Dear Dr. Don,
I own a six-month CD at IndyMac for less than the $100,000 Federal Deposit Insurance Corp. limit. Is the FDIC obligated to pay the promised interest rate? Can I get my money out? I am not interested in giving them a free or low-interest loan.
-- Peter Pecuniary

Dear Peter,
With the IndyMac FSB failure, the FDIC created a new bank -- IndyMac Federal Bank FSB -- as the assuming institution. This is a newly chartered, full-service, FDIC-insured institution. The FDIC was named conservator of the new bank.

As reported on the FDIC Web site:

As conservator, the FDIC will operate IndyMac Federal Bank FSB to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by IndyMac Bank, F.S.B.

The FAQ page "Question and answer sheet for IndyMac Bank, F.S.B., Pasadena, CA" explains what happens to the interest rate on your CD:

Will I continue to earn interest at the same rate?
Yes, interest will continue to accrue at the contract rate on all nonbroker deposits. If you deposited funds through a broker, the interest will accrue and be paid through Friday, July 11, 2008.

But the same Failed bank information page for IndyMac gives a different take on your ability to keep that same interest rate:

All interest accrued through Friday (July 11), will be paid at your same rate. IndyMac Federal Bank will be reviewing rates and will provide further information soon. You will be notified of any changes.

He explained that you will continue to receive your contracted rate for as long as the FDIC is conservator, but that the rate could change when a buyer is found for the bank. So, for now, you're safe at the established rate for your nonbrokered CD.

An earlier column, "Bank failure costs customer great rate" describes a takeover of a failed bank by an assuming institution where a depositor wasn't able to hold on to the original CD rate.

You can close out the CD from the failed institution early without penalty if that's your decision. If you do that, shop for a new home for your money using Bankrate's "Compare Rates" feature.

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