Concerns about FDIC funds and WaMu
There’s been some concern today about WaMu and the money the FDIC sets aside to insure accounts in case of bank failures. From the Financial Times:
“Attention has focused on the danger presented by the failure of Lehman Brothers. But the failure of a commercial bank such as Washington Mutual can have systemic consequences if it threatens a run on other weak banks. The failure of a bank its size would test the strength of the US deposit insurance system and its ability to maintain the confidence of the nation’s savers….
“The FDIC is respected for its operational effectiveness. But its $45 [billion] deposit insurance fund is underfunded according to its own guidelines, at 1.01 per cent of insured deposits….
“[A]nalysts fear it may have to draw on its $70 [billion] Treasury credit lines. Alan Avery, a partner at Arnold and Porter, said a single failure - if big enough - ‘would cause the FDIC to immediately draw on the Treasury credit’.
“Washington Mutual had $143 [billion] in insured deposits on June 30 - about three times the size of the deposit insurance fund, but less than half of its $307 [billion] assets.”
I can’t image that the U.S. government wouldn’t somehow cover all the insured losses were WaMu to fail. The government isn’t going to allow another Depression-era run on banks; they need consumers to be secure in the U.S. banking system. But I did want to bring this to our readers’ attention.
1-year 5% CD at WaMu
WaMu has a really terrific short-term CD available: a 12-month or 13-month CD that returns 5.00% APY. The CD has a minimum of only $1000. Some sources say that the CD may only be opened online, while some say the CD can also be opened in a branch, so you may want to call a local branch before going down to open a CD. Also, WaMu has been having some financial problems as of late, so make sure you are within the FDIC limits.
WaMu has many branches throughout the Chicago area. You can find one near you here.
4.25% short-term CDs at WaMu
Washington Mutual has some very nice short-term CDs available: Their 8-month, 12-month and 13-month CDs are all earning 4.25% APY. These CDs all have a minimum of $1000.
WaMu has many branches throughout the Chicago area. You can find one near you here.
(Thanks to trinidon2k for mentioning this in our Finding Deals post.)
