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09/30/2008

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I agree with you about raising the FDIC limits, but you don't have to spread it around among banks in order to be insured, so long as you have people close to you that you trust. You could put it in three cds, which if titled properly, could all be at the same bank and all be fully insured. In fact, if you count in a spouse, parents, grandparents, children, etc., I've seen a family insure up to $1.5 million at a single institution.

And Congress should get over its bottomless wallet, feel-good bullshit.

Wait....yesterday when I said something similar wasn't that repudiated as a endorsement of Leninism?!

It's a fine line...

Don't even have to do that boys. The Reserve Fund, who broke the buck and are probably going to get consolidated, had a side bus. they sold to broker dealers. Basically, you give your broker up to 1 mil, and it automatically gets parsed out to 10 banks at 100,000 each. You get one statement, and full insurance. The product had something like 30 billion distributed through it

But for those of us who are too small time to pay a broker to keep us under the 100K insurance limit, the inconvenience of using multiple banks is well worth the small trouble it causes. Not only does it slow down the options enough so that we can consider them, it gives the deposits to more banks (in our family's case four) thus helping them to stay healthy and lending.

However, there are arguments for increasing the limits that turn on the notion that we might identify stronger and weaker banks more quickly without this depository diversification. Maybe that's right.

One other method you can use that skips the broker is to find a local bank in the CDARS network. You open a single CD with your local bank, they farm it out to other banks in the network. You see no difference in your statements and only have to deal with your original bank, but your money gets spread around for you and stays insured.

Now if I only had enough money to put all this knowledge to use.

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