Yesterday, I got a phone call from a friend saying that his bank, WaMu, was not allowing him to close his account. They would let him withdraw the money, but not close the account. Why?
Honestly, I didn’t have an answer. Technically, they are supposed to allow you to close your account. But when I hung up with him, I said “try again tomorrow,” since it was already almost time for the bank to close.
As it turns out, WaMu was in limbo yesterday afternoon. The FDIC seized the bank over night and pushed (parts of) the failing bank into the lap of JP Morgan Chase.
Bank Run
Now my friend is freaking out more than ever. He can’t go to the bank branch because they’re closed. He’s even tried threatening customer service, but because of last night’s events, their hands are tied.
As many people are probably interpreting it, that means he cannot get to his money and it’s gone. Fortunately for him, this is not the case. WaMu is (was) FDIC insured.
No More Woo Hoo
I also have a bank account with WaMu. Actually two. But I know that I have nothing to worry about. The bank (as insolvent as it is) is FDIC insured. This means that each bank account is insured up to the first $100,000.
Considering that I don’t have over $100,000 in either of my accounts, I will be fine. I expect a notice in the mail in a couple of weeks, saying “Here is your new policy information” with a shiney new JP Morgan Chase debit card. Perhaps I’ll even get some new checks.
Problem is: People in their twenties have never experienced a major bank failure like this. Our money (if we had any when we were kids) was never at risk, so growing up, we may not have thought to find out if our bank was FDIC insured. Who would’ve thought a failure of this calibur was on the horizon? Not I…
But for those of whom have over $100,000 in their WaMu account (or any other bank, for that matter), you may have something to worry about. Since the FDIC only insures up to $100,000, you will lose anything over that. Check out the FDIC page to find out exactly what the status of your account is, here.
Future Reference
Not every bank has failed. I doubt they all will. When this is market crisis is over however, I think it will affect a lot more people than those at WaMu. For more information about the FDIC and how to find out if your bank is covered, click here.
~K
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The title of this article was my idea. Sort of.
They probably won’t let your friend close the account because it requires people to service that request. They may not be able to afford the man power. Allowing withdrawls, however, is allowed provided that they can find a WaMu bank.
Funny thing is, all those commercials of WaMu doing things “differently” and making fun of how other banks operate is now catching up on them. I guess those old bankers in the commercials are all saying, “Who’s silly now?”
On a side note, your friend should be fine. As long as WaMu has his address or some contact info, the government should be able to send over a check of the remaining balance once everything is over with. The only foreseeable problem is the current cash flow issue.
Also, I hope your friend saved plenty of records. And it’s never too early to start shopping for a lawyer.