Complain about a product or service

FDIC Closes NetBank, ING Assumes Deposits

Competition, mortgage slowdown, delinquent loans blamed

September 29, 2007

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 Friday, Sept. 28, will be honored up to the FDIC insured limit.

Starting on 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.

"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," said FDIC Chairman Sheila C. Bair.

Customers with questions about how deposit insurance works or who would like more information concerning the failure can visit NetBank's Website, the FDIC's Web site or call toll-free at 1-888-256-6932.

Scam alert

The FDIC stressed that all of NetBank's deposit records have been transferred to ING Bank.

Neither the FDIC nor ING bank will email NetBank customers 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 assume the messages are fraudulent and should not respond.

Web-based

NetBank, which was a "pure" Internet bank, had no physical branches. It's the first U.S. savings and loan to fail in three years.

NetBank was founded in 1996 and went public in 1997. It had 286,000 customers and $4.8 billion in assets in 2005 before online competition from national and regional banks eroded the business.

In its bankruptcy court filing, the bank's parent company said the bank's failure resulted from fewer mortgage originations and demands to repurchase delinquent loans, among other factors.

Large Depositors

NetBank had approximately $109 million in 1,500 deposit accounts that exceeded the $100,000 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.

The savings-and-loan subsidiary had $2.5 billion in assets and $2.3 billion in total deposits as of June 30, according to the FDIC.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |