Deposit Account Notices

Last week I reported on how Nevada FCU was paying members to withdraw their deposits. Nevada isn't alone. OregonLive.com reports on the problems of Oregon credit unions and how some are discouraging members from depositing their money. This excerpt from the article is a good summary of the problems that the Oregon credit union, Point West, is facing.

Like other credit unions, it has seen a flood of deposits from consumers seeking safety, higher returns and an alternative to fee-heavy, bailed-out big banks. But Point West can't make auto and consumer loans fast enough to generate income to offset the costs of serving those members.

In addition to zero interest rates, keep an eye out for new fees. The article described some actions taken by O.U.R. Federal Credit Union in Eugene:

Now it finds itself undercapitalized and implementing fees for dormant accounts, minimum balances, insufficient funds and check cashing.

EverBank has long offered foreign currency CDs. Back in 2007 I did a review of EverBank's World Currency CDs. Are these CDs a good option for savers? If they are a good option, wouldn't we see more banks offering similar products? That's the question discussed in this Bogleheads thread. Several pros and cons of EverBank's foreign currency CDs are mentioned.

From AP News via Yahoo Finance

How best to telegraph the approach of higher rates is likely to dominate discussions when Bernanke and his colleagues meet Tuesday. In particular, the Fed will decide whether to keep, or water down, its year-long pledge to keep rates at "exceptionally low" levels for an "extended period." Economists generally think "extended period" means at least six more months.

Do you think there will be any change in the Fed's language on future interest rates at Tuesday's meeting?

Bank interest rates don't seem so bad if you compare them to money market fund yields and treasury yields. Fred Wilson at Seeking Alpha has a good review of these yields and warns against chasing yields.

I received this offer in the mail. It was part of a coupon flyer so it's not targeted. Earn a $75 cashback bonus when you make your first $500 in purchases in the first 3 months. Offer expires May 7, 2010. Invitation code is DACC.

You can apply online at www.apply.Discovercard.com or by phone (1-800-210-9022). Offer for new cardmembers only.

Here's the scan of the offer.

From AP News via Yahoo Finance

President Barack Obama's likely choice of Janet Yellen to become vice chairman of the Federal Reserve would favor a policy that stresses low interest rates to ease unemployment over higher rates to curb inflation.

NetSpend is one of the leaders in the prepaid debit card industry which serves people who don't have or want bank accounts or traditional credit cards.

The unique aspect for savers is NetSpend Savings Plan that pays 5.00% APY. However, as I pointed out in this post, there are fees and limitations associated with this account.

The Austin Statesman just published an interesting article that reviews the history of the Austin-based company and how it has grown into a company with annual revenue of $200 million.

Calculated Risk Blog updated its unofficial problem bank list. There were just a few additions since the last update:

Additions include Heritage Oaks Bank, Paso Robles, CA ($942 million); Idaho Banking Company, Boise, ID ($228 million); Albina Community Bank, Portland, OR ($199 million); and Ravalli County Bank, Hamilton, MT ($191 million).

From the Wall Street Journal:

Senate Banking Committee Chairman Christopher Dodd is finalizing a bill to rework financial market rules that is expected to be tougher against banks than previously expected, people familiar with the matter said.

From Research Recap

Fitch’s rating outlook for the U.S. banking sector remains negative, although many of the factors that put negative pressure on ratings are easing. [...] There are some notable exceptions to the negative rating outlook among regional banks including U.S. Bancorp (USB), PNC Financial Services (PNC) and New York Community Bank (NYB). These three banks carry stable rating outlooks owing to better than average asset quality and a comparatively healthier financial outlook.

Calculated Risk Blog reviewed the American Banker article Regulatory Actions Hit a Record Level in '09. The article indicates there were over 2000 bank enforcement actions (both public formal actions and non-public informal actions) in 2009.

Individuals with Traditional IRAs are required to begin lifetime required minimum distributions (RMD) no later than April 1st of the year after they reach age 70½. They do not have to take lifetime distributions from Roth IRAs. Dr. Don at Bankrate answers a reader's question about IRA withdrawals and the impact to RMDs.

Sol at BestCashCow reviewed this week's CD and savings account rate trends:

The chart below shows that CD rates have largely stabilized although there is still a slight drift down in short term rates and savings accounts.

Capital One Direct rate changes:

• InterestPlus Online Savings is now 1.25% APY (was 1.45%)
• High Yield Money Market is now 1.05% APY (was 1.15%)

Capital One Direct (for Costco members) rate changes:

• InterestPlus Online Savings is now 1.30% APY (was 1.50%)
• High Yield Money Market is now 1.25% APY (was 1.35%)

The last major rate cuts at Capital One Direct occurred in early February. Refer to my Capital One review for more info and the rate history.

The Power Savings Account rate had been 1.50% APY for balances of $10K+ and 1.00% APY for under $10K. It's now 1.00% APY for over and 0.50% for under $10K. Please refer to my ProvidentNJ Direct review for the account details and the rate history.

From AP News via Yahoo

Washington Mutual Inc. has tentatively resolved disputes with JPMorgan Chase & Co. and the Federal Deposit Insurance Corp. over some $4 billion at issue in the bank holding company's Chapter 11 bankruptcy, a WaMu attorney said Friday.

It should be noted that WaMu depositors did not lose anything when regulators closed WaMu in September 2008. However, WaMu's holding company and its shareholders were crushed.

According to the Chicago Tribune

The Federal Deposit Insurance Corp. is putting at least a half-dozen struggling Chicago-area banks out for bid to healthy institutions that might want to buy their deposits and assets.

Several banks were mentioned in the article including Amcore Bank, Broadway Bank and Lincoln Park Savings Bank.

No banks failed in Illinois yesterday. Three failed in other parts of the country on Friday, and one failed in New York City on Thursday (see my bank failure review).

From AP News via Yahoo

Embattled UBS AG has warned that Switzerland's financial industry is at risk unless lawmakers approve a tax treaty with the U.S., and that other Swiss banks may be next to face pressure from American regulators.

Bank failure #29 for 2010: Old Southern Bank in FL. From the FDIC press release

To protect the depositors, the FDIC entered into a purchase and assumption agreement with Centennial Bank, Conway, Arkansas, to assume all of the deposits of Old Southern Bank.

Bank failure #30 for 2010: Statewide Bank in LA. From the FDIC press release

To protect the depositors, the FDIC entered into a purchase and assumption agreement with Home Bank, Lafayette, Louisiana, to assume all of the deposits of Statewide Bank.

I'll have more on these closures in my Friday bank failure review.

The FDIC is busy this week in NYC. Regulators closed Park Avenue Bank in New York City today. On Thursday, regulators closed the New York City bank, LibertyPointe Bank. Valley National Bank assumed all deposits at both banks.

Park Avenue Bank is the 28th bank failure of 2010. Refer to the FDIC press release for more details.

I'll have more on this in my Friday bank failure review.

The Credit Union National Association's (CUNA) has released a summary of the NCUA's call report data that was released March 1st. This is similar to the FDIC quarterly reports on the banking industry.

From Fox Business

Executives at Bank of America are coming under increasing pressure to downsize the firm as federal regulators seek to prevent large, cumbersome financial institutions from once again tanking the financial system as they did in the fall of 2008

This is 27th bank failure for the year. From the FDIC's press release

To protect the depositors, the FDIC entered into a purchase and assumption agreement with Valley National Bank, Wayne, New Jersey, to assume all of the deposits of LibertyPointe Bank.

I'll provide more details about this closure in my bank failure review on Friday evening.

When the FDIC announced its rate cap plans last year, it didn't seem that bad since the caps were intended only for less than well capitalized banks which make up a small percentage of the total banks. However, the Jumbo CD Investments blog describes how these rate caps are affecting the rates from healthy banks:

What is interesting that even healthy banks are deciding to follow the rate cap. I guess they figure if the FDIC thinks that is a “good” level they might as well fall in place.

From Sean at BestCashCow

According to SNL Financial, a research firm that tracks data filed with bank regulators, the total number of retail branches in the U.S. is on pace to decline this year for the first time since at least 2002.

From Reuters

Lingering U.S. labor market weakness and nagging doubts about the solidity of the economic recovery are expected to keep the Federal Reserve committed to holding borrowing costs very low for a long time at a monetary policy meeting next week.

Hopefully, the inflation hawk Thomas Hoenig will keep pushing for a move toward a rate hike.

From Clark Howard's Show Notes

The United States is not the only place in the world that loves to hate the giant monster mega-banks. England has a similar distaste. Fortunately, the British capitalist sector has stepped into the banking black hole with alternatives to the giant banks.

Many experts say that stocks are the only asset class that can out-pace inflation over the long term, and that any safe cash savings will fall behind. This Bogleheads thread lists some inflation, 6-month T-Bill and 6-month CD history for the last 46 years that show that cash may not be as bad as the experts have led us to believe.

From CNNMoney.com

It's dawning on people that getting a handle on burgeoning U.S. debt will be a long and hard process. So if lawmakers can't agree on a credible plan, some have suggested that the country could just "inflate its way" out of its fiscal ditch.

I'm glad to read many are warning against trying to inflate our way out of the debt. High inflation can especially hurt savers and retirees.

From MarketWatch

Big commercial banks would be barred from making speculative investments in stocks and derivatives and prohibited from owning hedge funds or private-equity firms, under financial-reform legislation introduced by five Democratic senators Wednesday.

From MarketWatch

Credit-card debt has been falling for 16 straight months but consumers aren't paying off their financial obligations as much you might think. Instead, they're walking away from the debt, forcing credit-card issuers to write off as much as 90% of that reported drop, according to a new report by CardHub.com.

This can't be good news for credit card reward programs. There's going to be less money to pay for those rewards.

From CUNA News

During fourth quarter 2009 alone, cyberthieves stole more than $150 million from small and midsize business accounts, says the Federal Deposit Insurance Corp. (FDIC).

If you have a business account, it's important to understand that business accounts have fewer protections against loss from fraud than personal accounts.

The 1.16% APY applies to balances of at least $10K. Refer to my WTDirect review for the rate history and account details.

MSNBC reported that its BankTracker has updated the list of banks with "troubled asset ratios" based on FDIC's 12/31/09 data. As I reported in this March 6th post, BauerFinancial was the first one to update its database.

Bank of America just announced the overdraft fee change in this press release

Bank of America today announced that beginning this summer it will only authorize single debit card transactions at the point of sale if a customer has enough money in their account at the time. [...] This change will help customers by reducing the likelihood they may inadvertently overdraw their account and thus eliminate unexpected overdraft fees on these transactions.

According to CNNMoney.com

The Federal Reserve recently announced new requirements that are slated to go into effect in July. But the Charlotte, N.C.-based lender's move goes one step further.

Would Bank of America have done this if it weren't for the Fed's new requirements?

From msnbc.com

As Congress this week inches toward a new set of rules to avert another global financial collapse, it is focused on two conflicting goals: reforming the banking system to protect consumers while still giving lenders the freedom to take risks. So far the score looks like: Bankers 1, Consumers 0.

iGObanking.com just cut its online savings account yield from 1.31% to 1.21% APY. CD rates were also cut. Refer to my iGObanking.com review for the rate history and other account details.

All internet savings account rates seem to be headed towards one percent.

It didn't take long after my review of this account for Sallie Mae Bank to cut the savings account rate. It's now 1.25% APY (was 1.35%). It still has a nice deal related to the Upromise Rewards Program.

Apple Bank for Savings cut its Grand Yield Direct savings account yield today from 1.40% to 1.25% APY. Refer to my Grand Yield Direct review for the rate history and for more account details.

While I focus on deals, we're going to continue to have others write articles on timeless banking topics. I'll be reviewing them before publication. The latest one was written by Debbie, and it's on Understanding Interest Rate and APY. Even if you're familiar with compounding and APY, you may be interested in the discussion of blended APY. If you have a reward checking account and keep your balance above the main tier, you will be receiving a blended APY.

From USA Today

Credit card companies are expected to implement a variety of new and creative fees to cushion the impact of a credit card reform bill signed into law last year.

This shows that you can be targeted with a ponzi scheme even inside of a credit union office. From CUNA news

Michigan's Office of Financial and Insurance Regulation (OFIR) issued a cease-and-desist order against a broker who sold unregistered securities in a multi-million dollar Ponzi scheme while operating out of a credit union service organization in Ann Arbor.

It should be noted that the credit union was not involved in the scheme.

From Bankrate.com

With paltry interest rates on money market accounts and funds -- and yields on certificates of deposit not much better -- retirees are looking for safe alternatives.

The article doesn't give any new alternatives, but it does review the basic alternatives which include corporate bonds, munis, Treasuries, mutual funds and stocks.

From the CUNA news

Credit Union National Association (CUNA) economists have analyzed a study in Georgia about the impact of credit unions' tax exemption and determined the study is not a complete look at the exemption.

The article primary disputes many parts of this study, but it also has a good overview of the credit union tax exemptions.

According to the press release from Chase

Chase Freedom is increasing the cash back rate to 5 percent on popular seasonal spending categories, like home improvement, gas and department stores. In addition, customers will earn a full 1 percent cash back on every purchase - with no tiers, no caps, no annual fee

The NYT Bucks Blog has a review of this card and mentions some downsides. The obvious one is the seasonal categories. Less obvious is the $300 annual cap for 5% cash back. Any other downsides?

From Reuters

Most U.S. business economists expect the Federal Reserve to raise benchmark interest rates within six months by between a quarter and a half percentage point, according to a survey released on Monday.

Keep in mind the road to higher rates may be long even if the Fed starts to hike rates. Rates are so low now, it's going to take a lot of Fed rate hikes to get them up to more normal levels.

DailyFinance article has some strong arguments against Bernanke's Zero Interest Rate Policy (ZIRP) without even the mention of its consequences on savers and retirees.

Sean at BestCashCow shows that money supply has actually not increased in the last several months as banks are not putting new funds to work but are instead simply holding them as capital. This has put a lid on inflation, and this could continue for quite a while.

Savings and CD spread graph at BestCashCow show that banks are compensating longer-term deposits more now than ever before. The article makes the case that some long-term accounts may not be a bad idea.

A reader recently reported that Union Savings Bank is having a grand opening special at one of its Connecticut branches. It's in South Newton. The bank has a webpage on this grand opening, but there are no details about the CD specials.

Hat tip to raypol who mentioned this CD special in the Open Discussion Thread.