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Brokered CDs: screening the issuing institution?
Old 06-12-2018, 11:43 AM   #1
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Brokered CDs: screening the issuing institution?

I recently started shifting cash to CD ladders (at Fidelity).
The cautions state to review the health of the issuing institution(s).
I slow down when offered choices from places like "Bank of China" or some name I can't even pronounce or spell, much less heard of before (bankrate never heard of them either).

Do you research the health of the institution before buying a CD from them?
If so, where do you find health ratings on the institution?
Or do you just go with "there is an "FDIC" icon in the the attributes column" and buy it?
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Old 06-12-2018, 02:37 PM   #2
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I have bought one B of C CD (paid higher than the rest). The brokered CD's are still underwritten by the issuing bank and not the broker. I stay away from the ones that have state level restrictions (blue sky). Otherwise, FDIC is good enough for me.
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Old 06-12-2018, 03:45 PM   #3
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Maybe I am overly cautious but I stick with well known names like Wells Fargo.
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Old 06-12-2018, 05:46 PM   #4
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As long as it is insured, I don't care who the bank is.
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Old 06-12-2018, 05:47 PM   #5
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I have had no issues with fidelity offered CDs but stay within the FDIC insured limit.
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Old 06-12-2018, 08:05 PM   #6
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I have had no issues with fidelity offered CDs but stay within the FDIC insured limit.
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Old 06-12-2018, 08:13 PM   #7
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I only invest in CD's from banks with an A or B rating according to https://www.depositaccounts.com/
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Old 06-12-2018, 08:31 PM   #8
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Maybe I am overly cautious but I stick with well known names like Wells Fargo.


Yep UBetcha! WFC knows how to treat customers. Seriously they were top notch before they lost their way. They seem to have the best rates for most maturities on the Fido site and pay monthly. While I favor well known banks I rely more on FDIC and diversification.
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Old 06-12-2018, 08:37 PM   #9
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Old 06-12-2018, 09:48 PM   #10
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So I assume these Bank of China and Bank of India type banks listed are US subsidiaries, subject to US regulations, FDIC insured, etc.?
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Old 06-12-2018, 10:55 PM   #11
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Or do you just go with "there is an "FDIC" icon in the the attributes column" and buy it?

^This. I have been doing this for years and so far so good. Banks with names that sound like Moldovia seem to pay higher rates (they might have to) than the household name banks.
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Old 06-12-2018, 10:59 PM   #12
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So I assume these Bank of China and Bank of India type banks listed are US subsidiaries, subject to US regulations, FDIC insured, etc.?

They are fdic insured.
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Old 06-13-2018, 01:44 AM   #13
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Good enough for you,
Good enough for me.
Only buy a few,
Cuz it's F-D-I-C.

Besides, it's gubmint guaranteed. What could go wrong?
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Old 06-13-2018, 07:14 AM   #14
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So I assume these Bank of China and Bank of India type banks listed are US subsidiaries, subject to US regulations, FDIC insured, etc.?

They are as safe as any CD but why are you so interested in these two banks. There are plenty of other options that would let me sleep better at night.
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Old 06-13-2018, 02:48 PM   #15
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They are as safe as any CD but why are you so interested in these two banks. There are plenty of other options that would let me sleep better at night.
I’m not seeking to buy from these banks in particular, I just noticed a large number of foreign country named banks on the new CD issues and was curious about how they are structured.

I know BBVA is a Spanish bank with a large US subsidiary, for example.
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Old 06-13-2018, 03:10 PM   #16
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I imagine most foreign countries would love to open a branch in the Untied States, sell CDs and get lots of USA dollars and then have the American taxpayer guarantee repayment.
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Old 06-13-2018, 05:07 PM   #17
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I imagine most foreign countries would love to open a branch in the Untied States, sell CDs and get lots of USA dollars and then have the American taxpayer guarantee repayment.
Hello? These USA dollars stay in the US. Also, the quid pro quo for FDIC insurance is conforming with US banking regulations on investments and capital. Not sure what you think the "play" is but ignorance is bliss I guess.
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Old 06-13-2018, 07:08 PM   #18
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Hello? These USA dollars stay in the US. Also, the quid pro quo for FDIC insurance is conforming with US banking regulations on investments and capital. Not sure what you think the "play" is but ignorance is bliss I guess.

Sounds like I struck a nerve with my comment and made you uncomfortable, my apologies. I way over simplified the attached short article.
https://www.depositaccounts.com/blog...operating.html

Anyone thinking about investing in FDIC insured bank of China or India should carefully read the attached article. Do not skim it, read it, and think through what the author is saying.

With so many options out there I would not put my money with the bank of China or India, but at the end of the day, as the author says, you are insured so go ahead if you want to.
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Old 06-13-2018, 07:34 PM   #19
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Blueskies, did you read your linked article? Fdic insured is fdic insured.
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Old 06-13-2018, 08:00 PM   #20
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Also, if an FDIC bank gets in trouble, the funds to reimburse depositors do not come from the taxpayer. I guess in case of many failures at the same the taxpayers could be on the hook (i.e. "Full faith and credit..."). From the FDIC website:
What is the source of funding used by the FDIC to pay insured depositors of a failed bank?
The FDIC's deposit insurance fund consists of premiums already paid by insured banks and interest earnings on its investment portfolio of U.S. Treasury securities. No federal or state tax revenues are involved.
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