- Nov 10, 2002
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[FONT=Verdana, Arial, Helvetica, sans-serif]Are Your Bank Deposits Now at Risk?[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]By Dr. Steve Sjuggerud[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Investment bank Bear Stearns vaporized yesterday... On Friday, it was worth $20 billion. As of yesterday, it's basically worthless. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Bear Stearns has 14,000 employees, and many loyal, long-time workers saw their kids' college funds vaporize in a day.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The question is, are you and I at risk here? If Bear Stearns can vaporize in a day, then can your bank too? Can Bank of America, for example, end up the same way Bear Stearns did? Are our bank deposits now at risk? And is there anything we should do to protect ourselves? [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]I posed these questions to two top executives from different banks yesterday. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]These questions would have seemed crazy just a year ago. But financial institutions do fail, actually... The savings-and-loan crisis of the 1980s cost taxpayers $125 billion in government money. More than 1,000 institutions went under, and federal deposit guarantees kicked in to save investors' deposits.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Both bank executives I talked to yesterday were quick to emphasize that "regular banks" are quite different from "investment banks." In other words, Bank of America can't vaporize like Bear Stearns did. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Regular banks (like Bank of America) are heavily monitored by many levels of banking regulators. Investment banks (like Bear Stearns) are not regulated by bankers... They're not officially banks. Importantly, regular banks can easily tap additional resources by going directly to the Federal Reserve.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]So Bank of America won't disappear overnight. But still, you can give yourself some extra protection... [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]You probably know that your bank deposits are protected up to $100,000 by the government. But what exactly does this mean? For example, if you have a $100,000 checking account and a $100,000 CD at the same bank, does that mean you're protected up to $200,000? The answer is no, actually – it's $100,000 for you, PER BANK.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]By Dr. Steve Sjuggerud[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Investment bank Bear Stearns vaporized yesterday... On Friday, it was worth $20 billion. As of yesterday, it's basically worthless. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Bear Stearns has 14,000 employees, and many loyal, long-time workers saw their kids' college funds vaporize in a day.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]The question is, are you and I at risk here? If Bear Stearns can vaporize in a day, then can your bank too? Can Bank of America, for example, end up the same way Bear Stearns did? Are our bank deposits now at risk? And is there anything we should do to protect ourselves? [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]I posed these questions to two top executives from different banks yesterday. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]These questions would have seemed crazy just a year ago. But financial institutions do fail, actually... The savings-and-loan crisis of the 1980s cost taxpayers $125 billion in government money. More than 1,000 institutions went under, and federal deposit guarantees kicked in to save investors' deposits.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Both bank executives I talked to yesterday were quick to emphasize that "regular banks" are quite different from "investment banks." In other words, Bank of America can't vaporize like Bear Stearns did. [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Regular banks (like Bank of America) are heavily monitored by many levels of banking regulators. Investment banks (like Bear Stearns) are not regulated by bankers... They're not officially banks. Importantly, regular banks can easily tap additional resources by going directly to the Federal Reserve.[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]So Bank of America won't disappear overnight. But still, you can give yourself some extra protection... [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]You probably know that your bank deposits are protected up to $100,000 by the government. But what exactly does this mean? For example, if you have a $100,000 checking account and a $100,000 CD at the same bank, does that mean you're protected up to $200,000? The answer is no, actually – it's $100,000 for you, PER BANK.[/FONT]
