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Financial Q&A: A banks failure may not lead to individual losses

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Q: I have a $25,000 CD, maturing in March 2009, through IndyMac bank. Now that it has failed, what do I do? On another topic, what is the difference between a money-market fund protected by SIPC and one protected by FDIC?

S.N., Portland, Ore.

A: You shouldn't have to do anything, says Morris Armstrong, a financial planner in Danbury, Conn. You should receive principal plus interest as stated when the CD matures. The Federal Deposit Insurance Corp. (FDIC), a government agency, insures bank deposits against the sort of calamity you have experienced at IndyMac. It was taken over by bank regulators July 12. Deposits up to $100,000 are insured. The Securities Investor Protection Corp. (SIPC) is a private insurance program meant to protect you in the event that a brokerage holding your money-market account goes under. Mr. Armstrong says that it does not protect against loss of principal in the money-market fund.

Q: I'm 70 years old and in need of monthly income from my investments. What are the pros and cons of investing in a GNMA fund?

B.G., Pittsburgh


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