Sunday, August 24, 2008
"Is My Bank Safe?"
Robert Wenzel over at EconomicPolicyJournal gives us his thoughts on protecting yourself from bank runs.* On a related note, in years past my wife and I had used Emigrant Direct as a way to take money out of our checking account (where we might spend it) and get it earning interest but in a very accessible place. It paid much better rates than what our bank's saving accounts offered, and it was all online.
Well, I'm not sure we want to continue using Emigrant Direct for our alternative savings account anymore, because its business is basically home loans, which (so I hear) isn't the best bet at the moment. Anyone have any thoughts on ED (not to be confused with a disappointing condition)? ED's accounts are FDIC insured, but still, if the point is to have a place to store your months' worth of savings in case you get laid off, you don't want the hassle of a bank closure.
* Did you know that bank runs are not a fact of life, but rather the result of government-sanctioned fractional reserve banking? Read Murray Rothbard's The Case Against the Fed (free pdf) for the juicy details.
Well, I'm not sure we want to continue using Emigrant Direct for our alternative savings account anymore, because its business is basically home loans, which (so I hear) isn't the best bet at the moment. Anyone have any thoughts on ED (not to be confused with a disappointing condition)? ED's accounts are FDIC insured, but still, if the point is to have a place to store your months' worth of savings in case you get laid off, you don't want the hassle of a bank closure.
* Did you know that bank runs are not a fact of life, but rather the result of government-sanctioned fractional reserve banking? Read Murray Rothbard's The Case Against the Fed (free pdf) for the juicy details.
Comments:
I followed your link to Emigrant. I did not go much further, but have you researched enough to say that alot of their business is home loans?
I listened to their CEO in an interview and he wrote an op-ed in the NYT where he was very clear that they did no sub-prime lending. Now, they may do alot of mortgages, but they seem ot not be sub-prime.
I listened to their CEO in an interview and he wrote an op-ed in the NYT where he was very clear that they did no sub-prime lending. Now, they may do alot of mortgages, but they seem ot not be sub-prime.
# posted by 
: August 24, 2008 at 10:08 AM
: August 24, 2008 at 10:08 AM
Bob,
Congrats on your new site, it looks like it is going to be a winner.
Thanks for the link to my site.
One thing to note about banks and their short-term safety is to look at both their assets and liiabilites. Of course, it is important to look at their assets, e.g. their loans, but you also have to look at the make up of their liabilities, e.g. their deposits. If it is "hot" money, i.e. money chasing the highest rates, those deposits can be pulled quickly and then a bank may have a liquidity crisis if that deposit money can not be replaced quickly. In most of the FDIC bailouts to date it has been a combination of the fear of the quality of the aessts (loans) resulting in the run on the banks of liablities (deposits) being pulled.
Congrats on your new site, it looks like it is going to be a winner.
Thanks for the link to my site.
One thing to note about banks and their short-term safety is to look at both their assets and liiabilites. Of course, it is important to look at their assets, e.g. their loans, but you also have to look at the make up of their liabilities, e.g. their deposits. If it is "hot" money, i.e. money chasing the highest rates, those deposits can be pulled quickly and then a bank may have a liquidity crisis if that deposit money can not be replaced quickly. In most of the FDIC bailouts to date it has been a combination of the fear of the quality of the aessts (loans) resulting in the run on the banks of liablities (deposits) being pulled.
# posted by : August 24, 2008 at 7:45 PM
: August 24, 2008 at 7:45 PM
Von Pepe,
The below is the entire answer (from ED's FAQ) to the question shown. I didn't say "subprime" specifically in the post, and it's my (quick and dirty) understanding that the problem in real estate isn't just subprime.
==============
Q: What is EmigrantDirect and who is Emigrant Bank?
A: EmigrantDirect is the online banking division of Emigrant Bank. It is for consumer accounts only. The Bank was founded by Irish emigrants as a mutual savings bank in 1850. By the 1920’s it had grown to become the largest savings bank in the nation.
As of December 31, 2007, Emigrant Bank and its affiliated Regional Banks1 has approximately $14.3 billion in assets and more than $1 billion in net worth, operating through 35 branches in the New York metropolitan area.
As a traditional savings bank, Emigrant Bank, through its mortgage banking subsidiary, Emigrant Mortgage Company, is licensed to originate home loans in New York and 19 other states. Last year, Emigrant originated approximately 2,800 home loans totaling $720 million. As of year-end 2007, Emigrant Bank and its affiliated Regional Banks1 serve more than 700,000 account holders and have provided 19,000 home loans. Emigrant Bank and Emigrant Mortgage Company have a loan-servicing portfolio of more than $5 billion.
Emigrant Bank's wealth management division, New York Private Bank & Trust, has its own deposit products starting at $2,000,000. Emigrant Bank is regulated by both State and Federal regulators. All deposits are insured by the FDIC up to the legal limit.
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The below is the entire answer (from ED's FAQ) to the question shown. I didn't say "subprime" specifically in the post, and it's my (quick and dirty) understanding that the problem in real estate isn't just subprime.
==============
Q: What is EmigrantDirect and who is Emigrant Bank?
A: EmigrantDirect is the online banking division of Emigrant Bank. It is for consumer accounts only. The Bank was founded by Irish emigrants as a mutual savings bank in 1850. By the 1920’s it had grown to become the largest savings bank in the nation.
As of December 31, 2007, Emigrant Bank and its affiliated Regional Banks1 has approximately $14.3 billion in assets and more than $1 billion in net worth, operating through 35 branches in the New York metropolitan area.
As a traditional savings bank, Emigrant Bank, through its mortgage banking subsidiary, Emigrant Mortgage Company, is licensed to originate home loans in New York and 19 other states. Last year, Emigrant originated approximately 2,800 home loans totaling $720 million. As of year-end 2007, Emigrant Bank and its affiliated Regional Banks1 serve more than 700,000 account holders and have provided 19,000 home loans. Emigrant Bank and Emigrant Mortgage Company have a loan-servicing portfolio of more than $5 billion.
Emigrant Bank's wealth management division, New York Private Bank & Trust, has its own deposit products starting at $2,000,000. Emigrant Bank is regulated by both State and Federal regulators. All deposits are insured by the FDIC up to the legal limit.
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