Got more than $100,000 in any one institution? Got more than $250,000 in any IRA? Got ETF's or funds like GLD? You may want to make sure when the institution(s) who hold your money go belly-up, as so many will during this housing/mortgage debacle, that you don't lose it all
Historically, insured funds are available to depositors within just a few days after the closing of an insured bank. Since the start of the FDIC in 1933, no depositor has ever lost a penny of insured deposits.
Basic Insurance Amount Is $100,000. The FDIC insures deposit accounts such as checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs). The basic insurance amount is $100,000 per depositor per insured bank.
The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased these products from an insured bank.
The FDIC also does not insure U.S. Treasury bills, bonds, or notes. These are backed by the full faith and credit of the United States government.
In addition, federal law provides up to $250,000 in deposit insurance coverage for self-directed retirement accounts, such as Individual Retirement Accounts (IRAs).
June 28, 2006
HP'ers: Get familiar with FDIC and their limits - you'll thank me down the road
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30 comments:
keith: what happens when your bank where you deposited your money from house sold, goes belly under and reneges on its FDIC promise..and the guvment leaves you high and dry.
keith, at least, you had a solid brick & mortar before/
If banks do go under in large numbers, that possibility seems to be suggested by the low reserve requirements, where does the FDIC reimbursement come from? The US Gov't is broke and doesn't have many many trillions of dollars to hand out to the sheeple. Will the money get printed? How will this be reflected in the M's (M1, M2, and the now deceased M#)?
How many trillions of ARMs reset this year? If the 100% 80/20 loans have the 20% 2nd default is that like leverage on the 80% first? In other words does $1T of 2nds imply $4T of 1sts at risk?
How does one posture to weather the risky scenario? Gold? Cash? lead?
It would seem that the FDIC insurance offers better protection against an isolated bank closure than against a system-wide breakdown. But why do you think banks would close if people start defaulting on their mortgages, I thought the banks sell off the mortgages as soon as they issue them.
Certainly someone will be left holding the bag, but who?
Who buys the adjustable 2nd MTGs and HELOCS? I know they sell the 1st mortgages but many of the FBs also got 2nds and 3rds, and HELOC'd those properties the 1st are secured by. What secures the other loans? When the FBs default, the economy slows / drops, and people want their cash to buy gold / silver... then will the banks get crushed? I was reading that the reserve amounts relative to deposits / loans is much less than previous recessions.
This may be the real problem looming. Trillions of dollars in unsecured credit.
As to stashing bullion in a safe - be careful. The safe is obvious. It is a good place to keep SOME of your stash, but you will open it when a thug has a gun to your head. The thug doesn't need to know that most of your stash is squirrelled away in other places. Do not put all the eggs in the same basket.
The new banking law that was passed last year allows banks to pay depositors a nominal amount on demand, and delay paying the rest for up to 30 days. Reserve requirements are so ridiculously low now, most banks would have to turn people away if even 5% of their customers tried to withdraw deposits.
What is "f" dick kleipfh?
I believe it was Henry Ford who once said "People who keep their money in banks deserve what they get: screwed."
Here is the link (from Daily Reconing):
http://tinyurl.com/hrfpt
"The scene is now perfectly set to reveal the ugly fact that total deposits at the banks are up to $5.2 trillion, which is 47 times bigger than it was in 1995. That's a growth rate of 42% a year, compounded! And the total loans and leases is now $5.7 trillion, which is 27 times bigger than in 1995, which works out to an annual growth rate of 35% a year! Big, Big increases!
Yet against that monstrous, cancerous rise in both assets and liabilities, the required reserves went down from $57 billion in 1995 to only $42 billion today in 2006! Hahahaha! Surprise! Down! Required reserves went down! Hahahaha! To keep the same 0.518 ratio of required reserves against total deposits in the banking system in 1995, the banks would need to have, right now in required reserves, $2.693 trillion! Instead, they have only $42 billion, 1.6% as much!"
Is this the real threat to those of us who are trying to protect what we have earned and saved?
I suspect it won't be long before cash transactions in the U.S. are severly limited (say less than $100) so that banks and the Federal Reserve can sidestep this issue of having no reserves in the system. If they need more funds in a crisis or emergency, Bernanke will just tap a keyboard and voila!, here's your money!
Handing out those debit cards after hurricane Katrina was an experiment - look for a much more widespread version in the future, comrades.
Clouds are forming said...
Oh, I think the US govt. can pay a little overtime as they crank out fresh US currency to pay you. It's not like they aren't doing that unregulated as I type. They can print new 5's, 10's, 20's..etc anytime they want.
If that is the case then cash will be a underground currency. What about all the gold / silver coins? There may be a underground market for those also, as seems to be the case where I buy mine with cash. No paperwork except exchanging cash for coins.
The darn dealer is a little greedy today, asking $50 over spot for their Maple leafs when Kitco is $30 over spot. This dealer must think gold is going way up in the near future.
Think I will start buying more lead and stainless steel (guns).
"They can print new 5's, 10's, 20's..etc anytime they want."
According to several reports from people forced to work overtime, Treasury actually printed two TRILLION in extra currency earlier in the year and then stored it away. Seems they expected some rather large shit pies to hit the fan. Perhaps they uncovered a scheme to contaminate paper money with some chemical or bio agent?
for a period when I was here in London I didn't have a UK bank accont set up yet, and my only access to cash was via my ATM card
Well, for 30 days the wells fargo ATM cards went down - as we did chip and pin conversion. I called the bank and they said they'd send a new one that worked right out. 10 days later, no card
I called again, and again, and again. Finally, 30 days later, I got an atm card and got cash. thank god credit cards kept working, but for a lot of stuff, gotta have cash.
living without cash or access to cash is a great lesson.
I just haven't figured out the answers.
Who here thinks Rush Limpbonbe will be penile-ized for his latest run in with the law? Will he receive a s"stiff" sentence. D "hard" time? Will republican "erection" hopes for Novemeber be "deflated"?
So you're saying my $57.34 in my savings account is safe? Wooshh.
What are you worried about? Banks are run by very responsible people who under no circumstances would tread on the credibility to make millions of dollars writing dubious loans.
Ha,ha - funny stuff. You think if there is a systemic failure of the financial system you will find out....
We can't even get straight news about the housing bust, Iraq, etc. Any systemic failure will be swept under the rug and heli Ben will hit the printing press.
1) Are money markets held at brokerage
accounts such as Fidelity insured
for sure?
Probably not. There are TWO kinds of accounts that have the words "money market" in them. One kind can be insured, the other can not.
Along with physical Gold, Silver and lead, I think that it is prudent to have 5-10% of your cash under the mattress. You gotta take care of yourself and family first. A little lost interest in exchange for possession is ok with me.
The writings of Richard Daughty aka the The Mogambo Guru can be found here:
http://tinyurl.com/93na6
There are also rumors that the banks in the Carribean have been buying dollar debt (T bills) to make up for the decline in China's and India'a and ________'s appetite for US dollar debt. Maybe that is where the pallets of new Franklins went.
And here is another good reason to have some gold / silver squirrelled away on one's 20 acre property( guarded by large dogs and guns): "I believe the stature and reputation of the dollar as store value has been greatly diminished and undermined over the past decade," Anthony S. Fell, chairman of RBC Capital Markets, said.
http://tinyurl.com/lnzg3
good thread...
One thing I started doing the last couple of months: as soon as I deposit a check from a client (I'm independent, no W2 wages) and it clears, I cash it out. I then deposit back enough to pay bills.. cable, CCs, gas, pge, etc. The bank(s) don't have more than 1000 of my money.
"The FDIC does not insure the money you invest in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if you purchased these products from an insured bank."
SIPC protects brokerage securities accounts from firms that go under financially. Do your homework before lighting a fire...
http://www.sipc.org/how/covers.cfm
"SIPC protects brokerage securities accounts from firms that go under financially."
Sure they do, but their resources are limited. Look at the PBGC, they are flat broke after only a few dozen pension plans went belly up. SIPC would have to stand in line with all the other "insurance" programs in the event of a major financial emergency. And just because they say you are insured doesn't necessarily mean you will have quick access to assets in your accounts.
It might take Congress months to come up with a bailout package and even then there is no assurance you will receive 100% of what you had. The whole FDIC/SIPC thing is smoke and mirrors to bolster confidence in a system that gets shakier every day.
Keith - You got my attention...we have a large sum in one bank (savings). To be safe, you are saying divide it into different banks, just not accounts? Thanks.
jj
401k's are toast?
Random Comments on multiple items:
- Fidelity accounts are *not* FDIC insured. SPIC protection is against fraud in a brokerage firm, and has nothing to do with the investment holdings. If there is market wide fraud, the fund is wiped out. Even a big failure of Fidelity, there will be not be enough in the insurance fund. Of course, if a business fails, the securities on account are used to pay you back at whatever market value. This is why its a fraud only insurance.
- The Federal Reserve will print money if it runs out of FDIC funds. So it will spread the pain. Which is better, no money, or you money back with 30% cheaper dollars.
It is very likely that they will issue some sort of Bond or T-Bill's similar to war or Brady bounds in order to "launder" the money creation and not have a sharp rapid rise in the money supply and inflation, since this could trigger a panic. They will prefer to retire these "bonds" slowly with slow inflation....
- I am in the "problem" of exceeding FDIC limits from time to time. I try and spread through broker sold CD's, with each insured up to 100,000. I have to track which banks have which CD's in order to not accidently buy two from the same bank at the same interval.
- I to have bought some physical gold and guns, but its barely 2% of my portfolio, and just a sh*t hits the fan backup plan...
- Banks have sold of the mortgages they have written, but they then buy back a bunch of "securitized" investments, backed by, you guessed it, mortgage paper. This provides geographic diversification, though not mortgage system. Also spreads the risk from lousy lenders to the others. Of course these are usually various forms of derivatives of varying complexity.
- Regarding Keith and the bank card. Yes, I can feel your pain, and was on a remote assignment once and dependent on my cards. At home, at least I know I have food, water, cash, (and the gold + guns) to ride out an emergency. On the road, you are at the will of a functioning financial system...
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