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Feds Try to Calm Worries with Sunday Announcements

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The Feds have been busy this weekend trying to calm worries. First, the FDIC just issued this press release from Chairwoman Sheila Bair. She claims there has been some "inaccurate and inflammatory reporting" on IndyMac's closure. Here's an excerpt from the press release that does provide a good overview of what the FDIC will cover.
The fact is that for insured depositors, IndyMac's conversion has been largely a non-event. The more than 200,000 customers of IndyMac with deposits of $18 billion are fully protected. It's important to keep in mind that the small percentage of uninsured are still covered for their insured amounts and half of their uninsured money. As assets of IndyMac are sold, they may receive even more. They have had continued access to their funds through ATMs, debit cards, and writing checks over the weekend, and on Monday morning, it will be business as usual.

In other news, the Federal Reserve has announced "that it has granted the Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary." This CNN article has more of this story.

For more information on Indymac Bank's failure, please see my Friday post.

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Comments
14 comments.
Comment #1 by Anonymous posted on
Anonymous
Where can one invest a million without having to worry about loosing it? One idea is by opening 10 separate acounts at different banks...Any more ideas? And while on the subject, where do the rich put their wealth without loosing any sleep at night?
Thanks all, I love this web site. Good job Guy!

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Comment #2 by Anonymous posted on
Anonymous
Buy Treasury notes/bonds/bills. Just as secure as FDIC insurance, but no $100k limit.

The truely rich can diversify their risks. They can invest in a broad spectrum of vehicles with different risks. Yes, an occasional investment may fail, but it will be minimal. As long as the entire economy doesn't fail, most of their investments will still be secure.

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Comment #3 by Anonymous posted on
Anonymous
Look into a CDars. You can buy a CD for up to $50 million, and its fully FDIC insured (as the money is automaically spread across participating banks).

www.cdars.com

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Comment #4 by Anonymous posted on
Anonymous
It's dispiriting indeed to watch the U.S. financial system, supposedly the envy of the world, being taken to its knees. But that's the show we're watching, brought to you by somnambulant regulators, greedy bank executives and incompetent corporate directors.

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Comment #5 by Anonymous posted on
Anonymous
HI! i know this is unrelated to the current topic, but i'm sure someone on this awesome site had ran into this problem. It would be great if anyone has any advice to share. THanks!

Hi! I have an account with joint owner with a cds locked in at 6.25 and 6.00% respectively for Pentagon and Agriculture. I don't want to lose these high rates, but i have to remove my name from these accounts due to personal matters. In both accounts there is ME and one one other person, let just say John.I want to remove my name from it, leaving only John as the sole owner of the cds. When i called these two banks, they said i would have to CLOSED both account or do nothing until 2011 for the cds to mature. Is this true? I am thinking they just want me to close my high interest accounts because it is so high compared to everything right now. Thank you for your advice.

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Comment #6 by Anonymous posted on
Anonymous
No you do not have to close the CDs. They can do a CD owner modification. both people need to be present to sign the new owner agreement and it has to be notarized.

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Comment #7 by Anonymous posted on
Anonymous
I checked out the all new IndyMac this morning and they are offering 4.15% on 12 month CD's. I'm surprised the FDIC can offer this rate.

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Comment #8 by Anonymous posted on
Anonymous
"but i have to remove my name from these accounts due to personal matters"

Be careful, your FDIC coverage will drop from $200,000 per institution to $100,000. We have all seen how important it is to remain under the FDIC limits!!!!

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Comment #9 by Anonymous posted on
Anonymous
Jim Bianco:
So Fannie and Freddie can use their own
securities as collateral at the Fed?? Can they
create them for the specific purpose of using
them as collateral at the Fed? This is so circular
I’m getting dizzy? (Imagine writing yourself a
check for $1 million and then going to the bank
and saying “now that I have $1 million can I get a
collateralized loan for $1 million?”) Does this
make any sense to you?

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Comment #10 by Anonymous posted on
Anonymous
IndyMac rates posted today are pretty similar to what they were on Friday before the takeover. The Web page is still using the "IndyMac Bank" logo, but at the bottom of the page it makes it clear is the FDIC-run operation by listing the name "IndyMac Federal Bank." Of course, at the start of Friday, the rates were down notably from the day before. But so far, no need to rush out of that bank.

online rates:
6 month = 3.65 APY
9 month = 4.05 APY
1 year = 4.15 APY
e-money market = @25,000 = 3.65;
@50,000 and up = 3.7

branch rates:
7 month CD = 4.05 APY (much higher than the 6-month online rate)

For those still holding a First Rate Money Market (no new accounts):
1000 = 1.5 APY
25,000 = 3.0 APY
50,000 = 3.25
75,000 = 4.0

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Comment #11 by Anonymous posted on
Anonymous
Does anyone know if the interest is insured on CD's at Indymac? I have tried to call them but you cannot get through on the toll free number. Also, can they lower the interest rate on CD's that were already in place?

Thanks for you help!!! I am losing sleep over this.

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Comment #12 by Bob (anonymous) posted on
Bob
Both the interest and prinicpal are insured on CD's up to the FDIC limits. The FDIC can lower the interest rate on CD's or MM under their management, but you can terminate them at will. You could cash out now with no penality.

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Comment #13 by Anonymous posted on
Anonymous
Spill over to other banks is why the IMB seizure was likely covered up for so long. We heard two weeks prior it was a seizure and not a voluntary closing of their mortgage unit. Look at what's happening today with other community banks with heavy Pay Option ARM exposure. And it will spill over WAMU is next.

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Comment #14 by O-Qua Tangin Wann (anonymous) posted on
O-Qua Tangin Wann
Some banks might not allow account ownership modification.

Obviously, if a death occurs, this would be a different matter.

Some banks might insist that if an owner of a CD wants out, this is tantamount to an early withdrawal, whereupon the bank might insist on an early withdrawal penalty.

Best to ask the bank's manager. If the manager says the bank will now allow an ownership name removal, there is nothing more he or she can do.

Remember, banks file tax forms for the interest under the owner's SS#. If they allowed ownership changes, it would cause them extra work when it comes to how much interest was earned under the different SS#'s. A lot of banks won't want this hassle.

~O-Qua Tangin Wann

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