Think about a local credit union

[ThePilgrim]

I long ago went from a bank to a local credit union, not because I didn't think my money was safe but because the treatment was better. But in the past few years it has come to my attention that ordinary folks money is not safe in the big commercial banks. And neither is your church's money if it is in a commercial bank.

God bless,
Larry

Read this from Karl Denninger http://market-ticker.org/



Let's Make The Clawback Risk REAL

One of the forum members pointed out something that was obvious to me when I wrote this morning's Ticker, but might have gone over your head.
I want to make absolutely sure it doesn't go over your head because if you're wrong about this you could lose everything in your bank and investment accounts -- every single dime.
FDIC / SIPC insured or not.
Recently Bank of America transferred a bunch of derivatives into their banking arm. "A bunch" means somewhere around $80 trillion worth.
Now pay very careful attention, because part of the bankruptcy "reform" law in 2005 placed derivative claims in front of depositors in a business failure - including a bank failure.
What JP Morgan is claiming in the MF Global case is that the derivative trade (which is exactly what a "Repo to Maturity" trade is - it's a derivative) is entitled to preference in the case of MF Global over those who had cash there for safekeeping either as a margin deposit or just as free cash as you would hold free cash in a bank.
If a major bank blows up this very same claim, supported in existing Bankruptcy Law with the changes signed by George Bush in 2005, will be used to steal the entirety of your bank account, and if you detect the impending blowup shortly before it happens -- say, 90 days before -- you're still exposed to the risk through clawback!
I have often referenced how that "reform" law in 2005 was used to screw you blind as a consumer, all under the name of the "ownership society" and "responsibility." The truth is that this "reform" law was a raw example of financial******that was intended to and did assault you, the common consumer in America, for the explicit purpose of benefiting large financial institutions.
Don't run any junk about FDIC insurance in this sort of event either -- in the singular case of Bank of America we're talking about $77 trillion in face value of derivatives. While "notional" values are wildly beyond what anyone would have to pay (as that figure assumes the reference all goes to a literal value of zero) the fact remains that with even a 5% loss the amount of money required would be roughly equal to the entire US Federal Budget, which the FDIC clearly does not have -- nor could it acquire.
A cascade failure of several large banks would easily result in loss claims that would exceed the entire US GDP; for obvious reasons virtually none of that would actually be paid or recovered and in the case of you, the average person, your reasonable expectation of recovery in such an event is zero.
There is a fairly cogent argument to be made that what BofA did is tantamount to intentionally placing an armed financial nuclear device in the center of the board room table and then daring anyone -- including the government -- to come tamper with it and risk setting it off, knowing full well that if it explodes it is utterly impossible to contain the damage to our economy and financial system.
Oh, and just in case you missed it, this risk is not limited to Bank of America. Go look at any of the large banks and their derivative book of business' notional value and then tell me that it makes a bit of difference which institution we're talking about at any instant in time.
If this risk has not sunk into your brain by now despite my incessant table-pounding you need to go for a psychiatric examination stat. This is not to say that you're about to have the entirety of your savings accounts, CDs and similar disappear, because nobody knows exactly how much risk lies where with what in the US banking system (say much less the European one) and thus the odds of such an event cannot be qualified in any meaningful way.
But as we have seen since 2007 executives will lie with impunity about their exposure and level of risk in this regard and despite Sarbox, which allegedly makes such lies (when reduced to writing in a quarterly or annual report) a crime nobody has been prosecuted for doing so and it is quite clear to me that the US Department of Justice is intentionally running the clock on the statute of limitations so those who did and do so get away with it.
The bottom line is this: The risk is very real as customers of MF Global have now discovered "the hard way" and if you're sticking your head in the sand at this point you have no right of complaint when and if it happens to you.

Edited December 6, 2011 by pilgrim1938

[John81]

Our little town only has one bank. I liked it better when it was totally local, but now it's part of a group of banks in the State but it's still somewhat hometown.

I don't have enough money in there to be overly concerned but our church does.

[OLD fashioned preacher]

We don't have a credit union here (or a big nationwide or international bank), we have one bank that is part of group of 12 banks in the state and 2 banks that are just local (the closest Bank of America, Citibank, Compass, etc is over 160 miles away).

Edited December 7, 2011 by OLD fashioned

[No Nicolaitans]

I left banks for my credit union several years ago. I had banked with one bank for YEARS; however, they went through several take-overs. Still had the same people working there different "rules".

I love my credit union. Unlike banks, the credit union treats you like you're doing them a favor rather than the "bank" doing you a favor.

[JerryNumbers]

Mt 6:19 Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal:
Mt 6:20 But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal:

Something I have little of, I just trust the Lord, & according to our Lord, if you have that stuff laid up, moths will get hold of it, or rust, or maybe even thieves will break in & take all of it.

Seems I heard about the latter quite often, & the older I get, the more often I heard about people staling others peoples money that they have laid up hoping it will make them many dollars.

Which, do as you like, I'm just telling of the way I have chosen, its worked pretty good so far, never had much material stuff, yet we have had our needs met, that is really all that I feel God has promised me, plus, I'm just trying to store treasure in heaven.

[OLD fashioned preacher]

I left banks for my credit union several years ago. I had banked with one bank for YEARS; however, they went through several take-overs. Still had the same people working there different "rules".

I love my credit union. Unlike banks, the credit union treats you like you're doing them a favor rather than the "bank" doing you a favor.

Part of the reason for this is that with a bank, you are a depositor; with a credit union, you are literally a share holder (you financial input is actually share holdings in the credit union and you are eligible to run for a board position).

I was a member of Eglin Federal Credit Union for 20 years.