Seattle Bubble Forum Archive

I don't have full access to the WSJ online. Here's the teaser paragraph:


FDIC Readies for a Rise in Bank Failures
By Damian Paletta

WASHINGTON -- The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.

The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.

FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." The division now has 223 employees, mostly based in Dallas.

http://online.wsj.com/article/SB120398607404892133.html

Oh my god. I just went to seattletimes.com and a HUGE drop-down banner ad for Key Bank runs the length of the screen, screaming: MONEY! and advertising CD rates.

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The FDIC classified 76 banks as "problem" institutions for the fourth quarter of 2007, up from 65 in the third quarter, showing that a growing number of financial institutions are under strain.

"Problem" institutions are those under closer regulatory scrutiny, as the banks are more likely to have weak capital cushions to prevent against failure. The FDIC never identifies which institutions are on the list, as it could lead customers to rapidly withdraw funds from the bank.

The 76 "problem" institutions had combined assets of $22.2 billion, the FDIC said. Federal bank regulators have said they expect to see more bank failures in the future. –Damian Paletta
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Anyone know where we can find this list of problem banks? It would be good to check if one's money is in a problem institution.

The article I posted indicates that the FDIC will not identify the "problem" banks for public perusal.

If you want to know which banks have the greatest risk of failure, just look at the rates they charge on their CDs. It is a long established fact that the institutions struggling to get savings, and taking the greatest risks, offer the highest CD rates.

It's no coincidence that Washington Mutual and Countrywide have come up in the top two lenders for CD rates for quite a while now. Can anyone imagine why WaMu and Countrywide are so desperate for desposits they are willing to pay above market rates?

So, in this one case it's not so terrible if your bank has lower rates. Good to know. Normally I look for higher rates, but maybe this is the wrong time for that.

Here's a follow-up article I found arguing essentially the same thing. If interest rates are too high, you should fly.

http://www.marketoracle.co.uk/Article3843.html

Thanks, RCC,

and look who the top banks are on this website.

Countrywide
Flagstar

and a big banner ad across the top for Indymac.

http://cdrates.bankaholic.com/

Hmm, some of those rates are getting kind of low. #25 is at 3.40%.

Should I be worried about BECU if their CDs are now at 3.76%? It does make me a little skittish.

Make that 3.66% for BECU (6-month). The 3.76 was for a 12-month which was longer term than those quoted by your link.

That's a good point sniglet. Because credit unions are non-profit and have additional tax exemptions, they should always be able to provide a better return.

There's been talk about what this site should do now that the crash is imminent. I for one would like to see a resource of 'safe' or 'risky' banks/credit unions presented. We already know WAMU is at risk, but who else?

So which bank WOULD you use? I'm talking normal checking and bill paying stuff. We've been with WAMU for 14 years, but I'm starting to get a bit nervous...