Should we be worried about bank failures like IndyMac? Well that really depends on who you are. Obviously, if you are a shareholder of a bankrupt bank you will most likely lose your investment. Moreover, it is generally not good for the economy as a whole to have too many bank failures.

However, as an average bank customer, you don’t have to worry. Why, you ask? The answer is simple: deposit insurance. In the United States the Federal Deposit Insurance Corporation (FDIC) insures all accounts up to $100,000. That means that even if a bank goes under, your money is safe up to that limit.

Better yet, you don’t have to do anything to get insured. All banks in the United States are required to be part of the FDIC insurance scheme. In fact, the whole thing works so well that even if you were a customer of a bank facing failure you would still have access to your money within 24 hours.

This is a vast improvement of the situation that existed before the FDIC was created in 1933. Before, that time if you were the customer of bank that failed you lost everything. That is why you used to get runs on the bank.

Now of course you don’t have to worry about losing everything. However, if you have more than $100,000 with one institution you do face some risk because amounts over this amount are not insured. The solution of course is (at least from a risk point of view) is to spread your accounts around at a few institutions should you be fortunate enough to have more than $100,000 to deposit at the bank.