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Practical information for dealing with bank runs?

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Re: Practical information for dealing with bank runs?

Unread postby Tyler_JC » Mon 14 Jul 2008, 20:29:16

I trust my local Eastern Bank based out of Boston. They have 70 locations and 6 billion in assets (according to their website).

They do mostly traditional home mortgages, commercial loans, life insurance, stuff like that.

I never saw any signs inside the bank encouraging people to get ARMs or interest only loans (I don't think they even offered those).

The scary thing is that as of June 30, 2007...WaMu was the 6th largest bank in the United States based on deposits.

Shouldn't that be too big to fail?

National City was number 11 and there is speculation that they are in trouble too (hence the 15% stock price crash today).

I would think they would be too big to fail as well.

Argh, I'm getting nervous. :(

The mattress is sounding better and better...
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Re: Practical information for dealing with bank runs?

Unread postby Tyler_JC » Mon 14 Jul 2008, 21:32:01

I should mention that my fear of WaMu stems from a family friend who got laid off when they eliminated the Boston office.

He said that the bank was in trouble if the write downs continued... 8O
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Re: Practical information for dealing with bank runs?

Unread postby yesplease » Tue 15 Jul 2008, 01:37:38

$this->bbcode_second_pass_quote('Tyler_JC', 'T')he scary thing is that as of June 30, 2007...WaMu was the 6th largest bank in the United States based on deposits.

Shouldn't that be too big to fail?
Offhand, the S&L scandal involved trillions in assets, so I don't think WaMu is too big to fall. Although it may be bailed if it's useful to do so? :?
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Re: Practical information for dealing with bank runs?

Unread postby Snowrunner » Tue 15 Jul 2008, 01:45:23

$this->bbcode_second_pass_quote('yesplease', '')$this->bbcode_second_pass_quote('Tyler_JC', 'T')he scary thing is that as of June 30, 2007...WaMu was the 6th largest bank in the United States based on deposits.

Shouldn't that be too big to fail?
Offhand, the S&L scandal involved trillions in assets, so I don't think WaMu is too big to fall. Although it may be bailed if it's useful to do so? :?
They will delay any failure as long as there is money in the FDIC, they just cannot afford for people to start panicking.

Is it too big to fail? Nothing is. Is it too important to the Fed right now to fail? Yes, certainly.
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Re: Practical information for dealing with bank runs?

Unread postby yesplease » Tue 15 Jul 2008, 02:02:58

But they haven't delayed any failure. IndyMac went belly up recently. Otoh, they do seem willing to delay larger institutions like freddy/fannie.
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Re: Practical information for dealing with bank runs?

Unread postby threadbear » Tue 15 Jul 2008, 02:07:45

A better question is how to shelter income from taxes spiraling upward to cover the big party the bankers threw themselves. The other good question is how and where to shelter cash you have already accumulated, as the dollar continues to devalue. If you're thinking of getting a small safe, seriously consider purchasing some gold or allocated silver certificates.

Spread your cash around to as many banks as possible, if you intend to keep your stash in cash. It's unlikely the govt will refuse to fund fdic, but better safe than sorry. The ones getting creamed at the moment, are those who own shares in these banks. The depositors should be okay...should.
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Re: Practical information for dealing with bank runs?

Unread postby Snowrunner » Tue 15 Jul 2008, 02:13:13

$this->bbcode_second_pass_quote('yesplease', 'B')ut they haven't delayed any failure. IndyMac went belly up recently. Otoh, they do seem willing to delay larger institutions like freddy/fannie.


Yes, IndyMac failed, but it did so in an orderly fashion. If I had to guess it was either that IndyMac lied to the Fed and other banks about it's balance sheet so nobody tried to marry them up before TSHTF OR (and this would be bad) the Fed tried and failed to find a suitor, in which case the rest of the week may just get rather interesting.

And as far as saving Freddy and Fannie goes: The amount of money that they have made available so far isn't even a drop in an empty bucket, so far it's all smoke and mirrors.

It will be interesting to see what:

a.) The Fed is going to do about interest rates.
b.) The BoC is going to do (considering how close Canada is to the US)
c.) What the ECB is going to do. If they raise their rate again then it is a clear sign that they expect a further devaluation of the Dollar and that could make things a lot worse for all involved.
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Re: Practical information for dealing with bank runs?

Unread postby threadbear » Tue 15 Jul 2008, 02:16:53

$this->bbcode_second_pass_quote('yesplease', '')$this->bbcode_second_pass_quote('Tyler_JC', 'T')he scary thing is that as of June 30, 2007...WaMu was the 6th largest bank in the United States based on deposits.

Shouldn't that be too big to fail?
Offhand, the S&L scandal involved trillions in assets, so I don't think WaMu is too big to fall. Although it may be bailed if it's useful to do so? :?


Not trillions, but 160 billion. Peanuts compared to the multi-trillions at risk now. Adjusted for inflation, 120 billion would be what; about double and then some? So maybe it would be comparable to 300 billion, at the most 400 billion, today?

This potential financial systemic failure is huge. This is the big enchilada. The economy's contractions are just starting, Fannie's the mom, Freddie's the dad, and man, is the baby going to be ugly!

Wikipedia--Savings and Loan crisis:

The U.S. Savings and Loan crisis of the 1980s and 1990s was the failure of 747 savings and loan associations (S&L's) in the United States. The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government -- that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts-- [1], which contributed to the large budget deficits of the early 1990s. The resulting taxpayer bailout ended up being even larger than it would have been because moral hazard and adverse-selection incentives compounded the system’s losses.

http://en.wikipedia.org/wiki/Savings_and_Loan_crisis
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Re: Practical information for dealing with bank runs?

Unread postby yesplease » Tue 15 Jul 2008, 02:34:45

$this->bbcode_second_pass_quote('threadbear', '')$this->bbcode_second_pass_quote('yesplease', '')$this->bbcode_second_pass_quote('Tyler_JC', 'T')he scary thing is that as of June 30, 2007...WaMu was the 6th largest bank in the United States based on deposits.

Shouldn't that be too big to fail?
Offhand, the S&L scandal involved trillions in assets, so I don't think WaMu is too big to fall. Although it may be bailed if it's useful to do so? :?


Not trillions, but 160 billion.
Trillions in assets.$this->bbcode_second_pass_quote('Wikipedia', 'I')n an effort to take advantage of the real estate boom (outstanding US mortgage loans: 1976 $700 billion; 1980 $1.2 trillion)[citation needed]and high interest rates of the late 1970s and early 1980s, many S&Ls lent far more money than was prudent, and to risky ventures which many S&Ls were not qualified to assess.

The ~160 billion, not adjusted for inflation from 1980, was what was lost, and the taxpayer had to fork over ~125 billion of that.$this->bbcode_second_pass_quote('Wikipedia', 'T')he U.S. Savings and Loan crisis of the 1980s and 1990s was the failure of 747 savings and loan associations (S&L's) in the United States. The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government -- that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts--
$this->bbcode_second_pass_quote('threadbear', 'P')eanuts compared to the multi-trillions at risk now. Adjusted for inflation, 120 billion would be what; about double and then some? So maybe it would be comparable to 300 billion, at the most 400 billion, today?There aren't multi-trillions at risk, just the bank's worth. Their holdings don't suddenly disappear if they go under.$this->bbcode_second_pass_quote('Wikipedia', 'A')s of November 22, 2007, analysts at a leading investment bank estimated losses on subprime CDO would be approximately U.S. $148 billion.[166] As of December 22, 2007, a leading business periodical estimated subprime defaults between U.S. $200–300 billion.[167] As of March 1, 2008 analysts from three large financial institutions estimated the impact would be between U.S. $350–600 billion.[168]

The cost to the taxpayer is proportional to the amount spent bailing out companies, so in this case we may see less losses via government bailouts and more bank losses. In any event, as of now overall losses are at comparable levels or ~twice those levels adjusted for inflation, and AFAIK less than what was payed for via the taxpayer in the S&L scandal.
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Re: Practical information for dealing with bank runs?

Unread postby MOCKBA » Tue 15 Jul 2008, 10:30:24

$this->bbcode_second_pass_quote('Leanan', 'I') really think it's best to spread your money around. I have my money in ING Direct (large European bank), HSBC (large Hong Kong-based bank), and a local credit union.

Both ING and HSBC should be considered "London Banks operating in North America thru Canada"...

During currency crisis in Argentine HSBC walked away leaving depositors holding a bag... They have been promoting themselves as "stable British/Canadian Bank that would never do that" but were structured to "walk away"

ING bought NetBank assets and liablilities after OTS shut NetBank down... Prior to that EverBank got out of a NetBank buyout after looking at NetBank financials in detail... this triggered OTS shutting NetBank down... I am suspicious of ING stability as well... And ING did and does mortgages world-wide on their own...

I banked with both, but closed my accounts due to safety concern...
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Re: Practical information for dealing with bank runs?

Unread postby threadbear » Tue 15 Jul 2008, 12:51:29

Yesplease, There's over a trillion dollars at risk, and likely over two trillion once the chaos works it's way through the system. Care to make a wager?
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Re: Practical information for dealing with bank runs?

Unread postby yesplease » Tue 15 Jul 2008, 15:23:49

A trillion? Maybe if we count the impact throughout the world economy, but will the US gov end up paying that much? I doubt it. In any event, I've tried wagers on the forum and everyone always backs out. :roll:
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Re: Practical information for dealing with bank runs?

Unread postby Tyler_JC » Tue 15 Jul 2008, 15:37:49

$this->bbcode_second_pass_quote('yesplease', 'A') trillion? Maybe if we count the impact throughout the world economy, but will the US gov end up paying that much? I doubt it. In any event, I've tried wagers on the forum and everyone always backs out. :roll:


I don't back out, ask Roccman or Ayoob. I'm on the hook for $50 to each of them if oil crosses $200 a barrel. Another $50 to Roccman if electricity prices rise more than 15% this year.

But then again, I'm somewhat of a gambling addict so don't use me as an example. :)

As for bank runs, if you put a second name on the bank account, you double your protection to $200,000. You should make sure you trust that person 100% or else they could clean you out. A spouse or dependent child usually works.

IRAs are protected up to $250,000 (if I recall correctly).

If you have more than $200,000 in cash, you don't need my advice.
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Re: Practical information for dealing with bank runs?

Unread postby Fiddlerdave » Tue 15 Jul 2008, 15:50:00

In my previous business, the line of credit issuewas critical. Losing it is very bad if you need it to operate. I'd draw it all out and consider the extra interest to be a cost of insurance that allows you to do business, if you can afford it.

The supply lines for Just In Time money are very shaky right now.
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Re: Practical information for dealing with bank runs?

Unread postby yesplease » Thu 17 Jul 2008, 11:01:33

$this->bbcode_second_pass_quote('Tyler_JC', '')$this->bbcode_second_pass_quote('yesplease', 'A') trillion? Maybe if we count the impact throughout the world economy, but will the US gov end up paying that much? I doubt it. In any event, I've tried wagers on the forum and everyone always backs out. :roll:


I don't back out, ask Roccman or Ayoob. I'm on the hook for $50 to each of them if oil crosses $200 a barrel. Another $50 to Roccman if electricity prices rise more than 15% this year.
Where's the fun in that? I mean, betting is betting, but if people wanna be fleeced, that isn't fair. I bet someone Uranium wouldn't break $200 and it didn't even touch $150, falling to under $100 by the specified date. I suppose I should have gone lower and taken odds, but it's not like they responded to me or posted on this site since. :lol:
In any event, I don't think I'd like your odds, not enough of a ROI... :-D
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Re: Practical information for dealing with bank runs?

Unread postby Leanan » Thu 17 Jul 2008, 12:33:53

Banks reportedly not taking IndyMac checks

$this->bbcode_second_pass_quote('', 'L')OS ANGELES - The frustration didn't end for some IndyMac customers when they finally were able to withdraw their funds from the failing Southern California bank seized last week by federal regulators.

Some people have run into more problems when they tried to deposit IndyMac cashier checks at other banks.
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Re: Practical information for dealing with bank runs?

Unread postby smallpoxgirl » Thu 17 Jul 2008, 14:06:46

$this->bbcode_second_pass_quote('Tyler_JC', 'A')s for bank runs, if you put a second name on the bank account, you double your protection to $200,000.


That's assuming the second person doesn't already have an account with that bank.
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Re: Practical information for dealing with bank runs?

Unread postby yesplease » Thu 17 Jul 2008, 14:12:26

Don't they prorate it? I mean, if there are two people on a $80,000 deposit, then both of those people could still have $60,000 in another account or share of accounts at the same bank, correct?
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Re: Practical information for dealing with bank runs?

Unread postby Tyler_JC » Thu 17 Jul 2008, 14:13:17

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('Tyler_JC', 'A')s for bank runs, if you put a second name on the bank account, you double your protection to $200,000.


That's assuming the second person doesn't already have an account with that bank.


...this is true...
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Re: Practical information for dealing with bank runs?

Unread postby Serial_Worrier » Fri 18 Jul 2008, 15:17:35

This is all pretty irrelevant for most people right? How many people in our debt-ridden culture(avg debt/assets 135%) actually have enough savings to worry about?
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