Saturday, November 03, 2007
Imagine my shock then when I tried to log into NetBank about a month ago and was abruptly greeted by a notice that NetBank had been shut down by OTS. (Alright, so the title is misleading. It's not actually the FDIC that shuts down banks. They only provide the insurance. But then again, nobody knows who OTS is.) ING Direct was taking over the FDIC covered deposits. My money was suddenly frozen. I felt like a nasty third world dictator against whom the US decided to take tough action. Weird.
All turned out well. Of course, all of my money was covered under the $100,000 limit. I was liquid again in a few days. The freeze happened smack in the middle of my house, car, power, and credit card bills being due. All of them were paid without a hitch. It's really sort of remarkable. It's easy to think of government regulation being more trouble than it's worth. This was certainly a case where I was thankful for government regulation and the oversight it provided.
Apparently, I can now say that I'm a victim of the subprime lending crisis. NetBank's undoing was the result of "payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies." Sure, it's a pain to find and set up a bank with checking services as good as NetBank's, but I sure am thankful I got back my lousy money.