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Delay In MetLife Bank Sale Gives Savers An Opportunity For More CD Shopping

GE Capital has agreed to buy the depository business from Metlife Bank.The sale of MetLife Bank’s depository business to a bank subsidiary of General Electric, originally set to close by June 30, is temporarily on hold.

According to a July 17 Wall Street Journal report, federal regulators have been too busy with “broad industry issues” (i.e., Dodd-Frank rule-making) to focus on approving the deal.

I’m taking advantage of the delay to bulk up the IRA CD portfolio I’ll have at the combined bank.

That portfolio will exceed the standard $250,000 permitted under FDIC regulations.

GE Capital Bank (it recently changed names from GE Capital Financial) offers longer-term brokered CDs having rates competitive with the best CDs offered directly by online banks.

It also carries a 5-star Bankrate Safe & Sound rating.

Once the sale closes, a customer’s GE accounts will be combined with MetLife Bank accounts for deposit insurance limit purposes.

However, under FDIC rules, MetLife Bank CDs owned on the closing date will be insured separately from the customer’s existing GE accounts, at least until they mature.

This means that, in the case of my IRA accounts at online brokers, I can acquire up to $250,000 in GECB brokered CDs (ignoring interest) before the sale closes, even though I currently own a $230,000 MetLife Bank IRA CD.

In other words, I can own $480,000 in FDIC-insured IRA CD investments in the merged bank after the closing.

Actually, I could also open another $20,000 IRA CD at MetLife before the closing, but I don’t like its current long-term rates. (Its 12- and 24-month rates are competitive with the deals that top our CD Rates Leaderboard.)

When my MetLife IRA CD matures in June 2014, my limit will go back down to $250,000.

Anyway, I recently purchased three GECB CDs for my Fidelity IRA — a 5-year at 1.80%, a 6-year at 2.00% and a 7-year at 2.15%.

Post-closing, it seems I won’t be able to buy any new IRA CDs at the combined bank.

But not to worry: My IRA accounts won’t be completely blocked from acquiring FDIC-insured bank CDs offered by GE affiliates.

The giant conglomerate owns another bank — GE Capital Retail Bank (formerly known as GE Money Bank) — which also offers brokered CDs at competitive rates and has a 5-star Bankrate rating.

And it’s a federal thrift, legally distinct from GECB, which is a Utah-chartered bank.

That means it’s separately insured by the FDIC, so I can buy up to $250,000 of its CDs for IRA accounts at any time, regardless of when or whether the GECB-MetLife sale is consummated.

Isn’t FDIC insurance wonderful?

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