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Old 05-05-2008, 10:10 PM   #21
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Diversification is never a bad thing. Lots more paperwork, though. And more entries on your tax forms.
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Old 05-06-2008, 12:18 PM   #22
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Check out the CDARS program:

Certificate of Deposit Account Registry Service
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Old 05-06-2008, 12:40 PM   #23
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Currently CDARS could not even approach the IR on CD's I have. Also this placement of funds with them (and potentially scattered around the country) still has to be tracked by someone - CDARS? I looked into this program (I received a unsolicited email last year) and IMHO the rate available using "one of their" institutions would have gotten me something south of 5% when I could buy them at PFCU at 6%. And who insures CDARS? This IMHO is not a service I would ever use. I think it is clear you can (with proper ownership designations) never have to use it. Additionally, the first few seconds of the video is a correct but, to be generous, misleading statement - that alone would run me off.
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Old 05-06-2008, 03:55 PM   #24
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If things get really ugly in the financial world some day, Uncle Sam may decide to change the rules about coverage. Not a likely secnario, but not impossible.
Wow, that would be a great way to guarantee a run on banks that makes several of them insolvent...
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Old 05-06-2008, 08:27 PM   #25
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Hmmmm, lets see, insured deposits are paid from multi-billion dollar deposit insurance funds of the FDIC or NCUA (both of which are solvent by any measure), which can be recapitalized by a credit facility from the Federal Financing Bank or the Secretary of Treasury (using public debt transactions like treasury notes and bonds). And each insured deposit is backed by the Full Faith & Credit of the United States, which is, in turn, backed by the taxing power of the Federal Government. Oh, and when the FDIC or NCUA pays an insured deposit, normally by transferring the insured deposit to a solvent insured bank or credit union, the Government then has a priority claim against the assets of the failed bank. So, the Government's claim exposure is never the total face value of the insured deposit.

Yep, there's a lot of risk to an insured deposit (excessive sarcasm intended) -- it's less of a risk than a T-bill.
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Old 05-06-2008, 10:16 PM   #26
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Hmmmm, lets see, insured deposits are paid from multi-billion dollar deposit insurance funds of the FDIC or NCUA (both of which are solvent by any measure), which can be recapitalized by a credit facility from the Federal Financing Bank or the Secretary of Treasury (using public debt transactions like treasury notes and bonds). And each insured deposit is backed by the Full Faith & Credit of the United States, which is, in turn, backed by the taxing power of the Federal Government. Oh, and when the FDIC or NCUA pays an insured deposit, normally by transferring the insured deposit to a solvent insured bank or credit union, the Government then has a priority claim against the assets of the failed bank. So, the Government's claim exposure is never the total face value of the insured deposit.

Yep, there's a lot of risk to an insured deposit (excessive sarcasm intended) -- it's less of a risk than a T-bill.
(2007) "Wow, these mortgage-backed securities are rated AAA, they're really safe."
My sarcastic point is that problems are not always predictable.
For a very small investment in time, and no money, I can get a small measure of increased security. I feel it's worth the minor effort, others are not required to agree.
Spreading the accounts around is also a natural part of my laddering.
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Old 05-07-2008, 07:55 AM   #27
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(2007) "Wow, these mortgage-backed securities are rated AAA, they're really safe."
My sarcastic point is that problems are not always predictable.
For a very small investment in time, and no money, I can get a small measure of increased security. I feel it's worth the minor effort, others are not required to agree.
Spreading the accounts around is also a natural part of my laddering.
And my point is that a federally insured deposit is as safe as a T-Bill, both from a credit worthiness and liquidity standpoint. T-bills are probably beyond the credit rating of AAA. If your insured depository institution fails, your insured deposit is available the next day at another institution (or if the deposit isn't transferred, then the account holder receives a check for the insured amount typically drawn from an account that Uncle Sam has with the Treasury - the same type of check you receive from the IRS for a tax refund or one used to receive from Social Security Adminsistration).

It's good to ladder accounts and to make sure all of your accounts are completely insured, but it's not appropriate to equate the ratings of corporate securities with the credit worthiness and liquidity of a T-bill or federally insured deposit.

For all the problems that the former FSLIC had during the S&L crisis of the 1980's, there was never a crisis in confidence over payment of a federally insured deposit. Problems can be unpredictable but if T-bills or federally insured deposits become less worthy than AAA-rated corporate securities, then our economic security and our financial world has been dramatically altered and we would have a lot more problems to worry about than credit ratings of corporate or government bonds.
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