if banks fail, how safe is our money in the banks?

i understand there is a govt insurance banks have, but i am not trusting it. for people who know finance, please give me the information on if our money is really guarenteed and if not, what they see doing with the money sittin in bank. i have cd's. i was driving down street and saw a house for sale. i dont want to put money in market. actually i have a portion already there. but with drop in house prices i was wondering about putting cash into houses and rent out until our economy settles.

what do you think?

be there to uphold the Insurance that they are supposed to carry if a bank goes under.

told me last week she asked the bank this re my mom's CDs. The banker said that you would only get a percentage back. He also said that if the insurance was needed re a widespread collapse to forget about getting anything back. This is second hand info though.

but the government cannot ensure how much your cash will purchase. You know, the old wheelbarrow full of cash for a loaf of bread thing.

First, the only way a bank can go under in a hurry is if there is a run on the bank. A bank can collapse due to its assets losing too much value, but that takes time and the Federal Reserve simply takes a bank where that happened and merges it into a larger bank. This has happened many times and the FDIC never even gets involved. All deposits are saved.

Even in the case where there is a run on the bank, the Federal Reserve has virtually infinite capacity lend money to member banks. If the Fed chooses to prevent a banking panic, it can by giving banks virtually unlimited borrowed reserves to meet depositors' demands.

If that's not good enough for you, foreign investors have considerable interest in making sure that the U.S. banking system remains solvent. You know all of those large foreign cash infusions we've seen so far? You would see even more if our banking system was truly on the verge of collapse. No one can afford to see the U.S. financial system collapse and there is sufficient foreign capital out there to shore up our banks under virtually any eventuality and the vested interest to do so. Anytime our financial companies have gone out there for additional capital infusions, it doesn't take long for the sovereign wealth funds and foreign private equity to get several billion together.

No major bank will fail and wipe out depositors. By major I mean more than $10 billion in deposits. I am willing to bet $5,000 on that.

all the money would be gone, had it happen twice to grandparent.... wait i said, i dont want back then, i want now. here is what i am seeing .... and proceeding to say the same as you, that govt would step in before. not as specific as you, but this is what i was seeing.

thanks. wanted to check but this is how i feel it would be handled.

you can be promised is the FDIC amount. Larger banks, you are completely and absolutely safe. There is a higher probability of a jet falling out of the sky and hitting your house killing you than there is of you being wiped out in the bank.

thanks. my bank isnt b of a or wells fargo, but i think it is big enough

you're in the banking industry.

I don't believe it.

The whole notion of other countries not wanting our banks to fail, and using that as a last resort firewall, is nonsense. If China wanted to destroy us, they could do it overnight, financially - and they just might be willing to take the worldwide instability that would result as the natural consequence.

If China decides on that route, we're fucked. Plain and simple.

brought our economy under.

Other nations have been bailing out various institutions so far. They will continue to do so. The world has never avoided catching the U.S.'s viruses and this year is no exception.

They wouldn't care if they ruined themselves, if it meant our ruin as well. They have a 5000 year history, and are very clear that times of tumult are temporary.

And what would 'ruin themselves' mean to them? A temporary return to the agrarian culture that they've only moved away from within the last generation? While our ruin, OTOH, would be the devastation of our economy when we have no remaining industrial base and 95% of the population is separated from the land. We would not only lose our economy, but probably our democracy as well. At least half their population, OTOH, is still rooted firmly in Maoist discipline, and would be ready to suck it up for the party and the nation.

Only a fool would not be terrified at China owning all our debt. We are the ONLY power that stands between them and their being the premier power in the world. Russia is a shell of its former self. India to too plagued with poverty, as is Indonesia. And for all the economic power of the EU, they are still a score of separate nations, and when push comes to shove the EU will collapse into rival nations as it has a dozen times before.

Nope, it's just us and China - and they're holding the cards.

Now there is.

IIRC, FDIC is another one of those evil things FDR did to pull us out of the Great Depression, lol.

from her grandparents. i had heard though not long ago a comment that it would be so much on our dollar. that was my real concern. then thinking, not wanting market, buying property could be a good place to put money.

you know, in this country slavery was once legal, i wonder if it could happen tomorrow? well, no.

same with the bank thing.

i'm a little frustrated because you've brought up a big concern yet brought no information to the table to explain why it's a rational concern.

i mean, why don't you fret about the sun not rising tomorrow? there's no guarantee there either.

hence the reason i didnt bring it up

but i got my answer, thank you. assurance. i was of the same opinion that there was not a reason to be fearful, but thought it better to be informed.... go figure, silly me.

:hide:

sometimes that little face behind the wall, lookin out, is so cute, and appropriate.

i can easily put cash into a house, ... that is all i was asking. i would rather money just sit in bank. i would rather not lose it either. took a long time and hard work getting it.

oops, wait, i was the one with the concern. :evilgrin:

:hi:

No gold standard now, so the Federal Reserve can and will create as much currency as necessary to stop a large scale banking failure.

The better question is: What will be the purchasing power of my dollars after a Federal Reserve intervention?

The British government has limited deposit insurance as well, but the BoE guaranteed all deposits in full during the recent Northern Rock bank failure. Central banks simply have absolute power. To take FDIC beyond the 100k limit, they would give it access to the Fed discount window. Just like they have the investment banks.

to http://www.thestreet.com/story/10405078/2/fdic-girds-for-bank-failures.html">convince the herd that they will be just fine as long as they let the foxes shepherds take care of all that complicated stuff that they shouldn't be worrying their woolly heads about, anyway.

What they, and their minions, leave out is that even if they did manage to cover the deposits, doing do will make that money completely worthless. Other countries are already refusing to accept the USD in favor of more stable currencies, most notably the Euro.

Unfortunately, there is precious little that regular people can do. There is a web of laws and regulations that basically force the average sheeple to use this potentially worthless scrip.

The failure of Penn Square Bank still ranks as one of the FDIC's "most difficult and most colorful bank resolutions," according to that agency's reports. When the bank folded, it had $470 million in deposits and $517 million in assets, and it was servicing about $2 billion in loans.

Of its deposits, only $207 million were insured. The majority of its uninsured deposits were actually other banks' funds. It was the largest bank in the FDIC's history in which uninsured depositors suffered losses. The FDIC, after consulting extensively with the Federal Reserve Bank and the Comptroller of the Currency, decided to pay off the insured deposits. But hundreds of other banks shortly followed Penn Square's fate, including about 140 in Oklahoma alone.


http://www.kfor.com/Global/story.asp?S=6738148


If I lean forward in my chair a bit I can see the office tower they were building when they went under.

After this the governemnt started shoring up the banks that it was dragging down with it.

I still use banks...but I do have a stash.

even a stash of cash stuffed into a mattress is still no guarantee - the government could pull in all $$$'s and reissue completely new bills at some ratio and then declare all the "old" money worthless.

TIME magazine many years ago--I think about 1990--published an essay written by a woman who had had all her accounts and loans in an S&L that went under. She wound up homeless because it took so long for her to get her money from the FDIC. Today, my husband and I bank with National City. National City is in trouble. We moved some money into an account at another bank just in case. We probably won't need it, but it makes us feel more secure.

about exactly this. (every night he comes home and i say, "anything happen today". and every night he says, nada, rollin eyes). anyway, he says the bank didnt do many of those loans causing problems and they are in pretty good shape. i had already heard this about this bank. pretty conservatively run. also husband said read an article in money saying think the corner has been turned on this. most banks have taken the hit already.

i do have two banks. generally clear out the other account (it collects hubby pay) and send money to active account in other bank. maybe will leave it gathering to do more like what you did.

from what i hear though, not seeming like it is a concern.