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Originally Posted by Marvelous Marv
A hypothetical question...
Let's say you happen to have over the federally insured amount in an account at your bank. I assume that anything over $100k is not insured by the FDIC.
Let's further say that you have a note with an outstanding balance to the same bank. If the bank were to go belly-up, could the money you had on deposit be credited to your note, or would you get screwed twice? (In other words, would you be told, "Your money is gone, but someone has bought your note, so you're on the hook for the entire amount.")
It's likely that this is a stupid question, but I just couldn't quit wondering about it.
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If a bank were to become insolvent, your insured funds would be paid. After all of the bank's assets were liquidated, FDIC would attempt to pay as much as possible of the remaining uninsured funds; this however, is not guaranteed.
Your deposit accounts and your notes would be treated as seperate entities; you would still be responsible for paying your note.
In all honesty, a good banker worth their salt should be able to structure accounts worth millions of dollars to ensure everything is FDIC insured. Working in Charlotte, I have many clients who at first glance may seem like they would not be able to secure FDIC insurance on all of their assets, but we find ways to accomodate all of their money.