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Alliancebernstein Income Fund Message Board

  • captainlate2001 captainlate2001 Jan 8, 2008 12:33 PM Flag

    Heavy CFC rumors

    That they are about to file BK. I guess if so we will find out sooner rather than later whether: (a) they are too big to fail; and, (b) if (a) is true whether the government can actually save them.

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    • I wasn't really talking about comparative rates so much as about the safety issues they can raise.

      You need to at least think about why a bank is offering above-peer term structure. It may be that there's a good reason; but, if you can't see that reason in the financials, then you're probably better off to find another, safer place at the certain rate of return or someplace where risk is acknowledged and compensated.

      For instance, I assume most here realize that a REIT paying 15% or an equity hedge appreciating at 30% per annum are risk media, while a bank paying 4.55 on 6mos is theoretically not. You can do it either way, but you surely don't want to incur risk without adequate compensation.

      A long way of saying that the banks are now something you have to think about. Can't just stick the money anywhere
      for some very fractional improvement on universally low APYs.

      I find it particularly disturbing that the increased risk seems to be concentrated in the very biggest banks--those able to put the greatest stresses on the FDIC deposit insurance system.

      My point is that it may be necessary to change one's thinking in the present financial environment. Read
      that S. Das article referenced here last night.

    • Awhile back when I looked at cd's thru Fidelity I noticed the rates were lower (about .25) than the rates listed on bankrate.com for the same term and the same bank

      Assumed this was the hidden commission but the convenience may be worth it. Bet the other brokerages do about the same

      Personally I like the Pentagon Credit Union where online one can request the interest by a check when wanted and it arrives about 2 days later

    • For some reason, links won't post here today. The article is "This Credit Crunch Has Bite" by Satyajit Das at Minyanville,

    • True, but it's something to think about. I recently went through a list of brokered CDs at Fidelity, all FDIC insured institutions, most small, and wondered why some of them were paying so much so far into the future.

      You probably shouldn't have to think about your bank at all, but now maybe you do. I don't have all the answers,
      so we deal with what we do understand and continue to
      grapple with the rest of it.

      The following articles should give you an idea of the extraordinary complexity and uncertainty of the situation.

      (cont'd)

    • <But, I don't. I always try to boil things down to their essentials: you weren't being paid to take that risk.

      True, but the reality of the situation is that today is the first day of the future. Need to make the best of that.

    • Well cruiser unless you can supply a link to back up your claim it will take 2 to 5 years for someone to get their money. I will assume you have just made another one of your half ass unsubstantiated statements

      Below is the FDIC link provided by phage with an answer to a payment time frame

      http://www.fdic.gov/deposit/deposits/insured/faq.html

      How long does the FDIC take to pay insurance on deposits after an insured bank fails?
      Federal law requires the FDIC to make payment as soon as possible. Historically, the FDIC pays insurance within a few days after a bank closing either by establishing an account at another insured bank or by providing a check. Deposits purchased through a broker may take longer to be paid because the FDIC may need to obtain the broker's records to determine insurance coverage.

      Customers with uninsured deposits receive the insured portion of their account as described above. They will wait longer to receive payment for some or all of their uninsured deposits. The amount of uninsured deposits they may receive, if any, is based on the sale of the failed bank's assets. Depending on the quality and value of these assets, it may take several years to sell the assets. As assets are sold, uninsured depositors receive periodic payment on their uninsured deposit claim.

    • I'll give up 5 years of interest on my CD if, in exchange, Mazilo goes to prison for the same period of time. And it has to be a real jail, like where the Tyco guy is presently holed up. I'm tired of seeing these guys ruining their companies (and my retirement btw) and then resigning with $100 million golden parachutes.

    • "I like that one."

      But, I don't. I always try to boil things down to their essentials: you weren't being paid to take that risk.

    • If your bank goes belly up, the FDIC steps in and:

      1) You receive an IOU from the gov't that you will be paid within 2 to five years. I'll be interested to see if the FDIC honors individuals holding multiple accounts (i.e. trying to "skirt" the $100k cap).
      2) You will receive 0% interest on the IOU even if you aren't paid back for 5 years.

    • Captain,

      just realized that I have a CD with them (through broker). I have faith in the FDIC, but, mechanically, how will that work, if they do go BK?

      Thanks

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