The worst that can happen if you put in under $100k is the FDIC, or another bank who takes control of your account via the FDIC, sends you a check rather than Wamu. Make sense? Would you do it? 5% is a terrific rate on an FDIC insured CD.
FDIC in itself is not trustworthy at the moment in my books. And I would keep 20 mile distance from any WAMU wachovia branches.
why are you on a trading site talking about 5% per year as a good return??? After inflation and taxes, its a negative return. You can buy PFE or T and get around a 6% tax advantaged dividend.
If the bank goes under, you will not get any accrued interest on your cd. You'll get your principal back up to FDIC limit.
Correct Clubber, per FDIC website: What happens when a bank fails? The FDIC would either transfer the insured depositor's account to another FDIC insured bank, or give the insured depositor a check equal to their account balance. This includes the principal and interest accrued through the date of the bank's closing, up to the insurance limit.
Their 8 1/2 2010 paper is 41% YTM. Tod bad that is not FDIC insured, though maybe it is Hank Paulson insured?
i understand your point but, if you really believe the FDIC/US govt. will fail to back bank deposits, i am curious as to what currency or asset class your $ is in? if, however, you don't feel the whole system is going to fail, then WAMU or the like @ 5% (vs 2.5% in BoA) makes sense as long as you make sure your deposits are structured correctly to take advantage of the FDIC limits. i have business funds in their 4% money market and personal in this CD and their 3.75% mmkt. i did take money out of WAMU a few months ago to put myself within FDIC limits...