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A Reminder - Don't Keep Your Egg$ in one Basket

Netbank fails, Arbitrageur SOL

     
1:51 am on Sep 30, 2007 (gmt 0)

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NetBank failed, and these guys are out 900k. Ouch. I don't know their model, but it smells of arbitrage. Ironically, they are doing mortgage stuff.

[money.cnn.com...]

This isn't the first nor last US bank to fail in this mortgage #*$!up, so beware. I heard bad rumors about another online bank just last week. Try to avoid keeping over 100k in one bank, and if you do, use a large bank that the US government would be unlikely let fail like bankamerica, citigoup, wachovia, etc.

2:15 am on Sept 30, 2007 (gmt 0)

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The Federal Deposit Insurance Corp. takes control of the bank. Separately, ING Bank announced it gained FDIC approval to assume $1.4 billion of the failed bank's deposits and 104,000 of its customers.

In addition EverBank Inc. acquired $700 million of NetBank's mortgage assets.

Bloomberg [bloomberg.com]

[edited by: encyclo at 2:25 am (utc) on Sep. 30, 2007]
[edit reason] fixed quote tag [/edit]

2:44 am on Sept 30, 2007 (gmt 0)

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Try to avoid keeping over 100k in one bank...

The $100k "insurance" is per depositer, not per account or bank.

3:10 am on Sept 30, 2007 (gmt 0)

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Just reminds me of the fairytale: "The Woman with the eggs", by Hans Christian Andersen - it's quite good and resembles the situation pretty well - with the eggs and just keeping them all in one basket and then dream away until it goes over the top and reality suddenly hits in, the poem can be found in various places if you search for it anyways - didn't think I could post it here since it was a translated version I found, and not the original .. "the woman with the eggs"

But don't people ever learn? Risk Profiles and such - just the basic stuff around investments (yes, it's an investment to put money in the bank too - it comes with a risk - most people just don't seem to get it) or just putting money you actually depend on anywhere actually? - apparently not, but i'm guessing that's a business too!

4:28 am on Sept 30, 2007 (gmt 0)

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For keeping >100k, instead of multiple bank accounts its better & easier to use government money market funds. They are safe, liquid & interest rate is comparable to most high yield savings accounts...One good one is Fidelity's SPAXX.
 

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