Wednesday, July 16, 2008

Distractions

Guess what my husband and I have been doing for the last few days. Focusing on our business? No.

Concerned about the bank situation.

If you're reading the mainstream media or any of the blog sites that like to elicit panic, you know that any bank that has real estate loans on its books is in danger of failing. The more they have, the worse off they are. Many analysts believe that other banks will fall very soon on the heels of the IndyMac disaster.

So, as you can imagine, I've been nervous~to put it lightly. Then I proceeded to get my husband worked up. While he waited to hear back from his contacts in the banking industry, I was begging him to go to our bank (one that should have been relatively safe) and withdraw all of our money. "What do we do with it once we take it out?" he asked. To which my researched and intelligent reply was, "I don't know." I thought that maybe we could put it all in a cashier's check, but then that has the potential of being worthless. I figured that he could hire a couple of armed guards, handcuff a suitcase to his wrist, and cash it all out. Then what? Which bank is safe?

My sister, the accountant, reviewed the 2008 first quarter financial records of four banks. Three of them did not look good. One of them was mine. She thought we should take our money out. But then what?

I spoke with my brother. He said that we should never worry if our accounts are FDIC insured and under $100K (haven't had to worry about that for the last year). He said he wouldn't even go near his bank if it failed. He'd just do business as usual. I think he puts way too much faith in the government. How do you perform transactions if your money is frozen for a number of days? FDIC had almost $53,000,000,000,000 in funds. The nations banks have over $4.4 trillion insured. You do the math. Not only that. FDIC just spent $7-8 billion bailing out IndyMac so far.

Work with me on this. Let's say I'm not so lucky as to have my bank fail next. That it fails, I don't know, let's say . . . tenth. And I'm at the end of the line. "Sorry, the previous customer just withdrew our last $100,000. There's no more left in the fund."

My husband spoke to both of his close contacts in the banking industry. They each told him, independently, that we should take no action. They told him that, if the FDIC runs out of money, we have a much bigger problem on our hands than trying to access our meager funds.

Now I'm worried that I'm not worrying about the right thing.