My great-great grandfather was a co-founder of Wachovia. A shame that it's been turned into such a shit-show.

Hey let's all withdraw our money from Wachovia today and make sure it is next huh?

My investments are handled at Wachovia's brokerage. It's all in mutual funds and stocks, I should be covered right?

@APFPilot: Is it a 401k account? If it is, it is held in a trust (per legal requirements) and is therefore safe even if Wachovia goes down.

No wonder they tried so hard to have me roll-over my 401k into an IRA with them instead of my new 401k.

No guns, no smoking, seashells are ok? What's the third symbol?

@sir_eccles:

No way! Leave your money there. Sure it is FDIC insured. All you will have to is stand in line forever, fill out a bunch of paperwork to prove it is your money, beg and plead and walla, you get your money in six to eight weeks.

Of course that is assuming that congress just doesn't take it and give it to Wall Street first since Wall Street knows what is best for you.

Hmmm, our fixed rate, paid ahead mortgage is with Wachovia. Maybe it will get lost in the possible collapse? Yeah, right....

@APFPilot: As long as it's not over $100k. Otherwise, you get fifty-cents on the dollar for any amount over $100k.

In any case, I would check. SOm investment vehicles are not FDIC covered at all.

@B: We conserve water!

@sir_eccles: Someone sounds a bit bitter today (or maybe that's satcasm).

@sir_eccles: I'm guilty - I just moved some money into my HSBC account. It's not rock solid either, but at least I can earn some interest in the short term.

666 Third Avenue?

Wachovia is the Bank of the Beast.

@sir_eccles: Depends I guess, on your immediate need for money. I don't have an immediate need. Then again, this is why I bank at a responsible credit union.

Asking people to treat bankers like Mr. Bailey from "It's a Wonderful Life" would probably go further if banks weren't willing to f*ck their own customers in the a$$ at any moment for a little profit.

I don't advocate yanking out money, because yeah, it is insured. However, if you have immediate needs to take care of (bills, vacation plans, whatnot) then I suggest drawing your account in advance for those.

The mortgage, banking, and financial crisis is a lot like a infestation of locusts. They move to a field, devour it, and move to the next field. I took this analogy from Steve Liesman at CNBC and it is very accurate.

Washington Mutual was devoured by the locusts overnight. This was because of their exposure in sub-prime and option arm mortgages coupled with a two week run on the bank by depositors.

Wachovia has a very similar exposure to WAMU. They were huge in the option arm market and because of "mark to market" they are absolutely exposed. Anything that triggers a depositor panic will take them down. I would guess that in today's market, that is almost inevitable.

This is all senseless. They have very strong assets and it is totally because of the irrational "mark to market" requirement. At the same time, the entire landscape of finance, banking, and investment is changing over night. This is not good for the consumer. Our investment options are going to be greatly reduced. The stock markets are absolutely going to have to adjust stock values downward significantly to accommodate the lack of viable investment banking. Smaller companies are going to find it almost impossible to go public. Leveraged buy outs are no longer an option. I would expect over the next 12-18 months to see the real value of stocks to drop another 20-30%. This may not be evident in the indexes. This is because I believe the drop will actually take place in a devaluation of the US dollar. The dollar is worth about half what it was a decade ago and I anticipate it will continue to drop quite significantly.

So here is what you will see on the stock market. The dollar will be dropping significantly and the stock market indexes will actually go up. In real value, we will take a major hit.

In the mortgage world, options are simply going to go away. We are headed back to the 20% down with a 30-year fixed rate mortgage days. Rates will continue to buck the logic and remain relatively high as compared to other barometers like the 10-year.

There will be tremendous consolidation in the banking industry. Local banks are in serious jeopardy. They may become a thing of the past.

Real estate will appreciate significantly. Again, this won't be real because of the shrinking dollar. I do believe real estate will be the most successful asset class. It almost has to be, given the economic climate.

Where the real money will be made is in Non-Traditional Real Estate. The next two years are going to be an absolute gold mine for those of us practicing in this field.

I knew Wachovia was in trouble, my mom has her home loan with them and had to turn them into the Office of Thrift Supervision for trying to add a pre-payment penalty to her home loan.

So now that I don't have to pay WaMu my mortgage, do I still have to pay Wachovia for my husband's car payment?

Or can I save all that money and take a trip around the world? Cuz, yeah for me if I can!

Hmm I will have to watch out for the pre-payment penalty addition, if they try to do that to my new home. One of the reasons we went with Wachovia was because they did not have a pre-payment penalty.

My fiancé and I recently moved to South Carolina, and went with Wachovia back in June, before all this crap hit the fan.

Maybe it is time to slip out into the world of credit unions that have FDIC insurance... (I know there are a couple in Columbia, I recently looked them up.)

Okay - My regular checking account is with Wachovia. Does anyone have any advice as to what steps to take or how I should handle this?

@Smitros:

More proof: [unstatusthequo.smugmug.com]

Speculative articles lead to bank runs - and then pretty much seal their fate.

Why do you run such articles, Consumerist? Why?

I have cash, monkey markets, mutual funds and stocks stored at Wachovia. The Mutual Funds and Stocks are not Wachovia funds/stocks. I know cash is FDIC insured, but what about the rest?

i think wachovia's fine. that is, until we see the fed's relax the restriction on max deposits. if you see that amount lifted (currently $700 billion - coincidence?), expect wachovia, wells fargo & a string of other banks to be folded into JPM or BAC. guaranteed.

@Inglix_the_Mad: You make a good point. In "It's a Wonderful Life", he took his entire savings to make sure the bank stayed afloat. No banker nowadays would do something like that to ensure that every one of their CUSTOMERS were taken care of, so why should we, as the customers that are getting constantly fucked, give 2 shits about them?

@Failsafe: That's exactly what I want to know. I don't keep much on deposit, but I'm going to need to deposit my paycheck and, you know, pay rent and bills out of it. Can you even still do that once a bank is taken over?

I just called and found out some interesting information from my local Wachovia branch. If you have an account type of a Money Market Account, it is not insured in any way. If you have money in this type of account, you would lose all of your money in the chance of the bank going under.

This is interesting because these types of bank accounts are commonly used as checking accounts for folks.

It was also very interesting that I had a very hard time getting an answer to this question. The representative at the local branch was obviously reading a prepared statement detailing how strong the banks financial condition current is. I finally had to tell her that I do not care about the financial position of the bank but just wanted a straight answer to my question, would I lose all of my money if the bank went out of business in my particular accounts?

@Joe White: If real estate continues to appreciate, how will anyone be able to afford it then?

For 30 year 20% down to ever work again, real estate needs to come down in a hurry. I'm 22 and I really don't see things going in my favor for quite some time.

My fiance and I even make real good money...it's just that living anywhere other than a townhouse or a condo is absolutely out of the question, and to even live in a townhouse or condo is expensive.

You guys who already have houses may be unhappy if real estate has to come down, but you should suck it up...if it doesn't, your kids aren't ever going to be homeowners.

@APFPilot:

Don't assume that. Their brokerage accounts should be legally separate and therefore not part of the estate of Wachovia should they go bankrupt. However the fact that you are asking this question leads me to believe you don't have the slightest about your situation so you should firm these facts up by speaking wtih your financial planner or the apropriate rep at Wachovia.

@meechybee:

Don't scare people with that! Brokerage accounts and investment vehicles are not FDIC eligible, but any securities held by Wachovia brokerage are insured in case of failure by SIPC up to $500,000 per customer.

This is true of almost all brokerages (Wells Fargo, Fidelity, Schwab, etc.) The insurance doesn't cover you for paper losses (If you buy a stock and its value goes down), but definitely covers you in case your brokerage goes under. More information here.

We'll be spending more than $700B shoring up the FDIC at this rate. The FDIC has NO real funds at this point.

Did you think the FDIC took those bank insurance fee's and saved for a rainy day? Uh, uh. The government spent that as fast as it came in. So now the Fed is busy printing money at an incredible rate while hoping China's pockets don't run dry.

But now China has already begun restraining lending to the U.S. and the crap is about to really hit the fan. You folks who figured it wasn't your problem are about to see why Warren Buffett is right yet again. I didn't want him to be right on this, I hate the notion of bailing out the crooks on Wall street too, but it's too late now. This is a rock and a hard place moment if there ever was one.

@Joe White:

I don't think local banks are in jeopardy at all. The local banks in my area (regional, state and truly local banks) have no exposure to subprime or Alt-A loans, because they've maintained high underwriting standards and don't repackage them for the secondary markets. They weren't making record profits in the last decade, but they have more than enough capital and performing loans to weather this storm.

It's the big banks that were taking chances to improve their bottom line that are in trouble. I think if anything, the draw-down in capital that national banks are undertaking to maintain liquidity will discourage the acquisition of local banks in the short-term- I doubt shareholders in local banks will accept any stock-for-stock transactions because of the instability in financial stocks right now.

@MsCongeniality:

Yes! Everything works the exact same if a bank is taken over by the FDIC or merged into another bank. Your ATM cards and checks and deposits, payroll direct deposits and billpay work just as they did last week, last month or last year. That's the reason we have the FDIC backing all the banks in this country.

@anonymousanonymous:

That is incorrect. A Money Market Deposit Account (MMDA) is considered a checking account for FDIC insurance, and is fully insured up to $100,000.

A Money Market Mutual Fund (MMMF) is not FDIC insured, but you can't get a MMMF through a bank, only through a brokerage service- and you buy shares in it, like any other mutual fund.

More information here: [www.fdic.gov]

Note that Money Market Deposit Accounts are in the "FDIC Insured" category.

@Morac:

In the case of your brokerage failing, your stocks and mutual funds are protected by the SIPC, up to $500,000 in value.

@anonymousanonymous: According to the Wachovia and FDIC web sites, money market accounts are insured alongside checking and savings.

@Ass_Cobra: It's all in ETF's and Mutual Funds that have no relation to Wachovia, I have little to no cash in the brokerage account.

@Hoodooz:

Well, for better or worse the FDIC has broad discretionary borrowing authority, including a line of credit at the Fed, the US treasury, and congressional authority to issue Bonds that are tax-free at the state and federal level. So the FDIC can handle it's own balance sheet and raise premiums on deposits in the future to pay off FDIC debt. FDIC debt is backed by the full faith and credit of the United States and is basically considered as solid as a T-Bill by the world markets.

What does this mean? Well, deposit rates will probably fall in the medium term, as banks have to pay higher premiums to the FDIC. And we might see fewer "Free Checking" account offers from banks. But the FDIC isn't going to need a full-scale bailout unless the entire country falls into anarchy- and at that point, I'm putting my money into an H&B fund.

Actually, the Wachovia account I am talking about is a HP MMA, or a High Performance Money Market Account. According to Wachovia employees at the local branch, this type of account is NOT FDIC insured.

I also read the same thing as you did after posting my last comment.

My particular type of account may differ from the ones referenced on the FDIC website. My apologies for not being more clear with my previous comment.

Well, now that you've published this article, they are sure to fall victim to the "Consumerist Curse".
Way to go!

Wachovia has that $120 bn in option ARMs valued on their books for 95 cents on the dollar. An option ARM borrower with 720 credit score and 50% LTV is currently trading for 50 cents on the dollar.

So $120bn cut in half = $60 bn writedown > $30bn company market cap.

Yeah, I'd say they're done.

The government is roughly $9 trillion dollars in debt at this point and the "broad discretionary borrowing authority" is now window-dressing unless we can get other countries to shore us up with more and more fresh loans - which they're becoming less inclined to do.

The Fed will have to start printing money at an alarming rate (it has no other option), and serious devaluation of the dollar will be the result. Today that trip to the grocery store that costs maybe $100; will turn into $500 very quickly.

Oh, and as of today - the FDIC has pretty much gone through its reserves. Your comment is a mirror image of the FDIC rebuttal to Bloomburg's suggestion that the FDIC itself will require a bailout ([www.fdic.gov]) - but the logic (we constantly bring in fresh revenue/we can borrow from the Fed) is skewed: Fewer banks = fewer insurance payments received, and the remaining banks are far to pressured to cough up higher and higher fees, plus, where is the Fed going to get the money to loan the FDIC?.

Sorry, it's sad but the facts seem pretty plain once you've followed the logic around the circle a few times.

Sorry, Consumerist--but by running articles like this you are contributing to the problem. I'm not sure how much of an impact you can have overall, though. It is scary to think we might be placed in a scenario where the media is always guessing 'Who's next?', each time driving people to remove deposits from the chosen mark.

I think that has already started.

@APFPilot: The Glass-Steagall Act requires broker-dealers to keep client securities seperate from their assets. Brokerage accounts are insured by SIPC. It doesn't protect the assets against market price changes, but it is there to protect the ownership of the securities itself.

As a practical matter, if Wachovia Securities were to fail, then the SIPC will insure that the securities are either returned to the owner or transferred to another solvent broker-dealer. SIPC insurance is really only insurance to cover against malfeasance.

For instance, if Wachovia failed and some employee stole your stock certificates or your securities otherwise went missing, the SIPC would replace them.

That said, I think Wachovia Securities is a super-shitty investment firm and I'd move my accounts elsewhere anyhow.

@anonymousanonymous: I also have the HP MMA. Wachovia's website shows that it is FDIC insured.

@mrgenius: The've been there since it was a local bank and I haven't bothered to transfer what I have there to scottrade.

If all the banks do go under and inflation goes up, blah, blah, blah, blah

You money wouldn't be worth anything if you do take it out if things get that bad, so what can you do? Just leave it in the damn bank.

@jamar0303: Sarcasm I guess.

Basic fact - no bank whether financially stable or not has the liquidity to survive a run of depositors withdrawing their funds.

These articles serve to do nothing more than drive speculation on the stock markets and create panic.

Does it make sense to remove basic checking and savings deposits and place them in a better bank, say the SECU or BB&T? If only to stop from having to wait for accounts to become unlocked after a failure?

NOES MY WACHOVIA! :(

Seriously, I've never banked anywhere where you always get someone who speaks English on the phone ... and they have always been very helpful.

I suppose this is karma for me laughing at my wife and her WaMu account ... I'm not feeling the woo-hoo either.