Indymac CD Holders Can Cash Out or Keep CDs

I just spoke to a woman from the FDIC regarding Indymac CDs and she told me that holders have several options. They can...

I just spoke to a woman from the FDIC regarding Indymac CDs and she told me that holders have several options.  They will have six months to cash out the CDs with no penalty or they can keep them at the bank.  If they keep them at the bank the FDIC will continue to pay the contract interest rate.  But, if another bank comes in and buys Indymac, as I'm sure the FDIC hopes, the bank has the right to adjust the rate paid on the inherited CDs.  In that case, the new bank will send a notice to all remaining CD holders.  She said it wasn't clear if CD holders would have an opportunity to cash out their CD penalty free at that point.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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Comments

  • JRodgers

    July 16, 2008

    Thank you for posting this, Sam. I think it should be of strong interest to many users of this site.

  • tightwad

    July 16, 2008

    Why cash out? With the Feds taking control it is now probably the safest bank in the country.

    If a new bank takes control and changes terms, You should be able to cash out than.

    Although people over the FDIC limits may lose money, this may be a good thing in the long run because it will educate people to the things blogs like this have been trying to warn people about; staying under the limit...Plus, if enough people lose money it may be the nudge needed to finally increase the amount of deposit insurance per person. 100K is outdated and too low!

  • Sam Cass

    July 17, 2008

    @tightwad: The only reason to cash out is if you think Indymac's deposit assets will be purchased and the rate reset significantly lower. The FDIC told me this could happen.

  • Joe Smith

    July 21, 2008

    Thanks for providing this information.

  • Suzi

    July 23, 2008

    If a new bank takes over, wouldn't it be good business to keep rates as is, thereby keeping customers happy and continual? Besides, try getting through to the bank by phone to cash or roll over, not possible.

  • Sam Cass

    July 23, 2008

    "If a new bank takes over, wouldn't it be good business to keep rates as is, thereby keeping customers happy and continual?"

    Yes, that would make sense. But it doesn't seem like the acquiring bank would be required to keep rates as is. That's just what I wanted to people to know.

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