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[Please note: This page is part of the Chicago CD Rates archive. Most of these deals on this page are not current and no longer available. Please check the date of the post before getting too excited and driving to a bank an hour away. If you have any doubts whether the deal is available, contact the bank or credit union. For a list of more current rates, visit our homepage.]
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.
Great post on I Bonds
Bank Deals Blog, probably the best site on the Internet for national CD rates, had a great post yesterday about I Bond rates. In short, the site theorizes that if you buy I Bonds before the end of this month and hold on to them for 12 months, you’ll have a government-secured 4.43% rate of return. There’s more than a few restrictions and hassles to this — such as a limit of $10,000 per person — but if you have any interest at all in I Bonds, you owe it to yourself to read the article.
What the rate cut means for CD rates
With the nearly unprecedented .75% Fed funds rate cut today, many CD rates are going to drop dramatically very, very shortly — for short-term rates, up to .50% off what the rates are at today. Banks will be the quickest to change, as many banks update their CD rates once a week (often Wednesdays), and larger banks may have already lowered their rates. Some banks, however, have already factored in a large near-future rate cut, so they may drop their CD rates only mildly. Credit unions, other than the largest ones, generally only update their CD rates once a month or even once a quarter, so it’s more likely that they will be slower to drop than rates than banks will. Given the drastic decision by the Fed today, however, it’s possible even credit unions will be working quickly to decide on new, lower rates.
I’m certainly not going to tell you if you should be putting your money in CDs vs. stocks, bonds, T-Bills, money markets, etc. — much of that depends on your specific situation and knowledge of the economy’s direction that I don’t have. But I can tell you this: If you’re looking to purchase CDs in the next month or so, the rates are only going down from today.
Des Plaines Valley CU merged with Argonne CU
From Argonne Credit Union’s website: “We would like to welcome the 1,400 members of Des Plaines Valley CU to Argonne Credit Union. The merger was completed December 1. ACU members now have access to a Lockport branch and DVCU members have access to ACU branches & products and services. We look forward to serving our new members and helping all ACU members succeed financially in 2008 and beyond.”
According to Des Plaines Valley Credit Union’s old website, the two had been “legally partnered” since October 1st. The membership of DSVCU (“[A]nyone who lives or works in Lockport Township, Lemont Township, or Homer Township and those areas of Crest Hill and Romeoville which are in Lockport Township”) is already covered by Argonne’s broader eligibility requirements (DuPage County, Will County, and a large number of communities in Cook County), so hopefully this merger will work well for all involved.
Bank of America Free to Buy LaSalle Bank
This would obviously would change the Chicago banking scene drastically. From Reuters:
“A court ruling on Friday should clear the way for Bank of America Corp. to buy LaSalle Bank for $21 billion, and give it a powerful presence in the affluent Chicago area even as it boosts its exposure to Michigan and its troubled economy.
“The ruling by the Dutch Supreme Court said ABN AMRO Holding NV does not need shareholder approval to sell LaSalle to Bank of America, the second largest U.S. bank….
“LaSalle has about 411 branches, 1,500 automated teller machines and 1.4 million customers. Its addition would give Charlotte, North Carolina-based Bank of America more than 6,100 branches and push it to the 10 percent federal cap on deposits nationwide. The bank would surpass JPMorgan Chase & Co. as Chicago’s largest, with about 16 percent of area deposits.
“‘Illinois is a very important market,’ said Marshall Front, chairman of Front Barnett Associates LLC in Chicago, which owns Bank of America shares. ‘Wells Fargo….and other big banks have been trying to break in, and not very successfully. LaSalle gives Bank of America the branches and a strong position in middle-market lending.’”
