Bauer Financial analyzes the performance of U.S. banks and then rates those banks from zero to five stars. They offer a handy tool if you want to see how your bank is doing. If you aren’t sure where your bank is headquartered, consider leaving the state drop-down box blank.

Unfortunately, my bank scored two out of five stars, earning a “problematic” rating. Of course, I’m going to move funds to a new bank soon. If you think that the FDIC will come swooping in to save you if your bank fails, don’t be too certain. The FDIC is stretched very thin. They only have the resources to cover approximately one percent of bank failures. If we experienced a significant number of bank closures, the FDIC would not be able to cover it. Should the FDIC insurance fund be exhausted, they are authorized to borrow from the Treasury. If the Treasury is unable or unwilling to make the loan, it would take an act of Congress to allocate more money.

The FDIC act also offers the promise that you will be paid “as soon as possible” in the event of a bank failure. Even if the FDIC were able to cover your assets in the event of a banking catastrophe, I’m betting that you wouldn’t get a check immediately. If you have all of your funds in one bank — both personal and business — how would you function for even a short period of time while the FDIC processed your request? If you are like me, you probably only keep a few hundred cash on you at any time — certainly not enough to make payroll or even eat for very long.

Here is my plan to keep my money safe:

1. Switch most of my money to a 5-star-Bauer-rated credit union that I found with their handy-dandy tool.
2. I plan to split my money between two banks.
3. Keep a couple of thousand in cash in the event of an emergency.

There are 305 banks currently on the FDIC troubled banks list. When I ran my local banks through the Bauer tool, I had trouble finding a bank with a four- or five-star rating. There were, however, an alarming number of banks with zero- and one-star ratings. With the economy the way that it is, your money isn’t as safe in the bank as it used to be.

-Wade Young

(http://lenderama.com/)