About Ken Tumin

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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NOVA Bank in Pennsylvania Fails Without a Buyer


NOVA Bank in Pennsylvania Fails Without a Buyer

There was only one bank failure this Friday, but it was an interesting one. NOVA Bank in Pennsylvania was closed by state regulators. The FDIC was unable to find a buyer, so the FDIC will be mailing checks to NOVA Bank depositors for the amount of their insured money. Those with uninsured deposits may have a loss.

This is the 47th bank failure of the year, and it's only the 4th this year which did not have a buyer. At this time last year there had been 85 bank failures.

For some past cases in which the FDIC couldn't find a buyer, the FDIC has given checking account customers time to open accounts at other insured institutions before they close the checking accounts and mail the checks. That didn't happen this time, but the FDIC is providing some help to customers who receive government direct deposit. According to the FDIC press release:

As a convenience to depositors, the FDIC has made arrangements with National Penn Bank to accept the failed bank's direct deposits from the federal government, such as Social Security and Veterans' payments through January 25, 2013.

My last report of NOVA Bank was in December 2008 when it was offering a CD special that was available nationwide via an online application. That may be one reason the FDIC wasn't able to find a buyer. Too many of NOVA Bank deposits may have been held by out-of-state CD customers who would be unlikely to build additional relations with a new bank.

There were no credit union liquidations this week. The total number of credit union failures remain at 10. One of those 10 was privately insured by the ASI.

Below is the summary of today's bank failure:

47th Bank Failure of 2012 (2nd in Pennsylvania)

  • Closed Bank: NOVA Bank, Berwyn, PA
  • FDIC Press Release
  • Size: 13 branches, $483.0 million in assets and $432.2 million in deposits
  • Acquiring Bank: None
  • Possible Uninsured Deposits: The amount of uninsured deposits will be determined once the FDIC obtains additional information from those customers
  • Rate Changes: The FDIC will mail checks directly to depositors of NOVA Bank for the amount of their insured money
  • Estimated Cost to Deposit Insurance Fund: $91.2 million
  • Enforcement Action: FDIC 5/7/10 Consent Order
  • Financial Ratings: 1 star at Bankrate.com, 0 star at BauerFinancial, 1 star & Texas Ratio of 315.63% at DepositAccounts.com (see financial rating note)

Financial Ratings Notes: 0 star is lowest at BauerFinancial, 1 star is lowest at DepositAccounts.com & Bankrate.com, Texas Ratios over 100% is considered at risk. Ratings are based on June 30, 2012 data.


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Anonymous   |     |   Comment #3
Truthseeker:  So what you are posting is that ALL the banks we use are really insolvant?  Would you please advise when you expect the entire banking system in the US to crash so that I can "try" to get out of all the CDs I have and Ken can close down this Forum and Blog.  If we shouldn't buy CDs then why is Ken still listing them for us?  If what you expect to happen is years away then we have no problem.  I will be in eternity by then and won't need CDs.    Please let Bankrate, Bauers and all the other rating services know they don't know what they are doing so they will give us the correct ratings for the banks by "your" calculations.  After all, many of us use them to make important decisions for which banks to use or not use.

BTW, are your calculations the same  for credit unions?  Are they all insolvant too?  This is a serious question since you are making such a serious asumption by your post.  Maybe we can abandon banks and just use credit unions when our CDs mature.
Anonymous   |     |   Comment #4
Nuts. If you buy coin, you might as well trade all of your currency for nickels. That is the only currency unit worth less than the value of the metal. Old copper pennies are worth 3 cents but the new ones are worth 1 cent in zinc. You can do well with these.

In any case, these fraudsters were not too big to fail. It will be an inconvience and loss of income to many retired savers. Good luck finding a 4% APY. The price of gold is currently falling. Go with the nickels, it is the only thing guaranteed not to lose value.
Bancxman   |     |   Comment #5
There's no reporting fraud here. If you want a better picture of this bank's financial status at closing, follow this link:


While the bank was booking its assets at $483MM, it's also clear from its entries for loan loss reserves and troubled assets that this bank was severely undercapitalized and unlikely to stay in business. 



Truthseeker   |     |   Comment #7
Anonymous #3, apparently, even though my posts have been on topic, Ken doesn't like what I am posting, so he is removing them, probably because I am raising questions about the overall solvency of the banking system. But, it is a simple fact that, absent Congressional authorization for massive money printing, the FDIC does not have the resources to compensate deposit holders if one of the mega-banks, like Bank of America, JP Morgan Chase, etc. fail. But, reading this site is very useful, because Ken provides a lot of good info on liquid accounts like TIAA direct, Barclays and others. Since we are currently living under a fiat currency regime, we have no choice but to hold onto a few US Federal Reserve notes, even if we eventually intend to get rid of them and replace them with hard currency.

Credit Unions, at this point, probably are a better bet, but it is a fact that the entire US and European banking system is insolvent. How else can a bank continue to do business when it has overvalued its assets, as proven by the difference between the value of the assets stated on FDIC filings, and the real value as illustrated by the FDIC estimate of loss expected? Nova overestimated its assets by over 40%, as per my posts which were removed. And, yet, only now, is it being closed, and its officers/directors, who filed the estimates of the value of its assets are not being prosecuted. Nor, is anyone at any other banks that failed, with wildly incorrect FDIC asset value estimates, being prosecuted.

How many banks, otherwise thought to be solvent, are overestimating the value of their assets. I think there are a huge number of them. We had a credit boom driven by derivative writing by the NY based casino banks, and this has caused insolvency throughout the banking system, since all the banks, even the innocent ones, were loaning money based upon asset values bloated by the existence of securitization markets. The only solution is massive monetary inflation, and that is what is going to happen. That is why I stopped buying CDs and turned mostly to gold.

Austrian economists knew this bust was coming long before everything began collapsing in 2007/08 and wrote repeatedly about it. The great economist, Ludwig Von Mises studied the history of credit booms and busts, and teaches those who take the trouble to read his historical analysis that there is NO WAY to stop the destruction of a credit driven boom. When the national authorities, like the Federal Reserve, turn to money printing to do it, it eventually ALWAYS induces what is known as a "currency event". That happens when everyone finally loses faith in the currency.

What is amazing is that it hasn't happened yet, in spite of the repeated busts of banks like Nova. But, that it will eventually happen is a certainty. That is why I use this site to find temporary places (liquid MM and checking accounts) for storage of my wealth as I earn it, plus 6 months of expense money, but never open CDs anymore. All this being said, I suspect that Ken Tumin is not going to like this post either, so read it fast, before he removes it! Nevertheless, if even a few otherwise innocent people are benefitted by knowing reality, it is worth my trouble to post it.  I strongly advise Mr. Tumin, that you READ THE WORKS OF LUDWIG VON MISES and that of his successors, who predicted the 2008 financial crisis in its entirely, several years before it happened.
Truthseeker   |     |   Comment #8
Anonymous #3, I'd also like to say that the rating services are NOT completely worthless. It is obviously a lot better to keep your wealth in a bank with, for example, 2 stars, rather than zero stars, because it would tend to mean that the bank is "less insolvent". Nova, for example, was rated 1 star by Bankrate, and 0 stars by Bauer. But, there have also been a number of banks with multiple stars which, nevertheless, failed. That is because the entire banking system, and most of the banks that comprise it, are insolvent in the absence of marking their asset values to fantasy levels. That is why the Federal Reserve is wildly printing money, in a desperate effort to correct a solvency problem by flooding financial markets with liquidity. But, you CANNOT correct a solvency issue by flooding the market with liquidity. Hence, the Fed's efforts are in vain, and are simply making the problem worse. Sooner or later, there will be a mega-bank that fails, and the US government will, by then, lack the credibility to stand behind it, as it did back in 2008. That's when the truth about all the insolvent banks will "hit the fan" and when all the banks you are expecting to allow you to escape from CDs by paying early closure penalties will prohibit you from closing the accounts, as the US dollar spins down into oblivion. It is also when our current fiat money system will return to a gold anchor, and any federal reserve notes you have stuck in unclosable CDs will be exchanged, at a very unfavorable rate, for the "new dollar".
Paoli2   |     |   Comment #10
Truthseeker:  It is not like Ken or his Deleters to delete posters for having a difference of opinion.  However, you have basically taken over this particular blog to "inform" us of your concerns over and over again.  How do we know you are not just some seller of coins or other investments you are urging us to turn to?  Everytime I read an article about how to save ourselves from the economic collapse, after I read it, it is always to steer me into buying someone's newsletter or book etc.  So many are trying to make money these days off of our fears.  You have been given ample time to convince us of your theory and even show us where to go for more info so our ulcer can get worse.  Thank you for your concern and desire to help us but I think you have done your job and you should not expect Ken to give you more time to keep repeating yourself.  Have a nice day.
Anonymous/ Pot meet kettle
Anonymous/ Pot meet kettle   |     |   Comment #11
Paoli, what an ironic comment, since you took over this blog with the savers petition and badgered everyone about it.    Has Ken appointed you the blog Nazi in charge of restricting what can be posted?  
Truthseeker   |     |   Comment #13
Paoli2, how in the world can I sell you gold coins or newsletters when I have never included any reference to my alleged "coin shop" or "newsletter"? I own neither. I've been reading this site for many years.  Prior to 2006, I was a huge buyer of CDs and used Ken's information to get the best deals. I am still forced to live in a society that uses fiat currency, I do want to get the most interest I can on that portion of my assets which I keep liquid, even in a Fed-induced artificial low-interest environment. I am sure I will buy CDs again, someday in the future, once the Federal Reserve Note is replaced with a tangible-asset backed dollar.

I stopped buying CDs in 2006 after reading about Austrian School economics. The Austrian economists predicted an impending "World Economic Crisis", as the inevitable result of the irrational credit boom happening at that time. By 2008, almost like clockwork, it actually happened. More information can be found at http://mises.org/. The Von Mises Institute does sell some books, and asks people for donations, but it gives away most of its information. It is a non-profit outfit, with huge amounts of free reading material. So far, I've never made a donation or purchased any of their books. Yet, the info. they distributed helped me make a lot of money so I really should, now that I think about it.
Truthseeker   |     |   Comment #14
Nova Bank is not the last one which will fail. Many more will come unless the "powers-that-be" print money to infinity, which means that the dollar will fail. Savers who learn about Austrian School economics will be more secure because their eyes will be opened.

To give you an example of how the non-profit Mises Institute works, see http://academy.mises.org/courses/the-state-the-rothbardian-analysis/. That link will take you to a course for 3 "credit hours". You can contribute $79 for the course, watch the videos, and get a certificate of completion. Or, you can pay nothing and just download the written materials without video.

If you look around their site, you'll find a huge number of free-to-read materials that are immediately downloadable. They've got to get some revenue in order to keep the site up. Getting that revenue from ads would be unlikely, given the Libertarian view which is commercially undesirable to Keynesians now running most banks, brokerage houses and our economic system in general. Once again, I have no connection, whatsoever, to that website, except for the fact that I am now a Libertarian (previously a Republican).
Anonymous   |     |   Comment #15
Truthseeker..........Let me preface my remarks by saying that I'm no fan of CDs because as you corerectly pointed out, investing at the current rates is in fact a gradual but consistent surrender of ones purchasing power.

However fans of the Austrian school, hard money, precious metals etc. fail to understand the true nature of money. At its ultimate core, money & the value of money is simply what we as a worldwide civilization agree it to be. Nothing more, nothing less. Gold, silver, toilet paper etc. have no intrinsic value above what their industrial uses disctate. And that intrinsic industrial value fluctuates wildly depending on economic conditions, which for better or for worse is in fact valued in "fiat" currency & all world currencies are in fact "fiat" currencies.

To truly understand the Austrian school you have to understand where they're coming from historically. To truly understand why German economic policy is what it is today you need to view it within their historical fears, historical background. The same applies to Bernanke & his views today...........which reflect an almost genetically ingrained fear of a depression.

Beliefs of some people on this board to the contrary non-withstanding, Bernanke isn't stupid or irresponsinble. Nor are his policies part of an elaborate attempt to fatten the wallets of his "pals".  He is & has been for the past 4 years, attempting to engineer a politically & socially palatable slow motion deleveraging. The printing of money, which is a quaint but inaccurate categorization, should be viewed within the context of an attempt to prevent a potentially accelerating price decline across all asset classes, be they stock, real estate & yes, precious metals. The whole "stimulating the economy" explanation is but a thin veneer masking the real goals. The reason inflation has NOT skyrocketed in the past 4 years despite all this "money printing" is because there is a counterforce that is pushing all prices lower worldwide as the worldwide economy continues to slow down, continues to deleverage.


It is impossible for one asset class (precious metals) to massively outperform within the context of this scenario UNLESS there is a complete collapse in confidence in society period. Is this going to happen? No, that is highly unlikely. But if it does then just stock up on canned goods, guns & ammo.

Much more likely is a scenario that we will continue muddling along with tepid growth for as long as perhaps another decade. The dollar & other major currencies will survive & the prices of precious metals will track the prices of other assets, albeit with more volatility. Banks will fail in an orderly fashion just as they have been all these years. We will not see hyper inflation & with a bit of luck we will not see a depression. Your gold holdings which are worth $1700 an ounce today could be worth $3400 in a decade or $800 in a decade. Both scenarios are highly unlikely. Much more likely is a scenario where all that physical gold will be around the same price it is today...............& you'd be earning nothing on it year after year. 
Anonymous   |     |   Comment #16
#15  FINALLY!!  A poster who makes sense!  Thanks for the reprieve!
Anonymous   |     |   Comment #17
Truthseeker .. Get a life :)
Truthseeker   |     |   Comment #18
Anonymous #15, I understand where you are "coming from" but you are incorrect in several respects.

First, it is true that "money" can be whatever people agree it is. But, gold (and silver, platinum to a lesser extent) happen to be ideally suited for the purpose of being money because they cannot be printed by men like Bernanke. That is why societies have used gold for at least 7,000 years, whenever gold was available. The experiment in fiat currency, including but not limited to the Federal Reserve Note is a mere 100 years old, and for most of that time was still linked heavily to gold. Pure fiat money has existed ONLY since 1974, so it is less than 40 years old.

Second, for hundreds of years, the price of gold (and, secondarily, of the other precious metals) has followed the world monetary base quite accurately. This has every likelihood of continuing. There was an exception period from 1981 to 1999, but we now know that the market was being flooded by central banks dishoarding thousands of tons of previously hoarded gold. They can no longer flood the market, as a lot of their prior stock is gone. So, it will, once again, follow the monetary base. Bernanke and his counterparts all over the world, have more than tripled the monetary base since 2008, and they are continuing to increase it by $40 billion plus each month now.

Third, the Fed IS printing money. You need not take my word for it. Just listen to Bernanke describe what quantitative easing is, during his first interview on CBS back in 2009. Of course, as QE has gotten a bad name, he has since changed his tune, but, at the time, he stated, and I quote "We are basically printing money..."

Fourth, the Fed is now buying bonds that the free market doesn't want, as they did, heavily, back in 2009/10. The reason is that mortgage backed bond prices would collapse if they didn't do so. Don't you think the free market has a reason it doesn't want those bonds? They are considered to be garbage, and non-Fed related entities now buy them only because they expect the prices to be propped up by the Fed. What do you think happens once foreigners decide to lower their purchases of US dollar denominated instruments? The Fed will be forced to defend the dollar, which means raising interest rates. Which also means that a large number of the securitized bonds now on the Fed book will go bad. Which means the Fed goes insolvent...except for its gold certificates. But, if the only thing that saves the Fed is gold, what do we need it for?

Fifth, you say there hasn't been any inflation so far. I don't know what planet you're been living on. It isn't the same one I am living on. My cost of business car rentals, for example, are up more than 250% since 2000, when the monetary base began rapidly expanding under Greenspan. Since 2008 and the Crisis, almost everything I buy is up by high double digits. And, we are still supposedly inside a deep recession. What happens when we get the "recovery"???  Hyperinflation????  Thankfully, I have the money to pay for everything I want, but not everybody does.

Sixth, I do not think Fed policies are "noble" attempts to wean Americans off of debt. On the contrary, statistics show that, so far, there has been little or no "deleveraging" at all. Corporate debt, personal debt and government debt are all up thanks to Fed policies that favor debtors over savers, and steal money from the pocket of honest people who buy CDs and want nothing greater than a small rate of honest interest sufficient to offset inflation. Simply put, the Fed has been stealing from Grandma and Grandpa's CDs to give to Goldman Sachs and JP Morgan Chase. They have boosted stock prices at the direct expense of savers.
Anonymous   |     |   Comment #19
The only thing that has gone down in price are house prices. If you consider the real rate of inflation, as compared to the phoney rate reported by the government, everything is up by double digits since 2008.
Anonymous   |     |   Comment #20
There should be a limit to how many "the sky is falling" posts we can have on here.  Poor chicken little sure has a lot of company these days.  Think optomistically!  Most of us posting here are probably so OLD that we will be gone before all those dreadful things happen to the economy.  Just be sure to leave a LOT of money for your children so they can survive.  We don't want another Jim Jones thingee in the US! 
Anonymous   |     |   Comment #21
Truthseeker.........It's clear that we disagree on pretty much everything & that's fine. You know, from time to time I purchase some pretty high end stuff & yet I haven't seen any of the "high double digit" inflation you refer to. So, clearly we do live on different planets. But regardless of that.................I've already laid out what I think the next decade will look like. Instead of rehashing all our disagreements why don't you give us some estimated date or time frame as to when this cataclysmic hyper inflation is supposed to occur so that we can make a note of it & see whether you or I am right? 
Truthseeker   |     |   Comment #22
OK, #21, who I assume is the same as #15.

I never said we will have hyperinflation, if you define that as triple digit inflation, or "Zimbabwe on the Potomac". I simply mentioned that as a possibility if we ever have a real recovery. But, we never will have a real recovery, because Fed market-rigging policies are causing massive levels of malinvestment throughout society. That will end in yet another crash in the next few years. The Fed has increased the monetary base by 350%, and may end by increasing it, perhaps, 600% over 2008.  But, given the serial economic crashes, high double digit inflation, masked by faked up statistics from the BLS for several years is the most likely outcome.

The US and world are going to switch to a totally new currency system based, in some as yet undefined manner, to gold or other tangible assets. By 2018, with compounding of the double digit inflation, the US Federal Reserve Note will buy, perhaps, about 20 cents worth of goods and services, possibly less. The Fed will have lost virtually all credibility, by then, foreign governments will stop buying FRNs, and the Fed will be on the verge of insolvency, except for the existence of its Treasury gold certificates. The FRN will then be traded for a new "dollar", which will be a US Note of some kind, similar to those that existed before 1934. The age of the irredeemable Federal Reserve Note will be at an end, and it will be possible to invest in CDs again, because the new currency will be anchored to unprintable gold (or another unprintable asset) and, therefore, stable.
Anonymous   |     |   Comment #23
Truthseeker:  If the FRN notes will only be worth about 20 cents per dollar etc. are they going to be able to find a way to take care of all the seniors and retirees who are  paying rent and don't own homes since their assets will not be enough to support them?  The money we may have will certainly not be enough for our needs and what will they do about our social security benefits.  Those getting over one thousand dollars a month will need $4,000.00 just to keep up.  What you post will bring about such financial horrors to our country that the government will have to find a way to support millions of the elderly and more will have to be on Welfare.  Then again, does your nightmare include a Welfare system to provide for the "poor" which most of us will end up being?  Let's hope you are just having a nightmare and will wake up soon and tell us all will be well!
Anonymous   |     |   Comment #24
Truthseeker..........Yes I am #15 & #21, as evidenced by my avatar. Zimbabwe on the Potomac? That's a new one. Very colorful, I like it. May I use that in future discussions elsewhere? 

Thanks for laying everything out. So 2018 is your date? That's a smart choice. I figure that the 6 years from now until then breaks down to another year or two to wrap up that book deal, publish & sell..............then assuming sales go well online & on hardback, another year before you see some paperback sales. That would put you at 2015 & you'll have 2 years to work on trying to sell the rights for the movie. Good luck, & hope it works out for you. :)
ChrisCD   |     |   Comment #25
For the record we do market a CD service. 

Truthseeker -- I too have seen large price increases and I think everyone posting here lives on the same planet.  Gas over $4/gln, Medical expenses through the roof, Food prices higher, etc.

However, what confuses me is if you think the banking system is so unsafe why would you keep money in any bank accounts?  If a TBTF bank indeed fails and the FDIC is unable to meet its demand, do you believe you will be able to get your money out in time?  Or do you believe you'll be able to get enough out to make do, until things calm down and are sorted out?

If that's the case, CDs can be closed and penalties taken (yes there are risks here and both Ken and I have written about them).  There are still CDs paying quite a premium above many MMA or savings accounts and I believe those are worth it regardless of how frail you believe the banking system to be.  Stick with 4-star to 5-star rated banks if you are worried about the FDIC not being able to meet its obligation. However, note the FDIC hasn't yet not met its obligations and they closed many banks since 2008.
Anonymous   |     |   Comment #26
I have an account with this bank (just around $1000) and did not hear about the closure.  I opened it when the bank was caled USABANCSHARES.COM.  Their interest rates drifted downward like eveybody else, so I just left the minimum balance to avoid fees.  The bank's rating was one star for most of the past few years, so its financial condition was a bit insecure.  I was going to close out the account by the end of this year, but it appears that it will be done for me automatically so i can save a postage stamp and letter.
Anonymous   |     |   Comment #27
Nova director Barry Bekkedam arranged for a group of Florida investors to help recapitalize Nova, but they lost millions in a pyramid scheme and made only a fraction of their planned investment

"Banking is tough today," Fellheimer said. "I'm so happy to be out of it, I can't tell you."
Anonymous   |     |   Comment #28
#27........Please! No investor who admits to have invested in a "pyramid scheme" would ever be approved by federal regulatoors to be an "investor" in a bank. People here love to throw terms around left & right. It adds to the sensationalism & paranoia. 
Anonymous   |     |   Comment #29
Bekkaedam was hiding the fact the he was involved as a feeder fund in the Fla thing. He was raising money to pouchase DVFG Advisiors in Conshy. It looks like the are faied as well. One Major thing that no one is seing here is the fact that DVFG was financing life insurance policies with NOVA money. they started on 09, 24 months later the loans started to default. Nova was OK before they got in bed with Barry and DVFG. Google Financed Life Insurance Policies / Death Pools. Leman Bros was a big buyer, until they all realized the policies were basicly not legat to own.