[Part 3 of The Real Issues They Should Be Talking About series.]
"Messin' with my money is like messin' with my emotions".
Or so once said a wise man from South Central Los Angeles.[1]
I mean come on, we're supposed to trust financial institutions. They are supposed to be good stewards over our money. Even the government agrees, thus the guarantees from the FDIC. But I'm sure a gang of Californians are feelin' hoodwinked, bamboozled, and generally "messed with" right about now.
Worried customers with deposits in excess of insured limits flooded IndyMac Bank branches on Monday, demanding to withdraw as much money as they could or get answers about the fate of their funds.The obvious issue: What about the folks with more than $100,000!?!?
With the failed bank now under federal control, hundreds of people lined up before dawn outside its headquarters branch in Pasadena, reports CBS Evening News correspondent Bill Whitaker.
The Federal Deposit Insurance Corporation took over IndyMac after depositors, worried about its solvency, made a massive run on the bank Friday. IndyMac, which had assets of more than $32 billion -- another victim of the mortgage mess -- flying high in 2006 on risky mortgage loans -- today being run by Uncle Sam.
"I just want to reassure people," said John Bovenzi. "Ninety-eight percent of the people who do business with the bank have less than $100,000 in their accounts. They don't have to worry about anything. Their money is completely protected."
They (we?) are the ones really getting the ass end of the pyramid here.
That's right folks! Word hard. Pay your taxes! Diversify. Save and invest! Do everything fiscally responsible, and you can still get completely screwed by your bank's poor business decisions (ie: predatory lending) and lose it all.Not quite. IndyMac Bancorp Inc. had $1 billion of uninsured, unsecured, and unprotected consumer deposits at stake. The 10,000 uninsured depositors will get 50 cents on the dollar now and wait for the rest.
Uninsured deposits are the most easily avoided risks for investors. Your total savings and checking accounts are insured to $100,000 per person per bank (joint accounts for two people would hold $200,000 insurance) and IRAs are insured separately to $250,000.Mutual fund, bank bond- and investment accounts are not FDIC-insured.
I repeat: Mutual fund, bank bond- and investment accounts are not FDIC-insured!!!
I hate to sound like Chicken Little, but damn, all the signs of a monumental financial collapse are right there. Foreclosures are rampant. Jobs are being slashed daily. The Dow is goin' down like Paris Hilton. Gas is $5/gallon. Kashi is $7/box. Ed McMahon is about to lose his Beverly Hills estate. Diddy is paying a whopping $100k a month in child support alone.
[Editor's (b)Elated Note: Today in the grocery store, I caught a sale on all varieties of Kashi Heart to Heart. 2 Boxes for only $6. I think I might have actually shed a tear or three in the cereal aisle.]
And now, if your bank goes under, you'll prolly have to settle for pennies on the dollar, if that.
Somethin', somethin' just ain't right.
I would advise everyone, despite how your fiscal situation looks, to read the links below, speak with your financial advisor, and further educate yourself on this issue. I'm pretty well diversified right now, but reality is you can only do so much.
AverageGrandma's old adage about putting money under the mattress ain't soundin' so bad right now.
I'd love to see our two Presidential candidates get off that ole' "lesser dependence on foreign oil" BS and start kickin' some real ideas on this. As is, PapaMac's idea of economic stimulus is to marry a rich white woman. Too bad there aren't more of them to go around. And I'm not totally convinced Barry has any more fiscal sense than I do.
We're screwed either way.
Question: How are you planning on adjusting your financial plan to lessen the potential impact of such a banking collapse? In what practical, everyday ways has this recent financial downturn changed your spending habits?
Nervous Depositors Make A Run On IndyMac [CBS]
What if my bank fails? Some questions and answers [BusinessWeek]
Give no credit when creditors are due [WSJ]
[1] Name said wise man. I'll provide the Cyber CapriSuns.
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12 AverageComments™:
Being fiscally responsible means knowing that only funds up to $100,000 are insured.
I'm not mad at McCain for marrying rich...I mean, women have done it for ages. Oops...
Big Worm said that.
Ima need folk who are smart/fortunate enough to pile up 100K+ to be smart enough to know who to deal with and keep their insured accts under 100K.
This macro money thing is mad messy and the MSM is doing a terrible job of covering it.
Like the two previous posts, I agree that people who have that amount of money should have some knowledge that their money is only insured to $100,000.
I still believe that the best long term strategy is in mutual funds...
Also...GET OUT OF DEBT! You can live without credit cards!
The reason this bank made news is because this type of situation doesn't happen that often.
Make your money work for you!
Kashi is $7/box. STOP SAYING THAT. I just bought some Go Lean last week though and I was tripping that it cost so much.
As for the question, I am the CFO of our family (Mr. SingLikeSassy is the CEO) and I don't put all our money in one basket. Sometimes it seems like there are too many accounts to keep up with, but diversification, patience and living within our means, are our best longterm options. We also have an exit plan in case things go code orange.
Why don't people just listen to James Brown and bury their money.
AB Kashi might be $7 a box but wheaty puffs (the generic brand) is still affordable.
Well, the run on this bank all started with Democratic Senator Chuck Schumer inadvisably opening his big mouth and sparking a panic. There are ways to point these things out, but I guess it never occurred to him that people might panic when he claimed the institution was on the brink of failure.
Talk about a self-fulfilling prophesy... I wonder if he shorted his stock in Indymac before he issued that statement.
Nevertheless, AB is dead right, you should diversify and never deposit more than $100K in any one bank.
My people listen to me and listen to me good... THE Great Depression is going to hit by next year!!!! All the signs are there. And it will be worst than the 1930s. AND NO, the media will not tell you in advance because they don't want to cause a panic. PREPARE NOW! I tried telling my friends but they just laughed me off. Simple negroes! Every great nation/empire has demolished b/c of greed, corruption and war(s). The U.S. is no different. Google and do your own research before you laugh this off as well.
Obama supporters better hope not! If he gets elected and there's a 1920's style depression in 2009, It'll be 50 years before another black man can run for the office. I mean seriously, people STILL toss around Herbert Hoover as the Presidential boogeyman of stupid economics.
For a clearer understanding of this economics thing, I recommend reading the following books by Dr. Ravi Batra:
The Crash of the Millennium, The Downfall of Capitalism and Communism,The Myth of Free Trade, Greenspan's Fraud.
I really haven't curbed anything. The only material weakness I have are handbags, and I maintain a special fund for that. (Some people buy cars, and clothes-I buy handbags-it's an addiction I've had since I was a small girl) We are able to maintain so far, thank God. I'm still buying the Kashi. It's not quite $7 in my neck of the woods.
We make sure when we make purchases we can afford them and don't live beyond our means.
It is going to take Black president to turn this country around. Go Obama!
Checkmate
@anonymous
RIGHT! I'll Do just that.
@hollatyagirl
King Vitamin is still good to. These niggas is eatin' Kashi. WHAT? Don't get uppity and think your too good for Cheerios. I'm just sayin'.
@AB
Can you really do anything about it? Gas prices are what they are. People just can live frivolously anymore. (Kashi bruh? I'm just yanking your chain. Man, we have come along way from Steadman Place). It's truly not that bad if we go back to the way our parents thought and live within your needs, not means. People have start buying smaller homes closer to their jobs because that's what is needed. You don't need that sprawling house in the Suburbs(I can't talk though).
@ the ink
The CapriSuns are yours.
And yeah, the MSM is doing to totally sh*tty job of covering this recession (yeah, I said it) at the everyday level. Folks are sufferin'.
@ singlike/hollatyogirl
Kashi is on sale now. 2/$6 at Safeway. I'm eatin' some as I type this.
Eff' a Wheaty Puffs! I'm too old for all that high fructose corn syrup.
@ CJames
Bruh, this is not sophomore year at The Cafe anymore. We are too old to be eating crappy sugar-laiden cereals.
Long live the seven whole grain goodness of Kashi!!!
But you're right, King Vitamin was some good cereal. Cheap too.
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