Thursday, October 9, 2008

Bank Question

Someone at work heard about a website that is keeping tabs on the health of the banks. She wanted to know about hers, Fifth Third Bank in Charter One. Can anyone help?

3 comments:

  1. The name of the site is Bauer Financial and Fifth Third currently has a three star rating. Your coworker found out about this site, most likely, in this Sun Times article.

    I would like to caution against putting too much weight into a site or rating like this. Most likely your coworker is not seeking to invest in a bank, she is simply looking to make sure her money is safe. It is improbable that she is holding more than $250,000 (the new FDIC limit) at the bank, and thus, she is just as safe as at any other FDIC bank (any bank she would open an account at).

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  2. Thank you very much Jumco, I'll pass the message along. You're probably right, I think it's just her savings account.

    Have any banks defaulted on savings accounts (I don't even know if that questions is worded correctly)?

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  3. Yes, when a bank defaults or fails, all of its accounts fail. For stakeholders and business partners of the bank, there is then a process of trying to sort out the seniority of various monies owed, etc.

    This, however, is a lot less scary than it sounds. For example, when WaMu failed, not a single dollar of insured deposits was lost and most customers could not tell the difference between a WaMu run WaMu and a JPMorgan Chase run WaMu. Depositors are very different than stakeholders and trading partners.

    Again, if she does not have more than $250K in the bank, she no more to worry about than if her bank had 5 stars on Bauer Financial or any such site.

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