Washington Mutual was bought by JP Morgan Chase. Wachovia’s banking operation was just bought by Citigroup Inc. What happens if your checking account or mortgage is at one of these banks?
The short answer: Nothing.
This may feel scary, but do not panic. All FDIC-insured banks insure individual accounts up to $100,000. If you have less than $100,000 in your bank then you’re okay. If you have more than $100,000 and your bank was bought you will still be okay. Check the FDIC for information about joint accounts and retirement accounts. The FDIC is giving people a grace period of 6 months to restructure their accounts. This means that if you have over $100,000 because of your bank being bought, you have six months to fix it.
There should be no service interruption with either bank. Both JP Morgan Chase and Citigroup understand the importance of a seamless transition. Your direct deposits will arrive, your checks will clear, and your bill payments will go through. The branches are not going to disappear overnight. You can still access your safe deposit box and anything else you need through your branch or your bank’s website. However, after the consolidation is finished some branches may disappear. Eventually there will be some changes, but they shouldn’t be significant.
According to the FDIC website, “JPMorgan Chase accepted Washington Mutual’s interest bearing accounts including CD’s at the contract rate; therefore, they are not waiving early withdrawal penalties.” This means your rates will remain the same. Most likely, the same will be true with Wachovia, although you should check the FDIC for updates.
What if your mortgage is with a failed bank? The first thing to understand is that nothing is going to change until the deal completely goes through. You may eventually have to send your mortgage checks somewhere else, but you are still going to have to pay your mortgage.
However, if you have a loan in process you should contact your loan officer immediately.
The only people that have lost are people who owned stock. Take Wachovia, their stock was $50 last year, and today it is at $1.50. That’s almost a total loss.
Things seem scary right now, but with Wachovia and WaMu gone we are probably getting close to the end of the bank failures.