Question for the finanical savvy (Droski and others, I do respect your opinion)

#1
TheDeeble

TheDeeble

Guy on the Couch
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May 6, 2007
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#1
First I'd like to just say I enjoy reading here and enjoy what almost everyone has to say during this economic instability. I'm mostly unknowledgable about stocks/investments/money managment. All this turmoil has me uneasy as I'm not sure what to expect. Don't post often, but I check up often.

As for my question:

If my bank's stock price is crapping out do I have reason to worry about my money there?

Suntrust is where my savings/checking accounts are. I talked to one of their financial advisors back in July/Aug trying to get an understanding of what was going on and how it was affecting me. He said Suntrust was solid because they didn't really get involved in subprime loans. Said their stock was still strong and had maintained that strength.

That was last fall. I've kept up with their stock price, which at that time was around $35-40 a share. Was as high as $59 a share in Oct of 08 now it's down to $9 with a large drop just today. I plan to speak with someone there soon, but would like to get some "unbiased" opinions as I'd think they'd say whatever they think will convince me to continue banking with them.
 
#2
#2
Unless you have a VERY significant amount of money in actual savings and checking accounts with one bank, then as far as I know you have nothing to worry about. The FDIC insures your funds as long as it is an FDIC-backed bank. There is a limit, normally it is 100,000 or so...but that may have been upped to 250,000 or so for the remainder of this year due to many people pulling there money out of other investments and to prevent a run on that money from the banks.

For those of you that know more than I, have I missed the boat?
 
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TennTradition said:
Unless you have a VERY significant amount of money in actual savings and checking accounts with one bank, then as far as I know you have nothing to worry about. The FDIC insures your funds as long as it is an FDIC-backed bank. There is a limit, normally it is 100,000 or so...but that may have been upped to 250,000 or so for the remainder of this year due to many people pulling there money out of other investments and to prevent a run on that money from the banks.

For those of you that know more than I, have I missed the boat?
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It's significant to me, but it's not breaking the 100k barrier. I'm old school when it comes to money. I don't spend frivolously and avoid unnecessary debt at all cost. Usually end up saving around 20-25% of my yearly gross. Not that I target that, that's just what it comes to with my living standard.

Suntrust is FDIC backed. It was 100k, but I think you are right about them uping it to 250k. I remember with some of the large banks failing last fall, some people (economists) were wondering about the FDIC's capability to back their commitments. Something like they had $100 billion to back 1.something trillion dollars in the banks. Not even 10%. And with the losses incurred it caused some to question FDIC stability.(I think)
 
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#4
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TheDeeble said:
It's significant to me, but it's not breaking the 100k barrier. I'm old school when it comes to money. I don't spend frivolously and avoid unnecessary debt at all cost. Usually end up saving around 20-25% of my yearly gross. Not that I target that, that's just what it comes to with my living standard.

Suntrust is FDIC backed. It was 100k, but I think you are right about them uping it to 250k. I remember with some of the large banks failing last fall, some people (economists) were wondering about the FDIC's capability to back their commitments. Something like they had $100 billion to back 1.something trillion dollars in the banks. Not even 10%. And with the losses incurred it caused some to question FDIC stability.(I think)
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In my opinion, if there were any real threat to the FDIC, then the government would quickly throw in the additional billions to back it. The bottom-line is that we cannot lose faith in these funds...it would completely undermine any stimulus or TARP part two. I say this like I know something about finance, which I don't, so perhaps I should be quiet now and wait until papa, droski, skins, memphis, etc. come in to clean up :).
 
#5
#5
Your money is fine at SunTrust, or any other regional bank, for that matter. To the extent you exceeded the FDIC limits, you'd have exposure and need to move some. Be wary of that in retirement funds in CDs and such.
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#6
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My ex is a Senior Vice President for Sun Trust. While times are hard for them like everyone these days, the bank is just fine and in no danger of going belly up. (Despite her presence there:))
 
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if your under $250k total you are free and clear. if you are over it you mgiht want to either consider opening another account somewhere else or investing in their money market fund.
 
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I would have believed that 6 mos. ago, but how do we know what would happen if a bank went belly up? What would happen exactly? How would you get your money from FDIC?
 
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Daddy Gee said:
I would have believed that 6 mos. ago, but how do we know what would happen if a bank went belly up? What would happen exactly? How would you get your money from FDIC?
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That is a valid point...it won't be immediate. If you don't have another source of money and are very concerned about this, you could open a smaller (emergency) account at another bank that you deem to be at least stronger than most. I don't see a bank like that going belly-up, but if it saves you a lot of worrying and you would need access to at least part of the money quickly (who wouldn't), then opening a second account could be a solution.
 
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Daddy Gee said:
I would have believed that 6 mos. ago, but how do we know what would happen if a bank went belly up? What would happen exactly? How would you get your money from FDIC?
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I'll tell you. The FDIC immediately funds all of the underfunded deposits, at takeover, and the new bank buying those deposits administers those accounts just as the prior bank had. There is no risk in that process up to the $250k per borrower limit.

In the end, you would simply have a new bank name to deal with come Monday morning.
 
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BigPapaVol said:
I'll tell you. The FDIC immediately funds all of the underfunded deposits, at takeover, and the new bank buying those deposits administers those accounts just as the prior bank had. There is no risk in that process up to the $250k per borrower limit.

In the end, you would simply have a new bank name to deal with come Monday morning.
Click to expand...

I'm assuming that takes a few days....or is it really that immediate?
 
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TennTradition said:
I'm assuming that takes a few days....or is it really that immediate?
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It's immediate. They wire the difference upon shutdown. They have to. Can't have your funds unavailable to you.

Just went through one here with some of our larger accounts. One of our banks failed and the FDIC immediately made all accounts whole and turned them over to the bank that had already bid on the accounts.
 
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BigPapaVol said:
It's immediate. They wire the difference upon shutdown. They have to. Can't have your funds unavailable to you.

Just went through one here with some of our larger accounts. One of our banks failed and the FDIC immediately made all accounts whole and turned them over to the bank that had already bid on the accounts.
Click to expand...

That's pretty sweet...I had no idea it was that immediate.
 
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TennTradition said:
That's pretty sweet...I had no idea it was that immediate.
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and that's why the FDIC is so persnickety about nonperforming assets and liquidity ratios at a bank. When they have to step into the breach, they have to make up the difference, then hope to liquidate the assets to recoup their outlay, which doesn't happen.
 
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an fyi for those with brokerage accounts is that in the event of a bankruptcy the firm cannot use your assets. if you own stock and bonds those are yours 100% and you have zero risk that you will lose those assets because of the bankruptcy unless you have a debit and are borrowing on margin. the money market fund is the same. if your cash is in a bank deposit program just make sure it's under $250k.
 
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