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09-15-2007, 05:23 PM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2003
Posts: 5,105
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Run on Bank in England!
Bankers fear £12bn run on Rock - Times Online
This is an interesting story. I wonder if it will be picked up here in the USA. If so will it cause other problems here.
With on line banks you don't even have to run to the bank.
Will it be called a bank "Click" in the future?
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Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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09-15-2007, 06:01 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Jun 2006
Posts: 1,512
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CountryWide recently had a bit of a run on their bank. I had a CD at IndyMac, one of the biggest Alt-A lenders, and when I asked them to cut me a check at maturity, they made a fairly aggressive effort to keep me there. I suspect a lot of people are pulling out their deposits.
BTW, both CountryWide and IndyMac have some of the highest CD and money market rates in the country right now.
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09-15-2007, 06:06 PM
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#3
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Moderator Emeritus
Join Date: Dec 2005
Posts: 10,123
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I wonder if anyone knows if the UK has the equivalent of the FDIC. I think that it has prevented bank runs, I was in Texas during the S&L crisis and things were pretty calm.
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Angels danced on the day that you were born.
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09-15-2007, 09:02 PM
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#4
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Full time employment: Posting here.
Join Date: Apr 2006
Posts: 890
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Quote:
Originally Posted by dex
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I heard about this on NPR on Fri. They had a short story with a couple of proper Englishmen babbling on about it. "This is all because of the problems the US is having with their home loans...".
We'll see...
-CC
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"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
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09-15-2007, 11:04 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Jun 2006
Posts: 1,512
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Quote:
Originally Posted by bssc
I wonder if anyone knows if the UK has the equivalent of the FDIC. I think that it has prevented bank runs, I was in Texas during the S&L crisis and things were pretty calm.
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From CR:
I've found this: the Financial Services Compensation Scheme1. I have my money in a joint account in a High Street bank. How would FSCS pay compensation if the bank failed? The compensation limit of £31,700 applies to each depositor for the total of their deposits with an organisation, regardless of how many accounts they hold or whether they are a single or joint account holder. In the case of a joint account FSCS will assume that the money in that account is split equally between account holders, unless evidence shows otherwise. This means that each account holder in a joint account would be eligible for compensation up to the maximum limit.
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09-16-2007, 12:38 AM
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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: May 2005
Posts: 15,563
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Quote:
Originally Posted by bssc
I wonder if anyone knows if the UK has the equivalent of the FDIC. I think that it has prevented bank runs, I was in Texas during the S&L crisis and things were pretty calm.
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I guess it is how you define 'calm'... no, there were not runs on banks but just the opposite...
Before some of the S&Ls were going under, they offered some high interest rates to get funding... and people were flocking to them to get that money knowing they were protected... we had people pulling money out of the bank I worked at just to do that...
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09-16-2007, 12:43 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 15,563
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I read an article about one couple who was very worried as all their savings... 2 MILLION pounds were on deposit at the bank... not a good investment IMO..
Sounds like it is history and someone will get a bargain basement piece of business..
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09-16-2007, 11:16 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Jun 2006
Posts: 1,512
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Quote:
Originally Posted by Texas Proud
Before some of the S&Ls were going under, they offered some high interest rates to get funding... and people were flocking to them to get that money knowing they were protected... we had people pulling money out of the bank I worked at just to do that...
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It's been a while since I looked at the FDIC rules, but I thought that they only paid back your original principal and none of the accrued interest. Not sure I would chase the highest yield at a bank that looked like it might fail.
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09-16-2007, 11:31 AM
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#9
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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 I understand it, this is a liquidity problem, not an asset quality problem. Their loans haven't gone bad in droves; its just that the market isn't funding anyone now and these guys don't have enough alternative funding sources. So the Bank opf England (Fed equivalent) has stepped in, and I imagine they will have no ,long term issues.
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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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09-16-2007, 01:52 PM
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#10
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Recycles dryer sheets
Join Date: Dec 2006
Location: Florida
Posts: 249
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Always the devil's advocate here: what if there were NO deposit insurance? Imagine that: depositors would (if they were wise) make an institution prove that it handles money wisely. With FDIC and equivalent, there is big-time moral hazard. Many countries today have zero public guarantees, yet some of them are the safest banks in the world (e.g. Switzerland.) Next chapter: how government guarantees make people do other idiotic things like build mansions on sand bars next to the ocean.
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I've got nothing against an honest day's work, provided that someone else does it.
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09-16-2007, 05:06 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: May 2005
Posts: 15,563
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Quote:
Originally Posted by twaddle
It's been a while since I looked at the FDIC rules, but I thought that they only paid back your original principal and none of the accrued interest. Not sure I would chase the highest yield at a bank that looked like it might fail.
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IIRC, you DO get your interest... up to the day the bank is closed. But the FDIC can break any contract that the bank has including CD rates.. I think that they left it up to the buying bank to determine if they wanted to continue to pay the high rate or have them cancel the CD before they bought it...
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09-18-2007, 08:28 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 2,557
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Quote:
Originally Posted by brewer12345
As I understand it, this is a liquidity problem, not an asset quality problem. Their loans haven't gone bad in droves; its just that the market isn't funding anyone now and these guys don't have enough alternative funding sources. So the Bank of England (Fed equivalent) has stepped in, and I imagine they will have no ,long term issues.
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All Ponzi schemes are inevitably liquidity problems not a problem of bad loans. And the plethora of off-balance sheet financing by banks in packaging home mortgages at AAA rated investments is leading consumers to have no faith in what their banks are telling them so they panic. It will be interesting to see just how much the government will be willing to pony up for the Ponzi bankers. And the resets don't start in earnest for another 90 days. Don't think this is the last of the "liquidity issues" that will have world governments bailing out banks.
As the ultimate Ponzi player of course the government can inflate away promised payments so everyone can get back to square one. I think this is the scenario Greenspan sees when he said over the weekend in a couple of years there will be a need for double digit interest rates. An interesting comment by Greenspan over the weekend was that world governments have an obligation to save the greedy and arrogant in order to preserve the capital markets and avoid hurting the innocents.
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ERD 50 says I should post this as a warning in believing anything I would post. I allocated one percent of my portfolio to calls for 2020 and then sold all my stocks on March 5, 2020. Returned back in on June 3, 2020.
https://www.early-retirement.org/forums/f44/why-i-believe-we-are-about-to-embark-on-a-historic-bull-market-run-101268.html
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09-18-2007, 08:32 AM
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#13
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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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Hey, I just heard a piglet squeal!
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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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