Are Any Non Mega Banks Safe Enough To Ignore 100K FDIC Limit?

[David Sklansky]

I want to throw a chunk of cash into CDs in one or two convienient walk in banks. Maybe a million or so. But I don't want to get totally ripped off just for the sake of safety, by accepting B of A type rates which are more than one percent below the best. On the othe hand, I don't want to take any more than about a one in a two thousand chance of losing my non insured money.

Does anyone think they know which, if any, banks in my neck of the woods ar within about a third of a percent of the top paying ones and are safe enough to ignore the FDIC? If so please tell me who they might be.

[Zygote]

[ QUOTE ]
I want to throw a chunk of cash into CDs in one or two convienient walk in banks. Maybe a million or so. But I don't want to get totally ripped off just for the sake of safety, by accepting B of A type rates which are more than one percent below the best. On the othe hand, I don't want to take any more than about a one in a two thousand chance of losing my non insured money.

Does anyone think they know which, if any, banks in my neck of the woods ar within about a third of a percent of the top paying ones and are safe enough to ignore the FDIC? If so please tell me who they might be.

[/ QUOTE ]

put your money outside the USA

[DcifrThs]

[ QUOTE ]
[ QUOTE ]
I want to throw a chunk of cash into CDs in one or two convienient walk in banks. Maybe a million or so. But I don't want to get totally ripped off just for the sake of safety, by accepting B of A type rates which are more than one percent below the best. On the othe hand, I don't want to take any more than about a one in a two thousand chance of losing my non insured money.

Does anyone think they know which, if any, banks in my neck of the woods ar within about a third of a percent of the top paying ones and are safe enough to ignore the FDIC? If so please tell me who they might be.

[/ QUOTE ]

put your money outside the USA

[/ QUOTE ]

i agree.

fly to Australia and open an account there. OR, open a eurodollar account in australian dollars.

then hope the currency doesn't actually depreciate like it should in terms of interest rate diffs.

Barron

[Zygote]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I want to throw a chunk of cash into CDs in one or two convienient walk in banks. Maybe a million or so. But I don't want to get totally ripped off just for the sake of safety, by accepting B of A type rates which are more than one percent below the best. On the othe hand, I don't want to take any more than about a one in a two thousand chance of losing my non insured money.

Does anyone think they know which, if any, banks in my neck of the woods ar within about a third of a percent of the top paying ones and are safe enough to ignore the FDIC? If so please tell me who they might be.

[/ QUOTE ]

put your money outside the USA

[/ QUOTE ]

i agree.

fly to Australia and open an account there. OR, open a eurodollar account in australian dollars.

then hope the currency doesn't actually depreciate like it should in terms of interest rate diffs.

Barron

[/ QUOTE ]

the real best thing to do with US dollars now though is to buy silver.

i own australian dollars too though, not a bad a move in general.

[DcifrThs]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I want to throw a chunk of cash into CDs in one or two convienient walk in banks. Maybe a million or so. But I don't want to get totally ripped off just for the sake of safety, by accepting B of A type rates which are more than one percent below the best. On the othe hand, I don't want to take any more than about a one in a two thousand chance of losing my non insured money.

Does anyone think they know which, if any, banks in my neck of the woods ar within about a third of a percent of the top paying ones and are safe enough to ignore the FDIC? If so please tell me who they might be.

[/ QUOTE ]

put your money outside the USA

[/ QUOTE ]

i agree.

fly to Australia and open an account there. OR, open a eurodollar account in australian dollars.

then hope the currency doesn't actually depreciate like it should in terms of interest rate diffs.

Barron

[/ QUOTE ]

the real best thing to do with US dollars now though is to buy silver.

i own australian dollars too though, not a bad a move in general.

[/ QUOTE ]

definitely agree that AUD is a good place to be.

why do you think silver would yield more in terms of opporutnity cost than AUD?

i don't see silver appreciating like other things right now given the direction of the US / global economy.

what are your thoughts?

thanks,
Barron

[Zygote]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I want to throw a chunk of cash into CDs in one or two convienient walk in banks. Maybe a million or so. But I don't want to get totally ripped off just for the sake of safety, by accepting B of A type rates which are more than one percent below the best. On the othe hand, I don't want to take any more than about a one in a two thousand chance of losing my non insured money.

Does anyone think they know which, if any, banks in my neck of the woods ar within about a third of a percent of the top paying ones and are safe enough to ignore the FDIC? If so please tell me who they might be.

[/ QUOTE ]

put your money outside the USA

[/ QUOTE ]

i agree.

fly to Australia and open an account there. OR, open a eurodollar account in australian dollars.

then hope the currency doesn't actually depreciate like it should in terms of interest rate diffs.

Barron

[/ QUOTE ]

the real best thing to do with US dollars now though is to buy silver.

i own australian dollars too though, not a bad a move in general.

[/ QUOTE ]

definitely agree that AUD is a good place to be.

why do you think silver would yield more in terms of opporutnity cost than AUD?

i don't see silver appreciating like other things right now given the direction of the US / global economy.

what are your thoughts?

thanks,
Barron

[/ QUOTE ]

I can go into more reasons myself if you have more questions but here's a short case written by someone else (since its late and im lazy right this second). In fact i'll just write my opinions on this tomorrow but here a few facts to start with. I know you dont like article postings and prefer a summarization but these words are pretty concise and quite to the point.

Commentaries from James Turk:

Silver Is Money.




This chart presents a base-100 analysis of crude oil prices in terms of dollars and goldgrams (grams of gold, and the unit of account of my company, GoldMoney) – and it now includes silver too, about which more in a moment. In other words, to establish the comparison in this chart, this analysis assumes that one barrel of crude oil equals 100 units of each currency as of December 1945. The month-end price is thereafter calculated based on the actual dollar price of crude oil and the prevailing dollar-to-goldgram rate of exchange. We can see from this chart (the red line is the price of crude oil in goldgrams) that a goldgram today purchases basically the same amount of crude oil as it has at any other time shown on this data line.

Thus, the price of crude oil today is not out of line with past experience, provided it is measured in terms of goldgrams. When viewed by its goldgram price, crude oil today costs not much more than it did throughout the sixty-two years presented in this chart, and has occasionally cost a lot less.

These two prices of crude oil are surprisingly different. Why has the price of the same commodity taken two separate paths so unexpectedly divergent? Clearly, the answer lies in the money used to calculate crude oil’s price.

We can see that crude oil’s price fluctuates in both data lines, rising and falling in dollars and goldgrams. After all, nothing in our world is static, and we clearly see in these prices an example of that reality. Supply and demand changes cause the price of crude oil to fluctuate in both dollars and goldgrams.

This interaction between supply and demand is basic economics, but this fundamental principle becomes distorted and therefore difficult to assess over long periods of time when the dollar – or for that matter, any other national currency – is used to measure prices. National currencies do not provide an accurate, consistent measure of buying power. In other words, because the dollar is being inflated, the trend of crude oil prices in dollars in this chart (the blue line) is rising. But goldgrams are not being inflated, so the price of crude oil in terms of goldgrams continues to trend sideways.


More on Silver.

The movements up and down in the gold/silver ratio very clearly show the ebb and flow of demand between gold and silver. This ratio also shows us something else.

There exists a phenomenon that I call the ‘silver paradox’. Namely, if we analyze the minerals in the earth’s crust, there is about ten times more silver than gold. Therefore, given this amount of the relative supply of these two metals, why isn’t the gold/silver ratio 10:1 instead of the present level of 55:1?

The simple answer is that supply is only one-half of the supply/demand equation that determines price. The demand for gold and the demand for silver also need to be factored in, which leads to the second part of the silver paradox. Given that there is relatively little demand for gold as an industrial metal or for its use in items such as jewelry, gold’s demand clearly arises almost entirely from its monetary use, but silver is different.

Silver has a very strong industrial demand. What’s more, in contrast to gold which is hoarded and not consumed – i.e., gold does not disappear – silver is consumed in photographic and other applications, never again to re-appear. To explain this observation another way, essentially all of the gold mined throughout history exists in its aboveground stock. While the size of the aboveground stock of silver is controversial and probably unknowable, it seems likely that less than one-half of all the silver mined throughout history still exists in its aboveground stock, which brings us back to the silver paradox. Given the relative amounts of gold and silver that appear in the earth’s crust and given silver’s relatively small aboveground stock compared to gold, should not their ratio be 10:1 or perhaps even less?

The answer again comes back to demand. The demand for silver is elastic, while that for gold is relatively inelastic. Therefore, at the bottom of the precious metal bear market in the early 1990’s, it took over 100 ounces of silver to buy an ounce of gold. It still takes 55 ounces of silver to buy one ounce of gold, but the trend is clear. Silver is gaining on gold, and will continue to do so as this precious metal bull market continues to develop because on the margin any new money coming into the metals has a bigger impact on silver.

Thus, while I am very bullish on the long-term prospects for gold, I am even more bullish on silver. Historically, the ratio of these two precious metals is about 16-to-1. Therefore, as both gold and silver climb higher in this current bull market, I expect silver to climb even faster than gold, outperforming so that eventually the gold/silver ratio approaches 16-to-1.

[brendanb438]

I agree not to get a CD. Invest in other currency. Euros, Canadian $ or even British Pounds. Or somehow open a foreign account in the currency of your choice and get the going rate for a CD in that country. What are the odds that you put a Mill into a US CD and a year or 18 months or whatever from now the US $ depreciates > than the % you earned against 1 of those foreign currencies?

[SteveOMS]

As a general and probably easier note you can just get additional insurance for amounts over the FDIC standard limits. Most banks will offer the additional insurance and it's fairly cheap to buy, should be much less then the one % difference in rates

Steve

[Jimbo]

Revocable Trust Accounts, estate planning trusts and or (living trust, family trusts) are insured for up to $100,000 for each person on the account. Or just ask the bank to use a CDARS (which will cost you a very small percentage of your total yield).

Or since you are the genius perform the math yourself, from 2001 through 2004 22 banks were taken over by FDIC and four of these banks failed to return 100 cents on the dollar on uninsured accounts when the final dividend was paid.


SOURCE: FDIC

<font class="small">Code:</font><hr /><pre> Failed Bank--- Date Closed----- Total Uninsured Deposits Repaid

Bank of Sierra Blanca
18 January 2002
65.35%

Sinclair National Bank
7 September 2001
82.17%

The Malta National Bank
3 May 2001
91.21%

First Alliance Bank &amp; Trust
2 February 2001
94.99%

</pre><hr />

The remaining eighteen banks that went under had returned, by the spring of 2005, anywhere between 30% and 98% of uninsured deposits, but they are still in receivership and could return more.

One percent of all the banks in the US fail each year.

This should give you all the data you need to compute your 1 in 2000 thousand chance.

www.idcfp.com is a good website to get an accurate rating of a banks solvency.

[ImBetterAtGolf]

We don't know the probability that a good bank will fail. There aren't enough events in recent years to estimate it very well. However, your requirements are fairly stringent and it may be that no institution today satisfies them.

In any event, retail bank CDs are unlikely your best alternative. If you think you are giving up too much owning Treasuries, you can find money market funds that both can get you where you want to be and are more liquid than CDs.

There are a lot of issues in the short term funding markets today, so since you appear to be quite risk averse, find a super vanilla 2a-7 fund.

I don't understand all the Australia stuff. Aside from being nonresponsive to the poster's question, Australia has been hit hard with -- US subprime mortgages!