You read the title right. When you’re a high roller, the $250,000 limit of FDIC insurance just isn’t going to cut it. Let me show you how you can get $50 million. It’s all about rocking the CDARS.
In order to stem the tide of panic-stricken morons taking out all their cash from banks and further destabilizing the financial system, the US is considering a proposal to completely back ALL deposits. This would mean that there would be no deposit insurance ceiling. So even if you had more than $100,000 in the bank, even if you had $1,000,000 in the bank, the government would give you back ALL of that money if your bank failed. The proposal is only in discussions right now, and several different agencies would have to agree that there was “systemic risk” in order to enact it. Europe has already guaranteed all deposits, however, and in order to keep large corporate accounts from emigrating overseas, the US may be forced to follow suit within a few weeks.
The collapse of Washington Mutual and the FDIC-engineered fire sale to JPMorgan Chase has people worried — about Wachovia. Wachovia’s stock is down 45% for the week, and 27% today as bailout talks stalled in Washington and WaMu held a garage sale at the FDIC.
If your FDIC-insured bank implodes, how long does it take for the FDIC to start paying depositors? Ever since IndyMac imploded, the question has no doubt been on many people’s minds. One reader emailed me saying that he had asked the his banker about how long it might take. Allegedly, the banker squirmed around before finally saying that the FDIC had 20 years to pay people back. This is not true.
Yesterday the FDIC shuttered the 28 branches of the First National Bank of Nevada and the First Heritage Bank. Federal regulators will perform a nifty little magic trick over the weekend, and on Monday, the branches will reopen as Mutual of Omaha Bank. Aren’t bank failures fun?!
Ever hear of IndyMac Bancorp? Well, it’s gone! Federal regulators seized the California bank spawned by Countrywide founder Angelo Mozilowhich, which had giddily doled out mortgages to lenders without requiring proof of income. Rather than blame the second largest bank failure in U.S. history on the subprime meltdown, the charmingly politicized regulators at the FDIC blamed the bank’s demise on Senator Charles Schumer (D-NY). Huh?