San Diego Housing Bubble News and Analysis

Good Credit Unions who seem less entrapped in the housing catastrophe are alternative to Banks. Their insurance funds (NCUA) are not under as much stress as FDIC.

Union Bank is another safe one. A Japanese bank that carries zero mortgage paper.

Who are the underlying insurers for credit unions, and how do you go about vetting them for security?

Are you speaking of Union Bank of California?

Because it is either a credit union or that one for us if you are

Union Bank of California is not invested in the mortgage/subprime market. It's a very conservative bank. I recently pulled the majority of my cash out of WAMU and put it in Union Bank. My friend is a manager at the downtown branch. Very good service for those with accounts over $100k. (Of course you won't get the cd rates that WAMU is offering right now). She treated me to lunch at the Crab Hut in Kearny Mesa. I got the Alaskan king crab. Nobody at Wamu ever took me to lunch.

NCUA takes over Valley Credit Union

http://bankimplode.com/blog/2008/09/03/v...

They were CAEL rated 4 or ** (second worst rating).
http://www.bankrate.com/brm/safesound/ss...

I'd feel better about my banks CAEL 2 or **** rating if Valley was CAEL rated 5 or *.

Thanks for the links!

Not to yell fire in a crowded theatre but...

North Island Credit Union has A CAEL Rating of 5 or * (worst rating)

Just Sayin

Thanks for the heads up nccoast...
I checked my credit union and it came up a 4! Ouch. I called them, and funny, before I barely said a word they assumed I was calling to close out my account. Weird! Maybe I'm not the only one?
Anyway I was going to get some checks to write against the account, but when she said that, I said, "yes, that's what I'm calling for."

On another note. I had a large sum of money in Wachovia's CDs'. When I went to get the money out, they gave me such a run around, it blew me away. I took all the money out that day, but man, they really tried to stall me.

Watch out people, somethings on the rise and aint good.

I checked a bank in the CDARS network yesterday, which had a good rating from bankrate.com. The scheme seems like a good idea, but I was put off by the fees, which you can either pay or the bank pays giving you a lower rate. I also couldn't find if CDARS is regulated, and since they don't leave any contact details on their website (another minus in my book), I couldn't really ask them. Most of the banks in the network are small, and although you can ask not to have you funds placed with certain banks, you can't specify which ones you do want. The banks are apparently vetted by some FDIC solvency test. A similar scheme exists for Money Market funds. I think I'm right in saying the FDIC "watch" list grew 30% last month, and I still haven't been able to find a leaked document of those banks on the internet.

I guess in today's climate there is no clear safe bank. But if I were to bank, I'd bank in a bigger institution. That said, FYI

FWIW: Some of you might have an online account with emigrantdirect.com (I remember they use to be one of the higher interest payees for online savings).Well i think Emigrant Bank has a 4, ** rating.
http://www.bankrate.com/brm/safesound/ra...

Wamu was offering a 12 month cd online with an add on feature for 5% last week. Best I've seen. They also have deals at the branch level for thsoe who are willing to speak to the manger and have a 90 K to put down.

I found this link which offers a comprehensive list of troubled banks. You need to send your email to get the list. The video is long but worth a listen, and at least they name names. I would cross reference their list with other ratings lists, and if a bank appears on 2 or 3 lists, I'd move my funds. The main thrust of the video is 1) FDIC reserves appear adequate to date, 2) short term US treasuries or MM treasuries are a safe otion, 3) Inverse ETFs or options are a good hedge against many negatives, 4) brokers currently aren't a real concern, 5) big is not commensurate with safe

http://www.moneyandmarkets.com/newslette...

Careful using the troubled bank list. I doubt it's very comrehensive.
Indymac was not even mentioned on it when it failed....

I totally agree peterb, that's why I suggest cross referencing more than one list. One hopes that, if a black list does anything, it may compel some banks to defend their positions, with perhaps a little more transparency. Of course, if anyone is fortunate to stumble across the FDIC list, I for one would take it seriously. I wonder how legal withholding this information is? Are the courts sympathetic to Catch 22 scenarios? I guess it may depend on the judges politics.

Wamu was offering a 12 month cd online with an add on feature for 5% last week. Best I've seen. They also have deals at the branch level for thsoe who are willing to speak to the manger and have a 90 K to put down.

I would be very careful with Washington Mutual. Their corporate bonds are having a yield to maturity of 28.675% and a coupon rate of 4.0%. Maturity date 1/15/2009. I think you could call this a death-watch rate? WaMu is trying to get capital in fast... It is easier to pay out on the CD rates than the Bond rates. If WaMu needed to float bonds, it would have to match the current 28.7%+/- rate. Payout on 5% is easier.

Two of the safer banks are:

(Agree) Union Bank of California
US Bank

Might want to look at their stock price(s) to see what Wallstreet thinks of them.

UB Union Bank is trading close to it's high - that is a clue. Beyond that, they are a very conservative bank. Their CD rates stink, but frankly in this environment, I'm not chasing high CD rates anymore....can make more money in the stock market anyway (on the short side).

The fact that Wamu was/is offering a 5% CD tells me just how desperate they are - I would stay away! I don't think they will survive much longer. I actually closed my last account with them last month. Had less than 100K but just didn't want the hassle when they shut their doors (just my opinion of course).

Bank of America is also offering a decent short term rate and they will be one of the few that will survive, but not without more pain to come.
Wells Fargo is also supposed to be safe (but in this environment, you never know).

FWIW

Mercedes7,

I posted this on another bank thread.

Cramer said that Wells Fargo (WFC), US Bancorp (USB), Bank of America (BAC) and JP Morgan Chase (JPM) all reported quarterly results that showed they will survive.

How did you come up with Union Bank of California and US Bank being solid? (Are US Bancorp and US Bank one in the same?)

Thoughts on Wells, BofA, and JP Morgan Chase?

Thanks all

Because Union Bank of California owns zero mortgage paper...they were only brokers. Their Japanese owners knew what was going to happen...because it happened 10 years ago back in Japan.

Higgy- I would take what Cramer says with a grain of salt. Personally I think he's an idiot. Remember he's the guy who told America to keep BUYING Bear Stearns stock and at $30 that it was a great deal!

Why narrow the focus on Californian banks? I would have thought CA is one of the worst places to be looking for a bank. Union Bank of California only gets a 3 star from bankrate.com

What about US Bank? Anyone have any thoughts on this one?

UBOC does not have a large capital markets business which means they did not get heavily into derivatives or other messy products. They do not make markets in thousands of instruments at significant liquidity levels so I don't believe they have the exposure, either propietary or counterparty.

They are primarily a wholesale and retail banking institituion, with a profitable trust and treasury business as far as I know. They have been an old school bank and continue to be fairly conservative as far as I know.

I would think they are a fine place to park your money compared to some of the other banks mentioned here.

I agree, UBOC is solid. Zero mortgage exposure. I moved all of my money out of Washington Mutual when their stock sunk below $5 from over $40 just a year ago. Wamu will be Wamu Federal within a year, you can count on it.

S & P just downgraded Washington Mutual to negative from stable. Hope no one has >100K in the bank there. Wouldn't be surprised if they go down some Friday soon.

More on union bank of CA (www.uboc.com): I opened an account with them today and found their service to be outstanding. I'm also getting a good rate on my cd's there: 4.0%. This is not the advertised rate (which is closer to 2%) but they were very flexible.

This is the only bank where I've walked through a "weapons detector" with a double-door entry (the kind that locks a robber in) past an armed guard into the service area. They also gave me a safe deposit box. I'm not paying any fees on any of the 4 accounts I opened there today.

I'm always a bit loathe to actually go as far as recommending any institution, but has anyone considered offshore. I have used many, for many years, and one of the best is Anglo Irish, because their rates are almost always consistently higher (US$ 4.75%). http://www.angloirishbank.ie/Personal_Sa... They are an asset management bank so no retail facilities, and of course the Irish Government has guaranteed all deposits. It may be worth checking that this does cover foreign depositors, and not just Irish taxpayers, who after all would foot the bill. Their core business is commercial real estate so some may wish to err on the side of caution, but they claim only a small indirect exposure to US subprime mortgages. However, their stock price has seen quite big dips recently, but this is probably largely attributable to the general trend.

I would be cautious about depositing large amounts into banks guaranteed by small countries with a big banking industry. Why? Because the potential shortfall the small country's govt has to make up if a lot of the banks topple could be more than their citizens are prepared to actually pay.

It's all very well for a govt to say that it guarantees everything, but if things go really bad and the bill is for 5 years of the country's income, it ain't all going to get paid. People aren't going to go from big screen TVs and vacations in the Galapagos to pulling roots from the ground for dinner to keep their banks' creditors whole.

Patientrenter, I assume you are referring to Iceland. For US citizens, they may feel safer with keeping everything in their own back yard, but many foreign residents, expats, migrant workers etc, may prefer to spread the risk by using resources more familiar to them. While a bank in Timbuktu might seem bizarre to some, it might have appeal to others who see banks collapsing everywhere around them in the US. However, since the virus has drifted across the oceans, you might ask is anywhere safe? Is a government guarantee any safer than the FDIC, which is equally ill-equipped for a major collapse? I guess the answer is you stick with what you know.