On Dec 12, 2:58*pm, Don <dwz...[at]telus.net> wrote:

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Sickening isn't it.

On 2008-12-12 06:23:36 -0800, kastnna <kastnna[at]auburnalum.org> said:

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No "financial advisor" in any bank I have dealt with has ever
recommended any fund other than that banks own funds.

On Dec 11, 3:27*pm, Don <dwz...[at]telus.net> wrote:
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Ha! Well put.

It's the bank trustees and "financial advisers" that really rub me
wrong. The problem is that they often have the minimum of
qualifications to serve the post. Both positions are often stepping
stones along the bank's path to "Senior VP of this-and-that". As such,
employees who don't want and don't know anything about that job
description do just enough to "get by" while they wait for the next
promotion. I've been astounded at the number of bank trustees I know
that have admitted they had NO experience with trusts AT ALL until the
bank made them take a 3-day training seminar.

The other problem is that the bank runs a very self serving commission/
payment schedule. The financial advisers not only make more money by
recommending their funds over, say, Vanguard, but they even receive
negative performance reviews if they don't sell enough of THEIR
products. Of course, that only keeps them trapped in the job they
don't want that much longer. The end result is often a lack of
investing options. For each demographic, they push one financial
product, instead of offering the pros and cons of a handful of
options.

I will say that some banks actually have full service brokerage
divisions that employ career advisers and work with large financial
institutions. They are usually less exposed to the above problems.

On 2008-12-11 11:31:05 -0800, kastnna <kastnna[at]auburnalum.org> said:

[I think it's well known that I normally hate banks/bankers, but I
- quote -

I agree with you. Nevertheless, I get along very well with bank
empoyees. My wife and I have accounts with 5 banks (all JTWROS), and at
one time we had accounts with 8. We both are very friendly and polite
with all the people in the banks. We look upon bank officials somewhat
the same way we would look upon greedy, self-centered, spoiled cousins:
We are friendly with them and invite them to family gatherings, but
would never, never lend them a lot of money or go into business deals
with them.

The last two accounts we opened were interesting. Immediately upon
opening the accounts, we were assigned a "financial advisor," who spent
quite a lot of time trying to get us to invest in various bank-operated
mutual funds (with large management fees). When we were finally able to
get in a word edgewise, we explained that we had no money to invest.
And the only reason we wanted an account at the bank was to have
somewhere to deposit rent checks from our income property, so that it
would not get mixed up with accounts at other banks. I think the lady
had trouble understanding what we were saying, as if we had come from
some distant planet and were speaking an alien language.

On Dec 11, 10:05*am, "Gil Faver" <rowdy'sb...[at]xxyz.com> wrote:
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[I think it's well known that I normally hate banks/bankers, but I
oddly find myself defending them. ???]

They don't "assume" anything. I say again, they don't know you exist.
They only know Etrade holds $XXXXX.XX in CDs with them. And because
Etrade is likely a large customer, the banks are typically very prompt
and accomodating. Having etrade not offer their CDs could be extremely
detrimental to the bank.

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Non-sequitur. This situation of rate dropping is not "ordinary" so
it's not logical to apply the typical process to a non-typical
situation. I don't know what level of liquidity Essex bank is
offereing to its customers in this non-typical situation.

ORDINARILY, the bank (as a courtesy) allows locals to access their
money immediately. There are no CDs to discuss. It's cash only,
temporarily "floated" by the new bank while they await the FDIC claim
to be paid. There are no new CDs (rate adjusted or otherwise), there's
only cash. The situation is typically the exact same for brokered CD
holders, EXCEPT they have to wait a couple weeks for their cash.
Again, no new CDs. For those few weeks, the brokered CD holders are
SOL.

This situation is unique in that Essex seems to be assuming control
over the CDs as opposed to filing an FDIC claim for them.

"kastnna" <kastnna[at]auburnalum.org> wrote in message
news:3d49df64-1665-4c08-8a0c-a9094b7b8c97[at]f33g2000vbf.googlegroups.com...
- quote -

and thus, they can assume I am not a local, repeat customer.


- quote -

so, would they drop the rate to near zero, and then not allow immediate
access? Or would they honor the rate, or institute a new, realistic rate,
as they deny immediate access to the funds?

On Dec 10, 6:52*pm, "Gil Faver" <rowdy'sb...[at]xxyz.com> wrote:
- quote -

Not true. They don't "treat" them at all. In your case, The Community
Bank of Loganville has no idea who Gil Faver is or that he even
exists. To them, your CDs are owned as part of a very large block in
Etrade's name. Etrade, in turn, keeps record of who has claim to the
CBofL CDs they own. If you were to call-up the bank, they wouldn't be
able, nor know how, to address any of your concerns.

The indymac CD client I mentioned earlier was a brokered CD holder
(obviously, since they were my client, and I'm not affiliated with or
employed by indymac). The broker I use had to file ONE FDIC claim on
behalf of all the Indymac CDs they held. They then dispersed the funds
using internal processes.

- quote -

You are both correct that this is usually the case (and understandably
so). Banks, AS A NON-OBLIGATORY COURTESY, often offer direct CD
holders immediate access to funds because local clients engage in
other forms of business with the bank (or at least they hope to entice
them to). A local client is more likely to change checking accounts or
move his IRA because he can't access his money. A brokered CD holder's
business is usually confined ONLY to CDs.

<BreadWithSpam[at]fractious.net> wrote in message
news:yob8wqnfven.fsf[at]panix3.panix.com...
- quote -

So why is there a "window of opportunity"? Why not let anyone who wasn't
paying attention to bail out of the CD with the new, crappy rate, whenever
they become aware of it?

- quote -

I bet they treat brokered CD holders as second class citizens, as they are
likely to not be local, repeat customers; and not full service customers,
with checking accounts, etc. who also went for a CD.

- quote -

I recall seeing this as well, but obviously not the case here.

"Gil Faver" <rowdy'sboss[at]xxyz.com> writes:

- quote -

Nevertheless, by offering folks full, penalty-free redemption,
effectively they are offering folks the new bank's standard
CD rate - if they want. Folks who aren't vigilant, of course,
are going to get a crappy rate, but they are still getting
all their money back and overall, it's not a terrible
situation for them.

I didn't notice in your original posting, but I remember
you saying you had a *brokered* CD held there. I wonder
if they treated direct CD clients the same way as they
are treating the brokered ones. I figure, again, that
brokered clients are assumed to be a little more sophisticated,
and more capable of easily taking the liquidation and putting
it into a new other CD.

If I remember correctly from a previous bit of research
about FDIC takeovers, direct CD clients usually get
immediate/continuing access to their assets while the
brokered clients often have their assets tied up for
a couple of weeks while the situation gets resolved.



--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

On Dec 9, 10:16*am, "Gil Faver" <rowdy'sb...[at]xxyz.com> wrote:

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I agree that it's not a very polite thing to do, but at some point
people gotta look after themselves to some extent.

More to the point, I'm not positive, but I think it is the action of
the acquiring bank, not the FDIC. I dealt with the Indymac buy-out and
this didn't occur. In that instance the FDIC simply issued a check the
same as your car insurer would. Those were also brokered CDs.

"kastnna" <kastnna[at]auburnalum.org> wrote in message
news:0215eebc-cd45-4e8e-83d6-a8eb5ee02a84[at]s9g2000prg.googlegroups.com...
- quote -

yeah, I got that. I just don't think dropping the rate to 0.25% when the
acquiring bank is issuing CDs at a higher rate is "right". I wonder if that
is an FDIC policy, or the acquiring banks. This is my first instance of an
FDIC takeover.

On Dec 9, 8:48*am, kastnna <kast...[at]auburnalum.org> wrote:

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That should be "they're NOT ready to be investing on their own".
Sorry.

On Dec 8, 5:43*pm, "Gil Faver" <rowdy'sb...[at]xxyz.com> wrote:
- quote -

I think paragraphs 2-4 in my above post explain the logic behind NOT
continuing the current rate.

I too am a bit surprised they didn't just liquidate. When Indymac went
under earlier this year I had 1 client (spouses) that held their CDs
in a brokered format. Their statement showed $0.00 for three weeks
until the FDIC claim went through, after which they had their prior
balance back in cash.

Perhaps it has something to do with the manner in which the FDIC
"bailed out" the bank. I found "wevidence" that the failure cost the
FDIC about $200-$240M, but from the quoted wording in your post, it
seems that Essex is responsible for the CDs, not the FDIC. Perhaps
that is significant.

IMO, if someone doesn't notice, maybe they need to get screwed.
Getting a crappy interest rate is a lot less painful a lesson than
investing, say, entirely in Fannie Mae bonds or having your entire
nest egg in company stock (i.e. Enron). If investors can't stay on top
of a simple matter like this, then perhaps they ready to be investing
on their own. Also remember that Essex Bank has a fiduciary obligation
to its shareholders to act in their best interest. I don't see how
babysitting/handholding oblivious and/or ignorant investors fits that
goal. Gil, just be thankful that you have the financial savvy to
efficiently handle matters like these.

"kastnna" <kastnna[at]auburnalum.org> wrote in message
news:ffbcf942-6c47-4220-923f-90590c00fbe9[at]k41g2000yqn.googlegroups.com...
- quote -

I would have expected the interest rate to either continue at the stated
rate, or more likely, be adjusted downward to the acquiring bank's realistic
rate. 0.25%? Someone is not going to notice and get screwed.

On Dec 8, 10:29*am, "Gil Faver" <rowdy'sb...[at]xxyz.com> wrote:
- quote -

What did you expect them to do (serious question, no hostile tone
implied)?

CDs are a good cource of immediate liquidity injection into a failing
bank. As such, it is not unheard of for a bank to offer an
unreasonably high interest rate shortly before it fails. It's a last
ditch attempt to provide some much needed liquidity.

Banks also profit from the spread between what they THINK they can
earn and what they pay (like interest arbitrage, but not completely).
Simplistically: they think they can make X% on funds. They offer Y% on
CDs. X-Y = profit. Banks can get into financial trouble when they
overestimate "X" and thus offer an unsustainable "Y" (iow, Y> X).

The FDIC's goal is to insure existing deposits, not the future
obligations of a failed bank. Furthermore, requiring the purchasing
bank (Essex, in this case) to take on the failing bank's obligations
would be a hinderance to the liquidity/buy-out process and not in the
best interest of the FDIC or the American taxpayer.

By the by, fixed annuity rates have recently crested over 6%. All 50
states (I believe) have annuity guaranty agencies that operate similar
to the FDIC. Depending on your liquidity and time horizon, that may be
a viable alternative. Or not.

here is an e-mail I got from my broker regarding one of my brokered CDs.
Unlike what I would have expected, the CD rate will be dropped to near zero
from this point forward (unless I redeem now within in the window of
opportunity, without penalty).

Mon Dec 8 09:15:45 2008
- Attention Brokerage Customer

Dear Valued Investor

<PRE class="f2"> THE COMMUNITY BANK, OF LOGANVILLE,GA (CUSIP
203534GK2,203534Gx4,203534GZ9,203534HA3,203534HB1, 203534HD7,203534HE5,203534HH8,203534HJ4)
WAS PLACED INTO THE RECEIVERSHIP OF THE FDIC. THE DEPOSIT LIABILITIES OF THE
COMMUNITY BANK WERE ASSUMED BY BANK OF ESSEX.
THE DEPOSIT ACCOUNTS OF THE COMMUNITY BANK ARE NOW DEPOSITS OF BANK OF
ESSEX.
AS A RESULT, CD'S WERE REPRICED AS OF THE ASSUMPTION DATE AT AN ANNUAL
PERCENTAGE YIELD OF 0.25%. THESE FUNDS MAY BE WITHDRAWN WITHOUT PENALTY AND
WITH ACCRUED INTEREST DUE TO THIS CHANGE. CD'S THAT ARE NOT REDEEMED WILL BE
SUBJECT TO A NAME CHANGE
INTO BANK OF ESSEX AND WILL REMAIN OUTSTANDING AT THE REPRICED RATE UNTIL
THEIR MATURITY DATE. THIS OFFER HAS NO WITHDRAWAL PRIVILEGE
THIS ELECTION TO OPT OUT FOR REDEMPTION WITHOUT PENALTY EXPIRES 12/22/08
INSTRUCTION DEADLINE : 12/18/08 12:00NOON NYTIME
PLEASE CONTACT AN ETRADE REPRESENTATIVE, IF YOU WISH TO PARTICIPATE.