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Insured deposits only



May 09, 2008 – Comments (9)

I have stressed several times to ensure that any funds that you have in any bank be under the FDIC insurance limit.

It looks the bank closures are starting.  This is what the press release for a closed bank looks like.  This is what the notice telling you that you may not get amounts over $100k back looks like.

Better yet, if there are signs the bank you belong to is in trouble, move your money elsewhere and avoid the hassle. 

9 Comments – Post Your Own

#1) On May 09, 2008 at 8:06 PM, joeykid13 wrote:

I agree 100% with dwot's sentiment.  A bank is only too big to fail...when it's the only one failing.  The government has neither the competence or capacity to handle more than one at a time...caveat emptor!

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#2) On May 09, 2008 at 8:07 PM, joeykid13 wrote: that a real picture of you...nice...what is a girl like you doing all the way out in the tundra?

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#3) On May 09, 2008 at 8:30 PM, joeykid13 wrote:

I'm sorry for being personal in my last statement...I have always found it difficult to be a person, and not be personal...I suppose the idea of getting too personal is contrary to my nature. apologies...I hold you in the highest regard.

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#4) On May 09, 2008 at 8:45 PM, DemonDoug (31.46) wrote:

lol joey it's okay man, she can take a compliment.  it's not like you are stalking her like uma thurman or something.

incidentally I agree. SIPC insures broker accounts up to 500k (including 100k in cash).  So if you have more than 500k in stocks and mutual funds, make sure you have that spread out too.  I've got 4 different brokerage accounts (vanguard, fidelity, sharebuilder, firsttrade).


p.s. maybe she likes cold weather and really extreme day/night variations? 

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#5) On May 09, 2008 at 11:29 PM, dwot (29.02) wrote:

joeykid13, yes that is a real picture of me, I guess Christmas about 3 years ago.  The hat seemed perfect for my fool profile. 

On the subject of bank failure, it is an enormously serious risk right now.  Banks probably at the largest risk have high real estate exposure through both housing and commercial real estate.  The commerical real estate bubble is only just now bursting so there is going to be another difficult round.  A big difference between the mortgage bubble and the commerical real estate bubble is the commercial real estate is held by a lot of smaller banks.  They are going to be shut down and investors with more than the insured amounts are for sure going to lose some money.

Calculated risk has another good post on this.  This is an incredibly interesting detail, "the FDIC hasn't released an "emerging risks" report since late 2006."  CR goes back to the last report and shows the dire nature of the emerging problem.  The report also shows the risk by bank size.

I've been thinking that I don't want to be in a brokerage account because I have less trust of the backing of the insurance and I have concerns about the leverage of stocks with people who own them on margin.  The financial sector went off a cliff relatively quickly and I can see that some might have been caught owing after their stocks were sold off.  I anticipated a faster sell of of the market so brokerage accounts left me very uncomfortable.  I am not thinking it is going to be a slower drawn out decline as the margins are squeezed, which would limit losses enormously for brokerage companies.  But, if there is a fast sell off of the market those leveraged accounts create significant risk for the rest of us that goes beyond what we think we are risking. 

And then you just don't know what other garbage they are  involved in and the risk they are creating from that.

I definitely think the market is headed lower.  Many company margins are going to be squeezed and the consumer is tapped out.  There are a few winners, but I think a lot more isn't going to meet expectations and the market will go down.  The S&P below 1000 wouldn't surprise me, hence I am leary of brokerage accounts.  But, with the price index so high the S&P might just end up flat.

So, why am I here.  I think teachers are treated awful.  BC is particularly bad.  Contrast it to Ontario and the workload is about 17% higher, the top salary is about 17% lower and the cost of living is at least 20% higher.  An average home is $4-600k and the starting salary for a teacher is in the low $40k and the top 11 years later is in the low $60k.  The workload without compensation exceeds anything I've done before.  BC has a significantly higher student to teacher ratio than the other provinces.

I went to teach in Britain and that was awful.  It is a disaster in terms of what happens to kids when education is not properly funded.  They ran into a teaching shortage more than a generation ago and I think they are living the longer term consequences of that.  I remember being utterly horrified by the news a few years about about two 10-year-old boys that took a 2-year-old and sexually assulted and murder him.  From what I saw in Britain that no longer surprises me.  I just kept remembering when I was in school part of my European history referred to Britain as barbarians and I just kept thinking I was living in "the return of the barbarians."  The adults were often not civil.  I also suspect that is from growing up in a declining standard of living environment.

So, when I was looking for where to go I was looking for better pay.  I found better pay, and better working conditions.  There is a two year probation here.

Doug, I think it is a good idea to spread it out even if you have less.  Say I had $100k, I'd have it in at least two accounts.

I may sound paranoid here, but I do think the market is bad enough that it would be wise to have money in more than one bank as well just so you have access to funds in case your bank has problems. 

And the day/night extremes, whoa, it isn't getting completely dark until close to midnight now.  I am finding it really interesting how when it is still light outside your body just doesn't slow down for sleep. 

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#6) On May 10, 2008 at 1:53 AM, dwot (29.02) wrote:

Wowzie...  Past midnight and the sun is not completely down...

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#7) On May 10, 2008 at 8:34 PM, lquadland10 (< 20) wrote:

Do they have enough in FDIC to cover all the banks?

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#8) On May 10, 2008 at 11:22 PM, dwot (29.02) wrote:

lquadland, I think the way it works is deposits under $100k are covered first.  Then if there is money left deposits over $100 get a share back.  I think those with over $100k lose their money before the FDIC pays a penny.

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#9) On May 10, 2008 at 11:23 PM, dwot (29.02) wrote:

And I think it is in the range of 1/4 of deposits that are insured. 

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