[N8 v2.0]

http://www.iht.com/articles/2008/07/13/business/guarantee.php

In a country that holds itself up as a citadel of free enterprise, Washington has morphed from being the lender of last resort into effectively the only resort for home loans for millions of Americans engaged in the largest transactions of their lives.

Before, the government's more modest mission was to make more loans available at lower rates. Now it is to make sure the loans that matter most to middle class Americans are made at all.

The new reality is scorned by libertarians and conservatives, who fear intrusions by the state in the market, and by populists and progressives, who rue a society in which education and housing increasingly rest upon the government's willingness to finance it.

"If you're a socialist, you should be happy," said Michael Lind, a fellow at the New America Foundation, a research institute in Washington. "But you should really wonder whether you want people's ability to pay for housing and college dependent on the motives of people in Washington."

 

[X3pilot]

N8, I'm not sure what your point is. Is it that you agree or disagree with the government helping to finance (i.e. underwrite) mortages?

Is it about the government financing standards of living to different classes of our society?

In other words, what are we debating?

 

[BurlyShirley]

You know this issue could get a whole lot deeper than just the Mortgage Crisis too. I mean, in a depression type scenario, because of "FDIC" the government could potentially be in charge of a high percentage of the publics' money in general. A run on some of the largest banks out there could leave the gov't footing quite a bill.

If only we had all that Iraq money back.

 

[X3pilot]

There was a report somewhere today and I can't find it now but in CA, they had people lined up at 4 am this morning to pull money out of a bank there that is being taken over by the feds. They actually used the term 'run on the banks'.

isn't this somewhat how the depression started?

 

[Secret Squirrel]

There was a report somewhere today and I can't find it now but in CA, they had people lined up at 4 am this morning to pull money out of a bank there that is being taken over by the feds. They actually used the term 'run on the banks'.

isn't this somewhat how the depression started?

I had visions of the depression starting with some okies driving through Nevada in b&w with lots of dust...

Or John Malkovich crushing mice...

Not sure which...

 

[N8 v2.0]

There was a report somewhere today and I can't find it now but in CA, they had people lined up at 4 am this morning to pull money out of a bank there that is being taken over by the feds. They actually used the term 'run on the banks'.

isn't this somewhat how the depression started?

http://www.reuters.com/article/topNews/idUSWA000014120080714?feedType=RSS&feedName=topNews&rpc=22&sp=true

The FDIC said the renamed IndyMac Federal Bank will cover insured deposits, mostly up to $100,000, and initially cover 50 percent of uninsured deposits.

"I have $360,000 in this bank, and I was misled by this bank," said Robert Clark, a Glendale resident. "I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don't know what to do. I really don't know what to do."

 

[JohnE]

I think the government should only step in the most extreme matters...such as when a bajillion idiotic consumers get into mortgages WAY over their heads because they are misled into believing the economy will be great forever.
Those who dont learn from history and all...

 

[Secret Squirrel]

When you put your money in a bank that sounds eerily like a macaroni and cheese conglomerate, you shouldn't be too surprised...


Seriously though...that blows. FDIC insuring only goes so far...


Sorta OT, but a "reverse mortgage" is just about the most innane thing I've ever heard about...Really good way to screw yourself...even in Japanese terms...

 

[JohnE]

The FDIC said the renamed IndyMac Federal Bank will cover insured deposits, mostly up to $100,000, and initially cover 50 percent of uninsured deposits.

"I have $360,000 in this bank, and I was misled by this bank," said Robert Clark, a Glendale resident. "I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don't know what to do. I really don't know what to do."
This guy oughta be happy to get the 50% over the 100k FDIC limit back. Is it just me, or is it kind of dumb to hold all your eggs in one financial basket like that?
He will (possibly) only take a hit of 130k, as opposed to 260..

A retirement (Or financil empire) is like a table...the more legs it has, the more stable it is.

 

[BurlyShirley]

The FDIC said the renamed IndyMac Federal Bank will cover insured deposits, mostly up to $100,000, and initially cover 50 percent of uninsured deposits.

"I have $360,000 in this bank, and I was misled by this bank," said Robert Clark, a Glendale resident. "I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don't know what to do. I really don't know what to do."
This guy oughta be happy to get the 50% over the 100k FDIC limit back. Is it just me, or is it kind of dumb to hold all your eggs in one financial basket like that?
He will (possibly) only take a hit of 130k, as opposed to 260..

A retirement (Or financil empire) is like a table...the more legs it has, the more stable it is.

360K in one account doesn't seem excessive to me, and the 100k limit seems a little dated given current incomes, but I really have no idea when they set that, or why they chose that number.

 

[JohnE]

From the FDIC website...

How much insurance coverage does the FDIC provide?
The basic insurance amount is $100,000 per depositor, per insured bank.

The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.

Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank.

Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.



So 360k in one account would be bad, but in the bank itself it would/could be covered. Right?

 

[BurlyShirley]

From the FDIC website...

How much insurance coverage does the FDIC provide?
The basic insurance amount is $100,000 per depositor, per insured bank.

The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.

Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank.

Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.



So 360k in one account would be bad, but in the bank itself it would/could be covered. Right?

I wasn't arguing that people should keep more than 100K in an account, just that 100k seems like a paltry sum given what people make these days. 360k in one account, seems like it should be acceptable. For instance, a business owner who needs money on hand to buy materials, or has just made a huge deposit from completing a contract, wouldn't really be able to invest or spread the money out effectively over many banks and still have immediate access to what he might need.

 

[Lowlight7]

I wasn't arguing that people should keep more than 100K in an account, just that 100k seems like a paltry sum given what people make these days. 360k in one account, seems like it should be acceptable. For instance, a business owner who needs money on hand to buy materials, or has just made a huge deposit from completing a contract, wouldn't really be able to invest or spread the money out effectively over many banks and still have immediate access to what he might need.

When they say "diversify", this is what they're talking about. Who needs immediate access to 150k cash?

It's certainly time to update the numbers involved in FDIC due to inflation. But I can't say I have a whole lot of sympathy, they did teach us about FDIC in 6th grade...

 

[ohio]

When they say "diversify", this is what they're talking about. Who needs immediate access to 150k cash?

I don't know how FDIC ensures business accounts, but it doesn't take a very large business to have more monthly cash flux than $100k. If you're a small op it would add considerable overhead to try to do AP/AR from more than one checking account.

 

[Samirol]

And more banks are supposed to be hurting in the next couple weeks too, so if you have more than 100k in an account, definitely open a new account in that bank or in a new bank.

 

[BurlyShirley]

And more banks are supposed to be hurting in the next couple weeks too, so if you have more than 100k in an account, definitely open a new account in that bank or in a new bank.

It would be nice if this worked the same in revers; if you have more than 100K in debt to a bank, and the bank goes under, the gov't only makes you pay back 100k.
Always screwing over the little guy...

 

[Samirol]

It would be nice if this worked the same in revers; if you have more than 100K in debt to a bank, and the bank goes under, the gov't only makes you pay back 100k.
Always screwing over the little guy...

I'm confused, how would that benefit the bank?

 

[$tinkle]

didn't the u.k. go through something like this w/ northern rock 1-2 yrs back? seem to recall much ado about something with p.m. brown getting shivved by david cameron for this.

here: http://en.wikipedia.org/wiki/Northern_Rock