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Personal Finance Blog By MoneyRates - July 2008

FDIC Creates New Online Tool for Customers of Failed Banks

July 31, 2008

By MoneyRates Team | Money Rates Columnist

The FDIC has reacted to the increased pace of bank failures this summer by creating a tool which allows customers of a failed bank to determine their insurance status within one business day of the bank closure.
From the FDIC website:

"This tool allows failed bank customers the ability to verify whether their account is fully insured or they need to contact FDIC. A link to specific contact information will be provided.

This service is only available for banks that failed after July 1, 2008. The customer must enter each account number to determine that account's status. If you have multiple accounts with the failed bank, please enter each account number one at a time.

This service will be available for use no later than the first business day after a bank failure"

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Virtual Bank Increases Rates on Money Market Accounts, Savings Accounts, and CDs

July 29, 2008

By MoneyRates Team | Money Rates Columnist

Virtual Bank is division of Lydian Private Bank which has been operating as an "internet-only" bank for over 5 years. Without branch overhead VirtualBank has been able to consistently pay some of the top rates on their deposit products. VirtualBank increased rates this week with the following rates available to online banking customers:

eMoney Market Accounts with $100 minimum opening deposit
3.05% APY on balances over $25,000
3.52% APY on balances over $50,000
VirtualBank CDs with $10,000 minimum opening deposit
1-month CD 3.05% APY
2-month CD 3.05% APY
3-month CD 3.46% APY
6-month CD 3.72% APY
1-year CD 4.13% APY
2-year CD 4.34% APY
3-year CD 4.34% APY
4-year CD 4.34% APY
5-year CD 4.60% APY
VirtualBank Checking Account with a minumum opening deposit of $500
2.02% APY on balance over $50,000
VirtualBank considers their customer service open 24 hours a day 7 days a week because accounts can be opened at anytime or account information accessed, but to talk to a customer service rep (#877-978-265) consumers have to call between 8:30 AM and 5:30 PM EST. More information about Lydian Private Bank (FDIC number 35356) can be found on the FDIC website.
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Predictions on Bank Failures

July 24, 2008

By MoneyRates Team | Money Rates Columnist

Intrade is a prediction market website where visitors can trade on the likelihood on the outcome of current events in the areas of politics, economics, finance, entertainment, weather, and more. Members buy contracts with real money with a price of 100 indicated the "event" occurred and a price of 0 indicating the event did not occur. A contract trading at a price of 80 correlates such that the Intrade market is factoring in an 80% of that event occurring. For instance the price to buy a contract on Barack Obama winning the US presidential election is 65. If it becomes more likely Obama will be elected president that contract will increase in value and the contract holder can sell at a profit. If Obama is in fact elected president then the contract would have a value of 100. Recently Intrade added US Bank Failures as a trading category on banks identified by Intrade as potentially troubled. Recent prices on the contracts for individual banks failing include:

Bank United Financial 45
Downey Savings and Loan 45
FirstFed Financial 30
Regions Financial 15
Wachovia Corporation 15
US Bancorp 5

A number of banks are listed, but have not generated any trading yet. Those banks include:

First Horizon
Oriental Financial
M&T Bank Corporation
National City Corporation
Washington Mutual Bank
Zions Bankcorp

Right now the very low volume of trading on these contracts makes the information regarding the banks rather meaningless. However, if Intrade generates a lot of interest in this type of trading consumers can watch for their banks and the current prices on the contract of their bank failing as a precautionary measure. If nothing else not seeing your bank on this list is a good thing.

More Prediction Market News

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Zopa Borrowers with 0.00% Loan Rates?

July 23, 2008

By MoneyRates Team | Money Rates Columnist

Zopa US is offering the closest thing to a win-win proposition for borrowers and lenders who use their social lending site. Borrowers are able to lower their interest rates on personal loans by using a personal profile and social networking tools like e-mail, blogs, Facebook, and MySpace to get help on her loan from lenders. The Zopa website is listing a number of borrowers who even received enough help to bid their loan rate down to 0.00%! Lenders are guaranteed a rate of return linked to a one-year credit union CD. Lenders donate a portion of their interest to one of the Zopa borrowers at their own discretion. The rate (before donations) is 3.75% on the NCUA-insured one year CD issued from one of the following credit unions:

Addison Avenue Federal Credit Union

Affinity Plus Federal Credit Union

First Tech Credit Union

Forum Credit Union

Provident Credit Union

USA Federal Credit Union

The Zopa model was first introduced in the United Kingdom, Italy, and Japan before launching in the United States in 2007. Zopa US makes it very simple to promote a loan which is listed on their site. The original loan rates compare favorably to other personal lending sites even before donations help lower the rate. Not everyone is going to be able to receive enoug donations to get their loan rate down below 6%, but Zopa makes it easy to try.

Find more information on Zopa and social lending sites by visiting the Money-Rates.com Social Lending Report.

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FDIC Update on IndyMac Bank

July 13, 2008

By MoneyRates Team | Money Rates Columnist

The blame game is in full force after Friday's late news that IndyMac Bank was being closed by the FDIC. Bush administration officials have blamed Senator Schumer, Schumer has blamed IndyMac executives, and regulators are blaming the media for misrepresenting the story. Today the FDIC released a statement regarding the media frezy in an effort to calm the public perception about the US banking system. FDIC Chairman Sheila C. Bair's statement reads:

"Over the past weekend, I have seen news reports which have fairly and accurately reported on the conversion of Indy Mac Bank into a conservatorship operated by the FDIC. I have also seen inaccurate and inflammatory reporting which could well cause needless, unnecessary worry and angst among bank depositors throughout the country.

That fact is that for insured depositors, IndyMac's conversion has been largely a non-event. The more than 200,000 customers of IndyMac with deposits of $18 billion are fully protected. It's important to keep in mind that the small percentage of uninsured are still covered for their insured amounts and half of their uninsured money. As assets of IndyMac are sold, they may receive even more. They have had continued access to their funds through ATMs, debit cards, and writing checks over the weekend, and on Monday morning, it will be business as usual.

All bank depositors should understand that their insured deposits are safe. IndyMac is only one of 8,494 depository institutions operating throughout the country and represents only .2 percent of banking industry assets. The overwhelming majority of banks in this country are safe and sound. The chance that your own bank will be taken over by the FDIC is extremely remote. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits.

All bank depositors should also understand that they can have insurance coverage in excess of the basic limits of $100,000 per institution, with an additional $250,000 per institution for IRAs. For instance, subject to certain conditions, single and joint accounts are separately insured, and revocable trusts generally provide $100,000 of coverage per beneficiary. If you have any questions about whether your deposits are insured, we encourage you to consult with your bank or contact our deposit insurance specialists at 1-877-ASK-FDIC. If you find that you are not fully insured, it may be possible to restructure your accounts to bring your deposits below the insured limits. But first get the facts before making any changes in your accounts or banking relationships.

The banking system in this country remains on a solid footing through the guarantees provided by FDIC insurance. Our industry-funded reserves are strong and our insurance guarantee is backed by the full faith and credit of the United State Government. No bank depositor has ever lost a penny of insured deposits. On this, our 75th anniversary, we will continue that proud tradition."

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