What Happens During an Online Bank Failure?
With much of the bank failure panic behind us, one of the best lessons throughout the failures was that business typically continues as usual. In all the carnage, with brick and mortar banks like IndyMac and Washington Mutual (among others) failing, there wasn’t a single major online bank failure. For that, you’d have to go back to 2007 when NetBank went under in the fall/winter.
NetBank, at the time, was the largest failure in 14 years (soon eclipsed this year by many others) but those who were FDIC insured escaped unscathed. The bank was closed on a Friday and re-opened on a Monday, with ING Direct at the helm. For the customers who had under the FDIC limit of $100,000 (now $250,000), there was little change. For those with amounts above, they had to do a little extra work to recoup their funds.
In the end, an online bank failure is just like a regular bank failure - everything is fine by Monday.