Safest banks to bank with?

OperationButter · November 21, 2014 12:50PM

Slightly off topic for the PM forum but i think could promote some good discussion. If you dont feel comfortable to share some of the questions its no problem, just curious on the forums takes on banks for banking activity, not investments.

What are the "safest" banks in terms of solvency? Do you currently like your bank/why do you bank with them etc? What do they offer that other banks dont (or dont offer same perks etc)?

Personally im quite unhappy with my current bank and looking to compare other banks to it. This would include credit card rewards as well as a banking relationship.

vpr · November 21, 2014 12:55PM

I've been with US Bank for almost a decade. Higher fees if you use any services but they have excellent customer service unlike BofA or Citi.

I recently opened a Fidelity Cash Management account and absolutely love it! No monthly fees, free checks and they pay ATM fees anywhere in the world (no limit). They also pay decent overnight interest on balances.

MsMorrisine · November 21, 2014 1:07PM

Credit Unions

Convenience and low-no fees are out. Safety is in.

Bank Solvency can be a mystery until the tide goes out.

MsMorrisine · November 21, 2014 1:26PM

I use a NE regional bank or two for their free coin counting machines though.

PerryHall · November 21, 2014 5:26PM

Doesn't the FDIC and the FSLIC insure your accounts? If so, do you really have to worry if you stay within the limits of coverage established by the FDIC?

LochNESS · November 21, 2014 6:02PM

Credit unions are awesome. Allowed me to get a car loan at 1%. But I don't use them as a bank. I use a bank for banking. Many online-only accounts offer relatively decent interest savings. Ally, ING, and HSBC are three that come to mind.

rawteam1 · November 21, 2014 8:35PM

<< Doesn't the FDIC and the FSLIC insure your accounts? If so, do you really have to worry if you stay within the limits of coverage established by the FDIC? >>

Hmm, y would someone else insure "my" monies in someone else's bank?...and me not have to pay for that insurance to boot...

ebaytrader · November 21, 2014 8:54PM

Personally, I keep the bulk of my ready cash with a brokerage MMF where the funds are diversified, and still has the SIPC insurance overhang. Between careful titling of cash accounts at banks and brokerages, you can utilize a tremendous amount of govt insurance protection.

You can check bankrate.com or other rating sites to find the "best" commercial banks, but even that can be misleading for lack of disclosure from the bank and time of evaluation.

BAJJERFAN · November 21, 2014 9:56PM

<< 

<< Doesn't the FDIC and the FSLIC insure your accounts? If so, do you really have to worry if you stay within the limits of coverage established by the FDIC? >>

Hmm, y would someone else insure "my" monies in someone else's bank?...and me not have to pay for that insurance to boot... >>

If you aren't paying any fees to your bank, that insurance isn't costing you anything, duh. It's a cost to the bank of doing business just like employee salaries, benefits, utilities, etc.

PerryHall · November 21, 2014 10:19PM

<< 

<< 

<< Doesn't the FDIC and the FSLIC insure your accounts? If so, do you really have to worry if you stay within the limits of coverage established by the FDIC? >>

Hmm, y would someone else insure "my" monies in someone else's bank?...and me not have to pay for that insurance to boot... >>

If you aren't paying any fees to your bank, that insurance isn't costing you anything, duh. It's a cost to the bank of doing business just like employee salaries, benefits, utilities, etc. >>

The FDIC was created by the federal government during the Great Depression since so many banks failed and people lost their savings and their faith in the nation's banks. The member banks pay into a fund to cover any depositor loss due to a bank failure. As had been said, there is no direct cost to the depositors.

derryb · November 21, 2014 10:59PM

If they pop it will pretty much happen all at once. There will be a first which will serve as a warning for the others.

I prefer the local credit unions for ALL of my banking needs. I also prefer more than one CU.

BAJJERFAN · November 21, 2014 11:03PM

<< 

<< 

<< 

<< Doesn't the FDIC and the FSLIC insure your accounts? If so, do you really have to worry if you stay within the limits of coverage established by the FDIC? >>

Hmm, y would someone else insure "my" monies in someone else's bank?...and me not have to pay for that insurance to boot... >>

If you aren't paying any fees to your bank, that insurance isn't costing you anything, duh. It's a cost to the bank of doing business just like employee salaries, benefits, utilities, etc. >>

The FDIC was created by the federal government during the Great Depression since so many banks failed and people lost their savings and their faith in the nation's banks. The member banks pay into a fund to cover any depositor loss due to a bank failure. As had been said, there is no direct cost to the depositors. >>

True, but you are paying for it indirectly since the bank has to figure that overhead cost into their fees. For myself the only fees I pay are whatever interest might result when I use my HELOC or if I mess up and the bank has to do a transfer to cover a shortfall.

SaorAlba · November 21, 2014 11:13PM

<< Credit Unions

Convenience and low-no fees are out. Safety is in.

Bank Solvency can be a mystery until the tide goes out. >>

Credit unions are locally owned - by their members/shareholders. They are the ONLY way to go. That said I am a member of four different credit unions that are tailored to serve my various financial needs. I have to admit, they have friendlier and well, better looking tellers also that have been known to save me lots of older stuff, silver dollars, half dollars and old bills.

OPA · November 21, 2014 11:30PM

<< 

<< Credit Unions

Convenience and low-no fees are out. Safety is in.

Bank Solvency can be a mystery until the tide goes out. >>

Credit unions are locally owned - by their members/shareholders. They are the ONLY way to go. That said I am a member of four different credit unions that are tailored to serve my various financial needs. I have to admit, they have friendlier and well, better looking tellers also that have been known to save me lots of older stuff, silver dollars, half dollars and old bills. >>

True, but stick with the larger CU's...Over 10,000 smaller sized CU's have gone under or have merged in the last 20 years.

MsMorrisine · November 22, 2014 12:12AM

And credit unions are not generally to big to jail

I'm surprised someone mentioned Ally. They were on e GMAC and reorganized into Ally.

johnny9434 · November 22, 2014 12:49AM

<< Credit Unions

Convenience and low-no fees are out. Safety is in.

Bank Solvency can be a mystery until the tide goes out. >>

i prefer a credit union myself.

SaorAlba · November 22, 2014 2:40AM

<< [

True, but stick with the larger CU's...Over 10,000 smaller sized CU's have gone under or have merged in the last 20 years. >>

All four of mine are smaller and have been around since the 1930s to 1950s - look at their balance sheets and you see that unlike banks they have a lot less "risky" loans.

At the same time look at the volume of bank failures, mergers - WAMU being a prime example.

jmski52 · November 22, 2014 5:50AM

I'm surprised someone mentioned Ally. They were on e GMAC and reorganized into Ally.

Ally = part of the GM bailout.

There is a good website that lists the debt ratios and financial conditions of all banks, but I lost my files to a computer virus a few weeks ago and I had to start fresh with a new machine, so I can't give you the link.

OPA · November 22, 2014 8:51AM

<< 

<< [

True, but stick with the larger CU's...Over 10,000 smaller sized CU's have gone under or have merged in the last 20 years. >>

All four of mine are smaller and have been around since the 1930s to 1950s - look at their balance sheets and you see that unlike banks they have a lot less "risky" loans.

At the same time look at the volume of bank failures, mergers - WAMU being a prime example. >>

small = $100 million or less in assets.

You can also look at the big "Corporate" CU's that failed because of high risk real estate loans packaged to them by their member credit unions. (That is one of the reasons, most c.u.'s indicate a less risky loan portfolio, along with great Insurance policies issued by CUNA Mutual, that protects the credit unions from fraud, some loan defaults etc.)

roadrunner · November 22, 2014 9:00AM

The FDIC was created by the federal government during the Great Depression since so many banks failed and people lost their savings and their faith in the nation's banks. The member banks pay into a fund to cover any depositor loss due to a bank failure. As had been said, there is no direct cost to the depositors.

This might be true. But it's also true that the banking laws were recently modified to give the settling of bank otc derivatives a higher priority than customer deposits (ie savings and checking accounts). Sure, you'll get paid....but only after the $300 TRILL in failed, otc big bank derivatives get settled/paid out first. I wouldn't bank with any of the big 6 US derivative's banks (JPM, Citi, GS, BoA, Morgan Stanley, WF)...and the similar guys over the pond. Their tentacles run deep into many other banks. As derryb hinted at....it's one big daisy chain. And even if you as a depositor gets paid out, how equitable will it be if there's a 25%, 50%, ot 65% devaluation in the dollar following $Tens of Trillions of dollars being key stroked into existence? Just hope that such a day never comes.

OperationButter · November 22, 2014 9:09AM

<< The FDIC was created by the federal government during the Great Depression since so many banks failed and people lost their savings and their faith in the nation's banks. The member banks pay into a fund to cover any depositor loss due to a bank failure. As had been said, there is no direct cost to the depositors.

This might be true. But it's also true that the banking laws were recently modified to give the settling of bank otc derivatives a higher priority than customer deposits (ie savings and checking accounts). Sure, you'll get paid....but only after the $300 TRILL in failed, otc big bank derivatives get settled/paid out first. I wouldn't bank with any of the big 5 derivative's banks (JPM, Citi, GS, BoA, Morgan Stanley). Their tentacles run deep into many other banks. As derryb hinted at....it's one big daisy chain. And even if you as a depositor gets paid out, how equitable will it be if there's a 50%, 65%, or even 90% devaluation in the dollar if $tens of trillions get printed up? Just hope that such a day never comes. >>

With that said and to address the question, where does one put their money? Banking assets, not investment assets. By the sound of it, you use 1 or more CU's but just curious due to your response.

jmski52 · November 22, 2014 9:13AM

the banking laws were recently modified to give the settling of bank otc derivatives a higher priority than customer deposits (ie savings and checking accounts). Sure, you'll get paid....but only after the $300 TRILL in failed, otc big bank derivatives get settled/paid out first. I wouldn't bank with any of the big 5 derivative's banks (JPM, Citi, GS, BoA, Morgan Stanley). Their tentacles run deep into many other banks. As derryb hinted at....it's one big daisy chain. And even if you as a depositor gets paid out, how equitable will it be if there's a 50%, 65%, or even 90% devaluation in the dollar if $tens of trillions get printed up? Just hope that such a day never comes

Most people wont' realize that their money on deposit only makes them an unsecured creditor of the bank now. This "law" is simply bizarre and should serve as a flashing red light to every US citizen from this point on. It's a prelude to more intimidation and theft. There is no justifiable reason for this "law", other than a tearing down of established values.

roadrunner · November 22, 2014 9:49AM

<< With that said and to address the question, where does one put their money? Banking assets, not investment assets. By the sound of it, you use 1 or more CU's but just curious due to your response. >>

You put it where you are most comfortable. I'd suspect most forumites are comfortable with those big 6 banks. I'm not. If most of it is not under your direct control, then who is control of it? If you can't get at it within 12-48 hours then who is in control of it? The answer is different for everyone. I would agree with what many have said. Bank with CU's if you can...more than 1 if necessary. My banking is done with a smaller state bank and with USAA.

BBN · November 22, 2014 9:57AM

SIU CU for me. Love it.

cohodk · November 22, 2014 10:12AM

No one has ever lost a penny on deposits that were covered by SIPC

s4ny · November 23, 2014 8:50PM

SIPC does not insure money market funds in a securities account because those
balances are held by the fund, not the broker.

No investor has ever lost a penny in a FDIC insured deposit. What is safe is to
keep your balances at or below the $250,000 limit.

derryb · November 23, 2014 9:09PM

<< No investor has ever lost a penny in a FDIC insured deposit. What is safe is to
keep your balances at or below the $250,000 limit. >>

And hope that bail-outs don't become bail-ins. You did correctly identify account holders as bank "investors" and the next banking crisis will unfortunately treat them as such.

cohodk · November 23, 2014 9:29PM

Yes, FDIC is what I meant to write. Damn fat fingers and small phones.

roadrunner · November 23, 2014 11:56PM

There will be lots of "first" in the banking system when the $300 TRILL in big US bank derivatives finally get stressed to the point of fracturing. I suspect the FDIC will make good on any guarantees. But, there's no guarantee that the dollars you get paid in will have close to the same purchasing power as the dollars that existed just before a major stress event. Social security has never welched on payments either. It's quite clear that this is going to change. Either that, or the payments will be in "different" dollars. Before 2008 we never had TRILLIONs in bailouts required in the financial system. That was a first. During the S&L crisis of the 1980's those payouts were a 1,000X smaller....same comment for the Asian banking crisis in the late 1998's when $4.6 BILL in LTCM derivatives blew up, a micro-pop compared to 2008's $10-$20 $Trillion in CDS and MBS losses. The 8X larger interest rate swaps have yet to be tested. The FDIC won't be able to cover the fallout from that kind of mess.

jmski52 · November 24, 2014 12:01AM

What is safe is to keep your balances at or below the $250,000 limit.

I believe that the regulation limits the aggregate amount to $250,000 and it doesn't matter if you split the money between several banks.

The FDIC ceiling used to be $10,000. They can make it whatever they want, but the question is whether or not it means anything.

cohodk · November 24, 2014 12:10AM

<< What is safe is to keep your balances at or below the $250,000 limit.

I believe that the regulation limits the aggregate amount to $250,000 and it doesn't matter if you split the money between several banks.

The FDIC ceiling used to be $10,000. They can make it whatever they want, but the question is whether or not it means anything. >>

And before that it was $2500.

"They" are not going to "steal" your money. I know this because "we" would not let it happen. Just as "we" did not let lots of things happen in the past.

derryb · November 24, 2014 12:19AM

<< "They" are not going to "steal" your money. I know this because "we" would not let it happen. Just as "we" did not let lots of things happen in the past. >>

"They" have been stealing your money via inflation since the creation of the FED. They're in the process of trying very hard to resume the theft. "We" haven't done a thing to stop it. Some, at the risk of being called many names, attempt to make the public aware.

As for money in the banks, it has recently been determined (and publicized) that it's not the depositors' money. They loaned it to the banks. Expect these creditors to take a haircut in a bank collapse regardless of the FDIC paper promise. The worthlessness of the FDIC promises were apparent in 2008 when it was determined a bailout directly to the banks, and not to the depositors, was the only fix. FDIC could not have come even close to handling the fallout.

As I have stated many times, FDIC promises are nothing but a ruse to encourage loaning your money to the banks so they in turn can either gamble with it through investments of THEIR choosing or loaning it out in multiples to whom THEY determine is credit worthy. As a depositor (creditor) the OP is doing his due diligence in searching for a bank that is worthy of the credit he will be giving them.

roadrunner · November 24, 2014 12:30AM

<< "They" are not going to "steal" your money. I know this because "we" would not let it happen. Just as "we" did not let lots of things happen in the past. >>

How are you going to prevent that? Vote them out of office only to have another clone take over? Write a petition? 1,000,000 person march? Sit ins?

Why didn't we prevent our jobs from being off-shored (NAFTA)? How did we let Homeland Security become what it is? How did we allow the Patriot Act to become laws? Why did we allow bank otc derivatives to get head of the line privileges over depositor accounts? Student loans are exempted from bankruptcy filings...so are other types of consumer debt....how did we allow that to happen? Whey do corporations get a clean slate in Ch 7/11 and not consumers? How did we allow the 1933 securities laws to be removed during 1999-2001 so derivatives could run amock and banks could make trillions with govt backing? Our liberties are being replaced at the expense of tighter security and loss of privacy. If we couldn't stop any of this "good stuff" from happening why would you think it will be any different as Soc Sec and FDIC guarantees get overhauled or reduced? I would think FDIC will get replaced with a "govt safety net of forced TBond investments." No need to ensure your deposits when they all sit in "safe" and "protected" USTreasuries.

The next big banking crisis will be a one-off event. There won't be any instant replays to save J6P's money. He will be given what the govt decides he needs and nothing more....regardless of current laws or FDIC. The president and govt can institute the 1917 War Powers act to include about anything (insurrections, economic catastrophes and hardships are now considered within the envelope).

BAJJERFAN · November 24, 2014 12:39AM

<< SIPC does not insure money market funds in a securities account because those
balances are held by the fund, not the broker.

No investor has ever lost a penny in a FDIC insured deposit. What is safe is to
keep your balances at or below the $250,000 limit. >>

That's $250K per account. If you have $1 million, you simply open 4 accounts. Imagine the logistical nightmare some greenhorn winning $100 million in the lottery would have.

hchcoin · November 24, 2014 1:02AM

<< The FDIC was created by the federal government during the Great Depression since so many banks failed and people lost their savings and their faith in the nation's banks. The member banks pay into a fund to cover any depositor loss due to a bank failure. As had been said, there is no direct cost to the depositors.

This might be true. But it's also true that the banking laws were recently modified to give the settling of bank otc derivatives a higher priority than customer deposits (ie savings and checking accounts). Sure, you'll get paid....but only after the $300 TRILL in failed, otc big bank derivatives get settled/paid out first. I wouldn't bank with any of the big 6 US derivative's banks (JPM, Citi, GS, BoA, Morgan Stanley, WF)...and the similar guys over the pond. Their tentacles run deep into many other banks. As derryb hinted at....it's one big daisy chain. And even if you as a depositor gets paid out, how equitable will it be if there's a 25%, 50%, ot 65% devaluation in the dollar following $Tens of Trillions of dollars being key stroked into existence? Just hope that such a day never comes. >>

Does anyone have a source for the above quote that banking laws were recently modified to give the settling of bank otc derivatives a higher priority than customer deposits. I can't find that information anywhere online. Thanks!

derryb · November 24, 2014 1:35AM

<< The member banks pay into a fund to cover any depositor loss due to a bank failure. As had been said, there is no direct cost to the depositors. >>

The consumer always pays for up-the-chain costs through higher prices or higher fees. Those who support $15 an hour for burger flippers fail to understand this basic law of retail.

<< And even if you as a depositor gets paid out, how equitable will it be if there's a 25%, 50%, ot 65% devaluation in the dollar following $Tens of Trillions of dollars being key stroked into existence? Just hope that such a day never comes. >>

One could get a dollar self-insurance policy. I add to mine regularly. Insurance "premiums" are down at the moment.

roadrunner · November 24, 2014 1:50AM

<< Does anyone have a source for the above quote that banking laws were recently modified to give the settling of bank otc derivatives a higher priority than customer deposits. I can't find that information anywhere online. Thanks! >>

Numerous sources and links in this article should get you started

It's not written by zero-hedge so I can't vouch for the author.

.....the references are real and available to be proofed. Seems to me this all started in Cypress and then came across the pond. J6P won't be aware of this until the day comes when he is made "whole" by being given shares in a failed bank. It's up to him to turn that into cash.

The Dec 2012 G-SIFI to private sector operation, Resolving Globally Active, Systemically Important, Financial Institutions, coauthored by the FDIC & the Bank of England is a key document.

Note 1: unsecured debt holders are ordinary bank depositors (ie me and you)
Note 2: G-SIFI stands for Global Systemically Important Financial Institution (ie not me and you) - where the holders of otc derivatives are considered secure debt-holders.

Another article where you can find references - including the 18 page article from Dec 2012 between FDIC-BOE-FED on handling failure of SIFI's

Huffington Post review of the FDIC-BOE paper

BoA puts taxpayers on the hook for Merrill's derivatives

But, the FDIC has never failed to pay out. So I'd put all my trust and savings with them.

derryb · November 24, 2014 1:59AM

I believe justification of bail-ins began with recommendations from the IMF and/or the Bank of International Settlements, both a serious threat to every nation's economic independence and both behind globalization on the economic front. Their experiment in the form of the European Union is about to set them back 20 years and rightfully so.

s4ny · November 24, 2014 2:07AM

Worry about something else. FDIC insured bank deposits are fine.

Derivatives were at risk in Sept 2008 and the Treasury propped up AIG.
(and made a profit on the investment)

If AIG had been allowed to fail, derivative counter parties would have lost money with Chase, Citi, etc.,
but insured depositors were never at risk.

The 250M is not aggregated at all. You can be insured in 100s of different banks.

If someone wins the $100 mil lottery they probably will buy Treasury Bills, not go
to 400 banks.

There is no major website that has been as consistently wrong as Zero Hedge.

hchcoin · November 24, 2014 2:12AM

Thanks roadrunner!

roadrunner · November 24, 2014 2:15AM

<< Worry about something else. FDIC insured bank deposits are fine.

Derivatives were at risk in Sept 2008 and the Treasury propped up AIG.
(and made a profit on the investment)

If AIG had been allowed to fail, derivative counter parties would have lost money with Chase, Citi, etc.,
but insured depositors were never at risk.

The 250M is not aggregated at all. You can be insured in 100s of different banks.

If someone wins the $100 mil lottery they probably will buy Treasury Bills, not go
to 400 banks.

There is no major website that has been as consistently wrong as Zero Hedge. >>

Zero hedge is not listed in any of my links. AIG made a few $Billion for the taxpayers at the expense of $10-$20 TRILL in payments being snuck out the back door via the FED. We taxpayers are on the hook for that debt. Hardly a fair trade. As the Huffington Post stated, there's nothing in the Dec 2012 FDIC-BOE language that says they can't pay you off with bank shares rather than cash. If AIG had been allowed to fail then JPM, GS, Citi, MS, and BoA probably would have failed too. It would have been nightmare with a multi-week, world-wide banking and economic collapse. Hence, AIG was not allowed to fail. Depositors would have been at serious risk if those 5 banks went down. Even with the relatively small of amounts of failed derivatives that Lehman and BSC had, they nearly took the system down.

I fully agree....that everything is fine for now....until the next Lehman event.

roadrunner · November 24, 2014 2:18AM

Title II of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act provides the Federal Deposit Insurance Corporation (FDIC) with new powers and methods to guarantee derivatives once they plummet as did AIG in 2007-09. The bank's paid-for politicians made sure congress did not regulate derivatives, and thereby encouraged increased financial betting. Thanks to Dodd- Frank and it's advanced copy, the 2005 Bankruptcy Act, congress made sure these fraudulent bets on stock market manipulation would be mandated to be legally paid back to the banks. This time by the bank's savings deposits. Yours.

I like the part about the FDIC's new arm - the OLA (orderly liquidation authority) - sheesh - I thought they just paid out money

When Lehman brothers failed assets/derivatives were put on the auction block they got 8c per dollar. I believe that included "unsecured creditors/depositors." Anyone have any information to the contrary where the FDIC bailed out all depositors up to $250,000 each? AIG wasn't allowed to fail. Neither were the other Big 6 banks. What if they had failed? 8c on the dollar.

derryb · November 24, 2014 2:26AM

Lehman was sacrificed because of an earlier failure to play ball with Treasury. Any one of the banks could have easily been sacrificed. Our Lehman moment could very easily have been a Citi or BoA moment.

<< Worry about something else. FDIC insured bank deposits are fine. >>

As long as FDIC insured banks are fine. FDIC is a marketing tool to help you sleep at night.

<< Derivatives were at risk in Sept 2008 and the Treasury propped up AIG.
(and made a profit on the investment) >>

Derivatives are nothing short of paper promises. All paper promises involve counter party risk. The bigger the bet the greater the risk. Ensuring someone else is at risk makes it an even greater risk.

<< If AIG had been allowed to fail, derivative counter parties would have lost money with Chase, Citi, etc.,
but insured depositors were never at risk. >>

Insurance that covers those depositors is no where funded by the amount of those deposits. FDIC will only work in an isolated, very limited failure.

<< The 250M is not aggregated at all. You can be insured in 100s of different banks. >>

Correct, but if you have a loss claim that involves 100 different banks what do you think your claim will be worth? Answer: a couple of pennies on the dollar, if that.

<< There is no major website that has been as consistently wrong as Zero Hedge. >>

CNBC?

OperationButter · November 24, 2014 2:37AM

While Im not at this point in my life, some of your responses have me curious. I tried to find concrete info on this but a short google search left me with more questions, maybe you guys can help.

The FDIC insurance covers up to 250k. Is this 250k per account per bank or is this all accounts tied to your social.

Ex: Wells Fargo accounts total 240k (lets say 3 checking/savings accounts)
Bof A accounts total 550k (lets say 2 checking)
Credit Union ABC accounts total 800k (2 checking)

Per FDIC insurance, would ALL my deposits be covered if the accounts had less than 250k in them? So for that example, all Wells accounts were below 250k, therefore all covered. The BofA accounts clearly are over the limit by 50k in one of those accounts (which I get the 50k extra isnt insured) but is the 300k that is additional covered under FDIC insurace? Same with the credit union accounts, is it only 250k insured per entity or per account or per account on that social/tax id number?

Hope that makes sense..

derryb · November 24, 2014 2:40AM

Bank FDIC coverage is per account. In a serous enough banking failure there is a good chance that total value of all accounts could become a factor on the amount of pennies per dollar one would recoup.

FDIC does not cover credit union accounts, but CUs have their own similar National Credit Union Insurance Fund.

Note that as of fourth quarter 2013 the FDIC insurance fund totaled only $47.2 Billion (in 2009 they were insuring $4.7 Trillion in deposits). But according to the FDIC website "FDIC deposit insurance is backed by the full faith and credit of the United States government. This means that the resources of the United States government stand behind FDIC-insured depositors."

In a Trillion Dollar plus crisis just where in line do you think the US government will put the FDIC-insured depositors?

OperationButter · November 24, 2014 2:48AM

<< FDIC coverage is per account. In a serous enough banking failure there is a good chance that total value of all accounts could become a factor on the amount of pennies per dollar one would recoup. >>

Which makes sense, but when I look up Fidelity cash mgmt, this doesnt make sense to me.

Fidelity's FDIC Insured Deposit Sweep Program details
In utilizing the Program, your uninvested cash balance is swept to a program bank where the deposit is eligible for FDIC insurance. If you have more than $245,000 in uninvested cash in your account, the Program maximizes your eligibility for FDIC insurance by systematically allocating this uninvested cash across multiple program banks. At a minimum, there are generally five banks available to accept customer deposits, making customers eligible for nearly $1,250,000 of FDIC insurance.

Why the need for 1.25m insurance if you could just open additional accounts?

derryb · November 24, 2014 2:55AM

<< 

<< FDIC coverage is per account. In a serous enough banking failure there is a good chance that total value of all accounts could become a factor on the amount of pennies per dollar one would recoup. >>

Which makes sense, but when I look up Fidelity cash mgmt, this doesnt make sense to me.

Fidelity's FDIC Insured Deposit Sweep Program details
In utilizing the Program, your uninvested cash balance is swept to a program bank where the deposit is eligible for FDIC insurance. If you have more than $245,000 in uninvested cash in your account, the Program maximizes your eligibility for FDIC insurance by systematically allocating this uninvested cash across multiple program banks. At a minimum, there are generally five banks available to accept customer deposits, making customers eligible for nearly $1,250,000 of FDIC insurance.

Why the need for 1.25m insurance if you could just open additional accounts? >>

It appears you are discussing an investment account with Fidelity that is not eligible for FDIC coverage, not even the cash balance is eligible. To make the cash balance eligible for coverage and as a service to you, Fidelity is "sweeping" it into eligible deposit accounts with up to five FDIC covered banks.

BAJJERFAN · November 24, 2014 3:25AM

<< Yes, FDIC is what I meant to write. Damn fat fingers and small phones. >>

Has the FDIC ever had liabilities that exceeded its assets requiring Unka Sam to bail them out.

s4ny · November 24, 2014 3:30AM

Meanwhile, no FDIC insured depositor has ever lost a penny and the Dow Jones Industrial
Average and S&P 500 are making new all time highs at 3 PM on Monday.

As the bartender said to the horse "what's with the long face?"

How many stocks did you buy on the recommendation of Zero Hedge?

derryb · November 24, 2014 3:35AM

<< 

<< Yes, FDIC is what I meant to write. Damn fat fingers and small phones. >>

Has the FDIC ever had liabilities that exceeded its assets requiring Unka Sam to bail them out. >>

No, Unka chose to bail out the banks directly in '08 instead of letting it get to the point where he had to bail out the depositors because of an FDIC overload.

OPA · November 24, 2014 3:54AM

<< In a Trillion Dollar plus crisis just where in line do you think the US government will put the FDIC-insured depositors? >>

derryb...Didn't we just go through that same scenario? Hundreds of Banks folded and not one depositor was left out in the cold.

Your Doomsday scenario's are tiring.

Safest banks to bank with?

Comments