San Diego Housing Bubble News and Analysis

This is why Jim Sinclair (www.jsmineset.com) is telling us to eliminate all financial intermediaries standing between us and our assets

Yes, if E-Trade goes under you are likely to get your money back from SIPC - of course, you'll be at the end of the line in any bankruptcy proceedings and might wait 2 years to see any of your money

SIPC is another under-funded plan like FDIC - there are enough assets to cover about 2% of the potential losses - as long as only a few people lose money SIPC and FDIC will be OK - in a massive meltdown SIPC and FDIC are likely to be handing out chits or vouchers that will trade at a discount to US dollars

Protect your assets (if you plan on keeping them)

I have some CDs in etrade (under 50K) do I need to worry. If I do an early withdrawal etrade has a penalty...so I'm thinking whether to withdraw or wait for maturity

Here's Jim Sinclair (www.jsmineset.com) showing us the legal language which allows an internet broker to basically say, "Tough titty, kitty - your money is my money until I decide to let you have access to it."

I especially like this phrase: "... reserves the right to ... block my access to the Service without notice, for any reason or for no reason ..." - that means you could wake up on a monday morning to find that the Asian and European markets melted down overnight but you can't sell you positions because your internet broker has blocked access to the Service ...

Yes, you can play the macho game and threaten to sue your broker (and their dog) - a lawsuit will cost you MINIMUM $15K and you won't win anyway - much easier to protect yourself before anything happens

~

(s) Termination of Accounts
I may close my Account at any time, after all Debit Balances are paid, on written or oral notice to _____TRADE Securities. ______TRADE Securities reserves the right to terminate my Account or to block my access to the Service without notice, for any reason or for no reason. The terms and conditions of this Agreement will survive termination of my Account and will continue to apply to any disputed or other remaining matters involving my relationship with _______TRADE Securities. After the termination of my Account, I will remain liable to _____TRADE Securities for payment of any indebtedness or obligation to ____TRADE Securities, plus interest as provided under this Agreement.

(e) Modification of Agreement or Service
I understand that ______TRADE Securities may change any of the terms and conditions of this Agreement and/or eliminate any term or condition anytime. _____TRADE Securities reserves the right, but does not intend to follow it as a matter of course, to notify me of modifications to the Agreement by mailing or e-mailing a written notice or new Agreement to me. I understand that the normal method of notifying me of modifications to the Agreement will be to post the information on the _______TRADE Securities Web site. I also agree that ______TRADE Securities may change its Service anytime and that it is not obligated to provide me with notice of such a change.

I agree that use of the Service after a change to the Service or notice of a change to this Agreement, or if I do not close my Account within fifteen (15) calendar days of the change to the Service or notice of a change to the Agreement, means that I accept the change, whether or not I actually know of it, except that changes required by law will be effective immediately.

g2006 - as long as you withdraw before they declare bankruptcy you will be OK

feeling lucky?

"SIPC can only perform as long as only a few call upon it,and then only up to $100,000. SIPC will in my opinion be looking for a rescue, which it will get paying you in some form of non transferable paper maturing in 3 to 5 years when the financial community all falls down."

This 'non transferable paper' is what I was referring to as a 'chit' or 'voucher'

If you wanted access to the money prior to maturity you would only get a portion of your money - 70 cents on the dollar? who knows ...

http://www.sec.gov/investor/pubs/holdsec...

Holding Your Securities—
Get the Facts

As an individual investor, you have up to three choices when it comes to holding your securities:

     Physical Certificate — The security is registered in your name on the issuer's books, and you receive an actual, hard copy stock or bond certificate representing your ownership of the security.
       "Street Name" Registration — The security is registered in the name of your brokerage firm on the issuer's books, and your brokerage firm holds the security for you in "book-entry" form. "Book-entry" simply means that you do not receive a certificate. Instead, your broker keeps a record in its books that you own that particular security.
       "Direct" Registration — The security is registered in your name on the issuer's books, and either the company or its transfer agent holds the security for you in book-entry form. The "Direct Registration System" (also known as "DRS") allows investors to transfer securities held this way. For more information about DRS, please see our Frequently Asked Questions below.

DTCing all me and my wife's stock from stock options, espp shares, private investments, etc into other brokerage accounts

FLU - Can you please explain this in some detail. I too may like to do this.

DTCing all me and my wife's stock from stock options, espp shares, private investments, etc into other brokerage accounts

FLU - Can you please explain this in some detail. I too may like to do this.

Simple.

1) I transferred (or in the process of transfering) all stock electronically to other brokerage firms I have. There are two types of transfer. One is called a DTC, the other is called an ACAT. On typically is charged using one or the other. Typically DTC is free, ACAT isn't. DTC is a request from the "FROM" brokerage and pushed to the "TO brokerage". As far as cash, I have a bank checking account linked to etrade, so I wired all cash held in money markets out to the savings.

2) I'm trying to get the other brokerage firm (schwab and ameritrade) to register the stock in my name. I believe brokerage firms usually don't register in your name, but street name. However, this might not happen.

3) #2 doesn't work, I'm going to ask my brokerage to send me the actually stock certificates for stock that I plan on holding for a long time.

4) There's nothing you can really do about stock options. Typically your company only designates 1 stock option administrator. But, it's not really an issue because the stock options aren't worth anything until you exercise, and the company you work for should have records of that.

5)ESPP shares are similar to normal stock, except for a handful of anal companies.... you can't move the shares out unless you terminate the company.. You can sell the shares and move money out, but not physically move the shares). The reason being is when you sell espp shares (ie shares purchased with an employee stock purchase plan which gave you a discount off the purchase price), part of the profits needs to be reported on W-2 as income and part is short or long term gains. To simplify paperwork, some companies put restrictions require you to trade in the designated brokerage firm so that the brokerage firm can adequetely report back to the company when you sell those shares so that your company can properly send you a w2. However, most companies don't do this..They basically let you do whatever you want, and you are responsible for reporting ESPP sold shares appropriately as income and/or cap gains. Last time i checked, companies like Qualcomm, Yahoo, Symantec don't have this issue. W2 reporting for ESPP transactions is all your responsibility, so there aren't restrictions on DTC or ACAT transfers.

6) Some stock are restricted stock (particular if you just ipoed or private equity stock). For that, call etrade for details. Fortunately, I found out that life restricted stock at Schwab and not etrade so I don't have that issue (yet).

The Depository Trust Company (DTC) is a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency with the Securities and Exchange Commission. The depository brings efficiency to the securities industry by retaining custody of some 2 million securities issues, effectively “dematerializing” most of them so that they exist only as electronic files rather than as countless pieces of paper. The depository also provides the services necessary for the maintenance of the securities it has in custody.

https://portal.dtcc.com/dtcorg/index.html

The Automated Customer Account Transfer Service
a service offering of National Securities Clearing Corporation (NSCC)

The Automated Customer Account Transfer Service (ACATS) is a central processing system that provides for the timely transfer of customer accounts among participant financial institutions, including banks and broker/dealers.

http://www.dtcc.com/about/business/index...
http://www.dtcc.com/products/cs/equities...

If you have an E-Trade account and are wondering if you should keep it or not, good blog by Mish.

http://globaleconomicanalysis.blogspot.com/

Hi everyone,

Does anyone have a favorite bank/brokerage alternative to etrade? Of course, this would be an analog that is not over-exposed to bad debt, as is the case with ET.

-Fishsticks

Anyone try Fidelity? Can you park your spare cash in SPRXX if you have a brokerage account with Fidelity?

I would like to know the same thing....Where are you putting your money? Are you putting it in S&Ls or Union Bank types.... I still remember my Great Grandma had $$ in the mattress!

In my view E*Trade has a fantastic platform (setting aside the mortgage holdings) that would get bought easily for at least the current share price. The odds of the firm going away are almost nill.

I bottom fished some shares on Monday in the mid 3s.

"In my view E*Trade has a fantastic platform..." This is exactly my view as well. I've tried many other brokerage but they all have very horrible websites that is not very intuitive at all, especially when you have more than 1 account w/ them. They'd be an easy take over target if things get worse for them.

Hi everyone,

Does anyone have a favorite bank/brokerage alternative to etrade? Of course, this would be an analog that is not over-exposed to bad debt, as is the case with ET.

-Fishsticks

I have an account at different brokerage firms. What I'm waiting to find out is which other brokerage firm has mortgage exposure that they haven't disclosed yet. I'm sure there are others. As such, these days I have multiple accounts across multiple institutions. The first sign of trouble, I plan on moving things around. So to that end:

SmithBarney (now part of Sh*ttyBank..i mean Citibank).

Wachovia ( uh oh)

Schwab ( scrub the deck)

TD ameritrade.

Fidelity

Vanguard 

Etrade has been mostly eliminated from holding significant assets. Personally, I don't think there will be an issue, but then again I don't want to find out if there are issues. And pretty much, the commissions as schwab, ameritrade, etc aren't drastically different.

In my view E*Trade has a fantastic platform (setting aside the mortgage holdings) that would get bought easily for at least the current share price.

I don't agree.  Their software platform can easily be duplicated without the need buy them out.   Or wait to buy it in bankruptcy court. 

We have all our retirement accounts, a large portion of our assets in E*TRADE. I looked closely at E*TRADE financials last night, and concluded the company is effectively INSOLVENT. The CEO of E*TRADE is writing they "...could absorb an immediate write down in excess of $1 billion and still remain well capitalized."

Except there is one problem, look at E*TRADE balance sheets: there appears to be a lot more than a billion in write downs in store for E*TRADE. The numbers don't look pretty.

This week the markets finally spooked me, shook me to the core, that this finanical melt down could get real ugly. Major banks could collapse.

Just one example, a best friend of mine works in a very senior position in a very large Wall St. investment bank.

I wrote him, "What's the feel of the markets, from the inside?"

He Blackberry's me back,

"Be afraid, be very afraid. I'm now at a insider financial conference and very senior managers are discussing Worst Case Scenarios. There is real fear in the air even among very seasoned finance industry professionals."

Today I submitted request to have ALL our family assets tranferred out of E*TRADE. It takes about 7 days to complete. I cannot imagine E*TRADE would collapse, but they certainly could lock our accounts up for a long time. WHO KNOWS how this all will play out for security of major financial institutions?

I think gold is looking more and more attractice. The gold market LOVES financial instability.

stockstradr

You may want to contact the company you are moving your assets to, to see if they will pick up the charge for your transfer. Usually a company is going to charge you a couple hundred bucks as a coordination fee for transferring assets. A sort of "don't let the door hit you on the way out charge."

We also do....I pulled some out yesterday...But, can I ask where you transfered your funds? I put some in our credit union for now. But, again not sure if that was right.

It is very confusing and murky...Especially since we have been quite happy with Etrade....

I guess we are now entering the Musical Chairs style banking phase of this financial markets meltdown.

:-)

Each week the music stops and another financial institution is declared insolvent and it goes down like chairs being pulled from a game of Musical Chairs.

Quick, scramble to find a "safe" bank to sit your retirement account down in.

When the music stops you hope it is sitting in a SOLVENT financial institution.

Yep....that is exactly what I told the bank employee yesterday! :)

I told her when the music stops I just want to make sure I have a chair!

I have $1.01 in savings with E*Trade, I'll leave it in there and see what happens to it if they go bankrupt.

cooprider14,

They'll probably end up charging you $25/year as an account maintenence fee :) 

Just thought you guys might be interested in this email I just got from Etrade
"The past few months have been challenging for the financial services industry. And, as you may be aware, E*TRADE has been the subject of some unfounded rumors and speculation in recent days.
While many of our customers have openly expressed their confidence in us, I'm writing to reassure you that your money is safe at E*TRADE FINANCIAL.
Because the sweep option for your brokerage account is the E*TRADE FINANCIAL Extended Insurance Sweep Deposit Account, you have one of the highest levels of asset protection in the industry—including 5X the FDIC coverage for our standard sweep accounts¹:
FDIC insures all E*TRADE Bank accounts to at least $100,000 and Extended Insurance Sweep Deposit Accounts to $500,000².
SIPC protects E*TRADE Securities customers up to $500,000 (including $100,000 for claims for cash).
Additional E*TRADE Securities protection of up to $150 million per brokerage account is underwritten by London insurers (aggregate $600 million).
E*TRADE is well capitalized by regulatory standards. In addition, our core business is thriving. Today, over 3.5 million customers worldwide rely on us for their trading, investing, and banking needs.
Our ability and commitment to invest in our products, services, systems, and platforms are stronger than ever. We look forward to serving you for many years to come."

I wonder just how many customers have pulled their assets so far?

I wonder just how many customers have pulled their assets so far?

Good question, but an even better one would be why are they pulling their money out at all? As long as your accounts are below the insured limits, you're safe. I wonder if this whole thing wasn't just a trick conjured up to make some quick cash on the etrade stock. That one goofy analyst opinion drove the stock down farther than it should go then someone buys up the shares before they bounce back. Those that bought down at 3.50 on Monday are now up over 50%. I'm convinced that 99% of the stuff you read about stocks in the news is designed to manipulate the market.

Still, their mortgage exposure is a bit scary but not "stuff your money in the mattress" kind of scary...

Chris Johnston

For those of you that are interested in GOLD I just felt compelled to correct a post by stocktradr. There is no correlation that is meaningful between times of financial stress and Gold values. Just go look back at stock market crashes of the past and you will see that GOLD has actually declined more than it has rallied during these periods.

Put your money in GOLD if you think it is prudent, but do not do it for the reason that was stated, it is inaccurate. Inflation is the main driver of GOLD prices, I covered this in great detail in one of my newsletters to clients last year. It is true that inflation at times has been present during stock declines, but it has not always been there.

The ETrade situation is a shame, but I doubt a reason for immediate panic. Fear is a great sell for books etc.. but rarely pushes you into correct decisions.

I wonder just how many customers have pulled their assets so far?

Good question, but an even better one would be why are they pulling their money out at all? As long as your accounts are below the insured limits, you're safe. I wonder if this whole thing wasn't just a trick conjured up to make some quick cash on the etrade stock. That one goofy analyst opinion drove the stock down farther than it should go then someone buys up the shares before they bounce back. Those that bought down at 3.50 on Monday are now up over 50%. I'm convinced that 99% of the stuff you read about stocks in the news is designed to manipulate the market.

Still, their mortgage exposure is a bit scary but not "stuff your money in the mattress" kind of scary...

Because even though there shouldn't be a problem, why take a chance? You're not being rewarded for the extra risk. As far as the stock price, stock price is a reflection of market sentiment. What you saw falling to 3.5 could have been an overreaction. The rise to $5 could be because some of that initial panic subsided OR it could just be a dead cat bounce: people think it went down so much it has to rise and hence bought. Only time will tell.

I did clean out our accounts. 

Yeah, I understand not wanting to take a chance. But if everyone just pulls their money out willy nilly because joe analyst says that the company might be in trouble if people start pulling their money out, then it becomes a self-fulfilling prophecy. And then everyone moves to some other bank and the cycle repeats again when joe analyst writes the same thing about that bank. That opinion was actually quite silly when you think about it -- "If people start pulling all their money out, then e-trade could be in trouble!" No s*** sherlock, the same is true for any bank. I wonder how much he gets paid to write those little pearls of wisdom.

Again, if you have faith in the FDIC insurance there should be nothing to worry about. If you don't have faith in it then it will be hard to find a safe place to put that money...

http://calculatedrisk.blogspot.com/2007/...

"The subprime crisis claimed a new scalp Thursday, as E-Trade's CEO Mitch Caplan said he was stepping down as part of a deal that has private equity firm Citadel injecting $2.55 billion into the troubled firm"