Bank Bailouts 2009: Check Your Bank’s Rates and Fees

The U.S. Senate behind Banking Committee Chairman Christopher Dodd is proposing that the FDIC be allowed to borrow as much as $500 billion from the Treasury Department. The proposal came after FDIC Chairman Sheila Bair publicly stated last week that the insurance fund was underfunded to meet potential bank failures in the future.  Americans are already on the hook for the huge capital injections into many U.S. banks which comes straight out of taxpayer money. Now with the FDIC needing to raise premiums at member banks and the banks receiving federal money already under intense scrutiny, bank customers will  likely pay higher bank fees and see lower deposit rates as banks need to find a way to be profitable. The question to be asked is: Are we injecting money to extend the life of troubled banks by a few months only to scrape more money out of us to pay again until they fail?

This question has provoked more debate in Washington over the last few days as the stock price of Citigroup (C) has dipped below $1 a share. Democrats are urging that allowing Citigroup to fail could create aftershocks even worse than the failure of Lehman Brothers last fall. Many Republicans oppose the piecemeal nationalization of  Citigroup and would prefer to risk a massive bank failure rather than continue to support the bank with taxpayer money. Because of the massive costs involved of either letting major banks fail or propping them up with government assistance, the banking industry as a whole will share the costs through higher premiums and stricter regulation. But sharing the costs means passing on the costs to us. Finding the best banking deals may be more important than ever. Smaller local banks and the online banks posting rates at MoneyRates.com will likely be the banks offering the best rates on money markets, CDs, and savings accounts as well charging more reasonable fees than the large banks under financial strain. Check your bank account today to make sure your bank’s fees and rates are still competitive and that you are not paying more than your share of the bank bailouts.