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The Undertow Bank

August 25, 2010

Rocky received an email  that Shore Bank had been seized by the FDIC, and his account had been safety transferred to “Urban Partnership Bank.”

Rocky previously sang the praises of Redneck Bank which sends new depositors a free beer can holder, pays 2% on its money market account, and has NOT been seized by the FDIC. Redneck Bank is from a “red” state.

In contrast, Rocky surmises that Chicago-based Shore Bank got “in too deep” with the loan “sharks,” and was eventually was swept out to sea. Some news reports even suggest that the Chicago-based bank had questionable ties to President Obama and other pols. See: http://biggovernment.com/centralillinois912project/2010/08/05/shorebank-now-under-scrutiny-by-the-feds-federal-bailout-also-unlikely/

The email from Urban Partnership Bank isn’t too promising either. It begins:

It has been a very busy Monday here at Urban Partnership Bank, formerly ShoreBank. We are pleased to share with you that our new bank remains committed to meeting your banking needs and to the mission of serving low and moderate income communities. We will also continue to support energy efficiency and environmentally-friendly development.

[Disclosure: Rocky wishes that the “mission” of  taxpayer-funded FDIC-insured banks was to lend money only to credit-worthy individuals and businesses.  Instead of focusing on energy efficient lightbulbs, perhaps checking the loan documents should be a higher priority?  Rocky also notes that without FDIC insurance, he would  not have an  account at Shore Bank.  This is an example of “moral hazard.” ]

  1. August 25, 2010 at 10:34 am

    So why did you open an account at Shore Bank?

  2. August 25, 2010 at 11:07 am

    They had above-average interest rates to attract depositors.

  3. August 25, 2010 at 1:49 pm

    Aha! That would have got my attention, since paying any amount of interest these days is above average. But wait, Shore Bank went under. Now Redneck Bank is offering “about average interest”. Is there a pattern here?

  4. masteroftheuniverse
    August 25, 2010 at 9:52 pm

    My parents are in the rollover for retirees business and sometimes get snagged when a bank goes belly up. In fact, whenever a bank closes, I always call my dad up and ask him if he had any CD’s in that bank. I am amazed at the places he stashes his money,but as he says, who cares as long as it’s insured.

  5. August 25, 2010 at 10:00 pm

    Well, it may be insured, but somehow I think getting your money back after a bank goes belly up is going to eat up some of your time, time that could be better spent drinking beer.

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