Monday, July 14, 2008

IndyMac Revisited

I'm sorry. Maybe I've been reading too much of Cristin's blog, but I can't help kicking these people while they're down. (Cristin: remember there's always a 40 in "60-40," and 40% is a lot. Ted Williams hit 40% and he's in the Hall of Fame. I'm just sayin'.)

I thought we had the Federal Deposit Insurance Corporation so things like this didn't happen anymore. Isn't that what President Roosevelt and Senator Glass wanted us to believe? These people show up at 4am, 11 business days late. Haven't they identified themselves as the depositors most worthy of losing their money? They probably didn't even know there was a problem until they saw Linda Alvarez tell them last night. (Is she still around? What about Colleen Williams? Man, I used to think she was hot!)

Then there's this retired teacher walking around with $171,000. He had $171,000 and the best investment he could come up with was a bank? Or this other guy who says, "I have $360,000 in this bank, and I was misled by this bank. I gave the names of my mother, my sister and my brother on the account so I thought I would be insured." So at least he was misleading the bank right back. Maybe this news story should have the headline, "People Who Try to Game System End Up Gamed." That's not really news. There's a reason FDIC insurance has a cap. These people are finding out what that reason is.

And I want to add a little something about reverse mortgages: I know they're great for particular old people, but how they ever be great for the bank? They basically pay today's value for an asset that they can't unload if the asset value goes down. And when you're dealing with old people, the appreciation on their homes is usually unbelievable, so they have a ton of room to borrow and the bank has no cushion against depreciation. I don't get it. Anyway.

The retired teacher was "originally attracted to IndyMac because of the high interest rates it offered on deposits." What is wrong with these people? Don't they wonder why interest rates differ? These are the type of people who decide where to place their retirement accounts based on what style of toaster they'll get for opening a new account.


Cristin said...

I agree. These people are idiots. Everyone knows the FDIC only insures up to $100k. On the news today they had a bunch of folks lined up outside of IndyMac to get their money. I almost expected to see people walking out with bars of gold or bags with big dollar signs on the side, but didn't.

Erik said...

Thats why I beleive in spendng all of my money as soon as I get it, so then the bank can't lose it for me. At least when the world falls apart I will will have bullets for my gun if I buy them today instead of saving money....