Learning the hard way about FDIC insurance

Carolyn Said, Chronicle Staff Writer
Sunday, October 12, 2008
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(10-11) 16:12 PDT -- Fran Quittel vividly recalls the moment she heard IndyMac Bank had failed.

The technical recruiter was driving back to her Emeryville home office, thinking about how her postponed 2007 corporate tax return was almost done and she could now make her planned contribution to her retirement account.

The news came on the radio that IndyMac had gone belly-up. It was late afternoon on Friday, July 11.

Quittel had both a business checking and business savings accounts at the bank, but because each held less than the $100,000 limit guaranteed by the Federal Deposit Insurance Corp., she figured she would be OK. (The limit has since been raised to $250,000 until the end of 2009, as part of the bailout bill passed by Congress this month.)

But because the two accounts together totaled more than $100,000 and shared a single taxpayer ID, she did lose money - an amount she declines to specify, other than saying it was more than $10,000. She lost half of everything she had over the $100,000 limit. It was money she had been holding in abeyance for her retirement account, plus the funds for a payroll check she had issued to an employee who had not yet cashed it.

"I was in a stupor for the first week" after finding out the money had vanished, she said. "I thought to myself, 'How could this happen? I was trying to be so careful.' "

more:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/12/BUS01396T5.DTL

And the $250,000 is only temporary. They need to make this permanent.