Bank Closing - What to do?

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TheBullLady

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A question for you financially savvy folks! My mom called today and said she heard on the news that the bank she has her CD's in is "going under".. or going out of business, or some such. (I didn't hear it) She's all panicked now, and asked me if she should run over there tomorrow and take her CD's out. I don't have a clue, as I've never had any CD's. I know they are relatively short term (6 months to a year, and she renews them when they mature) and they have a penalty if she takes them out before maturity. The bank is FDIC insured, but does that mean for CD's also, or just depositors?

Any knowledge would be appreciated!
 

HerefordSire

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TheBullLady":1lbot9wt said:
A question for you financially savvy folks! My mom called today and said she heard on the news that the bank she has her CD's in is "going under".. or going out of business, or some such. (I didn't hear it) She's all panicked now, and asked me if she should run over there tomorrow and take her CD's out. I don't have a clue, as I've never had any CD's. I know they are relatively short term (6 months to a year, and she renews them when they mature) and they have a penalty if she takes them out before maturity. The bank is FDIC insured, but does that mean for CD's also, or just depositors?

Any knowledge would be appreciated!

If it is a FDIC bank, funds will be good up to $250K per account based upon new law. Need to look at charter of bank. You can find out on internet with name of bank.


These were closed on the 26th and updated today.

Mirae Bank Los Angeles CA 57332 June 26, 2009 June 30, 2009
MetroPacific Bank Irvine CA 57893 June 26, 2009 June 30, 2009
Horizon Bank Pine City MN 9744 June 26, 2009 June 30, 2009
Neighborhood Community Bank Newnan GA 35285 June 26, 2009 June 30, 2009
Community Bank of West Georgia Villa Rica GA 57436 June 26, 2009 June 30, 2009

http://www.fdic.gov/bank/individual/fai ... klist.html
 

Frankie

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TheBullLady":30mrcwwd said:
A question for you financially savvy folks! My mom called today and said she heard on the news that the bank she has her CD's in is "going under".. or going out of business, or some such. (I didn't hear it) She's all panicked now, and asked me if she should run over there tomorrow and take her CD's out. I don't have a clue, as I've never had any CD's. I know they are relatively short term (6 months to a year, and she renews them when they mature) and they have a penalty if she takes them out before maturity. The bank is FDIC insured, but does that mean for CD's also, or just depositors?

Any knowledge would be appreciated!

If the bank is FDIC insured, she doesn't have to do anything. Her CDs are secure, just as her deposits are up to a total of $250,000. The Feds will come in and run the bank until they can sell the assets to another bank. Somewhere along the line, the bank will probably change names, but that's probably the only difference she'll see. Her CDs will mature on the date specified and interest paid should be what was promised.
 

Ryder

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They scare people talking about the penalty for early withdrawal as though it is a terrible thing.
If and when anyone wants to take CDs out before maturity the penalty is three months of interest. At least that has been the information from banks I have checked on.

I say this because there may come a time when it will be best to get your money out.
 

Brandonm22

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Herefordsire and Frankie are both right. All the deposits are FDIC insured. You can stay right to the bitter end (I am living out this scenario myself with Colonial Bank) and the worst thing that can happen is that on some future Monday the bank will open either handed over to another bank or under the direct management of the FDIC.
 

1982vett

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Ryder":3i9sakyg said:
They scare people talking about the penalty for early withdrawal as though it is a terrible thing.
If and when anyone wants to take CDs out before maturity the penalty is three months of interest. At least that has been the information from banks I have checked on.

I say this because there may come a time when it will be best to get your money out.


Oww. Big penalty nowdays. $50 on $10,000. :lol: But it is 25% of the years income on a $10,000 CD. :(
 

HerefordSire

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1982vett":1axnklhv said:
Oww. Big penalty nowdays. $50 on $10,000. :lol: But it is 25% of the years income on a $10,000 CD. :(

As you know, the buying power reduction as the result of inflation, printing new currency, and forex echange rates differences are much much more than any penalty or interest received. The bank usually won't tell the CD buyer this because the bank takes the CD money and invests it thereby taking on additional risk. The CD buyer's main risk, as long as the account is backed by the FDIC, is the government going bankrupt.
 

TexasBred

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TheBullLady":2j3tpknx said:
A question for you financially savvy folks! My mom called today and said she heard on the news that the bank she has her CD's in is "going under".. or going out of business, or some such. (I didn't hear it) She's all panicked now, and asked me if she should run over there tomorrow and take her CD's out. I don't have a clue, as I've never had any CD's. I know they are relatively short term (6 months to a year, and she renews them when they mature) and they have a penalty if she takes them out before maturity. The bank is FDIC insured, but does that mean for CD's also, or just depositors?

Any knowledge would be appreciated!

Tell Mom to relax. If her bank has done their homework they will have made sure all her accounts were insured. She should get a notice from the new bank which took over her old bank. Since a CD is a contract all the orginal terms and conditions of her CD's will still apply until maturity of each.
 

1982vett

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HerefordSire":2krxj6hy said:
1982vett":2krxj6hy said:
Oww. Big penalty nowdays. $50 on $10,000. :lol: But it is 25% of the years income on a $10,000 CD. :(

As you know, the buying power reduction as the result of inflation, printing new currency, and forex echange rates differences are much much more than any penalty or interest received. The bank usually won't tell the CD buyer this because the bank takes the CD money and invests it thereby taking on additional risk. The CD buyer's main risk, as long as the account is backed by the FDIC, is the government going bankrupt.
Yep, better spend it now on Micheal Jackson memorabilia before inflation makes your money worthless. :lol:
 

HerefordSire

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1982vett":wlo9hu65 said:
HerefordSire":wlo9hu65 said:
1982vett":wlo9hu65 said:
Oww. Big penalty nowdays. $50 on $10,000. :lol: But it is 25% of the years income on a $10,000 CD. :(

As you know, the buying power reduction as the result of inflation, printing new currency, and forex echange rates differences are much much more than any penalty or interest received. The bank usually won't tell the CD buyer this because the bank takes the CD money and invests it thereby taking on additional risk. The CD buyer's main risk, as long as the account is backed by the FDIC, is the government going bankrupt.
Yep, better spend it now on Micheal Jackson memorabilia before inflation makes your money worthless. :lol:


A bunch of canned food would be one of my highest priorities along with toilet paper, toothepaste, etc.
 

Ryder

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HerefordSire":257vz46e said:
1982vett":257vz46e said:
Oww. Big penalty nowdays. $50 on $10,000. :lol: But it is 25% of the years income on a $10,000 CD. :(

As you know, the buying power reduction as the result of inflation, printing new currency, and forex echange rates differences are much much more than any penalty or interest received. The bank usually won't tell the CD buyer this because the bank takes the CD money and invests it thereby taking on additional risk. The CD buyer's main risk, as long as the account is backed by the FDIC, is the government going bankrupt.[/i]
:shock:
Oh My! But we know that could never
happen.
Don't we :?: :?
 

HerefordSire

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I heard through the grapevine recently......that one Wal-Mart in the US ran out of bread. Maybe a truck broke down? There were absolutely no loaves of bread in the entire specific store.

:shock: :shock: :shock:
 

Brandonm22

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Ryder":3fb1apbc said:
HerefordSire":3fb1apbc said:
risk. The CD buyer's main risk, as long as the account is backed by the FDIC, is the government going bankrupt.[/i]
:shock:
Oh My! But we know that could never[/i] happen.
Don't we :?: :?

The U.S. government can never go bankrupt. It prints its own money backed up by only threat of force. It is a crime for a creditor in the United States to refuse to accept paper dollars in payment. We can (and probably will) see inflation but the dollar always has some demand because most U.S. consumers owe debts that are payable in dollars.
 

HerefordSire

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I am not sure that is true B. Any entity can choose to go bankrupt any time the entity wishes, including governments. It is theoretically possible, for example, to secretly transfer a sum of wealth to a new entity prior to official insolvency, and then have the new entity resume control. Could be a way to remove all debts if you don't get caught like Bernie did. How long did he deceive the SEC? 30 years? The only way I know this could be done is through natural resources, such as gold, silver, oil, etc. OR knowledge because the old currency could be worthless similar to Zimbabwee.
 

Ryder

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That money floating around out there and more being put out everyday is borrowed money.
I hear that China and others are wanting to get rid of US dollars, not really wanting to get more of them.

I don't think China and others are near as afraid of of us being a threat as they once were. China wants their currency to replace the US dollar as the world's currency.

The US has gone from being the world's richest nation to being the world's biggest debtor nation in a relativly short period of time..
I don't care what kind of laws you pass or how cleverly our esteemed leaders talk, if you owe a bunch of money and can't pay your debts, for whatever reason, I call that bankrupt, or just plain busted.
 

Brandonm22

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HerefordSire":1n9jrvsg said:
I am not sure that is true B. Any entity can choose to go bankrupt any time the entity wishes, including governments. It is theoretically possible, for example, to secretly transfer a sum of wealth to a new entity prior to official insolvency, and then have the new entity resume control. Could be a way to remove all debts if you don't get caught like Bernie did. How long did he deceive the SEC? 30 years? The only way I know this could be done is through natural resources, such as gold, silver, oil, etc. OR knowledge because the old currency could be worthless similar to Zimbabwee.

The Zimbabwe currency is worthless because most folks IN Zimbabwe and everybody outside of Zimbabwe chooses to have their money in some other currency so as soon as somebody gets a Zimbabwean note they exchange it as soon as possible. My point about the U.S. is that Americans owe trillions in mortgage, auto, student loan, and credit card debts in US dollars thus as soon as an American gets a dollar he uses it to pay last month's mortgage payment or pay down his Home Depot tab. This means there is a bomb proof demand for dollars. Are we likely to see a future period of hyper inflation? Yes, that is the only way U.S. gov and most consumers can pay down their debts. Hyperinflate the economy so that a $10 trillion national debt is more like a $2 trillion debt. Yes if I had a very very large wad to invest I would rather be in real commodities rather than green paper or T-bills. Back to the original question, Mom's bank account is completely safe (as far as the $$ amount is concerned) because U.S. govt will create the dollar (since 1972 entirely just a make believe construct anyway) to honor that FDIC guarantee no matter what else happens. US gov is waaaaaayyyy too invested in the banking biz to allow it to collapse like that.
 
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