Move your money to small banks.

**alevin** · 12-10-2009, 05:53 AM

Everyone out there with a savings or checking account in a commercial bank needs to be paying attention to this, especially if you have a small business, but maybe for the personal accounts as well.

http://urbansurvival.com/week.htm

what will happen to the banking system in the USA after the first of January 1st. Transaction Guarantee Program (TGP) under the Temporary Liquidity Guarantee Program (TLGP):

Many banks, like this one at the other end of this here link, are participating in the TGP under the TGLP until June 30, 2010.

The opt-out option is explained on the FDIC web site here,
after December 31, 2009, funds held in noninterest-bearing transaction accounts will no longer be guaranteed in full under the Transaction Account Guarantee Program, but will be insured up to $250,000 under the FDIC’s general deposit insurance rules. FDIC definitions:

"A "noninterest-bearing transaction account" is defined as a transaction account with respect to which interest is neither accrued nor paid and on which the insured depository institution does not reserve the right to require advance notice of an intended withdrawal.

This definition encompasses traditional demand deposit checking accounts that allow for an unlimited number of deposits and withdrawals at any time. This definition does not encompass interest-bearing money market deposit accounts (MMDAs).

the FDIC is including in the definition of a noninterest-bearing transaction account:

•Accounts commonly known as Interest on Lawyers Trust Accounts (IOLTAs) and functionally equivalent accounts; and

•Negotiable Order of Withdrawal accounts (NOW accounts) with interest rates no higher than 0.50 percent for which the insured depository institution at which the account is held has committed to maintain the interest rate at or below 0.50 percent."

Some banks have figured out that "free checking accounts" are presently covered by by the TLGP and if it's linked to a low/no-interest savings account, that low/no interest savings account would not be covered under TLGP if the bank opts out early.

Some banks are opting out early (by end of December 2009). Some are planning to stay covered by the TLGP until 30 June '10. From the FDIC website (linked here) we read:

List of Institutions Opting Out of the Original Transaction Account Guarantee Program - Excel (Excel help)

Any institution currently participating in the TAG Program that opted out will continue in the TAG program through December 31, 2009.

List of Institutions Opting Out of the TAG Program Extension - Excel (Excel help)

List of Eligible Entities that Opted Out of the Debt Guarantee Program - Excel (Excel help)

if you have a 'free checking' account that's considered covered presently by the TLGP and your bank is opting out early:

Do you move all your funds into an interest-bearing account (in which case, you would conceivably have to pay a monthly fee for checking services if you don't meet the continuing capital requirements of most interest-bearing checking accounts), or...
Do you assume the (small, but nonzero) risk that goes with having FDIC insurance to $250,00 on the account as good enough if you're aware that "FDIC insurance fund closes quarter with $8.2 billion in debt"?

While its a political certainty that FDIC will never be allowed to go broke, there's the little matter of timely settlement that concerns me. Since we presently use one of those non-interest bearing accounts that may not be covered after January 1, here's my personal strategy to deal with the matter....(list of action items provided in the original article at the link).

**CountryBoy** · 12-10-2009, 11:25 AM

alevin or anyone,

What does this mean to the economic illiterate? We have no bills, some cash at home, most of our savings is TSP, on-line ROTH's and small emergency savings at one of the TAG opt out banks.

It sounds like the FDIC is lowering the amt the will insure, but since they are broke, you might have to wait awhile to get your money back if your bank is not participating in these 2 programs. Is that the gist or am I missing something else.

I'm a survivalist and always try to prepare for the worst, Boy Scout, so what's the worst, the way you or anyone else will conjecture?

**alevin** · 12-10-2009, 02:23 PM

CB, I'm like you mostly. No debt, small Roth at a brokerage, I of course have bills every month-mostly utilities. My property taxes are paid up (I have to pay separately now the mortgage is paid off). I do have a non-interest savings account linked to my major checking account however-but those are not in any of the banks listed here.

I do have a small "non-interest" checking account (my FSAFEDS refunds get put into that account) and a moneymarket savings account (mma) still with BofA, which IS opting out end of this month. Having the MMA is what gets me my free checking account, that and the direct deposit FSA $, since my paycheck now goes to the other bank. The article above has a list of suggested action items at the bottom of the article if your bank is on one of the lists and you think you have accounts that may be vulnerable.

Basically FDIC is broke. If your accounts are going to only be covered by FDIC up to $250K, and not by one of the other programs at some point, the recommendation is to make sure you get the most critical payments from that account cleared before the coverage from the other programs ends. If your bank is at risk safety ratingwise, even if you are keeping less than $250K in the checking account, and FDIC has to take over the bank, it could mean a delay in a very important check clearing. Savings accounts may have no coverage at all if they don't earn a high enough interest rate.

Bankrate.com gives safety ratings for all banks and credit unions in the country, and explains their basis for the rating. My main accounts are at a 5star credit union (savings), and checking at a 4star regional bank that doesnt show up on any of these lists.

The savings account at the regional bank is linked to main checking and I am planning on closing that savings account, just to be on the safe side. soon. And I'm going to move my FSAFEDS link away from BofA to either the credit union or the regional bank checking account. The way I read these issues earlier, it was mainly small business checking accounts that could be at risk from loss of coverage from the other programs, but reading this article last night, I'm thinking why take the BofA risk? Inertia? not a good enough answer for me.

**CountryBoy** · 12-10-2009, 03:47 PM

Originally Posted by alevin

CB, I'm like you mostly. No debt, small Roth at a brokerage, I of course have bills every month-mostly utilities. My property taxes are paid up (I have to pay separately now the mortgage is paid off). I do have a non-interest savings account linked to my major checking account however-but those are not in any of the banks listed here.

I do have a small "non-interest" checking account (my FSAFEDS refunds get put into that account) and a moneymarket savings account (mma) still with BofA, which IS opting out end of this month. Having the MMA is what gets me my free checking account, that and the direct deposit FSA $, since my paycheck now goes to the other bank. The article above has a list of suggested action items at the bottom of the article if your bank is on one of the lists and you think you have accounts that may be vulnerable.

Basically FDIC is broke. If your accounts are going to only be covered by FDIC up to $250K, and not by one of the other programs at some point, the recommendation is to make sure you get the most critical payments from that account cleared before the coverage from the other programs ends. If your bank is at risk safety ratingwise, even if you are keeping less than $250K in the checking account, and FDIC has to take over the bank, it could mean a delay in a very important check clearing. Savings accounts may have no coverage at all if they don't earn a high enough interest rate.

Bankrate.com gives safety ratings for all banks and credit unions in the country, and explains their basis for the rating. My main accounts are at a 5star credit union (savings), and checking at a 4star regional bank that doesnt show up on any of these lists.

The savings account at the regional bank is linked to main checking and I am planning on closing that savings account, just to be on the safe side. soon. And I'm going to move my FSAFEDS link away from BofA to either the credit union or the regional bank checking account. The way I read these issues earlier, it was mainly small business checking accounts that could be at risk from loss of coverage from the other programs, but reading this article last night, I'm thinking why take the BofA risk? Inertia? not a good enough answer for me.

Yeah alevin,

I read the article and it's suggestions and am already implementing those that are applicable. Also sent it to my daughter. Tht's what got me to thinking am I reading this right or not.

We're both in the same boat, with our existing bills and where our money is. I think I will look into moving my checking and savings to my Credit Union, since my bank is one of those that opted out the TAG Program. We're pulling alot of money from the checking and savings right now. Keeping just enough to cover our automatic withdrawal type bills.

Thanks for the idea of moving my FSAFEDS to my Credit Union 5*, I never thought about that re-imbursement income coming into my checking account. My bank us bancorp, didn't even show up at bankrate, regardless of the iterations I tried. That doesn't sound good.

Thanks for you comments, that's the feeling I got also, but it helps to have another opinion and I always listen to what you have to say, though we don't agree all the time.

Thanks for your response and suggestions

CB

**alevin** · 12-10-2009, 05:24 PM

CB, I wonder where you were looking, US Bank OHio is there. I'm USB also for main accounts, not OH tho.
http://www.bankrate.com/rates/safe-s...&c=&s=&z=97801

Decisions, decisions. All you can do is get as much info as possible and make best choices you can with what you know at the time.

**CountryBoy** · 12-10-2009, 06:14 PM

Originally Posted by alevin

CB, I wonder where you were looking, US Bank OHio is there. I'm USB also for main accounts, not OH tho.
http://www.bankrate.com/rates/safe-s...&c=&s=&z=97801

Decisions, decisions. All you can do is get as much info as possible and make best choices you can with what you know at the time.

Thanks alevin,

I called my local US Bank branch, because I knew the HQ was in Cincy, but they told me the real HQ was in Minneapolis and went under the name of US Bancorp. That didn't sound quite right, but they fooled this Country bumpkin,

. I'll have to tell Grandma, and tell her I've run outta feet to shoot.

Thanks for setting me straight,

Just another reason to make a move to my Credit Union, since I already have a Savings acct there. I use that acct for drawing money for our online ROTH's.

Well your information has been a big help, I've been a little leery about the banks since all of this started.

CB

**grandma** · 12-10-2009, 06:48 PM

Both the credit unions I use had a couple of `issues,' - whether that meant closer to danger zone or not, I don't know. The money goes `auto-out' timed to the `auto-in' so there isn't much to worry about - Yet. My car will be paid off this next week, THEN I'll have some money ! ! - to put into the house mtg .... Whoooah !!!

**nnuut** · 01-23-2010, 12:33 PM

This could be another reason to move your money:
JANUARY 23, 2010

Executives Fret Over Bank Regulation

CEOs Say U.S. Financial System Reform Is Inevitable but Many Are Wary of Government Meddling

http://online.wsj.com/article/SB1000...article_MoreIn

JANUARY 23, 2010U.S. Plan Fuels Global Fire for Financial Regulation

By STEPHEN FIDLER, ALESSANDRA GALLONI And DAVE KANSAS

International efforts to regulate financial institutions gained renewed momentum Friday in the wake of the Obama administration's proposals to curb the size and spread of the biggest U.S. banks, leading regulators said Friday.
The U.S. moves, announced Thursday, are likely to make financial regulation one of the top items on the agenda at next week's gathering of world political and business leaders in Davos, Switzerland. The news hit bank stocks around the world Friday as investors concluded banks would face tougher government actions.
Until now, many investors had expected Washington to resist tough action on banks. Instead, the administration of President Barack Obama, responding to popular pressure, appeared to move into a leadership role with its proposals, jumpstarting a debate on global financial regulation that had begun to falter. [more]
http://online.wsj.com/article/SB1000..._MIDDLETopNews