FDIC Closes IndyMac Bank

[ERD50]

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

1974: Deposit insurance increased to $40,000.00.
1980: Deposit insurance increased to $100,000.00; FDIC insurance fund is $11 billion.

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

-ERD50

 

[eridanus]

Certificate of Deposit Account Registry Service

CDARS® is the Certificate of Deposit Account Registry Service®. And it's the most convenient way to enjoy full FDIC insurance on deposits of up to $50 million.

 

[OAG]

Certificate of Deposit Account Registry Service

CDARS® is the Certificate of Deposit Account Registry Service®. And it's the most convenient way to enjoy full FDIC insurance on deposits of up to $50 million.

Like all "good" deals (and IMO this is not one of them) the "devil is in the details". "They" will decide what you will receive as an interest rate (even if you can get a better one). What are the fees (which further reduces the returns). I would use something like the "EDIE" calculator to stay within the FDIC insurance limits (which can be $400K for a two person system, without simple ownership designations (without the need for using a Trust)).

This is not the first time this program has been discussed here. I would like for someone HERE that has actually used this system talk about it.

 

[eridanus]

Like all "good" deals (and IMO this is not one of them) the "devil is in the details". "They" will decide what you will receive as an interest rate (even if you can get a better one). What are the fees (which further reduces the returns). I would use something like the "EDIE" calculator to stay within the FDIC insurance limits (which can be $400K for a two person system, without simple ownership designations (without the need for using a Trust)).

"They" don't decide what the rate is; you decide that when you sign up.

The fees may be excessive but it beats losing 45% of your cash sitting in an Indy account. Of course, as you stated, it's better to do it oneself if one has the time and inclination.

 

[Texas Proud]

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

If you read the history of the last increase.... it was not even in either the bill from the House or the Senate... it was put in by someone during the conference cmty....

NOW, as a taxpayer.... I don't want it to go any higher than $100,000... heck, I would much prefer it go back down to $40K.. If you have the kind of money where you can stick $100,000 in ONE account... then you should have enough sense to spread it around a bit with various banks or S&Ls.... The insurance was for the 'small' depositor.... not the guy who has $500K to put in a CD...

 

[CaseInPoint]

I agree with you and OAG that Congress could, and should, raise the current deposit insurance limit, maybe to $500,000. Prospectively, though, and not to bail out those with uninsured deposits at IndyMac. But that still leaves the funds above $500,000 uninsured, doesn't it? So there are potentially some funds at the bank that are not safe no matter what the limits are, right?

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

 

[REWahoo]

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

You need to consult EDIE, the FDIC's Electronic Deposit Insurance Estimator.

 

[CaseInPoint]

You need to consult EDIE, the FDIC's Electronic Deposit Insurance Estimator.

Cool! Will discuss this in person tomorrow with a banker.

 

[UncleHoney]

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

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.

 

[Bikerdude]

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.

 

[al_bundy]

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

 

[windsurf]

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?

 

[al_bundy]

IndyMac was big into alt-a loans

 

[Helena]

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)

 

[ladelfina]

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"

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

 

[OAG]

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.

 

[Texas Proud]

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..

 

[FinanceDude]

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??

 

[yakers]

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.

 

[FinanceDude]

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.........

 

[al_bundy]

Resolution Trust Corporation here we come

 

[Helena]

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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[eridanus]

My crystal ball says...Wachovia will have a bank run this week.

 

[ziggy29]

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.

 

[Helena]

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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