Countrywide CD Rate Update - New 5.65% 6-Month CD

As much as I think the CEO of Countrywide is a tad shady, and their lending practices predatory, I must admit they have kept their CD rates high. Maybe too high. I always wonder why an institution offers higher-than-normal rates. Could it be they need money? Lots of money? That they are fudging on their reserves? Bottom line, the real risk-taker is the FDIC (read:taxpayers), since abnormally-high interest rates are not penalized by the FDIC (so far as I know).

Which raises another interesting issue. Should banks offering abnormally high interest rates (as a result of bad practices, bad press, or whatever) be required to pay higher FDIC premiums? There is some economic logic to that.

Thoughts?

Yours,

Bozo

Bozo,
Countrywide recently borrowed from Bank of America at a rate of 6.75%, so their borrowing from public is still cheaper than what they can get from other institutions. Normally, borrowing in small amounts from public has admin expense, but since most of these CDs and Money market accounts are administered on-line, the expenses are low.

One thing that I noticed on countrywide's website is there suggestions on beating the FDIC limit of 100k by opening accounts under different names and structures and still being within FDIC insurance. That clearly shows that CFC does see fear in its customers to give it larger deposits despite attractive interests.

Personally, I favor preferred stocks and corporate trusts over CDs as they are liquid and give over 8% interest. Income on some of these is considered qualifies and eligible for 15% tax cap.

At least their stock went up. Recent news: Countrywide Loses $1.2B, Sees Turnaround.

mk,
could you please explain what is it a 'corporate trust' and how safe it is?

Corporate trust services are services which assist, in the fiduciary capacity, in the administration of the corporation's debt. For example, in a normal bank loan, the lender normally lends money to the company (usually with conditions called "covenants"), accepts payments from the company monthly, and watches the company to ensure that it is meeting all its agreed upon conditions (for example, that its ratio of profits to expenses stays above a certain amount). However most large companies borrow money not from banks, but by selling bonds. When the company sells bonds, a corporate trust company can handle the acceptance of payments from the company (which it passes on to the bondholders), and is the entity which monitors the company to ensure it is responding to covenants. In the event of the companies bankruptcy, the corporate trust company fights to get as much money back as it can for the bondholders.

by the way, that definition I just gave is from Wikipedia

Took me from 08/20 until 10/02 to get an account open at Key Bank and then 2 more weeks to get linked accounts approved. It took only 2 days to open, fund and get 2 accounts linked at COUNTRYWIDE. That along with their good rates makes them number 1 with me. Stay under the FDIC limit. With all the banks out there it is stupid to go over the limit with any bank. I agree with MK that preferred stocks are a good place to look for good returns. I just bought some that I consider safe that pay 6.5% and their dividends qualify for the 15% tax rate. Gives me an after tax rate of about 5.5% which is better than CDs or Muni bonds. They are callable but I bought at only 84% of the call price so who cares if they get called.
For those involved in the stock market Schwab has an excellent checking account tied to a brokerage account. While it is a seperate account they will automaticly transfer funds between the accounts as needed. I love it.
Not sure if it is available without a brokerage account.

At Countrywide's California "financial centers" you can get 5.70% APY on a 6-month CD.

This one is gone as of 11/2/2007.
I know because I snagged it 11/1/2007, and the next day it vanished.
CW will honor rate, as of date of online application, for 9 more days.
As long as funding is in their hands no later than the ninth calendar day (not on a weekend) after application you'll get that rate.
Added benefit is that once initial $10K min. funding is received, CW will allow additional funding of same CD for 30 days!