Posted on 09/18/2011 3:34:36 PM PDT by fightinJAG
With the European banking system tottering on the brink of collapse, nervous holders of cash have flooded the U.S. banking system with $1.2 trillion of deposits. Panicky holders of large amounts of cash are taking advantage of a provision of the Dodd-Frank Act that provides unlimited FDIC insurance coverage on noninterest-bearing transaction accounts.
The Dodd-Frank Act provides unlimited deposit insurance coverage regardless of the account balance or type of ownership. [snip]
After the near total meltdown of the financial system in 2008, investors are taking steps to move their money into government guaranteed accounts. The revelation that money market funds run by Fidelity and Vanguard had a significant portion of their assets invested in European bank debt contributed to the deposit surge into U.S. banks.
[snip]
Normally banks would love to have interest free money but these are not normal times. . . . Since the Federal Reserve has forced interest rates to zero on the short end, banks are actually charging fees to accept large deposits to offset the FDIC deposit insurance assessment fees.
Depositors are so worried about the safety of their money, they are willing to pay the banks to hold their money. The banks, unable to profitably invest the funds, would just as soon not take the deposits.
The amount of deposits insured by the FDIC has surged since last year. For the quarter ending June 20, 2011, the FDIC insured deposits of $6.54 trillion, up 20.7% from $5.42 trillion at September 30, 2010. Backing up the FDIC insurance coverage of $6.54 trillion of deposits is the FDIC Deposit Insurance Fund which has a balance of only $3.9 billion for a reserve ratio of a minuscule 0.06%.
(Excerpt) Read more at problembanklist.com ...
It's Utopia.
The money flows in quickly, but it will also flow out quickly once the danger of European collapse is over.
This is also why the stock market has been going up in the last several weeks.
Since we are buying Euros with dollars, what could go wrong? ;-)
Investors haven't seen it before and have no idea what the outcome might be. We had this in the beginning of this crisis and now we are doing it again.
That equates to an enhanced risk, IMHO.
If people are nervous about their cash, I will hold it for them.
And banks aren’t lending because Justice continues to accuse them of “redlining.” Somebody tell Holder (and the Prez) that credit scores have no skin color.
No lending means no small business start ups. That means no employment growth, and BIG DEMOCRAT LOSSES in 2012!!!!!
Interestingly, why aren't the Europeans putting their money in the Big Four Chinese banks? Is it they realize the Chinese banks aren't much safer than the European banks?
In $100K increments?... or whatever the new FDIC limit is now.
And what happens to this money should the US find itself in a crisis at some point while Europe takes a dive? Some of these guys in goverment and on Wall Street might see an opportunity to steal it especially if its the banks themselves that are in trouble. We certainly would become very unpopular after such an event. It’s an opportunity the left and Obam would love to have to hurt America even more.
Unfortunately, the Libs haven’t figured out how the system works, yet.
I have heard them mention the banks and liquidity but nothing happens.
Never mind. Should have read the article.
Unlimited — wow! That seems like a train wreck in which us little people (small depositors) will get screwed and the big cronies are covered.
Well, I guess their money can collapse right along with ours.
I'd like to get hold of that Chinese guy who promised I would live in "interesting times".
This is not a direct reply to you. I urge folks to check out their bank’s rating. Google Bauer Bank ratings.
Under 4 stars is not great. 2-2.5 would run me off.
This is not a direct reply to you. I urge folks to check out their bank’s rating. Google Bauer Bank ratings.
Under 4 stars is not great. 2-2.5 would run me off.
Why should banks pay interest anymore? Its all free $$. In fact, they should CHARGE for keeping the $$ safe.
You know where this is going. Almost as if its been engineered that way.
>> “The money flows in quickly, but it will also flow out quickly once the danger of European collapse is over.” <<
.
Do you believe in fairy godmothers?
The ‘danger’ of European collapse will be over when the collapse is complete. That collapse will take with it some of our largest banks.
We do not need the FDIC to be further burdened by this well placed panic. FDIC should be limited again.
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