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Bank botches CD call - rate goes to 4.125% for 5 years!
Old 09-26-2019, 05:53 PM   #1
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Bank botches CD call - rate goes to 4.125% for 5 years!

One of my step CDs were called on Monday this week. Rate was supposed to go from 2.25% to 4.125% and of course they were going to call.

Today, at end of day, a transaction shows up reversing the call, I get the CDs back, they take back the proceeds, rate moves to 4.125%.

I'm on the phone with Fidelity minutes later. What happened was the issuing bank was required to give 15 days notice of their intent to call, but only gave 5 days. So the call was invalid, and they have to abide by the remaining terms - 4.125%, no more call dates, maturity 9/23/2024.

Works for me.
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Old 09-26-2019, 06:00 PM   #2
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Originally Posted by njhowie View Post
One of my step CDs were called on Monday this week. Rate was supposed to go from 2.25% to 4.125% and of course they were going to call.

Today, at end of day, a transaction shows up reversing the call, I get the CDs back, they take back the proceeds, rate moves to 4.125%.

I'm on the phone with Fidelity minutes later. What happened was the issuing bank was required to give 15 days notice of their intent to call, but only gave 5 days. So the call was invalid, and they have to abide by the remaining terms - 4.125%, no more call dates, maturity 9/23/2024.

Works for me.
Congratulations!
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Old 09-26-2019, 06:03 PM   #3
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Nice.
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Old 09-26-2019, 06:09 PM   #4
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Thanks!

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Old 09-26-2019, 06:13 PM   #5
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Hehe, some VP is gonna get raked over the coals for this snafu!
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Old 09-26-2019, 07:45 PM   #6
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Congratulations. Who issued that CD?
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Old 09-26-2019, 07:48 PM   #7
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Congratulations. Who issued that CD?
Bank is HSBC - CUSIP 40434ANG0
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Old 09-27-2019, 02:47 AM   #8
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Hehe, some VP is gonna get raked over the coals for this snafu!
This is true - I looked up the details and the total of the CD issue was $5M. So paying an extra 2% on it for 5 years comes to a $500K mistake.
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Old 10-02-2019, 11:46 AM   #9
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See attached - HSBC really messed up - this makes a total of 4 for me.
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Old 10-02-2019, 11:53 AM   #10
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What does this mean?

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Customers are required to cover any debit created by the bonds being returned to the account.
They can screw up and if fees are incurred they’re not responsible? That’s BS. I hope it’s uncommon for any fees to be incurred. Heck, paying fees my be worse than the benefit of the higher interest rate.
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Old 10-02-2019, 12:06 PM   #11
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What does this mean?



They can screw up and if fees are incurred they’re not responsible? That’s BS. I hope it’s uncommon for any fees to be incurred. Heck, paying fees my be worse than the benefit of the higher interest rate.
It happened to me last week the first time. Not about fees - obviously the customer couldn't have known a situation like this would arise and Fidelity was aware.

What happened was the day they called the CD and the cash was put in my account, since it was a closed position, I went and spent it - put it into a new CD. Well, 3 days later when they reversed it, it left me with a negative cash balance. How was I to know that this might happen?

I did have maturities over the weekend which hit on Monday morning which was the settle date for the reversal so everyone was happy in the end.
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