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American Bankers Association Urges FDIC To Force GMAC/Ally Bank to Cut Deposit Rates


The American Bankers Association issued a letter on May 27th directed to the FDIC Chairman, Sheila Bair, complaining about Ally Bank (formerly GMAC Bank) offering high deposit rates. Here's an excerpt from the letter:
ABA believes it is completely inappropriate, and indeed risky, for GMAC Bank/Ally Bank to be allowed by the regulators to continue to pay rates well above the market. We urge you to apply the same principles that would apply to other banks in a comparable situation to GMAC/Ally. Thank you for considering our views on this issue.

Haven't deposit rates been driven down low enough? How much more do they want savers to suffer? I'm afraid the ABA isn't alone on its anger over "high" deposit rates. You can hear Jim Cramer's complaints about "high" deposit rates in his Wednesday interview with Sheila Bair. According to Bair, the FDIC will be holding a board meeting today to discuss this issue.

The ABA and the FDIC need to remember what the real problem is. A reader in my previous post summed it up well:
What killed profitability for banks was their idiotic investment in risky mortgages, not their paying 2% interest to savers.

Paying 2% deposit rates isn't the problem. The problem is with the loans. It's hard enough for savers now to live with 2% rates. Don't punish us any more with even lower rates.

As stated in the letter, there is already regulations that prevent certain banks from paying deposit rates that exceed 75 basis points from the rates of similar types of accounts in the bank's normal market area or nationwide. Based on this, I don't consider the rates Ally Bank has been offering as excessive. Their most competitive rates include 2.80% APY for a 12-month CD and a 2.25% APY for the savings account. Subtract 75 basis points and the rates become 2.05% APY and 1.50% APY. These are reasonable for internet accounts. As you can see in my weekly rate summary, many healthy banks are offering internet accounts with rates higher than these.

Thanks to the reader tuphat who mentioned this letter in the Daily News & Deals Page.

UPDATE #3: Here is some contact information to let the FDIC know how you feel about this. The physical mail address used in the ABA letter is:
The Honorable Shiela Bair
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429-9990

Several FDIC email addresses are listed in the FDIC Contact Us Page. The Ombudsman may be a good contact regarding the handling of this board meeting and how this new rule was passed. You may also want to write to your congressman and senators. You can write to your Congressman online using this service.

Reward Checking at Risk?

A reader posted this link of comments by two banks on this interest rate restriction rule. One of the banks is Libertad, and its CEO provides 20 pages of comments. Libertad Bank is a small bank that has been offering a reward checking account since last year. On page 10 the Libertad CEO comments about how the FDIC rule may affect reward checking accounts:
Recently the FDIC has indicated that it may consider the bank's 'Rewards Checking' accounts as brokered deposits

UPDATE #2: The FDIC has just issued a press release on its rule changes regarding restricting interest rates. There's also a link to the Final Rule document.

Update: Some reports of the today's FDIC board meeting have come out. According to this Reuters article:
[FDIC] voted to bar a bank with insured deposits from paying interest rates that "significantly exceed" prevailing market rates if the bank is deemed not well capitalized.

And according to this Dow Jones article:
The new rules call for the FDIC to calculate and publish a "national rate" on its Web site that would set the national standard that under capitalized banks would need to adhere to when advertising interest rates on accounts.
Related Pages: Ally Bank
  |     |   Comment #1
This is outrageous. I urge all readers of this site to write a letter to FDIC Chairman Blair in response to the ABA's objections regarding Ally Bank. Any action against Ally Bank by the FDIC will filter down to the rest of the savings institutions. Before you know it, the best rate available will be 0.5% APY. Evidently, some other large banking interests have complained to the ABA regarding Ally Bank's deposit rates. This is pure intimidation, and shouldn't be tolerated by we savers. Write that letter today!
  |     |   Comment #2
The American Bankers Association and their elite members are bunch of thieves and greedy bustards.
They lobby Congress and the FEDs to keep the rates artificially low so that they can have a bigger spread and profitability.
  |     |   Comment #3
Chase has gutted the Wamu online savings account, currently paying only 0.75% ... I'm closing mine soon and I haven't used it in quite some time.

This is the 'benchmark' that Chase would like the FDIC to use.
BestCashCow Bankman
  |     |   Comment #4

Great article! This is indeed very dangerous. The letter is really about muting competition in the banking sector. Banks are free to raise credit card rates as high as they want but are seeking a "national average" on deposits.

I agree that the FDIC need to hear from the savers who are backstopping the TARP and providing cheap funds to the banking sector - yes, even 3% APY is cheap.
  |     |   Comment #5
When the economy is down, ABA wants low rates by claiming higher rates will prevent the economy to recover.

When the economy is good, ABA wants low rates by claiming the economy will slow down if rates are normal.

With other words, ABA wants low rates all the time on expense of the savers.
  |     |   Comment #6
It appears that the FDIC will go forth, as of the beginning of 2010, with their plans to limit all FDIC-insured banks not considered "well-capitalized" to the prevailing national rate, determined by a new list on to be posted on the FDIC website.

I find this somewhat perplexing, and wonder how the FDIC wants these banks to attract depositors. I would assume that a large portion of the population avoid “troubled” banks, and offering more competitive rates helps keep deposits on file and attract new money. Other than raising capital through selling the company (ie increasing shares/stock), is there another way for these banks to capitalize themselves?

The arguments in favor of the new rule seem to fall in two camps: 1) Offering high rates to banks operating at a loss (or at least low profitability) does little to increase the soundness, security and capitalization of that bank. 2) It is more difficult for the FDIC to auction off a bank or sell off assets for institutions offering substantially higher rates.

A few things to keep in mind – Members did stress the possibility of separating different types of accounts (ie Savings, MMA, CD), and the account’s competitive rate would be determined on its type. Second, there would be possible exceptions for highly competitive / high-rate markets, where banks can submit documentation (requirements to be announced later) to petition the ability to offer rates higher than the national amounts posted by the FDIC.

I am curious if an Online Savings Account would be a category separate than a normal savings account, or if the online market is would be acceptable as a highly competitive and high-rate market given the example used in this post (Ally/GMAC offering only about 75 basis points higher than other widely available rates online). Great in theory, but I severely doubt both options.

While I am typically in favor of certain consumer protections (I don’t like being taken advantage of or nickel and dimed), I feel this ruling along with the Credit Card Holder’s Bill of Rights will lead not only to less credit being available for the public (along with the addition of new fees, higher rates, and fewer rewards), but the incentive and reward for “safe” deposits and investments will erode as well.
  |     |   Comment #7
When the rates are low, the spread is high and the profitability is high, hence bigger bonuses for the CEO and the gangs.
  |     |   Comment #8
If ABA can kill the competition, it would mean low saving rates, and that is the aim of the big banks.
  |     |   Comment #9
My letter to Chairman Bair, regarding this 'open warfare' on savers by the ABA, is going out in today's mail. Please write yours today.
  |     |   Comment #10
Since the freaking government is extorting billions of tax dollars (and printing billions more) to hand to the banks so they can continue their fractional reserve racket, they don't need our deposits.

An economy should be based on a solid foundation of production and savings, not endless debt creation to fuel unsustainable consumption.

The whole system is so distorted it's unbelievable.
  |     |   Comment #11
I think that there is more going on here than just Ally Bank's deposit rates; after all, its rates were above average when it was still GMAC Bank. I think that it is Ally's heavily advertised pledge of being a "different kind of bank" (i.e., customer friendly) with no gimmicks, no fees, no fine print, no minimum balances, and high rates that has the large national banks running scared. Clearly the likes of BofA, Chase, Citi, WellsFargo, etc. want to quash the competition right out of the gate. I'm going to call Ally Bank and suggest that they send a mass email to their depositors informing them about the ABA's letter and asking them to write Secretary Bair. Perhaps if other readers also call Ally with the same suggestion, they might act in their own self-defense.
  |     |   Comment #12
Excuse me, I meant Chairman Bair.
  |     |   Comment #13
I just called Ally Bank. The CSR said she was going to let upper management know about it (assuming they don't already know).
  |     |   Comment #14
Can somebody post the address (physical or email) that we can use to contact FDIC Chairman Blair?

Maybe some sample letters or outlines of points to make as well?
  |     |   Comment #15
The ugly trio, BofA, Citigroup and Chase are trying to control the rates for savers and borrowers.

While the U.S. government bails out these banks because they are "too big too fail," banks choose to use this power to take advantage of consumers who are struggling. The same consumers who are taxpayers that helped to bail out these greedy banks.
  |     |   Comment #16
I agree that Ally banks new outlook on banking has the larger banks crapping in the Dockers. They make thier money on the fine print, double talk, and half truths. With Ally doing away with that it is going to attract a larger consumer base and the large banks are going to see thier deposits dwindle. The fact that ALLY bank does have the highest rates in the country also helps. I have several accounts with ALLY and when they changed thier name I got worried. I called and spoke to a CSR and guess what I got... HONESTY. I told the girl I was worried about the name change and was thinking about closing my accounts. And she told me, "I can understand your concern, we want you to be comfortable with the bank you have your money at, whether that is with us or another bank is for you to decide. If you would like I would be happy to close your account, of course we want to keep you as a customer, but first and foremost we want you to be confortable with the bank you do business with." UNBELIEVABLE!!! A bank the has my interest and peace of mind as thier concern. Needless to say, I kept my money there and transfer a large amount for BoA. Keep up the good work ALLY, and I too will be writing a letter today.
  |     |   Comment #17
The physical mail address used in the ABA letter is:

The Honorable Shiela Bair
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429-9990
  |     |   Comment #18
Nobody should be "too big to fail".
That is the payback for saving their jobs. Corporate greed is aimed against the savers just to prove a point that they are now in control of our lives.
* Bank of America (BAC) will increase its monthly account maintenance fee on its MyAccess checking from $5.95 to $8.95 per month in June. It will also start charging a one-time fee of $35 if your account is overdrawn for five business days. And that's on top of the overdraft fees, the maximum number of which has also been raised. Last year, they would never ding you more than five times in one day; now, they can whack you up to 10 times.

* Citigroup (C) began charging 3 percent of the transaction for some debit card purchases and ATM withdrawals made outside the U.S. last year, up from 2 percent before. That now matches the cost of using credit cards. Citi also increased its overdraft fee to $34 per incident. It had been $30.

* SunTrust (STI) is charging a higher fee on its basic checking if customers overdraw multiple times. The bank also raised its overdraft fees on other accounts.

* Wachovia/Wells Fargo (WFC) is doubling to $10 its fee to transfer money to checking to cover insufficient funds on some accounts. It will also start charging that fee to a credit card rather than taking it from a linked bank account, so you could end up paying interest on that charge as well.
This is just a beginning of their abusive powers.
  |     |   Comment #19
Here is the address for Chairman Bair:

The Honorable Sheila Bair
Federal Deposit Insurance Corporation
550 17th street NW
Washington, DC 20429-9990

I also called Ally Bank and directed the CSR to this web site. She at least acknowledged looking at it. Hopefully, this is being up-channeled to the executive level there. Maybe making Ally Bank a cc on any letters to the FDIC would be helpful.
  |     |   Comment #20
  |     |   Comment #21
The FDIC Board is meeting today and one of the topics of discussion is this issue with Ally Bank. The meeting may be viewed live on the internet. Here is the FDIC site regarding this:


Unfortunately, the FDIC may take action today and restrict the rates at Ally Bank. They sure took away any chance for the public to comment on this.
  |     |   Comment #22
ABA is nothing more than a forefront for the corporate greed.
ABA is financed by the big banks to protect their interest only.
ABA will lobby the Congress to go along with the banks full control of the interest rates.
ABA is interfering in FDIC rules and regulations by alleging false accusations against ALLY.
ABA should be stopped by public outcry.
  |     |   Comment #23
It's too late. The board met at 10:00 am EDT and the meeting lasted 1 hour. I guess we have to wait for the video to be posted on their archive to find out what decision they may have made, if any, regarding restricting rates at institutions like Ally Bank.
  |     |   Comment #24
Banking Guy, we are running out of time in this debate. FDIC are poised to rule on Ally today.
Is there any way that you can send a copy of this blog to Sheila Bair this afternoon?
  |     |   Comment #25
To Angelo_Frank, it is never too late to express the outcry of the American people. We should still contact FDIC and express our dissatisfaction of ABA manipulative power.
  |     |   Comment #26
I left a message with Mr. Robert Feldman at the FDIC. He is responsible for the FDIC Board Meetings. He was out the office, how should I have guessed, but I left my concerns that the public was not afforded ample opportunity to voice their concerns on the matter regarding the topic of restricting deposit rates on under-capitalized banks, discussed at today's meeting. I let him know I was concerned specifically with the ABA's attempt to squash the rates at Ally Bank. Hopefully I will get a return call from Mr. Feldman.
  |     |   Comment #27
>> I left a message with Mr. Robert Feldman at the FDIC.

What is the contact number? Even I will call and leave a message.
  |     |   Comment #28
To Angelo and others: Now we have a second reason to complain to Chairman Bair. Not only the ABA's false charges against Ally Bank, in an overt move to manipulate the FDIC into killing the oligopoly's competition, but also the FDIC's undue haste to "discuss" the ABA's concerns about Ally Bank (before anyone, including Ally, got wind of it). We should write to Bair, and specifically ask what reason is there for the haste? And let her know who the voters will blame for it! Hasn't this government got a clue as to the high probability of unforeseen consequences when they rush to judgment?
  |     |   Comment #29
This is why I'm a happy depositor/owner in Alliant credit union.

They don't **** you like the big banks, and they pay high dividend rates like the troubled banks, even though they're extremely well capitalized.
  |     |   Comment #30
When many banks are restricted on interest rate can offer, and start offer low interest rate, other banks or credit union will tend match to those low interest rate, or just a big higher. So, eventually everyone will offer low interest rate.

With our 401K, IRA and brokerage accounts shrank 40-60%, people especially older people should have a chance to put their hard earned money into a CD or saving account with a good interest rate. If the interest rate is too low, they have no choice but put into brokerage account, which they can loose their retirement money.
  |     |   Comment #31
I meant to say "a bit higher"...
  |     |   Comment #32
Agree with Collin, some sample letters or outlines of points to make will be good.

The following address has FDIC Electronic Customer Assistance Form:
  |     |   Comment #33
I just mailed my letter. I stressed Ally Bank's commitment to customer friendly policies, the misleading nature of ABA President Edward Yingling's letter, that Ally Bank's 'normal market area' is internet-based and its rates must be compared to other internet-based banks rather than to the national average, and that the FDIC's inclusion of this issue in today's board meeting was done with undue haste, before the public was even aware of it (which seems inconsistent with the Obama administration's touted commitment to transparency). By the way, the idea to c.c. to Ally Bank is a good one! Let them know that their depositors stand by them.
  |     |   Comment #34
In his Presidential campaign last year,(and he's still saying this now) Ron Paul called for the FDIC to be audited. The idea sounds better and better, doesn't it??
  |     |   Comment #35
Lobbying for this action by the ABA has been in the works for quite some time already. It isn't really something specifically directed at Ally Bank.

FDIC issued Financial Institution Letter FIL-5-2009 regarding these proposed restrictions back on 1/28.

So please don't focus your feedback on Ally Bank ... that's too easy for the FDIC/ABA conspiracy to dismiss.
  |     |   Comment #36
The next step by the ABA will almost certainly be to lobby that credit unions also comply with this restriction. Note the restriction only applies to institutions regarded as 'less than well capitalized'.

Banks tend to shrug off credit unions like they're not really worried about them as competitors. That isn't really the case ... the banks like their cheap deposits and will aim their guns at anyone who threatens them.
  |     |   Comment #37
Basically the FDIC Board came to this decision today: "The FDIC is amending its regulations relating to the interest rate restrictions that apply to insured depository institutions that are not well capitalized. Under the amended regulations, such insured depository institutions generally will be permitted to offer the “national rate” plus 75 basis points. The “national rate” will be defined, for deposits of similar size and maturity, as a simple average of rates paid by all insured depository institutions and branches for which data are available."

The complete ruling in pdf format is at:


I don't see any banks specifically mentioned but there are names and phone numbers regarding points of contact on this subject within the text of the pdf. This ruling seems to take effect January 2010.
  |     |   Comment #38
More about the bill requiring the Fed to be audited. As of last week, it had 179 co-sponsors.

  |     |   Comment #39
Note Update # 2 with link to FDIC final rule to be effective Jan 1, 2010.

While reading the new rule, on page 19 on my copy, I noticed the following in a revised paragraph -

Paragraph (e). Under new paragraph (e), “a presumption shall exist that the prevailing rate or effective yield in the relevant market is the national rate . . . unless the FDIC determines, based on available evidence, that the effective yield in that market differs from the national rate.

end of quoted text.

I noted the 2 letter word "or" .

Is it just me that believes there exists a difference betweem an interest rate and the APY when applying that interest rate using any compounding being effective?

And apparently the FDIC will get to choose which of these two different values to be the "national rate" . . .

Impressive 'fog' at the FDIC.
  |     |   Comment #40
Evidently a couple of banks sent in their thoughts last month on this FDIC ruling. They may be viewed at:

  |     |   Comment #41
"Impressive 'fog' at the FDIC."

You are correct. One must be a lawyer or have a congressional staff to interpret the FDIC ruling.

Someone was asking for Robert Feldman's phone number. It is 202-898-7043 or you might try to contact him at:

FDIC Call Center: 1-877-275-3342
7:00 am - 8:00 pm ET; Monday-Friday
9:00 am - 5:00 pm ET; Saturday-Sunday
  |     |   Comment #42
Thanks for the contact info Angelo_Frank. Hopefully enough people will will get a call to arms and make thier voices be heard. I know I will be yelling at the top of my lungs.
  |     |   Comment #43
Yingling's 3-page letter to Bair repeatedly mentions Ally/GMAC by name. How can we not focus our feedback on Ally Bank -- it is the one being singled out! It is not just about the rates, but also Ally's intent to change the way banking is done in favor of the depositor! That's the real threat to the oligopoly! They want to take Ally out to the proverbial "woodshed."
  |     |   Comment #44
Thanks for the updates Banking Guy. I wonder what this "national rate" will be when the FDIC gets around to posting it. I'm sure it will be driven down to almost nothing by the big banks. Let's see, if the "national rate" for savings accounts is 0.5% APY, plus 75 basis points, gives us 1.25% APY at the most. Whoopee!
  |     |   Comment #45
What's next...to alter existing CD deposit rates??? I must admit this is a truly troublesome situation...I might imagine "suggesting" odd behavior...but to say Ally/GMAC is WAY out of line @ 2.8%/12 months..considering the base company is in/near bankruptcy is way out of line.

Gee, maybe between to yak-up on *adding* a VAT tax and this suggetsing to some banks...well, maybe the US based volunteery income tax compliance system needs evaluation by the citizens...sans Congressional approval....

What makes this suggestion of te FDIC truly NUTS is that, should the banks fail (this being the only reason the FDId should really care about rates...)...well, the FDIC has the options to simply close the account...case closed.

How about the gov't decides (already in process" to not only manipulate treasure rates, but CHANGE the rates on existing bills!!!

Oh, by the WAY FOR ALL OF YOU READERS...just what is the INT rate.penalty being charged by the IRS....

Yeah, this is a real nice "FU" for the American public!!!!!!!!!!

Me, if you could not guess...well I'm really ****ed off..just have to figure out how to response...beyond this blog
  |     |   Comment #46
The FDIC ruling seems to cover more than just undercapitalized banks. It groups banks into three categories:

1. Undercapitalized
2. Adequatly capitalized but no broker depoists
3. Adequatly capitalized broker deposits.

It then applies the "national average" to all three in varying ways.

I've been looking for the definition of an undercapitalized bank. Anyone know where it is? I've also called the FDIC for clarification.
  |     |   Comment #47
I quickly scrambled a message to the FDIC, and sent it. The public should blast them with related thoughts:


I read today about actions the FDIC is taking, regarding the deposit practices of the ex-GMAC bank, now known as 'Ally'. While I am 100% in favor of a healthy banking system, suppresion of competition is runs counter to the American ideals of capitalism. Industries need to be protected from predatory practices, but what Ally bank is doing is far from predatory. They are making an effort to develop new customers by paying interest rates that are just slightly higher than the market. We are not talking about a bank paying 4.1% on a one year CD when the median in the industry is 2.1%. We're talking a rational incentive to bring in new business.

By forcing an artifical ceiling of 75 basis points over a 'national rate', the FDIC is doing nothing more than protecting large banks, that in many cases are financial basket cases already. Solid business plans apparently are not considered, as it is obvious that the majors believe they can not compete with the efficiencies developed by modern thinking firms As new money comes in to someone like Ally, they create a pool of new loanable capital. No one is seeing the major banks making any effort to re-energize their traditional reasons for existence. The FDIC should not be preventing 21st century banking firms from growning and maturing. Lay off alternative business models, and pay attention to the legacy problems that still exist with the BofA's and Citicorps'.

  |     |   Comment #48
I think this is just part of the new Government controlling & monitoring everything. Instead of getting new money & customers by providing a little better interest rate, Ally Bank should be applying for a bail out (now the proper way to correct money issues).
This way we do not have to move our money from B of A, Wells Fargo & Chase. I already feel better and will leave my money with B of A where it is safe, low interest rates & lots of hidden fees. I don’t want to upset the balance!
  |     |   Comment #49
I'm sorry who quotes Jim Cramer as a credible source. Really? and in a letter to the ABA chairman.
  |     |   Comment #50
This may be the chance the large overhead/fee non-internet banks were waiting for to rein in those banks with low fees and overheads. While all us folks who check out banking guys blog likely have good deposit rates, I wouldn't be surprised if a very significant amount (if not overwhelming majority) of savings are in accounts/CDs that have a much poorer rate. If we define average by looking at a bank's rate and multiplying it by the amount of funds in such accounts (a reasonable way to calculate average), the large banks with poor rates but tons of apathetic/disconnected investors will swamp the average, and draw it significantly lower.
  |     |   Comment #51
I hope I'm not the person who "quoted Cramer as a credible source.". If it was my comment I failed. My purpose was 180 deg opposite. Over the years, I thought he (sometimes) made sense...now I know I was wrong...he MAKES NONSENSE!

Everyone (here) who has mentioned that the FDIC, via the ABA is attempting to protect the largest banks (not the public) is 110% correct. First, regardless of the (food/gas) costs I see changing day by day, the fed has the B_LLS to say that infalation is and will be for a year negative several percentage points....thus their actions with EE/I bonds. Even the markets have accused the Fed via high handed "auction" means of artifically controlling free market rates.

I'm not lawyer, but, I wonder if the FDIC would actually have the power to control rates for deposits as the ABA asks for...without any congressional action? Of course, since the fall of 2008, the fed/treasures seems to have taken action and (frankly) lied to Congress and the Amercican people... I'll freely say, that I'm not a Republican and not a strong Democrat either. But, I don't think that the mandate for change given in the 11.08 election is at all reflected at the present. Not that CNBC can (for certain) be considered a fair minded network...I wonder (! WHY I have seen nor heard anything concerning this matter (AB/FDIC) the entire day???
  |     |   Comment #52
Unfortunately it does appear that the FDIC will be setting deposit rates at the behest of the Treasury under Tim Geithner. There will be no competitive rates at banks and credit unions when they are done. This is a manipulated economy now, from the top down, and we savers are at the mercy of these bureaucrats. By 2010 I expect we will have to move our funds either into corporate bonds, equities, precious metals, or foreign currencies in order to survive. Indeed the American banking system is in shambles.
  |     |   Comment #53
"By 2010 I expect we will have to move our funds either into corporate bonds, equities, precious metals, or foreign currencies in order to survive. Indeed the American banking system is in shambles."

Surive? I'm not so sure.
This would put our saving just where the Wall Street money brokers want it. And then our savings will be in a shambles too.
You can just bet they are eying all our money sitting in safe FDIC insured accounts and are conniving to force it out where they can get at it. Then all the wealth will be held by an elite few and the middle class written off. Very uncertain times to say the least.
  |     |   Comment #54
For me this entire matter might be a disguised blessing. At present everything I have is in US$ denominated assets, accounts at USA banks and credit unions. My instincts are telling me this is idiotic. But years of inertia and habit are anchoring me inside this now failing country. No country can borrow and spend its way to prosperity, not even the once-great USA. I need to let go. And this interest rate cutting foolishness will help force me to do so.

Regardless what the ratings services tell us, US Treasury notes and bonds are not AAA securities. They are not even close to that. And similarly, FDIC and NCUA insured deposits no longer can be considered to possess AAA quality securitization. They might be dollar good. But the dollars will have diminished purchasing power going forward. It's a form of tax. It's a way to "level the playing field" and "spread the wealth around". The IRS at present is going after "offshore assets" with great vigor. I need to get my own assets "offshore", and I need to follow them to wherever they end up.

Critical mass has been achieved at the ballot box. The drones have elected their President. He is serving them effectively and well. The worker bees need to flee the hive pronto, lest they be reduced to and trapped into permanent slavery.
  |     |   Comment #55
Banking Guy,

Is this the most comments you ever received on one of your posts? There's much to be said about this subject. It is very sad for me to see so much government meddling into this issue and the many other areas of our lives that the government stick it's nose in.

Enough is enough!!!
  |     |   Comment #56
I wrote both my Senators and the President. I also wrote a letter to the Newspapers. People really need not to let this issue blow over.

I wrote, "I am disgusted by the FDIC's new rule change in response to the ABA, which lobbied the FDIC to effectively kill competition in bank deposit rates.

Big companies like Chase, Bank of America, and Citi-bank obviously felt threatened by internet Banks like GMAC/Ally Bank bringing in customers by offering competitive rates. Those big banks don't want to compete on offering reasonable interest rates on savings (which already are dismal right now). So, they encouraged the FDIC to pass rules that prevent competition by using the FDIC to force smaller banks to offer uniform rates. Shameful.

This is all in the guise of worrying about those banks performances. Ironically, however, it was never the small banks competitive interest rates on saving vehicles that caused or even contributed to this economic mess. It was the big banks and their greed in handling mortgages. Congress should for once stand up, look out for regular folks, and not let the banks get away with this."
  |     |   Comment #57
I was about to open an account with the Ally Bank by way of Wachovia where the rates are obviously pathetic. I would, as someone else suggested, appreciate some guidance in composing a letter or email to Chairman Blair -- or better yet a sample letter. I am a senior citizen trying to get by on S.S. and with the low interest paid on savings. Thanks a million for all the help.
  |     |   Comment #58

I am a Canada citizen, and I will be in US(Durham, NC) as an international student this fall. I do not have a US drivers license and US social security number, which I found are required by many banks if you want to buy a CD

1, Can I buy CD in some US without US drivers license and US social security number?

2, if I can do that, at which bank/banks can I get the best one- year CD rate?

Thanks a lot!
  |     |   Comment #59
Perhaps George Orwell should have titled his book "2009" instead of "1984." INGSOC has come to America!
After the government is done meddling into free markets and deposit rates, what's next? Will Geithner, Bair, & Company want to see my laundry list?
  |     |   Comment #60
It is all about control. The agenda of this administration is first to destroy the wealth and then control the lives of everyone in it.
  |     |   Comment #61
The letter written by Erik Beguin CEO Libertad Bank SSB is outstanding.


He has made an excellent case to FDIC but looks like it has gone nowhere.

Is there anything we - the people - can do?
  |     |   Comment #62
I read these posts about the destruction of our "capitalistic" banking system and wrote and mailed my letters of GREAT concern to Bair, my senator etc. However, I have seen this coming and have written to my senator before. What a joke! They are destroying our economy and our nation as we once knew it and most Americans are just sitting back like helpless cattle being led to the slaughter! If you have not contacted your people about this I URGE you to take this seriously and at least be able to live with our conscience when they end up putting us all in bread lines if we don't stop them NOW!
  |     |   Comment #63
Maybe Anonymous at 8:49 PM is on to something. Not only are our deposit rates headed to virtually nothing, but the value of the dollar is dropping. I just heard that $1 on inaugeration day is worth 93 cents today. The fact that long-term treasury yields are up shows that our money is worth less, and we are earning less on it besides. I'm planning a visit to Canada next month, and every day I see the exchange rate getting worse, so that my trip will end up costing more.
And Anonymous at 7:31 AM is right about control. With the government having controlling ownership in the TARP-funded banks, AIG, and auto industry, we are already on the way to a centrally controlled economy. The FDIC thinks it can command and control deposit rates because it is part of a government that delights in control and does not believe in free markets and property rights. Look at how the Chrysler and GM bondholders have been intimidated, at how their property rights have been utterly dismissed.
If Ally Bank's high rates and low fees are an unsustainable or "risky" business model, then the free market will sort it out. But if you don't believe in free markets, but rather in government central planning, then you swat it down so that it can't upset the system.
Maybe Orwell's "Animal Farm" is the more apt comparison. The barnyard animals have invaded the farmer's house, and are making a mess of it.
Okay, now I'll get down off my soapbox. Everybody, enjoy your weekend!
  |     |   Comment #64
For those considering a move north, to Canada:

The Canadian federal tax rates are manageable, if not reasonable. But be alert regarding the PROVINCIAL tax rates. They are nothing short of confiscatory. They are outrageous.

It's a tough call, really. Remain here in the USA and watch your savings melt in purchasing power as their nominal value rises and propels you into ever higher tax brackets. Or go north and take your chances with the high taxes. At least in Canada the entire country does not appear to be melting down . . . yet. Australia also is doing well. Not sure I could handle such a long move, though.

And for all the posters here using their time to contact their supposed "representatives": thanks I needed the laugh. You will shortly realize that in The United States of America v.2009, people like us have no representatives. Your chances going forward are slim and none. And it has been reliably reported that Slim was seen leaving the building. You have but two choices remaining to you: Get out or pay up. Choose your poison.

Good luck and have a nice day.
  |     |   Comment #65
Time for a campaign to boycott/protest the big three (BofA, Citigroup, JPMorgan Chase) and move everything online checking/ savings/ mortgage/ everything finance.
Ally's CD rates have already dropped a bit in the past two weeks I've watched them.
  |     |   Comment #66
To the student from Canada who wants to open a CD without a SSN:

Yes, you can open a CD without a SSN. You need to get an Individual Taxpayer Identification Number.


If you do not have a driver's license, a bank can use your passport as ID.
  |     |   Comment #67
I called and emailed the FDIC to get a list of the 248 banks considered "less than well capitalized". Was told this list not available to public. So I asked if someone could advise what criteria FDIC uses to decide if a bank is well or under capitalized. Was told to call back Monday. If I get the info I will post it here.

BTW, I researach any and all banks before doing business so I don't think I would use any of the 248. It would help to know who they are.
Dan The Man
  |     |   Comment #68
Does the ABA also want Ally/GMAC to stop paying me 5.05% on the 5 yr. CD I bought from them in July 2008???. This is absurd!!!
  |     |   Comment #69
Wow- 68 replies, and they just keep on pouring in! Banking guy, this is the most incendiary article that you have ever posted!
  |     |   Comment #70
What is next from FDIC, how much money we are allowed to have in saving accounts?

Or, we should give the money back to the Government after a certain amount allowed to possess?

We may be laughing now at our jabs, but slowly and surely we will lose our sovereign mind and freedom.

Only way to get read off this menace is to change our corrupted elected officials. Nothing else will work.
  |     |   Comment #71
Ti the poster at 10:49 AM, May 30, 2009.

I'm not surprised if that CD is nullified from FDIC.
If they can order the banks to change rates, management, CEOs,
landing and borrowing rates and amounts, set new solvency rations,
set long and short terms money flow, set limits and so on, I can believe anything now.

To poster at: 11:28 AM, May 30, 2009, you are right and your reasoning is not to far fetched .
  |     |   Comment #72
To Anonymous @ 4:20 AM
Go ahead and open the account with Ally Bank. You'll still get a better rate than what you're getting from Wachovia, and it is still FDIC insured (just don't go over the $250,000 limit). Customer service at Ally is good and you'll have an unlimited number of external links (makes a nice "hub" account). Oh, and their ACH transfers are fast! You won't have to worry about sneaky fees or the necessity of keeping a minimum balance. And you'll "stick it" to the ABA, WellsFargo, et al. How dare the big banks, under the guise of ABA, tell Ally what their rates ought to be? Aren't they the ones that created the banking mess in the first place? What audacity!
  |     |   Comment #73
The media never took Ron Paul as a serious candidate when he ran for president. Yet, he has a very good understanding of money matters and how to fix them. He has introduced a bill (HR 1207) to have the Federal Reserve disclose its books to the public. So far there are at least 179 co-sponsors to this bill. I would urge everyone to contact their house representative and ask them to support this bill. It’s time to get government out of controlling our money and our lives!!!
  |     |   Comment #74
Fellow readers...I think the *end* of this issue is not yet been played-out. Having read the FDIC's definitions of "local vs non-local" markets as well as their definition of a :national rate"...well it seems to me that the FDIC (at the bequest of a trade organization (ABA)) has itself declared that free-market operations are about to end!

Let us all "step-back" and consider really just how-many banks are offering deposit rates "that are somehow out of line. Is the FDIC actually saying (in effect) that ALLY, Corus and perhaps less than 25 banks that comprise a total deposit "threat" of a really small $ amount taken in context are "a danger to the solvency of the FDIC" and major banks?

The FDIC has already increased their member bank service rates and many mid and smaller banks are yaking that the FDIC is putting them out of business. Just earlier this week, in Bankguy's blog there was a quote from a banker saying his 2009 FDIC rates were more than 75% higher than in 2008! I commented at the time that this seemed without proof of fact.

In summary, as I could rant about this for pages (!)...just how did the FDIC, seemingly by request of the ABA, reach such a decision, without a period of public comment or notice (see the FDIC rule with is markered "FINAL NOTICE"...

I'm really sorry to say it folks...but this news on Friday (which I have yet to see published elsewhere); seems to me to not only *bad* news for conservative (& retired folks) but marks the most troubling news I have seen since this all began in Q4/2007.
  |     |   Comment #75
To 12:01 PM, May 30, 2009

I tried that rout, it never worked for me.
Only language the reps. understand is:


If they ignore us or they do something against us, the answer is above.
  |     |   Comment #76
ABA can attack the small banks for their reward checking accounts next.
  |     |   Comment #77
To 12:23 PM, May 30, 2009

I fully agree with you. However, the trouble that we have now is that we have already voted the rotten potatoes IN. The next chance of any change will be in November of 2010. Until then are we to do nothing? I believe that it is better to contact our representatives and let them know what we want and to let them know that we will not vote for them in their re-election if they do not properly represent us.
  |     |   Comment #78
If the ABA is allowed to get away with this, ANYTHING could be next! Reward checking, add-on and liquid CDs, installment savings, etc. -- all could be at risk! Who gets to decide? Apparently, all that the big bank bosses have to do in order to get rid of anything they don't like is to write Bair at the last minute before a board meeting so that their will will be done before anyone knows what's going on. Shameful!
  |     |   Comment #79
Change, Change MY A**!!!

There is NO change. There never was any change!!!

This is exactly what the sheep voted for and this is what the sheep got. A bunch of crap.

They have manipulated statistics (inflation, no inflation, deflation, etc.), they have manipulated markets and now they are manipulating currencies and interest rates. That's NOT a free market!! That was NEVER a free market. That's a RIGGED market.

Wake the hell up!!

These bankers don't care about you or me. Wall St. owns this country.

All they care about are Jobs, Jobs and MORE JOBS. They want everyone to be subject to PERMANENT slavery. And Yes, they do want you to take your money out of insured investments and dump it right into their PONZI "market" so that they can go right back to doing what they were doing all along. Getting richer while you get poorer.

This comes as no surprise. I expect it to get a lot worse. This is just the beginning. You AIN'T SEEN NOTHIN' YET!!!

Just wait until they get through bankrupting the dollar.
  |     |   Comment #80
You can vote until you die, it will not do a bit of good.

Until you get rid of the two party monopoly, you will never get TRUE change. All you will get is BAD and BADDER.

They are headed down the path of Japan in the late 80s and 90s.

They are also headed towards debunking the US currency.
  |     |   Comment #81
I did not think that GMAC/Ally Bank rates that that much higher than other banks. But, I guess if your rates are more than the "big boys" than that makes you appear to be taking on too much risk. I guess with so much cheap money being parceled out to banks, it would seem illogical for banks to offer high interest rates in order to attract even more money. The focus is squarely on those who owe money and not on those who save money. The current aim is to help those who are in dire need (the credit card customers, mortgage customers, loan customers). Those not in current financial trouble are to be ignored for the present. How about going back to the preset interest rates offered by every bank and S&L back in the 1960s? That would eliminate much of cross border banking that has mushroomed since the dawn of the Internet age.
  |     |   Comment #82

...are that much higher....
  |     |   Comment #83
Maybe I'm missing something... but doesn't it make sense for a "less than well capitalized" bank to offer higher rates so it can be better capitalized?
  |     |   Comment #84
"Maybe I'm missing something... but doesn't it make sense for a "less than well capitalized" bank to offer higher rates so it can be better capitalized?"

That's the way it works in the corporate bond world. Riskier corporations must offer higher yields in order to attract buyers for the bonds. The higher yields make up for the high risk involved.
  |     |   Comment #85
To Anonymous, at 8:37 AM, May 31, 2009.

It used to be like that in the good old capitalism, but now it is a different story with different agenda and it is not what we are used to.
  |     |   Comment #86
Welcome to SOCIALISM!
  |     |   Comment #87
Welcome to the U.S.S.R. of America!
  |     |   Comment #88
But savers are considered bad people now and are not entitled to a decent rate of interest on their money on deposit. Weren't you aware that they are an impediment to the profitability of the large banks?
  |     |   Comment #89
From Ally Bank website (http://www.ally.com/messages/):

Ally -- doing right by you and your money isn’t controversial

At Ally Bank, we’ve set out to do right by you, the consumer, and your money. In the last few days the American Bankers Association (ABA), a banking industry trade group, has been up in arms over the fact that Ally offers great rates and does right by customers. Now, while upsetting the ABA is not a goal of ours, we feel it's a strong indication that we’re on the right track.

We strongly believe instead of lobbying against more competitive rates and for older ways of banking—the ABA should encourage even more healthy competition that benefits both the consumer and banks.

At Ally, we consistently offer among the best rates in the country, never hide behind fine print and give you 24/7 access to a real human. We don’t think that should be a controversial statement. And we encourage all banks to join us.
Join us and stand up to make banking better.

We encourage you to join us in standing up for making banking better for everyone. You can voice your response through Ally (http://survey.confirmit.com/wix/p910320302.aspx) and we’ll forward to the ABA or you can send an email directly to [email protected] and let Edward Yingling the CEO of American Bankers Association know what you think.
  |     |   Comment #90
Bravo for Ally! Also, Ally's claim to be well capitalized makes sense, as bankrate.com's most recent (Dec. 2008) evaluation of the former GMAC Bank notes that is it well capitalized and gives it 3 stars. Are we to believe that the bank's capitalization has dramatically deteriorated in just five months?
  |     |   Comment #91
Ally is only considered a 'well capitalized bank' because it was propped up with taxpayer bailout money (as GMAC Bank before the name change).
In this instance, the ABA has a legitimate point. The FDIC is limiting the interest rate other banks can pay, while allowing a bank that the US government owns a controlling interest in to offer interest rates well above the limits the FDIC (a government agency) is allowing privately owned banks to offer. That is the ABA's gripe. If GMAC/ALLY was 100% privately owned the ABA would have no issue with the rates it is offering.
This is a case of the US government limiting the interest rates privately owned banks can offer while a bank it controls is not subject to those same limits. The same limits hsould apply to any bank that needed TARP money to remain 'well capitalized'.

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