E*tradeSo, it's finally come to this. The financial community is chatting seriously about the prospect of a run on a bank. E*trade Bank, specifically. From the standpoint of one who has an account with them (a modest sum, and it's not where my paycheck or regular savings goes) what are the ramifications for an insured bank failure or the bankruptcy of the bank holding company?

I will probably close my account (which is the fashionable thing to do), but strictly speaking, what is the timeline of events between a bank failure and the return of my insured funds via the FDIC? Does the FDIC encourage other institutions to assume the deposits? Do I just get a check? How long does it take? Do modern banks and thrifts have provisions to restrict or delay deposits in order to forestall a run? (I remember when I was a mere lad that my first passbook savings account had a notice on the deposit slips that the savings bank had a right to delay paying withdrawal requests for up to 90 days.)

On the topic of E*trade bank specifically, they went through a rapid ramp-up during which they paid among the highest rates of interest in the country, subsidized almost all of their routine fees, and had their customer service people pick up the phones promptly. Then, presumably when they reached some level of critical mass, all of the coddling ceased (a sort of bait and switch, I suppose). And hence, despite the convenient interface, we decided several months ago to move almost all of our money elsewhere.



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