Savers can help ensure the safety of their savings

How safe are your savings? People who are putting money into savings accounts are faced with a difficult question. They still don't feel comfortable with the stock market, bonds, or even mutual funds. Yet they don't know how safe their money is in a savings account, particularly if it is in a savings-and-loan association.

Certainly the interest rates are more attractive. While this week's half-percentage point rise in the prime rate will make borrowing more costly, especially for those with adjustable home loans, home equity loans, and adjustable car loans, the higher rates also mean a better return on savings.

But what happens if the S&L goes out of business? Is your money available immediately, the next day, next week, or next month? Can you lose any of it?

The answers to these questions used to be fairly theoretical; there weren't enough S&L failures to really test the system, so people had to talk about what would probably happen.

Now, of course, we know.

Hundreds of thrift failures, particularly in the Southwest, have given the Federal Savings and Loan Insurance Corporation (FSLIC) some fast experience in handling their collapsed charges and protecting depositors.

Some changes in the deposit insurance system are being discussed by regulators and members of Congress. The options include lowering the coverage from $100,000 to perhaps $50,000 or $25,000, absolutely not covering any deposits over that amount, as some past bank and S&L bailouts have done; and having savers who want deposit insurance pay for it, instead of the present system where the banks and thrifts pay the premiums.

But in the current system, several different things can happen.

The little sign on the door of federally insured thrifts seems to imply that in case of a failure, you'll get your money from the FSLIC. Though that can happen, it rarely does, and is the least desirable alternative.

When this happens, it means the FSLIC was unable to find another thrift or a bank to buy the failed institution, take over its deposits, and keep paying interest. When the FSLIC steps in, the interest on your savings stops accumulating the day the S&L is shut down.

At two failed S&Ls in California last summer, the FSLIC had to handle more than 15,000 accounts. They contained more than $1.3 billion, and by the end of the first week more than 64 percent of the depositors had their money back and were able to deposit it somewhere else. After four weeks, 98 percent of the deposits had been returned. But that still meant that some people either lost interest or could not get to their money, even if it was an emergency and they cashed in a certificate of deposit early.

In most cases, however, the delays weren't the fault of the FSLIC. Almost all local depositors got their money the next day. People who had sent in deposits by mail were sent Mailgrams with forms to complete and return. Those that sent them back immediately got their money as soon as the FSLIC could process a check and put it in the mail, usually in a day or two.

If you are one of the growing number of people who have bought high-yielding certificates of deposit through a broker, there could also be a few days' delay. Since these accounts are held in the name of the broker, the money would have to come from the FSLIC, go through the broker, then to you.

If you have more than $100,000 to deposit and you want full coverage, there are ways to get it, even though the amount exceeds the insurance limit. If you are married, you and your spouse can have three accounts: a joint account, one in the wife's name, and one in the husband's. If there are children, accounts could be opened in their name to increase your coverage further. But be aware of the ``kiddie tax'' rules, where income from assets in a child's name can be taxed to the parents.

You could also have $100,000 in one regular savings account or a certificate of deposit, and another $100,000 in an individual retirement account. Even if they are in the same name as CDs or savings accounts, IRAs are considered separate accounts for insurance purposes.

You cannot, however, have $70,000 in a CD and $50,000 in a money market deposit account, with accounts both under your name. That adds up to $120,000 and exceeds the limit. Also, accumulated interest could push you over the $100,000 level.

Having separate accounts under similar or identical names could slightly increase the wait for your money if your thrift goes under. The FSLIC will have to figure out whether each account is insured separately, or if they should be lumped together.

After all this, there's one more important rule to follow: Watch the news. The federal deposit insurance system, particularly for thrifts, is in deep trouble. The General Accounting Office estimates that the FSLIC will lose some $16 billion this year. Rescuing it may involve changing some of the rules of coverage. And that could mean keeping smaller amounts in one institution, or looking harder for stronger S&Ls or banks.

Today's federally insured deposits are almost certainly safe; those made in the future may need more protection from both the government and the individual.

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