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FDIC may be getting ready for a large bank failure.

 
Anonymous Coward
User ID: 334201
United States
02/05/2008 02:36 AM
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FDIC may be getting ready for a large bank failure.
[link to www.marketwatch.com]


How risky are uninsured bank deposits?

By Gail Liberman and Alan Lavine
Last update: 7:30 p.m. EST Feb. 4, 2008Print E-mail RSS Disable Live Quotes

PALM BEACH GARDENS, Fla. (MarketWatch) -- The Federal Deposit Insurance Corp. is gearing up for the prospect of a large bank failure. So double-check that all your deposits, including interest, are well within FDIC insurance limits.

The agency seeks comment by April 14 on a proposed rule designed to help it make a quick insurance determination amid an increasingly complex quagmire of FDIC rules and tough-to-figure-out bank accounts.

One section would place a provisional hold on a fraction - say, 10% or so -- of certain account balances at some 159 of the nation's largest banks. The hold could affect some accounts with balances under $100,000.

If you have uninsured deposits at a bank, should you worry?

Possibly. Depositors without FDIC coverage lost money in at least two recent failures -- NetBank, Alpharetta, Ga., and Miami Valley Bank, Lakeview, Ohio.

Of $109 million in uninsured deposits at NetBank, nearly 30% has not yet been reimbursed. Of $14 million in uninsured funds at Miami Valley, only 5.9% of uninsured funds, so far, has been reimbursed. All deposits in the most recent failure -- Douglass National Bank, Kansas City, Mo. -- have been reimbursed.

Fortunately, FDIC insurance limits have increased on certain accounts in recent years. Certain retirement accounts, for example, now are insured to $250,000, up from $100,000 per person.

But the tide on FDIC reimbursement of uninsured depositors may have changed in 1991 for the worse. Congress sharply curtailed the FDIC's discretion to extend protection beyond insured deposits. Now the FDIC must enter into the "least costly" transaction when dealing with a troubled bank. So the FDIC won't reimburse uninsured depositors if it means increasing the loss to the deposit insurance fund.
"As a result, uninsured depositors are protected only if a bank acquiring the failed bank will pay more for all of the deposits than it would for insured deposits only," said FDIC spokesman David Barr.

By contrast: "Prior to December 1991, the only time that the insurance limit was imposed was when we could not find a buyer for a troubled bank and had to issue checks to depositors for their uninsured funds. The overwhelming majority of the time, we were successful in finding a buyer."

Big and bigger

Weren't you reassured about our deposit-insurance system with the bailouts of three colossal banks in the past -- Continental Illinois, First Republic and Bank of New England? Each large bank approached an eye-popping $40 billion in assets. Today, however, a bank of that size would not rank in the top 40, FDIC chairman Sheila Bair warned in a speech last year.

FDIC data indicate that as of Sept. 30, there were 65 institutions with assets of $18.5 billion on its list of "problem" institutions. Barr would not elaborate on their sizes. Nor will the FDIC name the institutions.

Institutional Risk Analytics, Torrance, Calif., based on FDIC data from that same date, puts Bank of America Corp. (BAC:bank of america corporation , as the riskiest big banks. More recently, Managing Director Chris Whalen cited J.P. Morgan, Citigroup and Bank of America as his chief concerns due to their heavier trading activity.

He stresses that there is a 45-day lag time from the close of a quarterly period and the publication of FDIC data. Bank conditions can deteriorate very quickly. Fourth quarter 2007 FDIC data won't be released until late February.

Nevertheless, Whalen doubts that even uninsured depositors at those banks need worry.

"Uncle Sam is not going to let any of them fail," he declared. Some investors, though, could take "haircuts."

Be on guard

So what should you do if you deposit large amounts at a bank?

Know which deposits are FDIC-insured and which aren't. Make certain you're fully covered by visiting www.fdic.gov and clicking on "Deposit insurance." Allow room for accrued interest and provisional holds.
Know the financial strength of your bank. You can search your bank for free at www.bauerfinancial.com. Besides www.institutionalriskanalytics.com, some other sources of bank safety information include www.FEDFIS.com and www.bankrate.com.
Consider a service, such as www.cdars.com, which disburses deposits at a number of banks to make sure all are FDIC-insured.

Keep good records.

Take special care with "sweep" accounts, which move money periodically from one account to another. Determine how FDIC insurance would work with your type of account. The FDIC notes that if funds are swept into a deposit in a foreign branch of the bank, normally those funds are not insured by the FDIC or treated as "deposits" under U.S. law. "A depositor should understand the nature of the sweep transaction, how funds are being changed during the course of the business day and the implications of these changes," Barr says. "Sweep account transactions can have a big impact on a customer's status in the event of failure."
Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest book is "Quick Steps to Financial Stability" (Que/Penguin). You can contact them at www.moneycouple.com.
Anonymous Coward (OP)
User ID: 334201
United States
02/05/2008 02:42 AM
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Re: FDIC may be getting ready for a large bank failure.
Its starting to hit the Main Stream Media....

This is an important post!!!!
Anonymous Coward
User ID: 368089
United States
02/05/2008 03:23 AM
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Re: FDIC may be getting ready for a large bank failure.
Do they think they can hold things together that long?
Anonymous Coward
User ID: 368089
United States
02/05/2008 03:24 AM
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Re: FDIC may be getting ready for a large bank failure.
and I bet the FDIC is ready to go bankrupt
stl lunatik

User ID: 367546
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02/05/2008 03:29 AM
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Re: FDIC may be getting ready for a large bank failure.
bump
Try not. do, or do not. There is no try!

[link to www.youtube.com]
Anonymous Coward (OP)
User ID: 334201
United States
02/05/2008 03:52 AM
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Re: FDIC may be getting ready for a large bank failure.
Hmmmmmmm



My little conspiracy and tin foil covered mind is thinking, how will the NWO/Illuminati use this to their advantage.....


Hmmmmmmmm


.....and to joe six pacs DISADVANTAGE?????
Anonymous Coward
User ID: 357422
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02/05/2008 04:38 AM
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Re: FDIC may be getting ready for a large bank failure.
Three of the largest US banks (if my memmory is correct they are Chase, JP Morgan and Citibank) have derivative debt of about 166 trillion US dollars.

Who is the creditor?
No more doom
User ID: 368208
Brazil
02/05/2008 07:12 AM
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Re: FDIC may be getting ready for a large bank failure.
Of $109 million in uninsured deposits at NetBank, nearly 30% has not yet been reimbursed. Of $14 million in uninsured funds at Miami Valley, only 5.9% of uninsured funds, so far, has been reimbursed. All deposits in the most recent failure -- Douglass National Bank, Kansas City, Mo. -- have been reimbursed.

These deposits were uninsured, FDIC only guarantees $100k per depositor per institution.

Previously the FSLIC failed and "the ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government."

courtesy of [link to en.wikipedia.org]

The government will never let the banking system fail, worst case if the FDIC goes bankrupt the government will back the deposits up to the FDIC limit and tax payers will pay for it.

Point of the story is safest place for you money is in the banks where you at least get interest to offset inflation.
GREY LENSMAN
User ID: 98619
Malaysia
02/05/2008 08:56 AM
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Re: FDIC may be getting ready for a large bank failure.
PRAY

WITH WHAT EXACTLY WILL THE "GOVERNMENT" BACK UP THE BANKS AND STOP THEM COLLAPSING?

YOU DO KNOW THAT THE "GOVERNMENT" IS THE PEOPLE.

GL
Eagle # 1
User ID: 366021
United States
02/05/2008 10:23 AM
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Re: FDIC may be getting ready for a large bank failure.
SURE, the " safest place for your money is the bank " ..
they get to USE YOUR money at 9 to 1 lend out rate, while you, the SUCKER, get to watch that FIAT DEPRECIATE at 12-14 percent a YEAR !

WHAT could be DUMBER ?

What could be SMARTER ? Buying gold/silver, and watching it 'appear' to appreciate about 30% a year ! At least your retaing it's VALUE at the time of the purchase of gold/silver.

Eagle
Kat Mama

User ID: 363455
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02/05/2008 11:53 AM
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Re: FDIC may be getting ready for a large bank failure.
"Uncle Sam is not going to let any of them fail," he declared.
 Quoting: Anonymous Coward 334201



laugh
CONDEMNATION without INVESTIGATION is the HIGHEST form of IGNORANCE
Anonymous Coward
User ID: 160240
United States
02/05/2008 11:55 AM
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Re: FDIC may be getting ready for a large bank failure.
Normal savings accounts are paying you interest of only one-tenth of one percent! So why bother with a savings account with them? Not worth it.
dude in florida
User ID: 368421
United States
02/05/2008 02:22 PM
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Re: FDIC may be getting ready for a large bank failure.
"Uncle Sam is not going to let any of them fail," he declared.



laugh
 Quoting: Kat Mama



sad aint it?
dude in florida
User ID: 368421
United States
02/05/2008 02:24 PM
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Re: FDIC may be getting ready for a large bank failure.
Three of the largest US banks (if my memmory is correct they are Chase, JP Morgan and Citibank) have derivative debt of about 166 trillion US dollars.

Who is the creditor?
 Quoting: Anonymous Coward 357422



are you playing dumb? the fuckin FED.
Anonymous Coward
User ID: 310637
Canada
02/05/2008 02:29 PM
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Re: FDIC may be getting ready for a large bank failure.
What has me really freaked out now is that I saw a CDIC commercial for the first time ever yesterday. It almost came across as a don't panic statement.
Anonymous Coward
User ID: 368462
United States
02/05/2008 04:18 PM
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Re: FDIC may be getting ready for a large bank failure.
I hope it aint B of A.





GLP