The kids have their savings at WAMU (Washington Mutual). I told them that WAMU went bankrupt yesterday... Fortunately, their money was guaranteed by the US government which negotiated a sale of WAMU to JP Morgan. So they should not be affected in any way.
Their first question was whether only their branch or the entire bank had been affected... They then wanted to understand how a bank could go under. I gave them a simplified explanation of the current crisis in the financial industry, and explained the fact that most people borrow money to buy their homes.
They inquired about our ability to pay our mortgage and were relieved to hear that we wont have to move anytime soon... We all agreed that our house is a great house.