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0% T-Bills, FDIC Trust, GMAC Problems and other Banking News of the Day


There were several banking related news stories today. Thanks to the readers who emailed me or commented on these. Below are a few of the most interesting ones.

Zero Rate Treasury Bills: As reported by this CNN article, the Treasury auctioned $30 billion worth of 28-day bills Tuesday at a yield of 0%. Investors are desperately looking for safety and security. This can't be good for bank deposit rates.

Trusting the FDIC: Many people may be staying away from banks because they don't trust the FDIC. The FDIC had a press release today in response to a CNBC/Portfolio.com survey which showed that 31% of consumers surveyed had little or no confidence that their money would be safe if their bank were to fail. The FDIC reiterated the fact that FDIC insured savings were backed by the full faith and credit of the United States government. It also mentioned some of the recent changes including the new temporary $250K coverage which I last mentioned in this post.

More Problems at GMAC: CNN reports that GMAC Financial Services (parent of GMAC Bank) has said it's coming up well short in its efforts to raise the capital needed to become a bank holding company. GMAC applied to the Federal Reserve in November to become a bank holding company so it can be eligible for some of the $700 billion bailout funds. This MarketWatch article has some more details and commentary on GMAC's troubles.

Strongest US Bank? Which is the strongest bank: Bank of America, Wells Fargo or JPMorgan Chase? According to this Financial Week article, it's Chase.

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Bill M
Bill M   |     |   Comment #1
This is scary times in our economy, last time this happened was 1930s during the great depression.
Anonymous   |     |   Comment #2
i hava saving account in GMAC. is it safe or i should close it immediately ?
Anonymous   |     |   Comment #3
Safe from what? Terrorists?

You have a better chance of being blown to bits this week than your money being gone forever.
Banking Guy
Banking Guy   |     |   Comment #4
If you keep under the FDIC limits at GMAC Bank, there is nothing to worry about.
Anonymous   |     |   Comment #5
@Banking Guy -- You are correct about FDIC coverage for one's own balances being the only real factor. All other measurements of bank "strength" are irrelevant and are potentially misleading. Respectfully suggest you downplay or eliminate the Bauer and similar "strength" indicators.
Anonymous   |     |   Comment #6
Oh, but measurements of "bank strength" is relevant and should NOT be downplayed. Just kept in it's proper prospective. And Bauer has been quite accurate as of late.

Banking Guy does a fantastic job of reporting timely bank and CU information. We can make of it what suits us best.
Anonymous   |     |   Comment #7
The news about GMAC is directed at the financial agency within GM. The GMAC bank is affliated with GMAC finance, but at least the bank part is FDIC insured. People who are invested in the GM Demand Notes program are the ones who need to be concerned about the possible shutdown of GMAC. GM Demand Notes are invested in unsecured debt obligations of GMAC finance. The program has paid a much higher interest rate than most other bank savings rates (as of 12/11/08, the rate is 5.25%). I had an account with them and closed it a few years ago. If you want to buy into the higher yields of the GM Demand Notes, then you want to think twice given the auto bailout plan being discussed now (by the way, the program rules were changed so that only GM affliated workers can invest in them now).