Question for the banking experts

[Joe Wicked]

OK, with all these financial institutions in trouble, I am now worried. Yesterday they announced Wamu was for sale. I have been banking with them for several years now. I don't have any amounts that wouldn't be insured so I am not worried about that. I am worried about automatic withdrawals being delayed or checks not being paid on time. Since I travel for work, I like having a large bank that is nationwide so I can go in wherever I am. How do I tell what banks are more stable than others? I was thinking of changing banks, but I don't want to change to a bank that in a few months will be in the same situation.

[427 S/O]

Excellent question, I pay via my banks online 'bill pay'. I get a confirmation # for each one, that and the date should protect me?.

[4RE KLR]

Joe,
No need to change banks just yet.

Washington Mutual is in trouble because they over loaned on mortgage loans and built new banks on every corner that was for sale. Just like many other banks did.

As for your deposits, don't worry about them either. As long as you are under the FDIC insured amount you should have no problems. Your funds will always be available to you. If they do close, which I doubt, you will have access to your debit cards and checks until the bank is reopened.

If you have a credit card from them that may be a different story. The card "could be" held up on, so you will have to watch that closely. The reason the credit cards could be held on payment is because the bank "may" no longer be able to issue credit. Now, I am not saying they CANNOT, I am saying they MAY NOT be able to.

Basically the bank is for sale, that does not mean it is defunct. It means they are looking for capital infusion to pay the bills, and keep the needed reserves required by FDIC and the regulators. A bank is required to keep reserve for loan losses and reserves for deposits, among other things. If they get close to the minimum, or below they try to raise capital. Washington Mutual is no different from any other bank right now in that they need deposits to shore up for the reserves.

OK, So what happens to your money?
If the bank is sold, the new owners will make your money available to you just as it is now with no problems. Only the name on the building will change as far as you are concerned. Your checks will still be good, even though they have Washington Mutual on the front of them. The checks are paid by a routing number, not by the bank name on the check.

So what do you do?
Nothing, you don't want to move to a bank that is not public about being for sale. That is when you get in trouble.

Hope this helps.
14 years in banking,

[Smokingcobra2]

Federal gov has only 1% of the needed money to back the banks. If they all start to go under we are screwed.
joeg

[4RE KLR]

That is true, But we are a long , long way from ALL banks going under.

[cobra de capell]

Originally Posted by Joe Wicked

OK, with all these financial institutions in trouble, I am now worried. Yesterday they announced Wamu was for sale. I have been banking with them for several years now. I don't have any amounts that wouldn't be insured so I am not worried about that. I am worried about automatic withdrawals being delayed or checks not being paid on time. Since I travel for work, I like having a large bank that is nationwide so I can go in wherever I am. How do I tell what banks are more stable than others? I was thinking of changing banks, but I don't want to change to a bank that in a few months will be in the same situation.

As noted above, no need to change yet, on the other hand - if you do change, go with one of the buyers of failed institutions - specifically Bank of America.

CitiBank may buy WaMu - but WuMu has a huge portfolio of crap mortgage loans.

[Joe Wicked]

Bank of America and Wells Fargo are the ones I was looking at, but like I said, I didn't know how to tell how well they are actually doing. Thanks for the replies. I will just hold for now. I hate changing banks, I used to always use local credit unions and had to change every time the Navy moved me, so when I moved here 8 years ago, I decided to switch to a regular bank and I have been happy with them. Overall I think it has been better than the credit unions.

[nevermind65]

Also, you cannot have more than $100,000 in one bank. It is not "per account" but "per banking institution". If you have several accounts with over $100k in one bank, you will only be insured for the first $100k.

[Chuckster]

Having numerous clients in the banking industry (and recently downloading them relentlessly about the latest happenings), the banks with the strongest balance sheets right now are the regional (or small local) banks in your area. Ones that use the traditional banking model.....they rely on a strong deposit base to keep them solvent and may dabble in car loans, CD's etc.....are the safest bet. If they originate home loans, ask them the mix of conforming / non conforming (sub prime) and what percentage of non conforming is still on their books. The more conservative regionals are doing quite well and watching the mess unfold from the sidelines. Personally, I am in the process of moving from BOA to a local bank.

My $0.02

[4RE KLR]

Joe,
I would stay away from BOA. (personal opinion)

You are fine right where you are right now. Don't loose sleep over this.

How can you tell if a bank is in trouble?
Well they are required by law to make public a counter statement. When you go into the lobby you will see a tri-fold paper laying in the counter with the banks name and logo and information in it. It is the latest PUBLISHED information they have made available to the public.

Here are the concerns.
1) You have to know how to read it. Not that you don't know how to read OK. But I mean the financials of the banks itself.

2) Usually for it to make any sense you need several previous statements for comparison.

3) It is only good as of the day it is dated. Meaning if it is dated yesterday, that is what the condition of the bank was yesterday, NOT today.

4) These counter statements have been know to be slightly misleading to the public.

5) Make sure it is dated, as of the last "quarter" of the banks year.



As mentioned the smaller banks right now will be your best bet. They tend to be more conservative in the exotic lending practices. They still have board members that bank there and have their own families deposits there. If they are publically traded, look them up and perform a "insider trades" search. CNN.com is a good easy one to operate. If the insiders are selling in large numbers and often RUN!

Right now you are OK. Like I said. If the bank sells, the new owners will keep your money available to you. They DO NOT want a run on the deposits. If that happens they will loose their investments.

Just sit tight, and get a counter statement every time you go in the bank and learn how to read it. If you have problems reading it, ask to visit with a Senior Bank Officer. Set down and spend ten minutes and get the low down on the bank financials.

Piece of cake.

[4RE KLR]

Washington Mutal:
http://money.cnn.com/quote/quote.html?symb=WM

Insider Actions:
http://money.cnn.com/quote/insiders/...s.html?symb=WM

Doesn't look to me like they are selling off.

[Joe Wicked]

Originally Posted by 4RE KLR

Washington Mutal:
http://money.cnn.com/quote/quote.html?symb=WM

Insider Actions:
http://money.cnn.com/quote/insiders/...s.html?symb=WM

Doesn't look to me like they are selling off.

Thanks Steve. I spent a little time trying to figure out what you linked, and correct me if I am wrong, but the directors are getting stocks awards (benefits or bonus?) and not selling them. Which would mean that they don't feel like the their money is at risk right?

[4RE KLR]

Exactly.

You do need to remember there my be underlying reasons though. For example they may have been awarded these options as bonuses and are choosing to exercise the options now and they are (or may be) required to hold them for a certain number of days before they can sell.

Just watch what they are doing and you will learn a lot about what goes on behind closed doors.

[Scott S]

My mother has my name on several of her accounts that are well over the $100K limit, I also use the same bank for both my personal and business accounts, I have been told that my mothers accounts would count against my $100K and I need to move her banking to protect myself. Is this true?

Scott S

[Chuckster]

Originally Posted by Scott S

My mother has my name on several of her accounts that are well over the $100K limit, I also use the same bank for both my personal and business accounts, I have been told that my mothers accounts would count against my $100K and I need to move her banking to protect myself. Is this true?

Scott S

An easy way to remember it is $100K or less per social security number or entity (tax ID).

[cobra de capell]

Originally Posted by Scott S

My mother has my name on several of her accounts that are well over the $100K limit, I also use the same bank for both my personal and business accounts, I have been told that my mothers accounts would count against my $100K and I need to move her banking to protect myself. Is this true?

Scott S

It's not necessarily true - it's all about "ownership categories" .......

You may qualify for more than $100,000 in coverage at one insured bank if you own deposit accounts in different ownership categories.

The most common ownership categories are:

Single Accounts
Certain Retirement Accounts
Joint Accounts
Revocable Trust Accounts
Single Accounts

These are deposit accounts owned by one person and titled in that person’s name only. All of your single accounts at the same insured bank are added together and the total is insured up to $100,000. For example, if you have a checking account and a CD at the same insured bank, and both accounts are in your name only, the two accounts are added together and the total is insured up to $100,000.

Note: Retirement accounts and qualifying trust accounts are not included in this ownership category.

Certain Retirement Accounts
These are deposit accounts owned by one person and titled in the name of that person’s retirement plan. Only the following types of retirement plans are insured in this ownership category:

Individual Retirement Accounts (IRAs) including traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, and Savings Incentive Match Plans for Employees (SIMPLE) IRAs
Section 457 deferred compensation plan accounts (whether self-directed or not)
Self-directed defined contribution plan accounts
Self-directed Keogh plan (or H.R. 10 plan) accounts
All deposits that an individual has in any of the types of retirement plans listed above at the same insured bank are added together and the total is insured up to $250,000. For example, if an individual has an IRA and a self-directed Keogh account at the same bank, the deposits in both accounts would be added together and insured up to $250,000.

Naming beneficiaries on a retirement account does not increase deposit insurance coverage.

Joint Accounts
These are deposit accounts owned by two or more people. If both owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $100,000.

If a couple has a joint checking account and a joint savings account at the same insured bank, each co-owner's shares of the two accounts are added together and insured up to $100,000, providing up to $200,000 in coverage for the couple's joint accounts.

Example: John and Mary have a $220,000 CD at an insured bank. Under FDIC rules, each person's share of each joint account is considered equal unless otherwise stated in the bank’s records. John and Mary each own $110,000 in the joint account category, putting a total of $20,000 ($10,000 for each) over the insurance limit.

Go to fdic.com for more information.

[Joe Wicked]

Well my accounts will be transferring to Chase sometime "In the future" as they put it. The chase accounts will actually cost me more per month than the Wamu did as they don't have the same packages as Wamu. I am seriously considering Wells Fargo at this point as it will cost me less than Chase and the account that fits me best will actually save me money today.