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If the aggregate amount of money in an institution remains the same, then I don't think it will affect interest rates. Now, if institutions start moving large amounts of money from Treasuries to banks then that would be a problem. But I will not happen for a variety of reasons, liquidity being foremost.
That is what is starting to happen. In order to pick up a little more yield than Treasuries, they are looking at all "safe" alternatives, CDs being one of them.
That is what is starting to happen. In order to pick up a little more yield than Treasuries, they are looking at all "safe" alternatives, CDs being one of them.
CDs are completely different instruments than Treasuries. Treasuries are liquid and fluctuate over time. CDs have longer time horizons and have penalties associated with early withdrawal. I don't see anything new in the last few years that have dramatically altered the landscape and the FDIC changes certainly don't affect the fundamental differences. There may be some fringe cases where it is applicable. Maybe someone can use a savings account rather than Treasuries but again this is fringe.
the banking system really had little use for this money since they knew it would be pulled out when it expired so it was difficult to match maturities to loan it out at all.
I follow what you’re saying, but the certainty of unlimited FDIC insurance for 4 years gives them enough time to take advantage IMO. Whatever the reasoning, the banks were not happy about it; & shortly afterwards they started to promote/ switch from non-interest checking accounts to interest checking accounts.
Quote:
Originally Posted by mathjak107
the banking system was flooded with money from nations all over the world,especialy europe who were sending huge somes of money here to keep it safe as well as insured.
Thanks mathjak107; I have a better understanding of the demeanor of the Banksters. It looks like starting January 1, 2013 accounts over $250k will have to pay a fee to hold/insure the money?? Scarface (Al Pacino movie) had this trouble many years ago.
Quote:
Originally Posted by richrf
The average person simply has to divide up the money so that there is no more than $250,000 per title account. It is quite easy to have a million or more of money in a bank as long as the accounts are titled correctly. Of course, some banks may place limits on how much money they will accept from a family.
Careful, the FDIC goes with the Bank records, regardless of what records the account holder has (signature card/etc...). The FDIC will tally any discrepancies of accounts (single, joint, POD, etc...) in favor the US Taxpayer.
FDIC gives a false sense of security for most. For wholesale, market-wide banking panic where multiple large banks fail, there is not enough money in the FDIC kitty to pay off everyone.
FDIC is only noticeably useful if you have money in some 2-branch rural bank where the chances of a failure for unique reasons are high enough- even in these situations, the FDIC tends to find another bank to assume the deposits and the insurance is never needed.
FDIC gives a false sense of security for most. For wholesale, market-wide banking panic where multiple large banks fail, there is not enough money in the FDIC kitty to pay off everyone.
FDIC is only noticeably useful if you have money in some 2-branch rural bank where the chances of a failure for unique reasons are high enough- even in these situations, the FDIC tends to find another bank to assume the deposits and the insurance is never needed.
Next to U.S. Treasuries, FDIC insured deposits are probably the safest form of deposits in the world. The only thing anyone has to worry about is the $250,000 account limit and the proper titling of the account by the bank.
During the last banking crisis, the Federal Reserve and FDIC stepped and forced larger banks to buy up the assets of huge banks such as Washington Mutual. Not to shed any tears for the larger banks, the Federal Reserve promptly printed up a few hundred billion dollars and took the bad loans off the books. When you have a money printing press, miracles can happen.
These are two contradictory statements. You talk about how safe FDIC insurance is; then you talk about how deposits are safe because the Fed and FDIC get other banks to asasume them. Then they are not using the FDIC insurance fund then.
These are two contradictory statements. You talk about how safe FDIC insurance is; then you talk about how deposits are safe because the Fed and FDIC get other banks to asasume them. Then they are not using the FDIC insurance fund then.
Let's not get silly here. There is probably one and only one place that is safer than FDIC insured deposits and that is Treasuries, and the difference, if any, is negligible. Getting into the nitty gritty of FDIC insurance is like getting into the nitty gritty of how the Federal Reserve repays Treasury debt. They do both in exactly the same way, they print money.
No one has ever lost a cent in an FDIC insured deposit, and unless the Federal Reserve printing press breaks, they never will. Now, if you want to discuss why the heck the Federal Reserve is allowing banks to speculate with our money as they did during prior to the 2007 crisis, and why taxpayers have to bail out uninsured bets, now that would be an interesting discussion.
My question would be this. When can i expect to get my 3, 4 or 5% interest back on my money markets like i was getting a handful of years ago?
The answer to this question is very simple, and very important for savers to understand.
Interest rates are low because the Federal Reserve prints as much money as they have to keep it low. If a large bank needs money, they just go to the Feds and get as much as they want at .75%. Therefore a bank doesn't have to pay a saver any interest. The interest market is being manipulated by the Feds to the advantage of banks who can borrow money at the .75% rate and simply reinvest it in safe 2% Treasuries or speculate with it on foreign bonds which may pay 4% or more. So you lose and the big banks win! How does that make you feel?
That's irresponsible. You're falsely telling people there is some roundabout way the Fed could pump money in the system, get some banks to acquire other banks and everyone's deposits would be the same. This is nothing more than your continued whining about easy money. It's no guarantee whatsoever that a bigger loss of confidence wouldn't leave people's deposits at risk if multiple money center banks failed.
I think German bunds are dramatically safer than a Bank of America deposit account.
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It looks like starting January 1, 2013 accounts over $250k will have to pay a fee to hold/insure the money?? Scarface (Al Pacino movie) had this trouble many years ago. 
