupled with that, many businesses went and some are still grappling to remain in business.

Most times, when a bank closes its doors, it occurs on a Friday, and then reopens on a Monday. The Federal Depository Insurance Comany (FDIC), an independent agency of the Federal Government becomes the Receiver. A Notice of closure is generally placed on the bank door in the form of a news release. With this agency stepping in, it tries to recoup and sell as much assets of the failing bank. At the same time, they have to overseer offers from other banks who might be interested in purchasing the failed bank. The bank that purchases the failing one will also take over all the entire history. Sometimes, it will retain the current staff. An example of this situation is Bears Stearns. They made a transfer of all brokeage accounts to JP Morgan.

Although the bank is physically closed, customers can access their money through the writing of checks, ATMs, and debit cards, if the amount falls within the FDIC limit. On October 3, 2008, Congress increased FDIC Insurance amount from $100,000 to $250,000. This change has been extended to December 31, 2013. As a result, there is no need to panic and feel out of control as your

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