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Old 07-14-2008, 07:39 PM   #61
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OhSoClose, those are very good points.

But for today, we're dealing with the $100k limit. What do you advise people who are holding $1 or 2 million, not wanting to stick it in the stock market? Do they open 10 or 20 accounts

what about MM accounts at a few brokers? SPCI or whatever it's called is like $500,000 per account
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Old 07-14-2008, 07:39 PM   #62
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O.K. So what's the real story as to why this happened? What questions does one need to ask about his own bank? Is the chicanery mistake widespread?
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Old 07-14-2008, 07:40 PM   #63
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IndyMac was big into alt-a loans
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Old 07-15-2008, 12:35 AM   #64
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Originally Posted by ERD50 View Post

How long has it been since the $100,000 limit has been raised? Was it back when you could go to a 'five and dime' store?


OK - google says:

The History of FDIC



OK, no inflation since 1980, a $ today is the same as it was 28 years ago. right.

-ERD50


FDIC raised IRAs to $250,000 in 2006.

FDIC: FDIC Consumer News Special Bulletin (Revised September 2006)
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Old 07-15-2008, 04:32 AM   #65
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IndyMac: IndyMac History and Collapse. The Saga of the Second Largest Bank Failure in History, here in Sunny Southern California. Dr. Housing Bubble Blog

"IndyMac: Spawn of Countrywide"

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IndyMac was started in 1985 by Angelo R. Mozilo and David Loeb, who together had founded Countrywide Financial Corp., and grew to be the second-largest independent mortgage lender after Calabasas-based Countrywide, which was acquired by Bank of America last week.

The Pasadena-based lender was the outright leader in "alt-A" mortgages -- those made to people with decent credit on terms that fell short of prime mortgage standards. Many borrowers, for example, were allowed to state their income without proof. And many of the loans were "pay option" adjustable-rate loans, or "option ARMs," which allowed a homeowner to pay so little each month that the loan balance grew instead of shrinking. IndyMac also made home-equity loans and sub-prime mortgages -- types of loans that have been beaten up badly by defaults.

The problem with IndyMac's product line was that borrowers often used such loans to turn their homes into ATMs, refinancing from time to time as long as housing prices were rising. When prices stalled and then plunged, defaults surged.

"When all was said and done, IndyMac had specialized in a category of loans -- option ARMs, alt-A, home equity -- that were used by borrowers to strip equity out of homes and live on it, especially from 2004 to 2007," said Frederick Cannon, an analyst at Keefe, Bruyette & Woods.
IndyMac Bank to exit most home lending, slash 3,800 jobs - Los Angeles Times

Senior VP Sales: Mark Mozilo
VP Bus. Dev.: Eric Mozilo
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Old 07-15-2008, 07:25 AM   #66
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I heard on the news (NBR?) that the fed will pay $.50 on the dollar for deposits over 100K at IndyMac Bank. Needless to say the people in line with over 100K were mad at everyone but themselves. Stupid tax strikes again.
Initially (max initial check amount) - it will take a few days to sort out the additional payouts that may be appropriate (joint accounts, individual accounts with beneficiary designations, individual with trusts involved0. A prudent person that structured ownership beyond the "norm" should be made whole.

For some of the people there I wonder what happens to yield on savings (CD's especially). I suspect that even if a CD was at say 6% and had a couple years to go it would be terminated and the funds would have to be reinvested at today's rates (much lower) or the interest rate would be knocked down to current rates (much lower) or may be holder could terminate the CD (without penalty). In any even the account holder suffers a loss as I do not think they will honor the previous rate and the remaining term.
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Old 07-15-2008, 09:01 AM   #67
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Initially (max initial check amount) - it will take a few days to sort out the additional payouts that may be appropriate (joint accounts, individual accounts with beneficiary designations, individual with trusts involved0. A prudent person that structured ownership beyond the "norm" should be made whole.

For some of the people there I wonder what happens to yield on savings (CD's especially). I suspect that even if a CD was at say 6% and had a couple years to go it would be terminated and the funds would have to be reinvested at today's rates (much lower) or the interest rate would be knocked down to current rates (much lower) or may be holder could terminate the CD (without penalty). In any even the account holder suffers a loss as I do not think they will honor the previous rate and the remaining term.
If they have not yet changed how they do things.... the interest rates will not be changed on the CDs. Last Friday Indymac stopped existing as a S&L. All deposits etc. were transferred to a 'bridge bank' with the same terms. They will try and decide what is the best tactic to minimize their losses, ie. sell as ONE entity or split it up into many smaller banks... they then put these out for bid...

The bidder will say if they want to keep the rates as is or not... if there are not a lot that are out of whack, they might keep them... if there are, then you will get a revised rate when it is sold...

From what I saw on TV last night... there is still a run on the bank and a LOT of people are taking out their money... I was very surprised to see all these 'old folks' who were taking out money.... they had to have been through the S&L crisis etc... maybe that was only a Texas issue, but almost every S&L changed hands a number of times..
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Old 07-15-2008, 09:04 AM   #68
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I have all my accounts in credit unions. Regular deposits are covered by NCUA to $100K per account. You could have up to 3 accounts between you and your spouse and be covered to $300K. IRA accounts are separate and are insured to $250K per person. So that would give you up to $800K for two people.

In addition, my credit union has extra insurance by ESI (excess share insurance) to the tune of $250K per qualifying account for CD and IRAs. So you could have coverage up to $300K + $1250K for two people with three regular accounts and two IRA accounts.

Edit; The joint account would be covered to $200K. Plus there are trust accounts you can have. Too many gory details for me and not enough money.
I often wodner about custodial accounts. maybe $100K per kid??
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First Official Bank Run
Old 07-15-2008, 10:05 AM   #69
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First Official Bank Run

IndyMac besieged as it reopens after takeover - Pasadena Star-News

Will be OK if it stops there. Don't know what will happen if there are more.
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Old 07-15-2008, 10:17 AM   #70
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IndyMac besieged as it reopens after takeover - Pasadena Star-News

Will be OK if it stops there. Don't know what will happen if there are more.
makes good video fodder for the networks. It also shows how panicked folks get. I mean, if you have $100,00 or less per account, FDIC made you whole, what's the problem. The folks that only got 50% of the amount that was uninsured, well, they should know better..........

The BIGGER issue is that covering IndyMacs depositor accounts will drain about 12% out of the $53 billion in FDIC, meaning if any more larger banks fail, it will be Congress and taxpayer bailout time.........

Let's see, $46 billion covering $5 trillion in deposit accounts, that's 1 cent of the dollar.........
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Old 07-15-2008, 10:40 AM   #71
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Resolution Trust Corporation here we come
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Old 07-15-2008, 10:50 AM   #72
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IndyMac besieged as it reopens after takeover - Pasadena Star-News

Will be OK if it stops there. Don't know what will happen if there are more.

Will Washington Mutual be next big bank to fail ?

WaMu is tanking BIG TIME !


Or will JP Morgan/Chase take it over ?

Bloomberg.com: Investment Tools


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Old 07-15-2008, 10:52 AM   #73
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My crystal ball says...Wachovia will have a bank run this week.
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Old 07-15-2008, 10:52 AM   #74
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Will Washington Mutual be next big bank to fail ?

WaMu is tanking BIG TIME !
My mom has about $60,000 in WaMu. But right now it's earning 3% and it's under the insurance limit -- plus she doesn't need immediate access to the money, so I'm not worried. If she had over $100K there I'd be telling her to move some of her money so she has less than $100K in deposits -- yesterday.
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Old 07-15-2008, 10:54 AM   #75
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My crystal ball says...Wachovia will have a bank run this week.

There was also speculation that JP Morgan/Chase might take over Wachovia !

Create a bank run and it could be bought for pennies on the dollar


CNBC report links Wachovia, JPMorgan



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Old 07-15-2008, 10:57 AM   #76
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If they have not yet changed how they do things.... the interest rates will not be changed on the CDs. Last Friday Indymac stopped existing as a S&L. All deposits etc. were transferred to a 'bridge bank' with the same terms. They will try and decide what is the best tactic to minimize their losses, ie. sell as ONE entity or split it up into many smaller banks... they then put these out for bid...

The bidder will say if they want to keep the rates as is or not... if there are not a lot that are out of whack, they might keep them... if there are, then you will get a revised rate when it is sold...

From what I saw on TV last night... there is still a run on the bank and a LOT of people are taking out their money... I was very surprised to see all these 'old folks' who were taking out money.... they had to have been through the S&L crisis etc... maybe that was only a Texas issue, but almost every S&L changed hands a number of times..
Typically, the FDIC has 90 days to repudiate (or affirm) the interest rate on any interest bearing account it has acquired as a result of a receivership. If you read the FDIC press release carefully, you might gain some understanding of the mechanics of the closing and transactions, which are complicated by the formation of a new IndyMac, which acquired some of the assets and liabilities of the old IndyMac (placed in receivership). The new IndyMac has now been placed under a conservatorship by the FDIC. Anyone who has seriously worked in this area would know of this transaction as a "pass-thru receivership into a new FSB bank under conservatorship." (Bridge Banks can only be formed for National Banks in receivership like the mega-bank failures of First Republic Bank, M Corp, Bank of New England in the late 1980's and early 1990's; IndyMac was a thrift so the functional equivalent of the Bridge Bank is being used, i.e. a pass-thru receivership into a new FSB under conservatorship). These arcane machinations are further complicated by the duality of roles undertaken by the FDIC, as insurer of deposit accounts and as receiver of the failed bank's assets and liabilities.

I say all of the above because the CD rate really depends on which entity, old IndyMac under FDIC receivership or new IndyMac under FDIC conservatorship has the CD. If old IndyMac under FDIC receivership has the CD (i.e. not been transferred to new IndyMac) -- which likely occurs when the CD is over the insured amount -- the CD holder will likely receive a pay-out check for the insured amount and a receivership certificate for the uninsured amount (with the payment of a 50 percent "advance dividend" cash payment from the FDIC receivership estate). The receivership certificate is a claim on the assets of the old IndyMac assets in receivership, but depositors holding that certificate get priority ahead of other general creditors. If new IndyMac under FDIC conservatorship has the CD, then it's possible that the old rate could be honored, but why would the FDIC do that if the franchise value of the deposits has already been undermined by what appears to be a lot of negative publicity? Normally rates are honored if a new assuming bank (including the FDIC as conservator) thinks it will lose franchise retail value of the depositors by breaking the rates, but in this case, according to the newspaper reports, a lot of the deposits are "brokered" or "hot money" so these are deposits that have little, if any, retail value, anyway!
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Old 07-15-2008, 12:43 PM   #77
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I was told that the existing rate on my CD accounts will be honored until maturity.
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Old 07-15-2008, 12:49 PM   #78
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I was told that the existing rate on my CD accounts will be honored until maturity.
Thanks for the information; but I bet they busted the rates of all brokered deposits. I bet you have a nonbrokered account and the bank wants to keep you as a customer, and the FDIC doesn't want to spook the public, as there's enough hysteria already being played out.
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Old 07-15-2008, 05:51 PM   #79
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After hearing about the IndyMac fiasco, I met with my banker today to check out strategies for being insured on non-IRA accounts over $100k.

Bottom line - No such thing. Instead, need to open multiple accounts or CDs. Otherwise - buy Treasuries.
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Old 07-15-2008, 06:02 PM   #80
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After hearing about the IndyMac fiasco, I met with my banker today to check out strategies for being insured on non-IRA accounts over $100k.

Bottom line - No such thing. Instead, need to open multiple accounts or CDs. Otherwise - buy Treasuries.
You can leverage insurance with multiple accounts with multiple account owners, but I this structuring has its limits. At one time, there was at least one AAA-rated bank -- not sure you can say that these days. Best bet is to open multiple accounts with multiple owners in multiple federally-insured depository institutions (banks and credit unions). When I hear of individuals or organizations (particularly nonprofits) with uninsured amounts in banks or credit unions, I always cringe.
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