You can't have an opinion about a fact, however. The FDIC does pay out, and does so quickly and without any work by the owner of that money. You can't have an opinion about that, its either true or its not, and for the past 75 years and for the next 75 years, this will continue to be true.

Economist, there is one flaw in your argument: the FDIC has an unlimited line with the Treasury. This is not a bailout, this has been on the books for quite a long time now, and it requires no participation from Congress. In the case that FDIC's warchest does run out, the Treasury will print money on demand to cover the overage in protection.

Unless either the government fails, we run out of trees, or the Congressionally passed acts that allows the FDIC to exist and for it to have an unlimited line with the Treasury are removed, what I said continues to be fact: we have nothing to worry about.

I'd like to add something here: I really have no problem with people saying WAMU is going to fail. I've been saying WAMU is going to fail since before Bear Stearns went under months ago. If I was into shorting stocks, I would have been shorting WAMU like crazy. I'm just tired of people flooding WAMU threads (such as the ones centered around WAMU's new increase to 4% APY on their savings account) with total bullshit.

FWF exists so we can share ways of making money with each other. WAMU offers 4% APY, there is at least 2 major threads discussing this. These threads contain trolls about the FDIC not doing what it is required to do by law (see my op post). For every person who decided to shy away from WAMU's 4% because they do not understand how the FDIC works or have fell for the trolls and are misinformed because of it, I feel FWF has failed in some way.

This is the purpose behind me starting this thread.

Never defaulted on anything backed by its credit. Ever. But you can say what you wish and fear what you choose.

DiabloD3 said: In the case that FDIC's warchest does run out, the Treasury will print money on demand to cover the overage in protection.

Yes, they will print money on demand. And so the value of the funds will be lost by inflation.

revheck said:Yes, they will print money on demand. And so the value of the funds will be lost by inflation.

So? Inflation itself is not your enemy. A healthy economy inflates, and does so at a near constant and easily predictable rate. It is only a bad sign when it rapidly inflates, such as what we've been facing for the past 3-5 years or so.

Even if we had to plunk down $500 billion to bail out Chase or Citi or some other super-sized bank, if that was the only thing we had to do that year it'd only make a tiny dent in our healthy level of inflation.

Right now, we're rapidly inflating to deal with the Iraq war, the Sub-prime mortgage mess's direct influence in people's lives, and then the Sub-prime mortgage mess's destruction of half of Wall Street.... and even with this triple threat, our economy is not nearly as bad as it was shortly after the 1987 crash and I do not believe we have quite reached the levels of the dot com bubble burst either.

Currency inflates, no matter if it is fiat or not. If you think money should be safe in a mattress, then you're sadly mistaken. This is the nature of money.

But then why did this woman lose her $20,000?

So you mean, if I go over the $100,000 limit that I'm told not to go over then I won't get that money that isn't insured at all? *rolls eyes*

The video said:But it's ok to bail out these corporations that made bad business decisions
You mean like the bad business/financial decision you made by keeping more than the FDIC limit in a bank?
The video said:I feel like taking the money out and putting it under the mattress...I don't think anything's safe anymore
Ugh...

BHG> Thanks for the link. I did find the reading enjoyable.

Except it doesn't prove much. I searched for "full faith" and it only came up as text of "signs" that would be "prominently displayed". Also, the text was either:

1) The other will indicate deposits are insured by the Federal Deposit Insurance Corporation and/or "Deposits Federally Insured to $100,000--Backed by the Full Faith and Credit of the United States Government."

or

2) "Deposits Federally Insured to $100,000--Backed by the Full Faith and Credit of the United States Government."

Notice that FDIC is supposed to be contacted only if 1) is applicable, but OTC (Office of Thrift Supervision) is the ONLY listed option when 2) applies. Thus, nice "red herring", BHG. Thus, the link you provided did little to help your argument and did not establish at all that FDIC-insured accounts are backed by "full faith" and "credit" of USG.

Another red herring, which, nonetheless, may be used as circumstantial evidence, is your reference to FSLIC. Still, circumstantial evidence of the government's behavior, as evidenced by very recent events, shouldn't be taken for granted. Remember how the government decided to save Bear Stearns by a forced sale, but let another big ivestment bank fail and go into bankruptcy?

Yes, I'm actually an economist. However, that was a nice ad hominem attack from you Whenever my opponents choose to go after me personally rather than discuss my reasoning, I know they must not have good arguments to support a differing position or do not have the skills necessary to construct such arguments

The magnitude of the current crisis is quite profound. Many events that most would think only a year ago were impossible came to be a fact. Thus, I wouldn't trust past performance too much in making decisions about the future.

In the current environment, I think it's prudent to diversify holdings among different banks. Further, with the deposit rates being nothing to write home about currently, I'd probably pull at least some money out of WAMU and stick them into say ING. The difference would be 1-1.5 percentage points in the interest rate, but it's much easier to imagine a scenario when both your ONE bank and the FDIC fail than all of your SEVERAL banks and FDIC all fail

I did have a very pleasant experience with the Netbank failure, as the account got converted to ING and access to the money was not interrupted for more than a couple of days. Still, it doesn't guarantee that the same would continue to apply as losses mount.

beethovengirl said:Economist said:Thus, it may come a time where FDIC runs out of funds to pay the claims of the insured depositors. Absent a government bailout (which now seems very likely but not guaranteed)
Actually, a government "bailout" is guaranteed, as the FDIC is backed by the full faith and credit of the US Government. In fact, during the savings & loan crisis, the FSLIC became insolvent, and it's not hard to guess how it got recapitalized.

Are you actually an economist?

taxmantoo said:
And as we all know, the US federal government has never reneged on a promise. [/sarcasm]

Green for being one of the few people who correctly spells (and, I'd assume pronounces) "reneged".