NetBank Fails

NetBank, was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. My bank failed. Not something people think about on a regular basis, but it does happen.

Granted NetBank isn't just any bank. As Internet's oldest online only Bank (up until Friday at least), there is some inherent risk. However, NetBank had been around over 10 years and wasn't some fly by night operation. See Wikipedia's summary.

So this is what FDIC insurance is for. There is almost no immediate impact for customers with FDIC insured accounts under the maximum threshold. The existing website, checks, ATM cards, etc. are still functioning and they money is intact. However, money over the FDIC limit will probably only be recouped at 50%.

ING Direct purchased the existing NetBank accounts from the FDIC immediately and provides a clean transition. In the near future (~60 days) they will be working with account holders to transition into ING accounts and close the existing NetBank accounts. From what I can see on the website I'm not sure ING Direct offers checking accounts so I'm not sure how they will transition checking accounts.

As an early adopter of Internet banking (I was also a customer of the short-lived WingSpan Bank) I'm not sure this will scare me away, but I may be a little more selective in the future, and I'll certainly be conscious of the FDIC insurance levels.

Let this be a reminder to everyone. Banks do fail. Make sure you are covered.

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