July 17, 2008 — The territory's banks are financially sound, Lt. Gov. Gregory Francis reassured V.I. banking customers Thursday.
Many in the territory may have seen media reports about the failure of the Pasadena, Calif. -based IndymacBank, taken over by the federal government and now called Indymac Federal Bank.
The New York Times reported recently that analysts fear as many as 150 banks across the country could fail in the next 12 to 18 months.
Many have been affected by risky mortgages and lending practices. John McDonald, the director of the territory's Banking and Insurance Division, said the problems encountered by U.S. are a result of the large number of mortgage foreclosures.
According to McDonald, banks doing business in the territory generally do not offer certain types of risky products like sub-prime loans. He said these conservative practices have helped to maintain a stable banking environment in the territory.
Depositors are further protected by the Federal Deposit Insurance Corp., an arm of the federal government. It insures bank accounts up to $100,000. It also insures Individual Retirement Accounts, referred to as IRAs, up to $250,000.
St. John resident Harry Daniel said he was a little worried when the news about the huge amount of foreclosures began hitting the national airwaves. And he continued to be a bit concerned when he saw the stories about IndymacBank failing.
"I worried we'd have fallout," he said.
Francis, who also chairs the territory's Banking Board, sent out the press release Thursday in response to an inquiry earlier in the week by the Source.
"The Division of Banking and Insurance takes its responsibilities to provide a safe and secure banking environment for the Virgin Islands community very seriously," Francis said.
To learn more about how the FDIC insures bank accounts, visit www.fdic.gov.
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