Expensive lessons: 'I was blindsided'

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'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 by surprise: 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."  

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