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09-10-2008, 08:23 PM
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#1
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Full time employment: Posting here.
Join Date: Oct 2003
Posts: 961
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Puerto Rico Bank CDs?
Occasionally I check out the CD rates at VBS. Kind of like, okay, if I had enough money to make laddering the CDs worth the time - day dreaming of sorts.
I noticed today that most of the highest CD rates were from banks in PR. Doral Bank, R-G Premier bank, etc. I checked them out on the FDIC site, and they both have billions in assets. I figured there had to be some catch explanation for the higher rates, and thought someone [brewer, etc.] might already know.
Thanks,
Alec
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09-10-2008, 08:34 PM
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#2
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Moderator Emeritus
Join Date: May 2007
Posts: 12,901
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Yeah I was wondering the same thing yesterday while I was checking the CDs available at Vanguard. They had nice juicy rates but I had never heard of them. Of course they are FDIC insured, so in the end does it matter?
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09-11-2008, 01:35 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Jul 2004
Posts: 1,434
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I have been wondering if FDIC, itself, has a moral hazard. To attract cash a failing bank can offer higher rates even though it is questionable that they can pay the rates very long. They can justify this with two lines of thought. One, the liquidity will give the bank the breathing space to recover their business - not a moral hazard. Or two, the bank can simply think that, even though the rate is higher than they normally would offer, no one is hurt if no one exceeds the FDIC limit - a moral hazard.
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09-11-2008, 06:17 AM
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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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Some of those banks are not in great shape. But they are all covered by the FDIC, so keep it under the insurance limits and you should be OK.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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09-11-2008, 07:48 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by brewer12345
Some of those banks are not in great shape. But they are all covered by the FDIC, so keep it under the insurance limits and you should be OK.
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It's all good until FDIC runs out of money, and then borrows $70 billion from the Treasury.
Imagine the dent a WAMU failure would put on FDIC...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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09-11-2008, 03:45 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 4,337
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I have about 25% of my CD money with the PR banks. The interest rates seem to run about 0.1 to 0.25% higher so it isn't that much more.
I strickly keep less than $50,000 in any one bank.
I'm counting on FDIC backup. If you think this is a panic, watch what happens if the FDIC doesn't back up a failed bank. I think the government would turn on the printing presses full speed to avoid that happening.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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09-11-2008, 05:25 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,951
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Quote:
Originally Posted by 2B
I If you think this is a panic, watch what happens if the FDIC doesn't back up a failed bank. I think the government would turn on the printing presses full speed to avoid that happening.
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It is the obvious answer, and so far the government is cruising down the path of trying to prevent a credit implosion by printing (virtual) money.
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