banks | Online Savings Blog

Why IndyMac's Failure Matters to You (Even if You Don't Have Money There)
07.24.08 | Money Management | 2 Comments | by Fred Siegmund

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All savers should pay attention to what happens with the recent IndyMac Bancorp default.

IndyMac Bancorp is different than other recent defaults because IndyMac is a bank that offers checking accounts, which are money by definition of the Federal Reserve Bank and by common understanding of depositors and everyone else. Bear-Stearns, remember, was not a bank.

It is good that accounts are insured by the Federal Deposit Insurance Corporation up to $100,000, but that is not the only protection for depositors. Failure to guarantee every dollar of every checking account has potentially severe and dangerous consequences for savers and the economy.

Failure to pay on a bank default introduces risk for those who are holding money as deposits. Every business and individual needs somewhere to hold money that is risk free.

If businesses and individuals realize there is risk to holding checking accounts, they will change their financial habits in unpredictable and unmanageable ways that will make it much harder to manage the U.S. economy.

Businesses can hold accounts abroad. Individuals can horde cash and so on.

As a bank offering checking accounts for depositors, IndyMac only had to hold around fifteen cents on each dollar of deposits as reserves to pay on their customer's checks. In the normal course of business that is adequate because those writing checks will about equal those making deposits.

In the normal course of business, their borrowers will be paying monthly principal and interest to further assure they have reserves to pay on their checking account customers.

There in lies the problem. The banks were careless and made many risky and foolish mortgage loans. The loans were made with the other eighty five cents on the dollar of depositors' money; loans made without the knowledge or approval of depositors.

Notice how different that is from someone who buys a stock or a bond by their own decision and using their own money.

Our Federal Reserve Bank and other bank regulators have the full ability and authority to regulate and supervise loan practices and review their financial condition. They failed to do so.

Our Federal Reserve Bank has full ability and authority to protect every dollar of the IndyMac accounts in addition to deposit insurance. They can provide the reserves in case of default. They determine and manage total bank reserves. Now they must do so. Pay close attention here.

Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
FNBO Launches Pay Yourself First YouTube Contest
05.06.08 | Online Finances | 1 Comment | by junger

FNBO, which has made itself pretty well known among online bankers, is launching an online video contest: the Pay Yourself First Challenge.

FNBO Direct wants to hear about your savings obstacles. Have you been struggling to save for college tuition or a wedding, pay off medical bills, go on the vacation of a lifetime or just get out of debt? Whatever the reason, we want to hear about it. Make us laugh. Make us cry. Make us say, "Wow! This person really needs to learn how to Pay Yourself First!"

To enter the contest, you have to shoot a 10- to 60-second video on your savings challenges and upload it to FNBO's YouTube channel.

The winner, as judged by FNBO, receives a "Restore Your Balance" vacation — a trip to a resort and spa (or cash in place of the voucher).

What are the judges looking for?

According to the official rules …

* Saved the most money during the challenge – based on percentage increase, rather than dollar amount saved (50%)
* Ranking by financial experts based on challenger's saving skill level: tactics for saving, ability to meet saving goal, and sharing saving challenges and solutions with PYF community (20%)
* Vote by American public via poll on www.PYFChallenge.com that judges the challengers' saving skill level: tactics for saving, ability to meet saving goal, and sharing saving challenges and solutions with PYF community (20%)
* Adherence to contest requirements, including active participation in the challenge activities such as blogging on www.PYFChallenge.com, and other promotional activities (10%)

Check out FNBO's promotional video for the contest.
Online Banking Customer Satisfaction Up, Survey Says
04.15.08 | Online Banking | 1 Comment | by junger

Customers are increasingly satisfied with their online banks, according to a new survey from ForeSee Results (says the AP).

The measurement comes from the University of Michigan's American Customer Satisfaction Index, which gave online banking an 82 out of 100, up from 73 in 2003.

The reading of 82 was higher than customers gave banks overall — 78 in 2007 — suggesting they are more pleased with banks' online operations than with branches and call centers. The score is also strong compared to other arenas: Online retailers, the highest-scoring category measured by the ACSI, recently scored 83.

Satisfaction is up partly because people are more comfortable banking online than they used to be, said ForeSee Results president and CEO Larry Freed. Other big reasons he cited include efforts by banks to boost security, allow more types of transactions, and ease navigation.

For the most part, I'm content with the online banks that I use. But there's still a lot they could do better.

First, get rid of ridiculous log in methods. HSBC is the worst when it comes to this, since you have to use their ridiculous virtual keyboard that constantly gives me errors.

Let me add as many external accounts as I want. E-Loan says you can only have one external account "for security," but that's a load of bull. I should be able to take my money wherever I want to go, whenever I want to go.

Speed up transfers. There's no reason it should take so long for my money to get from one account to another. Yes, there are some ACH issues surrounding this, but once that's done, my money should be where I want it.

What would make you more satisfied with your online bank? Leave a comment below.
Yelp Reviews Financial Services In Your City
03.14.08 | Money | 0 Comments | by Tom Valenti

Today I rediscovered a site I used to check out a little while ago, yelp.com.

It's a site where people can write reviews about a variety of different things. It seems to have taken off, and I plan on using it more (if I can remember).

The reason I bring it up in this forum is that members have critiqued and rated financial institutions, which can be of great use to prospective customers.

The ones I've read seem to focus more on the service and décor in physical locations, and not so much on the actual products.

But, if you're new to an area it's certainly a nice place to start your banking search, especially if you intend to be a frequent user of actual branches.

Tom Valenti is a marketer and project manager who currently works for a financial institution in New Jersey. For more info, visit him at http://tomvalenti.com.
How Electronic Banking is Affecting America's Jobs
03.05.08 | Online Banking | 0 Comments | by Fred Siegmund

There was a time when people saved at banks, savings and loans and credit unions … and that was about it.

People still do, but our federal government defines banks, savings and loans and credit unions as part of a much bigger group of establishments called credit intermediaries that do financial intermediation.

Savings is not as simple as it used to be, but jobs in intermediation still have most of the same titles, including 558,000 jobs as tellers.

Tellers are an important job to watch. Office automation could just about eliminate teller jobs or knock them out of the whole economy (like cars knocked out horses in my grandfather's day).

Money machines eliminate the need for tellers for check cashing and other basic banking transactions. Writing paper checks requires an elaborate process of handling, posting and clearance that takes much longer and requires more labor than electronic processing at the point of sale.

Today's digital technology basically eliminates check writing, paper and even currency. However, teller jobs are not decreasing — they've actually been increasing modestly in the last few years.

Our happiness with these teller jobs has to be modest, because the median annual salary rings in at $21,300, but their continued growth shows America's resistance to further changing to electronic money.

With broadband Internet connections in more and more homes, some people are comfortable with their money literally flying through the air. Perhaps paper gives comfort to others.

Whatever the reason, America's refusal to eliminate checks and currency supports many more jobs than technology requires.

We know that increasing productivity makes manufacturing more efficient, but it continues to eliminate jobs. In a digital world, finance and insurance also have room for more efficiency. The number of teller jobs means that more efficiency could affect things.

Efficiency sounds so much like something we should like, but if efficiency keeps eliminating jobs, maybe we should begin to feel differently.

If more Americans would like things that are inefficient, we would have more jobs, but if America wants efficiency, they may have to think of shorter hours or new ways to spread the work.

Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

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