Move Your Money

[Mike 870]

I'm guessing the answer is zero?

[Pox Eclipse]

That's my understanding.  So why are you afraid of a bank run?

[Mike 870]

I said I was afraid of a virtual bank run.   An ING account is like a virtual add on to a checking account.  You move your money in and out via computer.  You used to get like 4 % interest on your money while it was in there without restrictions.  It's so easy to move money in and out that a big panic could cause everyone to try to move their money out at the same time, via click of a button.  I can just imagine a computer message, we're sorry all account activity is suspended at this time.  Please try again later.

[pagan]

Here's a pretty good article on the subject.

http://www.lewrockwell.com/north/north527.html

[muldoon]

How many depositors have lost their money in a bank run since 1933?

I'm guessing the answer is zero?

I'm breaking my self imposed rule about posting while intoxicated.  But this is not true.  The correct working is "How many depositors have lost their money in a bank runs for insured amounts since the inception of the fdic in 1933?"  For that, the answer is zero. 

How many people have lost funds in the past year due to bank failure, the answer is in the thousands.  Until Fall of 2008, the fdic insured amount was 100k, and then it was raised to 250k.  If a bank account had more than that upon seizure it was lost.  I know of two business's personally that have been affected by that as their payroll was larger than 100k and they HAD to keep more in the account to meet check obligations. 

Not someone I know personally, but someone I read about and research checked as legit sold a house on a Thursday, got a settlement check on Friday for 300k+ and fdic closed the bank.  They were only insured to 250k and lost a hell of a chunk. 

As for accounts under the limit, no one ever to my knowledge has lost a penny. 

But thats not what this is about (to me at least).  It is about how a bank operates in my opinion.  For every dollar they have in deposits, they are allowed to lend 90% out.  As we all know, they are not lending this money out but keeping it on reserve at the fed and gaining a few percentage points there.  This means that when you put your paycheck in one of those pig banks, they get to gain interest on 90% of it for doing nothing.  For their trouble, they will charge you 29.99% interest on money they borrow at zero%.  They will hit you with every overcharge they can think up, and they will snidely and snottily give themselves bonuses for their innovative "money creation" thinking.  They know they are too big to fail, to big to be regulated, to big to be prosecuted, to big to follow laws, and to big to be questioned.   I say it is morally reprehensible and repulsive to give those pigs a dime. 

Not only does increasing their deposit base give them that "too big to fail status" it also gives them the capital to play games like buying oil on the ice intercontinental exchange and keeping it in tankers to drive the cost up - which only hurts america and our economy more.  These are people without a country, or a sense of right and wrong.  They manipulate and steal and defraud without consequence or care. 

I simply cannot verbalize how much I hate these big banks with every fiber of my being.  No decent person should have a penny deposited with any of them. 

[ScottA]

What he said.

[Pox Eclipse]

I have no love for the banks, but from a safety perspective, what is your alternative?  As far as I know , no other institution can offer any guarantee at all, so that makes the FDIC's $250,000 look pretty good.

[Mike 870]

The National Credit Union Administration (NCUA) insures funds in credit unions up to $250,000 as well, thats one way you can go.  FYI I don't work for a credit union, I'm only a happy member.

[muldoon]

I have no love for the banks, but from a safety perspective, what is your alternative?  As far as I know , no other institution can offer any guarantee at all, so that makes the FDIC's $250,000 look pretty good.

There are over 7500 banks in this country, only 150 or so took TARP funds, and only 8 or so of them are considered too big to fail.  Are you honestly saying that you cannot find an alternative to the too big to fail banks? 

[Pox Eclipse]

No that's not what I am saying.  Mike didn't limit his criticism of banks to those that were deemed "too big to fail".  He was talking about all banks, large and small.  And I largely agree with him about how the banks have shat on the American economy for their own enrichment.

I think credit unions are probably the best alternative, but they are no more immune to runs than any other institution, so if you are a business with a million dollar payroll, you are still going to have to split up your accounts to guard against runs.

[Pox Eclipse]

I found this list of failed banks on the FDIC website, 140 of them in the last year.  Here is a similar list of failed credit unions on the NCUA website.   They are all small community institutions that were either taken over by large banks and credit unions, or they were liquidated and depositors were reimbursed by the FDIC or NCUA, up to the limited provided by law.  It seems to me that, from strictly a risk standpoint, for the foreseeable future, unless you have inside knowledge of their viability, small community banks and credit unions are the last place you should be putting your money.