Netbank goes under!

[reyx77]

I'm a long-time lurker and this is what finally made me take the plunge and register. Appears the accounts were just taken over by the FDIC and will be transferred to ING. I just put $40K in a 5.35% CD with Netbank and was so happy that I got in before the interest rates dropped!

Has anyone ever been through anything like this before?

On September 28, 2007, NetBank, Alpharetta, Georgia was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

The NetBank web site will be closed from 3:00 pm to 5:00 pm EST, on September 28th and will reopen in a read only mode. Normal online services will be restored in the early evening Sunday, September 30th.

The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a car loan, a business checking account, a commercial loan, a Social Security direct deposit, and other relationships with the institution. The FDIC has compiled the following information which should help answer many of your questions.

[sweeps]

Yeah just saw that! Link

[jeffrey]

FDIC Announcement:

The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today approved the assumption of the insured deposits of NetBank, Alpharetta, Georgia, by ING Bank, fsb, Wilmington, Delaware.

NetBank, with $2.5 billion in total assets and $2.3 billion in total deposits as of June 30, was closed today by the Office of Thrift Supervision, and the FDIC was named receiver.

The failed bank was an Internet bank and did not have any physical branches. Depositors of NetBank will automatically become depositors of ING Bank.

Over the weekend, customers can access their money by writing checks, or by using their debit or ATM cards. Checks drawn on the bank that did not clear before today will be honored up to the insured limit. Starting on the morning of Monday, October 1, customers will have full access to their insured deposits via the Internet and for the foreseeable future should continue to utilize NetBank's current Website to transact banking business.

ING Bank has agreed to assume $1.5 billion of the failed bank's insured non-brokered deposits for a one percent premium and will purchase $724 million of assets. NetBank had approximately $109 million in 1,500 deposit accounts that exceeded the federal deposit insurance limit. While these customers will have access to their insured deposits, they will become creditors of the receivership for the amount of their uninsured funds.

In addition to continued access to their insured deposits, depositors of NetBank with deposits in excess of the insurance limits will also receive an immediate payment of 50 percent of their uninsured balance from the FDIC as receiver.

NetBank also had approximately $744 million in brokered deposits that are not part of today's transaction. The FDIC will pay the brokers directly for the amount of their insured funds.

"When a bank fails, it touches almost every office and division in the corporation," said FDIC Chairman Sheila C. Bair. "As chairman, it makes me proud to see the hard work and dedication demonstrated by staff. Since we began insuring banks in 1934, not a single depositor has lost a penny of insured deposits. Customers of NetBank should have confidence and security knowing that they will have access to their insured funds in a timely and orderly manner."

Customers with questions about how deposit insurance works or who would like more information concerning the failure can visit NetBank's Website at www.netbank.com; the FDIC's Web site at https://www.fdic.gov\bank\individual...\NetBank.html; or call toll-free at 1-888-256-6932. While the toll-free number will be operational 24 hours a day, seven days a week, customers are encouraged to call before midnight, Eastern Daylight Time, if possible.

It is important to note that neither the FDIC as receiver nor ING Bank as the acquiring institution will e-mail customers of NetBank asking them to validate their deposits or to request personal, confidential information, such as account numbers, Social Security Number, driver's license number, etc. If customers receive e-mails asking for such personal information, they should consider them to be fraudulent in nature and should not respond.

The FDIC entered into a Loan Purchase Agreement with EverBank, Jacksonville, Florida, to purchase certain assets of NetBank. EverBank will purchase about $700 million of mortgages held by NetBank. The FDIC will retain the remaining $1.1 billion in assets for later disposition, including NetBank's leasing division, NetBank Business Finance which will continue operations. Loan customers should continue to make payments as usual.

The FDIC estimates the cost of this transaction to its Deposit Insurance Fund to be approximately $110 million. NetBank is the second FDIC-insured bank to fail this year and the first in Georgia since AmTrade International Bank, Atlanta, Georgia, was closed on September 30, 2002.

[sweeps]

You know, some people poo-poo FDIC insurance. Well, here you go. Banks can and do fail, is it worth the risk to go without?

[poundwise]

Of course, NetBank has been having trouble for some years now.

Wikipedia entry: NetBank

Summary: Beginning in 2005 and continuing into 2006, NetBank undertook some drastic measures in a desperate attempt to restructure and stay afloat. Back in the spring of 2007, NetBank had a deal in place with Everbank, to take over its core banking operation but the deal fell through. Then, today, the SEC closed NetBank and ING took over the deposit accounts.

[reyx77]

Good news. Netbank's CD interest rates will be honored


8. Will the interest rate change on my account(s)?

CDs will stay locked in at their opening rate. Rates on savings and money markets (including IRAs) and checking accounts will convert to the current rate ING DIRECT offers on its equivalent accounts. You can view current rates by visiting ingdirect.com.

[asmom]

This is too bad. I've been with NetBank since 2001 and I have been very pleased with them. I have had absolutely NO complaints in addition to absolutely NO fees, much better than the experiences I've had with the B&M banks. I hate to see them fail.

[Scanner]

This country has had 3 banking failures in it's history - it can happen again. (as well as a currency failure).

It is interesting to follow - I have noticed a proliferation of internet banks, rather than bigger banks buying out smaller ones and creating mergers. I would guess that this leads to more chances of failure, rather than just being swallowed up.

It's interesting when an FDIC insured account fails and a money market, which isn't guaranteed, doesn't.

[humandraydel]

It's interesting when an FDIC insured account fails and a money market, which isn't guaranteed, doesn't.

Well, a bank can use its FDIC insured accounts to fund subprime mortgages and other moderately risky assets. However, by law a money market fund must invest in securities with very little risk, such as treasuries. Of course, there are a few money market funds that have invested in some questionable assets, but they aren't supposed to.

[BTC]

I've had my checking with Netbank for about 3 years now. I've never had any problems with them. It was interesting to see that ING Direct is taking over when I logged in today. Other than their one star rating on Bankrate, which I really never gave much weight, I had no idea that Netbank was having problems. I hope t his doesn't result in any issues for me. I don't really know much about ING Direct's checking. It seemed to have some quirks when I looked into it some time ago.

[poundwise]

I've had my checking with Netbank for about 3 years now. I've never had any problems with them. It was interesting to see that ING Direct is taking over when I logged in today. Other than their one star rating on Bankrate, which I really never gave much weight, I had no idea that Netbank was having problems. I hope t his doesn't result in any issues for me. I don't really know much about ING Direct's checking. It seemed to have some quirks when I looked into it some time ago.

I don't know about quirks... but say good-bye to writing paper checks. (If you don't need them, then no worries.)

After my Electric Orange is opened, will I receive paper checks to write?
No. This is a completely paperless checking account – you'll be able to make payments online, use a debit card for purchases, and even receive your statement electronically. Please don't order paper checks from a third party provider - we won't accept them.

[BTC]

Yeah, the check writing thing appeared to be the biggest quirk. I do use paper checks, although I only average 2-3 per month.

[Ima saver]

Well, that is a shock!

[BTC]

It's only been a couple of days, but the thus far the transition has been seamless. We are supposed to receive more information within 60 days. I really hope that ING Direct will incorporate Netbank's paper check offering into their core business for the long term, but I'm not going to hold my breath.

[humandraydel]

I really hope that ING Direct will incorporate Netbank's paper check offering into their core business for the long term, but I'm not going to hold my breath.

In the way you are thinking, no, they won't. To be clear, you CAN send a paper check to someone - you just can't WRITE a paper check yourself. ING will print a paper check and mail it wherever you want. And hey, you don't even have to pay for a stamp!