In light of the FDIC Capping Interest Rates thread, which discusses a new FDIC regulation effective 1/2010, where any FDIC institution (e.g. banks, not credit unions) that has a capital category other than "well capitalized" is subject to interest rate caps, should we add either the capital category to the information in the Quick Summary of the stickied Best Nationally Available High APY Liquid Accounts thread, or at least a flag, indicating whether or not the bank is considered well capitalized?
Note: The interest rate cap depends on the type of deposit account and the corresponding average national interest rate for the account type. 75 basis points is added to that average to get the capped rate.
If you favor the idea, please green the OP; if not, please red. Feel free to discuss in this thread pros and cons of this idea.
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posted: Jun. 2, 2009 @ 1:23p
mttatkns
Thrifty Member
posted: Jun. 2, 2009 @ 1:44p
Capitalization should be an important consideration when opening new liquid accounts between now and January 1, but after the new regulation takes effect it will be a moot point given that only well capitalized banks will be able to pay the highest rates. I think it would be beneficial to add the referenced column for the next seven months; after that, it will have diminished value (especially if it's a Y/N field, which doesn't indicate how close a bank is to becoming subject to the regulation). The biggest question is where to obtain the most recent data, since FDIC (to my knowledge) does not regularly publish capitalization ratings, and third parties such as bankrate and bauer financial have very different definitions of capitalization levels than the FDIC.
glxpass
Senior Member - 5K
posted: Jun. 2, 2009 @ 1:51p
You can ask the bank directly. Ally has already said they are well capitalized in their ABA response and Solera simply volunteered the informaiton when I asked about the longevity of their rates. That's no guarantee that the rates will last, but at least capitalization level isn't a concern with Solera.
I'd agree the value of this information is most effective prior to 1/2010. As you know, banks can even start implementing the regulation right away if they choose to.
ETA: I withdraw my suggestion about asking the bank. FDIC has this information as detailed below.
mttatkns
Thrifty Member
posted: Jun. 2, 2009 @ 2:06p
glxpass said: You can ask the bank directly. Ally has already said they are well capitalized in their ABA response and Solera simply volunteered the informaiton when I asked about the longevity of their rates. That's no guarantee that the rates will last, but at least capitalization level isn't a concern with Solera.
I'd agree the value of this information is most effective prior to 1/2010. As you know, banks can even start implementing the regulation right away if they choose to.I wouldn't recommend this method. Practically every institution will find a way to portray themselves in the most favorable light, and minor differences in diction can mean the difference between being considered well capitalized or less than well capitalized by the FDIC.
For example, Ally did not state that they are well capitalized. In his letter, Molina said Ally is "among the best capitalized banks in the country" and that their Tier 1 capitalization leverage ratio is triple what constitutes being well capitalized by FDIC regulations. However, looking at those regulations, we'll see that to be considered well capitalized, a bank must have their "Total Risk-Based Capital Ratio equal to or greater than 10 percent, and Tier 1 Risk-Based Capital Ratio equal to or greater than 6 percent, and Tier 1 Leverage Capital Ratio equal to or greater than 5 percent." Molina only addressed one of these points, and I venture to guess it is because Ally falls short on the other two. His carefully-worded statement does not directly indicate that Ally is deemed to be well capitalized by the FDIC, and if you use the responses of banks, I forsee similar responses. Until a better measurement is proposed, I'm giving this idea red.
Ank329
Member
posted: Jun. 2, 2009 @ 2:14p
I think it is a good idea to indicate if the bank is well capitalized or not, but like mttatkns points out it will be difficult to determine the bank is well capitalized or not. So, until we have a "clean" data source that's valid I'm going to give the idea a red as well.
glxpass
Senior Member - 5K
posted: Jun. 2, 2009 @ 3:05p
The points are well-taken about getting an accurate answer to the question of capitialization level of a given bank. I found out that the FDIC indeed doesn't have this assessment available, but am awaiting a call that might tell me how to derive this information from reports that are available for each FI at the FDIC web site. For example, there is an income statement, apparently for each calendar quarter that shows Tier 1 risk-based capital amounts (or percentages), as well as total risk-based amounts. I haven't found leverage yet.
If this pans out, then we will have an accurate way to determine capitalization level of a bank, without having to take their word for it or risk an incomplete answer. For example, there is a current income report showing assets and liabilities for each quarter-ending date, which mentions Tier 1 risk-based and total risk weighted assets. I'm not sure about leverage information.
I'm awaiting a call from an FDIC specialist in this area.
ETA: I didn't get a callback yet, but it appears the information is available at FDIC. See my below post.
glxpass
Senior Member - 5K
posted: Jun. 2, 2009 @ 7:44p
mttatkins said: <snip>
The biggest question is where to obtain the most recent data, since FDIC (to my knowledge) does not regularly publish capitalization ratings, and third parties such as bankrate and bauer financial have very different definitions of capitalization levels than the FDIC.
It appears that one can determine the FDIC capital category from on-line FDIC information.
Capital Group Descriptions "Well Capitalized." Total Risk-Based Capital Ratio equal to or greater than 10 percent, and Tier 1 Risk-Based Capital Ratio equal to or greater than 6 percent, and Tier 1 Leverage Capital Ratio equal to or greater than 5 percent.
"Adequately Capitalized." Not Well Capitalized and Total Risk-Based Capital Ratio equal to or greater than 8 percent, and Tier 1 Risk-Based Capital Ratio equal to or greater than 4 percent, and Tier 1 Leverage Capital Ratio equal to or greater than 4 percent.
"Undercapitalized." Neither Well Capitalized nor Adequately Capitalized.
Here's how to determine the capital category or group:
* Start with FDIC: Institution Directory * Click on Find Institutions. * Enter the Institution Name, e.g. Ally Bank. * Click on the Find button. * Click on the Cert link in the Cert column of the applicable FI. * ID Report Selections pull-down menu - select All Summary Information. * Report Date should say March 31, 2009 or whatever the most recent quarter-end reported is. * Click on Generate Report.
Here's what you'll see for Ally Bank as of March 31, 2009, under Condition Ratios (%):
102 Core capital (leverage) ratio (This is Tier 1 Leverage Capital Ratio): 11.38% 103 Tier 1 risk-based capital ratio: 15.72% 104 Total risk-based capital ratio: 16.99%
Therefore, as of March 31, 2009, Ally Bank is considered well capitalized, according to the FDIC.
Edit: Used FDIC's terminology of "capital category." (They also call it "capital group.")
That QS doesn't fit on my screen anyway. What's one more column until January?!
acheslow
Member
posted: Jun. 6, 2009 @ 2:08a
I like this idea. In the meantime, here is the data on my banks:
Frost Bank (Frost Momentum): Well Capitalized as of 3/31/09 102 Core capital (leverage) ratio 8.82% 103 Tier 1 risk-based capital ratio 10.77% 104 Total risk-based capital ratio 12.13%
FAB&T (First Arkansas Bank and Trust): Well Capitalized as of 3/31/09 102 Core capital (leverage) ratio 12.63% 103 Tier 1 risk-based capital ratio 18.47% 104 Total risk-based capital ratio 19.72%
I'll wait to see the outcome of this thread before posting in the High APY thread.
ThursdaysChild
Missed.
posted: Jun. 6, 2009 @ 1:23p
scripta said: That QS doesn't fit on my screen anyway. What's one more column until January?! Rather than adding more columns (which will fall out of date) I'd prefer to have glxpass' description of the way to determine the category as he set out in his June 2nd post.
glxpass
Senior Member - 5K
posted: Jun. 6, 2009 @ 6:52p
acheslow said: I like this idea. In the meantime, here is the data on my banks:
Frost Bank (Frost Momentum): Well Capitalized as of 3/31/09 102 Core capital (leverage) ratio 8.82% 103 Tier 1 risk-based capital ratio 10.77% 104 Total risk-based capital ratio 12.13%
FAB&T (First Arkansas Bank and Trust): Well Capitalized as of 3/31/09 102 Core capital (leverage) ratio 12.63% 103 Tier 1 risk-based capital ratio 18.47% 104 Total risk-based capital ratio 19.72%
I'll wait to see the outcome of this thread before posting in the High APY thread. Thanks! I put your information in the Quick Summary, and added Ally Bank as well as ebank. It appears from this Bank Deals post that ebank has cut its rates in anticipation of the FDIC rate caps. ebank is considered undercapitalized as of 3/31/2009.
If anyone is so inclined, please feel free to add other banks to the Quick Summary.
every news story I see says the GMAC/Ally bank is undercapitalized, maybe they are using some different formula?
glxpass
Senior Member - 5K
posted: Jun. 6, 2009 @ 7:05p
SUCKISSTAPLES said: every news story I see says the GMAC/Ally bank is undercapitalized, maybe they are using some different formula? I never received a call back from the FDIC specialist. I'll try again on Monday.
Can you provide any links that explicitly state that Ally Bank is undercapitalized? Thanks!
Since December, GMAC has received $12.5 billion in government infusions, including $7.5 billion last month to boost capital and help it expand auto lending at Chrysler LLC.
Perhaps these "government infusions" have made Ally Bank well capitalized.
i think i just read it last night or 2 nights ago I will try to find it
glxpass
Senior Member - 5K
posted: Aug. 23, 2009 @ 9:41p
bump as the deadline approaches. I don't know if more recent figures are out yet to determine capitalization group or level, but it might be worthwhile to check the Quick Summary and update/add banks where appropriate.
glxpass
Senior Member - 5K
posted: Nov. 17, 2009 @ 6:34p
Bump again, as Reward Checking Accounts are beginning to be affected. See this Bank Deals post on the subject. Thanks to ThursdaysChild for the reminder and the link.
bustgum
Member
posted: Nov. 17, 2009 @ 8:48p
Note that according to the testimony of the Libertad Bank CEO in this Banking Deals Blog post, even though his bank's ratios exceed those required to be "well capitalized," the bank is not considered well capitalized because it had entered into a consent agreement with the FDIC last year. So, it appears that you have to look at more than just the ratios to determine if a bank is considered well capitalized.
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