Background:
- Trump’s second term could mean the downfall of the FDIC, CFPB: Here’s what that means for consumers | CNBC
- Senator warns of national security risks after Elon Musk’s DOGE granted ‘full access’ to sensitive Treasury systems | TechCrunch
What prompted this is I logged into my bank this morning to send some bill payments, and the FDIC banner at the top caught my attention. At first it made me laugh because of recent events, but that laugh turned into kind of a nervous chuckle:
I was like “Surely this administration won’t fuck with the FDIC” but then read through the articles above, and now I’m not so confident.
Currently, I use a small, local bank. I’ve never really worried about it because of FDIC protections, but should I move my money out of it to a larger bank? Withdraw it all and stuff it in my mattress?
I’m not freaking out, but I am concerned about this for the first time in my life.
The rational part of me says that if it gets to that point, my money would probably be worthless anyway except for burning it to keep warm.
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I don’t even want to link to it directly in case links to that sub are being tracked so here’s an indirect example that may help explain why so many Democrats are currently going along with the plan to dismantle our society so extremely quickly into the new administration - bc their very families are receiving death threats.
And with what looks to me like the White House shown in the background, the new administration explains how not voting for Trump and supporting things like “Meals on Wheels” makes even centrists and not-right-enough rightists (rinos?) into “extreme leftists” (here).
I don’t think “stability” is going to be something that we can count on in the future. Sorry if I’m not helping here - emotionally I am not okay this week, and yes you are asking good questions to try to cope and thereby help others as well as yourself through the next steps.
That’s probably the one thing that could save the DNC despite its best efforts to become a regional party. If FDIC insurance goes away, all savings in the insured range will go to money markets, leading to bank runs on the now uninsured banks. It will make W look popular on the way out as the entire banking sector collapses.
I saw the same banner on my bank’s website the other day, and also wondered what the “full faith and credit of the US government” might really be worth in the near future.
If the FDIC goes away, then the question is which bank will be less likely to suffer a bank run. That is really hard to predict, since it is all about consumer confidence and marketing perceptions. Is your local savings-and-loan safer because they are stable and boring? Or is a huge national bank safer because it’s “too big to fail” and more likely to be bailed out in a crisis?
The best bet is diversification. Spread your savings among multiple banks, and consider putting it in things other than US dollars: real estate, gold, foreign currency, etc.
Y’all don’t want to hear this, but it might not be a bad idea to start storing some of your savings as crypto. It was designed for this very purpose: to allow you access to your funds from anywhere in the world, when governments fail to protect your assets.
The problem is for people who have more than $500 to save somewhere: if I put half my assets in crypto, we’re talking north of $600,000.
I do not trust a bunch of people who think computer-generated monkey pictures are neat with great big piles of money, and until they stop acting like a cross between the stupidest shit you’ve ever heard and a poverty-spec casino, it’s not gonna fucking happen.
So yeah, I still trust the banking system more than I do putting it into even something like ETH or BTC, even if I’m doing self-custody, because I don’t trust a single player that’s involved will do anything other than immediately collapse if it reaches the point where crypto becomes more useful than real money and people start trying to pull usable money out of their portfolios.
If I can’t pay my bills and buy food, then I might as well have just invested in shiny pebbles.
The thought had crossed my mind but dismissed it because they worship money, which ironically is faith based
But then you said it out loud and mentioned the world’s wealthiest Nazi at the helm of the ‘torch everything’ department and…I’m not so sure now.
If I was a wealthy Nazi who had more money than any other person on earth, I’d purposely cause another great depression so all the shit I wanna buy is on sale at bargain prices.
Maybe I should look into a swiss bank account for a portion of my savings
The thought had crossed my mind but dismissed it because they worship money, which ironically is faith based
Yeah, this thought/fear had been kicking in my mind for a few days until this morning when I realized that FDIC only protects deposits up to $250,000 which is poor people money to them. FDIC doesn’t really benefit them directly, so of course they’d be likely to torch it.
… per account. If you’re rich, you just split it into as many accounts as needed. Many banks will do this automatically for accounts that grow too big.
Edit: I was mostly wrong.
Maybe I learned it wrong, but I always thought it was per account holder. The upper limit has always been well above what I’d ever be likely have on hand/liquid, anyway, so never bothered to clarify.
Looks like yeah, it is per depositor per bank:
FDIC deposit insurance protects bank customers in the event that an FDIC-insured depository institution fails. Bank customers don’t need to purchase deposit insurance; it is automatic for any deposit account opened at an FDIC-insured bank. Deposits are insured up to at least $250,000 per depositor, per FDIC-insured bank, per ownership category.
https://www.fdic.gov/resources/deposit-insurance/faq
I have heard that financial managers can and do spread large dollar accounts out over multiple banks, though. There may also be something they can play with in regard to the “per ownership category” aspect, though.
Huh, I may be experiencing a Mandela effect.
Edit: So there’s a way to do it, but I’ll involve multiple banks, people, and/or account types. Still probably what rich people do.
The limit is per account type, per bank, per depositor: https://www.fdic.gov/deposit/deposits/brochures/deposit-insurance-at-a-glance-english.html
You can easily distribute your millions across multiple banks, or under your spouse’s name, or in a different type of account ownership categories (like savings, IRAs, joint accounts, …), and be covered.
This is what I do. But, my motivation was different. If the government or some corporation wants my assets I’ve made it as complicated as I can for them to take them: many accounts, different types, in the US and abroad. There’s certainly overhead. But, it’s mostly administration and limitations on liquidity.
This is part of why gold is at an all-time high. The other part is inflation.
It’s also part of why crypto is also at all-time highs, but that has a lot of other factors as well.
Yeah, I’m definitely not going to trade my real money for phony crypto nonsense. Logistically, gold is a non-starter since I can’t actually use that to live.
Basically I’m at the stage where I’m trying to determine if my money is going to remain safe in a small town bank. Like I said, until now, I’ve had confidence in the safety net the FDIC provides.
LMFAO. “Real money”. Someone still doesn’t understand. You almost get it with the realization of gold but still not quite there.
I’m still on the trusting-the-banks: I have a lot of money in the largest banks in the US, and if they fail, we’re all fucked: if BoA and Chase and Citibank collapse, we’re all going to back to growing our own food on family plots and you’ll want a donkey and 10 acres more than anything else.
To that end, I’m spending a lot of money on what amounts to chickens, seeds, canned/preserved food, and bullets.
I mean, I may not need 5 years of seeds, and what’s close to a year’s worth of not-great-but-not-starving food stores, and enough ammo to clear out the 100 acre woods, buuuuut if you do need it, better you have it.
Just because gold and crypto have experienced an uptick in their stability metric, relative to their previous standing, doesn’t all of a sudden mean they are more stable than the US government. Yes, even in its current teetering form.
Also, right after it’s swelled to an all-time high after everyone else has figured it out, is the wrong time to buy. The right time would have been in mid fall last year, before the election, and then if nothing goes wrong you can sell and take a very minor loss. “Time in the market beats timing the market” and all, but if you’re going to try to time the market, look forward, not back. Find some scientific or non-software (real world) endeavors, green energy being a big obvious one, outside the US, and put some money in those. They may still lose value during a big US economic collapse, but they’ll probably be okay in the long run, and you might be able to catch a big swell as the US implodes and all that motivation that was going to the US looks for other places of residence.
I think, totally separate from your pretty good question I have no idea the answer to, that moving a chunk of money to be stored in some foreign currency might not be a bad idea. The hierarchy of what’s a stable medium to store your assets in has sort of been upended right now. As far as I can tell, it is now, in descending order:
- Foreign currency
- Foreign investments
- US currency
- US investments
Edit: Typos
I have no idea how to get started with moving money to a foreign bank and into its local currency, but might be something I can look into and safekeep a portion there. I’m not wealthy by any means, but it’s still a life savings.
Mostly I’m just concerned that the small bank I use, and have used forever, may no longer be safe. Like most small banks, they’re pretty risk averse, but there are plenty of other factors which can cause them to go under. As for larger banks, I try to avoid them as they tend to take more risks and are generally more customer-hostile (which is why I love my small bank; they know me, and some of the old-timers have worked there for decades and knew me when I was a kid).
Yeah, makes quite a lot of sense to me. You can also, if you don’t want to deal directly with a foreign bank (not to say that’s a bad option, especially if you’re thinking in terms of maybe doing some travel there depending on how things play out), do this: Open an account with Vanguard (vanguard.com), or call and say you’re thinking about it, and ask them what to do if you wanted to move some money into being backed by a foreign asset. They are, at least historically, extremely reliable people on par with a local bank or better than. I won’t give investment advice, but they have risk scores for their stuff, and you can focus on things like international bonds that are low-risk and pegged to the faith and credit of something that isn’t the US government. Basically, not trying to make money off placing assets there, just putting it so it’s pegged to something that’s a little safer than the US right now. Bear in mind that they are still putting risk scores of 1-2 next to all sorts of US treasury stuff, so take it all with a grain of salt.
My feeling is that something that’s aligned on the side of the fence for the rich people, is much less likely to get fucked with than something that’s on the “consumer” side of the fence. Of course, deliberate fucking-with isn’t the only way that something can suffer problems.
You also don’t have to go whole hog. You can do some proportion of your savings to something that’s diversified away from the US, however you do it, and get a feel for it. Don’t try to be fancy, don’t move things around on a short timeframe, get advice from professionals when you feel like you need it.
