While this is timely information bank failures are normal part of life.
July 14, 2008 6:58 AM Subscribe
Worried about bank failures? First step: check if your bank is insured by the Federal Deposit Insurance Corporation (FDIC). If so, then your first $100K is insured against loss so no worries.
Got more than $100K? Well then, you'd better speak with EDIE.
EDIE (the Electronic Deposit Insurance Estimator) will tell you exactly how much FDIC insurance coverage you've got.
The maximum coverage is $100K per depositor per savings account per institution. So one approach would be to distribute one's money at multiple financial institutions. But by enlisting the entire family, the apparent FDIC limits for deposits at a single institution can be circumvented. Assuming we're talking about a married couple with two children, here's how it works.
Husband and wife each maintain separate savings accounts, gaining FDIC coverage on an aggregate amount greater than $100K but less than $200K. The children can help out here as well; by opening accounts in their name, and using either a living trust or what is called a Payable On Death account another $100K per child will gain FDIC protection. And IRAs, are insured to a max of $250K per account holder, regardless of other funds on deposit.
Using this approach, a family of four can gain FDIC coverage totaling almost one million dollars of deposits at a single institution. What ever you do, don't make these mistakes.
Troubled by trusts? Confused by all these accounts?
Well, the simplest approach would be to deposit your money into one of the 73 Massachusetts based banks which is a member of both the FDIC and The Depositors Insurance Fund (DIF).
After FDIC coverage has been exceeded, this private insurance covers any shortfalls. The last time we saw a large number of bank failures, the DIF covered uninsured losses of some 6,500 depositors at 19 failed member financial institutions.
Since it's inception "no depositor has ever lost a penny in a bank insured by both the FDIC and the DIF".
Got more than $100K? Well then, you'd better speak with EDIE.
EDIE (the Electronic Deposit Insurance Estimator) will tell you exactly how much FDIC insurance coverage you've got.
The maximum coverage is $100K per depositor per savings account per institution. So one approach would be to distribute one's money at multiple financial institutions. But by enlisting the entire family, the apparent FDIC limits for deposits at a single institution can be circumvented. Assuming we're talking about a married couple with two children, here's how it works.
Husband and wife each maintain separate savings accounts, gaining FDIC coverage on an aggregate amount greater than $100K but less than $200K. The children can help out here as well; by opening accounts in their name, and using either a living trust or what is called a Payable On Death account another $100K per child will gain FDIC protection. And IRAs, are insured to a max of $250K per account holder, regardless of other funds on deposit.
Using this approach, a family of four can gain FDIC coverage totaling almost one million dollars of deposits at a single institution. What ever you do, don't make these mistakes.
Troubled by trusts? Confused by all these accounts?
Well, the simplest approach would be to deposit your money into one of the 73 Massachusetts based banks which is a member of both the FDIC and The Depositors Insurance Fund (DIF).
After FDIC coverage has been exceeded, this private insurance covers any shortfalls. The last time we saw a large number of bank failures, the DIF covered uninsured losses of some 6,500 depositors at 19 failed member financial institutions.
Since it's inception "no depositor has ever lost a penny in a bank insured by both the FDIC and the DIF".
If I have some medium-to-large multiple of $100k in the bank, don't I also probably have an accountant?
posted by DU at 7:12 AM on July 14, 2008
posted by DU at 7:12 AM on July 14, 2008
Reading this reminds me of when I asked the president of my university if we were going to ever get a retirement plan. He said, you have a retirement plan - save money. He went on to say, if you make $300,000 a year (his salary), you should be able to save 200,000. (As associate professor the base salary is 40,000 - with nothing the school sets aside or matches for retirement).
Telling people what to do with their second 100,000 in savings is annoying elitist crap, it is alienating and leads me to believe those who consider questions of the economy (like mutant) have no concept regarding what is the economy for 99% of the population.
posted by dances_with_sneetches at 7:18 AM on July 14, 2008 [3 favorites]
Telling people what to do with their second 100,000 in savings is annoying elitist crap, it is alienating and leads me to believe those who consider questions of the economy (like mutant) have no concept regarding what is the economy for 99% of the population.
posted by dances_with_sneetches at 7:18 AM on July 14, 2008 [3 favorites]
I'm so glad I'm poor!
posted by papercake at 7:22 AM on July 14, 2008 [1 favorite]
posted by papercake at 7:22 AM on July 14, 2008 [1 favorite]
I'm getting a little nervous with all the headlines and speeches right now telling me "THERE IS NO NEED TO PANIC!!!" That's usually a bad sign.
Just kidding. I adhere to the old cliche: If you're going to panic, panic first. I panicked like 3 years ago, so I'm good.
posted by diogenes at 7:23 AM on July 14, 2008 [3 favorites]
Just kidding. I adhere to the old cliche: If you're going to panic, panic first. I panicked like 3 years ago, so I'm good.
posted by diogenes at 7:23 AM on July 14, 2008 [3 favorites]
Thanks for the info
posted by gagglezoomer at 7:31 AM on July 14, 2008
posted by gagglezoomer at 7:31 AM on July 14, 2008
My uncle worked in the Army during the Korean war as a translator. Once that was over, he moved to Omaha, and proceeded to work odd jobs until he died. Something he told my mom always stuck with me: "The first hundred thousand is hard. After that, it's all easy". He was working as a warehouse security guard when he passed on, and made about a third of what I make now as an analyst.
posted by boo_radley at 7:36 AM on July 14, 2008 [1 favorite]
posted by boo_radley at 7:36 AM on July 14, 2008 [1 favorite]
Telling people what to do with their second 100,000 in savings is annoying elitist crap
Based on the 2004 Survey of Consumer Finances, the median US family net worth is about $93k. It looks like $200k net worth would be about the 65th percentile. So that's something on the order of 35 million families / 105 million people above that. I suppose that typically families with over $100k in savings would have net worth substantially higher than $200k. But still -- it seems like worrying what to do with a second $100k in savings could be an issue for tens of millions of people. Is that really so elitist?
posted by Perplexity at 7:40 AM on July 14, 2008
Based on the 2004 Survey of Consumer Finances, the median US family net worth is about $93k. It looks like $200k net worth would be about the 65th percentile. So that's something on the order of 35 million families / 105 million people above that. I suppose that typically families with over $100k in savings would have net worth substantially higher than $200k. But still -- it seems like worrying what to do with a second $100k in savings could be an issue for tens of millions of people. Is that really so elitist?
posted by Perplexity at 7:40 AM on July 14, 2008
Aside from the monocle-bearing population, there are others with >100k. Consider retirees who keep their money in CDs because they don't want to be subject to the stock market at this point. There are also small business owners who need to have that kind of liquidity available. Also, if you just sold your house. Scenario 3 and Scenario 1 overlap not infrequently.
posted by a robot made out of meat at 7:42 AM on July 14, 2008
posted by a robot made out of meat at 7:42 AM on July 14, 2008
The maximum coverage is $100K per depositor per savings account per institution. So one approach would be to distribute one's money at multiple financial institutions.
Seems easier to me to distribute among financial institutions. And even currencies while we're at it... Mutant, what are the FDIC equivalents here in the UK and in the EU in general?
posted by vacapinta at 7:43 AM on July 14, 2008
Seems easier to me to distribute among financial institutions. And even currencies while we're at it... Mutant, what are the FDIC equivalents here in the UK and in the EU in general?
posted by vacapinta at 7:43 AM on July 14, 2008
leads me to believe those who consider questions of the economy (like mutant) have no concept regarding what is the economy for 99% of the population.
A vast majority of the population has bank deposits of less than $100K, IRAs with deposits of less than $250K, and classical investments amounting to less than the maximum amount of insurance allowed by SIPC (there are exceptions in things like annuities and futures contracts).
So, people who consider questions of the economy don't have to think that much about "the little guy," because the insurance system is doing it for them. Full Faith And Credit Clause and all.
posted by dw at 7:44 AM on July 14, 2008
A vast majority of the population has bank deposits of less than $100K, IRAs with deposits of less than $250K, and classical investments amounting to less than the maximum amount of insurance allowed by SIPC (there are exceptions in things like annuities and futures contracts).
So, people who consider questions of the economy don't have to think that much about "the little guy," because the insurance system is doing it for them. Full Faith And Credit Clause and all.
posted by dw at 7:44 AM on July 14, 2008
Looking a little more, table 5.04 shows that $203k in financial assets would put a family at about the 83rd percentile. So, yeah, I'm pretty sure it's fair to say that dealing with a second $100k is at least potentially an issue for a number of Americans in the low tens of millions.
posted by Perplexity at 7:49 AM on July 14, 2008
posted by Perplexity at 7:49 AM on July 14, 2008
There are plenty of Anonymous askmes from folks who are inheriting 50-100k.
posted by These Premises Are Alarmed at 8:09 AM on July 14, 2008
posted by These Premises Are Alarmed at 8:09 AM on July 14, 2008
your first $100K is insured against loss so no worries.
Sure, if you don't mind not having those assets locked up for an undetermined amount of time. I think in the U.K. people had to wait up to 14 months.
posted by furtive at 8:25 AM on July 14, 2008
Sure, if you don't mind not having those assets locked up for an undetermined amount of time. I think in the U.K. people had to wait up to 14 months.
posted by furtive at 8:25 AM on July 14, 2008
Looking a little more, table 5.04 shows that $203k in financial assets would put a family at about the 83rd percentile.
Financial assets includes retirement accounts.
posted by smackfu at 8:28 AM on July 14, 2008
Financial assets includes retirement accounts.
posted by smackfu at 8:28 AM on July 14, 2008
(By which I mean that a lot of people have 401k's that are over $200k that have nothing to do with the FDIC limit.)
posted by smackfu at 8:31 AM on July 14, 2008
posted by smackfu at 8:31 AM on July 14, 2008
Perplexity - from my reading that deals with total financial assets, including such things as life insurance, stocks, pooled investment funds and other managed assets (such as second homes) - damned few will have a second 100,000 in a savings account. (in preview, along the lines of what smackfu said.)
posted by dances_with_sneetches at 8:33 AM on July 14, 2008
posted by dances_with_sneetches at 8:33 AM on July 14, 2008
TPAA: And most of those anon AskMe askers probably have little to no other savings. :p
posted by wierdo at 8:38 AM on July 14, 2008
posted by wierdo at 8:38 AM on July 14, 2008
your first $100K is insured against loss so no worries.
Sure, if you don't mind not having those assets locked up for an undetermined amount of time. I think in the U.K. people had to wait up to 14 months.
You are categorically incorrect. One of the reasons why the FDIC prefers to seize banks on Fridays is so that they can have everyone's accounts up and running by Monday. See any of the recent bank failures cited above.
posted by JPD at 8:52 AM on July 14, 2008
Sure, if you don't mind not having those assets locked up for an undetermined amount of time. I think in the U.K. people had to wait up to 14 months.
You are categorically incorrect. One of the reasons why the FDIC prefers to seize banks on Fridays is so that they can have everyone's accounts up and running by Monday. See any of the recent bank failures cited above.
posted by JPD at 8:52 AM on July 14, 2008
You can build a pretty good bunker with a hunnert thousand dollars! That'll buy you a lotta ammo 'n' Hustlers!
posted by spiderwire at 8:54 AM on July 14, 2008
posted by spiderwire at 8:54 AM on July 14, 2008
I do think that nowadays you get people playing a lot of games with money. See FatWallet. With the internet, there's much more visibility to the whole consumer banking marketplace, and it's so easy to move it all to the highest interest rate at a whim (and those banks are probably the highest risk too). With the stock market tanking this year, it's also very tempting to just cash it all out and put it in something at least earning 4%. Plus you have credit card companies willing to loan you big chunks of money for 6 months interest free on balance transfers, just in the hope that you'll screw up.
People get greedy for the highest rates, and get caught up and ignore the 100k limit.
posted by smackfu at 8:55 AM on July 14, 2008
People get greedy for the highest rates, and get caught up and ignore the 100k limit.
posted by smackfu at 8:55 AM on July 14, 2008
Telling people what to do with their second 100,000 in savings is annoying elitist crap, it is alienating and leads me to believe those who consider questions of the economy (like mutant) have no concept regarding what is the economy for 99% of the population.
Well, whether you need this advice or not, it's really not much elitist: in the sense of numbers (at least a few 10s of millions of Americans would need this advice apparently), nor in the sense of social attitude (it's a poor assumption that those who are financially affluent all think they are better than the rest of us). My mom, for instance, has been a public school teacher her whole life, and as a widow, a single income earner for the past 14 years, she will need this advice--my stepdad had plenty of insurance when he died too young, and she's inherited a fairly large investment portfolio from different family members over the years. So you never know.
(Also, dws, if you're making a base salary of 40K as an associate professor--with no retirement benefits--I recommend finding a new institution! That's way below the national average in our field.)
posted by LooseFilter at 8:56 AM on July 14, 2008
Well, whether you need this advice or not, it's really not much elitist: in the sense of numbers (at least a few 10s of millions of Americans would need this advice apparently), nor in the sense of social attitude (it's a poor assumption that those who are financially affluent all think they are better than the rest of us). My mom, for instance, has been a public school teacher her whole life, and as a widow, a single income earner for the past 14 years, she will need this advice--my stepdad had plenty of insurance when he died too young, and she's inherited a fairly large investment portfolio from different family members over the years. So you never know.
(Also, dws, if you're making a base salary of 40K as an associate professor--with no retirement benefits--I recommend finding a new institution! That's way below the national average in our field.)
posted by LooseFilter at 8:56 AM on July 14, 2008
I'd have a lot more money if armored cars weren't so hard to open and strippers weren't so damn expensive.
posted by quin at 9:17 AM on July 14, 2008 [3 favorites]
posted by quin at 9:17 AM on July 14, 2008 [3 favorites]
I'd have a lot less money if strippers weren't so hard to open, and armored cars weren't so damn expensive.
posted by TwelveTwo at 9:37 AM on July 14, 2008 [2 favorites]
posted by TwelveTwo at 9:37 AM on July 14, 2008 [2 favorites]
Telling people what to do with their second 100,000 in savings is annoying elitist crap, it is alienating and leads me to believe those who consider questions of the economy (like mutant) have no concept regarding what is the economy for 99% of the population.
I sold my house last year so I'm sitting on some CDs that put me above the $100K amount. I have no other assets or retirement savings. I don't consider this elitist crap. I live paycheck to paycheck.
posted by shoesietart at 9:51 AM on July 14, 2008
I sold my house last year so I'm sitting on some CDs that put me above the $100K amount. I have no other assets or retirement savings. I don't consider this elitist crap. I live paycheck to paycheck.
posted by shoesietart at 9:51 AM on July 14, 2008
I'm with DU. While its mildly interesting to know how this sort of thing works, wouldn't everyone who actually has the finances to need over 100k protection have an accountant to handle all the messy details?
I mean I figure that if I've ever got even 20-30k sitting in the bank I'd hire an accountant.
posted by sotonohito at 10:01 AM on July 14, 2008
I mean I figure that if I've ever got even 20-30k sitting in the bank I'd hire an accountant.
posted by sotonohito at 10:01 AM on July 14, 2008
Looking a little more, table 5.04 shows that $203k in financial assets would put a family at about the 83rd percentile. So, yeah, I'm pretty sure it's fair to say that dealing with a second $100k is at least potentially an issue for a number of Americans in the low tens of millions.
If you're over 35 and you don't have over 200K worth of financial assets you can liquidate ... you're pretty fucked as far as surviving to old age without eating dog food.
Actually the price of dog food is pretty high these days.
posted by tkchrist at 10:09 AM on July 14, 2008 [1 favorite]
If you're over 35 and you don't have over 200K worth of financial assets you can liquidate ... you're pretty fucked as far as surviving to old age without eating dog food.
Actually the price of dog food is pretty high these days.
posted by tkchrist at 10:09 AM on July 14, 2008 [1 favorite]
I sold my house last year so I'm sitting on some CDs that put me above the $100K amount. I have no other assets or retirement savings. I don't consider this elitist crap. I live paycheck to paycheck.
Me too. And. I got more than that. Plus a home supposedly "valued" at nearly 3/4 of a million (yeah, good luck with that— though I never looked at it as an investment and I plan on living here FOREVER) and no debt. BUT I could STILL be eating out of trashcans in five years if this bubble bursts like it could.
I note that my clients, who are not dead beats, most are getting behind on paying me on time. This tells me the worm is turning out there.
It's funny what a bunch of bourgeois college graduates (some with graduate degrees) on Mefi will call elitist, huh.
posted by tkchrist at 10:18 AM on July 14, 2008
Me too. And. I got more than that. Plus a home supposedly "valued" at nearly 3/4 of a million (yeah, good luck with that— though I never looked at it as an investment and I plan on living here FOREVER) and no debt. BUT I could STILL be eating out of trashcans in five years if this bubble bursts like it could.
I note that my clients, who are not dead beats, most are getting behind on paying me on time. This tells me the worm is turning out there.
It's funny what a bunch of bourgeois college graduates (some with graduate degrees) on Mefi will call elitist, huh.
posted by tkchrist at 10:18 AM on July 14, 2008
BUT I could STILL be eating out of trashcans in five years if this bubble bursts like it could.
Those trashcans will have already been cleaned out by hippies who never bothered piling up money in the first place.
posted by TheOnlyCoolTim at 10:32 AM on July 14, 2008
Those trashcans will have already been cleaned out by hippies who never bothered piling up money in the first place.
posted by TheOnlyCoolTim at 10:32 AM on July 14, 2008
I wonder what the "free market-ists absolutists" think about these prop ups/bail outs? Seems awfully non free market. (I personally am not one of those and have always believed the markets need strict controls along the sides. Hell I'm even for graduated protected markets for emerging economies.
posted by edgeways at 10:35 AM on July 14, 2008
posted by edgeways at 10:35 AM on July 14, 2008
> If so, then your first $100K is insured against loss so no worries.
This is one of the most beautiful fictions of the system. Technically, the statement is correct. But, like any insurance system, it is built upon the assumption that the payout will only be needed for a relatively small percentage of depositors. When you get a massive cascading failure, such as we are in the beginnings of now, there will be far too many payouts needed and the FDIC system itself will be unable to bear it.
The whole system is built upon public confidence and it is that which is waning rapidly. The FDIC $100,000 system was made to shore up that confidence. And it will... until it doesn't.
posted by spock at 10:38 AM on July 14, 2008 [1 favorite]
This is one of the most beautiful fictions of the system. Technically, the statement is correct. But, like any insurance system, it is built upon the assumption that the payout will only be needed for a relatively small percentage of depositors. When you get a massive cascading failure, such as we are in the beginnings of now, there will be far too many payouts needed and the FDIC system itself will be unable to bear it.
The whole system is built upon public confidence and it is that which is waning rapidly. The FDIC $100,000 system was made to shore up that confidence. And it will... until it doesn't.
posted by spock at 10:38 AM on July 14, 2008 [1 favorite]
Telling people what to do with their second 100,000 in savings is annoying elitist crap
Wow. Just wow. So every retiree who has actually saved enough money to support themselves is part of some elitist conspiracy to keep you down? Average life expectancy at 65 is 18 years.
posted by madmethods at 10:39 AM on July 14, 2008
Wow. Just wow. So every retiree who has actually saved enough money to support themselves is part of some elitist conspiracy to keep you down? Average life expectancy at 65 is 18 years.
posted by madmethods at 10:39 AM on July 14, 2008
shoesietart: And you didn't know that only $100,000 would be insured?
posted by wierdo at 10:45 AM on July 14, 2008
posted by wierdo at 10:45 AM on July 14, 2008
> You can build a pretty good bunker with a hunnert thousand dollars! That'll buy you a lotta ammo 'n' Hustlers!
Well, if you're in the mood for some doomsaying...
"With the death of the IndyMac Bank last week, and the GSEs Fannie Mae and Freddie Mac laying side-by-side in the EMT van on IV drips, headed for the Federal Reserve's ever more crowded intensive care unit, there was a sense of the American Dream having passed through the event horizon that denotes the opening of a black hole.
What would happen if the US Government acted to bail out these feckless enterprises (and what if they don't)? Either way, it's not a pretty picture. If Mr. Bernanke does start shoveling loans into the GSE black hole, he'll further undermine the soundness of his own outfit and do nothing, really, to repair Fannie and Freddie's structural problem of having securitized too many loans that will never be paid back. If instead Fannie and Freddie are flat-out taken over entirely by the US government (and remember the Federal Reserve is not the government), then the national debt will roughly double overnight -- which will pound the US dollar down a rat-hole.
Meanwhile, the foreign holders of those decrepitating dollars might not rush to the redemption window, but they certainly would use them to buy up every oil futures contract on God's not-so-green Earth as fast as possible -- they'd be dumb not to -- which would leave American Happy Motorists with gasoline prices north of $5 a gallon, and possibly north of $10. (In that case, say goodbye to the airlines. In fact, say goodbye to what passes for the rest of the US economy, including especially the vaunted retail sector that supposedly counts for 70 percent of the action.)
If Fannie and Freddie are left to die out on the desert floor, say goodbye to the housing market, the major investment banks, countless regional banks, the retirement accounts of virtually everyone in America, the viability of all fifty states' governments, and the day-to-day operating ability of all their municipalities -- and very likely the current incarnation of the world banking system.
This process is really out of control now...."
posted by The Card Cheat at 10:59 AM on July 14, 2008
Well, if you're in the mood for some doomsaying...
"With the death of the IndyMac Bank last week, and the GSEs Fannie Mae and Freddie Mac laying side-by-side in the EMT van on IV drips, headed for the Federal Reserve's ever more crowded intensive care unit, there was a sense of the American Dream having passed through the event horizon that denotes the opening of a black hole.
What would happen if the US Government acted to bail out these feckless enterprises (and what if they don't)? Either way, it's not a pretty picture. If Mr. Bernanke does start shoveling loans into the GSE black hole, he'll further undermine the soundness of his own outfit and do nothing, really, to repair Fannie and Freddie's structural problem of having securitized too many loans that will never be paid back. If instead Fannie and Freddie are flat-out taken over entirely by the US government (and remember the Federal Reserve is not the government), then the national debt will roughly double overnight -- which will pound the US dollar down a rat-hole.
Meanwhile, the foreign holders of those decrepitating dollars might not rush to the redemption window, but they certainly would use them to buy up every oil futures contract on God's not-so-green Earth as fast as possible -- they'd be dumb not to -- which would leave American Happy Motorists with gasoline prices north of $5 a gallon, and possibly north of $10. (In that case, say goodbye to the airlines. In fact, say goodbye to what passes for the rest of the US economy, including especially the vaunted retail sector that supposedly counts for 70 percent of the action.)
If Fannie and Freddie are left to die out on the desert floor, say goodbye to the housing market, the major investment banks, countless regional banks, the retirement accounts of virtually everyone in America, the viability of all fifty states' governments, and the day-to-day operating ability of all their municipalities -- and very likely the current incarnation of the world banking system.
This process is really out of control now...."
posted by The Card Cheat at 10:59 AM on July 14, 2008
When you get a massive cascading failure, such as we are in the beginnings of now, there will be far too many payouts needed and the FDIC system itself will be unable to bear it.
If you're holding that extreme a position, you might as well buy a gun and keep all your assets in gold, because whatever insurance you have means nothing when the mob shows up at your door. Also I suggest a shack in Montana.
posted by smackfu at 11:02 AM on July 14, 2008
If you're holding that extreme a position, you might as well buy a gun and keep all your assets in gold, because whatever insurance you have means nothing when the mob shows up at your door. Also I suggest a shack in Montana.
posted by smackfu at 11:02 AM on July 14, 2008
I think most people know that only $100K is insured but they don't think about the risk especially if you're with a supposedly good bank (and one can debate what that means).
But do you really think people don't have accounts at Wells Fargo and Bank of America with more than $100K in them. And, of course, banks encourage this. Keep all your assets with us, build a relationship, get better service, rates, recordkeeping, etc... No bank has ever said, and I would wager that this is true of accountants too, take your other $100K+ to another bank because it's not insured.
And for what it's worth, my little cat food nest egg is spread around.
posted by shoesietart at 11:06 AM on July 14, 2008
But do you really think people don't have accounts at Wells Fargo and Bank of America with more than $100K in them. And, of course, banks encourage this. Keep all your assets with us, build a relationship, get better service, rates, recordkeeping, etc... No bank has ever said, and I would wager that this is true of accountants too, take your other $100K+ to another bank because it's not insured.
And for what it's worth, my little cat food nest egg is spread around.
posted by shoesietart at 11:06 AM on July 14, 2008
You can build a pretty good bunker with a hunnert thousand dollars! That'll buy you a lotta ammo 'n' Hustlers!
Personally I'd go for solar panels and water treatment facilities rather than guns and pornography, but then your apocalypse may vary.
posted by imperium at 11:15 AM on July 14, 2008
Personally I'd go for solar panels and water treatment facilities rather than guns and pornography, but then your apocalypse may vary.
posted by imperium at 11:15 AM on July 14, 2008
To be clear, I am accusing this post of saying, in essence, you are worried about the economy, here's how to save on next your foie gras purchase. This notion that everyone can save for retirement is Bushenomics, what my tax dollars have gone to finance, big tax cuts to those with several hundred thousand in the bank, tax cuts financed by raiding funds that could be used for future social security payments. It is not bourgeois to have actually fought my way out of poverty to get a degree, and then to have to listen to those with silver spoons in their mouths declaring let them eat cake.
posted by dances_with_sneetches at 11:36 AM on July 14, 2008
posted by dances_with_sneetches at 11:36 AM on July 14, 2008
Well, if you're in the mood for some doomsaying...
From a theater major whose most notable distinction is being a staff writer for Rolling Stone? Who has been in the process of moving the deadlines on his economic collapse timelines as reality has rolled over them for several years, in a manner that would do any messianic eschatologist proud? Sure, I'm always up for a laugh. The Sky is Falling! The Sky is Falling!
posted by nanojath at 11:51 AM on July 14, 2008 [1 favorite]
From a theater major whose most notable distinction is being a staff writer for Rolling Stone? Who has been in the process of moving the deadlines on his economic collapse timelines as reality has rolled over them for several years, in a manner that would do any messianic eschatologist proud? Sure, I'm always up for a laugh. The Sky is Falling! The Sky is Falling!
posted by nanojath at 11:51 AM on July 14, 2008 [1 favorite]
To be clear, I am accusing this post of saying, in essence, you are worried about the economy, here's how to save on next your foie gras purchase.
As pointed out above, having money in the bank for retirement, keeping it in CDs, etc., is not automatically a luxury. You are basically trying to clarify your earlier point by restating it in a form of an analogy.
This notion that everyone can save for retirement is Bushenomics.
Debatable, but even assuming that is true, this is not what the post is about: rather, it goes, at least in part, to those who were in fact able to save >$100k for retirement and happen have that money in a bank.
posted by jagalt at 12:21 PM on July 14, 2008
As pointed out above, having money in the bank for retirement, keeping it in CDs, etc., is not automatically a luxury. You are basically trying to clarify your earlier point by restating it in a form of an analogy.
This notion that everyone can save for retirement is Bushenomics.
Debatable, but even assuming that is true, this is not what the post is about: rather, it goes, at least in part, to those who were in fact able to save >$100k for retirement and happen have that money in a bank.
posted by jagalt at 12:21 PM on July 14, 2008
dances_with_sneetches, repeating your prejudices again and again in the face of people presenting fact about finances will give a warm pleasurable spurt to people who already think like you, but I doubt you'll convert anyone to your point of view.
posted by rodgerd at 12:27 PM on July 14, 2008
posted by rodgerd at 12:27 PM on July 14, 2008
Should have included this in my last post, but this is an illustrative article about IndyMac customers. Some relevant excerpts:
"Charles Tengeri, a retired school teacher, was the first customer to emerge from the Pasadena headquarters of the bank. He held a check for $171,000 -- an amount that he said represented most of his savings."
...
"Customer Harvey Solvan said he had more than $100,000 in the bank whose assets were seized Friday by federal regulators. "It's a question of how much we can get and how soon," he said while waiting in line."
...
"Some 10,000 depositors had funds in excess of the insured limit, for a total of $1 billion in potentially uninsured funds, the FDIC has said."
...
"Customer James Sherman said he also had more than $100,000 in the bank."This is my life savings here. I feel really horrible," he said."
I don't know why you are assuming that regular people - i.e., those comprising "99% of the population," as you say - would never have over $100k in the bank. These are regular people. They might not invest in stocks, and may prefer the relative security of a bank account. They may also not know about the FDIC limits. This is good information that should be spread more widely.
posted by jagalt at 12:32 PM on July 14, 2008
"Charles Tengeri, a retired school teacher, was the first customer to emerge from the Pasadena headquarters of the bank. He held a check for $171,000 -- an amount that he said represented most of his savings."
...
"Customer Harvey Solvan said he had more than $100,000 in the bank whose assets were seized Friday by federal regulators. "It's a question of how much we can get and how soon," he said while waiting in line."
...
"Some 10,000 depositors had funds in excess of the insured limit, for a total of $1 billion in potentially uninsured funds, the FDIC has said."
...
"Customer James Sherman said he also had more than $100,000 in the bank."This is my life savings here. I feel really horrible," he said."
I don't know why you are assuming that regular people - i.e., those comprising "99% of the population," as you say - would never have over $100k in the bank. These are regular people. They might not invest in stocks, and may prefer the relative security of a bank account. They may also not know about the FDIC limits. This is good information that should be spread more widely.
posted by jagalt at 12:32 PM on July 14, 2008
Little late to the game. My prediction is that the hardest hit customers are the small / family businesses who are conservative and need large amounts of liquidity (and lack financial sophistication). In my opinion, I can't see a time when I'd need to be that liquid >$100k. That's what AmEx is for.
Also I don't get where this bullshit about having >$100k makes you some sort of cigar smoking robber baron. You know who has >$100k? The grandmas who inherited money over the years, the guy keeping a few people on his small business payroll, etc. These aren't suave sharks making speculative, leveraged investments. These are people who aren't even aware of the $100k limit, let alone realize that the safest best for your money is probably t-bills locked up in a safe somewhere.
posted by geoff. at 12:54 PM on July 14, 2008
Also I don't get where this bullshit about having >$100k makes you some sort of cigar smoking robber baron. You know who has >$100k? The grandmas who inherited money over the years, the guy keeping a few people on his small business payroll, etc. These aren't suave sharks making speculative, leveraged investments. These are people who aren't even aware of the $100k limit, let alone realize that the safest best for your money is probably t-bills locked up in a safe somewhere.
posted by geoff. at 12:54 PM on July 14, 2008
imperium : but then your apocalypse may vary.
After the inevitable zombie apocalypse, when all lay in smoky ruin, and the state of the world can best be described as 'hell on earth', I'll trade you some of my pornography for clean water.
posted by quin at 1:11 PM on July 14, 2008
After the inevitable zombie apocalypse, when all lay in smoky ruin, and the state of the world can best be described as 'hell on earth', I'll trade you some of my pornography for clean water.
posted by quin at 1:11 PM on July 14, 2008
on a related note, Citigroup's $1.1 Trillion of Mysterious Assets Shadows Earnings
posted by ornate insect at 1:54 PM on July 14, 2008
posted by ornate insect at 1:54 PM on July 14, 2008
After IndyMac's failure, which bank could be next?
...After IndyMac was seized -- the seventh bank to fail since the credit crisis began last summer, and the second-largest bank to fail in the Federal Deposit Insurance Corp.'s 75-year history -- stocks in nearly all the nation's banks were clobbered Monday as the market bet that there will be more failures....
posted by ornate insect at 4:47 PM on July 14, 2008
...After IndyMac was seized -- the seventh bank to fail since the credit crisis began last summer, and the second-largest bank to fail in the Federal Deposit Insurance Corp.'s 75-year history -- stocks in nearly all the nation's banks were clobbered Monday as the market bet that there will be more failures....
posted by ornate insect at 4:47 PM on July 14, 2008
vacapinta -- "Mutant, what are the FDIC equivalents here in the UK and in the EU in general?"
Overall, not as generous as the United States: in the UK currently the governments insurance program covers 100% of the first £2K on deposit, and then 90% of the next £35K. After that nothing. So if you've got £35K or more on deposit in the bank, and the institution fails you'll only get £31,700 (curiously NOT Northern Rock though where 100% coverage was offered).
There is talk in the UK of increasing their coverage, but I wouldn't hold my breath. Considering the dire state of the UK finances, this isn't something that Brown, Darling, et al would engage in willingly. I'm with HSBC myself at present, not particularly thrilled, but HSBC has a strong balance sheet. The pulled a lot of off balance sheet stuff onto their balance sheets about one year ago. So they seem very stable and actually are aggressively grabbing market share in UK mortgages.
Banking regulation isn't so well developed across the entire Eurozone (still in it's infancy really, which gives rise to interesting opps) so as far as I know, there aren't yet EU wide regulations governing this.
Mrs Mutant is Dutch, and she's advised me that in Nederlands the first 20K euros is covered in its entirety. Between 20K and 40K 90% is covered. Amounts over 40K aren't covered ata ll. There is a wealth tax on liquid assets above 20K in The Netherlands, so they try to discourage building a large bank account.
Eideteker -- "Previously"
Yeh, I knew some folks had posted the approach in thread previously, but apparently never as an FPP. Also, the Massachusetts DIF angle was unique - full coverage, without all the FDIC shifting BS.
But as I was explaining in a MefiMail to one of our colleagues, I only posted this FPP after I received several emails this weekend expressing concern about the safety of banks. I really hate to see folks worrying about stuff like money (off all things!) when they're largely protected and thought I'd pull it all together, in one place.
posted by Mutant at 5:17 PM on July 14, 2008
Overall, not as generous as the United States: in the UK currently the governments insurance program covers 100% of the first £2K on deposit, and then 90% of the next £35K. After that nothing. So if you've got £35K or more on deposit in the bank, and the institution fails you'll only get £31,700 (curiously NOT Northern Rock though where 100% coverage was offered).
There is talk in the UK of increasing their coverage, but I wouldn't hold my breath. Considering the dire state of the UK finances, this isn't something that Brown, Darling, et al would engage in willingly. I'm with HSBC myself at present, not particularly thrilled, but HSBC has a strong balance sheet. The pulled a lot of off balance sheet stuff onto their balance sheets about one year ago. So they seem very stable and actually are aggressively grabbing market share in UK mortgages.
Banking regulation isn't so well developed across the entire Eurozone (still in it's infancy really, which gives rise to interesting opps) so as far as I know, there aren't yet EU wide regulations governing this.
Mrs Mutant is Dutch, and she's advised me that in Nederlands the first 20K euros is covered in its entirety. Between 20K and 40K 90% is covered. Amounts over 40K aren't covered ata ll. There is a wealth tax on liquid assets above 20K in The Netherlands, so they try to discourage building a large bank account.
Eideteker -- "Previously"
Yeh, I knew some folks had posted the approach in thread previously, but apparently never as an FPP. Also, the Massachusetts DIF angle was unique - full coverage, without all the FDIC shifting BS.
But as I was explaining in a MefiMail to one of our colleagues, I only posted this FPP after I received several emails this weekend expressing concern about the safety of banks. I really hate to see folks worrying about stuff like money (off all things!) when they're largely protected and thought I'd pull it all together, in one place.
posted by Mutant at 5:17 PM on July 14, 2008
the guy keeping a few people on his small business payroll
That's the market segment I'm more worried about, much more than the anecdotal single grandmas. Putting the owners of repair shops and nail salons out of business affects families, neighborhoods, and on up.
posted by gimonca at 6:57 PM on July 14, 2008
That's the market segment I'm more worried about, much more than the anecdotal single grandmas. Putting the owners of repair shops and nail salons out of business affects families, neighborhoods, and on up.
posted by gimonca at 6:57 PM on July 14, 2008
God what am I going to do with these hundreds of thousands of dollars that I've got sitting around everywhere. I need a fucking shovel for these bills or something.
posted by Avenger at 8:59 PM on July 14, 2008
posted by Avenger at 8:59 PM on July 14, 2008
I'm sure the central bank in Zimbabwe also gladly pays you 100,000 zimbabwean dollars now that the banks there are insolvent...
posted by DreamerFi at 12:46 AM on July 15, 2008
posted by DreamerFi at 12:46 AM on July 15, 2008
The economy is like a highway then. Everyone poorer than me is lazy and everyone richer than me is an elitist.
posted by Skorgu at 7:54 AM on July 15, 2008 [1 favorite]
posted by Skorgu at 7:54 AM on July 15, 2008 [1 favorite]
I wonder what the "free market-ists absolutists" think about these prop ups/bail outs? Seems awfully non free market.
The ones I know would agree with that sentiment and are firmly against the bailout. There are very, very few actual free-market absolutists in government, however, and neither Congress nor the administration has any significant belief in it (aside from a few individual congresspeople like Ron Paul).
(I'm not a free-market absolutist myself, but between a science/tech education and working in Silicon Valley, I know quite a few libertarians).
posted by wildcrdj at 3:32 PM on July 15, 2008
The ones I know would agree with that sentiment and are firmly against the bailout. There are very, very few actual free-market absolutists in government, however, and neither Congress nor the administration has any significant belief in it (aside from a few individual congresspeople like Ron Paul).
(I'm not a free-market absolutist myself, but between a science/tech education and working in Silicon Valley, I know quite a few libertarians).
posted by wildcrdj at 3:32 PM on July 15, 2008
making the rounds - please god, just one more bubble (possibly prescient ;)
posted by kliuless at 4:33 PM on July 15, 2008
A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest. "What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future," said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. "We are in a crisis, and that crisis demands an unviable short-term solution.cheers!
posted by kliuless at 4:33 PM on July 15, 2008
I've advised my parents (who are about to sell a condo that's paid for, and finance a new one) to break up that money into multiple banks.
They are normal people. They're just retired.
posted by kindall at 6:32 PM on July 15, 2008
They are normal people. They're just retired.
posted by kindall at 6:32 PM on July 15, 2008
If I have some medium-to-large multiple of $100k in the bank, don't I also probably have an accountant?
Hiring an accountant to manage less than several million would kill your returns. And do you really think they're going to spend a lot of sleepless nights sweating over the best way to grow and protect your life savings? Most of the companies doing wealth management run a self-dealing con game. (I guarantee your employer's 401K plan, if you have one, takes a generous percentage off the top, and likely advantages itself in whatever trading it does on your behalf.) It is obviously better just to do the work to figure things out yourself and invest carefully. Fatwallet is a great resource, BTW. They predicted the impending IndyMac failure back on 7/3/08. (Thanks, Chuck Schumer, D NY.)
posted by metaplectic at 10:57 PM on July 15, 2008
Hiring an accountant to manage less than several million would kill your returns. And do you really think they're going to spend a lot of sleepless nights sweating over the best way to grow and protect your life savings? Most of the companies doing wealth management run a self-dealing con game. (I guarantee your employer's 401K plan, if you have one, takes a generous percentage off the top, and likely advantages itself in whatever trading it does on your behalf.) It is obviously better just to do the work to figure things out yourself and invest carefully. Fatwallet is a great resource, BTW. They predicted the impending IndyMac failure back on 7/3/08. (Thanks, Chuck Schumer, D NY.)
posted by metaplectic at 10:57 PM on July 15, 2008
Husband and wife each maintain separate savings accounts, gaining FDIC coverage on an aggregate amount greater than $100K but less than $200K.
A married couple with no kids can actually shelter $900K at a single covered institution, with $400K available in demand deposit accounts:
Savers Need to Watch Out for FDIC Limits
Kathy Nagle, chief of the deposit insurance section in the consumer protection branch at the FDIC in Washington, D.C., said small savers generally don't have to worry about the limits.
"If the sum total of all your money at a bank is $100,000 or less, you don't have to worry about all these categories, you're fully insured," Nagle said. "If it's more than that, you can be fully insured — but you need to get into asking questions about whether you're allocating your money to different categories of coverage."
When looking at those categories, she said, "it's best to think about it per account owner, not by type of account."
She gave this example of a married couple and their insurance coverage at their hometown bank:
The wife has $100,000 in her name in several savings accounts.
The husband has $100,000 in his name in a separate savings account.
The couple has $200,000 in a joint account with equal withdrawal rights.
Each of them has an IRA, with $250,000 in each account.
In this case, everything is covered by FDIC insurance, she said.
posted by metaplectic at 11:07 PM on July 15, 2008
A married couple with no kids can actually shelter $900K at a single covered institution, with $400K available in demand deposit accounts:
Savers Need to Watch Out for FDIC Limits
Kathy Nagle, chief of the deposit insurance section in the consumer protection branch at the FDIC in Washington, D.C., said small savers generally don't have to worry about the limits.
"If the sum total of all your money at a bank is $100,000 or less, you don't have to worry about all these categories, you're fully insured," Nagle said. "If it's more than that, you can be fully insured — but you need to get into asking questions about whether you're allocating your money to different categories of coverage."
When looking at those categories, she said, "it's best to think about it per account owner, not by type of account."
She gave this example of a married couple and their insurance coverage at their hometown bank:
The wife has $100,000 in her name in several savings accounts.
The husband has $100,000 in his name in a separate savings account.
The couple has $200,000 in a joint account with equal withdrawal rights.
Each of them has an IRA, with $250,000 in each account.
In this case, everything is covered by FDIC insurance, she said.
posted by metaplectic at 11:07 PM on July 15, 2008
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