Taking money out of the bank

[PJJ]

Is anyone thinking of doing this due to the FDIC status?

My grandfather's parents lost their savings in the 30's.

What do you all think?

[BellinghamCrunchie]

I think there are no circumstances under which the FDIC will fail.

However, I think there could be bank holidays, or periods of time between a bank collapse and the FDIC getting money to the depositors.

Therefore, we are keeping 2 weeks of cash on hand, with the intention to slowly increase that (as we can afford to) to as much as three months.

I don't really think its critical to keep cash on hand in case of a bank holiday, though. Unlike the great depression, you can probably continue to use your debit card for groceries and gas, you just can't withdraw cash. Not too many people use cash these days, though.

[newbymom05]

I'm w/ the PP. We have a month's worth of cash on hand but that's it. If all the banks were to fail, having cash wouldn't be our biggest problem, y/k? I think bad times are here, more banks will fail, but I don't think we'll have some sort of systemic societal failure, which would really have to happen for the kind of 30's scenario you're envisioning, ie your deposited money is gone and irretrievable.

[Violet2]

The Ukraine is already limiting withdrawals including outright refusal to give people money. Argentinians lost their money in their collapse in the early 2000s. So it does happen and is happening.

So yeah, we do have some cash on hand. When they straighten out the banking system and re-regulate Wall St. we'll put money into banks. Right now no one really knows what's going on.

V

[mamadelbosque]

Its not that the FDIC could 'fail'. Its that if bank failures continue as they have, they will very likely be running out of money:

http://seattlepi.nwsource.com/busine...56_fdic05.html

WASHINGTON -- The head of the Federal Deposit Insurance Corp. has warned that the fund insuring Americans' bank deposits could be wiped out this year without the money the agency is seeking in new fees from U.S. banks and thrifts.

[Belleweather]

The FDIC insures your deposits up to $250,000 and is not likely to fail unless the US government does.

On the other hand, lots of banks are currently in a ton of danger. We just read that our bank is technically insolvent and will be moving to a different (small, local, limited exposure to Real Estate or CDOs) bank this week. If our bank were to fail we would eventually get our money reimbursed from the FDIC, but it's not immediate. I don't think there's anything wrong with having a couple of weeks of emergency money at home just in case.

[boobybunny]

making a run on the banks will definatly make them fail... However, you should be fairly safe with smallish, local credit unions and smaller local banks... the exception here in Oregon is Liberty bank.


My mom has two months worth of expenses in cash in her safe AND has credit union only accounts. She is a CPA married to an economist.. so take it as you will.

We have cash on hand, about one paychecks worth, plus we each carry an extra big bill in the car for emergancies. Our accounts are with two different credit unions in our town.

[A&A]

Originally Posted by BellinghamCrunchie

I think there are no circumstances under which the FDIC will fail.

seriously?

[JesiLynne]

Originally Posted by Violet2

The Ukraine is already limiting withdrawals including outright refusal to give people money. Argentinians lost their money in their collapse in the early 2000s. So it does happen and is happening.

So yeah, we do have some cash on hand. When they straighten out the banking system and re-regulate Wall St. we'll put money into banks. Right now no one really knows what's going on.

V

that:

[velochic]

I think the government would do everything in its power to make sure the FDIC stays solvent. However, in order to help out, the government also has to be able to get the funds. Every day we become a poorer credit risk... what would happen if the FDIC became insolvent, and when the government went once again to China with its hat in its hands, they said, "No. No more loans."

Some economists, like Paul Krugman, are calling for a bank holiday where there are no transactions while the toxic assets are reorganized all to a single zombie bank. In this case, your deposits wouldn't be in danger, but they could be completely inaccessible for a few days or a week. All transactions would have to be cash, I'd assume, or you'd have to put off your transaction. I don't know that anyone TODAY really know what would happen, but unless you have no self-control with cash, having a certain amount on-hand, as long as it is kept safely from fire, wouldn't be a bad idea.

[newbymom05]

Or you could open a bank account in another country like Canada. They're supposed to be the safest right now. Don't forget too that your insurance will only cover $500 in cash. So if you were to have a natural disaster or robbery, God forbid, you'd be out of luck.

But like others are saying, the gov't will do everything in its power to prevent widespread bank failures--they'd just run the printing presses if they had to. I mean, seriously, imagine if they didn't--it would be total chaos and I don't think the powers that be aren't going to risk it. It isn't like the 30's--at that time there was NO protection.

What will cause insolvency is people freaking out and causing runs on banks.

[KatWrangler]

At one time last fall someone posted a link to where you could check your banks rating. Does anyone have that link?

[Violet2]

www.bankrate.com

V

[bigteamug]

Here are more bank rating links:

http://www.bauerfinancial.com/ratings.html

http://www.thestreet.com/screener/in...ngsindex&tab=3

and here is the place on bankrate where the ratings are hid - I always have to dig for it on their site:

http://www.bankrate.com/brm/safesound/ss_home.asp

That being said, take any and all ratings with a large hunk of salt Wamu was a four star bank (out of five) on bankrate when it folded.

I have to say, the way many banks are shopping for new customers makes me nervous - even the credit union (well rated, of course) we just joined is running a promotion - $25 for each party if a member refers a new account, and the $20 fee waived for the new member. Wamu and lots of other banks are running large promotions for new checking accts, probably with bail out money, I'd guess....ugh.

[newbymom05]

I wonder of another mama--maybe Velochic?--has any thoughts on this theory. The FDIC report on Friday, could it be because they're setting the stage for Obama to get rid of the mark-to-market policy? Because w/o mark to market, wouldn't the banks be solvent?

[p1gg1e]

If you take money out and the whole market pick back up in a year. Put it back in. You can buy some silver or gold coins if you want or buy usable goods that give back to your family , like a woodstove etc.

Depends on how much you have in the bank IMO if you have millions in there then you might wanna re work where things are in in what amounts.

[Zan&Zav]

Originally Posted by newbymom05

Or you could open a bank account in another country like Canada. They're supposed to be the safest right now.

Is Canada really that safe right now? I'm just curious, I live in Canada and I believed we were in as bad shape financially as the USA right now. Although, we see more USA news here then Canadian news

[tayndrewsmama]

Originally Posted by Zan&Zav

Is Canada really that safe right now? I'm just curious, I live in Canada and I believed we were in as bad shape financially as the USA right now. Although, we see more USA news here then Canadian news

: When dh was working up there he said he was surprised at what all the guys were telling him at work and what was on the news.

[Free Thinker]

It's always a good idea to have a small stash of cash if you can, but I wouldn't take all your $$ out of your bank. Have you looked into small local banks? We are in a pretty good area economy-wise, and all our $$ is in small local banks (3 different ones). I feel like if thse banks folded, and the FDIC couldn't get us our $$, then any $$ we had stashed probaably wouldn't be worth much either, as the currency rate would have to be pretty much nothing. We are working on just being more self-sufficient, though.

[newbymom05]

Originally Posted by Zan&Zav

Is Canada really that safe right now? I'm just curious, I live in Canada and I believed we were in as bad shape financially as the USA right now. Although, we see more USA news here then Canadian news

I read recently that Canada is safer than the US because of stricter standards, both in lending and in reserve requirements. But that's not to say you're not circling the bowl too, maybe we're just going down faster, lol.

Really, panicking is what will cause banks to fail, and the "failure" will only be until the Fed injects more money. Like WaMu--depositors started withdrawing their funds, then the short-sellers stepped in, the banks couldn't make their reserves and they failed. But no one lost any money, they were just inconvenienced.

Of course the FDIC can't possibly cover every bank. How is that different from any other time? I mean, does anyone think all banks keep all the money in a big vault, just waiting for you to take it?

The dollar and the US is still considered a safe haven. Luckily or unluckily for us, the problem is global. There are already starting to be demonstrations and riots in parts of the world like China, India and E Europe. The US isn't going to take a chance of losing reserve currency status, or of letting civil unrest take over. I don't have a lot of faith in anything at this point, but I do have faith that my deposits are safe long-term. For them not to be would be an Armageddon type situation that I wouldn't be worried about money anyway!