Did The Coronavirus Save Fis On Brink Of Failure?

CDmanFL | Apr 10, 2020 | 286 posts since 2019

I have some CDs (and add on CDs) with banks/CUs with very low health ratings both on DA and Weiss. I knew going into this that there was a large risk of failure but the rates were enticing. Now that we are deep in the coronavirus pandemic and the government is handing out money left and right and providing all sorts of safety nets, I’m thinking that the coronavirus actually saved these FIs from failing. I don’t see any bank or CU going under (or terminating add-on features) in the foreseeable future thanks to the generosity of Uncle Sam. What do you guys think?

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Answers

jimdog | Apr 10, 2020 | 48 posts since 2010

They are still at risk of failure in my opinion, however, the FDIC/NCUA will be slow to shut them down. The closings will likely be another 12 months out, so you likely have time to move to a safer institution in my opinion. Its kind of like a movie theater we know should be bankrupt now, however, the FEDs money hand out will keep them afloat longer.

Choice | Apr 10, 2020 | 937 posts since 2020

With the Fed fully engaged, it is cost benefit time. The cost to take over failed FIs is too much when coupled with its “perceived” mission to “save the economy.”

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