In case you haven’t heard, online savings bank NetBank was shut down by the Office of Thrift Supervision this past Friday. Apparently, weak underwriting standards on subprime mortgages played a central role in their failure, and in August they were delisted from the Nasdaq Stock Market.
As of right now, visitors to NetBank’s website are greeted by the following:
In short, ING Direct is taking over the deposit accounts, whereas EverBank is taking over the mortgage assets. Customers with under $100k in checking, savings, or other deposit accounts are protected by FDIC insurance ($250k for retirement accounts) and will have full access to their money.
Customers with deposits in excess of the FDIC insurance limits will become creditors of NetBank and will have to await bankruptcy proceedings to see how much they’ll be able to recover. This is a great reminder of why it’s important to heed the FDIC insurance limits. Spread your money around to multiple banks if you must, because you never know when a bank might fail.