What if your bank fails? Is your money safe?

Q: How can I make sure my money is safe?

A: All deposits accounts worth $100,000 and less are automatically insured by the FDIC. Many retirement accounts, such as IRAs and 401(k)s, are insured to $250,000 per person. But since it's a person's aggregate deposits, and their not individual accounts, that are insured, any amounts over $100,000 deposited at any one bank are not covered.

While keeping more than the limit at any bank means taking a chance, the risks can be bigger with smaller companies, provided they're heavily exposed to mortgage and other debt during the current downturn.

"Consumers may want to pick an institution that has a substantial brand," Weber said. "But you don't necessarily want to run to a big bank because you think a smaller bank is going to fail."

Q: How much money does the FDIC have?

A: The FDIC has nearly $53 billion in insurance funds. Beyond that figure, Bovenzi said the FDIC would have go to other banks to raise more money, adding that in such a case, consumers could expect to see some of among passed on to them in the form of higher fees.

The current estimated loss to the FDIC resulting from IndyMac's failure is between $4 billion and $8 billion.

Q: How big does FDIC like to keep its deposit insurance fund?

A: The FDIC board of directors has set a Designated Reserve Ratio of 1.25 percent. That means their "target" balance for the fund is 1.25 percent of estimated insured deposits. As of March 31, the fund was $52.843 billion and insured deposits were $4.431 trillion, which resulted in a reserve ratio of 1.19 percent, 0.06 percentage point below the Board's target. If the fund falls below 1.15 percent of estimated insured deposits, the FDIC is required by law to adopt a restoration plan that will bring the reserve ratio back to 1.15 percent within five years.

Q: Do banks have to pay into the deposit insurance fund?

A: Yes. The total amount depends upon the assessment rate assigned to the institution and the size of their assessment base — which is roughly equal to an institution's total domestic deposits. Assessment rates are assigned to institutions based upon the risk they pose to the fund, and currently range from 0.05 percent to 0.43 percent, with the vast majority if institutions — almost 94 percent — paying between 0.05 percent and 0.07 percent.

Q: Does the government's decision to aide Fannie Mae and Freddie Mac help the nation's banks?

A: Tony Plath, an associate professor of finance at the University of North Carolina at Charlotte, says yes. "As mortgage money becomes harder to get and real estate prices go down even more, the solvency of many banks is called into question," Plath said. "The Fed is moving to protect the solvency of the banking industry by maintaining integrity."

Even so, the exact outcome is left to be seen, Weber said.

"One must have a bit of faith in the FDIC that they are going to be able to take care of whomever fails," she said.

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