The financial crisis is extremely serious, certainly one of the worst seen in any rich country since 1970.

http://www.economist.com/finance/displaystory.cfm?story_id=13110352

However, I don't think the government would allow a major bank where lots of ordinary people have their money to go bust. That would be too disastrous both economically and politically, and is the reason why they have already bailed out institutions like AIG.

Also, according the FDIC's website, Federal law requires them to pay up asap, and in the past they have done that within a few days.

http://www.fdic.gov/deposit/deposits/insured/faq.html

If concerned about being without access to your money for a period, it might be a good idea to spread your funds between different institutions, and maybe keep enough cash on hand to cover you for a few days.
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We are in uncharted financial territory right now and I would be very careful where you keep your cash. A few of the banks at this current time that seem the most safe to me are:

1. Bank of America
http://www.bankofamerica.com

2. JP Morgan Chase
http://www.chase.com

3. Citigroup
http://www.citibank.com

These big three banks in the United States seem to be the safest in this unchartered financial debacle. However, I would not keep your money in just one bank, and diversify your accounts, as well as keep some cash on hand, just in case you need it.

That does mean in a few weeks this couldn't change but those are the best and I feel the safest banks at this current time.

You should not worry about the FDIC, as they insure you up to a certain amount, and seem to pay as soon as possible as shown in the FAQ link below.

http://www.fdic.gov/deposit/deposits/insured/faq.html

According to its website FAQ question:

How long does the FDIC take to pay insurance on deposits after an insured bank fails?

"Federal law requires the FDIC to make payment as soon as possible. Historically, the FDIC pays insurance within a few days after a bank closing either by establishing an account at another insured bank or by providing a check. Deposits purchased through a broker may take longer to be paid because the FDIC may need to obtain the broker's records to determine insurance coverage."

I have received this information from a friend who is an expert financial advisor, and keeps up to date with the latest. Accordingly, he has outlined for you another good option that can be good for diversification purposes.

The name of it is CDARS, a five-year-old system designed to offer FDIC protection for amounts far greater than the standard $100,000 limit.
CDARS, which stands for Certificate of Deposit Account Registry Service, is a financial service created by the Promontory Interfinancial Network in Arlington, Va. CDARS works by farming out large deposits across multiple banks within its network. Funds are then invested incrementally in multiple CDs, with no single bank holding more than $100,000. If any individual bank fails - as several CDARS members have - the CDs it holds will be of a low enough value to be fully covered by the FDIC.

CDARS is free to depositors, and can insure deposits of up to $50 million. Member banks pay a one-time fee to join the network and thereafter pay transaction fees on the funds they pass through CDARS. Most of the network's 2,500 banks are small community banks - the average asset base of members is $250 million, according to Mark Jacobsen, president and COO of Promontory Interfinancial Network.

Businesses make up the bulk of CDARS customers, accounting for 37% of its volume. Individuals, public entities like local governments, and banks themselves are also major customers.

"What businesses like about CDARS is that they can deal only with their local institution and still protect their deposits," Jacobsen said.

The financial markets' recent instability has been profitable for CDARS. Promontory doesn't disclose how much money is covered by the CDARS system, but its transaction volume has tripled since July, Jacobsen said. Banks have also come courting: CDARS is enrolling 100 new institutions this month. A list of member banks offering its services is available on CDARS' Web site.

After his NetBank debacle, Applied Cognetics' Coulthrust began exploring options like CDARS. In the end, though, he opted for simplicity and faith in the "too big to fail" theory; if Bank of America tumbles, he's giving up and investing in First National Bank of Mattress.

Applied Cognetics has gotten back some of its NetBank savings in dribs and drabs through quarterly dividend payments, dispersed as the FDIC sells off NetBank's assets. To date, uninsured NetBank depositors have recovered 85% of their cash, according to the FDIC. Coulthrust estimates that his company is still short around $150,000, but he sounds resigned to his fate. In a way, the recent rash of financial system failures has been a comfort to him.

"When NetBank went down people were like, 'You had your money in an online bank?' I felt like a total loser," he said. "But then all these big banks started to close. Right after NetBank closed and we got all this press coverage, all these investment bankers from Wall Street started calling me up. They wanted to take our assets and manage them. Thank God we didn't go with them, because half of them are gone now."

Quittel is less sanguine. She's still furious about the $10,000 she lost in IndyMac's failure - a sum that reduces what she she'll be able to set aside this year toward retirement - and irate that banks and federal regulators don't do more to warn customers when their accounts surpass insured limits.

"I had the most incredible sense of despair when this happened, because I was blindsided," Quittel said.

Quittel is hardly alone in being caught out: 10,000 depositors at IndyMac had uninsured deposits, totaling $1 billion. More broadly, about 37% of the $7.07 trillion on deposit with U.S. banks at the end of 2008's first quarter is uninsured, according to a Wall Street Journal analysis of data reported to the FDIC.

Now banking at Citibank (C, Fortune 500), Quittel says she'll never again allow any account of hers to creep past insured limits.

"You can't allow electronic payments to flow into an account anymore if it's going to put you over. Even if I had a liability that needed to go out that same day, I might ask a client to pay me with multiple, physical checks instead of one big lump sum," she said. "Any bank might go under."
Source(s):
http://www.fdic.gov/deposit/deposits/insured/faq.html
http://www.cdars.com
http://en.wikipedia.org/wiki/Financial_crisis

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I don't think that Citigroup will Nationalize.

However, if Citigroup were too nationalize this would mean the government stepped in an saved them. The bank would remain open and transactions available. Share prices invested in the Bank Stock would be near zero. The shareholders would be the big loser in nationalization. Mutual funds, 401k, and bonds would take a hit. Brokerage and wealth management operations would be sold off.

Your savings according to "Saving to Invest" will have the following protection:
1. Savings are FDIC protect up to authorized limits of $250,000

Nationalization does not seem to impact depositors adversely unless they have assets exceeding 250k.
Source(s):
http://www.savingtoinvest.com/2009/02/what-would-happen-to-my-money-if.html

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Diversify your money as much as possible, that way no one thing can give you a big setback. Talk to a financial adviser for some ideas.
Source(s):
-knowledge
-http://www.franchiseopportunities.com

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If a bank fails, FDIC will make sure, it won't affect you at all. FDIC will ensure that, your account is active and you will be able to make regular transactions.

E.g. Failed Indymac bank:
http://www.fdic.gov/bank/individual/failed/IndyMac.html
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Try banks like:
1. Safest bank in America - Burke & Herbert
2. Cardinal Bank
3. Sandy Spring Bank
Source(s):
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/11/AR200810110...

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If you really want to keep the money you have safe for a while, government bonds are probably the way to go. They aren't generating any money really, but they aren't losing money either and won't anytime soon. About the banks, the safest ones are the ones that are the most stringent about their policies. These are the banks that are checking people's background before giving out loans and making sure they can get their money back. Fortunately, they don't mind if you make deposits, so it will be easy, as long as you can figure out which banks are careful.
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