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  #1  
Old 08-22-2000, 12:56 PM
Yarster Yarster is offline
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The counterfeit bill thread got me thinking about banks and their ability to pay people back. I guess my main question is are there any banks that are NOT FDIC insured?(And to clarify, I'm not talking about S&Ls because they obviously weren't). All the banks I see specifically advertise that they are FDIC insured which makes me think they are somehow trying to advertise they are better than "those other" banks, although are there any that fall into this category in the US?

As a complete tangent, I'm also curious at what point the bank actually has to be bailed out by the FDIC. One would presume that its a worst case scenario and the bank might have some period over which they could use their own resources to pay people their money back over time.
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  #2  
Old 08-22-2000, 01:34 PM
tomndebb tomndebb is offline
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Several states (perhaps all states?) charter banks. Those banks are often not covered by FDIC. The "National Bank of" that appeared in many old bank names was a reference to their charter, not their service area which was limited to a very small region within a state, years ago. State chartered banks usually have names ending "State Bank."

(The S&Ls were covered by the SLIC, but congress chose not to fund the SLIC to the FDIC level while encouraging S&Ls to go head to head with banks.)
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Old 08-22-2000, 04:00 PM
Doctor Jackson Doctor Jackson is online now
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Tom's correct about the state vs. federal charter for banks, but I know of no state chartered bank in Georgia that is not FDIC insured. There is no requirement that a bank but FDIC insurance, so that may be different in other states. It is a competitive disadvantage not to offer FDIC coverage.

Nitpick alert - S&L's were insured by the now defunct FSLIC (Federal Savings and Loan Insurance Corporation). Any remaining S&L's can be insured through the FDIC (Federal Deposit Insurance Corporation).

Quote:
As a complete tangent, I'm also curious at what point the bank actually has to be bailed out by the FDIC.
When the bank no longer has cash or assets to pay back it's customers (as determined by Federal banking regulators), those customers are paid with FDIC funds.
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Old 08-22-2000, 04:25 PM
AskNott AskNott is offline
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Member FDIC? 'Course I 'member that; you 'member LS/MFT? How 'bout CCR?
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Old 08-22-2000, 04:33 PM
manhattan manhattan is offline
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Quote:
Originally posted by Doctor Jackson

Nitpick alert - S&L's were insured by the now defunct FSLIC (Federal Savings and Loan Insurance Corporation). Any remaining S&L's can be insured through the FDIC (Federal Deposit Insurance Corporation).
Nitpick nitpick alert/question: I thought thrifts and other non-bank deposit-collecting institutions insured through SAIF, the Savings Association Insurance Fund, which is administered (and "owned," for all I know) by the FDIC.

Didn't the banks win the political battle to segregate the two funds way back when the thrifts had to pay higher premiums to make up for some of what whithered away in the S&L crisis? (n.b., I know the premiums are now roughly equal)
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Old 08-22-2000, 04:52 PM
Arnold Winkelried Arnold Winkelried is offline
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I've never really questioned this, but my credit union insures saving accounts up to $100K by the National Credit Union Administration, a U.S. Government Agency. Is there any significant difference between the NCUA and the FDIC?
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Old 08-22-2000, 08:12 PM
Strider Strider is offline
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May I hijack? I promise only a little one...

I have a slight hijack that is related to this subject, if I may. Now I know that FDIC insurance means that if I have up to $100,000 in a bank and the bank goes under, I get up to $100,000 back. Now let's say I have 10 million dollars and I want to put it into a bank. So I decided to deposit it in a BofA savings account. Now we all know that BofA is not going to go out of business anytime soon so I should be safe, right? Or are there other things involved? If this question gets too many answers I'll make a new thread. Thanks.

-N
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Old 08-23-2000, 12:08 AM
friedo friedo is online now
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Re: May I hijack? I promise only a little one...

Quote:
Originally posted by Strider
I have a slight hijack that is related to this subject, if I may. Now I know that FDIC insurance means that if I have up to $100,000 in a bank and the bank goes under, I get up to $100,000 back. Now let's say I have 10 million dollars and I want to put it into a bank. So I decided to deposit it in a BofA savings account. Now we all know that BofA is not going to go out of business anytime soon so I should be safe, right? Or are there other things involved? If this question gets too many answers I'll make a new thread. Thanks.

-N
It's always been my impression that the safest route would be to open a hundred different savings accounts. But most people who have ten million dollars don't keep it all in savings.
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  #9  
Old 08-23-2000, 01:17 AM
Danielinthewolvesden Danielinthewolvesden is offline
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As a legal point, yes, it is possible to have a "bank" that is only state chartered. But I know of exactly NONE, here in CA, that are not insured by one of the federal agencies, FDIC, NCUA etc. Why wouldn't you (a bank) be? Why would anyone want to put funds in a non-insured "bank"?
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Old 08-23-2000, 10:09 AM
Doctor Jackson Doctor Jackson is online now
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manhattan queries:
Quote:
I thought thrifts and other non-bank deposit-collecting institutions insured through SAIF, the Savings Association Insurance Fund, which is administered (and "owned," for all I know) by the FDIC.
I can't say for sure about S&L's displaying or advertising SAIF protection because all the S&L's around here were bought out or switched themselves to banking charters. The insurance fund is all one corporation now (FDIC). They may segregate S&L funds and/or issue SAIF stickers to those institutions but if a large enough S&L failed the FDIC would undoubtedly dip into the bank insurance funds to cover the shortfall.

Quote:
Didn't the banks win the political battle to segregate the two funds way back when the thrifts had to pay higher premiums to make up for some of what whithered away in the S&L crisis?
Yep. S&L's played by different rules than banks. I won't get into the gory details, even if I could remember them all, but S&L's were allowed to utilize accounting practices that were more lenient than those required of banks. Those lenient accounting practices played a large part in hiding the mess until it couldn't be fixed.

Arnold wonders:
Quote:
I've never really questioned this, but my credit union insures saving accounts up to $100K by the National Credit Union Administration, a U.S. Government Agency. Is there any significant difference between the NCUA and the FDIC?
Credit Unions play by a third set of rules, different from banks and S&L's. CU's are not my area of expertise, but I do know that they are allowed tax breaks not available to banks or S&L's and may be held to different standards for accounting. As far as material differences between the insurance funds, I don't know. I would guess that after the S&L debacle our beloved government would have looked clodely at NCUA and made premium adjustments to ensure that the fund is adequate, just as they did with FDIC. But that's just a guess.

Strider Dreams:
Quote:
Now I know that FDIC insurance means that if I have up to $100,000 in a bank and the bank goes under, I get up to $100,000 back. Now let's say I have 10 million dollars and I want to put it into a bank.
Actually, you can get back far more than $100,000 through FDIC. The deposit limit is an aggregate per person, not account. In other words, if Strider has a joint account with Mrs. Strider they would both be covered up to $100,000. That means the account could have a balance of $200,000 and you would still be safe. Ask your banker for an FDIC brochure that shows how you can, in certain situations, protect more than even $200,000.

Quote:
So I decided to deposit it in a BofA savings account. Now we all know that BofA is not going to go out of business anytime soon so I should be safe, right? Or are there other things involved?
If I got a $10 million windfall I would feel safe parking the funds in a large bank that I knew to be stable. Realistically, though, those funds would only stay there long enough for me to map out a long term investment plan. I would not leave the $10 million in any one institution (bank, S&L, CU, investment house, etc.) long term. Don't put all your eggs in one basket, doncha know.
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  #11  
Old 08-23-2000, 12:18 PM
Arnold Winkelried Arnold Winkelried is offline
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Thank you Doctor Jackson for the information. So if ever I become a multi-billionaire like Bill Gates I shouldn't put all my money in my credit union then? I'll make sure and stuff some under the mattress.
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