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Is Your Bank a Penny Stock?

Johns Wu Posted in Banking News by Johns Wu
July 2, 2008 09:49 PM - 16 Comments

Last week, Senator Schumer of NY issued a letter to federal banking regulators warning that there would be severe consequences to taxpayers if a large commercial bank like Indymac were to fail.

Senator’ Schumer’s letter created a bank run at Indymac’s branches; Indymac bank officials report droves of customers making withdrawals during the weekend. An official statement from Indymac later reports that over $100 mln was withdrawn over the weekend by spooked depositors.

Indymac Bancorp (IMB:NYSE) stock has been getting slaughtered on the market. Once a $40/share stock, IMB has been trading for the last few days under $0.75/share!

How does this make you feel?
Would you feel safe depositing your money in a bank that is getting slaughtered on the stock market? or is it good enough that a bank is FDIC insured?

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Comments (16)
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  1. Marcia Blackman said:
    on July 2nd at 11:08 pm

    As long as it’s insured, it’s okay with me. What isn’t OKAY, is that these jerks don’t answer their telephones, and tell you, ‘you have a 12 minute wait for the next operator’. Well, if they can’t hire enough help to speak to their (potential) customers; my money goes elsewhere.

  2. jay said:
    on July 3rd at 08:30 am

    i have a cd.at indymac and it will expire next year what will happen if the bank close? thaks smart people

  3. jacob said:
    on July 3rd at 07:46 pm

    i was going to recommend indymac to someone else, i’m glad i read this

  4. Larry said:
    on July 4th at 02:37 am

    It’s great when a bank crashes like this. Unless you were naive enough to keep stock with them the past few months.

  5. tom said:
    on July 4th at 05:48 pm

    larry do you mean great in the way that they are offering well over 4% interest cd/s or in another way i’m not thinking of?

  6. steve said:
    on July 4th at 06:40 pm

    I would assume the gov’t would reimburse you for everything up to $100,000 since it is FDIC insured.

    jay said:
    on July 3rd at 08:30 am

    i have a cd.at indymac and it will expire next year what will happen if the bank close? thaks smart people

  7. Dan said:
    on July 6th at 12:45 am

    The FDIC is not much of an insurance policy since they are poorly funded. If even one large bank were to fail, they would quickly run out of funds. Everyone has a nice warm false security. Think “FEMA for banks”.

  8. gordon said:
    on July 6th at 05:01 pm

    You’re an idiot holding a CD with ANY mortgage bank, if the FDIC takes it over, you will suffer a delay and in the process, they will CUT THE DIVIDEND IN HALF!

  9. Abby said:
    on July 6th at 06:58 pm

    I’d take the risk with up to $25M on any FDIC insured bank – just need the interest to pay the bills, eh? Anyway, I just bought a CD here – I can’t lose more than I’ve lost in General Electric stock ..hmm there’s a thought.

  10. Bill said:
    on July 7th at 11:18 pm

    I’ve had great service here….have my saving account making 4% better than any bank in the country

  11. tom said:
    on July 12th at 03:16 am

    wow indymac just collapsed! bankaholic called it beforehand. good luck all u indymac fans out there

  12. Ken said:
    on July 12th at 11:45 am

    The FDIC announced the roughly 10,000 customers with uninsured deposits will receive their deposit amounts.

    The FDIC also said it expects the fund to pay between $4 and $8 billion out of its deposit insurance fund, which backstops all U.S. bank deposits to a certain dollar level, in part to stave off a deposit run on banks.

    At the start of the 2008, the FDIC insurance fund had $52.2 billion in assets.

  13. Doc said:
    on July 15th at 04:56 am

    Banks going under…NOT GOOD…but it is hard to feel sorry for these jackazzez when they are charging you $2-3 everytime that you take your own money out through an ATM…good bye you greedy bastard INDYMAC

  14. Peter said:
    on July 16th at 07:31 am

    In response to Doc’s inane comment:

    I find it amazing that in the US people somehow have the idea that banks should not be charging ATM fees. Where does this illogical thinking come from? The banks invest thousands of dollars on the technology and machines and yet it’s somehow unreasonable to think that they would charge a fee for that? You’re better off complaining about highway tolls than ATM fees. Free banking is not a human right. If you think a bank deserves to collapse because of a 2 dollar fee, you really need to get a life.

  15. Macossay said:
    on August 20th at 10:01 pm

    In response to Peter’s comment about Doc’s comment. ATM transactions are cheaper for the bank than teller transactions, so there is no justification for passing on that cost. Even if there were, the average cost to the bank for an ATM transaction is 14 cents, thus their charges are unreasonably high. And finally there is an oversupply of ATMs, spreading the fee pool too thin and driving up ATM fees. Banks are overinvested in ATM, just as they are overinvested in dubious mortgages.

  16. Wizard Prang said:
    on October 16th at 05:05 pm

    In response to Peter’s inane comment:

    Remember banks before ATMs? They used to have 6-8 Teller desks. These days they have an ATM out front and 3-5 desks. This means that one ATM replaces three tellers, which is a HUGE cost savings for the bank.

    And you think I should pay extra for this?

    Next you’ll be saying that I should pay extra to view images of my checks… which _the banks_ now shred as a result of Check21 – a law written by _the banks_, for _the banks_, that results in a huge cost saving for… _the banks_.

    Bah

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