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Guest

Posted: Tue Jul 29, 2008 12:00 am

With the failure of two independent banks on Friday, I am
concerned about an account that my mother in an independent
bank. It is over the $100K FDIC limit.

My plan is to split the account into two and move them to
two "safe" banks. The question is: which banks are "safe"?

Of course, no one knows for sure. But my suspicion is that
small independent banks are more likely to fail than large
nationwide banks.

On the other hand, one might argue that large nationwide
banks might be at greater risk due to their higher potential
volume of subprime mortgages and other risky lending
practices.

Whadaya think? Does anyone know the names of some
large nationwide banks that pundits have said are at risk?

More importantly, where can I go to get credible advice on
the subject? Or is there simply no one whose advice can
be trusted, and we are left to follow our own hunches?

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Sgt.Sausage

Posted: Tue Jul 29, 2008 1:29 am

Guest

<curiousgeorge408@hotmail.com> wrote in message
news:612ccde7-6bbf-4397-9982-01f9354285d1@c58g2000hsc.googlegroups.com...

No bank is "safe" -- they are *all* at risk (for sufficient
values of "risk").

Some are safe-er than others, but none are truly safe. Any
bank can fail at any time for a large number of various
reasons.

Quote:

Of course, no one knows for sure. But my suspicion is that
small independent banks are more likely to fail than large
nationwide banks.

I wouldn't bet on that. A lot of the smaller independent
banks, just due to their smaller nature and other limiting
factors, were a helluva lot more cautious in what types of
folks they'd extend credit to. A lot of my local banks only
do commercial -- won't touch residential -- and only then to
the top-tier of borrowers. They're *extremely* careful with
what they loan out, and have been throughout the entire
ridiculousness of the recent CrazyLoanFrenzy(tm).

Quote:

On the other hand, one might argue that large nationwide
banks might be at greater risk due to their higher potential
volume of subprime mortgages and other risky lending
practices.

Now ya got it!

.

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John A. Weeks III

Posted: Tue Jul 29, 2008 4:14 am

Guest

In article <8b277$488e3960$42a1e606$12893@FUSE.NET>,
"Sgt.Sausage" <nobody@nowhere.com> wrote:

Quote:

curiousgeorge408@hotmail.com> wrote in message
news:612ccde7-6bbf-4397-9982-01f9354285d1@c58g2000hsc.googlegroups.com...

No bank is "safe" -- they are *all* at risk (for sufficient
values of "risk").

Some are safe-er than others, but none are truly safe. Any
bank can fail at any time for a large number of various
reasons.

At the same time, you have to look at the risk of the options.
Putting it under your mattress opens you up to home invasion,
theft, loss by fire, etc. You also don't earn any return if
you burry the money in your back yard, so you are losing buying
power.

I don't think that the risk of loss due to a bank failure is
that much to worry about, especially when compared to the risk
of non-bank options.

If the OP is nervous, then they should spread their money
around to several different banks. That way, if one has an
issue, you are not stuck without access to cash while that
one back sorts things out (or the FDIC sorts it out).

-john-

--
======================================================================
John A. Weeks III 612-720-2854 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================

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anoop

Posted: Tue Jul 29, 2008 4:15 am

Guest

On Jul 28, 1:00 pm, curiousgeorge...@hotmail.com wrote:

Quote:

My plan is to split the account into two and move them to
two "safe" banks. The question is: which banks are "safe"?

Your guess is as good as anyone else's. However, the govt.
will probably try to keep the very large ones from failing because
that might be viewed as a catastrophe. C, JPM, BAC come
to mind. They are all part of the DJIA.

Quote:

Whadaya think? Does anyone know the names of some
large nationwide banks that pundits have said are at risk?

I've heard of WaMu and Wachovia being at risk.

Quote:

More importantly, where can I go to get credible advice on
the subject? Or is there simply no one whose advice can
be trusted, and we are left to follow our own hunches?

Follow your hunches. There are many good blogs out there.
See, for example:
http://globaleconomicanalysis.blogspot.com/2008/07/dont-count-on-safe-sound-rating-of.html

Anoop

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Douglas Johnson

Posted: Tue Jul 29, 2008 5:37 am

Guest

"Sgt.Sausage" <nobody@nowhere.com> wrote:

Quote:

True, but if your deposits are below the FDIC limits, you don't really care. The
Feds close the old bank on Friday, open the new bank on Monday. The only
difference is the sign over the door. As I mentioned earlier, I had it happen
three times on my checking account.

Quote:

Right. Many local banks can't even spell "CDO". That's a good thing.

-- Doug

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Daniel T.

Posted: Tue Jul 29, 2008 6:29 am

Guest

"John A. Weeks III" <john@johnweeks.com> wrote:

Quote:

If the OP is nervous, then they should spread their money
around to several different banks.

Mitigate risk by diversifying... Isn't that the basic risk mitigation
technique?

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rick++

Posted: Tue Jul 29, 2008 7:39 pm

Guest

You might read the business columns in newspapers.
They are tracking local banks. Banks are supposed to
periodically report profits and non-performing assets,
but some have been known to lie Smile

In this climate
a safe bank will be making huge profits because the
spread between FED rates/deposit interest and
mortgage rates is largest in my memory. The local
bank I use reported a 41% profit increase this year
and non-performing loans of 0.15%. Anything over
one percent might be shakey.

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Guest

Posted: Wed Jul 30, 2008 7:45 pm

On Jul 28, 6:37 pm, Douglas Johnson <p...@classtech.com> wrote:

Quote:

if your deposits are below the FDIC limits, you don't
really care.

That is not entirely true, at least in my case. As I
wrote earlier, I am dealing with my mother -- an elderly
and "paranoid" person (not clinically, but enough to
bother me). So I am looking for a hassle-free solution
-- that is, hassle free for __me__. Yes, I know there
are no guarantees. But there must be "better ones".
For example, Chase Bank is among the highest ranked by
bankrate.com, and its financials are impressive.
Unfortunately, there is no branch near my mother, and
she requires a brick-and-mortar institution. (So do I,
actually.) Moreover, if her bank were closed, I'm sure
I would have to hop on a plane if only to make her feel
better. Besides the expense, I am not in a position now
where I can drop everything and run to her side just to
assuage her concerns.

Quote:

The Feds close the old bank on Friday, open the new
bank on Monday.

Sometimes; sometimes not. I don't believe that is the
case Indymac, for example. The FDIC will not run the
bank, except to disburse accounts. The bank can be
reopened only if another bank is willing to over the
failed bank.

--------------------------------------
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Posted: Wed Jul 30, 2008 7:45 pm

Guest

"anoop" <ghanwani@gmail.com> wrote in message
news:622259a8-4f11-4ac3-b527-ae8aad3f5b94@m73g2000hsh.googlegroups.com...

Quote:

On Jul 28, 1:00 pm, curiousgeorge...@hotmail.com wrote:

My plan is to split the account into two and move them to
two "safe" banks. The question is: which banks are "safe"?

Your guess is as good as anyone else's. However, the govt.
will probably try to keep the very large ones from failing because
that might be viewed as a catastrophe. C, JPM, BAC come
to mind. They are all part of the DJIA.

Whadaya think? Does anyone know the names of some
large nationwide banks that pundits have said are at risk?

I've heard of WaMu and Wachovia being at risk.

More importantly, where can I go to get credible advice on
the subject? Or is there simply no one whose advice can
be trusted, and we are left to follow our own hunches?

Follow your hunches. There are many good blogs out there.
See, for example:
http://globaleconomicanalysis.blogspot.com/2008/07/dont-count-on-safe-sound-rating-of.html

Anoop

FDIC will take of deposits but I just ran into another wrinkle. I had a CD
mature on July 20 in a troubled bank and moved the funds to a credit union
via the bank's check. The credit union put a hold on it till 6 Aug.
Suppose the bank does goes tits up before the check clears. Will it be
covered by FDIC?

The bank has 77% of it's float in short shares (29.9 days short interest)
and the share price is down 76% over the last year so I think it's odds of
surviving are not good.

I could have avoided this delay had I not chosen to use snail mail but
that's what I did.

Mike

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Chip

Posted: Wed Jul 30, 2008 7:45 pm

Guest

curiousgeorge408@hotmail.com wrote:

Quote:

The Feds close the old bank on Friday, open the new
bank on Monday.

Sometimes; sometimes not. I don't believe that is the
case Indymac, for example. The FDIC will not run the
bank, except to disburse accounts. The bank can be
reopened only if another bank is willing to over the
failed bank.

Over last weekend the largest (27 branches, $$$B in assets)AZ bank was

shutdown, the Feds took it over, sold it to Mutual of Omaha (who wanted
to get into the Southwest banking anyway), and all branches are open
this morning with new signs, old people, and safe money for ALL
depositors. Most times the system actually works.

That says nothing about allaying the fears of a paranoid mother. Been
there, done that, have the scars.

Chip

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Guest

Posted: Wed Jul 30, 2008 7:45 pm

curiousgeorge408@hotmail.com writes:

Quote:

The Feds close the old bank on Friday, open the new
bank on Monday.

Sometimes; sometimes not. I don't believe that is the
case Indymac, for example. The FDIC will not run the

Pretty much the case with IndyMac, though it was Mon and
Thurs, not Fri and Mon.

http://www.fdic.gov/bank/individual/failed/IndyMac.html

IndyMac was closed by the Feds on Mon, Jul 11.
IndyMac Federal Bank was opened on Thurs, Jul 14.

All non-brokered insured deposit accounts have been transferred to
IndyMac Federal Bank, F.S.B. (IndyMac Federal Bank), Pasadena, CA
("assuming institution") a newly chartered full-service
FDIC-insured institution. The OTS appointed the FDIC conservator
of IndyMac Federal Bank. All insured deposit accounts will be
available as usual during regular business hours starting July 14,
2008.

As far as I can tell, ATMs never stopped working, and
other access was simply suspended -- including physical
access (ie. safe deposit boxes, etc) -- for three days.

As of July 14, 2008 you may continue to use the services to which
you previously had access, such as, online service, safe deposit
boxes, night deposit boxes, wire services, etc.

Your checks will be processed as usual. All outstanding checks
will be paid against your available insured balance(s) as if no
change had occurred.

That's a pretty painless bank failure (from the
under-the-FDIC-limits consumer point of view).

IndyMac may be an exception, though - it was too big to
move all the assets to some other bank - the new bank might
have had to be created on top of the old one. Much smaller
banks may be handled differently, perhaps through moving
the assets to another local bank.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

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inky dink

Posted: Wed Jul 30, 2008 7:45 pm

Guest

<curiousgeorge408@hotmail.com> wrote in message
news:612ccde7-6bbf-4397-9982-01f9354285d1@c58g2000hsc.googlegroups.com...

Quote:

I use bankrate.com, but it is not foolproof. On the other hand, if you keep
the balance in any single bank to less than $100k (give some room for
interest to be earned), a bank failure should not pose much of a problem. I
would still look for banks with decent ratings, but beyond that trying to
guess big vs. small; national vs. regional is not very productive.

And I prefer separate banks to separate, differently held accounts within a
single bank. Not only might I screw up (relying of bank "advice", if a bank
fails, there might be some delay in obtaining my funds - the likelihood that
ALL my banks will fail seems pretty remote. Further, at least from what I
have heard re the recent INDYMAC bank failure, deposits less than 100K did
not involve a delay in accessibility - the "new" bank took over the next
day.

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Elizabeth Richardson

Posted: Thu Jul 31, 2008 2:44 am

Guest

<BreadWithSpam@fractious.net> wrote in message
news:yobljzji4r2.fsf@panix2.panix.com...

Quote:

curiousgeorge408@hotmail.com writes:

The Feds close the old bank on Friday, open the new
bank on Monday.

Sometimes; sometimes not. I don't believe that is the
case Indymac, for example. The FDIC will not run the

Pretty much the case with IndyMac, though it was Mon and
Thurs, not Fri and Mon.

http://www.fdic.gov/bank/individual/failed/IndyMac.html

IndyMac was closed by the Feds on Mon, Jul 11.
IndyMac Federal Bank was opened on Thurs, Jul 14.

On the calendar I've been using, July 11 was a Friday and July 14 was a
Monday.

Elizabeth Richardson

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Guest

Posted: Thu Jul 31, 2008 3:48 am

"Elizabeth Richardson" <erichktn@worldnet.att.net> writes:

Quote:

BreadWithSpam@fractious.net> wrote in message
news:yobljzji4r2.fsf@panix2.panix.com...
curiousgeorge408@hotmail.com writes:

The Feds close the old bank on Friday, open the new
bank on Monday.

Sometimes; sometimes not. I don't believe that is the
case Indymac, for example. The FDIC will not run the

Pretty much the case with IndyMac, though it was Mon and

IndyMac was closed by the Feds on Mon, Jul 11.
IndyMac Federal Bank was opened on Thurs, Jul 14.

On the calendar I've been using, July 11 was a Friday and July 14 was a
Monday.

D'oh. Sorry - I was looking at Aug.

I'd better figure that calendar out before certain birthdays and
anniversaries come around!

Anyway, the more I read about how they've been handling
these things, the more impressed I am with the smooth
and efficient operation of the FDIC when it needs to
step in.

That said, if I had enough in banks to be worried about
the FDIC coverage limits, I think I'd want to diversify
across multiple banks. Heck, limits or not, I keep two
active checking accounts, as well as checkwriting access
to a couple of brokerage accounts. Not out of fear of
not being able to access the cash, but for general
convenience, and for different purposes.

Thanks for the correction.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

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Guest

Posted: Thu Sep 04, 2008 1:19 am

Quote:

My plan is to split the account into two and move them to
two "safe" banks. The question is: which banks are "safe"?

Go to Bankrate and look for banks with 4 or 5 stars. For example, here
is a list of savings accounts, sorted by APY.
http://www.bankrate.com/brm/rate/mmmf_highratehome.asp?web=brm&params=US,416&prodtype=chksav&market=416&product=33&state=US&sort=2

Unfortunately, I don't see any banks with 5 stars. The bank with 4
stars that offers the highest rate in a savings account is Zions Bank,
offering 3.56% APY.

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