Months ago, when the Fed helped to bail out Bear Stearns by brokering a deal with J.P. Morgan Chase, it was clear that this was just the tip of the iceberg. And with the Fed recently helping to bail out Fannie Mae and Freddie Mac, it was only a matter of time before the Fed ran out of fingers to put in the leaking dike.
The extend of the greed and risk-taking on the part of Wall Street financial firms with respect to careless lending practices with home mortgages is now obvious. With Lehman Brothers now filing bankruptcy, and with Bank of America buying Merrill Lynch, we are seeing some long time financial forms either bit the dust or being assimilated. While it is sad to see any employee lose their jobs, I have no sympathy for the fat cats of Wall Street who made the collapse happen.
If you don’t have money in these troubled institutions, you may not think you have a problem. And if you do have money there, you may think that the FDIC insurance of balances up to $100,000 will keep you somewhat protected. Think again. Shortly after the Bear Stearns collapse, my husband and I took the opportunity to split up our CDs (which had just matured) and split them up over several banks. We were told at that time that while FDIC insurance is real and it will cover depositors, what the FDIC doesn’t make very clear is HOW LONG it will take to recover the money. In fact, one bank told us that it could take 10-20 years before we ever got the full amount of our money back, if in fact there was a collapse of the bank. So those people who have money in a Lehman Brother’s bank may have to wait a long time to see the full amount of their money should the FDIC have to step in to cover deposits.
Should people feel unsettled about these happenings? You bet. With many people having money in personal retirement plans like 401ks and IRAs, there is a lot of money out there just sitting and waiting for someone to screw it up for you. Even though the days of free-wheeling mortgage lending seem to be over for now, the repercussions will be felt for some time to come. It really is about time that the greedy executives and money managers at financial firms bear some punishment for the risks they took with money that didn’t belong to them. Unfortunately, the people who will really pay are depositors and average stockholders and the “common” employees who put their trust – and their money – in these firms.
If you haven’t taken a look at your own finances, it’s time that you do. If you have any deposits in any banks that exceed FDIC insurance limits, it may be time to split them up. And do your research – make sure if you do start moving your cash or investments that you put them in financial institutions that seem to be at the top of the heap right now. J.P. Morgan Chase, who basically stole Bears Stearns, and Bank of America, who lapped up Merrill Lynch, seems to be some of the few that appear stable. While I am not telling people to use these banks, it’s just a hint to do your homework before you hand over you money.
When the dust settles – and who knows when this will all be over – we may see less banks and financial institutions, but they may be stronger for it. Maybe the Fed will also get its act together and get some needed controls put in place. Hopefully, everyone will also learn from these mistakes and be smarter for it. My money - your money - depends on it.
Check out my blog home page for the latest information, here.
The extend of the greed and risk-taking on the part of Wall Street financial firms with respect to careless lending practices with home mortgages is now obvious. With Lehman Brothers now filing bankruptcy, and with Bank of America buying Merrill Lynch, we are seeing some long time financial forms either bit the dust or being assimilated. While it is sad to see any employee lose their jobs, I have no sympathy for the fat cats of Wall Street who made the collapse happen.
If you don’t have money in these troubled institutions, you may not think you have a problem. And if you do have money there, you may think that the FDIC insurance of balances up to $100,000 will keep you somewhat protected. Think again. Shortly after the Bear Stearns collapse, my husband and I took the opportunity to split up our CDs (which had just matured) and split them up over several banks. We were told at that time that while FDIC insurance is real and it will cover depositors, what the FDIC doesn’t make very clear is HOW LONG it will take to recover the money. In fact, one bank told us that it could take 10-20 years before we ever got the full amount of our money back, if in fact there was a collapse of the bank. So those people who have money in a Lehman Brother’s bank may have to wait a long time to see the full amount of their money should the FDIC have to step in to cover deposits.
Should people feel unsettled about these happenings? You bet. With many people having money in personal retirement plans like 401ks and IRAs, there is a lot of money out there just sitting and waiting for someone to screw it up for you. Even though the days of free-wheeling mortgage lending seem to be over for now, the repercussions will be felt for some time to come. It really is about time that the greedy executives and money managers at financial firms bear some punishment for the risks they took with money that didn’t belong to them. Unfortunately, the people who will really pay are depositors and average stockholders and the “common” employees who put their trust – and their money – in these firms.
If you haven’t taken a look at your own finances, it’s time that you do. If you have any deposits in any banks that exceed FDIC insurance limits, it may be time to split them up. And do your research – make sure if you do start moving your cash or investments that you put them in financial institutions that seem to be at the top of the heap right now. J.P. Morgan Chase, who basically stole Bears Stearns, and Bank of America, who lapped up Merrill Lynch, seems to be some of the few that appear stable. While I am not telling people to use these banks, it’s just a hint to do your homework before you hand over you money.
When the dust settles – and who knows when this will all be over – we may see less banks and financial institutions, but they may be stronger for it. Maybe the Fed will also get its act together and get some needed controls put in place. Hopefully, everyone will also learn from these mistakes and be smarter for it. My money - your money - depends on it.
Check out my blog home page for the latest information, here.
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