Ask the Readers: Choosing a Bank During the Credit Crisis?

We also have a WAMU account. We will be not be leaving now CHASE but soley because my paypal acct is tied to the WAMU acct and it’s just a serious PITA to change your acct on paypal. We haven’t used that acct for much anyways lately.

I don’t have any issue with Chase taking over. The fed’s took over the WAMU first (although Chase had offered to buy WAMU, the brand new CEO resisted) what is annoying is the reason WAMU failed was because there was a “run on the bank”. If people hadn’t needlessly pulled there money out it would of made it through. I wish people would understand that there money is safe in the bank. Now the people owning stock in WAMU have nothing and many of the employee’s are going to lose there job. Sometimes we are our own worst enemy.

Now including the WAMU acct we have 5 CHASE accts. The other’s are CC’s with 2 of them one’s that CHase purchased and one is a dental payment plan. The reason that Chase is doing so well and owning so much is they have been able to avoid much of the sub prime mess. So they may be annoying but at least they’ve been smart. That should mean something. I think we will see more “WAMU’s” as the banking industry continues to feel the hurt that they did to themselves.

We also have a local bank acct and a Credit Union so we are well diversed.

There also is a bit of a difference from how regular banks are regulated (which is actually they are regulated quite well) and how brokerages like Goldman Sacs are well not regulated. I think sometimes we hear so much on the news and we are mixing the two. The rest of the brokerages that were still standing now are also regular banks so they will be much more regulated.

I still have a number of CDs in Wachovia. I hope Wells Fargo would honor the same rate I locked before this happened. I also have a number of accounts in KeyBank; also savings in FNBO direct and a money market account at M&T.

I am not planning to participate in “run on banks” – this is one thing which contributes to banks’ failure. FDIC is there to prevent this from happening. I may invest some money in AAA municipal bonds, but for the most part I’ll continue to use banks I am using and, yes, unless bank is clearly bad – I avoided Countrywide and IndyMac, I’ll take advantage of good rates. In past cases of bank failures, there have been no interruption of service: FDIC took over, and transferred deposits to another bank. FDIC also has power of US government behind it. Yes, it is bad if taxpayers have to pay for deposits, but if everyone doesn’t start withdrawing deposits, the bank may not fail at all. Whereas in the current credit crisis even perfectly sound banks may go under if customers start withdrawing their money.

Count us among those who bailed on WaMu. We were not only depositors but also shareholders who watched the bank – and part of our life savings – plummet into oblivion, so I can certainly identify with “Nick” who voted with his feet. Even if the deal with Chase had been cleaner we wouldn’t have stayed because of the reputation for aggressive cross-selling other posters have mentioned and the inevitable degradation of a halfway-decent customer service culture at WaMu.

Now our funds are in a fairly new community bank with two branches serving very affluent communities and with little commercial loan exposure. The new safe deposit box is twice the size for half the price, the CDs pay a point more, we had our new debit cards in two days and, at least until the honeymoon’s over, I have a “personal banker” I can call or e-mail. (I’ll also mention, for those of you thinking of a switch, that it was a snap to change the bank link on our ING account.)

WaMu was seriously mismanaged and made their own bed. I closed all my accounts with WaMu a couple of years ago because I plain didn’t like their business practices. They charged me overdraft fees even though I had a linked account to my savings, paid lousy interest, and shafted me when my debit card was used fraudulently. I switched my accounts to Capital One, ING Direct, and a local credit union. I have never had an issue with overdraft, and great interest rates.

I do feel bad for a friend of a friend who worked for WaMu and his uncertain future. However, it happened to me too when I was working for Worldcom. Worldcom suddenly fell off the top of the world and a lot of my friends lost their jobs. But we all recovered and got new jobs (slowly – took me a year to find a new job). Nobody bailed us out.

I live in Seattle and the failure of WaMu is quite a tragedy to the community. It survived the Great Depression only to fall to its own greed in 2008. One of WaMus risk managers was on the radio the other day saying he warned management 2 years ago the danger they were facing. However, the money was too good and they ignored him. It’s very sad, and I wish they would have made better choices.

We have been discussing on Myinvestorsplace.com over that last several months all the banks that have been failing… 13 banks failed and took down 8 billion of the 53 billion the fed started with this year… one member of My Investors Place told us…that 117 banks are on watch… really …can’t the fed run out of money…what do you think??/ we would like to hear others opinions..thanks

In the comments some one mentioned that the FDIC has never failed… that is correct…and was an outgrowth of the Depression… however just 13 banks failing this year..one of them IndyMac took a Huge chunk out the FDIC pie… read this article from my blog
http://www.myinvestorsplace.com/profiles/blog/show?id=2325384%3ABlogPost%3A581

I will continue as I always have – splitting my money, with some in a credit union, some in a local bank, some in high-interest online banks, some in a huge commercial bank, and some in my house. I began doing this years ago – it may not be efficient, but I can sleep at night.

The old adage diversify comes to mind. With the FDIC raising your safety net to $250,000 you really don’t have to worry about losing your nest egg. Also, with so many banks having financial troubles you really don’t know who will start having troubles next. I would not recommend going through the hassle of switching all your banking information just to have to move it again in 6 months. That said, I do recommend diversifying your lump sum. It sounds like you are getting very decent returns on your CD’s. Why not keep them their but move your checking account to a separate bank? By splitting your money between two banks you have a safety net. If one bank goes under you still have your second account to live off of while you wait the many months it will take to get your money from the FDIC. The same is true with credit cards. On my How to Rich blog I have talked about having a couple different idle credit cards from separate lending institutions. A decent back up in case of financial hiccups.
All that said, I am currently running my business accounts through Wells Fargo. They have seemed to be pretty stable for me over last few years and are staying stable through this economic crisis.
Good Luck!

why does everyone think ingdirect is so safe?

check your bank/credit unions rating here:

http://www.bankrate.com/brm/safesound/ss_home.asp

Ing Direct is ING BANK, FSB, Delaware. It gets 3 stars and a safe and sound rating of 3.

that is not ultrasafe (at least according to bankrate).

It seems that the middle market banks are getting chewed up. The safe big banks are Citi, Chase, Wells Fargo, and Bank of America, but that’s not to say the small community banks aren’t a good choice. Much of the decision can depend on services, ATM fees and convenience.

Take note that there has been multiple times that this has happened in history, like the panic of 1907, 1929 and others. This is just another economic cycle that banks put themselves into because they don’t learn from prior mistakes.

Dave… Your experience with BofA is exactly why I don’t do business with them. They purchased my credit card (MBNA). I had a laughable $30,000 limit (what am I going to do, buy a car?) and used it exclusively for many years. MBNA was a problem free operation and I gathered many air miles this way.

Troubles began when BofA bought it. After blindly paying my bill for several months, I noticed that I was being charged late fees. When I called to ask why, the clerk told me that this is how they received it when they bought MBNA. In essence, my bill pay period shrunk to about 1 week, which allowing for mail is an impossible time period to pay in, and the credit rate was increased to the 20 % level.When I pointed out that the terms were impossible to meet and that the mileage benefit was outweighed by the costs, he told me “You should go and get a card somewhere else.” I was flabbergasted that any bank would lie to me about the transition from MBNA, not notify me of the change in terms and suggest that if I didn’t like it, I should go elsewhere. So that is exactly what I did. And here we are ladling millions of dollars into the pockets of the bank which at one time was known as ‘Little Bank of Italy’…

My Grandmother used to bank at BofA when I was younger. I never did understand why she would pay them as much as she did for banking, when perfectly good local banks would serve her needs just as well for less.

You may also remember when ATM fees used to be charged ‘only’ by your bank, even if withdrawn from another bank’s teller. The reason was that the other bank would charge yours for the service. It was up to your bank to decide whether or not to charge you, and many didn’t. BofA was the first bank in my area to begin charging ‘non customers’ to use their ATMS. They did that as a means of trying to coerce people to become their customers. Other banks soon realized that this was a good business move and followed suit.

Lately, in some areas, BofA has been reported as raising the fee to $3.00 a transaction. I caught my daughter pulling $20 from a BofA ATM. At $2 for that transaction, she was in essence charged a 10% fee, which is usurious.

I could go on, but suffice it to say, BofA exists solely to bleed their customers to the benefit of their own fat-cat business.

jegan