In an effort to protect their money from possible bank closures due to the financial crisis, some Chinese Americans are opening several accounts and distributing their money into different banks. Federal Deposit Insurance Corporation (FDIC) officials indicate that some Chinese banks in New York have a more lax standard for customers to open banks accounts, even for immigrants who do not have a legal immigration status. FDIC ordinarily would not review these banks’ customer information and bank accounts – Chinese banks operate in a lawful manner. Therefore, should an FDIC financial institution collapse, it would compensate the customers.
According to Martin Becker of FDIC, as long as the bank account is in a FDIC approved bank, customers are automatically insured, regardless of their immigration status or whether they reside in the United States. Once a bank closes down, FDIC provides compensation immediately. The insurance amounts vary according to the type of bank account. Last year, in response to the financial crisis, Congress increased the cap for compensation from $100,000 to $250,000, an increase that will only last until December 31, 2009. Starting January 1, 2010, the amount will go back to $100,000. At this point, Congress has not showed any indication that it will prolong the increase; however, retirement accounts have had an insurance compensation cap of $250,000 since 2006.
Customers concerned with the speed that they will be able to receive the compensation are assured by FDIC officials that they will be reimbursed quickly, usually after just a few business days. For example, when IndyMac Bank collapsed [in Pasadena, California in July 2008], customers were able to get their compensation from the ATMs after one weekend. FDIC will automatically transfer money into a victim’s other bank accounts or send a check directly.
FDIC publishes manuals in Chinese and other Asian languages to help immigrants understand more about FDIC and about their rights. Chinese banks officials agree that it is a good strategy to spread savings into different bank accounts, but hope Chinese customers can regain their confidence in the banking industry and FDIC.
