muses of the moment

January 31, 2009

Return On Investment-3 banks fold this week

Filed under: Odds 'n ends, The Financial Crisis — totallygroovygirlfriday @ 3:01 pm

“I am more interested on the return of my money than a return on my money.” Mark Twain

Three more banks imploded this week:

Ocala National Bank, Ocala, FL

Suburban Federal Savings Bank, Crofton, MD

MagnetBank, Salt Lake City, UT

This makes nine for 2009. These are small banks. But the Big Banks are still not out of the woods yet. As much as the government would like to believe otherwise. Regional Credit Unions that feed the local Credit Unions got a large loan (“bailout”) this week too. This was not covered in the media. Interesting, there was a silent run on Credit Unions and no one covered it.

What should you do?

If you have not already, take some cash and keep it at home. This is in case of a short “bank holiday”. Then, split your cash savings between at least two, if not three different banks. Make sure the amount is well below the FDIC insurance limit, which has recently been raised to $250,000. Even though that is high, the imploded banks this year had depositors with accounts over the limit. That means they lost all the money in that account, not just the difference. Right now, accounts at imploded banks are pretty much getting covered no matter what. That will change as more and more banks close. Chose account types that are covered by the FDIC and short-term, like 6-month CDs.

I suggest splitting your cash between a local bank, a regional bank, and a national bank with a brick and mortar building near you. And don’t forget the cash at home for the “bank holiday”. Another thing that could happen is that you will be limited on the amount of money you can transfer out of a bank or they might “hold” a deposit from out of state or an individual. This a regular practice in some banks already. Keep this in mind if you have large purchases coming up.

Follow this same outline for your business accounts as well.

Some economists are calling for 40% of the banks in the US imploding or “getting acquired by another bank” before this is all over.

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