Top Economist: Americans Should Worry About Bank Deposits if Congress Doesn't Act Posted Sep 15, 2008 12:58pm EDT by Aaron Task in Investing, Recession, Updated from 12:58 p.m. EDT With the "financial storm of the century" hitting financial institutions, many Americans are worried about the safety of their bank deposits. While the FDIC insures individual accounts up to $100,000, the reaction to IndyMac's failure this summer -- lines outside retail branches -- shows Americans have limited faith in the Federal Deposit Insurance Corp., which guarantees individual accounts up to $100,000. Update: "The banking system is safe and sound," Treasury Secretary Hank Paulson declared at a mid-afternoon press conference Monday, seeking to ameliorate such concerns. "Nothing is more important than the stability and orderliness of our financial markets [and] regulators remain vigilant," Paulson continued. "We're working through a difficult period in our financial markets right now as we work of some of the past excesses, but the American people can remain confident in the soundness and resilience of our financial system." But Americans are justified to be worried, says Nouriel Roubini, of NYU's Stern School and RGE Monitor, who notes there is already a "slow-motion run on retail banks" occurring nationwide. That "run" could accelerate as people realize the FDIC fund has about $50 billion to "insure" about $1 trillion in assets at the nation's financial institutions, says Roubini. "They're going to run out of money" unless Congress acts soon to recapitalize the FDIC. In addition, the recent spike in number of banks on the FDIC's "troubled list" is only through June, meaning even that inflated number understates the problem. The intent here isn't to add to people's anxieties, but Roubini is one of the few market watchers to correctly predict the severity of this ongoing credit crisis. If nothing else, he says people with accounts exceeding $100,000 in value should spread their money - and the risk - among different firms.
DOES ANYONE ACTUALLY BELIEVE THIS: Update: "The banking system is safe and sound," Treasury Secretary Hank Paulson declared at a mid-afternoon press conference Monday, seeking to ameliorate such concerns. "Nothing is more important than the stability and orderliness of our financial markets [and] regulators remain vigilant," Paulson continued. "We're working through a difficult period in our financial markets right now as we work of some of the past excesses, but the American people can remain confident in the soundness and resilience of our financial system."
What about brokerage accounts? For instance, I have money at Interactive Brokers in excess of 200k, should I be worried at all?
What I believe is that if your bank goes under, your money will be safe up to $100K. I think that is what Paulson was saying...I heard him speak. If there turns out to be less money in FDIC than needed, the government will fund it with more. Real simple. OldTrader
this is a big deal. paulson's bazooka did not prevent fnm and fre debt from going down. this market is scared and they want to see the capital. without the capital in the fdic you just give an excuse to a scared person to pull out
Once you take your money out of the bank, where do you put it? Keep it in cash under the mattress? Fine except..... ....if enough banks go under the gov't (via FDIC) is on the hook to make good on it. If they don't have the money, they'll just print more. Triggering inflation, and driving down the value of the cash in your mattress. So what have you gained? You can always buy gold of course and store it in your basement next to that exercise bike you use to dry clothing.
is this a sign of panic and...CAPITUL:ATION? but i dont even care. i dont even trade what i thin. i just trade. HAHAHAH
LOL right, good luck with that logic. After all, there are plenty precedents to this which prove above and beyond all doubt that the government is trustworthy.