Should FDIC insurance limits be raised?

[Drakkon]

Originally posted by: Fern
I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

This is kinda the point of my post...with a treasury only yielding 1-2% right now barely beating inflation unless you go up to the 10-15-30 year treasuries why not move to a CD? a lot of richer folk don't want to because of the risk....you can invest much more in a treasury and still feel relatively secure but a CD is only insured to the 100k mark and doesn't give much benefit after that. Up that ceiling and have a CD that beats inflation at the 500k mark and I would be moving money into a CD which supports the bank which in turn helps out the banking situations - which the treasury accounts don't really do.
And yes you could do this through multiple institutions already but you dont get the exact same rate at every institution. While bank A may have a cd at 3 every other bank will only have cd's at 2.9. So the more you could pump safely into bank A you would right?

 

[StageLeft]

Originally posted by: JS80

Originally posted by: fallout man

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

I was confused about this as well.

Apparently, the FDIC guarantee is up to $100,000 per account holder per bank. If you split your money into multiple accounts, it doesn't matter--you're still only insured for $100,000.

If you split your savings into multiple accounts at separate banks, you're insured up to $100k per bank.

Having multiple accounts at the same bank DOES NOT COUNT.

I think that this is fucking stupid, but I guess that it prevents the FDIC from going bankrupt after every shit-hole podunk bank fails.

You NEED to have you money put into separate banks, with each account having <100k in order to have FDIC security.

this is correct. a lot of fucktards that had their money with indymac got reamed ITB because the bank reps told them this false info.

Then they are morons. I said this because it's what I'd heard although it seemed slightly silly, but it's what is said often. I have dreamed of a day when I have more than $100k to actually drop in a savings account and of course would have checked into it. Now I don't have to As long as there are plenty of banks around, we can just get new accounts at new banks. That could be a hassle, though, they limit might as well be much higher. Won't impact me either way :0

 

[Balt]

Yep, it should be raised.

 

[fallout man]

Originally posted by: JS80

Originally posted by: fallout man

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

I was confused about this as well.

Apparently, the FDIC guarantee is up to $100,000 per account holder per bank. If you split your money into multiple accounts, it doesn't matter--you're still only insured for $100,000.

If you split your savings into multiple accounts at separate banks, you're insured up to $100k per bank.

Having multiple accounts at the same bank DOES NOT COUNT.

I think that this is fucking stupid, but I guess that it prevents the FDIC from going bankrupt after every shit-hole podunk bank fails.

You NEED to have you money put into separate banks, with each account having <100k in order to have FDIC security.

this is correct. a lot of fucktards that had their money with indymac got reamed ITB because the bank reps told them this false info.

With regard to my other "private issue" thread:

I was told that a single money-market account was insured 100k per beneficiary (as in 3 beneficiaries equals 300k FDIC protection). I smell bullshit. Anyone here familiar with that kind of thing? It really smells bad.

 

[JS80]

Originally posted by: fallout man

Originally posted by: JS80

Originally posted by: fallout man

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

I was confused about this as well.

Apparently, the FDIC guarantee is up to $100,000 per account holder per bank. If you split your money into multiple accounts, it doesn't matter--you're still only insured for $100,000.

If you split your savings into multiple accounts at separate banks, you're insured up to $100k per bank.

Having multiple accounts at the same bank DOES NOT COUNT.

I think that this is fucking stupid, but I guess that it prevents the FDIC from going bankrupt after every shit-hole podunk bank fails.

You NEED to have you money put into separate banks, with each account having <100k in order to have FDIC security.

this is correct. a lot of fucktards that had their money with indymac got reamed ITB because the bank reps told them this false info.

With regard to my other "private issue" thread:

I was told that a single money-market account was insured 100k per beneficiary (as in 3 beneficiaries equals 300k FDIC protection). I smell bullshit. Anyone here familiar with that kind of thing? It really smells bad.

I specifically remember reading an article about an indymac depositor that, at the suggestion of the bank rep, added his parents to his account because then the account is protected to $300k. Of course he was wrong and got $100k.

 

[The-Noid]

Multiple person accounts protect single people. You need to setup beneficiaries on the account or setup a revocable trust with beneficiaries. This adds protection based on the number of beneficiaries.

 

[fallout man]

Originally posted by: JS80

Originally posted by: fallout man

With regard to my other "private issue" thread:

I was told that a single money-market account was insured 100k per beneficiary (as in 3 beneficiaries equals 300k FDIC protection). I smell bullshit. Anyone here familiar with that kind of thing? It really smells bad.

I specifically remember reading an article about an indymac depositor that, at the suggestion of the bank rep, added his parents to his account because then the account is protected to $300k. Of course he was wrong and got $100k.

Originally posted by: Yoxxy
Multiple person accounts protect single people. You need to setup beneficiaries on the account or setup a revocable trust with beneficiaries. This adds protection based on the number of beneficiaries.

As far as I know, my situation involves beneficiaries on the account. Essentially, a single person account with two more beneficiaries, which the bank claims to be fully covered by FDIC for up to 300k. I feel like they're trying to take my parent for a "ur dumb" ride.

 

[The-Noid]

Nope that is correct, if you have beneficiaries on the account you are insured for each beneficiaries. It is a loophole setup for trusts and law trust accounts.

Account holder + 2 beneficiaries (transfer on deaths) = 300k insurance.

The FDIC is running webinars and townhall meetings starting this week explaining all these things, but in the meantime consult a financial professional if you have any questions.

 

[fallout man]

Originally posted by: Yoxxy
Nope that is correct, if you have beneficiaries on the account you are insured for each beneficiaries. It is a loophole setup for trusts and law trust accounts.

Account holder + 2 beneficiaries (transfer on deaths) = 300k insurance.

The FDIC is running webinars and townhall meetings starting this week explaining all these things, but in the meantime consult a financial professional if you have any questions.

Does that mean someone needs to be whacked before FDIC writes you a check in the event of bank failure?

btw: thanks Yoxxy.

 

[tfcmasta97]

If you'd want more people keeping money in the country, I would think so

 

[The-Noid]

The term beneficiary refers to trusts and qualified accounts with a successor owner that can assume that account in totality from a legal perspective. When it is a non-qualified (read after tax account) beneficiaries should be called transfer on death beneficiaries or payable on death beneficiaries.

Trusts and qualified accounts must by law have some beneficiary even if it is "Estate of xxxx." Non-qualified accounts must have an agreement on file with the financial institution called a TOD or POD to have beneficiaries labeled on the account. Otherwise non-qualified accounts default to the estate and are passed according to your will.

 

[Thump553]

Originally posted by: Yoxxy
Law firms are required to have trust accounts that often times contain many millions of dollars. By law they can not receive interest on the amount. It usually sits in a run of the mill checking account.

That depends on the state. In my state the trust account does earn interest but the interest is paid over to support things like legal aid and the cost of public defenders.

One thing your post doesn't bring out though is that the lawyers are personally liable for the shortfall if the bank fails and FDIC insurance doesn't cover the full account (I think they break it down per client in a trust account). Given your average home closing is way over $100k, your lawyer is taking on a substantial liability for handling a simple, low fee closing.

That's one of the main reasons I use a "too big to fail" bank, and I keep an eye on them these days.

 

[The-Noid]

Originally posted by: Thump553

Originally posted by: Yoxxy
Law firms are required to have trust accounts that often times contain many millions of dollars. By law they can not receive interest on the amount. It usually sits in a run of the mill checking account.

That depends on the state. In my state the trust account does earn interest but the interest is paid over to support things like legal aid and the cost of public defenders.

One thing your post doesn't bring out though is that the lawyers are personally liable for the shortfall if the bank fails and FDIC insurance doesn't cover the full account (I think they break it down per client in a trust account). Given your average home closing is way over $100k, your lawyer is taking on a substantial liability for handling a simple, low fee closing.

That's one of the main reasons I use a "too big to fail" bank, and I keep an eye on them these days.

Great point, I only know the state I am they are not allowed to collect interest. They also have to pay a state insurance fund in case the bank fails.

 

[smack Down]

Originally posted by: fallout man

Originally posted by: JS80

Originally posted by: fallout man

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

I was confused about this as well.

Apparently, the FDIC guarantee is up to $100,000 per account holder per bank. If you split your money into multiple accounts, it doesn't matter--you're still only insured for $100,000.

If you split your savings into multiple accounts at separate banks, you're insured up to $100k per bank.

Having multiple accounts at the same bank DOES NOT COUNT.

I think that this is fucking stupid, but I guess that it prevents the FDIC from going bankrupt after every shit-hole podunk bank fails.

You NEED to have you money put into separate banks, with each account having <100k in order to have FDIC security.

this is correct. a lot of fucktards that had their money with indymac got reamed ITB because the bank reps told them this false info.

With regard to my other "private issue" thread:

I was told that a single money-market account was insured 100k per beneficiary (as in 3 beneficiaries equals 300k FDIC protection). I smell bullshit. Anyone here familiar with that kind of thing? It really smells bad.

I don't think money market accounts are protected at all by the FDIC

 

[Craig234]

Yes, they should, but not as part of the 'bailout bill'.

 

[Baked]

Make it half a mil and I'm in.

 

[Mani]

Originally posted by: smack Down

Originally posted by: fallout man

Originally posted by: JS80

Originally posted by: fallout man

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

I was confused about this as well.

Apparently, the FDIC guarantee is up to $100,000 per account holder per bank. If you split your money into multiple accounts, it doesn't matter--you're still only insured for $100,000.

If you split your savings into multiple accounts at separate banks, you're insured up to $100k per bank.

Having multiple accounts at the same bank DOES NOT COUNT.

I think that this is fucking stupid, but I guess that it prevents the FDIC from going bankrupt after every shit-hole podunk bank fails.

You NEED to have you money put into separate banks, with each account having <100k in order to have FDIC security.

this is correct. a lot of fucktards that had their money with indymac got reamed ITB because the bank reps told them this false info.

With regard to my other "private issue" thread:

I was told that a single money-market account was insured 100k per beneficiary (as in 3 beneficiaries equals 300k FDIC protection). I smell bullshit. Anyone here familiar with that kind of thing? It really smells bad.

I don't think money market accounts are protected at all by the FDIC

Nope, they are not.

 

[Fern]

Originally posted by: Drakkon

Originally posted by: Fern
I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

This is kinda the point of my post...with a treasury only yielding 1-2% right now barely beating inflation unless you go up to the 10-15-30 year treasuries why not move to a CD? a lot of richer folk don't want to because of the risk....you can invest much more in a treasury and still feel relatively secure but a CD is only insured to the 100k mark and doesn't give much benefit after that. Up that ceiling and have a CD that beats inflation at the 500k mark and I would be moving money into a CD which supports the bank which in turn helps out the banking situations - which the treasury accounts don't really do.
And yes you could do this through multiple institutions already but you dont get the exact same rate at every institution. While bank A may have a cd at 3 every other bank will only have cd's at 2.9. So the more you could pump safely into bank A you would right?

OK, I don't wanna get too detailed here, but individuals and business's need to be seperated in this discussion.

Business's are gonna need to manage cash flow, they shouldn't be leaving big chunks of money in their accounts earning no interest. While they might need the money in a few days or weeks, they can place it in securities - even if for only a day or so. There are many investment alternatives far better than just leaving large amount of money sitting in a non-interest bearing account at the bank. (Banks do offer interest bearing short-term accounts for business's and people also).

But why an individual would do this (leave large amounts in a bank account) is not readily understood by me, nor do I believe it common. There are many things available in the short-term market besides CD's; if that's your preference just use use multiple accounts at various banks (get more free lunches from the bankers too, they like to take out good customrs )

Fern

 

[shira]

Originally posted by: Yoxxy
Nope that is correct, if you have beneficiaries on the account you are insured for each beneficiaries. It is a loophole setup for trusts and law trust accounts.

Account holder + 2 beneficiaries (transfer on deaths) = 300k insurance.

The FDIC is running webinars and townhall meetings starting this week explaining all these things, but in the meantime consult a financial professional if you have any questions.

This isn't quite correct. The FDIC insurance limit for one parent with two chidren as beneficiaries would be $200k.

The formula for trust accounts (either formal or informal [payable-on-death = POD account]) is:

N X B X $100K

Where

N is the number of account holders (for example, two parents).
B is the number of qualified beneficiaries (for example, two children).

For the two-parent, two-child example, the amount of FDIC insurance would be $400K. This $400k is the TOTAL insurance limit for ALL trust accounts at the same bank involving any combination of parents and children. For example, if there were several POD accounts as follows . . .

Both parents and both children.
Father and son
Father and daughter
Mother and son
Mother and daughter

. . . the total limit at that bank for trust accounts would still be $400k.

But note that at that same bank, the parents could also open non-trust accounts:

Both parents (joint account), FDIC insurance = $200k
Father (individual account) = $100k
Mother (individual account) = $100k

So this family could cover $800k at this one bank (this assumes none of the children are account holders).

 

[StageLeft]

ing direct right now says 100k for a person or up to 200k for a joint account. I saw it last night perusing around my account.

 

[Darwin333]

Originally posted by: Fern
Raise it why?

For the convenience of rich people?

If you've got $300,000 to put in the bank, just get 3 accounts each with no more $100k in them.

It's the account that insured (and thus has the limit), not the person.

I don't see why anyone would have that much $ in a bank account. If I had more than $100k I would be putting it in short-term treasuries etc; the term being dependant upon my expected cash-flow needs. I suppose large companies might need more $100K in their payroll account for some minimum period of time, but otherwise I don't see the need really.

Fern

Plenty of businesses keep way more than that around for operating capital. I think this would go a long way to prevent panic based runs on banks. Somehow, I don't think its Joe six pack withdrawing his 3K in savings that drives the bank under. Its the relatively few "big dogs" yanking their money out that kills the bank. I could be wrong but my companies payroll account alone is way over the $100K limit. Even a small rumor that the bank might go under and that money is getting yanked ASAP.

As I said earlier, I like the idea of being able to "opt in" to the insurance over a certain amount for a fee paid by the consumer, just like any other insurance. It would defiantly give people more faith in their bank in times like this and could prevent an unnecessary run.

 

[Genx87]

I dont really care either way but is this a big deal? How many people have 100K laying around in a bank account? I mean honestly? In our nation the avg retirement savings is about 90K. This will only affect a few people at the top.

 

[SunnyD]

Quick question - can someone explain how the FDIC works in terms of insuring accounts? Do the banks actually have to pay any sort of premium to the FDIC similar to the way normal people pay premiums for health insurance or car insurance, or is this something the gov simply provides for free to the banks?

 

[Darwin333]

Originally posted by: SunnyD
Quick question - can someone explain how the FDIC works in terms of insuring accounts? Do the banks actually have to pay any sort of premium to the FDIC similar to the way normal people pay premiums for health insurance or car insurance, or is this something the gov simply provides for free to the banks?

Yes, the bank pays for FDIC insurance. I think its a set amount per $1000 deposited (or insured maybe?) in the bank.

 

[Darwin333]

Originally posted by: Genx87
I dont really care either way but is this a big deal? How many people have 100K laying around in a bank account? I mean honestly? In our nation the avg retirement savings is about 90K. This will only affect a few people at the top.

From what I gather, this is just to prevent runs on banks. The avg joe has no reason to yank his money out of the bank if they think its going to fail. Some still do in a panic but so far the FDIC has came through on its obligations. 1 guy yanking a million out of a bank hurts that bank a lot more than 50 people yanking out 5K.