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  4. FDIC Insured Bank Bail Ins....Are We At Risk Of Losing Our Money ?

FDIC Insured Bank Bail Ins....Are We At Risk Of Losing Our Money ?

decades
  |     |   124 posts since 2010

My 90 year old father heard this on the radio about large banks going bankrupt...derivatives ..fine print in fdic rules etc. and asked me to google it .He wants to know which of the large banks are vulnerable . Is there truth to this or just a bunch of internet hype ? I found what I read upsetting ....FDIC Plots a Bail-In Plan Involving YOUR Accounts

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Answers
paoli2
  |     |   2,641 posts since 2011
Isn't it odd that most times when I see such an article which makes me want to do a "run" on our banks, it is usually always written by someone in the Precious Metals selling business!  If their Gold and Silver etc. are the answers to saving us, why aren't they hoarding it for themselves and not finding scary ways to sell it to buyers for "worthless" dollars"?  Aren't they keeping their worthless dollars in banks or credit unions, too?  I don't think anything like this will happen to your dad unless he lives to be over 100!  By that time, "anything" can happen to the banking system.
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Ally6770
  |     |   4,292 posts since 2010
#1 Read the name of the webpage that is endorsing articles such as this. 
#2 Read the comments. 
#3 Do a google on him

This should answer your questions
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JimKennedy
  |     |   2 posts since 2016
The US government has already answered this question.  According to an agreement signed by the Group of 20-all the governments agreed than depositors would be responsible to ":bail-in" insolvent banks. It's the law.  In addition, thanks to the lobbying of the banking industry, depositors are unsecured creditors and will be paid after the banks get paid for their derivative loses. Good luck with this deal.  The depositors might get shares of worthless stock in the re-organized bank and they will probably issued on a roll so you can use them in the bathroom.

It probably won't matter if the bank goes broke-FDIC has $25billion to insure $968billion in deposits...about 6 cents per $100.  The banks will get that money before you see a single cent.

Buy a home safe- you will be money ahead.
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decades
  |     |   124 posts since 2010
that's alarming if true ...I'm not real interested in covering their derivative losses...not fair....may have to rethink entire financial plan
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Barabbas
  |     |   9 posts since 2016
The Federal Reserve can print as much money as it wants. The economic repercussions of not funding FDIC would be devastating. $968 billion isn't a lot. That's close to what TARP was and that was an overwhelming success.
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Shorebreak
  |     |   4,039 posts since 2010
The four largest U.S. banks hold 93% of these derivative contracts.
JPMorgan, Citibank, Bank of America, Goldman Sachs
Wells Fargo is a bank that isn’t doing as much risky stuff as the other big banks. It’s just somewhat less involved in derivatives than other banks.
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decades
  |     |   124 posts since 2010
...would IRA funds be at risk too...what about credit unions are they safe ..don't think they have any derivatives
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Barabbas
  |     |   9 posts since 2016
Quit thinking of "derivatives" as a bad word. They can be used as insurance (put contract), hedge (currency swaps), or speculation. Every single financial institution uses derivatives. Most of them do so responsibly to control risk. Others may use them as ways to skirt capital reserve or margin requirements. Either way, it's a tool. Blaming derivatives for when financial institutions fail is like blaming guns for mass shootings. It's illogical and ignores the core of the issue.
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Purplesage
  |     |   179 posts since 2010
On the other hand...
Derivatives Should Be Banned From Financial Markets
The next time some derivatives proponent says that derivatives reduce risk, increase transparency, and are well hedged, stop them in their tracks and ask if they believe in tooth fairies, Easter bunnies and leprechauns. Actually, it's safer betting on the leprechauns than in the soundness of modern derivatives finance.
http://www.usnews.com/opinion/blogs/economic-intelligence/2012/07/16/derivatives-should-be-banned-fr...
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Barabbas
  |     |   9 posts since 2016
That article is rubbish. Not sure if which is more trashy. That or the original article. As I've stated before, there's actual legitimate use of derivatives. This is not debatable. For example, I hold mutual funds that hold foreign currency swaps to hedge against non-USD denominated holdings. That is not a "tooth fairy" like the fear-mongerer you linked to implied. It is completely 100% legitimate and a benefit to both sides of the contract. Presumably, the other side is a bank that is hedging it in actual currency markets, which would be too costly for my mutual fund manager to access. This is no different than any other industry sourcing a vendor for their business needs.
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Purplesage
  |     |   179 posts since 2010
Before you start calling articles "rubbish" or "trash" you need to research your own holdings which probably aren't that transparent. For example, buried in a footnote on page 164 of Wells Fargo’s annual report is the admission of a trading loss of $377 million loss on trading derivatives related to certain CDOs, or collateralized debt obligations went unremarked, because of bigger losses for instance at JPMorgan. Wells Fargo’s massive CDO-derivatives loss was a multi-hundred-million-dollar tree falling silently in the financial forest.
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decades
  |     |   124 posts since 2010
I don't think of derivatives as a bad thing per se ..... have personally held derivative contracts (S&P e-mini)... however I do think they can be a bad thing in the hands of people who do not know how to manage risk..... can lose your ass pretty quick and I'm not interested in covering someone else's trading losses...why would anyone in there right mind have deposits at a big bank if this is true ?
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decades
  |     |   124 posts since 2010
I posed this same question on another forum and was scolded for asking  ...fear mongering, etc.....My girlfriend is an officer at a large bank in Makati (big asian financial center)....asked her and was similarly scolded for worrying about such a thing ..asked my brother who is a DC lawyer (Morgan Lewis)... smart guy ...he had no clue but will check with one of the lawyers at FDIC whom he knows..... https://www.youtube.com/watch?v=_GbWIFXfROI
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