So, how's your bank (or credit union) doing this Saturday morning?

[marmar]

Calamitous day sees banks, credit unions seized
Three banks, two corporate credit unions taken over by regulators in evening

By John Letzing, MarketWatch


SAN FRANCISCO (MarketWatch) -- The pace of the ongoing credit crisis quickened significantly Friday when regulators seized three banks and placed two large corporate credit unions into conservatorship, citing a need to "stabilize the corporate credit union system."

Banks in Colorado, Georgia and Kansas were closed by regulators, bringing the number of bank failures this year to 20, while the National Credit Union Administration Board seized corporate credit unions in California and Kansas that have a combined $57 billion in assets. Corporate credit unions are chartered to act as a sort of clearinghouse for the credit unions that serve consumers.

The Federal Deposit Insurance Corporation said that Stockbridge, Ga.-based FirstCity Bank was closed by regulators, adding that it will mail checks to FirstCity's insured depositors Monday morning.

The failed bank's direct deposits from the federal government such as Social Security and veterans' payments will be transferred to SunTrust Banks Inc., the FDIC said. FirstCity had $297 million in assets and $278 million in deposits as of March 18, the FDIC reported. It also had roughly $778,000 in deposits that exceeded the federal deposit-insurance limit of $250,000.

FirstCity becomes the eighth Georgia-based bank to fail since the economy began sliding into crisis last August, according to FDIC data. The last Georgia bank to fail was Freedom Bank of Georgia on March 6, the regulator said. It estimated the cost of FirstCity's failure to the deposit insurance fund as roughly $100 million. .........(more)

The complete piece is at: http://www.marketwatch.com/news/story/Calamitous-day-sees-banks-credit/story.aspx?guid=%7B1B67729E%2DD317%2D41BD%2D9503%2D11DE3E9B48AF%7D

[CoffeeCat]

1. march 28 can't come soon enough...

We're using our bank only to pay bills. The rest of our money is 'out of the system' except
for one CD that matures on 3/28.

That day can't come soon enough.

We're just done.

...After reading Matt Taibbi's article in "Rolling Stone", I'm confident that our paranoia is more-than justified.

[CreekDog]

2. you're moving your money to a mattress?

or some equivalent?

[ThomWV]

5. Why not hide it under a rock at the bottom of the closest creek?

Just about as safe.

Out of the system indeed.

Ponder this: Money is the medium of exchange, when its 'out of the system' that means that it is in a place where it ceases to be available for exchange - hence it ceases to be money. What the guy (or gal) has isn't money, its just a stack of worthless paper making lumps in the matress.

[CoffeeCat]

9. That doesn't even make sense...

We're on vacation right now...spending money that's been "out of the system."

We don't trust the system right now, since it's been over run by criminals and sociopaths.

We'll return when the waters are safe. There's no harm in being conservative until this
mess dies down.

We also got out of the stock market early last fall, avoiding massive losses. Three
years ago, we sensed that economic hell was on the way--and we paid off all debt.

I think our intuition has served us pretty well so far.

[CoffeeCat]

8. Absolutely...

We slowly ATM'd our money out of our accounts. We've been doing this for
several months.

We use our svgs/chkg just for bill paying only--and the one remaining CD will be out 3/29.

[CreekDog]

10. how secure is your money?

what if your house burns down or wherever the money is kept?

[CoffeeCat]

11. It's in a fire-proof safe...(nt)

[CreekDog]

12. and if all the banks fail and the US gov't doesn't back them

then what will your cash be worth?

because you are putting it all in a safe to protect from that eventuality.

of course in that case your cash will be worth zip.

in the meantime you are taking more risk by storing it this way than by keeping it in financial institutions.

[CoffeeCat]

13. We all gotta do, what we gotta do...

I'm not claiming that I'm some financial genius.

Hell, I might be making a big mistake for all I know.

All I can do is assess the situation, weigh the risks and make decisions.

We're all just trying to survive and make the best out of a really impossible situations, aren't we?

Best of luck to all of us! :)

[CreekDog]

14. you aren't weighing the risks

actually.

you think you are but you aren't.

[CoffeeCat]

15. I'm open to what you have to say....

Are you suggesting that since my money is out of the banking system, that this is a "risk" because
it's not 'safe' in the bank?

Are you suggesting that fire or theft poses a greater risk than having it in a bank?

[CreekDog]

16. yes that's what i'm saying

i'm looking at some probable assumptions you are making and guessing that:

1) you think you are protecting yourself from bank failures that are not protected by the FDIC AND the full faith and credit of the US Government.

2) thus you are holding your cash where you deem it less vulnerable than to the failure of 1) bank 2) FDIC 3) US GOVT to honor, in accordance with law, your deposits

what i'm saying is that for your money to truly be at greater risk than it was in a bank, your fireproof safe would have to be stronger than the 1) bank (okay, i can believe that these days :P ) 2) the FDIC and 3) The full faith and credit of the US GOVT. it must be safer than ALL 3 and i don't believe it is.

thirdly, because you are holding "cash" then should all those 3 fail, then the value of "cash" in the form of US dollars would be a lot less. if you were truly hedging on such an eventuality, you should be hording precious metals or something like that (nevermind that there's a ton of risk in that!!!)

so that's my take. this all assumes you are within the amounts of FDIC protection and dealing with FDIC insured institutions (or insured credit unions).

the government is required to back insured deposits at insured institutions, this is not optional. if they do that and your money is in a safe, you took a risk for nothing, if they don't back it then your money (even if you have every dollar in a safe) is worth a lot less.

i'm not trying to convince you, but i'm trying to tell you to weigh all probable risks rather than just the ones that led you to the decision you made.

[CoffeeCat]

17. There are a couple of things...

First, the bank in which we currently have our money is rated two stars. It's a local bank. We're nervous about
that low rating. That's one reason that led us to using the accounts only to pay bills--and to keep the remaining
money out of this bank (and the banking system).

We thought...ok, what bank would be a safe bet? We decided that truly---we didn't know. Wells Fargo is very reputable
around here, but so many have said that all of the large bailout banks are insolvent.

We pondered for a while...

Then, we weighed some other info:

Do you remember when Washington Mutual failed? I followed that story closely and noticed in nearly every article
about WaMu's demise--there were a few sentences about the FDIC. There were quotes from FDIC insiders. They said
that WaMu's failure "stretched the resources of the Fed." In other words, the Fed's resources covered WaMu, but
that failure put a strain on their resources. Yes, WaMu was huge, but that was ONE bank.

Major red flag for me.

Furthermore...

Have you seen Sheila Bair's comments lately about the FDIC and it's inability to handle covering deposits--if there
are multiple bank failures. About three weeks ago, she stated this repeatedly. Her answer was to raise fees on
all banks--to shore up the reserves. I'm not sure where all of that went.

So really--there are cracks in the glass at FDIC. If you ask me, they've been sounding alarm bells--with their public
admissions about possibly not being able to cover deposits.

Also, there are a couple of DUers who have experienced bank failures that were covered by the FDIC. Both said it took six
months to recover their money. Six months? At the VERY LEAST, in my opinion, people should have a stash of cash
at home or somewhere else safe. Who could survive for six months without the money in their bank?

Another thing--I've grown incredibly mistrustful of our government institutions. Look at what these people have done
to our democracy. I don't trust them with our money--which is one vital component to our survival. Do I really
want to trust the 'good word' of a government that has become so corrupt and so steeped in criminal behavior? They
could care less about us. Look at what they've done with respect to our 401ks and pensions. The lured us into
sinking our nest eggs in their coffers--and they have no remorse about us--solely to enrich themselves.

I'm supposed trust that these people will make good on their word--if I give them my money and there's a problem?

Sorry, no. You said that I haven't weighed the risks. Ohhhhhhh...yes. Yes, I have.

I trust myself and our family to make healthy, rational decisions--more than I do this government. This was a decision
made after much reflection, research and weighing the options. It's a temporary decision, but I'm proud of it
and I stand by it.

[CreekDog]

19. okay, i hear you

but even if the FDIC were to run out of money, the US Gov't is on the hook to honor those insured deposits. doing otherwise would be "defaulting" on obligations, something the US government has not done. and again, if the government defaults, your cash may not be worth that much anyway. essentially you are betting on the failure of the institution that gives your cash its value and thinking you can protect that cash's value on your own while the institution behind it fails --it doesn't work that way. if the government fails, your cash, not backed by them = not valuable.

also most people who've gone through bank failures within insured amounts can access their money almost immediately. if you have more than is insured then you will have to wait until the bank is liquidated.

what i do is spread my money among different institutions so that one failure that causes a hiccup in access doesn't keep me from all or most of my money.



good luck to you.

[KharmaTrain]

3. Thank Goodness For The FDIC

They've been one of the few bright spots in this abyss...while taking over these banks (plus who knows how many last year), they've kept them open and people have been able to access their accounts. Sure beats the alternative. With the limit raised to 250k on deposits, hiding the money in your mattress is not going to make it any safer...especially if the dollar collapses, it won't matter where the money is. Now Gold...that's another issue.

Cheers...

[Hugin]

4. Swimmingly!

Thanks for asking.

( Wow! Market"Limbaugh for President"Watch has really swan-dived to the right. Well, I should have expected it from a News Corp. enterprise. )

[trof]

6. My CU has a 4 star (out of 5) rating.

We're doing just fine, thanks.

[The Velveteen Ocelot]

7. A five-star rating for mine.

Great rates, great service. I :loveya: my credit union.

[MadMaddie]

18. My credit union has a 4 star rating.

Whew..