[bsrsharma]

This is an interesting anecdote from a FDIC employee involved in the S & L Crisis of the 1980s. Shows the complexities of FDIC insurance. Be careful if you have a bunch of cash!

A LIFE SAVINGS NEARLY LOST

Twelve days after a bank closing in Hennessay, OK, in late 1985, only four FDIC employees remained at the bank to complete a payoff. By then, there were no more than a dozen uninsured depositors with whom we had not met. At noon, an elderly woman walked into the lobby and was shown to my office. We got right to business, and she explained that her husband had just retired after 40 years with a local farmers’ co-op. The couple had four accounts with the bank—a checking account with a few thousand dollars, a savings account with about $10,000, and two Certificates of Deposit, each for $100,000. One CD was in her name, payable upon death to her husband. The other was in her husband’s name, payable upon death to her. The bank had set up these two CD accounts so both would be protected with FDIC insurance. I told the woman that the CDs would be covered with FDIC insurance, but the other two accounts would not because they were set up jointly with her husband. She and her husband were each entitled to $100,000 of protection for the CDs, but they would lose the roughly $12,000 in smaller accounts. The woman sighed at losing $12,000, then told me that her husband had passed away on the same day the bank failed and she could not cope with any more bad news. I was shocked at this revelation because I realized that when her husband died, the CD in his name became her property. So, she was probably going to lose the other $100,000, which only seconds before I had told her was covered by FDIC insurance. I had no choice but to give her the bad news. She became extremely distraught at the thought of losing more than half of her and her late husband’s life savings. FDIC staff decided to consult a senior attorney in Washington about the matter, who asked the time of death. He explained that we were paying out funds based on the ownership at 3:00 p.m. on the day the bank closed, so if the husband was alive then, the insurance limits would cover both of them. I volunteered to call the woman to find out the time of death. The phone rang and rang. Finally, she picked up and I got the answer I was hoping for. Her husband had died at 10:15…p.m. So both CDs were, indeed, covered. I gave a thumbs up! –Robert C. Schoppe

[bsrsharma]

This is an interesting anecdote from a FDIC employee involved in the S & L Crisis of the 1980s. Shows the complexities of FDIC insurance. Be careful if you have a bunch of cash!

A LIFE SAVINGS NEARLY LOST

Twelve days after a bank closing in Hennessay, OK, in late 1985, only four FDIC employees remained at the bank to complete a payoff. By then, there were no more than a dozen uninsured depositors with whom we had not met. At noon, an elderly woman walked into the lobby and was shown to my office. We got right to business, and she explained that her husband had just retired after 40 years with a local farmers’ co-op. The couple had four accounts with the bank—a checking account with a few thousand dollars, a savings account with about $10,000, and two Certificates of Deposit, each for $100,000. One CD was in her name, payable upon death to her husband. The other was in her husband’s name, payable upon death to her. The bank had set up these two CD accounts so both would be protected with FDIC insurance. I told the woman that the CDs would be covered with FDIC insurance, but the other two accounts would not because they were set up jointly with her husband. She and her husband were each entitled to $100,000 of protection for the CDs, but they would lose the roughly $12,000 in smaller accounts. The woman sighed at losing $12,000, then told me that her husband had passed away on the same day the bank failed and she could not cope with any more bad news. I was shocked at this revelation because I realized that when her husband died, the CD in his name became her property. So, she was probably going to lose the other $100,000, which only seconds before I had told her was covered by FDIC insurance. I had no choice but to give her the bad news. She became extremely distraught at the thought of losing more than half of her and her late husband’s life savings. FDIC staff decided to consult a senior attorney in Washington about the matter, who asked the time of death. He explained that we were paying out funds based on the ownership at 3:00 p.m. on the day the bank closed, so if the husband was alive then, the insurance limits would cover both of them. I volunteered to call the woman to find out the time of death. The phone rang and rang. Finally, she picked up and I got the answer I was hoping for. Her husband had died at 10:15…p.m. So both CDs were, indeed, covered. I gave a thumbs up! –Robert C. Schoppe

[bsrsharma]

Even if it can be sold for $651k

Time to start using numbers smaller than $520K for stuff like this…

 

[bsrsharma]

Even if it can be sold for $651k

Time to start using numbers smaller than $520K for stuff like this…

 

[bsrsharma]

Even if it can be sold for $651k

Time to start using numbers smaller than $520K for stuff like this…

 

[bsrsharma]

SD Realtor,

Thanks for that informative reply. I didn’t know there is so much higher risk in new purchase. My concerns about buying a new house are more “engineering based” – let someone else do the “beta testing”; I am afraid of construction defects that may show up after a while, especially ground settlement/water related. (The house we owned & sold was involved in a similar lawsuit before we bought, and I was a little apprehensive at first looking at all the microfilms full of ‘disclosure’). Especially, anything built in the last 5 years or so should be suspect quality wise. But you add a compelling reason why I should just stay away from anything newly built.

[bsrsharma]

SD Realtor,

Thanks for that informative reply. I didn’t know there is so much higher risk in new purchase. My concerns about buying a new house are more “engineering based” – let someone else do the “beta testing”; I am afraid of construction defects that may show up after a while, especially ground settlement/water related. (The house we owned & sold was involved in a similar lawsuit before we bought, and I was a little apprehensive at first looking at all the microfilms full of ‘disclosure’). Especially, anything built in the last 5 years or so should be suspect quality wise. But you add a compelling reason why I should just stay away from anything newly built.

[bsrsharma]

SD Realtor,

Thanks for that informative reply. I didn’t know there is so much higher risk in new purchase. My concerns about buying a new house are more “engineering based” – let someone else do the “beta testing”; I am afraid of construction defects that may show up after a while, especially ground settlement/water related. (The house we owned & sold was involved in a similar lawsuit before we bought, and I was a little apprehensive at first looking at all the microfilms full of ‘disclosure’). Especially, anything built in the last 5 years or so should be suspect quality wise. But you add a compelling reason why I should just stay away from anything newly built.

[bsrsharma]

“inflation is intentionally made”

Nothing like that. Inflation is a collective consequence of everybody desiring to consume more than we produce. When a society as a whole likes to live beyond its means, you get inflation. No body plans on it (except during depressions, when Central Banks do it to stimulate consumption). It is like every credit card user starts to use cash advance from one card to pay off another card.

[bsrsharma]

“inflation is intentionally made”

Nothing like that. Inflation is a collective consequence of everybody desiring to consume more than we produce. When a society as a whole likes to live beyond its means, you get inflation. No body plans on it (except during depressions, when Central Banks do it to stimulate consumption). It is like every credit card user starts to use cash advance from one card to pay off another card.

[bsrsharma]

“inflation is intentionally made”

Nothing like that. Inflation is a collective consequence of everybody desiring to consume more than we produce. When a society as a whole likes to live beyond its means, you get inflation. No body plans on it (except during depressions, when Central Banks do it to stimulate consumption). It is like every credit card user starts to use cash advance from one card to pay off another card.

[bsrsharma]

“far from desperate”

Give it an year. Things will be just the reverse.

[bsrsharma]

“far from desperate”

Give it an year. Things will be just the reverse.

[bsrsharma]

“far from desperate”

Give it an year. Things will be just the reverse.

[bsrsharma]

“Do builders actually keep the deposit if you can’t get financing at closing time?”

Seems possible if someone is stupid enough to sign a contract without contingencies. Any one who signs to buy without committed funds deserves that though.

[Author]

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