And now a bank run

reply to post by St Udio


Those are the reasons that drew my attention to Indy late last year along with the general problems in sub-prime lenders and its geographic location in the biggest of the bubbles.

I don't have any easily relateable proof about this, but I think the FED has burnt through most of its most liquid assetts(short term treasuries) and would have to start selling longer dated bonds into the open market to continue these facilities. They already anounced that they would not be "rolling" treasuries as they matured. If they started to sell their longer dated items it could cause interest rates to rise further deteriorating housing causing further problems.

Originally posted by jefwane


I don't have any easily relateable proof about this, but I think the FED has burnt through most of its most liquid assetts(short term treasuries) and would have to start selling longer dated bonds into the open market to continue these facilities.

that's about the un-spoken prognosis i'm reading into their 'Dark Pool' of rescue money.

by all realistic reasoning, the Fed Reserve before all these bailouts had on hand about $750bn in Treasuries in their portfilio...which they burnt through in less than 6 months of bailing out financials...

my guess that represented about 50% of their cash reserve portfilio...
and the Fed Reserve isn't about to exhaust all their wealth portfilio on these series of crisis.

My take is that the Fed has been doling out brand new-issue US Treasuries as the collateral for all these financial-paper 'swaps', to the tune of +$450bn
on top of the undiluted Treasuries the Fed spent from their Corporations ready cash portfilio of Treasuries.

So how is the Fed Reserve dealing/responding to half way exhausting their own wealth held in mature Treasury notes/bills... the US Treasury is in the process of giving the Fed Reserve sole authority to set standards and requirements for all the credit industry and the authority to run a 24/7/365 audit of all levels of financial instututions on Ameican soil.
And thereby micro-manage the entire financial & economic engine of the USA... outside of Congress and the constitution.

but lets not go down that path... you can construct a model of action concerning big-small-regional banks like the OP thread is about.
then extrapolater about commercial, investment banks, brokerage houses,etc

way too many dynamics involved to even say what's next.

reply to post by son of PC

Originally posted by son of PC
They Fed is not going to let many of these banks fail. In the middle of the night they will just go in and exchange govt. bonds for the bad paper on the banks books. Then the banks will simply borrow operating funds from the open market, using the govt. bonds as collateral.

Is this what happens? If so, then the Fed's position is weakened, no? What will they do with all that bad paper?

Originally posted by bismarcksea
Soooo if 2 more banks of the same size go under, the fed won't have the funds to bail anyone else? Right?

Fed has the ability to print money at will..

They will ALWAYS have enough money. However, at the end of the day because of hyper inflation, it won't actually be worth anything lol ..

By the way .. many people may not believe it .. but from working with some older people in the financial world....

An amazing amount of people have over 100k in their bank accounts .. just sitting there .. FDIC only covers up to 100k .. I know if I had that much in an account, I would never let it surpass 100k then..

Please excuse my ignorance but I'm trying to learn. So are you saying we should take our money that's in our savings account at the bank out? Its only a few thousand but still.

reply to post by Bachrk


No, there is no reason for that. There is no bank-run crisis potential yet.. so far it is one major financial institution that is most likely already insolvent. If you keep money with Indymac, and you feel more comfortable with your money under your mattress go ahead..

Besides, a few grand will be covered by the FDIC anyways.

Please forgive me if this is an ignorant question, I am not to savvy in the ways of the FDIC: If my ban k were to go under, what would happen to my money and my home? I have my mortgage through my primary bank. Would I lose my home if the FDIC decided to wait 100 years to pay the debt back to me?

reply to post by Rockpuck

?? is that 100k per account??

reply to post by quaple_pouge


Your money will be paid, there is no specific time-line for payment, most likely I would assume, before a week ...

Your mortgage will be auctioned off to another bank, or the insurer of your mortgage, assuming it had insurance, would appropriate it to another institution ..

but no .. you wont automatically have your house paid for, and yes, you will still owe to some bank..

Lost: No, the FDIC only covers ONE account per family unit..

however from what I have learned there are "loop holes" .. such as if you formulate a trust fund for one or more person .. with POD status, the FDIC would ensure the entire sum in the account up to 100k per person selected in the POD contract.

So if you have 2 kids and you want to leave them 100k each, the FDIC in one account would insure up to 200k dollars.

To make it more clear, if you had a ton of money and wanted to, you could create an account for your two children, then your wife could also leaving a total of 400k dollars. You could then set up a joint account with your spouse, and create a POD account (payable on death by the way) and add ANOTHER 400k dollars.. totaling 800k to your kids (subject to death taxes). And if you want to leave a 100k to me to, I will be glad to accept it!

However it is asinine to actually create a trust in a bank with a simple POD .. the Gov still taxes it.

[edit on 7/9/2008 by Rockpuck]

[edit on 7/9/2008 by Rockpuck]

I hate to be the bearer of bad news, but the bank runs people are hoping and praying for on ATS are not going to happen. IndyMac may go under, but depositors will notice almost no interruption because FDIC will reimburse them almost immediately. The only people who have reason to be concerned - anyone in with assets over 100k for a single account - got out long ago.

Anyone with money in under 100k would be a fool to take it out. Indymac is offering very good interest rates due to their condition, and since your money is secure due to the FDIC, there is no risk to you.

The government understands any delays in fund reimbursement is just the sort of thing that the doom and gloomers on ATS and elsewhere would love to use to instill hype and panic, which is why the reimbursement procedure is almost instant. It MAY take up to 48 hours, if it happens on a Friday. Otherwise...we're talking about hours.

[edit on 9-7-2008 by ALightinDarkness]

Originally posted by ALightinDarkness
I hate to be the bearer of bad news, but the bank runs people are hoping and praying for on ATS are not going to happen. ...

I don't think people are "praying" for them, nor are they "hoping" for them. BTW, what you are saying is EXACTLY what bankers said in the late 20s.

It's only going to take 6 to 12 more months of these "foreclosures" before the banks aren't going to be able to sell physical houses. No one will be able to afford them.

I think people misunderstand the magnitude of what is going to happen in our financial sector. That, or I greatly misunderstand the "warning signs" (which is possible).

Originally posted by sir_chancealot
I don't think people are "praying" for them, nor are they "hoping" for them. BTW, what you are saying is EXACTLY what bankers said in the late 20s.

I am not fooled by the doom and gloomers on ATS. There are a large amount of people who are actively praying and trying to wish into reality an economic disaster. In fact, quite a few people admit they want a disaster on this board by saying so - an economic apocalypse is still an apocalypse, even if more traditional end of the world scenarios are more exciting.

Also, I highly advise you to read up on your history. As the FDIC did not exist until after the Great Depression, you are literally making things up in an attempt to further doom and gloom. Before the FDIC, it would of course have been prudent to take money out of Indymac - but the FDIC came into existence in 1933. Your attempt to compare our current conditions to the depression in order to instill panic has failed.

Originally posted by sir_chancealot
I think people misunderstand the magnitude of what is going to happen in our financial sector. That, or I greatly misunderstand the "warning signs" (which is possible).

I agree. Far too many people are running around hysterically in circles proclaiming the end because they do not understand the magnitude of the situation. The prudent thing to do is move out any assets beyond 100k from shaky banks, and invest in a diversified portfolio that is low on the housing sector.

reply to post by ALightinDarkness


I know Im not one of the people wishing for the worst. Im going to be jumping into Citibank BIG within the next month or two so no I dont want a bomb but I DO want some more tanking so I can feel a little more comfortable when I go into the financials. I am of the belief most of these are rumors that are being used to tank things so the big boys can go in and buy shiite for pennies on the dollar.

I hope Im right but I still do see an eerie resemblance to 1929 and if that is the case what Im thinking is a 3 to 5 year investment may be 10 to 15 years and that I dont want.

reply to post by ALightinDarkness


I think its foolish to rely on the FDIC to reclaim your money. The fact is there is only around $58 billion or so in the FDIC account. So if a TRUE bank run does happen the on the banks the FDIC will not have even close to enough money to cover everyone.

[edit on 9-7-2008 by mybigunit]

reply to post by mybigunit


If I remember correctly your some what of a professional trader...in which case, I understand. But I think you'd agree that for the vast majority of investors who are in it for the long term, whether its a 5 year or 15 year problem doesn't matter if you have no plans to retire during that time.

$58 billion far surpasses the amount of IndyMac's depositor FDIC insured depositor assets. Also, do you have a source that has that amount? From my understanding their reserves are immediately replenished as needed.

[edit on 9-7-2008 by ALightinDarkness]

Originally posted by ALightinDarkness
reply to post by mybigunit

 

If I remember correctly your some what of a professional trader...in which case, I understand. But I think you'd agree that for the vast majority of investors who are in it for the long term, whether its a 5 year or 15 year problem doesn't matter if you have no plans to retire during that time.

I dont like 15 year investments....time is money and if money money has to sit that long Id rather find somewhere where I can make money. A lot of the financials right now have really low dividends so its not like you can sit and wait and make money on the dividends. 3 to 5 years is my pain threshold point.

[edit on 9-7-2008 by mybigunit]

reply to post by jefwane


Wow, this is a really good post! Star and flag!

When I was done reading your post and the reply's that it generated, it made me think a bit.
There was something I read, perhaps here on ATS that the FDIC has up to 99 years to repay your accounts if the bank does indeed collapse and your money goes missing.

Is that true?? Anybody?

Originally posted by ALightinDarkness
reply to post by mybigunit

 

If I remember correctly your some what of a professional trader...in which case, I understand. But I think you'd agree that for the vast majority of investors who are in it for the long term, whether its a 5 year or 15 year problem doesn't matter if you have no plans to retire during that time.

$58 billion far surpasses the amount of IndyMac's depositor FDIC insured depositor assets. Also, do you have a source that has that amount? From my understanding their reserves are immediately replenished as needed.

[edit on 9-7-2008 by ALightinDarkness]

Light for you I will give you my sources for my numbers

www.fdic.gov...

BTW its 52 billion not 58 I was wrong but when I said a bank run Im talking a depression style bank run not just Indymac I should of made myself clear. If there is a run on the banking system people WILL lose money but like you said earlier the ones who have a heads up when the crap hits the fan they will be just fine.

reply to post by ALightinDarkness


I have to agree. Money is worthless, it`s paper that has no value. It has nothing to cover it, gold or silver. The fed prints tons of it every year to cover themselves (our national debt). The problem is, they can`t print it fast enough to cover what our government spends. Imagine it, we buy what we want with something that is worthless, nice huh? Think about it for a moment, who owns the bulk of the gold and silver? The ones who own the Federal Reserve. They want ALL the gold and silver, they don`t want you or I to have it. They don`t want it covering the dollars we have. That takes away from them and gives it to us, and they can`t have that. And this scare about the bailout and all the problems tied to it....it`s garbage. The Fed isn`t scared, it`s just paper, it`s no big deal to them. It`s not hard to put two and two together when you think about it.

Yes, they want you to be scared about it. Oh my, what are we to do if we have no money in the bank? Well, gee, you really didn`t have any in there in the start, only some numbers on a print out you get. Credits people, that`s what you have. No gold or silver backed money, just money with numbers telling you a credit point. And some of us never see that paper money at all. Have a credit card? Think about it. Look at how banks push us into getting more and more credit with them. Even at the cost of us going overboard with it, to the point of us going bankrupt. We give them everything in the end that we had worked for. That`s what they want. They will soon own everything that you see around you. They already own us, just by the contract you sign with them when you get a loan. They can only hope you can`t make those payments so they can take it away from you. They then put it back on the market so they can do it all over again.

A post I made elsewhere as well, but quite appropriate to this discussion. Take the time to view this clip...

Here might be the best 45-minutes you’ll spend all year. This the TRUE story behind the money-from-nothing monetary system and how banking and bankers control the economy – at your expense and mine.

Animated, but very well done. An eye-opener and a great education – share it with all young adults important to you. Unfortunately, for reasons that will become obvious, this brief lesson is NEVER taught in public schools or discussed in the main-stream-media…

This will encapsulate and clearly explain why the economy is about to collapse:

Money (theirs) as Debt (yours)

Google Video Link

Google Video Link