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National Banks Are the Most Popular With Consumers, But They Don’t Generally Offer the Best Rates — Find Out Where Your Money Could Grow the Most GMAC Financial Services' CEO Responds to the ABA
POSTED
ON BY Ken Tumin
The CEO of GMAC Financial Services, Al de Molina, responded to the American Bankers Association's letter to the FDIC. Ally Bank, the subsidiary of GMAC Financial Services, has set up this special page where you can read Molina's letter and the ABA's letter. Last Friday, I posted on the ABA CEO's letter to the FDIC in which they were pushing for the FDIC to restrain Ally Bank's competitive deposit rates.
I'm glad to see GMAC Financial Services respond. Molina makes some important points. The most important is the fact that Ally Bank is well capitalized so the FDIC rules restricting deposit rates don't apply. Here's an excerpt:
As I mentioned in yesterday's post there have been cases in which the rate restrictions have been applied to banks that were well capitalized. Hopefully, this won't happen to Ally Bank.
Ally Bank's special page includes a contact form that allows you to voice your concerns to the ABA. Also, if you want to give your opinions to the FDIC on this issue, I included contact information in my ABA-letter post.
Thanks to the reader who emailed me the link to Ally Bank's response.
I'm glad to see GMAC Financial Services respond. Molina makes some important points. The most important is the fact that Ally Bank is well capitalized so the FDIC rules restricting deposit rates don't apply. Here's an excerpt:
[T]he FDIC rules that you cite relating to brokered deposits by troubled banks are irrelevant. Ally Bank has capital well in excess of FDIC requirements and is better capitalized than many of your members.
As I mentioned in yesterday's post there have been cases in which the rate restrictions have been applied to banks that were well capitalized. Hopefully, this won't happen to Ally Bank.
Ally Bank's special page includes a contact form that allows you to voice your concerns to the ABA. Also, if you want to give your opinions to the FDIC on this issue, I included contact information in my ABA-letter post.
Thanks to the reader who emailed me the link to Ally Bank's response.
PERHAPS THE "OTHER" BANKS WHO ARE
ANGRY !!THEIR CEO'S WON'T GET
THEIR FAT BONUSES DUE THEIR GREED TO INVEST IN RISKY VENTURES THAT CAUSED THEM TO "NEED OUR GOV'T FUNDS" !!
You want to try saying that again, only this time (1) not shouted in ALL CAPS, and (2) translated into coherent English?
Undercapitalized banks can and do pay higher interest rates just to stay afloat, and the FDIC is right to limit this kind of thing.
Maybe if the ABA's members paid higher interest rates, Mr. Yingling wouldn't need to write these letters.
I did read the charter when FDIC was formed and its duties and obligations and all of the amendments there after,
THERE IS NO RIGHT GIVEN TO FDIC TO SET INTEREST RATES.
The FDIC insurance is not a consequence of interest rates but responsibilities to regulate banks.
The FDIC is to protect the savers and not the banks from each others competition and forbid or regulate interest rates.
There is a huge deterrence between Restricting interest rates paid and setting new rates;
Bellow is insert from FDIC US Code law.
"(C) Restricting interest rates paid
(i) In general Restricting the interest rates that the institution pays on deposits to the prevailing rates of interest on deposits of comparable amounts and maturities in the region where the institution is located, as determined by the agency. "
As you can see FDIC can not tell ALLY a numerical rate set nor can interfere with the current rates paid by the banks, locally or nationally.