San Diego Housing Bubble News and Analysis

El Banco de Colchon

There is no such thing; But if you insist, keep your money at City, BofA, JPMorgan, Wells. If these start going down, we will be on our way to become Zimbabwe. You should be afraid of food riots and shooting in the streets then, rather than worry about bank deposits!

The absolutely golden rule now is to split your funds into many 100K deposits. If you have done that, you can always sleep well.

Union Bank of California may be safe. From what my ex says and their EPS may back it, they did not make stupid loans. They are mostly owned by a Tokyo bank, and the crazy Japanese must not like subprime and Alt-A. They do charge fees for checking and stuff.

What, charge fees to make money instead of giving away loans to people that can't pay them, that will never work.

El Banco de Colchon

A classic strategy !
Some folks prefer to hold gold bars rather than dollar-denominated notes under El Banco de Colchon.

My Mom has a CD there. It has been paying her a whopping less than 1% for the last 8 years. Unless you have direct deposit, they charge for checking too.

Union has a very good CAEL rating.

I looked at union, they don't pay much on their cd's do they? Citi's 3-month cd pays more than union's 2-year cd. I just opened a cd with citi. Now I can tell everyone I have an account wif a shiti-bank.

For a while "home bank" is safe keep the money inside pillow and blankets and stich it - you can sleep well at least :-). There is no gurantee bank and we can't predict their plans as long as Governament flooding a lot options to save (failure is final truth). When final failure happens as per me 'Home Bank" is only the option otherwise like in Japan(old trend) one has to pay fee for keeping their money in banks :-)

You may want to consider credit unions as they use a different insurer than the FDIC and seem to be far more conservative with their loands.

If you have > 100k, I would recommend a brokerage account, invested in securities (e.g. a government only money market fund for those that are very risk averse). Such securities are federally insured up to 500k via the SIPC. In addition, most brokerages carry substantial additional private insurance. Note that cash in a brokerage account is only protected up to 100k, and that some brokerages use money market "deposit accounts", which are considered "cash" (100k limit). a money market fund, which is treated as a security, has the 500k SIPC protection limit. Also note that the SIPC does NOT protect against loss of principal in the investment, it only provides insurance for failure of the broker.

If you have less then 100k, then the FDIC will insure the full amount at any bank, plus there are ways to structure the deposit to provide > 100k protection. In my opinion, US Bank is a fairly conservative and stable bank.

Some banks, like Wachovia Securities (which is different than Wachovia Bank), also has additional SIPC coverage that protects your assets in excess of $500,000 (up to the full net value of the securities). So that means tens of millions of dollars if you have it.

I called Fidelity yesterday and they confirmed that they do purchase additional insurance to cover any assets above the SIPC limits. I just wired a big chunk of money from our corporate WaMu account to our corporate Fidelity account, and I will sleep much better tonight.

Any word on SDCCU? Are they safe, given how aggressively they were selling mortgages?

Bankrate Safe & Sound gives them a 4-Star ("Sound") and a CAEL rating of 2 ("Sound"), but who knows how accurate that is. I'd like to know more about the stability of SDCCU as well.

how aggressively they were selling mortgages?

Where is the evidence for that? I have an account there for over 15 years and they have never appeared aggressive. Friendly, yes; Stupid - no. Absent some evidence, calling them aggressive in mortgage selling is rumor.

Now, I can use a little less of their used car sale advertising. But, that is peanuts compared to the mortgage nukes that are going to obliterate the commercial banks.

Where is the evidence for that?

Mailings to home & apartments about their mortgage rates & closing costs. Emails advertising mortgages & auto loans. Advertising Refi's , home improvement programs....both on television and print media.

And, if you ever walked into their carmel mtn branch you would not call them friendly. Maybe not stupid, but definitely could not help me with some simple banking questions. Maybe they are cutting back on training their staff.

They do advertise quit a bit; but I don't think they give away dumb loans. I haven't been inside their physical branches in a while, but they have always been very helpful and knowledgeable on phone.

You want some really bad customer service? Have you been to a BofA or Wells Fargo bank?

BoA is the worst, I'll never bank there. Unless their interest rates are 2x everyone else. When my Dad died I had to wrap up his accounts there, and I've never been to a worse-run operation.

SDCCU has been friendly and informative with me but I do see a lot of ads about their mortgages; however, their balance sheet indicates that they are not at risk. I spent about 2 hours there yesterday (Sorrento Valley branch). They treated me well.

Tells us more, Peter. I stumbled across this and insurance was up to $250k, but depositors either had to be living in the county or institutional (?). It certainly seemed like an option.

TreasuryDirect is about as safe as you can get and you can roll everything over in short term Ts.

I would not open a securities account on the assumption of hiding your money there. Other than treasuries if the banks runs hit hard most investments will likely dive and you won't be getting all of your capital back insurance or not.

Careful with Credit Unions as well. They run under NCUA insurance but there is a lot less in there to cover failed banks than FDIC. I bank at Navy Fed and they were selling ARMs and 100% financing all over the place. I don't believe they will be hit but if they were they would likely drain the entire NCUA indurance pool themselves.

Capeman,

I think it is good to inform depositors that both FDIC and NCUA are federal government agencies and hence will stand behind any losses up to the insured amount. If the losses exceed trust fund amounts, it will most likely be replenished with open ended taxpayer funds. Not doing so would take out complete confidence in banking system. This guarantee is certainly more explicit than the implicit support behind GSE's that is attracting treasury and Fed support now.

In summary, splitting deposits to $100K and keeping it at the highest interest paying bank or credit union deposits is no less safe than treasuries and probably more profitable.

SDCCU is interesting in the way they loan people money. I opened an account there and I was in debt over my head already, and they still gave me a $5000 visa gold credit card, and they refinanced my auto loan at a lower rate then I had with Pt Loma CU, even though my car was 4yrs old and had 60k miles on it.

On the other hand, I applied for a personal loan at a later date and they turned me down even though I had been making all my payments on time on the other loans.

I also asked them about refinancing my house, and they couldn't qualify me, so I do say yes they are conservative in their home lending practices.

No bank or CU is safe and the FDIC may insure your account today, but if lots of banks go bust they may run out of money to cover as well.

I say there is nothing safer then PHYSICAL assets you can touch that everyone will always want, i.e. gold bars, jewelry, guns, etc. Avoid gold certificates because they are just a piece of paper, if anything happens, you may not be able to get your gold.

This world sure is getting crazy, I hope someone can fix it before it completely implodes. something tells me mccain and obama won't be those people.

You can find all kinds of information about credit unions at www.ncua.gov, hit "credit union data" on the left. After you figure out how to navigate around you will find financial info of all sorts. The "ratio" analysis is very nice. I did it for San Diego area because we want to split up our savings to get under the fdic limits. You will see that SDCCU has the best numbers locally by far relative to the other CUs. Now I want to know which one is second best; enough branches, service....

We are prequalified for a home loan at SDCCU and in the process I asked them about their home loan past. They said all their loans comply with Freddie and Fanny so they can be sold if necessary to them to raise cash. i.e., no alt in their vault; so they told me. (They keep their home loans, so they said.) You can look at the .gov site and see their default ratios (less than 1%, as I remember.) I like the bank.

On to FDIC insured amounts; it is a little complicated and the ncua.gov site has a calculator to help you. In summary (best I can remember), it is 100K for one person, 200K for a couple. If you are a couple and have a trust and the account is with the trust, it is only 100k! But, if one member of the couple opens a joint account with the trust in addtion to the trust account, you are at 100K for the trust, plus 200K for the joint or 300k. If you have dependents, make sure you add them as this increases the insurance and avoids probate at terminus maximus.

Your business account is only good for 100k no matter what.

I agree on that. If there were anything to bail out be it another BSC, FNM, FRE or FDIC deposits, the deposits would have to be first in line for taxpayer funds or else you'd have a lot of people with pitchforks at the Treasury steps. As a matter of convenience, once the funds run out on FDIC or NCUA there may be a time lag before backstopping which could inconvenience those who need their money quickly. In the end I have a lot of confidence in that system but I'll have some cash on hand in order to not get caught with my pants down if the system were to fail.

My take on Treasurydirect is sure safety unless the entire currency system fails and easy access to Ts if and when the FED/Treasury make the wrong move and kill the bond market.