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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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FDIC's Summer 2011 Consumer News: P2P Payments & Old Bank Accounts


FDIC's Summer 2011 Consumer News: P2P Payments & Old Bank Accounts

The FDIC recently published its Summer 2011 Consumer News. Some excerpts that I thought would be useful to highlight include:

  • Person-to-Person Payments by Smartphone and Mobile Computer Add Convenience and Pose Risks - I've covered several internet banks that have begun offering P2P payment services. Ally Bank's P2P payment service is the latest one. In my review of ING Direct's P2P payment service, one reader expressed concern about its security. This FDIC article reviews some of the security concerns:
    The P2P services offered by banking institutions have the same federal consumer protections that you get when using your credit or debit card if the payment is funded by linking it to your credit card or checking account, respectively. That means, for example, that if someone steals your smartphone and uses it to transfer money you may have limited or no liability for that unauthorized transaction provided you report the problem in a timely manner.
  • Lost and Found or Safe and Sound: How to Solve Mysteries of Old Bank Accounts - Most readers of this blog probably keep good records of their bank accounts, but what if you become an executor of a deceased person's estate? You may have to deal with old bank accounts and safe deposit boxes. This article has some useful tips on this issue. With many bank failures over the last few years, there may be more cases of banks turning over unclaimed accounts to the states. Here's what the article mentions about such cases:
    following a certain period of inactivity, the FDIC or the other bank will turn unclaimed property over to the state — after 18 months in the case of deposit accounts (under federal law) and after one or more years for the contents of safe deposit boxes (in accordance with state law).

I think I missed the FDIC consumer news that came out last spring. I didn't find many useful articles in this edition. Here's one that's worth mentioning:

  • Bank CDs: Key Questions to Ask - I'm not impressed with this article. They leave out two very important questions: what's the early withdrawal penalty and can the bank refuse an early withdrawal request. However, the article does bring up an important issue of dealing with non-bank agents and brokers to purchase CDs. Have you noticed ads in your local newspaper listing very high CD rates? Last year I gave an overview of these newspaper CD ads. Here's the tip this article provided:
    There have also been examples of some non-bank companies advertising above-market rates on CDs that, according to FDIC attorney Richard M. Schwartz, were "schemes devised by finance companies and insurance agents eager to get consumers in the door" to eventually purchase a non-insured investment.

Please refer to my February post for highlights of the FDIC's Winter 2011 Consumer News.

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Anonymous   |     |   Comment #1
All FDIC web and print publishings are basics of the basics info. It is on a level of uneducated person who only knows how to read. You can not rely on such info and there are more sub paragraphs that trump the issue at question or published on the web.

If this country gets into deeper trouble, FDIC will be frozen  in its tracks, the money at the banks will be frozen for withdrawal and FDIC becomes irrelevant.

What will happen to the value of the Dollar will determine how much of that money can be guaranteed to the customers. By thinking that our money is insured by the US Government is a farce and only wishful thinking.

Case in point: If the foreign countries stop buying US treasury bonds,  FDIC will become insolvent since the banks will stop paying the FDIC insurance, because there is no secondary market for the bonds and that will trigger unimaginable crises.

FDIC is just a tool for bank regulations and is not a tool for customers benefits and protection.

The Congress or the President of USA can declair emergency orders and the FDIC will cease to exist until such order is in effect. The customers money are the last thing to be protected and or saved.

Some of you may think, that this is far fetched scenario of doom, but on my thinking and observing of the reality as impartial person, I see that it exists such possibility, even dough the odds are small at present time, bur such changes can happen overnight.
Anonymous   |     |   Comment #3
#1:  You are giving us the worse possible scenario.  What you are actually describing is the complete downfall of our society as we know it.  It would make the French Revolution look like a summer cook-out in comparison.  Frankly, it would be the end of our so called Democratic Society as we know it and a perfect time for a dictator to take over.  Maybe Nancy Pelosi will become President and save us!
RJM   |     |   Comment #7
#1 Best be sitting in a storm shelter with his guns.
George   |     |   Comment #2
Yes, of course, I'd be inclined to agree with you on some of your aspects.  But the reasoning falls short.  as does the use of logic.  Yours is based on a most pessimistic thought process.  Further, I'd recommend you further your research to determine more accurately which of your factually implied statements have merit.

Anonymous   |     |   Comment #6
I happen to agree with #1, it is not too far from the truth. FDIC has only enough money to pay the savers of failed institutions of few billions Dollars. total. If a medium to a large bank fails,
FDIC will need the help from Congress, FEDs and the treasury dept. to pay the depositors.

FDIC may delay payments to savers of failed banks until they get the money from Ben or China. Some of you may not believe in such outcome because you belive $250K per account will save you from losses, but if the Dollar becomes  less valuable due to the printing worthless currency, what will be the price to pay to collect your deposits with half of the value gone for good.
storm shelter and guns
storm shelter and guns   |     |   Comment #8
shooot i vote for a bomb shelter and ak47
Anonymous   |     |   Comment #9
And you really believe "they" (the Insiders) are going to let the entire country collapse by letting this happen with the saver's money?  They will come up with the money if they have to print worthless paper 48 hours a day, imo!  You are talking about a basic destruction of our country and everything it is.  It is NOT just about not paying savers.  Our economic system for what little it is still worth will be destroyed if dryed up Uncle Sam can't get out of his coffin and do his job!
George   |     |   Comment #10
Please always remember this:  our gov't, through the Fed, is capable of meeting all obligations.  Why?  Because it will always print money needed to care for our obligations.  This is exactly what they've been doing through QE1 and 2.  Is this the best route?  No, not always.  It could lead to massive inflation.  In fact, the jury is still out whether the current Fed chairman and the Fed's staff will be capable of washing everything in such a manner to avoid excessive inflation.  The issue of whether they can is dependent on this:  it all depends.  It all depends on a myrid of variables that no one, including computer programing, is capable of dealing with.  That said, back to the original issue of the first comment (who would be a good Tea Party candidate......I'm not, but I am very conservative), the $ will be there to meet both absolute and implited obligations of our fair haired gov't.

Anonymous   |     |   Comment #11
To Anonymous - #9,

And what do you you think “they” are doing now?

Printing, borrowing, destroying with hidden inflation, devaluing the Dollar, raising commodity prices and pay very little interest on our savings, rasing the debt ceiling, creating un sustainable future for repayment of the national debt, printing money for worthless stimulus packages, bailing out failed businesses, ....shell I go on.....how about our standard of living going down, purchasing power of the Dollar going down, creating bad business environment,  salaries are on the way down, new taxes proposed, ........well by now you can see the path we are on, it seams to me we already are on that one way street of destruction.
Anonymous   |     |   Comment #12
Number one has really something there.
There are over $8 Trillions of savings out there and about $20 Trillions in mutual and hedge funds and retirement funds.
If something bad is to happen, no money on earth can pay the savers, unless the Dollar is devalued to 1 in 4 (for every 4 dollars you get 1 dollar).
FDIC is just a joke on the savers, it only works for a small failed banks, one at a time. It is supposed to be self reliant, but it is not, the premium charged to the banks for the insurance is to small to have any valuable effect, should a bigger bank or multiples banks failed at same time, FDIC is just useless.
Anonymous   |     |   Comment #13
To Anoy #11:  What took YOU so long to wake up?  Also, what are YOU doing about it?  Just waiting for someone else to take charge and make things better?  Keep excusing yourself by saying "it does no good to waste time contacting our senators etc. etc."  That is a cop out!  They have to know we still have the guts in this country to protect it even if we have to harass them with phone calls and emails 24 hours a day.  Let them know that if we go down, THEY go down with us!  Sept. 20 will draw the line in the sand as far as I am concerned.  If you truly care about your future, you will do something and not wait for people like me to do it for you.  BTW, I would love to know what Ken thinks about all this and if he thinks we are wasting our time still looking for CDs on his forum.  He has been very quiet lately.  Just wondering why.
Anonymous   |     |   Comment #14
TO POSTER George - #10,

How naive can you be!

FEDs are the worst thing that has ever happened to this country.
Putting every one of us in debt, without having a personal benefit out of it or incurring personal debt.
The money you have saved are being hacked by the FEDs and borrowed against them as collateral for future payment to the newly created debt, in other words, your savings are being destroyed.  Why you think Bernanke is holding the interest rates so low for so long, he is postponing the inevitable that is coming and I will not post it here because some of you are so blind sided, that the truth will only create denial and outrage in some of you including George #10.
Anonymous   |     |   Comment #15
To Anonymous - #13,

I have been proactive for the last 2 years and did everything you suggested to do, but few person like me are totally being ignored and my e-mails have been delete unread.
Hoe I know that, I never received a single reply back from my Senators and the Reps.
I left phone messages, but never received call back, it seams to me that nobody care about this country or what is happening to her.
Anonymous   |     |   Comment #16
Anony #15:  It gives me hope to know that people like yourself are still trying.  I just finished writing an email to Obama and if it goes into the trash, so be it.  We will just find other means to wake up more people to what is being "allowed" to happen and maybe one day we'll have a "Savers Party" marching on Washington!  Whatever it takes to protect our country and our finances.
Anonymous   |     |   Comment #17
I was inspired by #1 to write my thought about the whole money system.
I will give this example for $1, but implies for unlimited amount of money.

When I deposit my dollar to a bank, that dollar is being used to purchase overnight treasury bill. The treasury department takes that dollar to the FED and use is it as collateral to borrow 1 dollar to pay some of the bills and or entitlements.
 FED  charges interest on the money lent to treasury and puts it on the tab on the national debt, which will have to be paid back by the taxpayers with interest.

Now, you withdraw your dollar from the bank, the bank buys it back from the treasury.
The treasury is short one dollar (they spend it) and goes back to the FEDs and borrows another dollar to give to the bank that will give it to you. FED register that dollar, charges interest and puts it on the national debt tab again.

That is how we as nation created so much debt, because the deficit run by the treasury and the way the FEDa are set up to operate, puts every single one of us on the hook for the scheme run by our Government, since they spend more than we receive in taxes (revenue).

Only way out, as I see it is to stop spending more than what we collect. But how to do that, our Government made so many entitlements grand fathered in, created so many hand outs programs from food stamps to Pell grants and thousands of them in between, foreign aid in Billions and many more. Just thinking of them gave me headache.

 On top of that our Congress is so addictive to spending, stimulus every few months, bail outs, new give away programs and on top of that cutting taxes and collecting less revenue for SS and Medicate which will be borrowed from the FEDs to fill the shortfall in other words the innocent bystanders like the savers are punished for being responsible persons.

Our politicians don’t like to hear the truth nor to be confronted by us. Most of them are stuck in the 60s mentalities and are afraid to balance the budget. Do you think 2012 will help or we will deal with the same old same old?
Anonymous   |     |   Comment #19
I have spent most of the day reading everything I could on this "Twist" action and what the nation's best economist think about it.  It seems Bernanke and the Feds are grasping at straws because they really don't know what to do about the horrible financial position our country is in.  The Brains reveal that this Twist action was done in the 1960's and didn't work then so they don't expect it to have good consequences now.  One thing I read which did give me a bid of peace was that they don't think it's going to affect long term interest rates very much considering the position we already are in.  The scary thing seems to be that "no one" seems to know what to do to make things better!  Even the best financial brains can't agree what should be done at this point.  What a position for us to be in!
Anonymous   |     |   Comment #21
To operation twist - #20,

It started in Congress with unlimited entitlements and giveaway programs, that grew and grew to today’s un sustainable level.
Treasury borrows and borrows, FEDs are printing and borrow and little by little we came to a point of no return.
That is the problem, that point of no return, will cause all of to suffer and lose value of our savings do to loose monetary policy.
Only desperate countries print money, we became one of them, so don’t expect in near future better times ahead, unless we all realize, including the Congress, that this insane spending must stop now and slowly reverse the course.
Anonymous   |     |   Comment #25
Will someone explain to me what is the process that gets a post abolished?  If "any" irate poster just clicks "Report this Post" does that automatically get the post deleted?  I think many times it is forgotten that we are adults and will not turn to jelly if someone makes a negative remark to us.  I really thought we had more freedom than this in this group.  We are discussing frightening things that are happening in our country and if people get emotional about things, I, personally, don't feel they should be deleted unless they use obscene language (which I have not read in this group).  Just my opinion.  I do not believe in censoring people for voicing their feelings or opinions. 
RJM   |     |   Comment #27
We will NEVER have a civil blog with so many anonymous posters.


Make everyone provide a name & email address and then ban them if they get out of hand.

If the troublemakers leave, well, good !
Paoli   |     |   Comment #29
#27:  We DO have to provide a user name and email address in order to register and post on this blog. They just agree not to post our email addresses to protect our privacy and possible personal harrassment by uncivil posters.  Unless someone is personally being harrassed and posting rules are broken, I really resent any censorship or deletion of posts because certain posters do not agree with the information.
RJM   |     |   Comment #28
Speaking of P2P payments.

Discover is allowing me to send money via my Discover to anyone via paypal. (Even a fake email address set up to go to my paypal account)

While there is a limit of $500 per month, we do get cashback on it and no interest as long as you pay your bill in full every month.

So, assumin the low end .0025%.  One could make $1.25 per month,$15 per year by just transfering money to yourself.

Now, they SAY you cant send it to yourself, but paypal allows you to set up multiple email addresses, all contected to your account. So they have no way of policing it.

And, you get a month or so worth of "float".

Whats cool about it is the $$ shows up IMMEDIATELY whereas other transfers can take 3-5 days at paypal.

They told me the $500 per month limit is based on the calander month, not a statement month.
Anonymous   |     |   Comment #31
27 is 100 percent although i will prpbably be deleted
palmer chimay
palmer chimay   |     |   Comment #32
to 27 i raise that rhetorical question at least one time per year and the response is something to the effect that peolpe who offer value do not like to register god save the first amendement  watch this get deleted