NetBank is the first federally regulated bank to fail thanks to the ongoing subprime meltdown. The failure spotlights the importance of FDIC insurance, which guarantees deposits of up to $100,000. Customers who abided by the FDIC limits and deposited less than $100,000 with the internet bank will become ING customers, and will have immediate access to their funds. The 1,500 customers who collectively deposited $109 million above the FDIC limits stand to lose half of their funds.
NetBank was one of several financial partners of the US Airways. The Tempe-based airline offered promotions such as 4,000 miles to open a NetBank checking account, 4,000 miles for a money-market account and 5,000 miles to deposit at least $15,000 into a NetBank certificate of deposit.
The announcement annoyed at least some customers in U.S. Airways’ Dividend Miles frequent flier program.
“I’m flabbergasted to think a company they’re involved with would go out of business,” said Scottsdale resident Frank Simons, a US Airways frequent flyer who said he deposited money with NetBank. “I feel there’s a level of culpability, since they solicited me through the Dividend Miles program.”
More information on the bank’s closing is available on the FDIC’s website.