Earlier today I visited a couple of Huntington Beach branches of Downey Savings & Loan Association and did not see any lines outside or unusual level of activity inside, as previously occurred at some branches of IndyMac Bancorp and Countrywide Financial.
Even though there was hardly anyone there, I waited outside one branch on Brookhurst Street and talked to the first customer who walked out: Judith Button, 70, of Costa Mesa.
Button said she has banked with Newport Beach-based Downey since 1983 and thinks the thrift is solid and will survive. She has no plans to take her money elsewhere.
“I think people have to stop believing all the things they read in the newspaper and hear on TV,” Button said.
I realize this is hardly scientific and I plan to visit branches in other cities, but so far consumers don’t seem worried.
However, the thrift has experienced a drop in deposits. Parent company Downey Financial said today they totaled $9.9 billion at the end of June, down 12% from a year ago. That figure could be at the company’s discretion. If it scaling back on lending amid the housing slump, it may let deposits slide since it doesn’t need as many to finance lending.
In its release, the company was mum on the drop in deposits, except to point out it has added more checking accounts. I have questions into the company and am waiting to hear back.
Related news …
- Downey president leaves, company mum on cause
- Downey, WaMu, Indymac plummet in thrift industry rankings
- Downey reports $248 million loss, says reduced pay-option loans
- Bush drops veto threat on mortgage aid bill
- Countrywide lets Fullerton couple keep home
I had a little checking account that they got me to open, in order to qualify for a higher CD rate last year. I closed that today. The other people in the branch seemed to be doing normal business.
I’m not sure I’ll stay when my CD comes up 2 months from now … but I’m not worried enough to yank it early.
I have two CDs for a total of $65,000 in Downey Savings. One of them just matured but I couldn’t get there to close it, so I called them and had it changed from six months to three months. When it matures in October I’m closing it and putting the money in Bank of America. Same with the other CD when it matures in November. I’ll be close to the FDIC insured limit of $100,000 in B of A then, but I figure if B of A fails, we might as well all start rioting, because America will be pretty much on the verge of collapsing.
People are always a day late and in this case will be more than a dollar short. The time to check for lines is the day after the FDIC comes a’calling.
If you have FDIC insurance your safe who cares if Downey lost money. Every Bank in the USA has lost money. The media thrives on blowing everything out of the water. I say don’t listen to the news.
“I think people have to stop believing all the things they read in the newspaper and hear on TV,” Button said.
Quote of the Century.
There’s a big difference between not believing *everything* you read in the newspaper and see on TV and not believing *all the things* you read in the newspaper and see on TV.
Ignorance is only blissful for a while, unfortunately.
She’ll be dead in 8 years. What does she care.
I have my money in a credit union. I have found many people believe if it’s not FDIC insured, it’s no good. But they aren’t aware of NCUA. None of the insured savings has ever been lost by a federally-insured credit union. I think the media fails to inform readers about how their credit unions stack up against other institutions.
I love all the Downey supporters, especially from the previous thread. It makes me wonder… are they FDIC blog watchers, or are they Downey employees?
Lets do the banking 101 break down for Downey and actually read their latest 10Q, shall we…
1. Deposits shrank and shrinking
2. Liabilities are shrinking, but not at the pace deposits are shrinking, and Fed funds borrowing is higher.
3.Operating expenses increasing. They should be decreasing in a down market.
4.Cash almost half of what it was a year ago.
5. Their delinquent loans as a percentage of their total loans increased 431% YOY, and the total $ amount increased 391%.
6. Even if you take out the reperforming loans, the non-performing assets still increased 521% YOY.
7. Last, and certainly not least, their capital ratio dropped 25% YOY, from 10.08% to 7.57%
Executives are leaving daily at this bank, and after reading their balance sheet, because they are friendly, you will stay will them? Come on people… think, actually read, and then think… the math is right in front of you, and the executives are out the door. Do you really, I mean seriously, they have a chance to survive?
I just hope Mrs. Button has less than a hundred grand in her Downey account, the poor dear.
It is foolish to have more than the FDIC insured limit at Downey given their recent financial reports and the continued downward spiral.
The mortgage loan that every customer got from Downey Savings - was the dreaded pay-option neg am. They paid brokers 4 points for these now worthless notes. its going to get ugly.
Downey failure contracts were last traded at 45 on the Intrade prediction market (45% chance of failure). However, that is now the bid (ask 55).
I would suggest that uninsured deposits should be withdrawn today, by cashier’s check.
““I think people have to stop believing all the things they read in the newspaper and hear on TV,” Button said.”
she sounds like a realtor
Over 60 million withdrawn the Tuesday after the Indymac takeover. You should have been standing around outside a branch then…I was.
I think the media feeds on the negatives and unfortunetly people believe everything they hear. I do not understand why anyone would rush to any bank if their deposits are federally insured and pay a penalty to withdraw their money. Yet this is happening. If the media keeps targeting banks as the next Indymac and put fear in the minds of depositors then the banks targeted will not stand a chance.
Wake up. There is currently 93 banks on the Federal watch List.
The FDIC is an insurance corporation. It gets its money from insurance payments made by banks which are solvent. The reserves held by the FDIC are sufficient to cover only a small percentage of total bank deposits. If the FDIC runs out of money, the corporation is authorized to borrow from the US Treasury an amount of money not to exceed thirty billion dollars, at current market yields for US treasury securities.
If the FDIC were to run out of funds (the IndyMac failure drained out approximately 10% of their funds), then technically, depositors would be without recourse. Nothing in the FDIC statute strictly requires the US government to give the FDIC any extra money in the event that it becomes insolvent.
That said, however, we can expect that the Congress would do anything within their power to keep the FDIC funded, in order to avoid a general panic the likes of which we have not seen since our grandparents’ generation. But if the banking crisis were to come at the same time as a general funding emergency, or a collapse of the US dollar on international currency markets (such as might occur if China were to decide to dump its holdings of US treasury bonds), then the government might not be able to act, despite its desire to do so.
As far as where the actual money for such a bail-out would come from: Essentially, the United States would borrow it, just like it borrows enormous amounts of money to operate each year (hence the budget deficit). The total liabilities of the United States government are enormous, and most of our debt is held by the central banks of foreign countries. That is why the government must be careful about giving too many bailouts: foreign investors might become worried that we are printing too many dollars if the value of the dollar falls further. If the value of the dollar falls too low (because we printed too much money trying to bail everybody out), foreign countries might begin demanding payment on our debt by cashing in their treasury bonds. Since the total debt of the nation is not repayable, this could cause the value of the dollar to collapse, rendering any FDIC payments irrelevent.
Thus, it is not so simple as just “printing up” some money. In the event of more bank failures, the government might be forced to allow depositors to lose a percentage of their money.
There is already a whopping 1500% more paper dollars in circulation today than in 1970.
Here is something to think about when contemplating how likely a bank failure may be: Did you ever hear of “buying on margin?” Banks did it a lot, since they bet that the price of real estate would never go down. Buying on margin allows you to make enormous amounts of money if the thing you bought goes up. But you also lose big if it goes down. Citibank, for example, would be wiped out by just a 0.4% loss on their derivative contracts, many of which are tied to the housing market. That’s zero point four percent. This is why the housing downturn is hitting the big banks so hard.
Buy gold and silver. Protect yourselves in the event of the demise of the dollar. Thousands of Americans are already doing this. Gold and Silver are projected to double in the next couple of years. I work at Monex out of Newport Beach and can tell you our business is booming. People are withdrawing money from their C.D.’s and stock accounts and buying gold and silver. Gold has increased 20- 30% a year for the past 7 years. Much better return on investment than 5% on a C.D. And much more liquid.
“I think people have to stop believing all the things they read in the newspaper and hear on TV,” Button said.”
You forgot about using ear plugs and blinders, then you could be deaf dumb and blind.
Why do people try so hard to ignore reality?
If we get 7-8 more medium to large bank failures, the FDIC insurance fund is going to be in jeopardy.
Just like the housing bubble buyers in 2005, these people deserve to lose their money if they won’t listen to reason.
Now while I can’t hate on the media for continually publicizing bad news and criticism regarding the banking industry and the insiders’ favorite targets for failure (DSL and others), isn’t hanging around outside a bank asking customers why they’re not instigating a run going a bit far?
I moved five DSL accounts Saturday to B of A. The lines were not at Downey but at B of A where the surge of new customers was profound and from many other banks, not just DSL. Many people are paying attention and quietly going about the business of self preservation, without a lot of fanfare. My financial advisor blames Alan Greenspan who was warned in 2000 this crisis would happen and did nothing because of politics, she says. And, she said the worst is yet to come. Now, if I could just move my DSL, fixed rate mortgage…
People don’t want to believe it can happen to them.
My dad is over the insured limit at WaMu and I advised him to arrange his funds so as to be protected. He just laughed me off and said it’s only for a little while so he can make a pitiful 3% in between stock transactions (He transfers money between his brokerage account and checking account). Talk about ignoring risk.
I think older people get so comfortable with their routine that they’re willing to disbelieve reality because it’s convenient.
With regards to Dianne’s comment –July 26th, 2008 at 6:04 pm, being I’ve been with Monex for years, THERE’S NO DIANNE THAT WORKS THERE. AND I AM VERY DISAPPOINTED THAT THE MONEX ADVERTISING DEPT., WOULD USE THIS FORUM OF DISCUSSION TO SELL AND PITCH TO READERS GOLD UNDER FALSE PRETEXT.
MONEX is on the brink of losing there $250 million + in company financing AND CLOSING THERE DOORS FOR EVER DUE TO THEIR $380 MILLION OUTSTANDING TAX DEBT TO THE IRS AND LAWSUIT BY THE US GOVERNMENT.
As a employee, business has not been good this year, clients have been pulling out there money in groves and we’re all VERY SCARED that within a few weeks we could very well be standing in the unemployment lines - DUE TO THE MONEX OWNERS AND MANAGEMENTS UNETHICAL BUSINESS PRACTICES.
DSL is in huge trouble. what they ae NOT telling anyone is of the huge layoffs and mass exodus of management teams from their branches. The excessive amounts of “pork” at the top have yet to be held accountable for the wasteland they have created. Get your money out whil e you can - I did.