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Brokered CDs: screening the issuing institution?
06-12-2018, 10:43 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 1,955
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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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06-12-2018, 01:37 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Jan 2017
Location: Hog Mountian
Posts: 2,077
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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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Never let yesterday use up too much of today.
W. Rogers
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06-12-2018, 02:45 PM
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#3
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Recycles dryer sheets
Join Date: Sep 2014
Location: Miami
Posts: 337
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Maybe I am overly cautious but I stick with well known names like Wells Fargo.
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FIRE July 2015
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06-12-2018, 04:46 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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As long as it is insured, I don't care who the bank is.
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"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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06-12-2018, 04:47 PM
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#5
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Recycles dryer sheets
Join Date: Aug 2015
Posts: 179
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I have had no issues with fidelity offered CDs but stay within the FDIC insured limit.
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06-12-2018, 07:05 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,230
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Quote:
Originally Posted by 53anddone
I have had no issues with fidelity offered CDs but stay within the FDIC insured limit.
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+1
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TGIM
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06-12-2018, 07:13 PM
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#7
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Full time employment: Posting here.
Join Date: Aug 2013
Location: New Jersey
Posts: 910
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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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06-12-2018, 07:31 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,309
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Quote:
Originally Posted by Blueskies123
Maybe I am overly cautious but I stick with well known names like Wells Fargo.
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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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...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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06-12-2018, 07:37 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Apr 2016
Location: Ex-Cali
Posts: 1,236
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F-D-I-C.
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______________________
The plan was September 1, 2022 and I am 95% there. Still working a few hours a week at the real job.
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06-12-2018, 08:48 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,007
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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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Retired since summer 1999.
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06-12-2018, 09:55 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by Spock
Or do you just go with "there is an "FDIC" icon in the the attributes column" and buy it?
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^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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Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-12-2018, 09:59 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by audreyh1
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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They are fdic insured.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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06-13-2018, 12:44 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Sep 2012
Posts: 1,568
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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?
__________________
You know that suit they burying you in? Thar ain’t no pockets in that suit, boy.
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06-13-2018, 06:14 AM
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#14
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Recycles dryer sheets
Join Date: Sep 2014
Location: Miami
Posts: 337
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Quote:
Originally Posted by audreyh1
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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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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FIRE July 2015
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06-13-2018, 01:48 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,007
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Quote:
Originally Posted by Blueskies123
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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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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Retired since summer 1999.
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06-13-2018, 02:10 PM
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#16
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Recycles dryer sheets
Join Date: Sep 2014
Location: Miami
Posts: 337
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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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FIRE July 2015
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06-13-2018, 04:07 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
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Quote:
Originally Posted by Blueskies123
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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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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If something cannot endure laughter.... it cannot endure.
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Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-13-2018, 06:08 PM
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#18
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Recycles dryer sheets
Join Date: Sep 2014
Location: Miami
Posts: 337
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Quote:
Originally Posted by pb4uski
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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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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FIRE July 2015
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06-13-2018, 06:34 PM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Blueskies, did you read your linked article? Fdic insured is fdic insured.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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06-13-2018, 07:00 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,309
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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.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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