Country Living Series

Wednesday, April 6, 2011

"As low as one thousand dollars"

A couple weeks ago I wrote a WorldNetDaily article called Tangible Investments in which I stated how we prefer to put any surplus cash into physical possessions rather than in the bank. I later learned this column had the highest readership of any WND column I'd ever written. It even got mentioned on SurvivalBlog, which I'm certain accounted for a lot of those numbers.

It seemed the column hit a chord. A lot of people -- not just us -- apparently have little faith in money and would rather put their earnings into something tangible (a Jersey heifer in our case) rather than stash it in the bank.

And now I find out that one of our banks is teetering on the edge of disaster. This article lists 171 banks "for which the margin of failure is one thousand dollars." One of those banks is ours.

"Below we present the 171 banks that had to access the Discount Window for the paltry sum of $1,000.00," states the article. "That's right -- these are the banks for whom the margin of failure is as low as one thousand dollars. Any readers who have cash deposited with these banks (many of whom have not yet been visited by the FDIC's Failure Friday phenomenon), are urged to immediately remove all funds and run, Forrest, run."

We've known for quite awhile that two of our three banks are in fragile shape, but I hadn't realized just how fragile that shape was. It confirms our notion that banks are not the place to put our money (except for what we need to pay business and household expenses). The rare times we have surplus cash, we're putting it into something tangible.

Yeah yeah, someone is doubtless asking about the FDIC. Our money is covered -- insured -- by the (cough) full faith and credit of the United States government. Right?

Right. Do you honestly think our measly account would be covered by a bankrupt FDIC if our bank should fail? Of course not. Or if it is, the paperwork would tie it up for so long that we might as well kiss any funds goodbye.

We won't be closing our account with this bank. It's local and convenient. But nor will we keep any but the barest of funds in it. Our economic situation is such that we can't afford to lose anything because a bank fails.

13 comments:

  1. All I can say in response to this post is thanks for continuing to blog! I can't relate much since we're always low on funds and woefully behind on tangible assets (well, any assets for that matter, we're lucky we can put food on the table!). But we have been preparing as best we can, and honing our skills should it ever happen that we need to trade/barter goods and services instead of using money that won't be worth anything pretty soon. Since I'm the only one in my house that is even remotely concerned about our economy, it makes it just a bit tougher to prepare, even though we're in FL and hurricanes have knocked out power plenty of times, enough so that you'd think even Joe-Schmo would have half a mind to gather some supplies. Oh well, I'll keep praying and keep trying. Thanks for having an island of sanity in the crazy ocean that is the internet. ;)

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  2. smart move. we do that too...our cash goes into tangibles. we also chose a credit union bank, which seems to be a bit more responsible to it's customers. however, we check it's ratings and balance sheet every couple of months.

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  3. I agree 100%. We actually left our local "community oriented" federal credit union after eight years because it was obvious they just didn't care about the customer anymore. We now keep minimal funds in BofA and Chase (they're too big to fail, right?) with our direct deposit split into both (just in case). We've learned not to have all our (money) eggs in one (bank) basket.

    I also, speaking of Rawles, mentioned your beautiful blog titled Easter Story to him in an email. Let's see if you get linked to again (fingers crossed). Keep up the good work!

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  4. Patrice,
    There is another site, Investing Answers that uses something called the Texas Ratio to determine bank health. He has a list of 459 troubled banks, by state where headquartered and if your bank is not on the list, you can email him, and he will send you their ratio. We bank at PSB, MWB, and BofA. Texas ratios between 0.0 and 0.5 are "safe". I emailed him, and PSB is 0.16, ultrasafe, and MWB is 0.38, safe. That being said, we do keep only minimal money in any bank. I would never fully trust any of them. I do not know if either of these two banks have branches down your way or not. BTW, Sterling's ratio is 1.04 and they have been over 1.0 for a long time.
    Paintedmoose

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  5. Anybody who still doesn't realize we are in the Greatest Depression is in denial. We're not waiting for it to happen, it is happening. The banks failed during the Great Depression, land values were devastated, homes and farms were foreclosed - it's history repeating itself. Only this time it will be worse, hence the description "The Greatest Depression." We'd have the bread lines, too, if not for food stamps. We'd have the Hootervilles, if not for unemployment checks. Soon we will have the rioting. The Greatest Depression is not "down the road" anymore - it's here and it's real.

    By the way, it SNOWED here today. I sure do miss Global Warming. Where is Al Gore? Oh, now I remember, he's living a bachelor's life in a California mansion, rock star that he is. ROFLOL

    Anonymous Patriot
    USA

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  6. Transfer those funds to a safer harbor. Period.
    What little is in that bank is still NOT worth losing. Every penny represents your time in hard work.

    notutopia

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  7. I think it's irresponsible to suggest that someone pull their money out of a bank if your deposits are below the FDIC insured amount. Pulling your money out can send the bank into a tailspin and insure its failure. You don't lose any money if your deposits are below the insured amount.

    Local banks support local communities and should have your support. BoA, Citi and the larger banks aren't really involved in the local community and shouldn't be your first choice *if* you want to support your local community.

    I do not agree with all of the jumping up and down and scaremongering that Rawles and others push... this type of unfounded, baseless fear should be ignored. Take a look at the links that are posted on survivalblog - are they from trusted, reliable sites like the Wall Street Journal or some less reputable source? Think about it... why is he peddling so much fear? I am not buying it.

    Again, I would urge everyone to be strong and get involved in local communities to make them stronger. Get involved in the election process by supporting candidates you support to get this country back on track, living in fear is not the way I choose to live. I have chosen to be prepared but fear is NOT part of my equation, I am an American.

    -Fearless

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  8. I check my credit union after the quarterlies com out. It was running 2 stars last quarter and I was getting ready to pull my money when it went up to 3. Last year my mom lost most of her life savings after she sold her home, deposited in her bank account and then her bank went down. She was only covered for the first 250,000 and lost the rest. Here's the site I use
    http://www.bankrate.com/rates/safe-sound/bank-ratings.aspx?t=cb&i=&r=&a=&c=&s=&z=

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  9. Prepared teacherApril 7, 2011 at 9:41 AM

    We are also keeping only the minimal because if ATMs, credit card machines ( it has happened to us in the past , satellite down) go down we will not have any cash and it could take a long time to get the money. Yes, it is sad that the banks allow themselves to be hurt by those of us take our money out, but hey they should of been better at keeping their own accounts above the water line, if you know what I mean!

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  10. Fearless, although I tend to agree with you generally, I must disagree specifically about funds below the FDIC covered amount. The FDIC itself is bankrupt and needs constant refunding by the bankrupt federal budget. Even its increased fees to member banks will not supply enough funds to cover all losses should things get worse, which they will by design.

    In the banking business, taking from one fund to pay for another while both are overdrawn is known as "kiting" and is illegal. Once again proving that the feds can break laws they have created, while only the people are held to them

    Additionally, there is no time frame (that I'm aware of) for being reimbursed if your bank goes belly-up and is not bought by another one. Somebody could conceivably wait years for the FDIC to cover the account's losses. Right now, the FDIC is "finding" other banks to buy the broken ones. How long can that go on before the rot reaches the entire banking industry?

    Why protect a bank that is not protecting you? Loyalty is great, but misguided loyalty could be devastating.

    My own bank was on the FDIC Watch List last year. When I asked the bank manager about that, I was told that it was "merely a technicality." I told her I would be closing my savings account, but retaining my checking account. Then I reassured her it was "merely a technicality." You should have seen the look on her face as I turned to walk out the door. I guess she wasn't accustomed to getting a dose of her own medicine.

    -AP
    USA

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  11. "By the way, it SNOWED here today. I sure do miss Global Warming. Where is Al Gore? Oh, now I remember, he's living a bachelor's life in a California mansion, rock star that he is. ROFLOL"

    That was funny and much needed after the day of homeschooling I had with the little ones. 3 steps forward and 4 steps back. At least today...

    Thank you to cshellz (cute!) for the link. I have wondered about our bank as it is considered a little bank. Apparently it is good as it had 5 stars and 1 billion but less than 5 billion. I'm glad to hear that they are doing well.

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  12. Banks are like tanks. They roam around taking new territory until they run into people who know how to fight these beasts with the right weapons. Don't get too chilly A.P.

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  13. Every day is a trial in indurance for me Patrice. I am getting my back to the wall.

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