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CWB Rca Drops To .8% From 2.53%!

Friday, February 3, 2012 - 10:53 PMCommunity West Bank - Details
Whoa - happened (luckily) to check the  latest rca rates.  I couldn't find Community West Bank (CWB) on the table, til I saw it waaaay down the list at .80%! Stunned, since my account confirmed 2.53% at the beginnning of the week/month. 

Last time there was a big rate drop, I was notified personally by the bank. This one dropped SO drastically, they probably figured (rightly) there'd be an exodus regardless of the notice.

Thanks, KenBDG, for having your site so up to date. 
ekatekat74 posts since
Jan 22, 2010
Rep Points: 238
1. Saturday, February 4, 2012 - 4:57 AM
Thanks for noting this drastic rate cut. It is very disappointing to see such a big cut.

The bank had been offering a competitive reward checking account since 2007.

When I see such a big rate cut, it makes me wonder if it might be due to the FDIC rate caps. If a bank is considered by the FDIC as "less than well capitalized", the FDIC can enforce these rate caps. As you can see, the current rate cap for an interest checking account is 0.82%. Also, it appears that CWB's financial health has worsened. Its Texas Ratio has gone from 33.28% on 9/30/2010 to 52.81% on 9/30/2011. I don't see any public enforcement actions against CWB, but it's possible that the action hasn't become public.

I have more details about reward checking and FDIC rate caps in this blog post.
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,699
2. Sunday, February 5, 2012 - 11:38 AM
I just learned that the OCC has recently issued a Consent Order against CWB. So that may explain why CWB cut its reward checking rate to comply with the FDIC rate cap.

Details of the OCC consent order was made public in CWB's 8-K filing.

There's no reason why banks should be forced to lower their reward checking rates to the FDIC rate caps for interest checking accounts. Reward checking should not be considered as interest checking accounts.
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,699
3. Sunday, February 5, 2012 - 9:01 PM
It seems to me that drastic rate cuts like this would make a lot of people transfer all their money out (that's what I did); wouldn't that make the "less than well capitalized" problem get even worse?  Is this rule designed to make the bank fail faster?

BTW, Ken, your link to "CWB's 8-K filing" is bad (has depositaccounts URL at the beginning).
sgsgsgsgsgsg3 posts since
Jan 21, 2011
Rep Points: 5
4. Monday, February 6, 2012 - 6:26 AM
Thanks. The 8-K filing link has been fixed (I think the http didn't get inserted properly into the original link).
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,699