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Is Wachovia in trouble?
Old 07-22-2008, 01:48 PM   #1
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Is Wachovia in trouble?

Current CD rates are abysmal in our area with everyone offering rates in the 2.3% to 2.6% range. The one exception is Wachovia, which is offering rates ranging from 4.25% for 12 months to 5% for 36 months. I was about to send my wife there to open a $100K CD, but after today’s financials release, I'm not sure.

I haven't seen any comments implying imminent failure, but the there's some concern that they may have to put themselves up for sale.

Any opinions? Do these higher rates really reflect high risk?
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Old 07-22-2008, 01:56 PM   #2
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High rates more likely mean fierce deposit competition. In any case, if you read the fine print and stay under the FDIC limit, I see no reason why you shouldn't take advantage of the attractive rates offered.
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Old 07-22-2008, 02:02 PM   #3
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Jamie Dimon is waiting for all the big banks to be stupid so he can buy them.........
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Old 07-22-2008, 02:04 PM   #4
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Originally Posted by IBWino View Post
Current CD rates are abysmal in our area with everyone offering rates in the 2.3% to 2.6% range. The one exception is Wachovia, which is offering rates ranging from 4.25% for 12 months to 5% for 36 months. I was about to send my wife there to open a $100K CD, but after today’s financials release, I'm not sure.

I haven't seen any comments implying imminent failure, but the there's some concern that they may have to put themselves up for sale.

Any opinions? Do these higher rates really reflect high risk?
Just stay under 100k and there is no problem. Go for it.
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Old 07-22-2008, 02:05 PM   #5
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They need liquidity, or at least it seemed that way in their release, and might be done by offering great rates (similar to what ETRADE side) and/or cutting their dividend (which they did). Even though I cannot predict the future, I do not think Wachovia is in much trouble, or close to failure. They (and WaMu) are one of the hardest hit of the financials, but as long as you stay FDIC-insured, you should be fine.
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Old 07-22-2008, 02:27 PM   #6
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Thanks guys. I didn't think there was much risk to the principal, just to losing out on the earnings, in which case we might get 50 cents on the dollar. But even at that, we'd be earning close to what is being offered by most of the other institutions we’ve checked.
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Old 07-22-2008, 02:37 PM   #7
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Thanks guys. I didn't think there was much risk to the principal, just to losing out on the earnings, in which case we might get 50 cents on the dollar. But even at that, we'd be earning close to what is being offered by most of the other institutions we’ve checked.
Your interest needn't be at risk, either. Just invest so that the principal plus interest doesn't go over 100K. If you invest $95,923 for 12 months at 4.25%, your CD will be 100K at maturity.
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Old 07-22-2008, 03:08 PM   #8
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Your interest needn't be at risk, either. Just invest so that the principal plus interest doesn't go over 100K. If you invest $95,923 for 12 months at 4.25%, your CD will be 100K at maturity.
I didn't realize that. I always thought that the pricipal was insured, not the interest, regardless of the balance. If that's the case, then if it's a joint account, isn't it covered for up to $200K?
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Old 07-22-2008, 04:28 PM   #9
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Wachovia loses $8.9B, cuts 6,350 workers, dividend - Yahoo! News
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Old 07-22-2008, 04:34 PM   #10
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...and the stock rallies 17%
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Old 07-22-2008, 06:41 PM   #11
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...and the stock rallies 17%
I know it is all about expectations but...

When Wells Fargo and B of A, rallied they actually made money even after increasing loan losses, WB is hemorrhaging money. I'm sure there is money to be made on Wachovia stock, but not by me.
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Old 07-22-2008, 07:59 PM   #12
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I didn't realize that. I always thought that the pricipal was insured, not the interest, regardless of the balance.
Interest is not insured until it's credited to your account. In other words, if they go belly up at 5 months and 29 days, you potentially lose 6 months of interest [if the interest is credited at the end of the CD rather than compounded daily or monthly].
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Old 07-22-2008, 09:33 PM   #13
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Jamie Dimon is waiting for all the big banks to be stupid so he can buy them.........
Yeah, and it looks like WB's big mistake was buying Golden West. The Sandlers sure came out on the right side of that deal.
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Old 07-22-2008, 09:43 PM   #14
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Interest is not insured until it's credited to your account. In other words, if they go belly up at 5 months and 29 days, you potentially lose 6 months of interest [if the interest is credited at the end of the CD rather than compounded daily or monthly].
Accrued interest is covered.

What is the FDIC insurance amount?

"The basic insurance amount is $100,000 per depositor, per insured bank. This includes principal and accrued interest up to a total of $100,000."
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Old 07-22-2008, 09:46 PM   #15
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......if it's a joint account, isn't it covered for up to $200K?
No, you and your wife would have to open separate accounts. Each would then be insured up to 100K.
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Old 07-23-2008, 06:08 AM   #16
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No, you and your wife would have to open separate accounts. Each would then be insured up to 100K.
Joint account two names = $200K. Go to EDIE and check it out. FDIC Calculator.
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Old 07-23-2008, 07:53 AM   #17
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Yeah, and it looks like WB's big mistake was buying Golden West. The Sandlers sure came out on the right side of that deal.
Yeah, I knew I should have shorted WB when I saw that those fools bought from the Sandlers. Those old coots could have sold the bank any time in the past 10 years. They sold at a particular point in time for a reason.
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Old 07-23-2008, 09:36 AM   #18
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Joint account two names = $200K. Go to EDIE and check it out. FDIC Calculator.
I stand corrected, although this raises an interesting question. If the account is JTWROS and one spouse dies, woudn't it become a single account in the name of the surviving spouse, effective the date of the other spouse's death? If the bank subsequently failed before the surviving spouse moved half the money to another bank, it seems that only 100K would be covered. :confused:
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Old 07-23-2008, 09:43 AM   #19
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I stand corrected, although this raises an interesting question. If the account is JTWROS and one spouse dies, woudn't it become a single account in the name of the surviving spouse, effective the date of the other spouse's death? If the bank subsequently failed before the surviving spouse moved half the money to another bank, it seems that only 100K would be covered. :confused:
It probably would BUT you would have the ability change the ownership (or withdraw the funds - without penalty due to death). Could always name another joint owner (a kid, sibling, etc.,) to preserve the insurance status.
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Old 07-24-2008, 12:53 AM   #20
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A few months ago JP Morgan/Chase was interested in taking over Wachovia.

IRA CDs are FDIC insured up to $250,000.

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