Perhaps at no other time have people questioned banking — and banking institutions — as much as today. Huge conglomerated corporations (previously thought to be too huge to be in danger) are crumbling.

Now, more than ever, it is important to get answers to important questions before you decide where to put your money. When it comes to banking, there are many subtle regulations, terms and laws in play.

Because a big part of an attorney’s job is to protect a client’s assets, consider this some friendly advice from your local neighborhood attorney when thinking about which bank to trust with your money.

Below are five questions you should learn the answers to — they will help you make an educated decision about what banking institution to work with for your personal and business needs.

1. What are specific governmental issues related to banking?
Most banks fall under some sort of governmental regulation, meaning sometimes a banking institution is limited on how much (and to whom) it can lend.

“Despite a relationship you might have with your banker, he may not be able to make a loan to you because he knows the auditors who regularly review the loans made by the bank may find that the loan doesn’t meet the appropriate criteria, potentially lowering the bank’s government rating,” says Dusten Heugly, partner with the Provo-based law firm of Heideman, McKay, Heugly & Olsen, L.L.C.

Banking institutions are generally rated from A to E, with A being the best. An E rating is usually reserved for banks that are in financial distress. This also means the bank will probably be taken over by the Federal Deposit Insurance Corporation (FDIC) and your money may be unavailable for a short period of time.

Check on a bank’s governmental rating before banking on it.

2. What is a given bank’s available capital?
“A bank’s capital level can be a good indicator of the bank’s overall health as a financial institution,” Dusten says.

Available capital is the difference between the bank’s assets and its liabilities. If a bank is low on available capital, there’s a chance they may change their approach to customers. For example, a bank low on capital might be more interested in customers who want to make deposits and less interested in customers needing a loan.

3. If a bank takes federal TARP funds, what does that mean?
TARP (or Troubled Asset Relief Program) is a program wherein the government buys troubled assets from a bank in an effort to strengthen the institution.

“If the bank you’re considering takes TARP funds, then it most likely means the bank is struggling to recover funds on these assets but does not necessarily mean your bank is not sufficiently solvent,” Dusten says.

4. What are the pros and cons when deciding on a national or local bank?
Typically, national banks have more funds to give and may even have more services available. However, much of their lending relies more strictly on hard numbers and given formulas. Loan decisions are rarely considered at the local level or even in the same state. This probably doesn’t affect someone with good credit, but it can be a disadvantage for someone with a unique situation or a lower credit score.

“A local bank is more likely to value the personal relationship and is likely to be more willing to work with you and your situation,” Dusten says.

Local banks are also typically more aware of the local economy and situations specific to your area.

5. What is a Cease and Desist Order and what should I do if my bank has one?
The FDIC will issue a Cease and Desist Order against a bank when there are issues that need to be fixed before the bank can continue doing business.

“In most circumstances, if the bank you’re looking at or are banking with has a Cease and Desist Order issued, you would want to cease and desist doing business with that bank and find a new financial institution,” Dusten says.

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