With the number of bank failures expected to increase it’s more important than ever to know if YOUR bank is in trouble. Here’s a simple way: go to TheStreet and find your bank. They provide a free report and letter grade:
Because of the current extreme turmoil in the banking industry, financial experts such as Dr. Weiss suggest avoiding banks with any kind of “C” or below. His reasoning? With liquidity a problem along with unexpected counter-party risk (think the sudden collapse of Lehman) a bank can go from “C=Fair” to “dead” pretty quick.
Note: Wachovia Bank, the biggest bank failure in US history, had a rating of “C+” when they died last week. Washington Mutual was rated “B-” when it died two weeks ago.
But, you may ask, why worry–won’t the FDIC make sure get my money back? Well, only if the FDIC has the money to give. By some estimates they’ve already depleted HALF their insurance reserves.
If many more banks fail it is possible you will be told by the Secretary of the Treasury, “Your money is safe in your bank. Everyone’s money is safe. But, to ensure the smooth functioning of our banking system you are restricted to withdrawing no more than $2,000 per week.”