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"Has anyone actually been thru the situation of bank going bad? What happens? Is your money tied up for awhile?"

Yes, during the savings and loan collapse in the late 80's early 90's. I wondered why savings and loans across the country were offering insured CD's that were yielding 4 to 6 percentage points above treasuries. So I got as many as I could. Lets see, one was S and L was in Florida, yielding 11 percent for 5 years or so...so I invested in some. One to two years later, Crocker Savings and Loan was taken over by some government agency that was set up for all the S and L's that went belley up. I got my CD handed back to me, with accrued interest up to that date. I thought I should have been entitled to the interest for the entire term for the CD (5 years). I wasn't.
If interest rates had gone north instead of south, and Crocker stayed solvent, do you think they would have paid me more interest, or let me out of that CD early with no penalty? Nope.

One other S and L did the same thing to me, can't remember which one it was. I had CD's with 5 or 6 of them, as their offerings on CD's kept getting better and better.
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