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Old 09-29-2007, 04:12 PM   #21
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Originally Posted by ziggy29 View Post
If they can change the terms and the rates on the CDs, would that create a time window during which you can redeem the CD without the usual interest penalty? Seems only fair.
Technically, the terms and rates of the CDs of the failed bank are no longer operational, though the CD accounts have been transferred to the acquiring bank. In many cases, the acquiring bank will offer the CD holder in the failed bank a new CD, with the same rate and maturity as the CD in the failed bank. You are no longer locked into the old CD terms and rates and thus can pull out your funds with no penalty, perhaps as early as the next business day.

Net Bank, the failed bank, does not seem to be a traditional bricks and mortar bank. And you will note that the acquiring bank, ING, has a deposit base signifcantly cultivated from the internet. Welcome to the age of internet banking and an internet claims process, as well.
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Old 09-29-2007, 05:58 PM   #22
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Yowser, I totally missed this one. I do have an account with them, but think it has less than $50 in it. I had it on my list of things to do, that is close the account.

I be a girl, he's a boy. Think I maybe FIRED since July 08. Mid 40s, no kidlets. Actually am totally clueless as to what is going on with DH.
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Old 09-29-2007, 07:41 PM   #23
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Originally Posted by Texas Proud View Post
Seems like Cocobird can answer better as he was 'on the other side'... but yes, if they change the rates, you have a window to get your money out.. the previous contract was dissolved by the FDIC...

And Cocobird can answer this one even more so.... if it is a small bank, lots of time the FDIC will not allow a change.. they just bid the deposits out and take the highest bid... not worth the trouble.

When my bank (or should I say banks) failed way back when branch banking was not allowed.. so all our 'branches' were separate banks... the small ones were sold 'as is' and a few of them were sold for NEGATIVE dollars..
Whether someone can withdraw their funds from the CD or not depends on the contract that the assuming or acquiring bank signed with the FDIC. The agency negotiates with the buying bank and its goal is to make the transition as smooth as possible (meaning the customer should not notice any change except the name of the bank).

In some cases, customer were upset when the deal meant that they had to honor the terms of the CD contract. In other cases, customer were delighted when the buyer had to honor the contract (think back to when the banks offered rates of 18% during the high inflation days, and some people purchased 10 year CDs).

A buying can negotiate all kinds of things depending on the level of interest (very low) and the number of buyers (only one). If there is a high level of interest and multiple potential buyers, there is much less negotiating room.

Side note, in case anyone is interested: I'm a "she" not a "he".
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Old 09-30-2007, 02:04 PM   #24
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Thanks for the heads up. I was moving out of Netbank already. This gave me reason to finish the move!
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Old 09-30-2007, 03:44 PM   #25
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FYI - You can get $50 bonus if you open up an account with $250 at ING before Oct 1, 2007. This will let you try the ING products immediately.


Link: $50 bonus - ING Direct : savings account; Exp. - 10/01/07 - iBankDesign

PS The above site is a great site to check on current bank promos.
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Old 10-01-2007, 12:50 PM   #26
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A point of clarification: netbank didn't go belly up because of loan losses. They went bust because they had a lousy business model and have been floundering & losing money for years. I've been watching their descent into the abyss for a while and wondering when the jig would finally be up. Now we know.
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Old 10-01-2007, 01:06 PM   #27
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Looks like lending losses didn't help:

OTS Appoints FDIC Receiver of NetBank

NetBank sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies. As a result, the OTS executed a formal enforcement action with NetBank in 2006 directing the institution to correct its operating deficiencies and enhance its capital position. While the institution continued to operate in excess of minimum capital standards, the actions taken to address these problems were unsuccessful and it became clear that high operating expenses combined with continuing losses were jeopardizing the institution’s viability.
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